Indorama Ventures Public Company Limited (IVL) Earnings Call Transcript & Summary

Welcome, everyone, and thank you for taking time to join us for Indorama Ventures 2023 and Fourth Quarter Results Briefing. My name is Vikash Jalan, Vice President for Investor Relations and Planning at IVL. Joining me today, we have Mr. D. K. Agarwal, Deputy Group CEO and Group CFO; and Diego Boeri, Chief Executive Officer for Fibers segment. A quick disclaimer that this meeting is being recorded, and a replay of this session will be available on our website after the meeting. We have made a few assumptions and estimates on future trends for industry and business, which are based on our analysis of available information at this point in time. So with that, I now invite Mr. Agarwal to share business and financial highlights for the full year and fourth quarter before we open up the floor for Q&A. Over to you, please, Mr. Agarwal.

Thanks, Vikash. Good evening and good morning. We really appreciate you being on the Friday weekend, long weekend. So sorry for this delayed analyst meet. So let's begin with this slide, which is an overview of the macroeconomic environment and the key external factors influencing our performance. 2023 were a disappointing results for us. Full year results were impacted by the challenging macroeconomic environment characterized by Russia-Ukraine conflict inflationary pressure, high interest rate and sluggish economic growth, particularly in Europe and China. Our results in Europe got substantially affected, also in Brazil. Manufacturing activities in Europe are still contracting, as you can see from the slide, albeit at a slower pace, while U.S. moves into neutral territory. China's underperformance is primarily driven by housing sector and other domestic issues as China opened post-COVID. Supply chain normalization following the disruption after 2022 led to an unprecedented destocking. Now this destocking happened due to interest rate increase and normalization. This was further exacerbated by high interest rate environment, a slower-than-expected recovery in China and poor demand in European market. Sign of slowdown in this destocking terrain is observed at the beginning of 2024. You can see the right-hand side, the freight index. The recent conflict in the Red Sea have led to rerouting of the major shipping lines extending the Asia-European journeys by 18 to 20 days. This reroute has resulted in container shortage and, again, surge in shipping costs as reflected by Shanghai freight index. As you can see on the graph, you can see how much Shanghai freight index increased. Global core CPI began to decline towards the end of 2023, signaling a cooling of inflationary pressure, albeit remaining elevated, giving Central Banks little reason to rush on rate cuts, as you might have observed. Moving to the topic of energy prices. Strong crude oil prices and normalized gas prices sustained U.S. shale gas advantage, and that's why our American performance is fantastic, and lowered energy cost. Despite sustained high oil prices, average Brent crude oil price for this year stood at $83 per barrel compared to $101per barrel in 2022, resulting in inventory loss in 2023. So that is what has happened in the macroeconomic factors. Now let me take you through the highlights for the year for IVL for 2023. IVL's EBITDA for 2023, reported EBITDA stood at $1.1 billion, a year-on-year drop of 53%. Adjusting an inventory loss of $115 million and extraordinary items of $48 million, core EBITDA was $1.3 billion, which is a year-on-year drop of 44%. What exactly has driven this? Normalization of the supply chain, decline in crude oil prices and high interest rate resulted in destocking across all business segments, leading to lower year-on-year volume sales of 4%. Our revenue went down by 17%, which is in line with the crude oil drop, actually. Destocking, high feedstock prices in the West due to gasoline blend value, compressed Chinese benchmark margin for polyester value chain due to significant capacity addition in China and weaker global economic activities led to a decline in margins. However, we are pleased that with management actions, we were able to preserve cash by lowering our CapEx and working capital by nearly $789 million as against $500 million targeted. We continue to deliver on our transformation agenda with Olympus 1.0 program and unlocked incremental efficiency gain of $78 million in 2023 versus 2022. Despite the challenges faced in 2023, we have taken several measures to counterbalance the external pressure, and hence, achieved a positive free cash flow of $149 million after paying dividend of $185 million to the shareholders. Concurrently, TRIS maintained rating of AA- with a stable outlook, reflecting our efforts to strengthen our business and financial profile, and relying on our platform, the robust platform, which we have. We have taken a noncash impairment of Corpus Christi asset for $308 million, net of tax, $243 million, due to escalating project costs, delays and present market conditions. So that's a noncash impairment. Go to the next slide. It's important to understand what happened in 2023 versus 2022. This gives you big buckets. Comparing 2023 versus 2022 results. Adverse external conditions resulted in reduced volumes and spreads, leading to a decline in EBITDA. Nevertheless, our proactive decision-making and agile management actions enabled us to preserve cash and achieve efficiency gain and cost improvement. As I mentioned, we were able to achieve cash conversion -- conservation of $789 million, ahead of our target of $500 million announced earlier at the beginning of 2023. This was achieved through a combination of lower CapEx by $276 million and reducing working capital cycle by 9 days, resulting in $500 million-plus. EBITDA, as you see in the slide, was impacted by $0.32 billion on account of lower volumes, 4% down year-on-year. And if you see this volume loss, it's primarily gone into the Europe, where we had a drop by 18% to 20%, particularly in Europe, primarily driven by destocking across the industries, inflation-led high interest rate environment, slower recovery in China, and as I mentioned, weak EMEA demand. Now if you go to the second bucket, EBITDA was further impacted by $1 billion on account of lower spreads. The impact from the drop in the integrated PET spread was nearly $720 million, year-on-year decline due to decline in China benchmark price, a year-on-year reduction of $105 per ton, higher feedstock in the Western markets and lower premium due to supply chain normalization. The addition of new capacity in China resulted in decline of benchmark prices. The margins and IOD downstream spreads were impacted on account of destocking across the board, but particularly impacting in the premium margin products such as Crop Solutions, which gives you a better margin. Fiber margins were compressed, especially in Lifestyle vertical. If you go to the other bucket, on a positive side, we had a lower year-on-year energy cost of $250 million, net of hedging loss of $103 million. Because we had this hedging loss as we hedge 50%. We captured an incremental run rate gain of $78 million through Operational Excellence under Olympus 1.0 program. Project Olympus 1.0, actually, as you know, has allowed a structural and disciplined approach to continuous cost and commercial innovation that is crucial for our business to remain in the first-quartile position. Our continued focus on cost optimization and operational efficiency has translated the run rate efficiency of $527 million in 2023 versus $449 million in 2022. So this gives you what happened exactly in '23 versus 2022. This is an interesting graph to look from 2018 to 2023. What is exactly happening? How cyclical the business has become? If we look at across-the-cycle performance of IVL from peak to peak, now this is a pro forma. This means that all these assets were there between '18 and '19, and that's why it's a pro forma comparison, taking into account the acquisitions which we have done. So on peak-to-peak from '18 to '22, our portfolio delivered an EBITDA of $130 per ton, as you can see. Similarly, when we see from trough to trough, since '20 COVID year to 2023, we delivered EBITDA of $120 per ton. The operational landscape in recent year is marked by continuous disruption. Now this is a good example. In 2018, we saw the Chinese ban the PET West imports, which has notably enhanced polyester profitability due to shortage of feedstock at that time, and you see $147 per ton. At the end of 2019, we had unforeseen COVID-19 pandemic emerge as a black swan event, setting a further economic shock waves where crude oil dropped to an average of $42 a barrel in 2020. And if you remember, it actually became negative sometime. COVID-19 disrupted the supply chain in '21 and '22 and led to a significant increase in container freight cost. IVL got benefited with our domestic footprint in multiple countries. A significant restocking happened because people were worried about the supply chain disruption, in fear of disruptive supply chain and entire value