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

Good afternoon, everyone. Welcome, and thank you for taking time to join us here for Indorama Ventures First Quarter 2014 Results Briefing. My name is Vikash Jalan, Vice President, Investor Relations and Planning. Joining me today, we have Mr. D.K. Agarwal, Deputy Group CEO and Group CFO; Alastair Port, Executive President for newly formed segment, Indovinya; and Diego Boeri, Executive President for our 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 of industry and businesses which are based on our analysis of available information at this point in time. So with that now, I would invite Mr. Agarwal to share the business and financial highlights for first quarter before opening up the floor for Q&A. Over to you, Mr. Agarwal.

Good afternoon, and thanks for coming in person, a few of our analysts. During the first quarter, this is the first slide we -- here talk to you about the macro indicators, what is happening around the world, macroeconomic. During the first quarter, we have seen signs of economic recoveries, improving in the U.S. with better PMI, U.S. is really strong with all the data which is coming in. China still remains lackluster, and Europe is still lagging behind. So the big worry is in Europe. The second graph shows that destocking has come to an end, positively impacting our volume. So we see this in our different businesses. Geopolitical disruptions continue in various forms like Red Sea crisis has impacted the supply chain, and you can see in the slide there, that how the ocean freights are increasing and remain high as seen as in the Shanghai Container Freight Index, which is an indicator. While interest rates have been elevated, high inflation in the West has dampened the purchasing power. However, early signs of stability and some decline in core CPI was seen in first quarter '24. On the other hand, high crude oil price led to inventory gains and supported domestic prices in the net import markets like in the West, lower energy prices improved our conversion costs. You see that energy prices have been low in the United States and Europe. That's improved our conversion costs and strengthened our shale gas advantage in the United States. On this macroeconomic landscape, which is very dynamic and very volatile, IVL remains agile and continued to serve our customers and other stakeholders through prudent interest management. Now let me now take you through the highlights for first quarter '24, what the results we have delivered. Just wanted to guide here that we are now going to report adjusted EBITDA to basically reflect underlying business performance. There are always questions about hedging losses, inventory gain losses. So this will -- underlying business performance and if these events would not happen, and this has the real business performance. So this adjusts for inventory gain loss, any contract lag impacts, special items, hedging gain loss, et cetera. So this is basically replace the core EBITDA. And historical quarters, information is shown on an adjusted basis for [ apples to apples ] comparison. Indorama Ventures posted first quarter adjusted EBITDA of $366 million, an increase of 32% quarter-on-quarter and a decrease of 2% year-on-year. Remember that last year, same quarter, the PET margins were very strong. After onetime special expense of $11 million and an inventory gain of $12 million, first quarter '24 posted a reported EBITDA of $367 million. And if you want to see the reconciliation, full details of reported versus adjusted items are given in the appendix and also in our MD&A, which details out all the adjustments. Sales volume, which is the most important, grew to 3.55 million ton, showing clear recovery of the volume, an increase of 3% quarter-on-quarter and 2% year-on-year as I said, supported by destocking, easing. Volume growth would have been actually even higher, but was restricted due to winter event freeze in the United States. This is typical what is happening in the United States every year, winter freeze, resulting in a volume loss of approximately 60 kt basically in intermediate chemicals and Indovinya, and resulted into an EBITDA loss of nearly $24 million because of this. We have not adjusted here. So this is not normalized here. This is just an event, so I wanted to highlight that. Now the positive sentiments for our business can be summarized as follows. Volumes have stabilized and marginally improved, signaling an easing of destocking. Utility costs have lowered in the West, improving our unit contribution margin. Red Sea crisis, which is still hanging on, has improved import parity prices in Europe and EMEA and South America, thereby our margins, particularly in Integrated PET. The gas prices have been low in the United States. So improved shale economics in U.S. have resulted in improved Integrated EO/EG and MTBE profitability. However, persistent inflation and high interest cost is leading to muted demand and depressed benchmark petrochemical spreads continue to impact profitability in the polyester value chain in both Integrated PET and Lifestyle Fibers. We are very closely monitoring as presented in the Capital Market Day, our capital allocation and optimizing growth and maintenance CapEx. Working capital increased quarter-on-quarter, marginally due to increases in volume and prices. In second quarter '24, we are continuing to witness -- as you know, in May, to witness the positive impact of factors in first quarter '24 as well as better volume as the northern summer approaches, with increased demand for gasoline to support our MTB and beverage consumption, which drives our PET business globally. Industry benchmark spreads are expected to remain depressed as overcapacity in China persists, especially for Integrated PET. Margins are expected to improve for Indovinya, and will -- Alastair will address the questions if there are any, as we launch new products and demand improves for our HVA offerings. We are focusing on driving positive free cash flow from operation and strategic action. We also have enhanced our governance structure to deliver our IVL 2.0 evolved strategy by 2026, what we mentioned in Capital Market Day. MSCI recently upgraded our ESG rating to AA from A for 2024. Over the last 5 years, we have made steady progress on this index, reflecting our efforts to improve our performance in pursuit of our sustainability ambition. Starting from first quarter '24, as you might have noticed in the MD&A, we have renamed our IOD downstream business as Indovinya, which now represents our Integrated downstream Surfactants business as a separate segment, preparing for IPO. The IOD's intermediate chemical assets consisting of Integrated MEG, MTBE and merchant purified ethylene oxide businesses are now under the combined CPET business. So you will see the separate results even in CPET for both CPET and new intermediate chemicals. Now it is very important to give you a little bit of update about the strategic pillars driving our transformation journey to 2026. As we said that we are not relying on improvement on the margins. Management actions are key. Our focus will be on generating healthy free cash flows and reducing net debt to EBITDA to 3x and below. The first section, as we said in the Capital Market Day, optimizing our assets under IVL 2.0, we are in a process that will optimize 7 sites to rightsizing, mothballing and other management actions. As you are aware, in fourth quarter '23. We partially impaired one of these sites, the Corpus Christi joint venture in the United States to reflect fair market value after all 3 partners decided to hold the construction. On the remaining six assets, where we are targeting about $190 million of fixed cost savings, Indorama Ventures mothballed the PTA sites in Portugal in third quarter '23. And we are now in consultation with the work council regarding the Integrated PET/PTA site in Rotterdam in the Netherlands. In Europe, there is normally a consultation process with the work councils, that is the -- and the union. And other remaining four assets are at various stages of assessment. The second pillar was Olympus 2.0. We are deploying new digital tools to empower our managers to drive operational excellence through real-time data lakes insights, allowing them to react with greater agility to market changes and inform better decisions in this present volatile situation. We recently actually completed our implementation of SAP S4 HANA enterprise platform, which covers a significant -- nearly 75% of the revenue. And on this Olympus 2.0 in first quarter '24, these initiatives drove efficiency gain of $27 million which cuts across procurement, sales and excellence. So we continue our journey on this transformation 2.0 or Olympus 2.0. The third, we had talked about strategic action to unlock value. So as you can see from our first quarter results presentation, we have started preparation for the IPOs of -- for Indovinya and Packaging business, including putting in place governance structure and project management teams. We have also begun preparation for divestiture of two noncore businesses, which we mentioned in Capital Market Day. So there's a complete focus on these actions. We continue to focus on maintaining our leadership positions by delivering exceptional service and value to our customers and doubling down on bringing innovative and sustainable solutions to the market. Our Hygiene business has started a medical lamination line in the United States as part of our program to bring more high value-added products in medical field to our customers. And at Indovinya, we are pleased to announce the launch of our latest product line of rheology modifiers. These products enable us -- our customers to develop ultra-concentrated products, leveraging our strong commitment to the sustainability. So the innovation journey continues. Now this slide, let's look at the sales volume. Our first quarter '24 sales volume grew to 3.55 million tons, reflecting 3% growth quarter-on-quarter and 2% year-on-year. As I mentioned earlier, volume growth was negatively impacted by the winter freeze event in the United States, reducing volume nearly by 60 kt in Intermediate Chemicals and Indovinya business and also a minor planned maintenance in PO/MTBE site, so that impacted that. You can see that we saw signs of volume recovery after experiencing losses from an extended period of destocking since fourth quarter '22. So that also gives a sign that destocking is coming -- has come to an end. As you can see from the second quarter