Evonik Industries AG ($EVK)

Ladies and gentlemen, welcome to the Q1 2026 Earnings Conference Call. I'm Matilda, the Chorus Call Operator. [Operator Instructions]. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christian Kullmann, CEO. Please go ahead.

Thanks a lot. Ladies and gentlemen, good morning. Thanks, everybody, for joining our first quarter earnings call. Today, marks another special call for Evonik Industries. I have not only 1 but 2 CFOs sitting next to me. First of all, lot. Thanks a lot to you, Claus. Over the last 7 months, we have navigated our finance organization confidentially through rough waters, especially in crisis times like these. -- judicate longer on experience has prudenproven once and once again to be incredibly valuable. This experience was also pretiated by capital markets. As we had 2 good earnings calls with you so far, and I'm confident we'll have another 1 here today. Luckily, you're not gone but we will return to Singapore and continue to help our Asian operations. Second, Welcome, Michael, I'm looking forward to at least the next 4 years together. We have a lot of challenges ahead of us for sure. But with your vast experience across industries, companies and roles, you will for sure make a difference for us. I have no doubt that when my renewed contract ends in 2030, we will have jointly created a different one, a much better positioned and much more profitable company. With that, ladies and gentlemen, let's jump into today's agenda. Claus will start with our Q1 results, and I will then take over for the outlook. Claus, stage is yours.

Thank you, Christian. Thank you for your kind words as well. And as much as I enjoy sitting here with you, I am now looking forward to be back full time in Singapore and Asia again. Asia is the center of our future growth, and this is, in these days, I think, even more important than ever. Michael, welcome to I am happy that you decided to join us, and I'm looking forward to a good teamwork with you. Now let's have a look at the first quarter of 2026. Adjusted EBITDA came in at EUR 475 million. And with this slightly above our expectations at the beginning of the year. This result was supported by continued self-help measures. For example, we accounted 410 employees last end of March compared to end of last year. But of course, the main driver was a better operating performance in March after January and February had continued on the weak of last year. However, with the stronger-than-expected March, or without the stronger-than-expected March, we would have still delivered our guidance for Q1. After the war in the Middle East broke out, we started to see volumes picking up only in late margins. This was likely not an improvement in underlying demand. We believe this was rather pre-buying with customers aiming to secure volumes and potentially avoid price increases in the future. This was visible mainly in Advanced Technologies the segment that clearly beat our end year expectations. Next to prebuying, we also see notably weaker competition right now. For example, in crosslinkers, PA12 was strong in Q4 already and continued this trend in Q1. In Q1, we saw only minor pricing benefits. As we have a certain delay in price adjustments. Q2 is looking more promising on the pricing side. Our cash generation was strong in Q1. Free cash flow was at EUR 183 million. This is almost on prior year level despite clearly weaker earnings. Support came also from customer payments and from a take-or-pay contract that we terminated about 1 year ago. We had recorded the corresponding earnings last year in Q1 and Q2. We also received a couple of customer prepayments and cofinance for investment projects. Net working capital was about EUR 100 million outflow so very similar to Q1 2025 and in line with our usual seasonality. Chart 7, when you look to it shows how we are positioned in the current Middle East war environment. There are a lot of disruptions. -- and in global supply chain and chemical production. First and foremost, this impacts companies that are heavily export oriented and that are predominantly rely on feedstocks from the Middle East. These are mostly local players directly in the region and also in Asia. So with our global setup in which we source and produce local for local, -- we are relatively better positioned with the 1 partial exception of methionine in Singapore. Our production and our customer deliveries are cured. And to a high degree, also out of Singapore. But as always, let's say, fluctuation and changes which we have to take into consideration. And we have also a balanced product mix portfolio mix of specialties and more upstream products. This is also a great help right now. This means we will likely see a good advanced technology and a better-than-expected C4 performance in the short term. Beyond quarter the disruptions were the risk of order effects or more specific, the risk of inflation led demand weakness. More details on this now from Christian in the auto Christian, and back to you.

