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Claus Zemke: [Interpreted] A very good morning from Cologne, ladies and gentlemen, dear colleagues, this is Claus Zemke, and I'd like to extend a cordial welcome to you on the occasion of our telephone press conference on Q3. We have got Matthias Zachert here, CEO, and the CFO, Oliver Stratmann and they both will give you an update on what has happened over the past quarter, and we'll give you the guidance for the remainder of the year. Thank you very much for joining. Technical remark from my side. We are having this press conference in German, but there will be simultaneous interpretation into English. If and when you want to ask questions, there will be a possibility after Mr. Zachert's talk. How that is going to work will be explained a little bit later. And then, for legal reasons, you must know that there is an Internet stream. Mr. Zachert?
Matthias Zachert: Thank you very much. A cordial welcome to all of you listening to this press conference of LANXESS. So let me talk about Slide 3, making a head start on my update. And I'd like to give you a description of the general situation of the economy, the German economy. And I mean, you are all reporting about what is happening in the major industries of Germany, that is, the automobile industry, mechanical engineering, and this quarter, all the industries mentioned that the economic situation is very difficult indeed. And this is, of course, also true for the chemical sector, which requires a lot of energy. Well, the reporting has corroborated exactly that. And this brings me to LANXESS. So we are navigating stormy waters, and EBITDA and also sales are burdened. There is one segment that we have strategically developed, and this much to our pleasure, is rather stable, and that is consumer protection. Going to talk about that a little bit later, but the 2 other sectors, segments, that is the intermediates like the individual units, they go to show what fierce competition we have got and how difficult it is to run the business. And this is also true of Specialty Additives. So we are doing our best to offset the general conditions and navigate these stormy waters by cutting costs. So this is something that is under control, under our control, and we will go about it. And we will need to be more precise about the remainder of the year in a minute. Now, the Slide #4, weak environment, unfortunately, and also changes in the portfolio. And I mean, we divested a business unit, but also the unfavorable currency translations and the weak American dollar have had an imprint on sales and EBITDA. So sales are minus 16% and portfolio and currencies are one side of the story. But on the other hand, we have got price reductions of around 2%, a bit more than 2% and also a volume decline, which is rather painful because that holds up to 6%. Of course, that has a bearing on EBITDA. In the prior year quarter, we had EUR 173 million, which was not exactly brilliant in 2024, but that's still better than this year, and it was also an improvement over 2023. So we are still in a weak environment in 2024. And now figures have come down again. And this goes to show how dramatic the situation is in the energy-intensive sectors. Now, let us talk about our individual segments. And I have mentioned before, consumer protection. What we can see here is a rather stable operating income. The level of the prior year, and the margin is quite high, just under 16%. And this is the segment which we have developed and strengthened, also on account of acquisitions. So we have entered businesses that show rather stable performance, even if competition is a bit more intensive in comparison to previous years. Now let me talk about Specialty Additives, Slide 6. This suffers from the weak demand in the industry, particularly in the building and construction industry is still very sluggish, particularly in China, but also here in Germany. And suffers from the declines. This is something we have not seen ever before, particularly if you have a look at the last 10 to 20 years. And I mean, of course, there is an awful lot of catching up to do, but somehow it doesn't happen. There is still a crisis in the building and construction sector. And then the weak dollar is also having a negative impact on sales and EBITDA. As we all know, we are very busy in America as well, and we deliver from America to China, particularly when it comes to our fire protection materials, flame retardants, and well, the relationship between America and China is not exactly helpful in this context. Advanced Intermediates. In this segment, we see a lot of competition from Asia, particularly China, and weak demand. And the Advanced Intermediates business is the core activity of our activities here in North RineWustralia. So our sites in Leverkusen Endingen, and these business units, the Advanced Industrial Intermediates and also inorganic pigments are being produced there. And they suffer not only because they are confronted with strong Chinese competition. Well, the Chinese actually deliver at prices that are below our production costs. And I mean, we really have to discuss antidumping here. These activities not only face fierce competition, but also suffer from high energy costs, a lot of bureaucracy, and general conditions. I mean, we keep trumping that off the rooftop, saying they are conditions that are breaking the neck of our sets, even if our facilities are top-notch when it comes to their activities, their abilities to produce, and they can produce on a world scale. We are hard hit here over the prior year. We must say that there is a further decline. Slide #8, cash management. We are doing a good job here in the third quarter, stable environment. When it comes to the group's capital structure, net financial debt is stable, which has to do with