Covestro AG (1COV) Earnings Call Transcript & Summary

[Presentation] [Interpreted] Ladies and gentlemen, as Chairman of the Supervisory Board at Covestro AG and as a result, Chairman of this Annual General Meeting, I call the 9th Regular Annual General Meeting of our company to order. Welcome on behalf of the Board of Management and the Supervisory Board. Unfortunately, given the global situation, we are again having to meet under less than encouraging circumstances. A year ago, I had referred to it here as a global poly-crisis. The situation has meanwhile become more widespread and entrenched. Alongside the war in Ukraine, we now also have a spiral of violence in the Middle East. Polarization, divisions and extremism are on the rise, while democracies worldwide are coming under ever-increasing pressure. The environment is also permanently under stress with an unending string of new extreme events and the global economic situation remains tense. I don't want to stand before you as a prophet of doom, but sketch a realistic picture of the conditions in which our company operates. What makes me confident despite these circumstances is that Covestro is very well equipped to master the many challenges. We have an excellent Board of Management team, excellent employees as well as a forward-looking strategy that is trained on the circular economy and an ultimately better and sustainable future that promises great economic opportunities. In a moment, the Board of Management will speak in greater detail about the situation of the company, including its opportunities and risks in the current environment. But now I would like to begin by giving you a few housekeeping details for today's Annual General Meeting. The Board of Management in accordance with Section 13 Paragraph 2 of the Articles of Incorporation has decided that today's Annual General Meeting will be virtual. Shareholders on site and their representatives are not allowed to be here physically. The virtual format of today's AGM is basically the same as it was last year in 2023. And ladies and gentlemen, you are familiar with this format from a number of other companies as well. We will be broadcasting the AGM from Covestro's premises, to be more specific, from building Q24 in the Chempark here in Leverkusen. The attendance area is room G165, this is where the podium is, as well as neighboring rooms G167 and G163. I would like to welcome our notary public, [ Dr. Mark Hammonds ] based in Cologne, who, as in the past years, was responsible for keeping the record of today's AGM. The entire Board of Management is here on site at the podium. I would like to welcome the CEO, Dr. Markus Steilemann, the CFO, Christian Baier, Ms. Sucheta Govil, member of the Board of Management for Sales and Marketing and also Dr. Thorsten Dreier, Board of Management responsible to technology and our Labor Director. A vast majority of the Supervisory Board is here on site in Leverkusen, although according to our Articles of Incorporation at a virtual AGM, it's also possible for members of the Supervisory Board to attend virtually. In-person, we have the following members of the Supervisory Board: Dr. Christoph Gurtler; the Deputy Chair of the Supervisory Board, Petra Kronen, Frank Lollgen; Petra Reinbold-Knape; and Dr. Sven Schneider. Joining us virtually, we have the following members of the Supervisory Board: Dr. Christine Bortenlänger, Lise Kingo, Irena Küstner, Regine Stachelhaus, Marc Stothfang and Patrick Thomas. They are at other locations or even abroad. The members of the Supervisory Board, who are here in person are not up on the podium with me and the rest of the Board of Management for lack of space. But they are in the attendance area and can contact us at any time. The Supervisory Board who are here -- members who are here and those who are joining us online will be shown every now and again during the AGM so that you, our shareholders, can see them. We also see the proxies Ina Moritz and Dr. Martin Breloer. Both of them were appointed by the company. The entire AGM will be transmitted for our shareholders who have registered as well as for their representatives by audio and video through our investor portal. Shareholders and the public at large can also follow the entire AGM on our website. A number of social media channels will also be transmitting our AGM, but this will be only until and including the speeches by the Board of Management. The technical requirements for this live transmission were carefully checked together with our external service providers. We have also taken into account experiences from last year with some unexpected technical obstacles. And that is why we assume that today's virtual AGM will run smoothly from a technical point of view. The notary public has also been explained all the technical details of this transmission and he has familiarized himself with all these measures. Ladies and gentlemen, the invitation for today's virtual AGM was published in the Federal Gazette on the 6th of March 2024, together with the agenda and the draft resolutions from the Board of Management and Supervisory Form in due form and in due time. The documents are with the notary public who will include them in the record. Prior to the AGM, we did not receive any motions to add items to the agenda nor did we receive any counterproposals or election proposals. The company has received 3 statements, which were published in due time in the investor portal and on our website. Since the invitation was sent out or published on the 6th of March 2024, all of the required documents and information were available on Covestro AG's website. The documents will remain there for the duration of our virtual AGM. And a copy of all of these requirements are here in this meeting room with the notary public, Dr. Hammonds. Ladies and gentlemen, so that you can ask your questions based on current and comprehensive information, we decided to publish the speeches by the CEO and the CFO, as well as my own speech one week prior to the AGM. These were published on the company's website. And for the virtual AGM, we are also keeping a list of participants as required by law. Here, you will see the company's proxies as well as the shareholders who are represented with their share portfolios. These are all listed on the list of participants, and we have also included the shareholders who are following us virtually via the investor portfolio. The list of participants is available here in the meeting room and it can also be viewed in our investor portal. It will be updated whenever necessary. I will announce the attendance figures later on during the course of our AGM. Ladies and gentlemen, shareholders who registered in due time and due form were able to exercise their voting rights prior to the AGM, either by means of absentee ballot or by instructing and authorizing the company's proxies. During the virtual AGM, it is also possible to use our investor portal in the Internet to cast an electronic vote or to give instructions. The possibility to authorize the company's proxies and to give them instructions will be available until the beginning of the vote. You will have the possibility to vote electronically via the investor portal will continue somewhat longer in other words, until I, the Chair of the AGM, have concluded the vote. Let's now turn to the votes. When we come to the vote, I will explain this to you once again in detail. At this point, I would like to call upon you to cast your votes at an early point in time and information on how to cast your vote can be found in the invitation and also on Covestro's website. Ladies and gentlemen, you will have the possibility to use our investor portal. You have a button in the main menu to ask for the floor. I will explain this to you later on as well as the most important information as to the content of your contributions and the formal process we will be using for our discussion today. First of all, on the content, please structure your contribution as if you were at an on-site Annual General Meeting. Only refer to agenda items and optionally to the bylaws, and please do not digress to unrelated items. I would also like to ask you to be brief in the interest of all of the shareholders, who also would like to take the floor. As a guideline, I would say 10 minutes should suffice. I would like to make it clear that this is not a formal restriction in your speaking time. It's just a nonbinding request. I would be very grateful, however, if in the interest of all participants, you could stick to the guideline of 10 minutes. And to help you out here, we will have a clock showing you how long everyone has been speaking. As Chair of the AGM, I have to see to it that our AGM is carried out in accordance with the legal requirements. And this means that the speaking time can be officially restricted, if during the course of our AGM, this appears to be necessary, especially with regard to the number of requests for the floor that have not been dealt with yet. Today's discussion will be a type of general discussion, as you're familiar with from in-person AGMs. You will also have the possibility to discuss all agenda items and you don't have to ask for the floor separately for different agenda items. As Chairman of the AGM, I am also called upon to decide how your questions should be directed to us today. In the invitation, this was indicated. And now I have decided that questions can only be made via video transmission. If you would like to ask any questions, please register using our investor portal and then make use of this to either speak or to ask questions or both. And in the same way, you will have to ask for the floor if you wish to submit a motion during the AGM, either at the item in hand or with regard to the bylaws or if you want to submit an election proposal. When asking for the floor in the investor portal, you can also indicate that you would like to submit a motion. I would be grateful if you did so, so that I can then check and decide if your motion should be given priority when giving you the floor. Requesting the floor is possible at all times. This has been possible since 9:30 this morning, as indicated in the invitation to the AGM. I would like to say one more thing with regard to today's AGM. We know that you have a great deal of interest in the discussions between Covestro and Abu Dhabi National Oil Company. Rest assured, the Board of Management will deal with this in line with the requirements of the Stock Corporation Law. This will be done constructively and openly, also in the interest of our company and in your interest as well as in the interest of all of the shareholders. The Board of Management has kept the Supervisory Board informed at all times. It coordinates closely with them, as usual. Of course, the progress and the result of such discussions will depend on the capability of both parties to come to an agreement on issues where if they are of different opinion. Now the company here will also report on the results of the discussions also in line with our obligations with regard to the European Market Abuse Directive. And I would also like to mention that we, in the interest of the company and all shareholders, will also have to say that we cannot give you any further information on the status of these discussions and the content of these discussions. I hope that you can understand that. And now I'd like to give you a few more details on the technical procedure for requesting the floor and on our general discussion. When asking for the floor, you will be put on our list of speakers. The speakers on the list will then be divided up into groups of a maximum of 5 individuals. The first individuals will then be called out, and we will mention their name. And I will ask you then to be ready for a technical test for your audio and visual transmission. We will then interrupt the AGM for about 5 minutes before we begin the general discussion. And during this period, our technical team will then carry out the technical test with the speakers who have been called up. And then I will call up the speakers one after the other. They will be given the floor and then they will then be transmitted live by video and they will also be visible to the shareholders and to the public at large in the AGM. They will hear and see you. We will collect questions from you and prepare the answers. And at the end of the last contribution, we will then begin with a round of answers. After that, the next speakers will be called up and we will repeat the same procedure until all of the speakers have been able to take the floor and until all of the questions have been asked, and all of the answers have been given. Please be patient if perhaps not all of the questions are answered directly, with your contribution. Some of the questions might be answered at a later point in time. Ladies and gentlemen, I would like to mention one more thing, and that is that from the beginning until the end of this event, that means until the AGM is concluded by myself as the Chairman, you can submit objections with regard to the resolutions taken at the AGM. There is an appropriate button for this in the main menu of the investor portal. The notary public will take down any objections received and these will be included in the record of the AGM. So that should suffice on formalities. Ladies and gentlemen, before we get to today's agenda, I'd like to take a brief look back at the past year from the Supervisory Board's perspective. As mentioned, the poly-crisis has much to our regret turned into what feels like a permanent crisis. Hatred, hostility and violence reached new heights around the world in 2023. There's a growing sense of helplessness trust is being lost. A situation in which the economy is all the more expected to maintain a solid stance and to give direction. At the same time, the economy itself, and in particular, the chemical industry, is under pressure. 2023 was one of the most difficult years for our industry in recent decades. This is because geopolitical tensions combined with an ailing global economy and high energy prices, especially in Europe. At Covestro, the continued difficult external environment, again, had a negative impact. Business performance in 2023 was affected by weak overall demand in our main customer industries and by lower sales volumes. Unlike in the year before, average selling prices also trended lower this time. And this combined effect led to a significant decline in sales and EBITDA. Although the group's net income approved (sic) [ improved ] on the bottom line, it remained in negative territory, as did the result reported in the annual financial statements under the German Commercial Code. This prompted the Board of Management to resolve not to distribute a dividend for fiscal 2023. We very much regret this and hope you will understand. But I am confident that the economic and financial situation will turn for the better as the Board of management has clear goals to return the company to a growth path in what is expected to remain a weak and challenging market environment. Without giving away too much detail, I would like to mention the 4 key levers. We will continue to save costs, we will invest selectively, we will optimize capacity utilization in our plants and we will leverage efficiencies in a number of places. Ladies and gentlemen, this approach for the operating business does inspire me to be confident. But what spurs my optimism to an even greater extent is the way in which our company systematically realizes its long-term strategic goals, which coincides with the world's drive towards sustainability. As you know, Covestro has committed itself wholeheartedly to the circular economy for our own company, but also as a blueprint for the world. We see circularity as a key to climate neutrality, resource conservation and environmental protection, the 3 main imperatives of our time. To get there, we need a fundamental system in society and in the economy. And we, at Covestro, contribute to this change with our own transformation by getting production and therefore, the product range ready for alternative raw materials, renewable energy and innovative recycling. The Board of Management will report on other successes and milestones in just a moment. Closely related to this, however, there are other things to report on because, for us, the circular economy has a twin sister as it were, and that is climate neutrality. Here, Covestro has now set itself another strategic goal that complements our climate strategy. We also want to become climate neutral in terms of indirect emissions from purchased raw materials and other upstream and downstream processes in the value chain with a staged plan that will culminate in climate neutrality for the entire company by the year 2050. The CEO, Dr. Markus Steilemann, and the CFO, Christian Baier, are standing by to give you further details in their speeches and to talk about the performance of the business and the expectations for the current year. Ladies and gentlemen, we now come to the agenda as listed in the invitation. We'll begin with agenda item 1, and this relates to the financial statements and reports. Ladies and gentlemen, I would now like to hand over to the CEO at Covestro AG, Dr. Markus Steilemann. Thank you.

