Wacker Chemie AG ($WCH)

Ladies and gentlemen, welcome to the Wacker Chemie AG Q1 2026 Conference Call. I am Sandra, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions]. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Joerg Hoffmann, Head of Investor Relations. Please go ahead, sir.

Thank you, operator. Welcome to the Wacker Chemie AG conference call on our first quarter 2026 results. Dr. Christian Hartel, our CEO, and Dr. Tobias Ohler, our CFO, will walk you through the presentation. The press release, our IR presentation, and detailed financial tables are available on our web page under the Investor Relations section. Please note that management comments during this call include forward-looking statements involving risks and uncertainties. We encourage you to review the safe harbor statement in today's presentation and look into our 2025 annual report for information on risk factors. All documents mentioned are available on our website. Chris?

Good afternoon, everyone. Thank you for joining our earnings call for the first quarter of 2026. Despite the ongoing weak demand in many of our customer industries, Wacker had a solid start to the year. Group sales came in at EUR 1.41 billion, 5% below last year. This was primarily due to FX headwinds. On the other hand, EBITDA climbed by 45% year-over-year to EUR 173 million. The primary driver of the higher EBITDA was our PACE cost program, followed by pull-forward effects from customers.   We have made good progress with our PACE program so far, and we have benefited from lower spending and costs already in the first quarter. The aim of the program is to achieve annual savings of more than EUR 300 million in 2028. PACE is designed to sustainably enhance Wacker's competitiveness. Our efforts are focused on reducing our fixed manufacturing and administration costs. We are lowering technical spend and addressing over-scoping. We are optimizing structures in operations by merging units, tightening budgets, and cutting discretionary spending.   We implement, for example, in procurement, new bidding systems to foster greater competition among suppliers. Yet our efforts go beyond pace and pure cost savings. We are simultaneously streamlining our structures and processes and sharpening our business model. All of this makes Wacker fit for purpose and enhances our long-term competitive position.   While the cost savings were the primary driver of the strong growth in EBITDA, pull-forward effects from advanced customer orders supported the better-than-expected first quarter results. In mid-March, markets responded quickly to the conflict in the Middle East. Supply disruptions drove up raw material and energy prices. Our procurement teams pivoted quickly to secure critical materials. We quickly announced price increases to counter rising costs. Applying lessons learned from the unprecedented raw material inflation during the COVID period, we have a playbook at hand. We can draw upon that, and it helps us navigate through current challenges.   Both silicones and polymers saw customers' advanced orders pulling them forward into the first quarter. This was likely triggered by security of supply concerns and longer shipping times from Asia. The other 2 segments did not see any meaningful pull-forward effects. Polysilicon continued with its strong growth in semi with the new edging line strengthening our leading position. BioSolutions benefited in the first quarter from the timing of contracts. Here, the overall market remains challenging, and we remain focused on filling existing capacities.   Now, before I move on to the guidance on the next page, let me highlight a new investment that enables sustainable solutions. In Japan, we have just commissioned a new production line for thermally conductive silicones. This will allow us to meet growing demand for specialty silicones in applications such as batteries for the e-mobility sector. The performance of batteries is affected by heat, and our thermal interface material, known as Tennessee are essential high-performance materials and battery packs. EVs show strong growth, and this new asset positions us well.   Now moving on to the guidance on Page 4. We confirm our full-year 2026 EBITDA guidance while adjusting our sales expectations upwards. We now anticipate sales to increase by a high single-digit percentage as we raise prices in chemicals to effectively counter high raw materials. Our absolute EBITDA expectation is unchanged, and we expect EBITDA to be in the range of EUR 550 million to EUR 700 million.   With a solid start to the year, we are on track to reach our full-year expectations. That said, our outlook continues to be subject to a high degree of uncertainty. This is clearly due to the unprecedented developments in the Middle East and the still unresolved U.S. trade proceedings on imports of polysilicon and its derivatives.   In summary, we remain confident and alert. We have confidence due to the steps we've taken. We are addressing raw material inflation with price increases and cutting costs on the PACE. However, we are cautious about the development of end markets. We know that conditions can change unexpectedly. Our responsibility is to navigate whatever challenges arise with agility and discipline. With that, let me hand over to Tobias, who will discuss the group and segment performance in more detail.