good cash management, which we a couple of quarters. Now, Slide 9, geopolitical situation. I mean, tensions are still very, very high, which makes a contribution to the uncertainties in the world and in the individual regions. We still proceed on the assumption that the automobile industry will stay weak, as well as building and construction, and also the agricultural sector, even if there are different developments among the different actors. Looking at LANXESS, we are continuing with our cost and efficiency program. These are topics that we can control, and we are doing our level best to improve the framework conditions. And whenever possible, we try to draw attention to the fact that it is high time to bring the economy back on course and improve the framework conditions for the German economy. We talk to politicians and decision-makers, and these framework conditions have to be reestablished or else it's going to be so difficult, both in Germany as well as in Europe, to keep up strong industries that are definitely suffering under the present framework conditions. Our guidance of EUR 520 million to CHF 580 million, as published in the summer, will end up at the lower end of our forecast range. And in the second half of 2025, the framework conditions as well as demand haven't changed. So that supports this. On Slide 10, we would like to present the programs we are already using. You know our program forward with CHF 150 million. We finished this program swiftly, and we will be fully effective by the end of the year. In the second quarter, I spoke about the optimized production network. And we mentioned the closure of 2 operations and optimization of organization, and we are implementing these plans, and we take it that we will be successful according to our plans. Today, I would like to let you know that we are in the process of preparing further measures to achieve structural improvements of around CHF 100 million over the coming years. We are already discussing matters with our works council members, and we'll do so very soon and discuss, and decide and implement very soon, and this will probably be specified in the first quarter of 2026, so that you will be in the picture as well. You do see that we accept the market environment, and we change whatever we can change and control. And of course, we hope that the framework conditions will change in the future. But in particular, Berlin and Brussels are involved in the framework condition situation, and we hope some progress will be achieved there. The next slide, #11, gives you an overview of what's happening in the European chemical industry. Handelsblatt already mentioned some or many of the closures on the left-hand side in an article published in the summer, and we are repeating this. But in the right-hand column, we would like to share with you what was published recently. So you see, it's not just 10 minutes to 12, it's already gone to 12, and a lot of these changes are already taking place. The industrialization of those areas that need a lot of energy, and this is to be emphasized, those industries that need a lot of energy are taking place. And these are closures of operations that will not be resuscitated. They will not be back. These are closures of industries, especially the German industry is reputed for the high wages paid in this industry. We are among the industries paying the best wages. But should the framework conditions be such that you can no longer be competitive or even incur losses, then you have to draw your consequences, meaning you have to close plants and operations. This leads to lost jobs and a reduction in wealth. Other countries are fighting for their industry, knowing fully well that this is a driver of wealth and will attract other services, which will be beneficial for any country's wealth. So a lot of regions are fighting for their industries. And let me call a spade a spade. What is being closed here is in areas where the chemistry is needed and will be produced, most of which will be produced in China, where they're using coal for their production, which means, for the climate balance, this is no good news at all. There is not so much technological cleaning taking place. We know purification of water and air, tar, and catalytic purification. This is part of our standard. We are world market leaders there, but these capacities will be migrating to other countries, and they produce the same chemistry and generate wealth for their countries, but that is not beneficial to the global climate. So this is a detrimental effect on our global climate. This is worth thinking about again. You should know that the chemical industry right now is facing one of the most severe crises I've seen over the past 30 years, and we need to return to good competitive circumstances and framework conditions so that this high-level technology, especially the chemical industry, as the third largest industry in Germany, will be able to survive here in Germany. So the signals and the feedback we send out to the political decision-makers, as you see it on Slide 12, is that it's high time to act. We must return to competitive energy prices. We welcome the present discussion or initiative. Hopefully, there will be decisions taken soon on the industrial electricity prices and the compensation of electricity prices that have to be taken into consideration for the chemical industry. We clearly and unambiguously communicate to the European Commission and the European Parliament what is our position with respect to European emissions trading systems, and this needs to be reformed. And you quite frequently cover this topic in your articles. We also face the decision-makers, especially in Brussels, and say that they should not burden the European industry with additional regulations and restrictions, but rather to finally start to defend