chain, causing improved margin and volume. So we had a very strong -- and you can see in '22, we had $158 per ton. Early 2022, we also witnessed heightened geopolitical tension with Russia-Ukraine war, leading to demand contraction in Europe and high energy prices. As supply chain started to normalize post-COVID, in second half of '22, we saw significant destocking across the value chain, further exacerbated with high interest costs. This was witnessed throughout 2023 and negatively impacted our performance in contrast to 2022. What do we see in '24-'26? And what are we doing? In 2024, we anticipate around 4% to 5% increase in volumes, with destocking having bottomed out across most product categories as interest rates decline from their 2023 peak and modest improvement in margins. However, the management actions, there are some strong management actions. We view some of the Western assets competitiveness to be a longer-term concern and are therefore assessing our asset footprint in our CPET and Fiber segment. This includes make-or-buy decision as well as geopolitical rebalancing towards Asia. The combination of our strategic review will be completed in the first half of '24. And together with our previously announced footprint actions, ensure supply-demand balance is appropriate in our core markets for the current macroeconomic conditions, while also ensuring our customers have access of scale to high-quality innovative polymer recycled PET and fiber. These management actions will enable our ability to achieve appropriate return on capital for the value delivered to customer. Fixed and variable cost, management and operational performance initiative will give a major boost from the footprint optimization. So what we are trying to do here is try to optimize the high-cost fixed assets and driving operating rates to nearly 90% mid-'24 to full operating rates in 2026. So what you are seeing, that in 2024 to 2026, we anticipate growth in volume, improvement in quality of earnings, which you can see from '24 to '26 in graph above, where we plan to deliver $125 per ton EBITDA. I just want to mention here that we have not considered any spread or margin improvement here, except that in U.S., because the contracts are resetting. We have taken a drop in the margins with marginal increase in the China benchmark. So basically, this $125 per ton is from more management actions, putting the asset-light portfolio. So these are all the actions which we are taking. This will be driven also by easing of destocking because there will be a volume growth, marginal improvement in benchmark margin and significant management actions, as I said, improving cost structure and quality of earning. We will provide details of these actions in the Capital Market Day on 5 March 2024, and we hope you attend the same. Next. Now this is IVL 2023 versus 2022. Now let's see how IVL results of 2023 in a little more detail. IVL delivered '23 EBITDA of $1.12 billion, reported EBITDA, a decline of 53% year-on-year from the peak performance of 2022, and a core EBITDA of $ 1.3 billion, which is a decline of 44%, which negatively affected by inventory loss of $115 million versus inventory gain of $76 million. So we had inventory gain in last year and loss in '23. As mentioned earlier, 2022 witnessed record earning, supported by strong volumes and margins due to supply chain disruption despite high energy costs and high feedstock cost in the West. Year 2023 saw a volume decline of 4% year-on-year, predominantly in European markets, as I mentioned, creating a negative impact of $320 million year-on-year, driven by the unprecedented destocking trend that began in the second half of 2022. CPET EBITDA dropped by 61% year-on-year to $553 million reported. However, core EBITDA dropped by 51% to $657 million, a decline in year-on-year volume of 5.5%, lower benchmark -- China benchmark spreads, higher feedstock in the West and lower spread premium due to supply chain normalization, led to the drop in performance. IOD EBITDA dropped by 41% year-on-year to $440 million. However, core EBITDA dropped by 34% to $478 million, a decline in year-on-year volume or 6.1% on a pro forma basis by including one extra quarter performance of Oxiteno in '22. We acquired Oxiteno on April '22. So the volume drop we have considered based on pro forma 6.1%. A decline in premium margin products, I mentioned, like Crop Solutions and higher imports in South America, led to the drop in performance. Fiber EBITDA dropped by 54% year-on-year to $107 million. However, core EBITDA dropped by 41% to $124 million. A marginal decline in year-on-year volume of 1% but compressed margin due to competition from China, particularly in Lifestyle, lower auto demand invest and normalizing demand for hygiene post pandemic led to drop in the performance. However, energy costs lowered by $252 million, net of hedging loss of $103 million in 2023. Now let's look at regionally and what regionally happens. There has been a variety of factors playing, like destocking, margin reduction, elevated cost and import pressures. If you critically look at the slide, you will see that, geographically, results declined across all 3 regions. But Europe, swing from positive $316 million to $73 million, which is $389 million. Naturally, Europe is getting impacted due to cheap imports coming from Asia and high energy costs still lower than 2022. So you have a cheaper and higher feedstock cost in Europe. Regional disparity in aromatic pricing, as I mentioned, continues to be divided, bringing significant cost pressure and import competition in the West due to normalization of supply chain. Unprecedented low China benchmark spread in polyester value chain due to substantial China capacity addition impacted margins across Asia and EMEA. Operations in America, however, as you can see, performed relatively better. And particularly, if you split America in North America and South America, North America did pretty well, performed relatively better than CPET, but were impacted in the IOD downstream due to destocking and imports in South America. Actually, in Brazil, if you look at from $350 million, our performance dropped to $110 million because it also -- the pricing of the product, particularly in CPET, is then based on import parity. And IOD downstream, letting this -- in Brazil, basically, is the Crop Solutions dropped and other downstream businesses. Intermediates results were impacted due to planned maintenance, while MTBE, because of the gasoline blend, remained very strong. If we look at fourth quarter '23 alone, EBITDA impacted by $74 million swing from inventory gain of $24 million in the third quarter and inventory loss of $50 million. So it's a swing of $74 million for third quarter at gain, fourth quarter at loss. The quarter witnessed a decline in volume, mainly in CPET business from seasonality across the regions. However, EMEA saw year-on-year improvement due to reduced energy costs and narrowing feedstock disparity. American performance was further affected by seasonal softness. Normally in fourth quarter, the MTBE spread is lower because of the blending and planned turnaround of Canadian PTA plant. Asia performance on core remained stable, as you can see. The performance of individual segments, now we'll discuss in the next slide. So this gives you a regional breakup. Now if you look at CPET, CPET delivered an EBITDA of $553 million in 2023, a decline of 61% year-on-year, but excluding inventory loss of $82 million. And there was a gain of $94 million in 2022 and extraordinary items, the segment core EBITDA declined 51% year-on-year to $657 million. So the core EBITDA is $657 million. As I mentioned earlier, 2022 was a peak year due to higher margins, led by supply chain disruption, which has been securing higher premiums. The headwind began from second half of '22, where the industry witnessed demand slowdown and heavy destocking, which carried over into 2023. In 2023, the segment experienced 6% year-over-year decline in volume, primarily driven by global destocking impact across industry and a combination of subdued demand and import pressure in the EMEA region. Additionally, the mothballing of our Portugal PTA plant due to poor economics reduced our PTA sales. Margin compressed due to reduced integrated PET margins in China, lower freight rates and PET capacity expansion in China. Additionally, higher feedstock cost due to wider disparity in aromatic pricing impacted our margin in the Western hemisphere. This has been a big issue of the higher feedstock prices. Despite margin pressure, IVL maintain premium over the industry benchmark due to our global presence and resilient domestic supply chain capability, a unique strength of CPET, which led to above average margins in 2022, and you will see that in the next slide. We continue with our strategic focus on recycling footprint expansion. In 2023, we have added 45KT of new recycling capacity in Indonesia and Brazil, and we expect improved results in recycling in 2024, with better utilization of assets, improve operational efficiency and full year impact of the new