Since Claus, it's a pleasure for me now to convey you the audience with some more with pieces about what is going on. And I'm sure -- that is what interests you the most our expectation for the second quarter and the full year. Ladies and gentlemen, given the steep increase in input costs, we are pushing hard on pathways through to our customers. And it is working. Consequently, we see strong trial momentum in many businesses right now. At least in April, prebuying is continuing, so will likely see higher volumes in the second quarter. That all sounds great. But please keep in mind, though, we will also have significantly higher input costs and increased supply chain risks. And especially, we're looking at were volume limitations from the force mater in Singapore plus a planned maintenance shutdown in 1 of the 2 single propanes in April. Both effects are limiting our volumes and enhanced our ability to fully capture the attractive price environment. All in all, we record at least EUR 550 million of adjusted EBITDA in the second quarter. This is a significant improvement both versus this year's Q1 and last year's second quarter. I guess this is a strong message in these days. But honestly, I can hear you say, can't it get even better. Ladies and gentlemen, that is hard to say right now as things change quickly. But we are using the term at least -- so you can see we are aiming to strike a balance between on the 1 side optimism. And on the other side, the necessary caution given volume uncertainty towards the end of the quarter. In the third quarter and beyond that uncertainty is increasing. So it is plausible that driving inflation can lead to end customers demand softness. Consequently, demand for our products could fall again, possibly even amplified by destocking after current prebuying. This could lead to lower utilization enhanced could weigh on our performance in the second half of this year. But -- and I guess it goes without saying, none of these developments are certain. So we take a balanced view. Let me say a balanced view with confidence. In the short term, there are clear opportunities. Everybody at Evonik is working hard to capture as much of these opportunities as possible. Our outlook for the second quarter feels well underpinned by these to the second half of this year risks might increase. Against this backdrop, ladies and gentlemen, we confirm our outlook for the full year 2026. Adjusted EBITDA is to come in between EUR 1.7 billion and EUR 2 billion. We know that many of you here earnings at the high end of this range or even above it. But I guess, I hope -- you will understand that given we just reported on the first quarter and given all the uncertainties around for the second half of this year, it would not be -- it would really not be prudent to get to entities already now. But with a better first quarter of the year, the risk profile for the outlook is obviously developing to the right direction, the right direct. With a good turn EBITDA outlook, we also reiterate our cash flow guidance. We delivered cash in all weathers. We had a good start into the year, underpinning our 40% conversion target. Second quarter will see support from year-on-year lower cash out for bonus payments, and our balance sheet will be supported by our new dividend policy. Given cost and price inflation, net working capital could temporarily turn into a headwind in the next few months. But as a weaker second half is a possibility, the year-end effect is really hard to predict right now. Thanks so far for your attention, and now we are happy to take your questions.

[Operator Instructions] The first question comes from the line of Simon David from BNP Paribas.

David from BNP -- so a few questions, please. Could you give an early view of the May order books versus what you saw in April? That's number one. Related but sort of slightly different. If you're seeing prebuy continuing how can you tell the difference between prebuy and share gain? Have you had customers telling you they're stocking up or indications that stock levels are rising. And then finally, could you talk about the sort of mechanism of price increases in meting how much of the increase you'll see in the second quarter versus how much is coming through later in the year on contracts, et cetera?

Yes. David, thank you very much for your questions. The order book question goes to Klaus, also the prebuying indications to close, and then we continue with the methionine question with Christian.

Okay. Yes. David. So order books for me, are still looking good. And we had a good order book in April. We don't have the final numbers of April yet, but shows also a further improvement compared to March, and we also see a strong order book in May. Beyond May, it's already difficult to say because -- there's also a tendency right now to place orders late or change orders. So that's currently order book for the next month looks pretty good. identify prebuying is, of course, difficult. We have so many different business lines, as you know. And we have a lot of markets, different markets. In general terms, speaking is we don't believe that there is a fundamental improvement in the economy. So whatever we see right now there is only 2 options. Either it's be buying or we gain market share. And from that point of view, we have also both components. We know in certain areas. -- we have a split of where we believe 80% really prebuying, but also a touch of market share gain because we are in certain areas able to supply where others are not. One prominent example is, for example, our oil additives business line. So here, we are really in a very favorable position to be capable of supplying whereas some others are not. So like I said, this is now a mixture of prebuying and some, let's say, market share gains. However, having said this, the vast majority, we believe, is a pre-buying effect.