[Interpreted] Thank you, Mr. Pott. And I, too, would like to bid you a very warm welcome. I'm very pleased to see so many of our dear shareholders again today, and I hope that you've had a good year since our last Annual General Meeting a year ago. The period between then and now has once again been very challenging. The difficult global situation and the many problems on our own doorstep are weighing on all of us. And of course, our own company is no exception. In a moment, my colleague, Christian Baier, and I would like to take you through Covestro's performance in 2023. Just one thing upfront though, we are persuaded and confident that Covestro will again master all difficulties in 2024, and will report on our strategic path and the many successes on it, on our strategic path toward a circular and climate neutral economy. Covestro is one of the pioneers in the transformation to a circular economy and it's, therefore, understandable that we're also attractive to many investors, and this brings me to a topic that will be of particular interest to you, I expect. The discussions with the Abu Dhabi National Oil Company, or ADNOC, for short. We're conducting these discussions in a constructive, open manner in accordance with our obligations under German stock corporation law in the interest of our company, our shareholders. And of course, all other stakeholders as well. As is normal, the progress and outcome of such discussions depend on the ability of both parties to achieve a consensus on issues on which they have different views. We will continue to report on the outcomes of our discussions, of course, in accordance with our obligations under the European Market Abuse Regulation. Speaking of reporting, I'd now like to present an outline of how our company performed in the past fiscal year. As mentioned by Dr. Pott in his introduction, 2023 was unfortunately one of those difficult years that weighed on Covestro as well as the chemical and plastics industry as a whole. We again had to deal with a very challenging market environment in the past year. In 2023, we saw geopolitical tension, structural challenges and a weak global economy. The latest addition to this list is the military escalation in the Middle East. Just two observations at this point. The world is drifting further apart, a development that is often fueled by increasing extremism and fanaticism. And this is a disturbing trend that must be countered with determination. I want to assure you that we at Covestro reject political extremism and xenophobia in the strongest terms. Our employees from more than 60 countries see themselves as a large team that represents fairness, tolerance, and diversity. And we also support this conviction in society at large. And this brings me to my second observation. Let's not capitulate in the face of all these large and small problems. Let's look ahead with a healthy dose of optimism. That, of course, does not mean that the acute challenges will simply go away. After all, we at Covestro cannot influence the global economy. So for this reason, the company, again, had to deal with weak global demand in its key customer industries in the past year with one exception. Our biggest sales driver, the global automotive industry, saw growth of 10%. And the market for electric mobility, for which we are developing many innovative products, expanded by as much as 30%. But the market environment will remain challenging for Covestro in 2024. Against this backdrop, we did above all one thing, focus on the things over which we do have control and that we can influence. We have, therefore, consistently advanced our sustainable future strategy, for instance. To make Covestro even more dynamic and future oriented, we addressed 4 action areas in particular. Area #1, efficiency. This is predominantly about the energy that our company consumes, which is, as you know, a major cost and environmental factor. We continue to work on using energy in an even more rational and environmentally compatible manner with success. Let me give you an example. At our Dormagen site in Germany, we've modernized the plant for the production of the foam component TDI. As a result, we consume up to 80% less energy compared to conventional processes. And we're also reducing annual greenhouse gas emissions by 22,000 metric tons. By applying such measures, we were able to save EUR 20 million in total. Speaking of savings, this brings me to the next action area, cutting fixed costs. We successfully reduced them by a mid-range 9-digit figure. On the other hand, we also spent money as well, investments to make future growth possible. The third action area under our strategy, we invested around EUR 800 million in 2023 in research and development projects and in expanding our production among other initiatives. Here's one example from China to illustrate this. There's a great demand in China for reused polycarbonate for cars, electronics products and many other applications. And we responded to this by opening a plant at the Shanghai site for refining these kinds of recyclates. This is because we are increasingly focusing our portfolio on circular products, which will ideally be manufactured with zero impact on the climate. And this is, in turn, related to shifting our production towards nonfossil raw materials and renewable energy. We're systematically driving their expansion, and that has brought me to action area #4, our quest for climate neutrality. And I'll come back to this in more detail later on. All I want to mention at this stage is that we've further increased production -- the proportion of green energy in our energy mix last year from 12% to 16%. Our intention is not only to become climate neutral but also to make ourselves less dependent on price fluctuations in the energy market. This is because high energy costs, especially in Europe, weighed considerably on our business last year. And now, ladies and gentlemen, I want to give you a brief summary of our financial performance. As I mentioned, Covestro continued to face a weak market environment and weak demand in all regions in 2023. Lower sales volumes and a decline in average selling prices led to a 20% reduction in group sales. This also impacted EBITDA, which was down by 1/3 from the previous year. We did, however, meet the targets we had set for the year 2023. But Covestro was again unable to cover its cost of capital. Some positive news is that free operating cash flow, that is our readily available funds, increased by 68%, largely thanks to the optimization of inventories and receivables and liabilities. Greenhouse gas emissions rose slightly, and this is partially due to a more emission-intensive energy mix for purchased power and steam in the United States and Germany last year. Shareholders, ladies and gentlemen, conditions will remain difficult for us this year, and we're responding by continuing to drive forward the internal optimization of the company. This process focuses on 4 areas. Number one, production. We are further increasing the safety and reliability of our facilities and working even more energy efficiently. Two, increase in sales volumes. We are getting even more out of our facilities in order to improve earnings. With better capacity utilization, we want to generate significant contributions to our EBITDA. Focus area #3, higher margins. We're paying even greater attention to the needs of our customers and are concentrating on particularly lucrative solutions during this process. And last but not least, we're continuing to work on costs in all areas. We will watch expenses even more closely in all of these areas while continuing to cut back on fixed costs. All of these measures, ladies and gentlemen, are also benefiting from the advancing digitization of our company, a process that involves the large-scale introduction of artificial intelligence. We expect this to have considerable advantages in all parts of the company. We already use AI for innovation, development, production and administration. In administration, we are optimizing, for example, our liquidity planning with the help of AI, which helps us analyze huge data volumes. Through better foresight and planning, this allows our colleagues to save on interest costs, for example. In production, we already use artificial intelligence to increase production capacities. With AI, we can successfully reduce variance in polyester manufacturing, thus cutting throughput times and increasing our production capacity by 5%. In addition, all employees will now receive an AI-based wizard. This personal virtual assistant helps them deal with many day-to-day tasks from composing e-mails to summarizing huge data volumes. We are thus taking a further step towards aligning our employees' day-to-day work with the future. Shareholders, it is the people who make our company, our 17,500 employees around the world, a great diverse team that works in solidarity and to which everyone makes their own special contribution. In persistently difficult times, they have all worked tirelessly and achieved excellent results. So for this, a big heartfelt thank you from all of us on the Board of Management. We are confident that with this strong team and our powerful strategy, Covestro we will continue to weather all headwinds and stay on course for a bright future. For more details on our expectations for the present year and business performance in 2023, I will now hand over to my colleague, Christian Baier. Over to you, Christian.