Thank you, Chris. Welcome, everybody. Looking at the profit and loss statement. Sales during the first quarter of 2026 were EUR 1.41 billion. Group sales were down 5% year-over-year, mainly due to the negative FX effects. EBITDA came in at EUR 173 million versus EUR 119 million a year ago. Chemicals grew earnings by 18% year-over-year. EBITDA reached EUR 166 million, up from EUR 140 million a year ago. The improvement was driven primarily by pace. Cost savings supported the higher gross profit and lower SG&A expenses. Higher sales and utilization rates in March due to the pull-forward effects also supported the positive earnings development.  Others held back the reported EBITDA by minus EUR 30 million versus the minus EUR 51 million last year. This year's lower charge in others resulted from the lower CO2 compensation offset, or, in other words, the credit to the divisions. In the first quarter, this offset was around EUR 18 million versus EUR 40 million a year ago.   After depreciation of EUR 120 million, EBIT came in at EUR 52 million. All told, net income was a positive EUR 15 million, equating to an earnings per share of EUR 0.21. We are pleased with the initial successes achieved in our PACE cost program. However, we remain at the beginning of this program, and we need to continue to work hard to reach our interim goal of achieving EUR 200 million in savings in 2026.   Looking at Page 6, our balance sheet continues to show a solid financial structure with EUR 3.82 billion in equity and a high level of liquidity of EUR 1.44 billion. Our liquidity position was clearly supported by our targeted efforts to reduce investments in working capital last year.   In the first quarter of 2026, net working capital increased by EUR 119 million over year-end 2025, reflecting seasonality in our accounts receivable. Inventories were largely flat. Now, looking at the operating segments, starting on Page 7. At Silicones, sales in the first quarter of 2026 were EUR 708 million, down 5% year-over-year. This was primarily due to the negative FX effects.  On the other hand, the first quarter sales were 17% higher quarter-over-quarter due to seasonality.   At EUR 117 million, EBITDA was up 13% versus the prior year. This increase was primarily due to the pace as well as higher volumes. The emerging Middle East conflict led to significant pull-forward effects towards the end of the quarter. Due to the recent raw material inflation, we announced price increases in the quarter.   We have updated our 2026 Silicones outlook. Despite negative FX effects, we now see sales being a low single-digit percentage higher due to higher volumes and prices. Our expectation for the EBITDA margin is essentially unchanged, and we continue to see a slight dip slightly above prior year.   From today's perspective, end market demand in many customer segments remains weak, and our announced price increases will primarily offset raw material inflation without altering our overall absolute earnings expectations significantly.   At Polymers, sales were EUR 333 million, 8% lower than last year and up 7% on the previous quarter. Sales in the first quarter of 2026 were held back year-over-year by FX effects, softer prices and overall lower volumes.   EBITDA, on the other hand, increased by 33% year-over-year on cost control and lower raw material costs. As seen in silicones, pull-forward effects led to improving order intake at the end of the quarter, and we announced price increases to address raw material inflation.   We have updated our 2026 polymers outlook. Sales are now expected to be a low double-digit percentage higher than prior year. Higher prices due to raw material pass-through will be partially offset by negative FX effects. Our EBITDA margin expectation is essentially unchanged and is forecasted to be slightly higher than prior year.   