Okay. I take care answering the question about methionine. -- let's keep it like this. 2026, as of today, the third year in a row, which where we will have much better than expected methionine performance. And looking into the second quarter, are saying that we will have a pretty good signing business which is well underpinned already looking forward. It could be that the -- let's keep it from the market perspective and sign sort could last also. -- into the third quarter. So in a nutshell, for our outlook, the business is much better than at the beginning of the year that our assumption has been during the beginning of the year. Maybe some more color about the background for it. For sure, we are a market leader, not only in terms of production, but especially with regards to our global setup because we are the 1 and only methionine player having 1 world-scale capacity in each and every growth region. In Europe, in the United States and in Asia, in Singapore. So having said this current situation proves again how valuable this kind of signing positioning for us is. In other words, that is really helpful in underpinning our position of, let me say, having a good raw material access, which leads to a good position of fighting potential supply disruptions. And you should keep in mind that from the second half of this year, our mature mercaptan backwards integration of our capacity in the United States in Alabama will ramp up. So that is another, let me say, kind of tailwind for our. On the other side, the level of uncertainty is high. And therefore, it is prudent to say that we should not ignore that in the midterm, a normalization of prices, we should expect. So in a nutshell, second quarter, we will see a good machining rates could also last into the third quarter. And then let's see what is going to happen, and we should not put a blind eye on the potential, let me say, prices normalization, which could occur so far from my side.

That's really helpful. It was also just to understand the amount of refining pricing, which is on contract versus spot. So the spot prices that we see having materially increased. How much of your business is on those spot prices and we'll see the benefit in Q2 and how much might come through later if prices hold up?

David, I can't read you. David, I hear you and I could read you really from the bottom of my heart. But would it be true and clear to talk into the details. I guess it would not. But as you know, the spot prices are not at all the contract prices. And if the spot prices get up, the contract prices will follow but not to this kind of extent. And you should keep in mind, as you know, already because our methionine professional that there is always somewhat like a time delay from the, let me say, from the increase of the spot prices. And then you have the respective or similar or running this direction on contract prices, but I can really read you and please give me a chance to answer the question in the way I have done. Thanks a lot.

Next question comes from the line of Anil Shenoy from Barclays.

Good morning, everyone, and thank you for -- the first question is on the methionine market again. So I was just wondering if you could give us a sense of like what percentage of methionine capacity may be disrupted because of the raw material and availability in Asia. And again, on similar lines, if these Asian operations stay up, I mean if the straight of almost where to open tomorrow, how long do you think these Asian operations may stay disrupted? So any color on the disruptions in the methionine market would be very helpful. So that's my first question. And the second question is -- is there any chance, and this is generally for the group, that the benefits from the Asian disruptions that you're seeing be permanent. I'm asking this because a couple of companies have said that given the Asian disruptions, they're trying to get longer-term contracts with the customers. And customers would ideally be willing to pay premium if they're secured of volumes throughout the year. So are you seeing, I mean when you negotiate your contracts with your customers, would you be thinking from this point of view?

Anil. Question is taking the ion and Klaus, maybe on the long-term implications and if structurally something has changed in the industry. Okay.

Yes. Sometimes I don't feel like the methanoate of the company. So happy to take your question. First of all, by some rule 80% of the crude oil of gas from the Arabian Gulf is transferred to Asia, which means, in other words, the impact of the supply chain of methane capacities in Asia overall is heavy is heavily impacted by this. Second, we talking about our capacities in methionine are largely covered for the coming months, but not fully. That is why we have declared a force majeure for our capacities in Singapore, which is still ongoing. So we are largely covered but for the coming months, but not to the full. And then you have asked how we would assess how we would judge upon if the war in the Middle East would come to an end, how long would the impact last would step would put pressure on the supply chains. Honestly, I'm not an owner of a crystal ball. But so far, if I would give you with all the cautious of the German give you some idea about, I think, for sure several months. Could I can closer to it, maybe when we will meet in August, giving you our second quarter numbers and figures. But that is, let me say, best assumption for sure, several months plus. With this, I hand over to Claus.