[Interpreted] Thank you, Markus. Shareholders, I'd like to join my colleagues in welcoming you to this year's Annual General Meeting. This is my first time and it's a great pleasure for me to guide you through the results for fiscal 2023. After that, I will also talk about our expectations for the current year. Markus Steilemann has already said it. 2023 was another difficult year for the chemical industry. The global market environment continued to be impacted by weak demand and declining sales prices as a result. This is reflected in our results for 2023. For example, in the past fiscal year, lower sales volumes led to an overall decline in volume of 6.8% at the group level. The EMLA region performed the weakest in fiscal 2023, affected, above all, by the recessionary trends in Europe. Volume in the region was down around 10%. The main reason was the significant contraction of the electronics industry, which could not be offset by the slight rise in the automotive sector. The automotive industry also did well in North America, but as the construction sector shrank at the same time, our volumes declined by 5% in total in this region. The construction sector is a key factor in the performance of the APAC region. Here, too, the automotive sector performed well. However, combined with the positive development in the furniture sector, it went some way towards offsetting the decline in the construction industry. Volume in the APAC region, therefore, decreased by only 3% in 2023. Overall, sales amounted to EUR 14.4 billion in fiscal 2023, down 20% compared with the previous year. The downturn in volumes sold was also reflected in EBITDA, which amounted to around EUR 1.1 billion in fiscal 2023 compared with EUR 1.6 billion in the previous year. As you can see in the chart, the demand base changed in volume is a key factor driving this decline. Another relevant aspect here is the pricing gap, which is the difference between the sales and raw material price trends. Although the cost of raw materials, especially energy, dropped significantly in fiscal 2023, this wasn't able to offset the pressure on sales prices exerted by persistently weak global demand. But the critical question is, what are the things over which we do have control ourselves? They also include the management of our production and fixed costs, both aspects, which have been combined here in the other category, propped up our EBITDA significantly. This shows that our actions are having an effect and our systematic focus on efficiency is paying off. Moreover, toward the end of the last year, we saw the first modestly positive signs such as a slight improvement in demand. Our sales volumes have picked up recently in all our main customer industries, and we generated positive earnings of EUR 132 million in the fourth quarter of 2023. This puts the quarter substantially ahead of the prior year quarter. Most importantly, after 6 negative quarters in succession, we saw volume development turn positive again for the first time. Let's now take a closer look at our two segments: Performance Materials and Solutions & Specialties. Due to their distinct business models, their performance was quite disparate in the past fiscal year. Let's first turn to Performance Materials. Performance Materials is our commodity business, which is our business with standard polycarbonates, standard urethane components and the requisite base chemicals. Our focus here is above all on reliably delivering standard products at competitive cost. This segment is strongly influenced by economic cycles. Continued weak demand was thus impacted or has therefore impacted this segment in particular, compared to the group as a whole. This is why we are seeing how the global market environment caused a decline in sales and EBITDA here for the past fiscal year. In total, the segment generated EBITDA of EUR 576 million, translating into a margin of 8.6%. But there are positive signs here as well. Volumes, for example, displayed positive development in the fourth quarter of 2023. Encouragingly, this trend continued into the first quarter of the current year. Nevertheless, given our high dependence on economic developments, we are still cautious when it comes to projected price and margin trends in the first half of 2024. For the full year, we're anticipating EBITDA of between EUR 400 million and EUR 800 million for the Performance Materials segment. In this context, we focus, above all, on key factors that we are able to shape ourselves. This includes, among other things, further improvements to the availability of our plants. This gives us control over a critical lever for meeting our targets. Let us now take a look at our Solutions & Specialty segment, where in very close collaboration with our customers, we develop highly specialized products and come up with tailor-made innovations. Despite numerous challenges, the segment proved to be very stable in the past fiscal year, although a drop in sales prices and volumes meant that sales were lower, we generated stable EBITDA of EUR 817 million. This stability is proof of the resilience of this segment. We manage our product portfolio in conjunction with our customers in such a way that it performs well even in challenging economic situations. Our highly attractive products as well as rigorous efficiency and cost measures helped us raise the segment's margin to as much as 11.2%. For 2024, we forecast that the Solutions & Specialty segment's EBITDA will range considerably above the 2023 figure. This segment will, therefore, remain a central pillar of Covestro's future success. Let me make this point again. Especially in a challenging global environment, our focus is above all on areas that we can influence ourselves. Firstly, systematic investment in the sustainability of our progressive production facilities; secondly, the strengthening of the future viability of our company; and thirdly, ensuring an efficient capital structure. For us, this means that in a difficult fiscal year with low profitability, our focus is on free operating cash flow. Despite the significant drop in EBITDA, we successfully generated a positive figure of EUR 232 million in 2023. We thus exceeded our own forecast, even though profitability was under particularly intense pressure in the year 2023. An important aspect here was above all the focused measures we took on the working capital side and it was achieved without impacting on goods availability for our customers on the other side. To manage that balance is a challenging task, which the team mastered very well working together. Nevertheless, due to the numerous global challenges, we generated negative net income of EUR 198 million for fiscal 2023 overall. In light of this result, we, the Board of Management, decided not to propose any dividend for fiscal 2023. This is in accordance with our dividend policy. Since 2020, we have linked our dividend more closely to the financial situation of the company. In principle, the intention is to distribute a dividend of 35% to 55% of net income at the group level, if this figure is positive. In fiscal 2023, our net income was again negative despite a slight improvement compared to the previous year. Shareholders, let's now look ahead and consider our forecast for the current fiscal year. 2024 will remain challenging, especially during the first half of the year. We expect that the conditions will remain challenging and volatile, and the pressure on margins will ease off only in the second half of the year. But let me remind you that our company will focus on those levers over which we have control. We will reduce costs, leverage efficiency and make sure our plants are reliable. In addition, we continue to invest systematically in a successful, sustainable future for Covestro. In terms of financials, we expect EBITDA of between EUR 1.0 billion and EUR 1.6 billion in 2024. We also anticipate that free operating cash flow will remain positive at between EUR 0 million and EUR 300 million. This will result in ROCE above WACC of minus 7 to minus 2 percentage points. We're also working to further reduce our greenhouse gas emissions, which we project to range between 4.4 million and 5.0 million metric tons of carbon dioxide equivalent in 2024. Sustainability is particularly key to our future. We are thus making significant investments both in our vision of becoming fully circular and in the climate neutrality of our company. For more about our plans in this area, I now hand the floor back to Markus Steilemann. In the next few minutes, he will give you further details on the progress we have made on the way to a circular economy and on our climate neutrality targets. Thank you.

[Interpreted] Thanks, Christian. I'm happy to carry on from here. As you know, shareholders, the circular economy is our major goal, the vision to which we have committed the company. We aim to comprehensively entrench it within our company, and we want to contribute to making circularity the guiding principle in the economy and society at large around the world. And we're doing this in two ways: By switching production from nonfossil raw materials, renewable energy and innovative recycling; and by developing and manufacturing circular climate-neutral products for the key issues of our time, for clean mobility, for the energy transition, for sustainable building and living, and many others. We reached other important milestones in this regard in 2023. I touched on this previously. Our company buys an increasing amount of energy from renewable sources. Its share is now 16%, and we're progressing with great strides. Our aim is to get to at least 25% by 2025. A proven method for this is long-term agreements with energy suppliers. In 2023, we also entered into the first major agreement of this kind in the United States. This is to buy solar power for our Baytown site in Texas, Covestro's third largest worldwide. Together with Europe and Asia, this brings us to 5 large volume supply agreements for renewable energy and 4 more are in the planning. Recycling is another building block of our circular economy and climate strategy. According to a study from 2024, the global circular economy is only at 7% and only 9% of global plastic waste is fully recycled. This will have to change, and we want to contribute by promoting innovative technologies, especially for chemical recycling, which is very promising, but is still in its infancy. In this process, polymers are broken down into their chemical components and subsequently reconstituted. Sounds simple, but it is, in fact, technologically demanding. We are working on several projects of this type at Covestro. Our latest successes include a new process for chemically recycling plastic waste containing polycarbonate. We began technical implementation on a pilot scale last year. This allows us to produce raw materials that are in demand from plastic waste. Less waste, more circularity. This is one method for recovering alternative raw materials. Another lever is changing the raw material base. Ladies and gentlemen, we've got to move away from fossil resources such as crude oil, whose processing and use releases CO2 and accelerates climate change. And we've got to embrace raw materials from renewable resources such as biomass. In many cases, we're currently using raw material blends containing fossil and nonfossil carbon [Audio Gap] are more than just a supplier relationship, our 2 companies have formed a strategic alliance for pooling knowledge and promoting transformation in the construction sector, which will have to become carbon neutral in the European Union by 2050. We pursue these kinds of partnerships under our circular economy strategy at all levels and at all stages of the value cycle. In this, we are driven by the conviction that this is the best way to get to innovative technologies, products and business models. Cooperation was and still is the key to success in a groundbreaking new process. Ladies and gentlemen, I reported on this in the past. Together with academic partners, we managed for the first time to produce the important chemical, aniline exclusively from plant biomass, that is without any crude oil at all, an all-new complex process in which biotechnology also plays a key role. After a lot of success in the laboratory, we've now arrived at a point where we want to test it on a larger scale. To this end, we recently opened a pilot plant at the company's headquarters in Leverkusen, the first of its kind in the world. Compared to conventional technology, the new process achieved a significantly improved carbon footprint for aniline. So as you can see, shareholders, we want to manufacture our products increasingly without fossil raw materials. And this, of course, has a tremendous impact on the emission of greenhouse gases, because raw materials make up by far the largest part of the emissions included in our climate footprint. And these kinds of emissions are part of Scope 3, as it's called, 1 of 3 internationally recognized categories, which comprises greenhouse gases, affecting companies indirectly in upstream and downstream processes. For example, through transportation, business travel, waste travel and as I've just mentioned, in purchased raw materials, which already come with a carbon footprint. We now aim to become climate neutral in this Scope 3 as well. And to this end, we've set ourselves an ambitious target, which completes our climate neutrality strategy. And now let me introduce this to you. You may remember, shareholders, ladies and gentlemen, in a first step in 2022, we announced targets and actions to make Covestro climate neutral at the operational level. This target, which we aim to achieve by 2035, applies to what we call Scope 1 and Scope 2. Scope 1 covers all direct emissions coming from our own production facilities. Scope 2 is for the energy that we purchase. This covers the indirect emissions that arise in the production of these sources of energy and are allocated to us. And now we will also have Scope 3, which contributes the lion's share of the emissions. All in all, our company is going to become -- is intended to become completely climate-neutral by 2050. We have carefully planned the long road up to the middle of the century and set ourselves clear targets. One major milestone is scheduled for 2035, which is just 11 years from now. By then, we aim to reduce Scope 3 greenhouse gas emissions by 10 million metric tons net compared to our base year of 2021. And this corresponds to a reduction by 30% and includes some of the growth-related emissions projected up to 2035. Ladies and gentlemen, we have not only clear targets for Scope 3, though, we also have clear ideas of how we intend to meet them. Let's take a look at 4 levers that will contribute to our meeting these ambitious targets. The first lever we use is applied at the level of suppliers. If they reduce their Scope 1 and Scope 2 emissions, that will benefit our Scope 3 numbers. And secondly, we are investing in new processes for alternative and recycled raw materials, our Make project. And this includes platform technology for innovative recycling and of foam precursors. The first step we want to take is to chemically recover the components of flexible foam in mattresses. We're also planning to drive profitable sales of products based on alternative raw materials. And this is complemented by a large number of supporting measures to reach the Scope 3 targets. They include recycling more of our own waste so that less of it is incinerated anymore. Emissions are lowered accordingly. Step by step, we are therefore implementing our master plan for climate neutrality and the circular economy. And we've made further progress on this path so far this year in terms of raw materials, energy products and collaboration. Let me tell you now about just a couple of highlights. We made an early start in January when we announced an important agreement with the raw material producer Encina. From 2027 on, this company, which is based in the U.S., will supply us with raw materials recovered from recycled used plastics, on a long-term basis. We will then use them to make TDI and MDI, the components of flexible and rigid polyurethane foam. Another strategic agreement followed in February. This time with the German energy company, RWE. It will supply power and guarantees of origin from offshore wind turbines in the North Sea to our Belgian site in Antwerp from 2026 onward. This will allow us to cover as much as 60% of the plant's energy demand from renewables. So that's brand new news in terms of shifting our production to circular economy and climate neutrality. But we've also got news about corresponding products. For example, for our customer Henkel we provide specific components for adhesives made from raw materials containing a certain percentage of biomass. In turn, Henkel uses these components to manufacture adhesives for wooden components in buildings. In this way, we are jointly driving the transformation of the construction industry towards sustainability. I'd like to close off now, if I may, with another current example from our expanding range of sustainable products. Different sector, different customer. I'm now talking about the technology group, ABB, and the area of application is electrical engineering, where we supply the company with polycarbonate made from recycled, mass balanced organic waste. This is now being used for the first time in the manufacture of switches, connectors and multimedia outlets. Ladies and gentlemen, this brings me to the end of my presentation. I hope Christian Baier and I have been able to give you some idea of where our company stands, what challenge it has to overcome and what opportunities lie ahead. Here's a brief summary, if I may. In my opinion, Covestro's position is absolutely fit for the future in terms of both strategy and operations. Strategically, we are staying on course for the circular economy, the major worldwide project for the 21st century. This goes hand-in-hand with orienting the entire company toward climate neutrality. This helps not only us, but also our customers in many key sectors. And I'm sure it will ultimately also find its way into products that will make your life better and more sustainable, dear shareholders. From an operational point of view, we are continuing to work on improving our performance and competitive position. I'm sure you have an idea by now of the many levers and controls at our disposal in this context. In summary, this means that we are continuing systematically to implement our corporate strategy, the right mix to navigate Covestro safely through choppy waters and to reach the promising goals on the horizon. Ladies and gentlemen, I hope you will support our company on this journey. And this journey is definitely worthwhile and Covestro is already among the shapers and winners of the world as a brighter place. So on behalf of the entire Board of Management, I'd like to say thank you for your attention. And now I will hand the floor back to the Chairman of our Supervisory Board, Dr. Richard Pott.