their own industry, to protect their own industry, as many other states are doing. And I also think we have to have a faster antidumping process. At the moment, it takes around 12 to 18 months rather than just a quarter. And things can be analyzed and decided within a quarter, if you ask me. Ladies and gentlemen, let me now look at the last slide in our deck. The economic situation has just been described, but there is also some light at the end of the tunnel or on the horizon. In the second and third quarters, we've seen the maximum uncertainty in the world because of this erratic tariff policy. And at the moment, this has a full effect in the second and the third quarter. I take it that this tariff uncertainty will be here to stay, but at a lower level. There are some stipulations and regulations in some places; there is no longer total escalation. So the level of uncertainty should exist in the next year, but not as much as we've experienced this year. We also think that the stimulus program for the defense of infrastructure in Germany will also have its bearing on the industry in 2026. So order books will see more orders accepted. That will have some consequences on different products, flame retardants, screed, coatings, and pigments. We've got different portfolios, and we don't take it that this will change overnight. It's November now. We don't see the effects right now, and we take it that there will be a gradual increase. The new government has only been in office since May. And it is on the various levels, like the Federation, the federal states, and the municipalities, that this is going to be implemented, and then it should bear fruit. I can say that the EU is already working on antidumping processes. We have been successful in 2 such procedures in a way that we were supported in that respect, and this is an adpinic acid sector, and also the phosphorus-based claim retardants. And of course, we are looking for further investigations simply because here in Europe, we see that we are actually being glutted by products that are produced by China, products that they cannot sell in the U.S. any longer. Now they are pushing that into the European markets for a song. And market consolidation is what is happening just now. And as I've said previously, there are company shutdowns, site shutdowns, and also our competitors are reducing their capacities or closing them for good. That, of course, will strengthen our position in the market. And from a technological point of view, and also from a size point of view, our facilities are well established. And if we were to survive this competition, then of course, we will emerge stronger from the crisis once it's overcome. This is what I wanted to share with you, ladies and gentlemen, concerning the third quarter and the market environment. So together with my Board members, I have discussed the situation at great depth. And I must say I'm really very pleased that we are all rolling up our sleeves, taking rapid decisions, and responding in a pragmatic fashion. This is what is required in order to get through a time of crisis. We accept that we have a crisis on our hands. We are doing something about it, and we all pull together in order to handle 2026. But before that, of course, we need to conclude 2025. And when we are going to have our financial year press conference at the beginning of next year, covering the entire year of 2025, you will hear what we have been doing.
Claus Zemke: [Operator Instructions] Now Jonas Jansen. Mr. Jansen, you can ask your question.
Jonas Jansen: Thank you very much for your statements. I've got a question concerning your cost-cutting program, even though you say you can only be more detailed at the beginning of the next year. But what are your ideas? And you said as of 2027, the situation ought to become better. So, is that on the basis of the cost-cutting efforts planned for 2026? And what does that mean? Does that mean that more facilities need to be closed? Or will you try to cut costs further? And I mean, you already have an ongoing program and EUR 350 million, and now you want to double that figure. So where on earth do you intend to get that from?
Matthias Zachert: Well, Mr. Jansen, the EUR 100 million well, actually, we will be more detailed at the beginning of next year, but it is not true that this is only to have an impact on 2027. Part of it will already have an impact in the course of 2026. And how are we going to do that, please? Can I ask you to accept that we can only share more details if and when we have discussed the matter also with our works council, and when we can be more specific about the implementation. But it is quite clear that in the course of 2026, this will come the group's way and will bear more fruit in 2027. So when it comes to individual sites or facilities, I have said before that when it comes to production, we have already carried out our analysis and the implementations thereof, and we communicated that in the summer. So I'm really fighting for these sites. I cannot make any promises, but this is what we are fighting for to keep these sites, and sitting here today, we think that we will be able to keep all our facilities here in Germany. But that, of course, means that when it comes to our general cost basis, COGS, we need to save more money. And that, of course, is geared towards whatever does not make a contribution to the actual production. And then, of course, you have to discuss possibilities of simplifications, streamlining processes, and how to become even more efficient and effective. And we have to make sure that no facility produces any loss any longer. Since competition is so fierce and tough, we can only do what is under control, and this is keeping costs at bay. But as I've said before, we will communicate more details thereof in the first quarter of 2026.