capacity addition. With lower gas prices, our energy costs reduced year-on-year by $124 million, net of hedging loss of $50 million. Now I've come to fourth quarter. CPET delivered fourth quarter reported EBITDA of $71 million, an increase of 260% year-on-year because fourth quarter '22 was very weak, but a decline of 51% quarter-on-quarter, with inventory loss of $49 million versus gain of $20 million in the last quarter and extraordinary items. Fourth quarter '23 core EBITDA was $129 million, as you can see in the bottom of the slide, a decline of 5% year-on-year and 7% quarter-on-quarter. Energy hedging loss amounted to $13 million in particular quarter. If we look at different businesses in CPET, Integrated PET posted core EBITDA of $109 million in fourth quarter '23, a decline of 14% quarter-on-quarter. Overall, volume experienced a 5% quarter-on-quarter decline to 2.16 million tons due to seasonality and Canada PTA plant turnaround, which was a seasonal plant turnaround in winters. Despite persistent pressure from China's excess capacity, integrated PET China benchmark spread saw a slight movement from $115 in third quarter '23 to $134 in fourth quarter '23 from a combination of industry rationalization. The third quarter had very bad margins. Then there was a -- industry rationalization happened, reduced operating rates by Chinese players as they were losing money, and the spreads had reached an unsustainable levels. Further, antidumping duty production measures were introduced in Europe on Chinese imports in November '23. With ongoing evaluation for similar measures in certain countries. Mexico actually has recently initiated antidumping duty on China. Specialty Chemicals posted a core EBITDA of negative $3 million, an improvement of $10 million quarter-on-quarter, an improvement in profitability was primarily due to higher volume of our specialty product NDC in the U.S. after plant turnaround in third quarter '23 as well as due to lower utility and fixed costs. Packaging posted core EBITDA of $22 million, marginally down 9% quarter-on-quarter. The packaging performance remains firm and solid, with the opportunity to unlock growth potential in emerging economics going forward. Looking ahead, we see adverse impacts are bottoming out as we see improvement in the margins. We anticipate volume growth with the ease of destocking, organic growth and recycling expansion. We believe the current benchmark integrated PET spread is not sustainable and anticipate a gradual recovery going forward. With antidumping duties and other trade barriers in markets like EU, Mexico, India is putting BIS, and others, IVL premium spread over China's benchmark expected to widen, which tends to benefit IVL since the majority of our operations is situated outside of China. We believe gasoline demand will begin to stabilize going forward post-COVID activity. Coupled with global balancing of refinery production, the regional MX price disparity will narrow, but not go to the original level, aiding our Western polyester business with lower feedstock costs. So that gives you a good feel about CPET business. Now this is a premium slide. As you can see on the first chart on the left, despite compressed industry margin, IVL has managed to uphold a strong premium over the market, and we're giving you from '18 -- '17 to '23. Even with compressed benchmark in '23, we were able to maintain our integrated PET spread at the same level in 2018, which was a peak. If you see the premium, IVL has been able to improve our premium over the benchmark from $90 in 2018 to $190 in 2023 due to geographically diversified footprint, local price premium, trade barriers, strong customer relations and capability to offer recycled material as a distinguished factor. However, if you see in the middle, comparing '18 to '23, the decline -- there's a significant decline in the EMEA, which is because of the cheap imports, high feedstock prices and energy prices being high and the overall demand because of geopolitical situation. While America, you can see, remains robust with premium market position and new acquisition of Brazil post 2018 by IVL. But as I mentioned, the Brazil had significant impact in '23 versus '22. Asian business got impacted from significant benchmark margin competition through new addition of capacity in Egypt and India supported the performance. So this is just giving a comparison of '18 to '23 . As mentioned, our European operations were negatively impacted by a combination of high energy cost, import pressures due to lower supply chain costs. Regional disparity in aromatic pricing widened, bringing significant cost pressure and import competition in the West. The Russia-Ukraine conflict caused a significant energy cost increase. With these factors, our EMEA IPET, you can see, has contributed negative EBITDA in 2023. North American market has remained resilient, although with some negative impact from compressed benchmark margin and high feedstock. So this gives you a comparison of what happened in '23, even as saw that IVL enjoys the significant premium or benchmark spreads as we are protected in many markets from the Chinese dumping because of trade barriers. On the next slide. Now coming to IOD. In 2023, IOD segment delivered an EBITDA of $440 million, a decline of 41% quarter -- year-on-year. Excluding inventory loss and extraordinary items, the segment core EBITDA declined 34% to $478 million. Volume decreased 7% year-on-year pro forma basis, as I mentioned, mainly in Downstream business. And Downstream business IOD was impacted due to destocking in most of the end market, sluggish economic activities, high interest rates, slower China recovery and pressure from imports. With lower gas prices, our energy costs in IOD reduced year-on-year by $83 million, net of hedging loss, $42 million. If we look at Downstream and Upstream, Integrated Downstream. In 2023, Integrated Downstream delivered $302 million of core EBITDA, a reduction of 42% year-on-year. Downstream spreads were impacted on account of destocking across the board, but particularly impacting us in the premium margin products and import pressure for commodities in South America, post supply chain normalization. So this was particularly noticed a lot in Brazil that the earnings dropped quite a bit. Sales volume and margin drop was particularly in the Crop Solutions and housing-related business, that is propylene oxide, as well as an ingredient used in soaps and detergents, that is oleochemicals. So oleochemicals has been suffering in '23 versus '22. LAB and solvents, ethanolamines profitability was actually comparable year-on-year, so that remained reasonably stable. In Intermediates, in 2023, delivered $176 million in core EBITDA, a decrease of 16% year-on-year, primarily from MEG in Americas. U.S. MTBE spreads slightly improved from $623 in '22 to $651 in 2023, driven by the ongoing robustness in octane value and gasoline demand. Our Integrated MEG business continued to maintain shale gas advantage over Asia because Asia is [indiscernible]. However, Asia benchmark spreads remain suppressed at unsustainable level. Benchmark China Integrated margins in 2023 were softer by 6% year-on-year, amid lackluster growth of polyester. For IVL, MEG serves as an integrated component in our CPET segment, and we are running our MEG capacities mainly to fulfill captive needs and long-term contracts. '24 management actions -- one of the management actions being considered is to consolidate MEG production between our 3 sites in the Americas to increase operating rates and lower fixed and variable costs in order to reach breakeven EBITDA and better in 2024 and beyond. So this is one of the another management actions which we are working in. If we look at fourth quarter '23, delivered -- IOD delivered reported EBITDA of $100 million, which was up 7% year-on-year. Fourth quarter '22, as you know, IOD EBITDA included license income of $24 million against $2 million this quarter. So without license income, the IOD reported EBITDA increased from $69 million in fourth quarter '22 to $98 million fourth quarter '23, representing an increase of 42% year-on-year. Excluding inventory losses and extraordinary items, the segment core EBITDA was $112 million. However, volume increased 4% quarter-on-quarter with some easing of destocking in many product categories. In Intermediates energy hedging loss of $10 million for the quarter and $42 million for 2023. If you look at Downstream, in fourth quarter '23, Downstream portfolio delivered $87 million of core EBITDA, an increase of 90% quarter-on-quarter. Reported EBITDA was $74 million lower with the extraordinary items. Here, margins substantially improved from pricing excellence, favorable product mix and the easing of destocking in certain products. These factors collectively contributed to enhanced performance across both North America and South America. And if you look at core EBITDA per ton, improved to $240 (sic) [ $245 ] per ton against $136 per ton. So we are seeing that the Downstream recovery in the volumes, which is getting reflected as the destocking, is