[Interpreted] Thank you, Mr. Steilemann, Mr. Baier. Thank you very much for your presentations. On behalf of the Supervisory Board and certainly on your behalf as well, I would like to thank the Board of Management and the employees very much. We cannot stress this often enough. These have been long-lasting difficult circumstances. And all 17,500 people in our company have achieved great things. This is something we can't take for granted and I'd like to pay tribute to that here. With the help of the entire team, Covestro navigated relatively unscathed through choppy waters. At the same time, we never lost sight of our compass, focused on circularity and also focusing on a sustainable, better future, which offers us excellent economic opportunities. Ladies and gentlemen, before we turn to the report from the Supervisory Board, I would like to give you the current attendance figures as they now stand with regard to the list of participants. Of the registered capital stock amounting to EUR 189 million broken down into 189 individual shares, we have a total of 115,978,640 individual shares with the same number of votes. This is 61.36% of the registered capital stock. In addition, we also have absentee ballots for 377,159 individual shares. So altogether, we have a total of 116,355,799 individual shares, which corresponds to 61.56% of the registered capital stock. Ladies and gentlemen, I would now like to come to the report from the Supervisory Board. This can be found in the annual report on Pages 17 through 26. I'd like to refer to the report and since we've reported in detail there, I will be a bit shorter here at this point. As I said, 2023 was once again challenging for Covestro. Ongoing geopolitical uncertainties, for example, due to Russia's war against Ukraine or the conflicts in the Middle East, these have shaped global economic development. In addition, high inflation and low demand from Covestro's main customer industries impacted the company's 2023 fiscal year. The Board of Management has intensively analyzed this extremely complex and difficult overall global situation and reflected it in its strategy in order to secure the business and the long-term future of Covestro. In addition to the further implementation of the strategic goals, the focus of its work was on improving operational performance. As the Supervisory Board, we closely monitored the Board of Management and supported it in its deliberations and decisions. Strategically, Covestro continues to be positioned in the right and forward-looking way with a focus on establishing the circular economy and on innovations for greater sustainability in general. Important topics in fiscal 2023, including -- included the setting of Scope 3 targets for the company, the development of a sustainability component from the social issues area for the compensation of the Board of Management and the intensive consideration of strategic options for the company, including consultations on the expression of interest of the Abu Dhabi National Oil Company, ADNOC, for short, from the United Arab Emirates with regard to Covestro AG. As part of its supervisory duties, the Supervisory Board, in particular, closely monitored the process regarding the expression of interest in the interest of our company, its shareholders and all other stakeholders. For details, please refer to the explanations in the annual report. Equally important, however, was the fact that we set the course for the continuity of the company's management. For the position of Chief Financial Officer, which had to be filled due to the departure of Dr. Thomas Toepfer, we have recruited Christian Baier, who took up his new position on October 1, 2023. Mr. Baier previously held the same position at the Metro Retail Group, where he held various management positions since 2011. His previous positions include the international investment company, Permira, and at this point, once again, a warm welcome and all the very best wishes to you, dear Mr. Baier. However, there was another change in the Board of Management, shareholders. On July 1, Dr. Thorsten Dreier succeeded Dr. Klaus Schäfer as Chief Technology Officer. In addition, Dr. Dreier has been working as Labor Director since September 1. He began his career in 2002 as a Laboratory Manager in the Bayer Group and subsequently held various management positions at Bayer, Bayer Material Science and Bayer Technology Services. Prior to his appointment to the Board of Management, he was Head of the Coatings and Adhesives business entity at Covestro. On behalf of the entire Supervisory Board, I would also like to take this opportunity to wish you all the very best of success, Mr. Dreier. Ladies and gentlemen, there have been no personnel changes to the Supervisory Board in the past year. But I would like to inform you of the fact that as of today, Petra Reinbold-Knape as a representative for the IGB will be stepping down as this is the end of her active professional life. This is something that is hard for us to accept, I must say, and it's hard for her to accept. But I would like to thank you very much on behalf of the entire Supervisory Board. Thank you, Ms. Reinbold-Knape, for many years of excellent and trustworthy cooperation as well as many very good discussions. I would like to wish you all the very best for your upcoming retirement. Together with IGBCE, we have made a request for a successor. We've submitted this to the court. And due to the process, which is still ongoing, I would ask you to understand that we cannot mention any names right now. The entire Supervisory Board was in regular contact with the Board of Management in 2023. In doing so, we have convinced ourselves of the effectiveness of the decisions and measures taken by the company's management. In addition, we continuously monitored and advised the management of the Board of Management in the past year. This was particularly the case at sixth ordinary meeting attended by all members. Only in one case was one member unable to attend a single meeting of the Supervisory Board due to illness. The current challenging economic situation in connection with the acute crisis and their impact on the company was discussed at every Supervisory Board meeting last year. In the Supervisory Board, we received very detailed reports on these topics from the Board of Management and dealt in detail with the existing challenges and the measures adopted by the Board of Management. For details here and also for the individual meetings and their contents, I would like to refer you to the written report from the Supervisory Board, which is available to all of you. Ladies and gentlemen, that should suffice for the report from the Supervisory Board. At this point, I would like to say -- in agreement with the Board of Management, I'd like to say something about agenda item 7. And this is the approval of the domination and profit and loss transfer agreement between Covestro AG and Covestro First Real Estate GmbH. And in order to increase the efficiency here, we would like to also talk about a consolidation of the results of the Covestro Real Estate company. And that is why that on the 27th of February 2024, an agreement was concluded between Covestro AG, the controlling company, and its wholly owned subsidiary, Covestro First Real Estate GmbH, as the controlled company. This is when the domination and profit and loss transfer agreement effective as of fiscal 2024 was concluded. The domination and profit and loss transfer agreement requires the approval both of the Annual General Meeting at Covestro AG as well as the general meeting of the Covestro Real Estate -- First Real Estate GmbH. Approval from the general meeting at Covestro First Real Estate GmbH has already been granted. Further details on this agenda item and on the domination and profit and loss transfer agreement can be found in the invitation to today's AGM. Both the Board of Management and the Supervisory Board propose approving this domination and profit and loss transfer agreement. Ladies and gentlemen, that now brings us to our general discussion. I have already explained the formalities to you. I'll be brief and explain them once again. Please, if you want to take the floor, use the appropriate button in the main menu of our investor portal. After registering your request for the floor, you will be put on our list of speakers. The speakers will then be divided up into groups of probably 5 individuals. After I call out your name, we will interrupt the meeting for about 5 minutes. And those 5 speakers will then carry out a technical test. After that, the first 5 individuals will be called up one after another, so that they can be transmitted live by video and audio to us, and then they will speak to us, and they can ask their questions or submit any motions they may have. So please make all of your statements and ask your questions in one go. The questions will be noted down, and we will collect them before answering them. After each group, we will then have an answer round where the members of the Board of management will answer your questions and deal with your concerns. Questions which fall within the responsibility of the Supervisory Board will, in agreement with the Board of Management, be answered by myself. If there are any open questions or no request for the floor, then we will have another round of questions, and that will be followed by another round of answers until all of your questions have been answered. Once again, I'd like to ask you to be brief and you should use our guideline of 10 minutes. This is not an official restriction of your speaking time, but I do reserve the right in the course of our meeting to introduce such a restriction if that seems necessary. I would also make the following points. After the discussion and after your questions have been answered, we will begin with the vote. You can vote via the investor portal until the beginning of the vote. You can give authorizations and instructions. You can exercise your voting right and you can cancel them. You can also use the investor portal until the closing of the vote to cast your ballot by absentee ballot or you can change or cancel your vote. I will tell you once again before we close these possibilities, and then we will determine the results of the vote. Ladies and gentlemen, we will now begin with our general discussion. I have a number of requests for the floor, and the first speakers will be Frederik Beckendorff, [ Andreas Masek ], Arne Rautenberg, Andreas von Angerer and [indiscernible]. Our technical team has asked you to -- those 5 individuals I've just mentioned should then go to the investor portal and go to the technical test. This will take a total of about only 5 minutes. I would like to introduce the AGM for about 5 minutes, and then we will begin with the first speakers. [Break]

[Interpreted] Ladies and gentlemen, the Annual General Meeting is resumed. As you can see on screen, the Supervisory Board is still here. The first speaker I'd like to call is Frederik Beckendorff. You have the floor.