estimated volume, going forward, we anticipate an improvement in volume as -- in volume as destocking has eased with no impact from winter freezes. So you can see we are talking about 3.83 million tons from 3.55 million tons in the second quarter. And this is across Asia, Americas and EMEA and also in CPET, Indovinya and Fibers. So that -- because there will be no winter freeze event. So this gives you some indication about the volumes which we are targeting in the second quarter. Now let us look at Indorama Ventures first quarter results in more detail. As I mentioned, we posted first quarter adjusted EBITDA of $366 million, an increase of 32% quarter-on-quarter and a decrease of 2% year-on-year. As we noted earlier, the quarter EBITDA was impacted nearly by $24 million due to the winter freeze in United States. An improvement in adjusted EBITDA was primarily driven by volume growth in CPET and Fibers, along with a favorable impact from supply chain disruption and reduced energy costs, which we talked about. If you look at segments, in our CPET segment, Asian benchmark spreads remained still very low, below cash cost and the Chinese are losing money on that. Supply chain disruption and a consequent spike in global ocean freight supported high prices and margins, especially in Europe and South American markets. Western markets also benefited due to lower energy costs. In the Intermediate Chemicals portfolio, MTBE spreads were higher quarter-on-quarter, but lower year-over-year, supported by a tight gasoline market, low feedstock prices and resetting of methanol contract and on favorable terms, which began from the beginning of the year. As the Northern Hemisphere summer approaches, we're expecting increased demand for gasoline, also to support MTBE in second quarter '24. Despite some improvement in the Integrated MEG spreads, they remain under pressure due to significant global overcapacity [ I mean ] as you will see in MEG improved results, but still not because of the -- to that level due to significant overcapacity. Indovinya volumes dropped 2% quarter-on-quarter due to the winter freeze and a mini turnaround, which impacted adjusted EBITDA nearly -- by circa $5 million. We expect volume growth in second quarter following a period of significant destocking throughout 2023, which is reflected in the last 3 quarters' results. In the fiber segment, volumes and margins improved as demand grew across all 3 business verticals. Now looking at performance on a regional level, which is very important and how regionally we are doing. There has been a variety of factors at play this quarter. You see that EMEA has performed significantly better. So despite high feedstock prices, EMEA operations performed significantly better quarter-on-quarter, benefiting from supply chain disruptions, lower energy prices and also the antidumping duties on PET imports from China. The improvement in performance was seen in both CPET and Fibers, particularly in the Mobility. The American market remains intact. As you can see the results, $257 million in Americas by strong MTBE profitability and improved MEG performance, while Integrated PET margins softened from annual contract resets. The new contracts for PET in Americas, particularly in Mexico and the United States, has started kicking in from January. So it has some negative impact. Integrated Intermediates and Indovinya experienced volume and EBITDA loss of $24 million from the U.S. winter freeze that I mentioned. Otherwise, the U.S. results would have been even better. In CPET business, North American margins were lower due to contract resets. However, South America saw an increase in margins on supply chain disruption and trade barriers. Recently, Mexico has actually increased duties on PET from 25% to 35% from China. This is the -- most of the countries are trying to protect their markets from dumping from China, which will help our domestic Mexican business. As you can see, Asia remained stable, supported by improved volume, which was partially negated by continuously compressed benchmark spreads. So this gives you some idea on regionally how we are operating. Now coming to CPET, posted an adjusted EBITDA of $187 million, an increase of 32% quarter-on-quarter and a decrease of 6% year-on-year. Integrated PET posted adjusted EBITDA of $125 billion, an increase of 5% quarter-on-quarter and a decrease of 23% year-on-year because the Integrated PET spreads were quite low in first quarter, continued to remain low, driven by improved performance in EMEA due to supply chain disruptions, antidumping duties on PET imports into the EU from China, higher volumes and lower energy prices. This was, as I mentioned earlier, partially offset by the resetting of contracts in North America. Continued pressure of benchmark margins in Asia and high MX/PX feedstock prices in the Western market compared to Asia. The challenge of high paraxylene price continues in the western market due to the gasoline [ blend ] value. As per our strategy, we continue to invest in circular and bio-based materials, including expanding our mechanical recycling capacity in major emerging markets such as India and Africa. We recently did the groundbreaking ceremony for our first recycling plant in India with a JV partner, Varun Beverages, and we anticipate commercial production to start in the second half of '25. So we are steadfast in our commitment to the Ellen MacArthur Foundation and doing solutions to the customers. The Packaging business posted a stable adjusted EBITDA of $21 million in first quarter '24, a modest decrease of 4% quarter-on-quarter, an increase of 1% year-on-year. Specialty Chemicals, the section which was moved from IOD posted adjusted EBITDA of $40 million, an improvement from the -- sorry, this is Specialty Chemicals, not what Intermediate Chemicals. So this is covering NDC and IPA, and specialty polymers. So this posted an adjusted EBITDA of $40 million, an improvement from the negative performance in the last quarter. The improvement in profitability was mainly due to higher volume. And I would like to guide here that this is a onetime annual gain from campaign production of NDC. So normally, we do a campaign production of NDC and there were quarterly balance deliveries to the customer. That's why this extraordinary profit has come in and an improved performance in the high value-added PET. Higher aromatic feedstock costs in the West continue to delicately impact this vertical, especially PIA, a dedicated vertical management team, as we hired a new gentleman who's shaping an EBITDA improvement plan to optimize costs and maintain profitability as the volumes pick up with enhanced economic activity. So this gives you a combined PET. Now this graph, we always show you how the benchmark spreads, what premiums are. As you can see in this chart, despite compressed -- the dark blue line, you can see that how compressed are the Asian [ reference ] spreads. We continue to maintain a strong market premium in first quarter '24, and that's what differentiates IVL. The North American region was -- in spite this premium has come, which was negatively impacted by resetting of the U.S. contracts but has a positive impact from EMEA and South American contracts. As a result, we have been able to maintain our spread premium at a similar level to 2023. So Europe, you had an improvement. South America, you had improvement. In Japan market, we had improvement. But there was -- because of the resetting on the contract, there was a negative impact from America, United States and Mexico. So we remain a preferred supplier to our customers based on our global footprint, multiple manufacturing sites, proximity to customers, capability to offer recycled PET together with virgin, high-value PET resin for specialty application and advantaged shale gas to PET integration in the United States. These are the key strengths of our PET business. And this reflects in the -- our premium over benchmark spreads. These are spreads. These are not prices. So this [ spread ] which translates into profitability. Ocean freights trade and nontrade barriers and Indorama Ventures' differentiated position compared to peers globally has helped us to expand our premium in recent times, where benchmark spreads in Asia have been compressed by new supply in China. Overall, we expect a sequential improvement in earning for the CPET segment, with approaching, as I mentioned, seasonal demand in the United States, which normally uplifts the demand for beverages and cost improvement plans by different management teams. Now this is the Intermediate Chemicals, which has moved from IOD. What does the intermediate chemicals consist of? It consists of cracker, that's Lean and Lake Charles, the clarified ethylene oxide and integrated glycol and MTBE business. This vertical, which basically, as you can see is MTBE, Integrated MEG and purified EO, posted an adjusted EBITDA of $62 million in first quarter '24, an increase of 38% quarter-on-quarter and 48% year-on-year despite loss of volume due to winter freeze, which was nearly $19 million. Our newly formed vertical management team is working in collaboration with specialists from Indovinya to improve MEG plant reliability -- we are -- we just -- now the plants are running at higher capacities, all the MEG. So you will see the improved MEG production coming out because in the United States, because of lower gas prices and ethane prices, the MEG margins are better. And we have also taken the operations from third party who was managing the assets in -- of IVOG. As you know, MEG serves as an integrated component in our CPET segment, mainly to fulfill our [ capital ] needs, and we also export from there. Integrated MEG spreads, as I mentioned, because of lower shale gas, lower gas prices from $355 per ton improved quarter-on-quarter to $435, so $80 improvement due to higher MEG prices and lower cost of ethane. MTBE and MX trading prices are highly correlated, and both, as we mentioned, as used as a gasoline blend, which provides us a hedge between 2 chemicals. And our purchase for MX for PX and PIA production and sales of MTBE, So it acts as a perfect hedge, and that's why we are now reporting this into the CPET as we prepare Indovinya for listing. MTBE spreads in the United States improved from $512 in fourth quarter '23 to $544 in first quarter '24. Again, because of the tightness in the gasoline market, this is an octane booster, as you know. Now I'll hand over to Alastair to talk about Indovinya and then Diego will take over the Fiber and then will come back.