As in silicones, the higher sales are not forecasted to have a significant impact on full year EBITDA due to the raw material inflation from today's perspective.   At BioSolutions, sales were EUR 100 million, up 9% year-over-year due to project timing. EBITDA in the first quarter of 2026 came in at EUR 13 million, benefiting from higher sales and cost management. The timing of project completions also supports the quarterly result. Some projects in the fourth quarter of 2025 were pushed into Q1. And at the same time, some projects scheduled for the second quarter were completed ahead of time.   Our outlook for the full year 2026 for BioSolutions is unchanged. We see sales up by a high single-digit percentage with an EBITDA at around EUR 30 million. The market environment remains challenging, and we remain focused on strengthening our commercial activities, filling capacities and on cost management.   At polysilicon, sales in the first quarter of 2026 came in at EUR 226 million, 8% lower year-over-year due to lower prices for solar and continued low demand for solar. Semi, on the other hand, continues strong. Our semi volumes are growing nicely and the new etching line is performing very well. This asset clearly supports our business' overall resilience and strengthens our leading market position.   EBITDA was EUR 23 million in the first quarter. This level of earnings is comparable to the past few quarters. The better mix and good cost performance were able to offset the higher energy costs this year. For 2026, our outlook in polysilicon is unchanged. We expect sales to be a low double-digit percentage higher than prior year. EBITDA is forecasted to be at the prior year level despite higher energy costs in the year.   Earnings are supported to be significantly higher in semi sales and from efficiency gains. On the other hand, solar remains challenging. As Chris said, our outlook does not include any significant effects from trade policies.   Now let's look at the development of our net financial debt on Page 11. In the first quarter of 2026, we generated a gross cash flow of EUR 77 million, driven by typical seasonal pattern in chemicals, higher trade receivables held back the gross cash flow by EUR 108 million. Inventories were largely flat. Cash flow from investing activities came in at EUR 109 million, significantly down from EUR 197 million a year ago. Our major investments were concluded last year.   CapEx will be around EUR 300 million in 2026 versus EUR 466 million last year. Our focus is now on filling the new capacities, and this should allow us to keep CapEx well below depreciation levels for years to come. At the end of the quarter, we ended with net debt of EUR 964 million.   Before we start with the Q&A, let me summarize. We had a solid start to the year and even surpassed our own expectations due to push-forward effects from advanced customer orders. The first quarter EBITDA shows clear progress towards our full-year forecast and the cost savings under PACE by delivering tangible savings. We are at the beginning of this cost program, and we need to remain focused and work hard to achieve our ambitious goals.   I am confident that our efforts here will sustainably enhance Wacker's competitiveness. Against this backdrop, demand in many of our customer industries remains weak overall, and the crisis in the Middle East increases macroeconomic uncertainty. Raw material and energy prices have climbed meaningfully. Although order intake has improved, visibility remains short, volatility is high, and unseen risks may arise from the Middle East conflict.  Therefore, our full-year outlook is subject to a high degree of uncertainty from geopolitics, supply chain risks, demand stability, and trade policies. Now we are happy to address your questions.