Claus Zemke: Next question, Patricia Weiss from Reuters.
Patricia Weiss: I hope you can hear me all right. Well, the demand situation. And you said that this is going to stay weak until the middle of 2026, or even not longer. So will that reduce your earnings further in 2026? And then the second quarter, also, when it comes to your program to cut costs. And you said you want to keep the existing sites up and running. So, where do you want to get these savings from? I mean, are you considering further job cuts? And then also when you're talking about the general conditions, I mean, it seems that you are a victim of the general conditions. But what else can you do? What can you do when it comes to your strategic setup? And how can you become more resilient as an industry or a company in that sector?
Matthias Zachert: Well, Ms., let me take these questions one after the other. Job cuts are not exactly excluded. I mean, we are trying to keep as many jobs as possible, but we cannot exclude that some will go away. I mean, we will go for the approach of natural attrition. We are talking about demographic change, and that makes it possible to reduce the workforce without actually dismissing employees. And your second question, I mean, there is still quite a chunk of COGS, general costs. And 2 years ago, I said that we, for example, are spending too much on our IT. We are significantly above a target value that we must achieve, which is attributable to the fact that over the past 3 years, we introduced a new ERP system. So that was double a burden, if I can call it that. But this is now something that we have concluded. In the first quarter of 2026, this will be concluded for good, and there should be a major part from this sector that will then help with saving costs. That was our target and still is our target. When it comes to the strategy of LANXESS, I mean, the individual segments, if you have a look at what we have done up to now, we have certainly established a consumer protection element. This is a very strong pillar in our group now, and very many of the businesses that we have separated from were polymer activities, and the polymer industry is being shut down here in Europe. This is really in the crossfire together with other sectors of the chemical industry when it comes to Europe. So it was a good idea to get rid of these polymer activities. But then the remaining sector of the chemical industry is still subject to a lot of difficulties. But over the past 6 months or so, we said, yes, we want to orient ourselves in a way that we become future-proof with a strong global position. So this is the market orientation we are affecting, but this cannot be done overnight. And this has nothing to do with the cost, but with the business model and the go-to-market approach, which, of course, we are strengthening in parallel and reorganizing our company accordingly. I hope this answers your questions.
Claus Zemke: Next question to Annette Becker from Börsen-Zeitung. We can't hear you yet. Now we can hear you.
Annette Becker: Another question on the consolidation of the market as of 2027, as you expected. Do you think that it will be exclusively due to competitors dropping out of the market? Or will there be some options for acquisitions as you see it? And is the European chemical industry in a position at all, given the market conditions, to acquire new businesses, because what we've been seeing for 1.5 years is costs up, costs down, and so on. And where on earth would you want to have the money from to acquire new businesses?
Matthias Zachert: Well, looking at the past 30 years, there were different waves of consolidation in our industry, and they always took place after a severe crisis. Thereafter, acquisitions were an option. But quite often, there were also mergers that took place, creating a critical mass together with another company or more companies at the plant, at the business, at the value, adding chain level. So the industry always came up with innovative approaches. These need not always be decisions to acquire new businesses. There were also other approaches in the past, and we will see what the industry will be doing in the next 1 or 2 years to come. I believe that everybody will see that it's not only your own structures that you have to influence and change, but you have to think outside the box. And that has always been an element used by the industry, so I'm firmly convinced that the chemical industry will remain an innovative industry and will find new ways of strengthening its own position for the future. T
Claus Zemke: Next question from Bert Frondhoff from Handelsblatt. He is still muted. Can you unmute yourself, Mr. Frondhoff? It doesn't seem to work. So we will return to you. Annettebekker seems to have another question. I was probably too fast. Annettekka, back to you again.
Annette Becker: Talking about mergers, another question. The prime example for mergers is to be seen one of the partners will have to have the upper hand. And when you sold your primary businesses, you showed that there was 1 of the 2 companies that remained in control. And I think you are talking about mergers to create critical masses, but that's unrealistic. A lot of companies are failing when this happens.