Thank you, D.K., and good afternoon, everybody. So I'm pleased to share with you the first quarter results of our new Indovinya segment. The adjusted EBITDA was $70 million despite the winter freeze and the mini turnaround, as D.K. mentioned, at the PO/PG unit, which contributed to a 2% decrease in volumes quarter-on-quarter and impacted EBITDA by $5 million during the quarter. The Home & Personal Care volumes grew 6% quarter-on-quarter as customers resume purchasing after typical destocking in quarter 4. The 9% drop in volumes year-on-year is primarily driven by consumer down-tiering, influenced by tightening consumer spending in the U.S. Crop Solutions volumes marginally lower quarter-on-quarter, with farmers delaying purchasing until the new seasons amid high pricing and high interest rates. Energy & Resources volumes improved 3% quarter-on-quarter and should remain buoyant with higher crude prices. Coatings & Construction volumes were impacted by the U.S. winter freeze and the turnaround affecting our PO/PG production. The Solvents & Coatings business showed signs of improvement due to improved exports to Europe, the U.S. and also Asia. So Indovinya consists of a strong HVA portfolio, comprising of 80% of our volumes and operating with EBITDA margins in the high teens, plus an Essentials business, consisting of lower-margin coproducts such as oleochemical byproducts. In our Essentials business, we're creating a road map for improving our margins. In Indovinya's HVA business, this operates in multiple markets. Our HVA portfolio achieved an EBITDA margin of 15% in the first quarter of 24%, lower quarter-on-quarter due to the freeze impact and the mini turnaround on the PO/PG product line. This HPA portfolio is driven by product launches and maintaining our customer intimacy by providing them superior product solutions. This portfolio continues to deliver the high teens EBITDA margins throughout 2024. As D.K. mentioned, our innovation programs continue, and our latest products are well received by our customers. For example, this launch, the latest product line of rheology modifiers, which enable our customers to develop this ultra concentrated product leverages our strong commitment to both sustainability and price. After the mini turnaround for PO/PG, we expect volumes and revenue to improve in coatings and construction, together with overall sequential improvements in volumes and EBITDA in Indovinya. We expect high single-digit quarter-on-quarter growth in the volume in second quarter of '24, mainly in Crop Solutions, Coatings and Energy & Resources, which also means better sales mix and a higher unit contribution margins as well as the customer approvals with our new pharma products being launched.