getting completed. Integrated Intermediates, this vertical yielded core EBITDA of $25 million and reported EBITDA of $26 million. As you know, seasonality plays a role here. U.S. MTBE spreads declined from peak third quarter '23 to $512 from $892. However, it remains robust due to continued strong gasoline demand and low feedstock prices. Although integrated MEG spreads have shown improvement quarter-on-quarter from $314 to $355 due to improved ethylene spreads, it remains challengingly low an unsustainable level, delivering negative EBITDA. And that's where we are taking the action for MEG. How do we see going forward? We are seeing modest recovery in IOD downstream volumes and margins as destocking eases and the supply chain disruption which is happening is also putting better demand. MTBE margins continue to hold strong due to high octane value and lower feedstock prices. So that gives you some idea about what's happening in coming quarters. Next slide. The Fiber performance has been difficult in 2023, continues to be subpar where all 3 verticals have underperformed to its potential, primarily due to weak demand and persistent overcapacity in all markets. High cost, primarily in Europe, remained a key challenge. And the segment has crafted a thorough action plan to optimize asset footprint over the coming years to improve the quality of funding. In '23, Fiber segment delivered an EBITDA of $107 million, as you can see, a decline of 50% -- 54% year-on-year and a reported EBITDA of $124 versus $212, which is decline of 41%. If you look at Mobility, in 2023, while the Mobility showed promising signs of development with an uptick in automotive production, we did not fulfill fully benefit from the growth because of lower replacement tire volumes in the West. The replacement tire space has been relatively weak, indicating room for improvement. Hygiene sector had a very strong demand in post-COVID, but market is currently facing the dual challenge. You have excess capacity built during pandemic and normalized consumer prices. And also, we had higher polypropylene prices. In Lifestyle, despite remaining solid volumes, the Lifestyle vertical has faced challenges, primarily driven by overcapacity being built in China, leading to increased exports and subsequent margin compressions in the markets where we operate. In India, BIS certification is expected to support volumes and spread in '24. If we look at quarter results, Fiber segment delivered an EBITDA of $16 million reported and core of $18 million, which is a year-on-year drop -- a decline of $18 million, primarily due to lower volumes and margins. Mobility delivered an EBITDA of $12 million and a core EBITDA at $19 million for the quarter. Mobility business margins were stable and sales volume benefited from strong OEM demand. But replacement tire demand was weak. Hygiene posted an EBITDA of $5 million and a core EBITDA of $3 million, declining 78% quarter-on-quarter basis due to lag loss from higher polypropylene prices. Overall, volume increased from higher demand, mainly in U.S. and Europe. Lifestyle, as you see, reported EBITDA was negative $11 million against a positive EBITDA of $10 million. So that was a major challenge for us. This primarily came from $10 million swing from inventory gain of $5 million in third quarter, and we had inventory loss of $5 million in fourth quarter and change in core performance. So Lifestyle remains challenging because of the cheap imports from Asia. But as the BIS is getting implemented in India and we have significant volume there, we should benefit going forward. So looking ahead in Fiber business, we have implemented a volume recovery strategy, strategically securing contracted volume with brand owners. Domestic market production measures in various countries like India, Indonesia and Brazil will serve as a valuable safeguards, especially when market conditions improve. This proactive approach underscores our commitment to navigate the challenges and capitalize on opportunities, positioning us for sustained success in the foreseeable future. So a lot of work is being done in the Fiber business. Now in response to the current challenging environment, we have taken aggressive steps, as I mentioned, to reduce working capital and accelerate our cash conservation target. As you can see, we reduced the working capital by 9 days leading to a cash conversion of $513 million of working capital. And we reduced the CapEx by $276 million, with optimization of our maintenance CapEx for $138 million and growth CapEx reduced by another $137 million. Looking ahead in 2023, our focus on conserving more cash through CapEx optimization remains unwavering. The temporary halt, as you can see, of the Corpus Christi project exemplifies management's proactive approach in optimizing CapEx amid changing circumstances. These strategic decisions have enabled us to preserve cash and generate free cash flow in the face of macroeconomic challenges. So cash remains a very important focus at present. At the end of 2023, as you can see, our gross debt is $7.4 billion and net debt of $6.8 billion, the leverage ratio of net debt equity at 1.31 and DSCR at 1.27. High liquidity at $2.4 billion at the end of December '23, which comprises of cash and cash under management plus unutilized credit lines. So we have a good war chest. Effective finance costs for the year 2023 was at 5.31%, which is an increase of 1.29% over '22. This increase is driven primarily on account of 42% of debt, with benchmark at floating rates in U.S. dollars, Thai Baht and Euro. While around 58% of that remains with French -- with fixed price. So 58% fixed, 42% floating. Natural hedge on ForEx with our global manufacturing footprint in 35 countries. Our debt and net assets are directionally in the same currency, providing us a natural hedge, as you can see. However, at this time, we increased a little bit Thai Baht debentures due to lower interest rate as they are of long-term investments. Financing is very important. So what we have done, we have committed term sheet for $750 million of debt refinancing for which documentation is in progress and will complete in the first half to '24. The debt being refinanced have an average maturity profile of more than 5 years and at lower spreads. Further, we have committed term sheets of $400 million to refinance debt maturities in the first half of '25. Then that being refinanced has average maturity profile again of 5 years at lower spreads. And you can see what is our debt republication post-finance and pre-finance, and we are putting our debentures in the market for $10 billion, which will be closed by 7 March. TRIS has reaffirmed our AA- rating with stable outlook in October 2023 midst of ongoing volatile geopolitical and weak macroeconomic environment. We have diversified source of financing and types of financial markets and currency mix. In addition, we have been in the forefront of sustainable financing for $2.4 billion, which represents around 32% of debt outstanding. So there has been a lot of focus on the sustainable play. The management has taken steps to deleverage, to increase free cash flow from improvement and financial performance, working capital optimization, control CapEx and FX, asset optimization, divestment and realized value. We'll talk about this in subsequent slides. Next slide. So this is an interesting slide. The details we'll unveil at CMD. Today, IVL has created a solid platform with leadership in sustainable and growing market. The focus over the next 3 years will be on the continuous improvement of quality of earning, to enhancing the quality of our assets, our processes and our organization. As mentioned in the last release, the company is conducting a strategic review of all business segments with aim to deleverage, unlock further value to stringently review our capital allocation, to conserve cash and lower fixed costs. Each business segment has identified the area of business, focus with detailed and resourced action plan to remain vigilant on this front. We are reviewing our strategic option to prepare ourselves in the next era of growth. What does 4-pronged strategy talks about? Asset optimization, this is getting rid of the assets which are creating negative cash flow, monetizing and carve out of few assets, value unlock through various strategic options and leveraging Olympus 2.0 for continuous efficiency improvement. This action will bring value and improvement to the quality of earnings we expect in 2024 to '26. So we are targeting to bring down our net debt-to-EBITDA to below 3%, improved ROCE to over 12%, creating a healthy positive economic value added and OLYMPUS 2.0, which is basically the transformation, rationalizing the footprint, improving the efficiency, we are targeting efficiency gain of $450 million. As I mentioned, details of the plan will be shared at the Capital Market Day on 5 March '24, and we really look forward to meet you to spell out these strategies, which we are. So thank you very much. I think that's the last slide, right? And then we can now take your questions. You can keep that slide.