[Interpreted] Thank you. Chairman, Dr. Pott. Ladies and gentlemen, I'm Frederik Beckendorff, I'm speaking to you as a representative of the DSW, who is representing shareholders to whom voting rights have been transferred. Ladies and gentlemen, I'd like to start by expressing my regret and surprise at the fact that this year's AGM of Covestro, despite the very negative experience made last year, is being held as a virtual event once again. We deeply regret that the Supervisory Board and the Board of Management did not take into account or react to the technical difficulties experienced last year, making the entire event last about 9.5 years (sic) [ hours ]. So we do hope that the situation is much improved this year. We deeply regret that direct exchange between the shareholders and company management is being kept so difficult, although personal dialogue from where we stand given the current situation in which the company is operating, would have been so important. And Dr. Pott, it is not true that we are actually convening today, as you mentioned in your introductory statement. This may apply to the Board of Management and parts of the Supervisory Board, but it doesn't apply to anyone attending virtually. So my question is, why you are holding this event as a virtual one, despite the experiences made last year. What conclusions did you draw as the Board of Management and Supervisory Board from the events that occurred last year? How many shareholders are participating this year? And how does that compare to last year's virtual AGM? In the last week, I went to the Deutsche Telekom's in-person AGM in Bonn. So it is possible to do this. I would like to kind of request that the events of the AGM of Covestro be considered once again. I think the conclusion is that our right to be heard is significantly curtailed. 2023 was a very difficult year for Covestro and one of the most challenging ones that I've ever experienced in the past decade. The reasons are manifold ranging from sustained geopolitical tension through to high energy prices, especially in Europe, the global weak economy through to structural problems, especially in Germany. The sales dropped by 20%. EBITDA increased by 33% to EUR 1.1 billion. That was disproportionate. This equated to a decline in the EBITDA margin from 9% to 7.5%. With respect to sales, negative price effects of 11% came to play and a negative volume effect of 6.8% came to play. What was the influence of the sustained weakness of demand and the availability problems with respect to raw materials always compared to the previous year? As you reported, Mr. Steilemann today, in the past fiscal year, fixed costs were reduced by a mid-range double-digit million euro amount. What costs concretely were you able to reduce and to what extent do you plan to implement? If so, to what extent? You had another net loss of EUR 198 million following EUR 272 million in the preceding year. This corresponds into a negative earnings per share. According to the dividend policy, 35% to 55% of the net income is supposed to be paid out as a dividend. Now there's a profit oriented -- there should be a profit oriented payout of the dividend of 50%. We therefore, understand the conclusion that you have drawn. Nevertheless, the question is whether the yardstick that you have selected for determining the dividend is actually correct. And this is against a backdrop of the surprising resumption of your share buyback program. There has been an encouraging increase of free operating cash flow of 68%. We mustn't forget that. Has the Board of Management considered and consulted about the expediency of the dividend policy? Given the fast-changing cyclical nature of your industry, may you not reconsider this policy? Ladies and gentlemen, Covestro is resolutely focusing on the circular economy and climate neutrality. Your sustainability targets include short-term targets with respect to the sustainability of the energy supply chain, sustainability of your innovation portfolio. Starting or based on the status achieved in 2023, you seem to have quite a long road ahead of you. What is your assessment of the status quo with respect to your sustainability targets? Do you believe that the progress made will be sufficient to achieve your goals by 2025. Finally, you stated your plans to reduce both direct and indirect greenhouse gas emissions, including Scope 1 and Scope 2. And you have extended that to include Scope 3 for downstream processes. From your perspective, what are the biggest risks that would hamper the achievement of the Scope 3 emissions goals by 2035 and the climate neutrality goal by 2050? Based on your statement, the new net zero goal by 2050 is in line with the Science Based Targets initiative, SBTi for short. The objective is to limit global warming to 1.5 degrees centigrade. So far, however, Covestro has not made a commitment to the SBTi. When do you plan to have your goals validated by the SBTi? Covestro so far has been a real pioneer with respect to sustainability. The DIA Group this year for the first time has held a consultative poll say climate and placed that on their agenda as a chemical company. Is this a topic that the Board of Management and Supervisory Board are taking into account? As we've found today, high energy costs, especially in Europe, weigh on the business of Covestro. In addition, in Germany, there are deep structural problems that have not been tackled successfully by the politicians in the country. What are your conclusions? How do you assess the competitiveness of the European locations of Covestro in light of all of the burdens? What is the capacity utilization of your plants in your different segments and in your different regions? Must we fear closures or shifts of production to other regions, given the rifts? Ladies and gentlemen, this brings me to the agenda. Despite the dubious events of the past AGM, we plan to ratify the acts of the Board of Management and the Supervisory Board today. This is connected with a clear expectation that this year's AGM, which is also virtual, will proceed seamlessly and also that we will have an in-person AGM next year. With respect to the compensation report for fiscal 2023, it is suggested under item 4 that short-term variable compensation, the PSP consider the thresholds for the 3 KPIs. By consequence, the Supervisory Board again exercised its discretion and reduced the payout ratio to 50% for a payment of 75% because the payment of 70% did not seem proper given the commercial situation of Covestro. The bonus payments were also considered. In the preceding year, the payment of the bonuses had been reduced to 0. Please give us a timeline for the achievement of the goals of the PSP. There's also been a decision of the Board of Management with respect to the payout for the employees. There should be a link to the payments of the Board of Management. Do you believe that the way in which the PSP function is still proper? It seems that you must regulate this in order to make sure that compensation is appropriate. From the perspective of the Supervisory Board and the Board of Management, given the target set in 2021 for 2022 to 2024, before the fiscal year, it is clear that the threshold values for EBITDA, ROCE over WACC and free operating cash flow will probably not be achieved. For the current fiscal year, the long-term compensation Prisma introduced 2 more KPIs. That's employee engagement and missed days. What is the weighting of the 2 tranches of the Prisma? We have the sustainability factor and employee engagement based on the rate of participation in the employee opinion poll and that reflects on employee satisfaction. Is that considered? There is also an item on the agenda for the authorization to conduct share buybacks. Why are these 2 authorizations contrary to the practice on the market combined in one draft resolution put up for a vote, are the concrete plans to exercise the authorization to conduct share buybacks? And what is an anticyclical share buyback, which you reserve the right to conduct? The purchase of treasury shares, in our view, is only the third best solution after profitable investments in the business or a payout to the shareholders in the form of a dividend. We want to make sure that you're moving within the threshold values of the DSW before we actually approve this item on the agenda. Ladies and gentlemen, this brings me back to the current fiscal year. For 2024, you expect EBITDA of between EUR 1 billion and EUR 1.6 billion and free operating cash flow of EUR 0 billion to EUR 3 billion. In 2024, again, your capital costs will not be earned. That's quite probable. Under these conditions, it seems that a well-balanced net income is on the cards. You spoke about 4 areas today in which in 2024, you will react and take measures in order to continue optimizing the company production, sales, margins and costs. Please tell us for each of these focus areas, at least one concrete example or one specific measure. In the analyst presentation that was held and within the scope of the presentation of the results of 2023, for the forecast for the mid-cycle EBITDA, you no longer explicitly mention the KPI. Does that mean that the EBITDA KPI is intact as a matter of principle? Why do you no longer aggressively communicate this figure any longer? Now I've come close to the end of my submission without addressing the elephant in the room, and this is the state of the talks with ADNOC. From the takeover talks that you resumed in September 2023, which have lasted unusually long is one thing. And on top of that, you have announced that you do not wish to disclose any information on the progress of the talks. That's quite surprising. You say that the outcome of the discussions will depend on the capability of each party to actually reach an agreement. The fact that you don't want to make any further disclosures on this today only allows us to speculate on the topics that are on the table right now, maybe pricing, perhaps investment commitments or employment guarantees, but allow me to ask this question. In view of the binding of management resources, wouldn't it be desirable to reach a decision or an agreement soon? By when will the interlocutors finally show their color? The share price of Covestro, which seems not to be coupled to this, does not seem to indicate that the market participants believe that an agreement is very probable. Last but not least, I would like to express my sincere gratitude to the Board of Management and the Supervisory Board as well as to the entire workforce of the group for their dedication and their achievements for 2023. And we wish you all the best for 2024. Thank you for your attention.

[Interpreted] Thank you, Mr. Beckendorff. Thank you for those questions. Thank you for that contribution. The next speaker will be Mr. Andreas Masek. Mr. Masek, the floor is yours.

[Interpreted] Hello, ladies and gentlemen, my name is Andreas Masek from SdK, the Small Investors Association. You're familiar with SdK, probably 8,000 members and we represent our shareholders at about 450 AGMs in Germany and we represent the shares that we've been authorized to do so. Now let's talk about the agenda and how SdK is going to vote. There are certain things going on, such as the conflict in the Ukraine for which the Board of Management has no responsibility. And this has, of course, led to supply chain problems and cyclical risk. This once again led to a negative annual result. And the fact that no dividend will be paid to the shareholders, SdK believes that the cautious crisis management has kept the company on course and set the -- given us possibilities for future success for the transformation and the circular economy. A more specific forecast for the current business year, of course, is desirable. The forecast for 2024 has a wide range, EUR 1 billion to EUR 1.6 billion for operating profit, and this really doesn't tell us much at all. So we would like to have a more detailed portrayal of why the target corridor is so wide. Then approval of the actions of the Board of Management. Well, from the point of view of SdK, we cannot ratify or approve these actions. The AGM is the only possibility for shareholders to have a direct exchange of opinions with management and other shareholders and thus, to have an influence on the business policies of the company. But for us, SdK, this is something that is extremely important. And therefore, SdK prepares to have a different format for AGMs, which is live, in-attendance and maybe hybrid at best, because this would take best account of the different interests of the shareholders and it would be the best possibility for doing so. Carrying out just a virtual AGM should only be considered in a crisis. We can only approve of it then and if you only have a crisis like that if there are any government rules that would mandate this. And therefore, every year a virtual AGM is held, the SdK will decide whether or not they would like to ratify the actions of the Board of Management, to Supervisory Board. And we would only then approve of that in a crisis situation. I have some questions for the Board of Management. The production site of Germany has different factors affecting it, energy supply and bureaucracy and so on. Dr. Steilemann is the President of VCI and he signed the Antwerp agreement and he expressed this situation clearly. And therefore, my question is this, on the Board of Management, are there any thoughts or maybe even any plans as to when Germany or there would be a stop of investment in Germany or maybe whether even production would be shifted to other countries as a necessity? In this context, it would also be interesting to hear which of our production sites around the world are the most profitable ones. Then the sustainability report. According to CSR, that is supposed to make it possible for all third parties to see and understand the PGOs and so on can understand this. So what is the estimation of the Board of Management with regard to this type of risk? ESG that, of course, is important in the framework of nonfinancial reporting. It's hugely important. Now how much is the administrative and financial expense and effort for meeting the obligations of the sustainability rules? The Green DIB bond 28 was an effective interest rate of 4.9%. The interest on the DIB bond, 24, 26 and 30 is between 0.9% and 4% and 1.78%. So why is there a much higher interest rate for the green bond? How can that be explained? Ladies and gentlemen, one thing is quite noticeable. In the brief statements from the Board of Management and in the annual report, we heard the word sustainability 15 times. That's a sign of the times, but not once was there a word of regret today here in the annual report that we, shareholders, are not going to be getting a dividend for the second year in a row. We must realize that it's important to ask whether shareholder return is going to be in the focus of the Board of management or are they already in a takeover mode, and are they pursuing different targets? Your shareholders don't know this because we still do not have any specific information about the negotiations with ADNOC. From that, I believe that another share without any dividends for our shareholders would not be acceptable. Dr. Steilemann, you stated that this year, you believe the company will overcome all difficulties, and I hope that this also refers to your dividend policy with regard to the interests of the shareholders. The Supervisory Board met 10 times in the reporting very, including the meetings of the committees and almost all of the members were always present. The Supervisory Board met and approved of the financial statements according to German Stock Corporation Act. Ratification of their actions, however, cannot be granted because the Supervisory Board has approved of the holding of a purely virtual AGM, not ratifying the actions of the Board of Management and Supervisory Board is going to be based in the future or of the Supervisory Board will not be granted for the same reasons as we mentioned for item 2. And then in 2023, were there any heated discussions between Board of Management and Supervisory Board and what decisions were made on the basis of those discussions? Now I will talk about the remuneration report. The remuneration report was formally approved by the auditor according to the German Stock Corporation Act and was approved by the auditor and therefore SdK can also support that. But I have a question, ladies and gentlemen, about remuneration. The remuneration of the members of the Board changed from EUR 8.4 million in 2022 to EUR 13.9 million in 2023 even though the group is in the red once again. On the basis of what contractual stipulations have the levels of remuneration been established? I'd now like to move on the selection of the auditor. SdK would like to approve this too. KPMG since 2018 has been the auditor of the company without any interruption in the reporting period. They provided services for the financial services, and they did not provide any other services, so there are no conflicts of interest there. So SdK would like to support appointing KPMG as auditor. And then resolution on a new authorization to acquire and use own shares. SdK would like to -- is going to vote no here. SdK prefers that a dividend be paid out rather than having shares bought back. They think -- we think this is a good shareholder return for our members. In addition to that, we believe that this is a speculative element on share purchases. And we reject it. And then Item 7, approval of the domination and profit and loss transfer agreement with First Real Estate GmbH. Here, too, we agree with that, it's an advantage, in particular in years in which there's been a loss. And then finally, 2 questions about the annual report. In the management statement, there is a report on a donation concept. Please tell us who the -- what organizations got the 5 biggest donations? And then an evergreen subject, what is your risk assessment with regard to the class action suits in the United States that are still pending? Ladies and gentlemen, those were my statements. I hope that the shareholders can support our opinions, and I'd like to thank you for your attention.

[Interpreted] Mr. Masek, thank you very much for your contribution. The next speaker is Arne Rautenberg.