Good. Anil. So yes, your question was some of the benefits of the disruption permanent. So generally speaking, we don't like this rate. It's not good for the business. So -- so we rather prefer to have a normal open market, no disruptions, fair competition. Here, it's -- the question is right now. So of course, we look into what is changing because of this disruption. And it's another 1 that's pointing towards more regionalization. Supply chain, security, so of course, it has another impact that companies think about this, I think we even more intensive than in the past, but it's still in the general direction. That's why we believe the strategy we have put in place many, many years ago, 1/3, 1/3, 1/3 in the world be in the region for the region, which we have not fully mastered yet but to a certain degree, of course, is the right way to go. That's 1 thing, let's say answering your question, it is underlining our strategic approach. Then when I go to a little bit more specific. There are, of course, some areas where we see it. Right now, we know supply security is playing a bigger role, again, also in pricing. But we also know from the past -- but we know it is not that long ago, it fades out. So this element plays a role, but over time, it fades away. So we would not bank on this. So what we are looking right now is in certain other areas where we will certainly have an impact. So biodiesel is something that is delayed. Our business is not doing in the U.S. and in Europe as we predicted. Here we see now and we see a trend that this legislation will come in place faster, put more biodiesel into diesel to become less dependent on oil-based diesel. In Asia is already happening. Indonesia has just increased mandatory amount of biodiesel that has to be put in place. And Malaysia is thinking about this as well, even though they have already high degree gives you an element. So this will be a permanent thing to the benefit of our LCOs business. Our membrane business will also benefit because here, we have the membranes for biodiesel plants -- for biogas plants, sorry, and also here, we see a pick up much more interest now to use waste gas and purify it with our membranes, another permanent element. And last but not least, our Oil Additives Group is also helping customers right now. Maybe I have had base oil high-quality base oil is becoming short, especially because a super big plant of Shell in the Middle East has been -- is out of production right now. So here, we help customers to reformulate and by doing this, to use our additives. So we have elements that will be permanent, and we will have others that are not permanent. So, sorry to say it cannot -- there's no general answer for your question, but there will be some benefits that will be -- we are going to keep and others will go back to normal when it is over.

We now have a question from the line of Martin Roediger from Kepler Cheval.

Yes. Thanks for taking my 3 questions, please. The first 2 are on the guidance for the second quarter. Firstly, on Oxeno and the expanding spreads in the C4 chain, -- is it possible that Oxeno will contribute a large part of the EUR 75 million sequential earnings increase from EUR 475 million in Q1 in EBITDA to the guided minimum EBITDA of EUR 550 million in Q2. And in connection with Oxeno, there are hopes by some market participants that Oxeno could reach record earnings this year. Do you agree on that bullish expectation. Secondly, the role of methionine for your guidance in the second quarter, it seems that methionine did not have a very strong Q1 partly because of the force majeure in Singapore and some other things you mentioned already. Would you agree that due to the rising volumes and the rocketing prices for methionine in April and May that a large part of the EUR 75 million sequential earnings increase between Q1 and Q2 will come from methionine. And the third question is on the free cash flow of EUR 183 million in Q1. This includes the EUR 20 million cash inflow from the termination of a take-or-pay contract from Q1 2025. Why did it last 1 year to receive that cash? And beside that, can you disclose the amount of the other 2 items which supported free cash flow, i.e., the customer prepayment and the customer cofinancing of investments because I would like to know what the underlying free cash flow was?

Thank you, Martin. Christian will start with more general comments on the Q2 outlook and including methionine, Klaus then takes the xeno part and the comments or your questions on the free cash flow.

Okay. Martin, good to hear you. let's keep it like this. First of all, at least EUR 550 million of EBITDA means at least EUR 500 million of EBITDA. So that is, for sure, a significant improvement if I compare it to first quarter of this year and second quarter of last year. And having said so, I would say it's -- as mentioned, it is a balance between optimism on the 1 side and the necessary caution on the other side. And coming no closer to your question, all of our 3 segments, we'll likely see an earnings rise if I compare it to the first quarter. And that will be, as you know, mainly driven unsurprisingly for sure, in advanced technologies. Here, we have seen continued prebuying on a good level in April -- so in nutshell, April, I are saying was quite sexy. And now is it exclusively because of methionine? No, not at all. Look at our crosslinkers businesses, for example, look at PA12. Here, we have a really strong upcome -- and in methionine. Of course, you're right saying during the first quarter was signed methionine was, let's say, quite okay, and then by the increase of demand, by the increase of the prices where we have started to benefit from this from the last days of March. Because, as I mentioned, there is a certain delay between spot on the 1 and then contract prices on the other side, -- so here, we will see a better, better, definitely better the second quarter in respect of methionine, but is it the only an exclusive growth pillar for Evonik in those days, no, no, no. Not at all. Here, we are well positioned and are in a different -- and a good amount of different pockets of growth. And by having said so, I hand over to Claus.