Good afternoon. Fibers achieved adjusted EBITDA of $39 million in first quarter '24, 73% increase quarter-over-quarter and 2% year-on-year due to a recovery in demand as destocking eased across all the three of our verticals. This was reflected in an 8% quarter-on-quarter increase in sales volume and an 18% lift volume year-on-year. Our Lifestyle vertical delivered adjusted EBITDA of $6 million, a turnaround from negative EBITDA of $3 million last quarter. Volume improved 5% quarter-on-quarter as demand recovered in all markets except India, which is, though, catching up in the second quarter '24, margin only slightly improving. Mobility vertical posted adjusted EBITDA of $16 million, a decrease of 22% quarter-on-quarter and 3% year-on-year. However, adjusted EBITDA of fourth quarter, this is important, was positively impacted by a onetime insurance claim of almost $16 million, $15.8 million related to business interruption. Normalizing this insurance claim, adjusted EBITDA increased 247% quarter-on-quarter. Volume increased 15% quarter-on-quarter and 4% year-on-year, driven by 3% expansion in the replacement tire market, while OEM grew only at a modest 1%. Our China business is particularly strong in Mobility, driven by 6% domestic growth rate of replacement tires. Our Hygiene vertical reported adjusted EBITDA of EUR 17 million a remarkable increase of 229% quarter-on-quarter and 23% year-on-year. This was driven by improved volumes and our capability to offer unique pricing solution to customers, especially in the Americas. Volume grew 18% quarter-on-quarter and 24% year-on-year. We are on track with the construction of a new state-of-the-art nonwovens facility in Mocksville, U.S. which will start production by end of 2024. And we have also expanded our portfolio of high value offerings with the introduction of laminates for the medical market, which is a new market segment for us. China continued to be a very competitive market. However, our platforms outside China have seen increasing volumes as China faces trade and non-trade barriers in the fiber business in countries like Indonesia, with ongoing antidumping efforts in Brazil and U.S.A. Back to you, D.K.

Thank you, Diego. I think let's look at the financials, debt and everything. So at the end of first quarter '24, we marginally reduced net debt from $6.84 billion to $6.76 billion. Our leverage ratio like net debt to equity is at 1.3x and DSCR at 1.3x. Our effective finance cost increased, which is to 5.45%, which is 14 basis points, reduced from 2023 due to an increase in the benchmark interest rates. However, our refinancing program is being achieved at better spreads than before. So we are achieving better spreads on the refinancing. Of our total debt, 43% is floating, while 57% is fixed. By the end of the year, together with the refinancing, what we have done, we expect the fixed percentage of our debt will come down to just above 50%. So right now, our strategy is floating borrowing in lack of reduction in the interest rates. On the refinancing, we have progressed well, including the issuance of an Ninja loan of totaling $255 million, bilateral long-term loan of $100 million and a syndicated long-term loan of $500 million, which was subscribed by 18 banks and an oversubscribed Thai baht debenture issuance of THB 10 billion. These were achieved at lower-than-average spreads compared to previous issuance and shows the confidence in the company. This leads to a post refinancing debt repayment of only $400 million for 2024, and you see on the right-hand side, that that's a repayment and $900 million for 2025. We still have more ongoing refinancing in progress, which will further improve our repayment profile. So we have been very aggressive on refinancing. Our aim to maintain strong liquidity remains unchanged. At first quarter '24, we had liquidity of $2.5 billion in form of cash and cash under management plus unutilized committed credit lines from banks. Our global manufacturing footprint gives us, as we mentioned always, a hedge on ForEx. Our debt and net assets are directionally in the same currency which gives a natural hedge. However, at this time, we have increased Thai baht debts due to lower interest rates as they are for long-term investments. You can see some mismatch on Thai baht side. The sustainable financial portion of total debt in first quarter was 32%, showing our dedication to prompting sustainability in our operations and also in capital markets. So the summary is, if you summarize all the position after first quarter, what are the key takeaways. As you saw, we saw an increase in our sales volume in first quarter '24 on the back of easing of destocking and signs of demand recovery across all the business segments, even with a negative impact from winter freeze. We expect volume to be higher in the second quarter with no winter freeze disruptions and upcoming seasonality, as now we talked, the plants are operating at high capacities. Despite the challenge of low industry benchmark spreads and Integrated PET, we have managed to uphold a strong premium over the market because of our strategically diversified geographical footprint, supported by protection from trade and non-trade barriers. As a result, we stand ahead of the industry in the present, a very low margin environment. The ongoing Red Sea crisis is diverting ships from Suez Canal to the longer routes, Cape of Good Hope. As a result, tanker and container freight rates are expected to remain elevated with a tight market expected to last longer. These disruptions continued to benefit IVL as a domestic producer against expensive imports. Furthermore, the continued softening of gas and power prices have provided an additional tailwind to our cash conversion costs in Western markets and expands our shale gas advantage in the United States. We are reaffirming our commitment to maintain high liquidity and generate positive free cash flow while pursuing growth through operational excellence and strategic initiatives. As we commented in CMD, we are steadfast in our commitment to execute our IVL 2.0 plan. As you saw, strong governance in place. We are in active discussions with many parties, which enables effective oversight and coordination allowing us to navigate challenges and drive our transformation journey with confidence, along with the empowering of our management to enhance operational excellence, we are well positioned to achieve our IVL 2.0 goal by 2026. For more details, of course, I will -- 2.0, you can look at the CMD presentation. And we will keep you updated every quarter on these different management actions which are being taken. So thank you very much for your listening. And now we can take your question and answers online, on the floor. Thank you.

Thank you, Mr. Agarwal, Alastair, Diego. So audience, you can raise your hand online if you have any questions, and we can also take questions from the floor here. So you can raise your hand and ask your question now. Okay.

Thank you, D.K., for the thorough presentation. I got a few questions. First one is on MTBE. Do you think there is more room for MTBE to improve given the upcoming U.S. driving season? And I was curious, what was the quarterly peak in MTBE EBITDA margin or EBITDA in asset terms that we've seen in the past? That's the first one. Second one is the -- will U.S. PET margin be squeezed by higher PX price in the U.S., again, with the upcoming U.S. driving season? Or because of the contract renewal, there will be no impact on the spread? And the last one that do you see there will be more room for MEG to improve further now that U.S. Henry Hub price -- very, very low and could go in a little further.

Thank you, can you bring the MTBE slide? So margins for U.S. MTBE normally go up in second quarter because of their driving season. We're just trying to bring that slide up for you. And during the winter, there is also blending of butane, so butane becomes higher. So the second quarter is normally always better. Fourth quarter is weak. The driving season will certainly benefit. The -- you asked about the quarterly EBITDA margin on MTBE business, right?

Consumption.