Thank you, Mr. Agarwal. [Operator Instructions] I can see that Bank of America, Khun Komsun.

Thank you, D.K., for the thorough presentation. A few questions. First off, is the -- can you elaborate more on what you're going to do with MEG in the U.S.? You say you consolidate those assets, right? Can you explain a bit more? And what about the cracker that you have there? The second question is, can you add more color on the carve outs and monetization that you just mentioned?

Thank you, Khun Komsun. So MEG optimization, as you know, MEG has been a very challenging business causing negative EBITDA. We have 3 plants in Port Neches and 1 plant in Clear Lake. So we are working at how can we optimize so we can reduce the fixed cost and also the variable cost to improve the profitability. However, as you know, the MEG, if you can bring the slide of MEG, the margins of MEG, as you can see, has started improving. The middle shows that Asia integrated P2 spreads are very, very low, although they have started recovering now because they're making significant cash losses. The green shows that how the Asian spreads are improving. So certainly, we are seeing a lot of improvement in the spreads, but we want to make sure that this optimization happens so that we can reduce the overall fixed cost and improve the variable cost. And on the right-hand side, you see the global MEG cash cost curve. Naturally, ethane is the most cost competitive to make MEG where we stand. Your question was cracker Lake Charles, cracker and both port Neches crackers are operating very well. Lake Charles copper operating rate has been 75%. As you know, the crack margins has not been great if you go to that [ clean ]. Shell gas advantage still remains very high. You know that gas prices actually really collapsed to $1.95 and the ethane prices dropped. Paraxylene costs in the United States remains quite good. And you can see the middle, the crack margin still remains very poor, and that is because of the utilization rate. If you see on the right-hand side, we have tried to add up that how much capacity got added in the United States, 32 million tons versus 12 million demand. So the operating rate was only 81%. This is global. And you can see in Americas, it is 80%. But now as the capacities are slowing down, there's no capacity getting built. It's very expensive. The operating rate will go 84%. So this will certainly improve the crack margin. Your question was carve-out monetization. So there are 2 parts. Monetization is one, some noncore assets we have, which we'd like to dispose of. Like we'll try to give you detail more in the CMD. That will create some cash of $300 million. And the carve-outs, we are looking at as this may be -- certain businesses has -- as a some of parts, the valuations are better if they are listed elsewhere. So we'll provide you more details. This will range because naturally, net debt or EBITDA to drop to lower than 3x. We certainly are reaching a significant cash by carve-outs. So we'll -- we are involved in those discussions, and we'll give you more details in the Capital Market Day, if it helps you, yes?

I have a follow-up question that you mentioned about the end of destocking, in particular, for the [indiscernible] and crop solution. Are you seeing the trends continue, which will impact -- possibly impact Oxiteno unit or Brazilian unit? And the second question is, the Asian integrated spread has started to move up. Is that a function of capacity cuts in China? And if whether or not -- will that continue if ADEH mentioned has been implemented or you think that the Chinese may increase the rate when the spread has started going up? And are you seeing the seasonality in the second quarter going to be the same as that of last year?

Thank you. So Khun Komsun, first, on IOD downstream. We are certainly seeing improvement in the sales from first quarter. Destocking, we believe has really come to an end. So we are seeing crop solutions demand coming back. Home & Personal Care has been actually reasonably strong and even Solvents now. Also, the supply chain disruption where there was certain competition pressure in Oxiteno, which should help to improve. Coming to second question on your integrated PET spread, if you can bring the slide, you're right. the integrated PET spreads have improved. This slide shows you that how the Chinese PET operating rate is 6%. On the right-hand side gives you the slide that what is the average spread. Yes, as soon as the capacities were getting built, third quarter '23, there was a significant drop in the spread. And now we have seen January, February, the spreads improving on the bold line on the top, which you can see. This is because certain capacities have been rationalized in China. As you can see in the bottom, 70% of the capacity is owned by 4 players. So naturally, when they make cash losses, it doesn't make sense. So they are shutting down some of the lines, which were not cost effective, and that's why we see some improvement in the margin happening. Chinese PET exports also, you can see that -- because China is actually can't export to many countries because of the trade barriers. So there you can see even in '23, their exports were limited to 4.6 million tons. So certainly, the worst is behind us. We see but gradual improvement. Seasonality will play a role. If you can go to the next slide where -- how our sales composition is -- to explain you what is happening on '24 sales of our IVL. You can see that Americas, as you saw, the results are very strong. Europe, since there was no antidumping duty earlier, now the antidumping duties have come. Then there is a supply chain disruption of the Red Sea crisis. So only 20% of our sales are impacted by Chinese imports. And Southeast Asia is 9%, which, of course, enjoys better margin. And this is because of right-hand side. All the countries have taken action for antidumping duties. You see U.S., there is no Chinese cargo goes. India, still, there is a lot of Chinese cargo goes. But BIS, this is a quality certification, which will get [ inflicted ] by middle of '24, which will put stoppage of Chinese imports because they need certification, which is not there. And European antidumping duties has started from November. Japan already have, Brazil has. So certainly, this will benefit. Just to give you a little bit on the freight side, Vikash, if you can -- no, this is a disruption which is happening. This is the Shanghai Freight Index. You can see in '22 when COVID was there, how much as CFI, which is an indicator, went to 5,112. And then you suddenly see demand normalization happening and space containers, the freights came down to the pre-COVID level actually, in spite of high energy costs. Now recently, post-Red Sea crisis, the index has gone up. Right-hand side gives you some of our relevant markets where freights have gone up significantly in February. Now this has all recently happened. European man ports has increased from $32 to $124. East Coast to $239, West Coast to $195 and Turkey and Brazil. So this has just recently happened. Another important is -- if you can bring the graph. What is happening Red Sea because Singapore to China to Rotterdam, it was going to switch canal. Now it cannot go anymore. You must have listened to many disruptions which are happening. Everything has to go through Cape of Good Hope. Now Cape of Good Hope has improved. This increase the cycle time by nearly 18 days. This vessel capacity is reducing. Now this is all vessels are going through. So that is a shortage in Europe, which has certainly improved the European PET spreads at present. We are not showing Panama Canal here because of El Nino. Also Panama Canal, which serves the East Coast, there is also a disruption. But these are temporary. I hope these things gets resolved. But right now, this is a disruption which is happening in the marketplace. Hopefully, that answered your questions.