[Operator Instructions] Our first question comes from Anil Shenoy from Barclays

The first question is on pre-buying, which you said was mainly in silicones and polymers. I was wondering if you could just give us some color on which products in these segments have seen the most pre-buying, like in silicones, whether it was the standard silicones or more downstream silicones.   Similarly, in polymers, if you saw any advantage from the backward integration into VAM in Europe. So any color on that would be very helpful.   Secondly, I was just wondering about Q2 and the impact of price increases, the raw material inflation, and the timing difference between them. You increased the prices of silicones and polymers at the end of Q1. So I'm assuming that, that will impact in Q2.   In that case, when would you see the raw material inflation? Would it be sometime in Q2? Or have you already started seeing it? So in effect, I'm trying to understand, is there a possibility of a windfall gain in Q2 and possibly Q3 as well?

Anil, a very good question, Tobias here. Starting also with the first question on the pre-buying of silicones and polymers. I mean, it was when we had the call for the full-year results, just mid-March, and the real surge in order intake came around that period. And that's why our sales were running EUR 50 million higher than expected in March, and that is both covering silicones and polymers.   To be frank, it's broad-based. I would rather say it's focused on the region Asia, where we have seen the strongest impetus also for silicones and polymers, but you can't pick a segment. And it's been both for specialty silicones and standard silicones. I mean, there was not so much change in the portfolio and the mix.   With respect to the price increases, we reacted really immediately after that, yes, inflation on the cost side was appearing and coming towards us. But you can be sure that, yes, it rolls through the supply chain with a time lag. So it has not been affecting us cost-wise in the first quarter.   But also, the price increases, I mean, which we announced in the first quarter, were not effective in the first quarter. I mean, maybe in Asia or in China, where you have monthly or weekly or even biweekly pricing. But beyond that, no meaningful raw material and energy impact yet on the cost side, and no meaningful pricing effect yet on the sales side.   There will be, yes, over the course of the second quarter and then in the latter half of the year, a much more significant impact from that.

And maybe, Anil, let me add on that on the pricing side. As we said in the speech, I mean, I think we have a good playbook in place for bringing in these price increases. Many peers did the same thing, which I think creates, overall, a constructive pricing environment, yet it's not something that is super simple. Of course, you have to convince your customers.   It's day-to-day hard work, and our teams are working on it. So our aim is really to be successful here.

The next question comes from Christian Faitz from Kepler

Two questions, please, on 2 segments.   First of all, in Polymers, you're now forecasting a sales increase in the low double-digit amount. I'm just trying to get my head around this with a minus 8% performance in Q1. Has business since then so dramatically improved that this is now a possibility?  I mean, in mid-March, you still saw a pretty much flat development, if I remember correctly. So we would have to count on significant improvements throughout the entire year.  And second, in BioSolutions, can you give us any idea about the timing effects you flagged in Q1, i.e., the project delays from Q4 feeding into Q1 and the pull-forward projects that were originally planned for Q2'26? On your EBITDA forecast of just about EUR 30 million for this year, isn't this a bit conservative considering the robust performance of Q1, where you also mentioned cost management as a key factor? And would that not hold for the remainder of the year and thus lead to higher profitability in BioSolutions?

Christian, Tobias here, starting with your first question on the dynamics in Polymers. As I mentioned before, the cost increases start to kick in in the second quarter and then for the remainder of the year. And the same goes for the price increase.   From the order of magnitude, guided by sales around the prior year level to up low double digit in Polymers, you can calculate that we are talking about a 3-digit million number that we need to increase our sales prices.   And as Christian mentioned, we have the playbook in place that is different by region. While we work with surcharges in Europe, we have super dynamic pricing in Asia and formula pricing in the U.S. So we will see that impact that we are significantly above the prior year, starting in the second quarter in Polymers.

BioSolutions?

Yes, on your BioSolutions question. So BioSolutions delivered the EUR 30 million EBITDA in Q1 and the EUR 100 million in sales. And yes, you're right. This benefited from the project timing in both directions, as you pointed out, some Q4 projects were completed in Q1, and some Q2 projects finished ahead of schedule and went into the Q1 numbers. I would say it is the nature of the CDMO and pharma project business. Therefore, for Q2, we would expect a step down from Q1 because the projects scheduled originally for Q2 have already been completed. The pipeline continues to develop, and we have project activity throughout the year.   The full year target of around EUR 30 million, we believe, remains appropriate. And if you make the math then and the EUR 17 million, which is remaining, that would be roughly EUR 5 million to EUR 6 million per quarter.  That would actually be consistent with the run rate we saw in Q2 and Q3 of last year. And don't forget, we still see the CMO market remains challenging.  Also, don't forget, because you asked for the cost-effectiveness. The BioSolutions division already started cost measures 2 years ago.  So the PACE savings are not one-to-one related to BioSolutions for this year, and in the following years, some of these effects have already been achieved. Therefore, we still believe that the target guidance is the right one.