[Interpreted] Thank you very much. My name is Arne Rautenberg. I am Fund Manager at Union Investment for the folks in Raiffeisen Bank. So we are one of the largest investors in Covestro, and we represent 5.8 million investors. In the last 12 months, Covestro had a very good development of 36%. This is better than the European chemistry sector in 11% and better than the DAX, which had 45%. So the reason for these good values is not due to the operational development at Covestro, but it is due to the acquisition speculations. Mr. Steilemann, ADNOC is there, and you didn't give us any information at all basically. You go at a distance to your shareholders rather than to answer their questions directly. And now since the virtual AGM at Covestro last year was overshadowed with massive technical problems, a lot of the companies have gone back to in-person AGMs. Why don't you have in-person AGMs or why don't you offer the shareholders a hybrid format where they have the possibility to participate in person? And you saw this at your financial press conference with journalists. The shareholders would welcome this. And they would -- you would then be a pioneer here. Now to ADNOC. Mr. Steilemann, have you come to a standstill with ADNOC in your negotiations? Why, if that is the case? What do we have to agree on? What subject matters? How many discussions have you had with ADNOC up to now? And when was the first discussion with ADNOC? And when was the last discussion with ADNOC? Who is in charge of the discussions with ADNOC? How does Covestro ensure that the shareholders' interest are taken into account? And if we are not successful there, this will put pressure on the share price. What is Covestro doing in order to prevent this? What about competitiveness with regard to the European facilities? What does Covestro need to do? Should these discussions fail, what can they do in order to have a flourishing future? Are there any other requirements to reduce costs? And if yes, by how much? What's important here is what ADNOC does? If they -- if there is an acquisition agreement, what does Covestro have in mind? This is something which would affect all shareholders. If investments are made, German economy, if jobs are guaranteed, then the employees are included. If we have an attractive price, then of course, the owners, the shareholders will go along with this. Ladies and gentlemen, as a sustainable investor, we are concerned with economical -- ecological and social and governance criteria. Without reducing Scope 1, 2 and 3 emissions, then climate change cannot be stopped. Covestro bears major responsibility for the emissions of their clients, and that is why Scope 3 emissions have to be included in their own climate targets. We welcome that. So Covestro is a pioneer in the chemical sector. In addition to the publications and targets with regard to climate, all we need now is the publication of the water dates. Mr. Steilemann, do you want to meet up with this responsibility? That's something that we would welcome. This brings me finally to the agenda, ladies and gentlemen. I will vote against the share buyback option in agenda Item 6 because the duration is 5 years and our regulations only allow a maximum period of 2 years. Before we think about share buybacks, Covestro first has to pay out -- be able to pay out dividends. After 2 loss-making years, this is not the case. Another agenda item is the one that we can agree on. And all of the others, we will vote in favor of. Thank you very much for your attention.

[Interpreted] Thank you very much, Mr. Rautenberg for your questions and for your submissions. The next speaker on my list is Andreas von Angerer. So please go ahead, Mr. von Angerer. Unfortunately, the audio transmission from Mr. von Angerer isn't working right now. Audio has been restored.

[Interpreted] I'm Andreas von Angerer. I'm Head of Impact at Inyova AG, but on behalf of ShareAction, an NGO, I would like to ask a question with respect to financial issues. As we've heard today, the climate crisis is accelerating. We have a new heat record every month. And in the last 12 months, we have transgressed the 1.5-degree threshold. Climate intensive companies therefore, have to act quickly and with resolve in order to slow down global warming. We greatly welcome it that Covestro is placing its chips on the circular economy and that you intend to switch to environmentally friendly fuels at a degree of 100%. And that, that will be reflected in Covestro's products. This places Covestro among the leaders in the chemicals sector. However, Covestro hasn't established any short-term goals unlike LyondellBasell or others, who are their direct competitors. Short-term goals show us, investors, that Covestro is taking steps in order to achieve its long-term goals. We need details with respect to investment and research and development. These are also important signals for suppliers to make the transition to nonfossil fuels. Therefore, I'm asking you whether Covestro is willing to show its colors as one of the leaders in the European chemical sector by establishing a goal of not increasing its share of fossil fuels. Thank you.

[Interpreted] Mr. von Angerer, thank you very much for your questions and for your submission. The next speaker I have on my list is Mr. [ Matthias Gabler ]. Mr. Gabler, go ahead, please. I can't see Mr. Gabler and I can't hear him either. Mr. Gabler, what we'll do is this, we will try to reach you or you could please actually report back in during the further course of the AGM. Now that we've heard 4 questions, we will actually then just begin with the round of answers. And now for the answers, I would like to first give the floor to the Chairman of the Board of Management, Mr. Steilemann.

[Interpreted] Thank you, Mr. Pott. First of all, I will deal with a question by Mr. Beckendorff. Mr. Beckendorff, you asked about the current status of our sustainability targets, sustainability in the supply chain, sustainability in research and inclusive business and how we assess this whether or not our progress in these areas is sufficient so that we can meet our goals by 2025. Sustainability is a key aspect of our corporate strategy. We have very ambitious targets, and we are working systematically to achieve these ambitious targets in all of the 3 areas you mentioned. In the field of sustainability in the supply chain, by the end of 2025, it is our objective to only be working with suppliers who meet our sustainability requirements. We have monthly status reports to follow the progress here. And against that backdrop on the basis of our efforts and experience in the past few years, we're very confident that we'll be able to achieve these targets. Our R&D-based innovation product portfolio is going to be oriented toward the sustainability targets of the UN. Orienting the innovation portfolio towards this is measured using the costs for the projects that are considered to be sustainable as a ratio of overall project costs. We are seeing there's an increasing number of medium- and long-term technology projects that meet these requirements. Now since the KPI is based on the project cost, these projects in the early phase don't really have as much of an impact. With regard to inclusive business, I can say that by 2025, 10 million people will be helped to have them get more quality of life in undersupplied markets. Up until the end of fiscal '23, in our inclusive business solutions, we were already able to achieve to reach 6.7 million people and we're, therefore, confident that we'll be able to meet our target in 2025. Mr. Beckendorff, you asked about the 3 biggest risks for achieving the Scope 3 emission target and for climate neutrality by 2050. We believe that our targets are ambitious, but that they are doable. We regularly check our target achievement forecast with different scenarios and backup measures and therefore, we would recognize at an early point in time whether there is a risk for achieving a target and whether any adjustments are necessary, and of course, we would communicate this. There are 3 key aspects in achieving our Scope 3 targets that play a critical role. This includes changes in regulatory framework, technological developments and a lasting demand from customers with a change in their willingness to pay certain prices. Mr. Beckendorff, you asked when we're planning to have our climate targets validated by SBTi. The Science Based Targets initiative has published a cross-industry guideline for development of climate targets in line with the 1.5-degree CO2 budget. Sector-specific guideline for the development of climate targets in the chemical industry is expected at the very earliest in mid-'24. As soon as SBTi has come up with a sector-specific guideline for the development of climate targets, in particular for the chemical industry and published it, we will have a close look at it and then decide whether or not we want to have SBTi validate our climate targets. Mr. Beckendorff, you asked whether we are looking at a voluntary consultation decision at the AGM on the climate plan. That is the Say On Climate decision. It was just recently that Covestro published its Scope 3 targets. And we are in intensive discussions with investors and other interest groups. This includes ShareAction and the Net Zero initiative. The feedback has been very positive across the board. And in the overall package, I can say we have 1 of the most ambitious targets -- some of the most ambitious targets in the chemical sector. And for many years, we've been reporting transparently on our climate targets measures and success. So in terms of climate protection, we're on the right path, but this is a very dynamic subject. And it means that the Board of Management has to constantly observe this and adjust things. And this is 1 of the main reasons why from the point of view of today, we are against a decision being made at the AGM with regard to a climate plan. Mr. Beckendorff, you asked about the discussions with ADNOC and the subject that Covestro is discussing with ADNOC. In my speech I mentioned this, we are conducting discussions with ADNOC, and we are doing this in a constructive and open fashion. The guideline for us is the interest of our company, our shareholders and all other stakeholders. Progress and the final result of such discussions, as is always the case with discussions, will depend on the possibility and the ability of both companies to agree on things where they have different points of view. We will, of course, report on the results of discussions and relevant changes, of course, in line with our capital market obligations, but I'd like to ask for your understanding that as of now, we cannot give you any details about our discussions. Of course, these are confidential discussions. And therefore, I can't say anything today about different price ideas, possible investment agreements or employment guarantees. Mr. Beckendorff, you asked about the duration of discussions with ADNOC and the aspect of binding management capacities. We have decided to have these discussions with ADNOC with an open end, and we want to do this in line with our stock market obligations. And we will have to foresee whether we have certain options for a transaction with ADNOC. And then we'll decide about what would be the best solution for our company, our shareholders and all other relevant stakeholders. Our discussions in this regard serve to give us a more precise understanding of the points of view and the positions of both parties and then we will be able to take a better decision with regard to how the 2 parties are going to proceed. These discussions have to be carefully prepared and conducted. That takes time and preparing these and conducting these is a job for management as a whole and Board of Management, but you can rest assured that the Board of Management is always going to be taking care of its obligations with no restrictions.