Next, I can see Mayank from Morgan Stanley.

Thanks, Vikash. Thanks D.K., for the comprehensive presentation. First question, sir, was more related to the U.S. operations on Slide 10 that you kind of talked about, on the premium of Asia versus the U.S. for PET. Obviously, there have been resets in terms of pricing in U.S. for '24. So if you can just highlight of what will be the new spreads that we would be potentially looking at? How much is the reduction in contract pricing and margins for '24 over '23 in the U.S.? Because your competition has guided for a pretty tough outlook in the U.S. and PET as well. So if you can just talk about your view on how you are seeing things on the U.S. PET side.

Thank you, Mayank. So very good question. So you see this premium of $190, which we got in '23 because Europe was negative EBITDA. Totally -- so Europe was in terrible mass because the -- as you saw the freight cost was lower. So this -- and similarly, in Brazil, as I mentioned, the -- because the freights were lower. So $190 is not United States. It's a combination of all the sales which we do, okay, including United States, Europe and Asia. You're right, U.S. will have lower margins because the contracts have been reset. We have some legacy contract. So that may be a $75 million, $80 million impact of that. But actually, it will much more get compensated by gain in Europe and American spot prices also, the American spot prices have gone up. So we believe that our blended spread premium will still remain $190 per ton. Lower in United States, a little bit better or same in Mexico, but much better in Brazil and Europe. So it's a combination of all. So it's not only North America. Our diversified footprint will certainly help us in this.

So just to follow up on this because $82 million impact on U.S. because of the reset in contracts. So can you just share a bit about how much of the contracts are getting impacted for '24? How much volumes out of the total are getting impacted under the legacy contracts, which are shifting to new pricing?

So is 24% is the legacy contract, 56%, which got mainly impacted. So what I'm telling you is about the overall impact, which we -- because that is the impact of octane disparity. So that is where the contracts were reset at lower prices, but there are certain contracts which are still being discussed. So we think the combination of Americas. Americas will have some negative impact in the United States, but then it will get compensated from Brazil because Brazil has been significantly impacted last year due to 2 reasons. One is octane disparity and the freights in Brazil because Brazil pricing is totally done based on import parity. And now with the freight increases with Brazil, will have much more improved results. I hope that answered your question. So of course, if our competitors -- depends on what market mix you have, right? That plays an important role.

And the second question was on the CapEx slide that you had. So if you look at, I think, your growth CapEx even for '24 and '25, looks like it's running at the rate of around $0.5 billion still. Any reason of why this number is still that high? Is it because of the challenges you talked about in the market and the cash conservation strategy?

So this includes 150 million of oxygen on deferred payment. Of course, in '23, we cut a lot of maintenance CapEx. So 320 is the maintenance CapEx. I think we have a little bit here conservative with 430. We will certainly we'll be able to do better than this as we did in last year. And the growth CapEx is only 250, if you see in the dark line. So growth CapEx is only in Mocksville, completion of the project, which is the -- our new line, state of art line in Mocksville for hygiene business. And also some recycling in India. Because in India, as you know, the regulations are coming and recycling has a very significant demand of recycled PET. So that is the major, but no other major growth CapEx we are doing. And certainly, you're right, maintenance will be lower as we will rationalize. We will revise the numbers as we come back to you. And as you saw in the last year, '23, we only spent 320 million. So we are trying to keep cash conservation always, that would be the focus.

And just the last question was more related to net debt. So if you talk -- you said that the net debt is actually now this year is higher than the last year. And you had a positive free cash flow. So just wanted to understand what's going on, on the net debt side. Why has it gone up with a positive free cash flow?

So you exactly pointed out correctly. We are reporting in dollar and Thai Baht was very strong at the end of 34.2. So when you convert it into dollar -- actually, in Thai Baht, the debt has come down, right? But when you convert into dollar, it has actually -- on a particular point because the exchange rate was high.

So the reason I was saying is, it's a good $250 million delta.

Yes, yes. So one is translation impact. And second is also some operational lease because of IFRS, which you need to put as a debt, which was earlier as a finance lease because of the new regulations. So that came in. But that is reclassification, you can say. But we can provide you the bridge, yes.

And I think on that point itself, I think if you look at the fourth quarter run rate of your interest cost, it's running north of 6% gross interest cost. You think after the refinancing that you highlighted on the Slide 14, you will be able to reduce it or the increase will be -- how much would be the increase post the refinancing on the total debt portfolio on your cost of '24?

So our financing cost in '24 is expected to be same as 2023, which will be around $450 million, right? $440 million, $450 million. The benchmark spreads, because there was floating and fixed, certainly, the effective finance costs will be slightly higher. But overall debt, as it will slightly come down. And also, Thai Baht ratio will increase. So we expect the finance cost to remain same as '23, '24. We have assumed certain cuts in the second half of 50 basis points. That is the assumption at present. And you remember, this also includes amortization of finance costs when you refinance, so it also includes that part of the cost, yes.

I can see Yupapan. Khun Yupapan from Thanachart, can you ask your question?

Thank you for your presentation. So my first question will be regarding the Corpus Christi. I'm not sure whether you have mentioned how much the remaining book value of the asset is. And do you expect to put any more CapEx into Corpus Christi?