We have that number that we can share with you, I want to give you the correct number. The other question was on the U.S. reset of the contract in mixed xylene prices going up or paraxylene going up. So 90% of the contracts which we have are basically raw material linked. So when -- if the X goes up, we pass on to the customer. So basically, it doesn't affect -- 10% is the spot market. This is with U.S. and Mexico I'm talking about. So normally, that will depend on how the import parity is going and now with the Red Sea crises, the freight rates have gone up. So pretty good. Brazil, again, because of the Red Sea crisis, the freight rates have gone up. So the import parities of Brazil is showing improved results. Energy prices, you're right. The gas prices are $2 a million BTU. Forward curve is showing some increases. We continue to hedge our policy. We hedge by end of the year, 50%. Every month, we hedge 4%. So actually, this first quarter, we lost $8 million, which is adjusted in the -- because of the hedge. So certainly, the continued situation of the energy in U.S. and Europe will continue to help in the market. It's a tailwind. And so this brings the MTBE graph. You can see that driving season third quarter '23 on the right-hand side, it was $8.92 per ton in last year. So normally, in the driving season, you see such peaks coming in. Too early to say right now because right now, it is $534 per ton. In the first quarter, you see is $545 as compared to first quarter of $624. But yes, driving seasons will cause opt-in demand stronger, and we may see better numbers. But predominantly, it is July, August -- June, July, August. Meanwhile, we'll get you EBITDA margin, I can take another question. This is just MEG, if somebody is interested. As you can see, the utilization rates still remain quite low. But the middle graph shows that -- Asia spreads have started improving. You can see the lower -- because they were unsustainable, blue line. And the green line, which shows the integrated this MEG spread on gas advantage. So you can see the benefit coming in. And of course, ethane remains the cheapest. So MEG margin, you saw that it turned into a positive EBITDA [ EG and -- deal ] so that benefits that.

Thank you. There is one question on -- from Macquarie online, is asking that there's a one-off big gain for Specialty Chemicals in PET. How much is the volume? And if you remove the volume, what would the impact on CPET? So there's a question about Specialty Chemicals.

So can you bring the NDC slide. The -- this is because of the campaign production, as I mentioned. Normally, we produce NDC in campaigns. And in first quarter, we have produced. And also there was a contractual pending delivery to the customer. So it has a positive impact of $26 million -- so if you remove that, and that's where it is in $40 million counted here. But normal deliveries will come in Q2, Q3, Q4. So you can see an exceptional gain of circa $25 million, $26 million here. If that helps you.

I don't see any question at this time, online. If there are any question on from the floor, you can ask them now.

Sorry, I forgot to ask, Alastair, what should be a signpost we should be looking for, for Indovinya outlook volume to improve? Is that crop season in Brazil or anything like that?

So volumes in Indovinya. So I think there's many signals you can look at, at the same time, which is obviously what we do as well. I think D.K. opened up with some of the economic factors. So in the U.S., we're starting to see production levels reaching a 22-month high. Purchasing manager indexes are all up, which is good to see. In India, we're seeing some good improvements in volumes as the economy continues to grow. And in Latin America, we're seeing some improvement in the manufacturing industry in March and April in LatAm with a stronger purchasing manager index. So that's the sort of global sort of view of our markets. As we think about the next level down indices, I think if we look at Home & Personal Care, there will be a return to higher volumes, we think, in the Home & Personal Care. One is because of our innovation rates. One is the volume of spend or the share of the wallet of spend on health and hygiene products continues to rise globally. And the surfactants industry is, therefore, rising with it. If I think about the crop market, that's a much more complex market because obviously, there's different growing seasons in different parts of the world. I think what we're seeing is because of interest rates, because of crop prices are lower, because of -- I guess, the chemical and additive sides of the market, prices are reducing. All farmers are waiting to the last minute that they need the chemicals to buy. And the inventories that we've seen in '23 that were built up in '22, as you all know, they're starting to come down. So I think what you'll see is a few gradual signals, and I think we're starting to see that now, gradually improving supply chains. Then you might see a bit of a jump because normally, people start buying 6 months before the growing season, which means in the U.S., they're buying now. In South America, they're buying from June. I think what you might see is a start to rise in Q2 and then a rapid rise in Q3 and Q4 because people will need these chemicals without a doubt. And then when you move to the Energy & Resources, very economically driven but a large demand because of the price of oil, a lot of chemicals going into oilfield recovery and a lot of chemicals going into natural gas. And therefore, that's going to continue to be stable, but probably grow from our point of view because we've got some good, new chemicals coming on to the market. And then finally, with the coatings and the construction markets, obviously affected by interest rates globally, affected by reinvestments in economies. Affected by new house builds and existing house sales, whether you paint our new construction. Those are quite complex because what we're seeing certainly in the U.S. is people don't tend to want to move house because they're all locked in low interest rates during the low interest rate environment. And therefore, you're seeing house price rises without the inventory moving of existing homes. And therefore, the switch is now going to the new homes. And I think when you see that really kick in, that's what drives the whole economy for the materials and chemicals industry on the construction side. So I think you'll start seeing some improvements there. So what's the early signs? Crop seasons, you'll start seeing some improvement there. Surfactants and Home & Personal Care, I think that will be a slow return and exacerbated by new innovations that we're bringing to the market that we mentioned. The Energy & Resources, I think, will be a nice slow improvement as we expect. And then the Coatings & Construction. It could see some rebound. I think we're waiting to see, but I think it could be quite rapid when it happens because when construction happens, it will happen pretty quickly as we saw in '22 and early '23. So those are the signals I would watch for.

I hope that explains. And certainly, we see second quarter better in Indovinya.

I have a question -- a more general question. So it looks like your core EBITDA margin improved, and you are not losing money anymore. But on a broader side. So what is still missing? If you compare it to 2 years ago where you were making more money or you were making money in the first place, so what is missing right now? Is it the volume still so low as well as I can see, utilization rate is lower, I think. What else is missing and how do you see things develop over the remainder of the year?