Matthias Zachert: Well, Ms. Becker, I can't confirm that there are successful joint ventures and less successful joint ventures. And over the past 30 years, when looking at the different value chains, there were good examples. Also, we did have a good joint venture of PBT with DuPont, where both of us had 50%. This joint venture was extremely successful, and there are other examples as well. So I would like to say that talking about mergers, if we were to imagine a special type of joint venture, we should talk about it once it's communicated for value chains. All I said was that acquisitions alone are not the panacea to consolidate the business; there are different tunes that you can play on the keyboard, right down to a joint venture. And should that be announced, then we ought to talk about it. I hope that answers your question, Ms. Becker.
Bert-Friedrich Frondhoff: Sorry about the glitch beforehand. I have 2 topics. The first topic is that the first emissions trading in Europe was commented on yesterday by the ministers in Europe about free allocation. How do you see it? And what are the numbers? What would happen if this were not implemented and with respect to free allocation and further allocation, and short-term measures? And the second question is linked to this. Are you in favor of abolishing ITS as it is at the moment? Or do you want to see it changed? And if so, how should the change be affected?
Matthias Zachert: First question. I can only briefly comment on this. I have not seen an evaluation on the individual elements discussed by the federal ministers at the European level or the different ministers at the European level, whether it's free allocation, yes, or no. And will the door be opened or rather closed, and how to consider this? So let's turn to the second question right away, which was of a more general nature. On the system or the trading concept with CO2 certificates. There are very clear comments on this. Our industry has a consensus. And here, I would like to share with you what I'm reading and what my colleagues are saying. This system, according to our opinion, needs to be revamped, reformed at least, if not abolished. There are different levels of clarity in the comments, but everybody says that the present design of the system would substantially make or worsen the framework conditions substantially and let me be very, very blunt. Our industry over the past years has made substantial progress with respect to achieving the climate targets. If you look at our company, we were really supported and praised, especially by the SBTi initiative. We are Climate Truck Paris 1.5. We earned many awards, although we are not so affected by the ETS costs because we have a much progressive portfolio. But looking at the industry, I have to clearly say one thing. The European industry has the highest standards, and we have all sorts of requirements when it comes to water purification or water treatment, recycling, and air purification. I mean, they are all very, very strong, and we are being certified and need to earn these certificates. So we've got very high ecological standards, and we've got wonderful facilities that meet the requirements at a top-notch level. But over the past couple of years, these facilities have been hit hard by increasing energy prices. And over the last 3 to 4 years, particularly because of Timmansi, former commissioner, who is not exactly friendly towards the industry sectors, quite the opposite is true, I must say. So all the industries, including the chemical sector, were hit hard by excessive requirements and red tape, and whether it is EUR 50 billion, EUR 80 billion, or whatever, I mean that is the cost that is being mentioned because we all had to spend a lot of money in order to meet the requirements. So it is bureaucracy. It is high energy costs, and we had quite high labor costs, and other industries thought that it was really quite enviable that we could pay such good wages and salaries. But then, on top of it, we cannot invest very much in America or sell a lot there. And there is other stuff developing. And on top, the fierce competition of China now in 2026, on the basis of the decisions that were taken by the commission in 2022 and 2023 under the auspices of Commissioner Timmansi, that the ETS allocations ought to be curtailed when it comes to free allocation. Now there is an additional burden, and this is where our industry is saying. I mean, that was decided 2 or 3 years ago, and this is no longer in line with our current realities. What is happening here is a significant additional burden and triggers their respective shutdown events. And the general conditions are no longer the right ones here. So we are producing chemical products, which we are producing under very good conditions, and all that goes to China. And China will care less about clean production. So they use coal and they will not reduce their emissions, and then they put that into their tankers and transport the stuff to Europe, which is fueled by heavy diesel fuel. So we get the products from an environment that is not as conscious about climate protection as we are. And we are, and I mean, it comes back to Gemlif, saying that this is suicidal when it comes to climate protection and when it comes to the protection of our industries. I mean, this is really a very clear and very tough statement. But at the end of the day, I can see the reality thereof. And unless we get our act together now and protect our industry that produces products in an environmentally friendly way. And then we will lose out, and the whole world will lose out because we will then get the products from areas in the world that couldn't care less, or at least are not as conscientious as we are. So we will abolish ourselves unless we reform, unless the lawmakers can agree on a proper compromise, which, at the end of the day, will protect both the climate and our wealth. Under the current conditions, this will not be possible. So, Mr. Frondhoff, I hope that I've been clear enough.