Good luck with the supply and demand challenges for your overall business going forward.

The next question comes from Peter Spengler from DZ Bank.

I have 2. First on polysilicon and Asian PV demand. So could you elaborate on what you are seeing in the Asian market outside of China, specifically, is the recent increase in energy pricing leading to an acceleration in demand for PV installation in Southeast Asia? The second question is on your U.S. polysilicon import situation. Could you provide us with an update on the situation there? And I'm particularly interested in your perspective on current inventory levels and any shifts in customer purchasing behavior?

Peter, thank you for your questions. Let me start with the PV demand. You mentioned Southeast Asia. I think in general, I would say that the world at the moment is recalibrating its view on renewables in general and especially on solar. And I think we will probably see an uptick in overall PV demand.  That would be my personal view on this. And of course, this is a positive at the end of the day for our business. I guess that a lot of the PV demand in Southeast Asia will be supplied from China. That would be my estimate.   On the solar side in the U.S. in 2032, I mean, there's actually not so much more update. You know that the DOC filed the report to the President that was at the end of March, and the President now has 90 days to give a final solution, a final answer on this. We don't know in which direction it goes. I think we just have to wait until this is the outcome. And this also impacts customer behavior. So I would say it's fair to say that everybody now is in a wait-and-see mood, as to what comes out of that 32 decision.

Peter, with respect to your questions on the inventory levels in polysilicon, I had mentioned in my speech that the overall inventory was largely flat, and that is to be divided into the chemicals being slightly up because of seasonality and preproduction, also ahead of some turnarounds, and polysilicon inventory levels down.  So the solar demand is soft, as we mentioned, but we are running all plants at minimum utilization that is possible. And from that, we were in the position to at least slightly reduce our polysilicon inventories in the quarter.

The next question comes from Matthew Yates from Bank of America.

A couple of questions, please. The first is around the cost base. I was just looking at the headcount numbers you disclosed in the release.  I think you're down about 300 positions since the start of the year. And correct me if I'm wrong, I think we talked about 1,500 targeted in totality. Just wondering how to think about the lag in people leaving and coming off the payroll? Or put another way, of the EUR 200 million or so cost savings targeted for this year, can you give us a number of how much you realized already in the first quarter, and then we can think about what's still to come?   The second question was specifically on polymers, and I guess, the concept of net pricing. It's a little bit confusing to me, at least, that if I take something like VAM, there are some regions where you're long, and there are some that you're short. In the past, you've seen significant squeezes when raw mats have gone up, but I understand you have sort of changed some of your contracts to have higher frequency repricing. The guidance today hasn't changed in terms of still expecting margins to be a bit higher this year. Is that because you're still waiting to see how much raw mats move? Or are you confident that you can pass through whatever is necessary as far as you're aware today?

Matthew, Tobias here for the first question on pace. As we said, the overall target is to achieve savings of more than EUR 300 million starting or being fully effective in the year 2028, gross savings. And for this year, 2026, we are targeting EUR 200 million.  So we had a good start in pace, and we have some good progress, but the savings profile is not linear, definitely.  So we already began implementing some pace measures in late 2025. And the more effective ones are the non-personnel measures on budgets, on technical spend, and on some structural procurement savings. So these are already effective. There's also exactly the effect that you were seeing in the numbers, that we have reduced headcount. We have reduced headcount abroad. We have also slightly reduced headcount in Germany, but that is still a minor part of the savings. So if I put it together, for the first quarter, we could say we have roughly EUR 40 million. And then we have to increase the run rate, and we are confident that we can achieve EUR 200 million for the full year because the personnel measures will kick in mostly in the next year. As you know, we are still in discussions with the workers' council. It's not concluded yet, but headcount reduction in Germany will have a major impact starting in 2027. But we had a good start in Pace as an efficiency program, and that's a lot of self-help that is supporting our overall guidance also for this year. We are on a good trajectory and confident of reaching the EUR 200 million for the year.