So you see, you have to look at like '21, '22. There was a lot of supply chain disruptions, which certainly resulted into a lot of freight rises. Demand was very strong post-COVID, entire -- and the supply in China was also disrupted. As a result, we made, of course, volumes as well as margins were very strong and Integrated PET. Same in the -- our IOD business because of the imports were more expensive, demand for the [indiscernible] and all those products are already strong. Now '23, we saw a period of destocking. So that is a period of restocking and destocking what you saw. Now destocking is accelerated due to many reasons. As you can see, the interest -- earlier the interest costs were so low. So everybody was keeping high inventories because they don't want to run out of the stock. As soon as interest started moving up, you immediately see the destocking happening across the value chain. And I don't think this as a consumer. It's the entire value chain, retailers, intermediators, everybody wanted to cut the inventory. This is the [ mill ] demand reduced and the operating rates went down the volumes and -- which compressed the margin. At the same time, China built a lot of capacity in PET particularly. So '23, we saw that trough of the earning and destocking was continuing, also you can see all the chemical companies. Now as we come in the first quarter '24, the volumes have started improving. You can see we saw that the total volume are continuously improving. However, margins in Integrated PET has still remained lackluster because of the overhang of the China capacity because China built a lot -- still the demand in China hasn't come up so much. So that is putting the pressure on Integrated PET. Our strategy in PET has been because of geographical footprint which we have, a lot of trade barriers are there. You saw Mexico increasing 25% to 30%. Europe put anti-dumping duty. India is going to put BIS, there's anti absorption duty action going in India because they have anti-dumping duty, but one guy has a smaller duty. So every country is trying to protect their market. So our focus is on the premium which we saw. So volume, you can see here that we are talking of $3.83 million, which is really coming back. The margins will gradually -- we'll look at how the margins improve. Gas prices are lower, which is certainly benefiting. The other is the Western feedstock prices, which were very high. In '22, also, they were high, but we could pass on because of the supply chain disruption. In '23, those remain high because nobody is building refineries in the western world because oil demand has picked up. So nobody wants to build new refineries. This means the refinery margins are very high in Western world, particularly Europe and United States. So our raw material, which is mixed xylene or -- which it converts into paraxylene is a gasoline blend. So basically, the price disparity between Asia and America as well as here in Europe widened significantly. So our feedstock price was high, the freight rates came down. So as a result, the margins got compressed. Now what we see, the Red Sea crisis happened, so that started [indiscernible]. So what you see that volumes are coming back. As Alastair was also was also explaining the different -- we are seeing Fibers improving, PET improving, but margins are gradually improving. So that helps you understand what happened in '21, '22, '23 and '24. So that's how the volume. So our focus is management actions. We are not depending on margins to improve. So what we have said that, okay, we take certain actions on high-cost sites, reduce our fixed costs, improve our operating rate of the remaining assets, and there is $190 million of fixed cost reduction, and we'll give you a brief analysis as the situation develops and focus on the quality of funding. Of course, the margin improves, then that's a better thing to go. I hope that explained to you what cycles we have gone through.

Yes, sorry. How do you see things unfolding with the end of the year and next year?

It is -- I won't say it's a V-type recovery. It's a gradual recovery. Interest costs are still holding on. As you saw the latest data, there are maybe 1 or 2 cuts. But as interest costs come, the construction demand comes in, all these -- all your chemicals demand comes back, the margins improve. The Chinese situation, domestic Chinese demand has also started now improving in the first quarter, we saw in PET. So how does this balance out between demand. So we see a gradual improvement quarter-on-quarter. That's what I could say today. Thank you.

Yes, please continue.

Okay. I have the first question. I'd like to know that what you see about the potential impacts from the -- say, the export of the feedstock, say, propane or ethane or some other feedstock that U.S. export to China. And China [ currently ] actually become a big factor that made the down cycle for the entire global [ pet chem ] actually because -- I'm not sure that -- how that's interacts with the so-called like outflows of the export for the ethane and the propane because I saw it hit the record high last year for the export. And also, maybe you can update what would be the so-called like interaction to be in the very low Henry Hub, again the export along with the ethane because I remember that they put ethane about 2.6 million barrel per day, but export only about $0.5 million. That mean internally they use so much. So how that's play out for your intermediate as well? Second question about the what do we call Indovinya?

Indovinya.

Sorry, I'm not good about [ sounds of Greek ]. Okay. What you think that, say, what factor that you believe that would be the more important to drive margin direction, say, demand or supply side? And how you think that -- what could make the margin of your downstream IOD go back to, say, '21 '22, and if I remember, the year that have a very high level? I just wondered what exactly the factor. And the last one, the last question, I'd like to know that particularly in terms of the polyester chain because now we saw the really poor margin for the olefin, for the [ polypropylene ] for the past 4, 5 years. Would that be applied to polyester? Say margin could be at a really low level for the next 2 or 3 years? If not, what different?

So I'll take the first and third question, and Alastair will address the second question. Very good questions. So let's understand what has happened in the world. I think it is not only imports of ethane. Of course, there's a lot of imports of ethane, which has come from United States because the ethane was very cheap. A number of crackers are running based on imported ethane, the polypropylene -- when you say propane, the PDH units in China were running high. So polypropylene also became long. But basically, if you see what has happened in the world, this slide will explain you a little bit better, that in '21 to '23, 31 million tons of capacities was added globally. And a lot in China, very integrated crude to chemicals plant like [ Long Seng, Hang Li ], which they built along with the refinery. While the demand growth was 11 million tons. Now this is global. At the same time, North America was building a lot of crackers, 6 million tons, and the demand growth was 2 million tons, which was also 2%, particularly '23 wasn't great. So the global operating rate of ethylene dropped to 80% and 79%, which resulted into what you just mentioned, very depressed olefin margins in naphtha-based crackers, the U.S.-based crackers were still making money because of the Henry Hub, but not at the reinvestment level because if you see the -- just slide in the middle, that actually the spreads were very, very low, there are spot and NTP adder. Basically, we should see spot adder. In '21, it went up because of the disruption in the supply because of the [ olefin reached ]. But look at 22%, 23%, and the reinvestment economics is about $600 per ton. So in the United States, now no more capacity addition is there. If you see in '24, '26, no cracker is coming in because no board will approve a cracker based on these economics and the demand growth will expect to continue. So the operating rate in North America will go up to 79% to 84% and globally 80% to 82%. Now what it means for IVL. The question is if today, we have one cracker in Indovinya, 250,000 tons, another cracker 400,000 tons. So 650,000 tons of ethylene we make. As this spot tenders improve, you can see now 193,242. This is still below reinvestment. Any cracker which needs to be built will take 6 years to build in the United States. So Naturally, this gas availability, ethane availability is there. So you will see a gradual increase in this adder as a capacity utilization in the U.S., North America improves. However, global capacity addition, if you see, it is still 16 million tons, which is -- so olefins are -- still remain quite under pressure. And that's where the olefin margins remain under pressure. So the shale gas advantage, you can see on the left-hand side is $490, which will remain because ethane is in ample supply and if crackers don't come more. But only ethane exports that is happening where people are arbitraging between imported ethane, but it is expensive to [ hold ethane ], as you know, and take that as a feedstock. Other important plays has been also Russian crude oil. I think we shouldn't forget here that China has been getting cheaper Russian crude oil as compared to the other crude oil. So that also helped China. So China COTC, this crude to chemicals impacted actually our polyester chain also because there are integrated players, if we can move to that slide. There are people who are integrated with paraxylene and right up to oil to PT. Those people were making money by the [ PO/PT ] folks were not making money. Now your question second is, will the polyester value chain remain like this? In near term, we see that the -- there is an overhang of the capacity in PET and fiber both in China, which will keep the margin compressed, but they are not sustainable margins. You can see here that the Asia integrated PET spreads are much lower than historical and exports from China are also limited because China can't export anywhere. So the capacity utilization in China is remaining quite low, 77%. So China benchmark spreads, we don't see a big improvement happening in near term. But long term, it should happen because if you see the industry structure, can you bring the industry structure slide. So this COTC has also impacted the polyester value chain. Our focus will be to keep our cost structure low. Our focus will be to the market in those protected markets, leverage on a recycling and take action on the -- this particular slide shows you that 80% of our market is protected basically because of antidumping duties and other non-trade barriers. So on the right-hand side you see United States, India, Japan, everywhere. Everybody wants to protect their markets, so our focus will be on these markets, give unique solutions to the customers like recycled content and keep our premium. But yes, these margins are not sustainable for even Chinese. We've got that slide of the industry structure. So polyester will remain -- still remain under pressure because of the overhang of the capacity. But midterm, it should come back, improve. You want to take in Indovinya?