Yes. Then let me continue with another element that, of course, country will contribute to Q2 and rest of the year. You asked for this, what is the Oxeno part doing. And maybe 1 comment before I go into Oxeno, please don't underestimate totally huge increase. Don't get misguided by pricing only. We have a lot of cost increases on the raw material side. And so that has to be really taken into account, which you also are not fully -- we have not seen our pricing effect fully yet, but we also have not seen the cost effect fully yet. So having said this, come back to your question. Ono, we expect, of course, an improvement. However, it will also contribute to our guidance, no doubt. Will it come back to a record level and what's your second part of the question, absolutely not also here. I think what we feel in the market is really over-exaggerated. There are many reasons for this because in the old days, we had different kind of raw material contract in place, we have also had at these times a full loan demand, which we don't have now. Now we have, of course, now a better spread on the NAFTA side, no doubt we will benefit from this. But on the other hand, we also have minuses because I give you 1 example, we sell also quite a bit of material to the Middle East from Oxeno, that's not happening anymore. The MTBE market is not as strong as before because in summer, usually MTBE is mixed with NAFTA. And if you put more naphtha into the fuel, you need more MTBE there is not enough naphtha. So that's not happening. So I don't want to go in too much detail. But basically, you cannot just take the old numbers of Oxeno many, many years ago because there was also a full-blown demand behind it. Now we have the NAFTA spread helping us, but we also have -- we have some demand components. short in Asia. We, of course, have butadine that is helping us, but we also have other elements like I just said, having the contrary effect. So having a long story short, Oxeno will contribute. We go to record levels. or near them, -- absolutely not. Cash flow question you asked about the contract we had, which we, let's say, resolved or take-or-pay contract, there was some dismantling -- we don't disclose any kind of details here. I think the number you mentioned is not correct. Petropar is smaller. And -- and also for the, let's say, prepayments of investments is nothing unusual. We have this all the time. You also have seen that we have quite a high level of investment CapEx -- and that was always hand-in-hand, so high CapEx, but also get, of course, lowered by payments of customers, but they are shown in different buckets, and that has to be taken into account. So I think we still believe we have a very strong underlying operational cash flow. I hope that's good enough.

The next question comes from the line of Tom with us worth from Morgan Stanley.

Two questions, if I may. Just coming on to the kind of competitive landscape that you see noting. Could you just highlight where you felt more strongly the reduction in Asian exports? And any comments around the finding on that would be very useful. And on the other side of that, -- any -- are you now seeing any inputs drying up into Europe that you use or any of your products in Europe being asked to ship to Asia because pricing is more compelling in Asia than Europe. So I'm just trying to get a sense of the flows of chemicals that you see noting the feedstock constraints in Asia. Second question, if I may, is on Senex. Can you share with us the time line that you have for any potential strategic review here? Clearly, it looks like regionalization of assets is becoming more valuable, which might suggest at least to our eyes, that the value of net is going up, not down, and the threat of the deindustrialization in Europe is reducing, not increasing. So any thoughts there would be very helpful.

Okay. Thank you, Tom. Klaus will start with the trade flows and Asian competition that we are not see right now, and then Christian will comment on SYNEQT.

Yes. let me try also this very complex question because it's very, very different market segment and product by product. So generally, you see, as you know, freight costs went up quite a bit. It's not only the freight cost in up, availability of freight is also a topic. This alone affects all the shipments from China. So that's an easy factor in general terms. I think we pointed out some areas already like our core business. We see quite a pickup in or, let's say, a much weaker competition from Asia that is transferred into better pricing in Europe. And this would be a specific one. Methionine, I think Christian pointed out quite a bit already. Also here, the pricing increase is, of course, a question that comes supply/demand. So there's less supply. Most of the capacity besides ours is sitting in Asia. So there is less supply from Asia. On that side. In other areas, we don't see a bigger impact besides the more general 1 I just mentioned. So we have specific areas where we can really point out cross-linker, which was really, really -- and I think we reported on this in the last meetings, was suffering quite a bit. From heavy competition in Asia, this is softening. And that's the most pronounced 1 besides the methionine one.

Okay. Tom, I'll take the 1 about SYNEQT, maybe as a starter, I'm not on your page arguing that the infrastructure, the industry -- the industrial infrastructure in Germany is coming tremendously under pressure. Why? First of all, we do have the infrastructure investment initiative from our government, which is helpful. Second, if you look a little bit more into the details of SYNEQT, you will see 2 gas steam plants and a good amount of, let me say, the piping and net are elements of the SYNEQT . And in this respect, it is even becoming more attractive because this is what we need in Germany and in Europe also more to provide the industry and the inhabitants with a sufficient amount of energy and electricity. In detail, as you know, here, we talk about EUR 1 billion of revenues. Here, we talk about roughly EUR 200 million of EBITDA. So it is, let's say, well placed. and in a stable year-over-year, stable positioning stable development. And having said so, carve-out is done, successfully done. And we have not taken any decisions what to do next. But as you know, we are still evaluating several options for the future JV cooperation, straight divestment. And I will provide you as soon as possible when we have taken a decision. But as of today, we have not taken one. Thanks a lot so far for your questions.