[Interpreted] Chairman, ladies and gentlemen, my name is Mr. Giebel, and I'm representing my own shares. My first question relates to the independent test. Mr. Mark Herman from [ Cologne ] is the person question here. Here, I'd like to know the share of income of this gentleman due to his activities for Covestro relative to his total income as a notary public and attorney at law. In other words, in order to assess the person's independence, we need to know the share of income they procure from you relative to their overall income. And there's a ruling of the regional court of Hanover that becomes pertinent in this context. My second question relates to the fact that a member of the Board of Management apparently is not in a position or capable to present answers to the questions that we have posed in Germany. So I want to know what language you speak during the meetings of the Board of Management, what language the preparatory documents are written in, whether you speak German from start to finish. The backdrop to this is that a non-native, of course, is always at a disadvantage if they cannot present in their own mother tongue and this is why I have a follow-on question. Are qualified applicants for fleets on the Board of Management rejected because their English skills are not that good. May it perhaps be sensible to requests from members of the Board of management at least after a certain period of time that they gain a basic command of German. And if you don't agree with me, why. The next question relates to Mr. Baier, the CFO. I noticed that Mr. Baier does not hold any shares in Covestro. Now you may respond by saying that he hasn't been with the company for that long, and he can still procure some. But of course, he can use his private funds to do that. If he's confident about the Covestro share or for legal reasons, I should reformulate that. If I were confident about the Covestro share, as there is reason to be, as Mr. Baier said, then privately, I would have bought shares in Covestro. So why did Mr. Baier not do that? Does Mr. Baier have information or assessments that have not been communicated with us, which relate to the future of the share and may not be that rosy and therefore, have motivated him not to buy any shares? My last question relates to non-pecuniary proceeds and other compensation in kind on the Board of Management, Mr. Steilemann, procured EUR 24,000. Ms. [indiscernible] EUR 36,000. Please could you let us know for each of these individuals separately, the 5 biggest items. And please explain why a simple member of the Board of Management has greater compensation in kind and other monuments than the Chairman of the Board of Management. If this relates to the use of a company car, I would like to know the amount and the carbon footprint of the corresponding business car relative to the carbon footprint of the company fleet of the company in Germany. My next question relates to the members of the Supervisory Board -- excuse me, the works council, the employee representatives receive [ EUR 550,000 ] in additional compensation that is not associated to their offices on the Supervisory Board. This links up to the point of that activity on a works council is voluntary and is not remunerated. I know that some people see this differently, the CEO of a major automotive firm believe that, that was not correct and demanded that he received millions in income. This was rejected by the courts, and it was deemed that, that was not debatable. Therefore, I would like to know how many works council members have been absorbed from performing their normal tasks? How is the earnings trend calculated for these works council members who are absolved from performing normal tasks? And please let me know the biggest and smallest sum that is received by a works council member who no longer has to fulfill their normal tasks. If you counter by saying that this cannot be disclosed for reasons of data privacy, then I would say that just disclosing the biggest and smallest sum, I cannot draw any conclusions to the individual in question because the limits of the compensation of the works council members is not linked to years of service or hierarchy for instance, of the Chairman. And therefore, I don't think there should be a problem providing this information. The next question relates to the Board of Management and it's directed to the variable compensation and the performance-linked compensation. I would like to know about all of the elements of the performance-linked compensation. It's difficult to understand why, in a situation where the company is earning losses, the shareholders who, at the end of the day, bear the risks due to their investment in the company do not receive any compensation for this willingness to take on the risks, but the Board of Management, despite the substantial losses receives variable performance-based compensation. Is this compensation -- or can this compensation be broken down for each member of the Board of Management? And could you also tell us why the Board of Management is receiving this type of compensation, although the shareholders are not receiving any remuneration for their assumption of these risks. In your responses, you've already spoken about the PSP and the discretionary right of the Supervisory Board to intervene. You have a system that allows such discretionary rights of the Supervisory Board, but you really don't need it here. Compensation is paid. Performance-based compensation is made. Arbitrarily, you could just say well, Mr. Pott is going to look at the candidates and then he will decide based on his own discretionary opinion what the compensation is supposed to be on a performance base to basis. So why do you need this agreement? In response to the question posed by Mr. Beckendorff, with respect to performance-linked compensation, you responded or you reasoned why the participation rate is more important than the satisfaction of the employees. Did I understand you correctly that a superior whose entire staff participates in the survey and all of their -- all of his or her employees gives them a bad rating? Nevertheless, is considered to have been successful. So if a superior employees are all completely dissatisfied with him or her do they -- do the superior still receive performance-based compensation because of the turnout of his or her staff? I will find that hard to believe. With respect to the technical proceedings of the AGM, I had a technical outage that was not due to my Internet connection or my device. And therefore, just for a couple of minutes, I was unable to follow the AGM. During the technical test, the technician very early on, switch off the feed from the AGM, so he could talk to me. And as a result, I was unable to follow the submissions on ADNOC. However, since that's important, and you referred to that later on. I kind of request that you repeat that portion of the speech because only in this way, will I be able to reach a well-informed decision. My next point picks up on where Mr. [indiscernible] left off with respect to donations. You said that donations were made for certain purposes to -- for the benefit of people in India, Turkey and the United States of America. Why? Are the biggest donations being made to countries outside of Germany? Why did you not make major donations in Germany as well or at least why is Germany not featured among the big 5? So my question is what donations benefit for people who live and work in Germany? Follow-on question. For what reason do you make donations? What do you expect from them? Why do you make donations? What's your motivation for that? And my last question and this connection is whether you made donations to political parties. And if so, in what amount? And if so, please mention the party name and the amount of the donation. My next item is the talks with ADNOC. You say justifiably that they are confidential and therefore, you cannot comment on them. And therefore, I will leave that be. But I'd like to ask you this question. Are there change of control clauses in the contracts of the members of the Board of Management? And if so, what do these clauses look like? If they are different from one Board member to the next, please explain to us all of the clauses. And please let me know how high the maximum financial advantage is for each of the members of the Board of Management in the event of a change of control. I'd like to remind you in this connection of Mr. Klaus Esser, the former CEO of Mannesmann. He was vehemently opposed to a takeover by Vodafone. But at the end of the day, he endorsed the takeover and then it transpired that Vodafone paid him EUR 17.9 million in recognition of his contribution. In sum, he received a bonus of EUR 30 million for selling Mannesmann to Vodafone. Now of course, I'm not going to ask you whether ADNOC has committed to paying a success bonus to you or whether the talks are so difficult because you're trying to drive up the bonuses. Of course, you would decline rightly to disclose that. But the members of the Board of Management and the members of the Supervisory Board, and I ask you this, is it acceptable -- whether it would be acceptable for any of these members to receive success bonuses in the event of a takeover. My last question relates to the costs associated with the AGM. Here, you have been quite vague and intransparent you've just said that they have been considered. Please let us know the costs of an in-person AGM, a virtual AGM and maybe a hybrid AGM, which you could perhaps estimate. Perhaps you could mention the 5 biggest cost items for each type of event. And please let us know the cost of -- the total cost of an AGM per shareholder, be it in person or virtual.

[Interpreted] We'll move on to the next speaker, Mr. [ Yan ].

[Interpreted] Chairman, members of the Supervisory Board and Board of Management. I have a couple of additional questions because many of my questions have already been asked by the previous speaker. First of all, I would like to ask about this, let me hold this up to the camera. This is the current annual report for BASF. And my question for you, Dr. Pott is this. Do you think that this annual report, would you prefer to read it as a PDF or as an actual print out with 300 pages that you can actually hold in your hands? Now my questions. Question number one. This was a question that Mr. [indiscernible], Mr. [indiscernible] asked about production costs. And I think Mr. [indiscernible] and Mr. [indiscernible] already said something about this subject too but those questions were about a different aspect. So let me ask again, your competitor [indiscernible] has said about the part European market on -- well, it was a telephone conference on fourth quarter. And he said, if you have a look around the world, the low-cost producers are now in China. And he also said in Europe, we are perhaps not the lowest cost, but I would bet that we are very close to the lowest cost producers. So what competitive advantages, and this is my question, does Covestro have with regard to production cost or to ask you differently, why should I invest in Covestro and not invest in Dow Chemical, for example. The next question was about -- just a minute, please. Here we are, subject of ADNOC, but a different question. In your annual report 16th August, 8th of September, 26th of September, 2nd of October. At those meetings, the Supervisory Board takeover subjects. That's Page 29 of the annual report, 15th of August, 25th of August, 22nd of September, 18th of October, 31st of October. There, the Brazilian Committee of the Supervisory Board looked at take you over subjects, Page 23 of your annual report. Now how much time of your overall meeting time for the Supervisory Board was taken up by these takeover subjects. I'm worried a little bit that perhaps your operational business is being neglected and you're only looking at subjects such as these, such as possible takeover. Am I worried about this for no reason? And then another question that was also asked by Mr. Beckendorff, it's about the mid-cycle EBITDA. It was supposed to be going from EUR 2.2 billion EBITDA in 2021 to EUR 2.8 billion EBITDA in 2024, was supposed to go up to that level. We heard that at your real Investor Conference 2021. It's charts at 51. Then reasons mentioned there were resins in functional material, profit contribution, synergies this year or so to be EUR 80 million -- or that is 2023. Is that true? EUR 20 million, EUR 2,500 million, EUR 20 million. Is that also still going to be true and then stable fixed costs were mentioned. Now the RFM profit contribution, why will that possibly be a disappointment? And why will the synergy cost possibly not be target to not be reached. This warning is to be found in your Covestro EUR 5 billion debt issuance program as prospect is 15th of March 2024. Then I have another question that also Mr. Beckendorff asked about fixed cost. And the answer we got from Mr. Baier was that the administrative costs went down. Now I figured out something else based on the 2020 fixed cost up until 2023, we're supposed to remain the same. That was at the Virtual Investor Conference, Chart 49 compared to 2020. However, general and administrative costs were up by EUR 50 million to EUR 360 million. Mr. Baier also just said that administrative cost or cost of sales were down by EUR 50 million. You can read this if you wish, EUR 360 million annual report, Page 339 and EUR 310 million that was 2020 annual report, Page 187 of the 2020 annual report. Then research element cost 2023 compared to 2020. They were up by EUR 112 million. EUR 374 million instead of EUR 262 million. Now why did they go up? You were talking about reducing fixed cost or and at least keeping them at the level of 2020 as you announced back then? And why did that fail or whether there are certain biggest costs that were forgot because cost of sales, that's variable, right? And then investments and write-offs. 2022, the investments were supposed to stay at the level of the write-off that was announced in 2021. Chart 54 of the 2023, the depreciation was EUR 894 million, annual report '23, 206 -- Page 206, investment is EUR 755 million annual 423 on Page 242. Now please explain to us why there's a discrepancy of EUR 129 million there. That's significant. The investments were significantly lower compared to the depreciation. Are you doing that to just make your free cash flow look better? Question mark? Okay. Then employees end of 2021 according to the virtual Investor Conference, Page 48, a specific number of full-time equivalents there. 16,100 employees was plus 800 taken over from resins action materials from DSM. So total 17,900 with a lead program to further reductions were expected by 2023. 17,000 FTE, 17,500 FTEs were reached. That was 2023 annual report, Page 176. In what areas administration, marketing, sales, R&D or production, do you think that AI can be used or other measures to reduce head count even further starting in fiscal '24. The next question, coding adhesives. In your annual report Page 285, you're right that the central planning assumption is that the current difficult macroeconomic situation will continue or will normalize to a great extent by 2025 revenues, EUR 2.897 billion? Or do you still hold to your forecast for 2021 look for that at the virtual conference. Chart 10, revenue there for 2020, EUR 2.7 billion and average annual growth CAGR of 5%. Then I'll be done in a minute. Oh, yes. Then planned or unplanned interruptions in production. What was that about? Probably [indiscernible] margin? Although we didn't have any specific explanation of that in the '23 annual report. In the '23 annual report, there is Page 273. It says the general other income included to refund from insurance company due to shutdowns in these segments, performance materials look at next other operational expenses. So please explain to us how that came about. I'm not that good at accounting. Please explain it to us. Then there was a question that Mr. [indiscernible] and Mr. [indiscernible] also asked. It was about Board of Management remuneration and leeway Page 22. Am I right in assuming that the more sustainable and the more environmentally friendly our production is. It is not at all. In other words, the higher remuneration, your remuneration or compensation or you have those KPIs and how do they correlate negatively to each other if you're economically successful, then you'll pollute the environment and if you're less economically successful, then you benefit the environment. So that means basically your remuneration could be flatted out. Does that even make sense? Or shouldn't that somehow be thought through again? And then the last two questions, yes. According to the virtual investor conference. Chart 27. That was in 2021. It said there that the demand for methylene diesel [indiscernible] MDI. We're going to go from 2020 to 2035, up by 6% per year. The offer of MDI in the same time period, would go up by 5% in 2023. That was an excess amount. Was there an excess amount of MDI in the market? Greater than the amount that you forecasted and then 2025, you're saying that there would be in excess of 1,093 tonnes -- kilotons in excess, does that remain the same? And then about TDI according to the 2021 Virtual [indiscernible] conference, the demand for [indiscernible] and ISO who is going to go from -- up by 6% per year from 2020 to 2025, the demand for TDI. In the same time period, it was going to go up by 2% in the '23 annual report. The excess offering higher than the 700 kilotons use forecast. And for 2025, you said there would be excess demand of 505 kilotons that does that forecast to apply. Okay. Thank you for your patience and your answers. That was it.

[Interpreted] The next speaker is Dr. Arnold.