Sure. Yes. Yes, I'll break it down into a few different parts of the answer. I think the first part is margins. If you look at the average margin is 21% to 23% for Indovinya. In the HVA, the margins are actually higher in Indovinya today than they have been on the average of those 3 years. So it's not particularly a margin issue within HPA. There is a volume, obviously [ won't ] because of the freeze. But to -- there are structural volumes. I mentioned a couple of them, one with HBC in North America and one with crop in South America. The -- I think the other one to think about is the Essentials business, and I mentioned the Essentials business, it's 22% of our volume, but it's only 10% of our COMA. It certainly dropped there because that's the more commoditized part of the business and where high-volume companies around the world can certainly compete with us. So what are we doing about that? Well, I think the main issue I would suggest is more on the South American side for the commoditized side. There's a lot of imports going on in South America at the moment. The recent survey is the Brazilian chemical industry is down to 64% utilization because of imports. And that's the lowest for 20 years. And that's not sustainable either, quite frankly. I think I was reading that almost 50% of the quarter 1 volumes in Brazil were imported. That's just not sustainable. So what's happening about that is the Brazilian government recognized that. Just as D.K. mentioned, there's probably import duties going to be considered. They need to protect their own industry. And there are certain meetings during Q2 and half 2 that hopefully will help that industry recover. That said, we can't -- as D.K. mentioned, can't avoid our own responsibility. So the way I would look at it is local production in the industries that we're in is very, very important. A lot of our products don't travel globally. They're locally manufactured products. and therefore, maintaining the market share, the -- penetrate new customers, new tiers of customers, procurement pricing excellence, our transformation process, the innovation processes. Those are all things in our control, which will continue. I think that [ Cropper ] mentioned, I think that will come back. Crop cycles will continue. People still need to eat and they definitely need the chemicals we produce, to use that. I would have said the one beyond the commodity chemicals that we're more exposed to would be the one we talked about before, which is around glyphosate. And glyphosate is going to be -- it's about 16% of our crop business globally. It's not destroyed by any means. We still provide glyphosate. But I think it's a good example that you mentioned that China has produced a lot of capacity for these type of products. And there's no effort to go, so they ship it out and affect other people's markets. But there are some nuances to this. I mean China is now approving the cultivation of glyphosate-resistant crops. And when you approve the glyphosate-resistant crops, you need the glyphosate to kill everything around it. And therefore, that Chinese capacity is going to be used in China as those crops over the next few seasons start coming through. And that's going to be about 120,000 tons of glyphosate. So that story is going to sort of self-fix, just because China needs production for China eventually, which was why it was originally produced in the first place. The other thing about local supply is we have local farmers, local supply chains, big companies, as you know, that operate into these agricultural fields. And they see the value of the local production of this type of material, and therefore, they're offering incentives to farmers to buy local and not imported. That said, within Indovinya, only part of our production is even involved with glyphosate. A lot of our products go into enabling glyphosate. So whether it's imported or made locally, it only affects a small part of our portfolio. So I guess to answer your question, self-help, economy changes. Our margins are still pretty good and better than they've been for the last -- average for the last '21 to '23. So that's good. So now it's a case of building up that volume portfolio, bringing new innovations, adding on to that margin story and making sure we work out and control fix costs. That's our key to success.

Mayank, can you ask your question?

Can you hear me well?

Yes, we can hear you. Please go ahead.

So my questions are more related to cost. If you can just help us understand on the cost side, if I look at this quarter as well, you're not really seeing any significant reduction in costs. I was hoping that you could see some of this impact coming in from cheaper gas across U.S. and Europe, considering how quickly gas buses came off. So especially, I think, on the overall portfolio and if -- especially on the Fiber side as well, if you can kind of highlight of what's going there on the cost structure, especially now, I think on the Lifestyle side utilization rates are still low, [ 60-odd ] percent. So if you can just start with that and then we'll follow up with the other questions.

So Mayank, the cost -- I don't know you are referring to maybe the [ portent ] cost or...

[indiscernible] cost. Yes, correct [indiscernible].

The [ portent ] cost. So naturally, our first quarter operating rate was getting affected, as you see because of the loss of production. Yes, gas there has been a benefit naturally. But I think the major benefit will come from the actions which we are taking on the fixed cost reduction when we -- this rationalized this -- some of the sites which we are working on it. And also the management actions which we are taking in improving the operating rate. So you will see certainly some improvement in second quarter as the operating rate goes up. The energy part, you're right, we had a gain. That was about -- total gain is about $191 million based on the forward curve. But $45 million is actually a hedge loss, which is -- at today's market, I mean, it will depend on how the market shapes up when the delivery will happen. So this will be -- net benefit will be $146 million. But I think the major benefit in the cost will come from these fixed cost actions which we are taking, higher operating rate because higher operating rate will eventually lead into [ portent ] costs becoming lower because incremental production costs will be lower. So this we will see in sequential quarters. Now Fiber, do you want to address Diego?

Yes. On the fixed cost side, Fiber is engaged in a significant fixed cost reduction program. That is basically built around fixed cost productivity. We have -- we are starting this action as we speak. And we're going to also follow it up in the later part of the year with the organizational blueprint which will simplify the way we operate, which will yield a significant cost reduction also in coming and going in 2025. So fixed cost for us is very important. The -- on the -- there was -- the question was also building around Lifestyle volumes. Lifestyle, I think, is a mixed bag right now. We have places like Indonesia, where we're market leader, where our operating rates are very good. Our problem in Lifestyle at the moment is India, and we are seeing some improvement coming in, in the second quarter. But I think that is an area where we are expecting operating rate improvement.

Got it. I think clear. So on the operating cost side, just both fixed and the OpEx side, how much -- and when can you expect these numbers to filter through completely in the earnings? Like will it be third or fourth quarter this year or it will be more a 2025 event?

So you will see something trickling around in fourth quarter and 25% substantial part of it as we take the sequential actions on different fixed costs. So we are still on our track for $190 million, what we committed in year '26. But fourth quarter onwards, you will see.