We now have a question from the line of Chetan Udeshi from JPMorgan.

I'm just trying to understand your comment that the EUR 25 million uplift in EBITDA you got for Q1 ahead of your guidance was from prebuying in March. And I was just quite curious, if I look at your volumes in Q1 as a whole, they are down 2%. If I just do some math, the prebuying probably contributed plus 2% in March. So the point I'm trying to get to is how bad was start of the year that even after prebuying, your volumes are still down 2% year-on-year. And second, is there an element of inventory write-off that may have contributed to Q1 EBITA as well because we're struggling to see that come through from the volume point of view in terms of the reported numbers?

Thank you, Chetan. Both points go to Claus.

Yes. So yes, you have to always consider when you take the volume on a company level that we have super different businesses in terms of volume. And so we had a I think in my introductionary word, I said we would have reached our guidance without the prebuying. That gives you a feeling for what it really is the additional part in March. So it was not necessary for us to have the pickup in the end of March to reach out to, let's say, reach the guidance. It was only responsible for what the overdelivery was. We had no write-ups of inventory write-up of inventory in March. And so at a year, we did not support it. However, we had a very, let's say, a very soft start of our Oxeno business, which is big in volume, and we also have a very soft, let's say, start of hydrogen peroxide business, which not only for the base part of the business going into the paper market. these are big volume elements that contributes to the volume piece. And this maybe is misleading when you look to the volume part of the start into the year. I hope that answers your question.

And comes from the line of Georgina Fraser from Goldman Sachs.

I just have 1 -- and it's a bit theoretical, and I'm still very good trying to figure out how to phrase it. But if we do end up in an environment where we have such inflation that we see demand destruction. Is there a chance that capacities have been affected by shortages and to high feedstock prices in Asia, don't come back online in the second half of the year. Like if 1 was facing that situation. What would be the conditions for ramping your capacities back up that you would need to see?

Yes, Georgina, thanks. I think this can probably go to Claus. So the question is, if I get it right, is will capacities be permanently shut down, right?

If there's demand destruction -- or what -- did I get that right? It's more like why would capacity be rushing back to the market if we're in still a very weak environment with inflation. I think there's this assumption that we'll see a normalization of supply as soon as the straight opens never be working hard to bring capacity back. But I mean, to some extent, you also need the economic conditions to while they're doing that. And we were already in such a week starting quite at the beginning of the year before the conflict. So what's the risk that, yes, we have more permanent or longer-lasting shutdowns because of economic conditions, not just shortages.

Okay. So Yes. in. I hope you are well because you are sitting in the Middle East, right? And from that point of view. Let me try to give, let's say, our -- maybe my thoughts, I have to say. Right now, I think this kind of crisis is leading just into the opposite direction. When you look to where is the biggest overcapacity in the market, it's clearly China. And the profit margins when you also look to the last statistics in the markets went even further down 3 years in a row, profitability went down. So this sooner or later leads also to consolidation. And there's even the government in China when you look to the latest 15th 5-year plan, there is active measures to take old plants out. The pricing peak right now, of course, is just doing the opposite, even weaker ones can still live if they have material. -- but this will go away. And if, let's say, theoretically now we have inflation that's suppressing demand later. Then I think you are right. I would think then the weaker ones will be forced to move out. as 1 sign are, we know there are some very weak players that are not capable of surviving. But right now, this is, of course, super difficult to judge how that is playing out. But yes, if -- and the second order effects now from all point of view, not only inflation. When you look right now, there is a big debate on the farming side that the fertilizers are so expensive to farmers cannot buy them. And they're considering not to plant crops. So later down in the year, we will see problems in these areas. There is not enough food being provided. And this just 1 of the second order effects that we are going to see. And from that point of view, super difficult to judge. I can only say for us, -- what we have, we don't see any 1 -- any 1 of our plants being in that situation that this would become a question for us.

Thanks a lot, Claus. Having said so, ladies and gentlemen, this concludes our call for today, Claus. From the bottom of heart and the name of our company, thanks a lot for taking in the meanwhile, and for your outstanding commitment, it's a great pleasure to have you and to have you as our CO in Asia. Michael, next time, it is your term -- and I appreciate very much to having had an on side. So far, thanks a lot for your attention. Take care and hope to see you soon in person. Goodbye.

Bye-bye.

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