[Interpreted] Good afternoon. First of all, I would like to pick up on what the previous speaker said with regard to the deficiencies in digital transmission. With my browser, I have dissociation or no synchronization between the sound and the image and you have not -- well, I'd like to request that this be improved, and I would also like to request an in-person AGM. Ladies and gentlemen, members of the Board of Management members of -- or the shareholders. My name is Gottfried Arnold. I'm a pediatrician. I'm retired. And I got my PhD many years ago, and I wrote on carbon monoxide. And the -- how toxic carbon monoxide is to the nerves. And now I'd like to talk about the carbon monoxide pipeline which you have from one site to another manufacturing site. In other words, this was something you acquired from Baier. In doing so, the inhabitants in the district of MedMen and many people from Dusseldorf and Duisburg are very upset. And I have 460 signatures from physicians who are against this highly toxic carbon monoxide pipeline. A lot of people can understand the fact that you are you need to have a plan B for production downturn because you need this on a permanent basis, but we do not understand the fact that the -- that alarming that this pipeline is alarming. And this does not function properly. We do not understand the fact that the project is being continued. Although the fire departments have said that a break in the pipeline would not allow for any possibility for rescuing people, the toxicity of carbon monoxide. You need to realize that inhaling 30 milliliters of carbon monoxide. That's just a very tiny glass for adults, this would lead to a loss of conscience, so they cannot escape. And if you take in or inhale 100 milliliters a glass of wine, would kill you and for children, of course, the doses are lower. Now before I trigger off an alarm with this process, before this happened, 15,000 liters of carbon monoxide have escaped. That is, if you compare this to the 30 and 100 milliliters that I just mentioned, this is a huge amount, and nobody can accept this. And my question is, has the Board of Management considered the worst-case scenario that was developed by the company, beer, should the pipeline break? Are you aware of this? In this worst-case scenario if the break is complete and if you're within 600 meters, it would mean about 470 deaths. This is calculated on the basis of our area in Hilton. And in a radius of 1,500 meters, based on your worst-case scenario, there would be 3,000 seriously injured individuals, and this would be long-lasting injuries. Up until now, in the 17 years, since we've been discussing this pipeline, not a single day has there been a serious deficiency of carbon monoxide. And your CO pipeline was seen as CO storage because on a at a planned facility, such a large amount of carbon monoxide would never have been approved. And that is why my question is as follows. Number one, why are you extending the length of the carbon monoxide pipeline so that it has to go under the Rhine River twice. And secondly, are you aware of the worst case scenario from Bayer? And thirdly, why if Bayer before they set the pipeline, why didn't you search for [ BOMs ] beforehand? Haven't you -- why haven't you made up for that afterwards. And my final question is a request actually to the shareholders. And that is that you should not ratify the actions of the Board of Management until this horrific project on the pipeline is stopped.

[Interpreted] The next speaker is Mr. [indiscernible].

[Interpreted] Ladies and gentlemen, shareholders, members of the Board of Management and Supervisory Board. I'm [ Brian Pila ], I'm Austrian. And later on, it will be a very big role in one of my questions. First of all, I would like to express my sincere gratitude to all of the committed employees of Covestro AG. I'd also like to thank my predecessor speakers for the wonderful preparation. Congratulations on your questions. They were very on point. Unfortunately, I have to now deviate from this comfortable environment at the AGM because I'm really upset 2 years of losses. 2 years of no dividend. And will we turn a profit this year? Dividend for 2024. Is that on the cards? I don't think so. And if the Board of management is so euphoric as it's claiming to be, then I have a question to you. Are you willing to announce half of your compensation. Now I must add that I asked my questions upfront because it's easier to prepare therefore, this is a new question. Is the Board of Management willing to announce half of its salary. Receiving this amount of money for earning a loss is something that I simply fail to fathom. If there's no dividend, for the shareholders for 2024, could the Board of management then perhaps reannounce half of its astronomical salary and maybe donated for social purposes. Now why am I really upset, well, Covestro even if you look at the dividend in kind, the buffet, the food, well, that's not being provided either. That's another advantage of a virtual AGM, isn't it? So if you will, I think that's -- we've been robbed. At present, it appears to me as if Covestro wasn't acting like a listed company, like a stock corporation, but rather like an NGO or an association for the promotion of its members. And at times, it appears to me that you're working like the Department of an environmental ministry. This transformation process in which we are right now. And I accept, and I think is not also bad is one thing, but it appears to me as if the owners, the shareholders, that is are the ones left out in the cold or as we say in Austria, we are the idiots here in this situation. And I must add that I don't like being considered an idiot. No, many points raised by my predecessor speakers mean that they've already anticipated a lot of what I had to say. But with respect to operational concerns, I have another question the cost, especially the staff costs expected to continue to increase because, let's be honest. Your staff is doing quite well. And we see rates of above 10% across the board in Germany. I don't want to talk about the compensation of the Board of Management because that really upsets me. So keeping that in mind, we really are being left behind. So will the personnel costs rise this year? Furthermore, this is something you may not be aware of. And if someone has a completely different approach, please let me know because I'd be interested, the share at present is on a good trajectory to increase by excuse me, it has been overvalued by 10% or 20%. So we have a loss potential of 20%. No. and this is not based on the current scenario, but on an improvement of the business model. And this is why my questions in relation to ADNOC. And this is the reason why the share is where it is right now, and this is why it's so relevant. Let me point this out. My questions about ADNOC will be answered by you. And if you do not answer them, I will contest the legality of the AGM because there's no regulation, there's no law. I understand that there will be some confidentiality agreements, but you'll be able to answer my general questions. And I don't know. Why one of my predecessor speakers asked how often you negotiated. Why should that be confidential like the number of times you've met. You can say, we never negotiated because we've never met. It may be the case that you're not even interested in negotiating. Is that conceivable? So if you don't answer my questions that are not of confidential in nature because I tried to avoid them, if you don't, then I will contest the legality of the AGM. Now has the data room already been opened with ADNOC? How big are the overlaps of the operating business between Covestro Ruche and Borealis and how many talks have you held at the Board of management level with ADNOC and at the Supervisory Board level as well? Can you perhaps explain to us without divulging any secrets how this catalog of requests works. You don't have to go into detail, but it would be interesting for me to know how this works. Who are you negotiating with at ADNOC, I would like names. Why can't you mention any names? I don't see any reason for that. Now I have a question. Does ADNOC make a professional impression on you? Are they really interested in the deal? Or are these dilatant who are not well prepared and don't even know what they want. Furthermore, how probable do you believe it is that the deal will close by the end of 2024 or might fail by then. And please don't talk about discussions that are open ended. It's up to you to reach a decision as well. with respect to advisers of Covestro, I'd like to know names who is this? And what's very important is how high are the costs associated with the negotiations thus far. Okay, I can skip that. Furthermore, there are different aspects or are there different aspects and concerns and visions between the Board of Management and the Supervisory Board with respect to ADNOC? What does ADNOC take on shareholder value? Are shareholders important to them? Or is just the business site important to them? What about stockholders percentage-wise? Is the state a stockholder from your point of view. Okay, we can skip over that. And now we're getting to it. And this is why I pointed out that I'm Austrian. We in Austria, have an advantage or benefit or we have several of them actually, but this is a key one. We Austrians have made experience with investors from Abu Dhabi, the OMV company. That's an Austrian listed company. and they are involved in petroleum gas and chemicals since 1994, since -- for 30 years now, they have had a major shareholder from Abu Dhabi. They hold 24.9% in the company. This was a state fund. It used to be called EBIT and Mubadala. And now it's also called ADNOC. From an Austrian perspective, as I've said, we have 30 years of experience. This major shareholder proved to be a very comfortable strategic partner. This is not an actinistic shareholder a cost cutter or a low cost. No, this is a long-term strategic investor we're talking about here. And I believe if I were on the Board of Management of Covestro and if I were interested in a deal with ADNOC that I would have spoken with OMV, the Austrians have a similar mentality to the Germans. We almost share a language. So it would be easy to communicate and I'm sure it would be easy to meet at various events. So the question I have for you is -- and there's no reason why you can't answer this. Has the Board of Management or Supervisory Board spoken with OMV with respect to ADNOC. And what's at least equally important, and this is a question for the members of the Works Council on the Supervisory Board. Have there been talks with representatives of the works councils of OMV. And it's already been alluded to in the articles of [ corporation ], are there any pitfalls or traps in the contracts of the members of the Board of Management? Are there any clauses with respect to independent takeover clauses? Okay, you're not going to say anything about the state of the negotiations. That's fine. What do you believe? Why is ADNOC accepting your delay tactics? Or are they delaying the negotiations? Or is it normal for negotiations to last so long? And are you looking for a white knight? My very last question, and that has nothing to do with ADNOC. How many one-on-ones have you had with [ Qube ] Research Technologies. Thank you very much. And I wait with bated breath on the answers.

Ladies and gentlemen -- well, in that case, just gentlemen, thank you for your questions. We will now move on to the next round of answers, during which we can answer all the questions you've asked so far. And we will begin in the same order. That is, first, we'll hear from the Chairman of the Board of Management, Mr. Steilemann, answering his questions.

Thank you, Mr. Pott. Mr. [ Giebel ], you asked about the language in which our order management meetings are held and in what language do the materials for the meetings are drawn up. We only speak English at Board of Management meetings, and all of the materials are written in English. Mr. [ Giebel ], you asked whether Covestro makes donations to political parties. And if so, which parties and what amounts? On a global level, Covestro has committed not to make any donations to political parties, political institutions or institutional [ cost ] to parties or people who have a political office, and this is a voluntary commitment that we made and published on our website. The social [ institutions ] we are members of do make donation always taking into account legal stipulations. Also, our employees can make private donations at their own responsibility without any influence from us. Mr. [ Giebel ], you asked me to repeat what I had said about ADNOC. In my speech and in my answers to questions from different shareholders, I dealt in detail with the discussions with ADNOC. I'm sure you will understand that I cannot repeat this detailed information once again because this would substantially delay the AGM, and this is not something -- would be reasonable to ask of other shareholders. In the transmission of my statement, there were no technical problems that the company had, but you can rest assured that in our discussions with ADNOC, we are conducting them in a constructive and open fashion and taking into account well representing the interest of our company, the shareholders and all relevant stakeholders. And we are doing so with great dedication. And on that note, I'd hand over to Christian Baier.

Mr. [ Jan ], you asked about the costs for an in-person and a virtual AGM and the 5 largest line items at today's AGM. You also want to know what the costs were or are per virtual or a shareholder present on the site. The cost for the virtual AGM amount to about EUR 700,000. The most recent in-person AGM in 2019, it amounted to EUR 1.5 million. For a hybrid event, I cannot put an exact figure to that because we've never had such an event. But I'm sure you will understand that this would be more expensive than an in-person AGM. For the large -- 5 largest -- items would be interaction with our shareholders to set up for the virtual green screen studio, the cost for technology cancellation, costs for a possible location for an in-person meeting as well as the cost for external service providers. The cost for today's AGM per share -- for each shareholder present are zero because none are here. We now have 120 shareholders who are viewing as the overall costs are EUR 700,000. That means EUR 5,833 per participant. So I would then like to hand over to Thorsten Dreier.

Mr. [ Giebel ], You asked how many Works Council members of the Covestro Group exist in Germany who no longer have to fulfill their normal tasks. The Covestro Group currently has 32 Works Council members who fulfill that criteria on. Mr. [ Giebel ], you also asked about the biggest and smallest sum of total remuneration of a member of the Works Council who no longer has to fill their normal tasks. The maximum total gross compensation of such a Works Council member in Germany amounts to EUR 143,352.97 the lowest total gross compensation for such a Works Council member in Germany is EUR 55,581.08. Having said that, I would like to hand the floor back to Mr. Pott.