So actually, we have stopped -- all the 3 partners stopped the construction of Corpus Christi. The residual value is around $310 million after an impairment of $308 million. What we're going to do is that we are going to reassess the execution strategy of all the 3 partners, how can we bring the overall project cost in controllable manner? This is still a very cost-competitive asset because of its location, size and technology. I think what went wrong is on the project cost, which we will revisit in '25. The recurring cost will be certainly there. There will be $6 million per year, which is basically $6 million to $10 million, as this is mentioned, which is basically the insurance and the residual cost. But in book value, it still is $310 million left out, yes, not for the impairment.

My second question will be regarding the West PET. I see that the recent month in January that start to pick up because of the higher freight cost. Should I expect that this should be a benefit [ NBL ] margin in the first quarter as well?

I think certainly, first quarter, Europe will be beneficiary. U.S. will be beneficiary. Brazil, as you can see, will be beneficiary. And the situation is still evolving. As I mentioned that the cycle time has increased, the freights are further going up as we speak, for Turkey also. So this will certainly benefit. How long this situation remains is a very difficult question, how -- when the Red Sea crisis resolves. Meanwhile, no container companies are taking the voyage through [ stage ]. And that's why we certainly see this at least dragging up to next 3, 4 months because even if it resolves, then to get into capacity back will take time. So it's a very evolving situation. It will be very difficult, but it is certainly beneficial for us because as you saw in the previous '21, '22, as the supply chain disruption happens, you can price the product based on import parity. In Europe, 87% of our sales is based on contract on the market price. And market price reflects -- and I don't know whether you have the European margin slide, Vikash, that the European margin prices has certainly improved. As you can see on the green chart, you integrated PET spread on import parity, that will help. So what you saw negative certainly will help in the whole situation.

And Khun [indiscernible] from [ CGS CMB ], can you ask your question?

Thanks, Vikash. May I ask about the IOD downstream? Which product is actually stronger margins because EBITDA improved quarter-on-quarter? And the second question is on Corpus Christi. Does the company you have the option to sell the assets so that there could be some potential of a write-back?

So the first question was IOD downstream, if I got it, with the volume improvement, right, for Q4 to Q3. We have seen home and personal clear stronger. We are seeing a little bit rebound in the polypropylene oxide. Ethanolamines has been stronger. However, as you can see, this slide gives you a good picture of the volatility here also that $511 million is the average EBITDA for IOD downstream for '21, '22, '23 and North America is $326 million, and $185 million is South America. And for '23, because of destocking, as you know, we had a significant -- the drop in the sales, nearly 8%, as I mentioned, compress margin. The North America is $210 million. And South America was -- Brazil was most impacted, dropped to $92 million. Now as we see destocking ending, again, this is -- and the crop solutions coming back, Personal & Homecare remains strong. Coating and Constructions are still weak, which should, I think, come back as their interest costs are coming down and more construction activity. So we certainly see IOD downstream EBITDA improving going forward. The gas prices, lower gas prices will also help us. So we see an improvement. Second question was on Corpus Christi. Yes. that's an option available to sell to your stack and realize the money. Management will continue to look at all the options for this project. So yes, that option is always available.

Just a follow-up on Page 11 on the fourth quarter. EBITDA for the downstream, 74 versus 45. You said on the sideline that it is because of the better margins. I just want to understand this product.

Yes. So the better margin you have the detail is in the -- it's actually a mix of crop solutions being better. Ethanolamines margin have been strong, and Crop Solutions sales are better. So it's a combination of 3. Personal & Homecare was more or less stable margin. So you have to look at from that and -- from that angle, which follows. But we don't have exact breakup, but we can always provide you, if you have them.

And now I can see Sumedh from JPMorgan.

I have a couple of questions, somewhat housekeeping. But I just want to understand whether the Corpus Christi impairment, does it lead to any decline in your depreciation rate? And also I just want to understand whether you have any hedging outstanding with reference to the energy cost. So that's one. And the second question is specific to your mid-cycle EBITDA per ton that you mentioned around $125 over the next couple of years from around $90 where we are today. So I just want to understand what -- how do you construct the bridge? I mean, which products is where you are seeing improvement? And you may potentially see volumes getting cut as well. So how should we think about it?

Very good. So I'll go to your last question first. $90 to $125, we can bring in. Now Khun Sumedh, we are taking several actions here as the management actions. We actually -- has not improved and taken any margin increase in this because we believe -- we think that this margin, basically, if the market remains still same, what management actions we can take to improve this. So it's a combination of 2 things. One is volume increase. As you can see, our volume is only 13.9%. Our operating rate of the asset was 74% only. And this means that we have a huge fixed cost, operating all the assets. So that's why we are looking at this optimization of portfolio, particularly high-cost assets and improve the operating rate to 88% to 99%. If you see in the graph, actually, the volumes are the end volumes, which we are going back to '21 levels. So we are very confident about the volume. So the volume is throwing nearly 570 million plus from '23 to '26. Second is the -- which improves EBITDA per ton because your variable cost comes down, your -- because you're running the assets harder, which are running and operating at lower capacity. And if you have 4 lines and your conversion cost per ton is lower for one particular asset, you run that higher. But clearly, as you know, our Egyptian and Turkish plants are very low cost, and also Polish. The second is the Olympus 2.0, which is basically rationalization is reducing the fixed cost, improving the productivity, interact procurement, improvement, digitalization, value pricing, innovation. So that's exactly what we are talking of these 2 buckets in spite of having an escalation in the fixed cost of $100 million. So we basically talking of the submission of nearly $800 million to $900 million. So that is how this EBITDA per ton. Of course, if any margin improvement happens, that's a sweetener, which will come up in this. So it's the sales excellence and everything. Your first question was Corpus Christi was not capitalized. So naturally, there is no decline in depreciation because it will remain same. This $320 million, whatever, is net book value will still remain in work in progress. Second question was about hedging. What was that question?

Any outstanding hedging on Corpus Christi.

Yes, correct, hedging.

Any outstanding cost hedging on Corpus Christi. There is no hedging outstanding in Corpus Christi. Of course, you know that -- sorry. Go ahead.

Not on Corpus Christi. It's on energy.

Vikash, he asked energy. That's why I asked. Sumedh will never ask this. So yes, so we suffered $100 million loss. Can you go to the energy slide? Very important. So we have been following hundred -- if you see here, in '22, we had a significant energy cost jump of $637 million. We had a gain of $85 million, so net loss was $550 million. But actually, we passed on everything because supply chain disruption was so high, the freight costs were so high. In '23, we had $355 million, but $100 million loss. So $252 million were actually net impact. Now as the -- as you know, the gas prices have come down, we think there will be $180 million gain. There's a hedging loss of $31 million and the net gain will be $150 million. So $30 million is hedge loss as on today's market price. Now this may keep changing because as the market will change. But $150 million, there will be incremental saving versus '23 because of the energy prices, which hopefully we can pocket it. The energy prices has been very volatile, as you can see in '24, which is $1.86 per second, which never has happened in the gas because -- this is because of the winter being so -- not being so strong and high inventories were there. Although there is some cut in the number of wells and rigs, which has been announced day before yesterday by [ G Spec ]. So this is volatile. So we are still continuing to follow the policy of 50% hedge. Hopefully, that answer it.