Got it. And the second question was more related to, I think, on the inventory side. I think you have been highlighting of how you have been trying to control the inventory days. So if you can just give us for the first quarter compared to last quarter, have you seen any improvements there as well?

So there has been an improvement of 2 days in the inventory. Overall, our gross working capital days, which we counted as including receivables, everything has improved by 6 days from 92% to 86%. But yes, there is a lot of work to be done still on this. Some of this [ raxy ] crisis also increases the transit feedstock, which we take PTA. So it's sort of a double may but there is a continuous focus on the working capital.

So D.K., from a year-end perspective, do you think this comes down another 6 or 7 days by the year-end? Is that something that we can expect?

That's what we are targeting because 5 to 6 days. It is coming from also some rationalization of sites which will help. So it will also reduce working capital at some of the double stock holding. Because when you operate some sites and higher capacity, so that's exactly what we are targeting the working capital reduction.

Got it. And I think the last question was on Indovinya. Like if you can just help us understand on the HVA portfolio, there has been almost a 20% decline versus last year in terms of the EBITDA from that portfolio [ within ] HVA. So what's causing that pain apart from the dumping from China, et cetera, that is reasonably clear. But is there any specific product within HVA that's causing that problem?

Yes. So I'll go through it. So I think the first one is obviously the PO/PG where we lost 25 days of volume in Q1, partly because of planned mini tar and partly because of the freeze. So we fitted those two things together, and we did the tar during the freeze event, but it was a planned event. That's behind us now and the plan is to run that plant hard. So that was the bulk of the volume that was lost, about 15,000 tons from Indovinya in Q1 because of the freeze and the mini tar. So those are one-off events. If you're comparing it year-on-year, I think those are the areas to look at, would be deep formulating in HPC in the U.S. counteracted by an increase in sales in South America and APAC. I think if you look at the Crop Solutions, that's a well-known destocking issue. As you might remember '22, everybody panicked, built a huge amount of stock in the market. So going into '23, we had basically 60% of the volume for '23 already in '22. And that became the destocking event. When you look at Q1 -- sorry, year-on-year, South America had already reduced in quarter 1. So you're seeing some reduction in that destocking in the U.S. and the rest of the world. That will start to rebound as stock levels are becoming very low. Energy & Resources, I think we don't see an issue that will keep building and I think that's been a good performance. And the Coatings & Construction partly is the solvents and the Essentials part, with a lot of competition and inflation and the lack of construction. And the other part of the Coatings & Construction is the PO/PG, which will rebound. So I think you're seeing a mixed story. I think forecasting out, we're starting to see those volumes come back. We saw some increase quarter-on-quarter and probably 6 months on 6 months. Certainly at the start of the year, a little bit of a slow start in some areas and a big start in others. I think as we're entering Q2, we're starting to see a volume build in our supply chains and that's good to see. So hopefully, we're starting to see that trough, coming out of the trough. We're starting to see the end of the destocking and we're going to start seeing those volumes build during the course of '24 and into '25.

Sorry. And just the last thing on tax rate. I think you had where you had tax rate for the quarter. Anything specific or full year guidance, if you can give us on tax rate?

So Mayank, that's a good question. Actually, our tax rate is high ETR this year, this quarter because we have intercompany loans where the exchange gain was [ boosted ] OCI, which goes to which doesn't flow through the P&L, but the tax impact of that has come. If that would not have come, then the ETR would have been much lower -- about -- 17%. So our guidance is because of this extraordinary event, and we are actually talking to the auditors that how can this go into OCI because earnings is going into OCI. And this is because of part weakness versus other currency. Otherwise, we are expecting about 15% to 17% as ATR for the full year.

Thank you, Mank. So there's a follow-up question from Macquarie on Fibers. So asking that first quarter and first quarter this year and last year, the EBITDA levels are similar, but the volumes are higher materially. So what needs to happen for margins for Fiber to improve from here?

Yes. So the margin challenge and opportunity we have is really in the Lifestyle business, which is significant. It's half of our business. As you heard from D.K., the spreads are still compressed. We are seeing some improvement in economic activity. We are seeing improvement in destocking. We have seen less export of Chinese material, of raw materials and increased activity in textile, inter style business in China. That is the piece where we are expecting improvement in the year. For the other two segments, Mobility and Hygiene, I think we have very well framed and is on plan and pretty much locked in large contracts. I think if you're asking about the margin for us, it's Lifestyle and it's Lifestyle, in particular, in certain countries of Asia, like India. That is the picture for us.

I think just to add. So I think the -- what Diego mentioned, the major volumes comes from Lifestyle. And Lifestyle, as we just discussed, the polyester fiber margins are quite compressed, which are unsustainable. So once they come back, then you see the improvement in earning with the volumes yes.

Thank you. There's no question online, but if there's any question from the floor, we can take them. There's one question from Asia Plus Securities, is asking about the other 6 assets that we have. Do we expect any impairments on them and potentially when?

So as we mentioned at the Capital Market Day, we are looking at 7 assets which is, of course, one, you saw the Corpus Christi is already impaired. This consultation with Rotterdam is going on with the work council. It's a process which you have to go through with the work council where you talk about different alternatives about the site. So the impairment, anything which will come up will come up in the second quarter or third quarter, depending on the -- how the discussion process is and how -- what decisions are implemented. But this will be predominantly noncash. The cash impact will be much lower, yes. Thank you.

I don't see any other raised hands on the floor, and there's no other questions pending online. So we -- do we have one here. Okay. Sorry, we have one more.

Can you share furthermore about the impairment? I understand that you have impaired U.S. assets already. And for the site side, this is the size of the impairment, it is large? Or just small size or anything that impacts to the financial statement or anything else?

So these seven, six sites, it won't be small because these are -- you were talking about a fixed cost reduction of nearly $190 million across the sites. The financial statement impact, of course, will be on the -- not on the debt or EBITDA, but it will impact a little bit debt equity and earnings per share. But mostly, as I mentioned, it will be noncash. And cash part will be smaller depending on the severances. Now this all depends on how the negotiations goes with our unions and the timing of the actions of different assets.

So there are no more questions. So we thank you very much for joining us here in person, and we look forward to stay in touch with you if you have any questions.

I think just to add that the focus of the management in the Capital Market Day, as we said, is improve the quality of earnings. This means improve the operating rate, reduce the fixed costs, don't depend on the margin and bring debt over EBITDA below 3%, and that is what the management is focusing on. And we'll keep you informed when the situation develops, yes. Thank you very much. Thanks for coming. I appreciate it.

Thank you.

Thank you.