Matthew, on your question on polymers, yes, I mean the answer is we expect that we can pass through the raw material price increases, which we see. I think, as we said in the beginning, I think there's a playbook on how we can do this. I don't know if your question alludes to can we get more on that? I think it is too early to say because, as a reminder, I mean, that's what we said also at the beginning of the year, there is still, in the end, a weak demand pattern globally. So if that shifts or not, it is not foreseeable right now. Therefore, our assumption is that we are able to pass through the raw material price increases, which would then lead to an increase in the absolute EBITDA, but changes in sales and the margin.

The next question comes from Sebastian Ray from Berenberg.

My first one is on the polysilicon business and the semiconductor grade here. So Wacker looks like it has just over 50% market share in this area. And yet its market cap is dwarfed by most other significant players in the semiconductor industry, including players like Shin-Etsu. Can I discuss if there are any plans to increase the degree of market capture of value capture here, either by pricing up on new customer contracts? My guess is that some of the new volumes from the semi line came in at higher incremental pricing or to partner with the assets. So there are a few players in the U.S., amongst some Tesla, that seem to be interested in the polysilicon value chain. My second question is on the silicone standards. Back in the 2018, 2019 period, when there was a last big shortage of these products, from memory, Wacker had about EUR 100 million of EBITDA, which was a temporary fly-up margin. I appreciate that the European methanol prices on the input side have moved somewhat, but why wouldn't this also be the case in 2026?

Okay, Sebastian. Let me start with your first question on the semi side. Yes, I mean, as you know, I mean, Semigrad is a very successful business, and it continues to develop very positively. Volumes are up year-over-year, and we expect the same thing this year. The hedging line is progressing very well. Long-term contracts are in place. And of course, you can be sure that on the new pricing on the new contracts, we try to improve our position. Your question on the market cap, I would say that is not, in my view, so much driven by the pricing or potential pricing increase on semi, but more on the overall strategy regarding the solar. I mean, at the moment, we are in a phase where solar has a big question mark. We wait for the 232 decision, which could give a very clear decision on where to go. And we have a very clear strategy on the semiconductor side on poly that this is the future business for us. You also mentioned the question on other opportunities. And yes, I mean, there are obviously lots of big news around, and we have to see how these visions at the end of the day actually materialize. We are definitely happy to speak to anyone about new opportunities and what we can bring to the table. On the silicones, Sebastian, I can take over. You mentioned the last shortage in silicon standards in 2018 and '19. I think the last shortage was '21, '22. So there was one more reason. But the shortage was a shortage. And there, I see the difference. What we are talking about today is that the methanol price goes up by, I think, not even 50%, but methanol in the cost structure, it's the second largest raw material after silicon metal, it's methanol. So it's below 20% of production cost. And that doesn't drive -- if it has an impact, it would also lead to pass-through, first of all, because methanol is a global commodity. Also, considering the specific situation that China imports methanol from the Middle East, I would also consider that China produces a lot of methanol from coal. So we haven't seen it so much on the silicon standards side so far. There is a bit of an uptick in prices stemming from price movements in China at the end of last year, and that now also comes to Europe. So there is a firming up of prices in standard products. I wouldn't call it a shortage yet. And as a general remark, again, our portfolio strategy is to focus on specialty products. So the exposure to silicon standards is also not that big.

The next question comes from David Symonds from BNP.

I think I'm only left with one rather short-term question, which is, could you just talk about how April trading compared to the second half of March? And I know it's not customary to guide on the second quarter, but could you potentially give some indication of whether you would expect it to be higher or lower than Q1?