I can see Yupapan, your hands are still raise. Do you have any follow-up questions?

Yes, I have one more question. Could you please give an update on the supply -- PET supply situation in this year? How much you expect the new capacity will come given that the spread is very low, do you see any capacity delay?

This is about PET capacity, right? So I think that's a fact of the story that China has ended a significant capacity, and they may add another 3 million to 4 million tons in the subsequent '24, '25. Question is, what China will do with that extra capacity? They can't export to these markets because these markets are so protected. There is antidumping duty from 100% to 60%. That's why you can see that '23 exports, in spite of significant capacity additions, were restricted to 4.6%. Another important part is that cash losses, which Chinese are making. You can see on the second graph on the right-hand side, that Chinese made significant losses as the integrated spreads dropped from third quarter. And then they cut 2.5 million tons, and it has started moving up. So Chinese capacity has been there. As you've seen in the previous chart also, sometimes, it was 85%, 86% operating rate. So we actually -- our strategy is not to too much worry about China and focus on our cost optimization, our premium markets, giving solutions to customers like recycle PET as a blended product in Europe and America, and that is what is our focus. 70% capacity, as you can see on the right hand, is owned by 4% players. So certainly -- and each one of them has many lines. So what we have seen that they shutdown of a few lines and want to improve the spreads, which we have seen in January, February also happening. So this overhang of the capacity is there in China. I must admit that there is no solution and they will have to rationalize themselves and depend on what Chinese domestic demand comes in. And this is our game plan. Then our 20% sales only impacts by Chinese imports, 80% is -- we sell in the market being a local player. And again, we saw post-COVID customers want local supply. And we are again seeing today as supply chain disruption happened. So we focus on our local customers, and that is the solution which we are providing. But these spreads are unsustainable. We can certainly see because China itself is losing a lot of money.

Is the new capacity have lower cost than exiting player?

Actually, no, it's not. Because as you can see, the 70% to -- out of the 30%, others will get rationalized. And within 70% also, they have a line of 400 kt and 1 million ton. So the gap between the PET plants is not that significant. There's high $10 advantage because the technology has not changed much. So I think they themselves will rationalize, and we have seen like one example is in Guangzhou, one plant is permanently shut down. So you will see that rationalization are happening in 30% bucket. And also, some lines by these 4 players itself.

Mayank, do you have any more questions?

Just one just last question. On the Fibers business because that's where I suppose a lot of pain is going through for the last couple of years. If I look at the fourth quarter, the EBITDA per ton was the lowest, I think, in 6 years, even lower than COVID levels. So can you just help us understand of how much pain we could go through here and what are you guys doing to kind of improve the EBITDA quality in this business?

Aloke, you've got a chance now to speak little bit.

I'll give you a little break. So absolutely has been in a very difficult year, and our team is completely committed to turn around the performance of the business in many different ways. The first thing we have built a plan, which is based on volume recovery, which is basically across all the 3 key markets. We have regained share. We have secure volume. We have grown our nonwoven business in Asia -- excuse me, in Latin America, in the Americas. So volume is a key part of our equation. We're not banking on a margin improvement, right? But we are banking on a big restructuring and turnaround program that will be based on fixed cost reduction. We have a 10% fixed cost reduction program, which is active as we speak. That's very important. We have put in place an activity to improve our commercial excellence to improve margin by $30 million common margin through value pricing, cutting the tail of the business. We have a program to turn around our operating rate performance, which is fully staffed and dedicated. And then we have also a very aggressive. We're targeting a 19 days reduction in working capital, which will give us also some more cash to finance some of our restructuring plan, which we are planning to do. So it's a combination of different activities that with an improvement -- significant improvement in EBITDA expected, but a lot based on our controllable actions. So we it control, the controllables in the sense it's a lot of working capital, inventory choices and also fixed cost reduction. There is also -- we have started, and we will share more details on the 5th, we have started an asset optimization program, which is looking at the footprint, particularly in Western -- on the Western part of the world, which is active as we speak.

And just to add, Mayank. Lifestyle, as you can see, has been one of the very big factor, which is we have India and Indonesia presence. And at present, the Chinese margins were very low, huge exports because you had to compete. Now the BIS is implemented in fourth quarter on BOI DTI. So all this should help in turning around the lifestyle business also. So aggressive cost reduction, some improvement because this has been -- lifestyle is negative. So all what Diego explained will help.

So D.K., if you are to kind of think about the rationalization of assets when you're thinking about various businesses, obviously, you'll share details on 5th as is what you said. But which segment will have the biggest PET or it will be fibers?

It is basically in the European side because, as you know, Europe has been bleeding. So it will be across...

It will be in CPET.

CPET, yes.

[indiscernible] essentially from 74% utilization rate you need to go back to 85% plus. And that means without losing any market share, they are just going to reduce the number of types so that the remaining price can operate at full utilization. That's the -- and then that helps with [indiscernible], that helps with fixed cost, that helps with working capital management. Combination is something what Diego said is within our control. And that applies to all the 3 segments. There was earlier question on MEG. So MEG consolidation is basically -- we have these 4 lines that D.K. mentioned in Texas, and we have our captive consumption as well. So what the business is being asked to do is to look at that if there is one particular line that does not need to operate, and we can meet our market needs, our demand from the 3. That is how we can save on the cost -- the fixed cost, you have the working capital related to having a idle plant. So just optimize the operations to run that 85-plus percent utilization without banking on margins. There will be a margin recovery, but we don't know how much and when. But without the margin recovery, deeply that we can get back to 2022 EBITDA levels by 2026, with a much, much stronger balance sheet by making some of those carve-outs as well as the monetization of noncore assets. I think that is the summary of what the plan is. And I think we are going to -- and I believe we are going to share a lot more on Capital Market Day.

Thank you, Mr. Lohia. Mayank, do you have any more follow-ups? I don't see any other questions also on the line at this time.

None from my end, Vikash. Thank you.

Thank you. Just for Khun Amornrat, I don't know if you are still online. So just a follow-up on your question. So in the fourth quarter, the performance, which actually by application, we saw the improvement in Home and Personal Care, Crop Solutions, energy resources, but we did not see improvement in Construction and Coatings. So yes, these were the 3 sectors, we saw the improvement.

Vikash, the question was, which is the high-margin product that is not doing well. And that is Crop Solutions.

Crop Solutions, yes.

The Crop Solutions is still even with some improvement, but still way behind [indiscernible].

Absolutely. Thank you. We don't see any more questions. So we can -- so thank you very much.

Really, thank you very much on the Friday evening up to 7:30. We really appreciate your time. Thank you very much.

And we look forward to see you in person at St. Regis in Bangkok on 5th of March. We'll be having our Annual Capital Markets Day event. So you've got the invites and those were overseas, if you can't make it to Bangkok, then you'll also get the online link to join online. So see you. Thank you.

Thank you.

Thank you.