Claus Zemke: Mr.Frondhoff says he's got another question, but of course, he doesn't want to hog the scene. So, is there anybody else? Well, why don't you go on, Mr.Frondhofff? Quite all right with us.
Bert-Friedrich Frondhoff: Currency translations, foreign exchange effects. Can you quantify that? What does it mean for you? Is this attributable to the weak dollar? Or is it also the renminbi development? And what kind of further developments are you expecting? And maybe you can also talk about the business situation in the individual regions.
Matthias Zachert: Well, Oliver, why don't you take over?
Oliver Stratmann: Well, Mr. Frondhoff, you kicked it off very well. I mean, the most important currency is the dollar. Well, this dollar is the basis for our business in America and in Asia. So this is about 3% simply on account of the weakening of the dollar. And we expect this to stay? And if I have a look at the banking sector, this is a consensus that you cannot really talk about a short-term recovery when it comes to the most important foreign currency.
Claus Zemke: Thank you. Now we have a question from the English space, Andrew Noel.
Andrew Noel: If it's possible to get an answer, that would be great. The first one is, I guess, LANXESS was at the CPHI, and you've got some feedback from there. I want to ask, has CDMO finished in Europe? Has the market already shifted to India and Asia? Because when the Syngentas of this world look at ASM, it's in administration. I'm just wondering how much confidence they have in the future of Europe's CDMO. And what is the plan for the longer-term plan for Saltigo, if that's the case? The second question is just a clarification. We've been speaking about mergers and consolidation this morning. And I heard you sort of say different tunes that you can play on the keyboard and so on. Can I ask, do you feel more open to strategic mergers and the other kind of options, LANXESS as a company? Do you feel more open to these situations than previously due to the downturn in the market?
Matthias Zachert: Well, I will continue in Germany, and I just hope that you can understand the translation well. First, CDMO. For everybody to understand what that means. This is a custom manufacturing business, and this is all bundled in the Saltigo unit. And the conference that you mentioned is a conference that is happening here in Europe on a regular basis, where everybody comes together. And now your question is quite clear. We want to keep CDMO here in Europe. And this is a business activity, which is very important for the chemical sector. But then, of course, you really have to have first-class facilities and first-class technology to offer. I think the very early synthesis stages that are not yet on a high technological level that they will be in the hands of Indian and Chinese producers. But when it comes to the more complicated synthesis, and there are more steps in the entire chain, that they are going to remain here in Europe. But of course, you need to have a competitive position here. You have to know the technology, you have to know about innovation, and you have to be cost-effective. And you see that in the automobile industry. They have got a strong position in the premium segment, and they have to have that in order to have a good cost structure in order to be competitive in the international comparison. This is also true for the European and German CDMO business areas. You mentioned ASM, and that's not on our list for closures. I think in October, there was a communication that the Austrian CDMO company, ASM, filed for bankruptcy. They were by far not as widely established as Saltigo, and they used to be owned by a private equity company for 10 years before that. So they were not as well-equipped when they had to face the storm. And therefore, they were hit hard. This is changing the market in a way that Saltigo should benefit more than have a detrimental effect. So CDMO will remain important in Europe, technologically speaking, for the respective customers and clients. Cost-wise, of course, you have to keep pace so that in the international environment, you can survive the competition. And this is the motto also for Saltigo going forward. Our technology is of high value, high [indiscernible] value. But of course, we have to face the cost of the international competition as well. I hope that answers the first question. Second question, more with respect to mergers and acquisitions. Looking at the past 10 years, LANXESS has always been a company, which on the M&A side, was rather progressive in inverted commerce or took a pragmatic approach, never a dogmatic approach. And we will have a look at what will be beneficial for both LANXESS and our stakeholders. And then we will see what kind of strategic steps we may take in the future. I hope that suffices as an answer for the second question.
Claus Zemke: Thank you, Mr. Zachert. I have no additional questions, or nobody wants to take the floor, but let me look around. No show of hands. Thank you for attending our press conference. And lots of success and enjoy the rest of the day, and greetings from Cologne, and goodbye.