Tobias, you saved this one for luck. As we said, Q1 was positively influenced by pull-forward effects from customers ordering for their own supply safety. As I said before, the impact was significant in March. So we had the spike in order entry in March, and that has, yes, come down now again in April. So April is back at the level of January and February.   So from that perspective, we are not giving any guidance for the second quarter. But if you take out roughly EUR 20 million of pre-buying effects, which supported our EBITDA in the first quarter, you definitely need to consider that amongst all the moving parts that we discussed.  So the first quarter was not yet affected by cost inflation, nor by our own price measures. And then you have a little bit of seasonality in the second quarter, but you typically have some maintenance ongoing in the second quarter.  So I would summarize that overall, the pull-forward effects are one-off. They are borrowed from the second quarter. So I expect the second quarter to be lower than the first quarter.

[Operator Instructions] The next question comes from Chetan Udeshi from JPMorgan.

My first question was just going back to the previous question of David, and you kindly gave us some indication on the order books. I was just curious, would you say the orders going down is just a reflection of pre-buying going away? Or do you actually see some customers just basically, there is the first sign of maybe demand destruction coming through at these elevated price levels.   And the second question, there has been this view that this may not be applicable as much to your silicones business, perhaps or maybe to your polymers, but the shortages of NAFTA oil will be much more pronounced in Asia versus Europe, and hence, you have more supply reductions in Asia, which will be good for European producers. And Wacker is probably one of the more European-exposed in that respect. Do you see evidence of that? Do you see more evidence that your competitors are having to shut production much more in Asia than what you've seen so far? Of course, you've not seen many production cuts in Europe. But do you see signs that some of your competitors in Asia are seeing bigger production cuts at this point?

I can start with the second, which is specific to Asia. And I would argue, yes, there is -- in the polymer segment, there are some competitors more impacted than we are. So that's the opportunity for us in a weak overall market environment to capture some share. But I see that as temporary, and you need to see how that develops over time. I think it's more complex to answer that question for Europe. I mean, there's not so much coming on the polymer side, I mean, you don't ship dispersions, which are liquid and heavy from Asia to Europe, and powder also, there's a very limited impact on the European market.   But on the silicon side, what I have heard is it's less of a reduced production from Asia, but because of longer logistics from Asia to Europe, the ships still arrived so far, but there might be a gap because there's just chips missing because they are stuck in the Middle East. That's to be seen in the second quarter, but so far, not material.

If I follow up, you source acetic acid, and you source ethylene in Europe for your VAM production. I mean, with the big surge we've seen in the cost of VAM and acetic acid, what is your strategy? Are you still buying them? Are you buying the VAM itself from the market? How are you dealing with the very, very high raw material inventory in your polymer business in Europe, especially?

As you said, Chetan, we are a VAM producer, and we are buying acetic, but we are also a net buyer in Europe of VAM.  So we have more demand than we can cover with our captive production. And yes, for sure, we tried to price at market prices because the VAM asset also needs to return on its capital that is employed. But as I said before, it's still early in the first quarter. We announced price increases. It needs to be seen how they materialize in the second quarter.

Yes. Chetan, that brings me to your first question, as Tobias just pointed out, we have to see how these passes actually materialize in the second quarter. I mean, from today's perspective, as we said, I mean, the less order intake we see for Q2, especially for April, at the moment, we would say has a lot to do with the preordering, just moving the orders from April into March.   So far, I would not see demand destruction. But it's definitely an excellent point you brought up, and there are a lot of experts talking to economists on this. Where is the triggering point for demand destruction, especially in a weak market environment, which we see today? I cannot give you a great answer on that.  We don't see it at the moment. And I think Q2 and Q3 will be crucial in seeing how the order intake will develop, and also with respect to how the raw material prices will develop.  But yes, overall, I would say risks are today clearly higher than they were yesterday, and yes, to see.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Joerg Hoffmann for any closing remarks.

Thank you all for joining us today and for your interest in Wacker Chemie. Our next conference call for the second quarter 2026 results will take place on July 30, 2026. As always, don't hesitate to contact the IR department if you have further questions.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating.