Clariant AG

Anja Pomrehn - Head, IR Hariolf Kottmann - President & CEO Patrick Jany - CFO

Christian Faitz - Kepler Cheuvreux Patrick Lambert - Raymond James Andreas Heine - MainFirst Peter Clark - Societe Generale Charlie Webb - Morgan Stanley Peter Mackey - Exane BNP Paribas Markus Mayer - Baader Bank Gunther Zechmann - Bernstein Terrance Teh - Deutsche Bank Victoria Kruchevska - Vontobel

Thank you, Sarah. Ladies and gentlemen, good afternoon or good morning.

My name is Anja Pomrehn and it is my pleasure to welcome you to Clariant's half year 2017 results conference call and live webcast. I'm joined on the call today by Hariolf Kottmann, President and CEO of Clariant; and Patrick Jany, CFO of Clariant.

A copy of the media release announcing the half year and the second quarter 2017 results related in metro presentation and financial reviews are available on the Investor Relations section on the Clariant website, clariant.com. In addition, a copy of the media release and the related investor presentation providing an update on the merger between Clariant and Huntsman are also available in the Investor Relation section of the respective website clariant.com and huntsman.com, and have been filed with the SEC.

Before starting, I would like to remind you that today's discussion will include forward-looking statements and actual results could actually differ materially from projections or in the statements. You should therefore review the press releases and related investor presentation, Huntsman's existing filings and SEC filings at Huntsman and Clariant will make in connection with the transaction including the Form F for registration statement that will include a proxy statement of Huntsman and perspective of Clariant.

For more information regarding the factors that could cause actual results to differ materially from projection or expectation. Neither Clariant nor Huntsman undertake any obligation to update publicly any forward-looking statement.

In addition, Huntsman and its directors and executive officers may be deemed to be participants in the solicitation of proxy in favor of the proposed merger. You could find information about Huntsman's directors and executive officers in Huntsman's proxy statement and annual report filed with the SEC.

Let me now hand over to Hariolf to begin the presentation on Slide 4.

Ladies and gentlemen, good afternoon. Clariant delivered a strong performance not only in terms of sales growth, but also in profitability.

Sales rose by 9% in local currency driven by catalysis and natural resources. Underlying sales improved by some 5% in the local currency driven by higher volumes excluding the acquisitions in the oil and mining service business and the consolidation of the joint venture Süd-Chemie India.

We saw strong expansion in the business areas, care chemicals as well as catalysis. Sales in care chemicals rose by 8% in local currency helped in particular by the industrial application business, catalysis sales improved by 11% supported by 6% organic growth.

Natural resources soared by 19%, lifted mainly by the acquisition in North America, plastic and coatings grew 4% with continuing strong sales expansion and editors, and also in the China region. EBITDA before exceptionals also grew by 9% to CHF482 million, this increase is attributable to positive developments in both, catalysis and plastic end coatings.

This improvement corresponds to a 10 basis point improvement on the EBITDA margin before exceptional items to 15.4. Operating cash flow decreased to CHF116 million against the strong comparable base, yet the good growth dynamics in June led to higher networking capital in order to be able to satisfy the expected favorable demand in the coming quarters.

Net income soared by 20% in CHF to CHF153 million on the back of the improved absolute EBITDA, as well as lower finance cost. Crude sales were driven by 5% volume growth.

The acquisitions added another 4% to sales which totaled CHF3.1 billion for the crude. Prices stayed flat overall.

Looking at the regions, growth was most pronounced in the Middle East and Africa, Asia, as well as in North America. In Europe, sales rose by 8% in local currency while Asia advanced by 11% supported by the strong sales development in China and the full consolidation of the joint venture in India.

Sales in North America increased by 14% lifted by the acquisition and Latin America decreased by 3% due to the difficult economic environment, but also against a strong comparable base. Looking at the figures of the business areas for the first half 2017 in more detail starting with care chemicals on Slide 6.

Care chemicals, sales in local currency were up 8% year-on-year. Consumer care advanced with a mid-single digit growth rate despite a strong comparable base.

However, the industrial application business also reported strong growth. The EBITDA margin before exceptionals in care chemicals decreased to 17.5, it was temporarily negatively impacted by the ramp up cost for new capacities and anticipated maintenance shutdowns in various regions as already communicated in April this year.

Catalysis rose by 11% in local currency with growth contributions from all business lines driven by refill business as well as some progress in projects. The full consolidation of the Süd-Chemie India joined venture lifted the sales by 5% in local currency.

The EBITDA margin before exceptional reached a strong 23.7% reflecting the top line improvement, as well as more favorable product portfolio and improved capacity utilization and the impact of the joint venture. On Slide 7, we see that net full resources sales stepped up 19% in local currency driven by the acquisitions in the oil and mining service business unit and the continuing sound sales growth in functional minerals.

Excluding the acquisition in the oil and mining service business in the U.S., underlying sales in natural resources rose by 3% in local currency. On a business line level, the oil and mining services business report double-digits sales growth, lifted by the acquisitions; excluding the acquisitions the business line delivered a low single-digit negative sales performance which is a very good result given the continued difficult industry conditions in oil.

Functional minerals showed a sound single-digit sales growth in all segments. The main driver for this continued positive development was the purification business of edible oil.

The EBITDA margin before exceptional items decreased to 14.6% due to specific factors which included weaker demand for the refinery business that carried over from the first quarter. Sales in plastic and coatings increased by 4% in local currency with sales growth in all businesses.

In [indiscernible] all regions showed strong sales growth apart from Latin America where sales declined against a strong comparable base. The growth was primarily driven by packaging and fibers [ph].

Sales in pigments were mainly supported by Europe and Asia, in particular, China and India. While decorative [ph] coatings remained weak due to the current color trend for pastel colors, plastic applications and special applications reflected attractive sales developments.

Additives continued to report strong sales growth across all business line and all regions except for Latin America. EBITDA before exceptionals grew by 6% to CHF221 million following an impressive rise in sales of almost 20% during the same period last year.

Hence the EBITDA margin before exceptionals climbed another 40 basis points year-on-year to 16.4%. The good performance resulted mainly from the higher capacity utilization and the continued impact of the differentiated business steering.

Though we do expect the improvement to continue, the magnitude of increase in the first half should not be extrapolated for the full year. As for this business area, the first half generally tends to be the stronger one.

So in summary, as seen on Slide 8, in the first half of this year, all business areas delivered a solid sales performance. Crude sales grew 9% in local currency to CHF3.13 billion driven by higher volume growth across all business areas.

The EBITDA before exceptional showed an impressive rise on 9% to CHF482, lifting our EBITDA margin before extraordinary items to 15.4%. We therefore remain on-track on our part for continuous profitability improvement and with that, I'd like to hand over to Patrick for the discussions of the financials of the first half '17.

Thank you, Hariolf. Good afternoon, ladies and gentlemen.

Let us move to Slide 10. Looking at the financials for the first half of 2017, the gross margin decreased by 30.4%, mainly attributable to higher raw material cost of increasing selling prices to offset the higher raw material cost could not be fully implemented in the first half of the year.

Nevertheless, we could increase the EBITDA before exceptionals items 9% in Swiss francs interest rate to more than CHF82 million. The improvement was mainly driven by the continued recovery in catalysis and the differentiated business dealing of plastic and coating.

The EBITDA before margin before exceptional items therefore rose above the previous year's level to 15.4%. Moving on to Slide 11; net income grew significantly by 20% in Swiss francs to an excellent result of CHF153 million.

This expansion was reported by the improvement in absolute EBITDA, as well as lower finance costs. The operating cash flow decreased to CHF116 million against the strong comparable base in the previous year.

The positive entrance of the EBITDA improvement was more than offset by a higher networking capital level as a result of strong growth demand in June, which is expected to remain favorable in the coming quarters as well as an increase in other current assets and liabilities. Net debt increased slightly to CHF1.584 billion, which reflect the usual seasonal development in the first half of the year.

Let us now move on to our Q2 figures on Slide 13. In the second quarter, sales and profitability continued to step up year-on-year.

Sales rose by 8% in local currency to CHF1.53 billion, helped by acquisitions. Underlying sales was 4% higher in local currency; this progress was driven by higher volume.

EBITDA before exceptional items increased by 8% to CHF232 million, this advancement was mainly driven by catalysis and plastic and coating. The EBITDA margin before exceptional items stepped up to 15.2%.

The growth in the different regions can be seen on Slide 14. Sales growth in local currency was led by North America, growing 18% in local currency supported by the acquisitions at the end of last year; followed by the Middle East and Africa with 16% growth in local currency; Asia grew 10% with an ongoing strong development in China; while Europe rose by 5%.

Latin America was impacted by the weak economic environment and declined by 2% against the strong comparable rates [ph]. For the next few minutes I will focus on the development of the businesses in the second quarter starting with care chemicals and catalysis on Slide 15.

Sales in care chemicals increased by 8% in local currency, most regions achieved good growth with Asia showing particular strength expanding in the high double digit. As in the first quarter the current year, the goods sales development was reported by the industrial application business and crop solution.

EBITDA margin before exceptional items declined to 16.6%. The margin was temporarily diluted by the ramp up cost and various maintenance shutdowns.

The anticipated maintenance shutdowns amounted to approximately CHF9 million. Higher raw material costs also has a negative impact on margin due to a time lag in implementing corresponding price increases; this effect is expected to abate in the second half of 2017.

In catalysis, sales increased by 20% in local currency. The growth was driven by recovering demand in Asia, as well as in the Middle East and Africa.

The underlying sales growth was 11%, while the consolidation of the Süd-Chemie India joint venture added another 9%. The EBITDA margin before exceptional items in catalysis jumped to 27.4% year-on-year.

This excellent profitability increase is the result of the improved capacity utilization, the higher contribution from petrochemical and specialty assets chemicals [ph] and the positive impact from the joint venture. Moving on to Slide 16; sales in natural resources were augmented by 22% in local currency.

This upswing was propelled by the continuous good demand in functional minerals as well as by the acquisitions in the oil and mining service business which had a positive impact of 17% on the growth in natural resources. Though the industry conditions for the oil and mining service business remained difficult in the second quarter and are also expected to continue to be challenging until the end of the year, the underlying sales turned to positive growth in the second quarter.

This confirms our expectation for better performance in the second half of the current year. Functional minerals continued good sales growth in local currency which was mainly driven by the edible oil purification business, but also supported by foundry.

The EBITDA margin before exceptional items fell to 12.7% against a particularly strong comparable rates; the margin was negatively influenced by weakness in Latin America coupled with some margin pressure. However, we expect natural resources to have now turned the corner and are confident by profitability that natural resources will expand again within its target guidance of 15% to 17% in the second half of this year.

Sales in the [indiscernible] area stepped by 1% in local currency against a strong comparable base last year. The sales development was found across different regions with the exception of Latin America which reported negative sales growth in the second quarter, still impacted by the weak economic environment.

In master batches, sales in Europe repeated the good performance already seen in the first quarter. In pigments, sales growth was again most pronounced in Asia, mainly supported by China and Japan, while additives was boosted by strong sales development in Europe and North America.

EBITDA before exceptional items rose by 6% in local currency to CHF111 million compared to a strong period in the previous year; accordingly, the EBITDA margin before exceptional items jumped by 90 basis points to 16.5%. Moving on to the overview of Slide 17 and summarizing the second quarter 2017, we increased sales by 8% local currency mainly supported by care chemicals, catalysis and natural resources.

EBITDA before exceptional items grew by 8% in Swiss francs to CHF232 million, primarily lifted by the expansion in catalysis and plastic end coating. The EBITDA margin before exceptional item improved by 10 basis points to 15.2%.

With this, I'll hand over to Hariolf for the outlook on Slide 18.

Ladies and gentlemen, the first half of 2017 was characterized by economic and political uncertainties. However, we were able to grow and increase our profitability indicating that Clariant continues to progress along its path to become an even more profitable and resilient specialty chemical company.

This momentum was achieved as a result of the recent execution of our strategy by means of innovation, sustainability, portfolio repositioning and sales in growth opportunities. For 2017, Clariant expects the uncertain environment to continue.

We anticipate moderate growth in the United States and expect growth to remain stable in Europe. For the emerging markets, we anticipate that the economic environment will remain challenging and volatile.

As for our outlook, please move to Slide 19, point 9. For the full year 2017, we will continue to focus on growing our business by means of innovation, sales in growth opportunities and cost efficiency.

We are confident to be able to achieve growth in local currency to progress operating cash flow and to further improve our absolute EBITDA as well as the EBITDA margin before exceptions. Ladies and gentlemen, before we go into the Q&A, I would like to say a few words on the merger update that Clariant and Huntsman published this morning.

To allow time for this, we will focus on only a couple of slides in the merger update presentation. As we have already said many times, this merger of equals between Clariant and Huntsman is for us a merger of opportunities; opportunities from both strategic as well as a financial point of view, allowing to maximize sustainable long-term value for all shareholders.

This is summarized on Slide 4 of the merger update presentation. What excites us about this merger is the unique opportunity to leverage the complementary strength of both companies which will create a global specialty chemical leader with greater scale and complementary technologies, product portfolios and manufacturing footprint.

The leverage effect of the complementary production set up in supply chain benefits in care chemicals, performance products and natural resources represents approximately 35% of total pro forma revenue and there exists a meaningful growth opportunity through cross-selling, accelerating expansion into specific high-end downstream market and more differentiated applications. Since the announcement of the merger on May 22, our combined integration teams have identified additional organic growth, sales, revenues in excess of approximately 2% per annum and an EBITDA margin of about 20%.

The company's complementary asset and geographic fit provides significant commercial opportunities within established road to market. The combination also offers compelling financial rationale including at least $400 million annualized cost synergy and $25 million in tax savings, creating over $3.5 billion in shareholder value, which we have high confidence in achieving.

Approximately, 17.2% pro forma EBITDA margin went accounting for synergies. Strong balance sheet with pro forma leverage under 1.5x.

Higher cash flow generation, lower financing cost and ability to maintain investment rating, leading to greater strategic and financial flexibility; a more flexible capital structure for organic growth, value creating both on acquisitions and maximizing capital return. I will move directly to Slide 6; both Peter Huntsman and I are convinced and excite about the possibility to create value for all of our stakeholders and maximize shareholder value in the long-term.

For the new company, Huntsman Clariant, we have a shared vision on our future portfolio management principles and capital allocation intention. We will direct the majority of our investments to growth, regions and businesses, which will be managed for both, growth and margins by continuing to further expand into specific downstream opportunities, while the two plastic end coatings and textile effects businesses will be managed for cash.

As outlined on Slide 7, we started the integration work with Huntsman shortly following the merger of equals announcement on May 22. The project teams are progressing remarkably, rapidly and are fully dedicated to overachieve the synergy targets and leveraging the complementary strengths of both companies.

The shared vision and prospects that the new company; Huntsman-Clariant will offer is maximizing sustainable long-term value for our shareholders. This vision and the prospects are strongly shared by many of our shareholders who support this transaction and we do look forward to continue our open dialog with all of our shareholders.

I'm looking forward to having the excellent teams of Clariant and Huntsman work together, not only during the integration phase but also afterwards as we realize this imminent opportunity to create the global specialty chemical leader. With that I turn the call back to Anja.

Thank you, Hariolf; thank you, Patrick for taking out through the first half year 2017 results which represent another step forward towards Clariant's group targets and also on providing further information and clarity as to the merger of equals with Huntsman. With that, we will open the line for questions.

Operator?

Yes, thank you. Thanks for taking my two questions.

First is on raw material price installation. You mentioned some impact in care chemicals.

Can you quantify that and also for the whole group, was there any meaningful impact on the whole group in the first half? And in that relation, also going forward, you said you expect the time-lag effecting [ph] care chemicals from raw materials to abate in the second half but do you expect overall raw material price pressure to become issue for you, if more in Q3 and how can you give view that on your ability to pass them onto customers on time?

The second question is on your cash flow. When I look at your Slide 22 in your handout, I see that in the line others, the figure coming down from CHF161 million last year to CHF73 million this year; can you talk about that change in this line 'others'?

Thanks.

Okay, thanks very much, I'll take your multiple questions in an order. So looking at the raw material increase, indeed we had an increase in the expected range.

We -- you may remember that we guided for an increase of 2% to 3% for the year and that we see now coming through to different speeds in different businesses, and indeed the one which has certainly shown the highest impact until half year has been care chemicals; where if you take the margin decrease by around 4.9% in Q2, you probably have to count raw materials impact on the margin of around 1.5%, the rest being more of the announced maintenance stops and the cost of the ramp up capacities there. So that is the impact which we have seen in care chemicals which is the strongest in the group so far, the others have been compensating this impact in a better way.

In a way we would expect this increase in raw materials to continue through Q3 and we see that in Q4, we start to receive in Q4 -- care chemicals is certainly, currently increasing pricing in Q2-Q3. The pass-through has been a bit delayed which caused the pressure in Q2 and we would expect this pressure to abate as the raw material increases or price increases comes through at the same time as raw material pressure as well, we see slightly towards the end of the year.

So we will be able to come to the part of that pressure for care chemicals. At group level, the impact has been lower, also failed particularly in natural resources while others like catalyst and the functional business for instance have had no pressure or no time lag in passing on the raw material cost increase to the customer.

So it's a differentiated view depending on the businesses. Overall, the impact on the cost has been not material and we would expect it to be tackled in the third and fourth quarter.

Now looking at your question on the cash flow; we had a few deviations on the cash, one significant one is increase in inventory, the other one is a change in others. The main position year has been the previous year the payment from our partner in the polypropylene plant which made a payment at that time which was obviously not done this year, the plant is finished.

And the second biggest impact is timing difference in the [indiscernible] reimbursement, particularly in Germany and other northern countries which this year was in first stage of July while last year it was in June, that would obviously or has already reversed as we are today in July; so more of a temporary difference for -- I would say the biggest part of the difference.

Thank you.

You're welcome.

Hi, can you hear me?

We can.

Good afternoon, everybody. Thanks for the two presentations.

Three questions if I may. The first one on catalyst margin versus the very strong 11% organic growth in Q2; that's above what you were guiding at this at the end of the year and still in Q1 in terms of organic growth; and I wanted to understand a bit the growth behind the start of the polypropylene payments and sales and how does it affect the margins?

And also now, the -- do you think that the weaker growth is achieved a bit earlier than expected versus your previous forecast? That's question number one.

A bit of a same question on oil and gas, the margins development as its 150 basis points lower in H1 and still further that the underlying margins of the oil and gas business is well actually pretty well protected. So if you could comment on the latam [ph] impact in particular, why was it so impacted in H1 in terms of margins?

And why -- as together this CHF73 million was accelerating cash flow was explained. Thank you.

Alright, thank you Patrick, I'll go through your questions. So looking at the catalyst margins and specifically the growth, we had a decent growth, actually with 11% in Q2 which we see as being indeed a bit of an accelerated ramp up.

You may remember that we always guided for second half being stronger than the first half in catalysis and by the way the oil business as well. Certainly for catalysis, this slight increase in dynamics has been noted faster over in Q2.

So it is quite widely-sustained increase of growth through petrochemicals and specially catalyst in a wide area of geography, so we talk about Middle East, we talk about Asia and China, in particular as well while on the other hand, U.S. remains weak.

But it is I would say the forecasted and pre-announced effect coming slightly earlier. It is not what is clear, forwarding of demand from Q3 into Q2; we would expect a good development of sales in Q3 as well.

Which also means that the polypropylene did not contribute too much?

That is absolutely correct. I think the polypropylene is starting to ramp up on the technical side.

On the sales level, it is not material today to make a real impact on the figures. And we therefore would expect its momentum to continue into catalyst.

Therefore, we have changed actually; you probably have seen that in the press release, the wording for our view on this year, we certainly now guide on the growth for catalysis for 2017 on an organic basis. Now looking at the oil and mining business; there I would say unfortunately, it is as forecasted, so no bad but no good news.

We certainly forecasted better second half than the first half but the ramp up is happening; however in a very difficult environment to highlight the positive side of Q2. On an organic basis, was the first quarter -- since quite a few quarters we're actually growing in the oil and mining business, we have returned to growth in particular, as well in North America.

Nevertheless, the profitability is still impacted by a sudden price pressure of our customers and also more importantly, the rather weak refinery business, which as you know is a major drawback of margins particularly in Q1, beginning of Q2 and then Q4 of any year. So the margins per sales, the actual oil business are fine and stable, it is more the refinery business which prepares for this contraction of the margin; and also as you rightly mentioned, the weakness in Latin America, particularly in Argentina and Colombia and Brazil where the business is still not picking up tremendously but rather weakening.

Okay. Thank you.

You're welcome.

Yes, actually I wanted to follow-on on the catalyst business. So you answered one question already, so it's no phasing between Q2 and Q3, but what you see now is 10% increase at rather lower quarter seasonally.

Going into the same half, what do we expect as a good proxy for the growth? Is it already back to the mid-single digit what you expect as -- say, mid-term growth?

And also one question on the margin; the margin is always dependent on your mix which was very favorable in the same quarter. And going into Q2, it will be also dependent on the ramp up of the new catalyst plant?

Could you update as on these two factors and then at the margin, then is on the full year in line with the corridor or maybe even higher? Basically in the same direction as the question on oil and mining services, you said that there is -- that you seem -- that you expect a pickup in the business, it was a slight increase in the same quarter.

Do you expect and see this in your order book already an acceleration in the second half or will it be a rather slow recovery? Thank you.

Alright, Andreas. So starting with catalysis, you're right.

So it's not a fazing issue in Q3, it's a progressive recovery of demand per se so a more still and pronounced development. Although it is right to mention that the 10% on the Q2 is 10% of the weak quarter like Q3, to be two quarters up our ramp up quarters.

The real difference of the year will be Q4 and it would be wrong to assume that we will have a Q4 edging the excellent previous year by 10%. So we are not guiding for an organic growth of 10% for the full year, we changed our guidance from stable to slight growth to growth statement, which means we are targeting definitely growth but it will not be close to double-digit for the year.

In terms of margins, I think as we had guided already and we maintain this guidance. The margin itself was probably pretty close to the margin of the previous year, which is at the lower end of our guided range.

Given that as you mentioned we do have the PP plan coming in with its consequential ramp up cost as well. And on the one hand you have the growth in terms of sales but you also have additional costs to ramp up the PP plan and the marketing effort on that aspect.

So that will be offsetting the additional extra margin and therefore we will come in modest comparable to previous year. When I now look at oil and mining, I think the picture itself - happening, it is slow given the market environment.

The oil price has come down again, compared to what it was six months ago. So we see an increase in production volumes particularly in the U.S.

We will have to look into the future for in more details to see why they expect to have lost profitability - with it, but we will expect certainly only a progressive ramp up in terms of sales, which is according to our guidance and we didn't look favorable when compared to a weaker second half of last year. But if you look at the incremental dynamic, it is a very progressive data indeed.

Thanks.

Good afternoon and thank you for the presentation. I just had two quick questions.

First of all, I just wanted to check the 90 basis point improvement you have in plastic and coatings. Was that a mix effect or was that an underlying improvement in the business?

And also just wondering if you could help us and add anything to the story that we heard yesterday - say for a number of companies including yourself by the European Union investigating quartile activities and ethylene pricing?

Sure. I think your first question on the plastic and coating business, the increase on the margin is actually consequential of quite a solid development of the economy in quite a few major markets particularly for Masterbatches an additive while pigments had a more slow growth phase in the first half and particularly in the second quarter as the quartile market is not out of the buoyant as we have seen as well stock rise announcement of customers.

On the other hand, it is particularly strong performance of additives which has an excellent business and with the - back to where it used to be which is very supportive of the margin in that business area.

Yes, I think your question concerning the ongoing competition law investigation by the European Commission, we announced last night. We cannot give more details and information to this issue compared to what the announcement does.

Because first of all, we have an agreement with the authorities that we keep everything confidential and honestly speaking, we do not have very much detailed information about what's going on and what the Commission really is investigating for. The company is assisting the relevant authorities and we have just to wait outcome mid to long-term will be.

Okay. Thank you very much.

Hey good afternoon and thank you. So just one question really it's on the growth synergy target you have thrown out the 2% with the 20% incremental margin.

And I mean you are indicating around that's basically coming particularly from performance products care chems, natural resources particularly overlaps I guess performance products in care chems. Now Huntsman when they were talking about the merger obviously had lifted their growth targets encompassing some of the growth synergy I think.

I'm not really sure that your new numbers will be changed very much. So I'm just wondering how much of that 2% is actually already factored in the numbers, if you see what I mean by that.

Thank you.

Thanks for your question Peter this is a very important point. Actually the 2% additional growth per annum at an average EBITDA of 20% is a totally new figure and is to be seen in addition to anything as you figure that we have communicated on the merger before today.

What we had announced on the 22 May when we came out is that we would have a cost synergy target of CHF5 million to CHF25 million taxes were also included at the time and that we will work out, say as in revenue synergies as we go along in the process. In the meantime, we have I think 35 teams working with I think now daily meeting who have involved more than 100 people on either side in those teams and we have been able also always with still quite limited access given clean team approach that we have for commercial issues, still we have been able to discover and explore new areas of overlap of cost cutting opportunities and of product improvement through each other technology which today allow us to for the first time communicated additional growth potential of 2%.

So this figure was not included in any figure of neither one of us neither Huntsman nor us before that day. And it really resides a bit on the broader cross-selling and products overlaps and technology transfer than the performance products and chemicals it also -- a project issues of additives technology into polyurethane into advanced materials there is a nice technology for compliment clarity there allowing to upgrade products.

And also technology for poly oils and polyurethane which was totally in-line with our chemical knowledge and our R&D. So from that point of view it is quite a broad approach of across quite a few business units on either side, which allows us to have this quite significant guidance of 2% additional growth.

Okay. Understood.

It will mean Huntsman has some pretty punchy numbers I think on their businesses. But anyway, I understand what you are saying.

Thank you.

I think they have been progressing quite well in there in Q2.

Good afternoon gentlemen. Just two questions for me.

Kind of bit more on the catalysis business. How much of that good growth you saw in the second quarter would you associate to first fill versus refill and is it really the refill activity that's picking up from the delays we saw kind of last year decided to come through now?

And then secondly on that business, kind of looking further ahead are you seeing more projects on the horizon that are up for tender whether it will be in the Middle East to an Asia that is kind of more to-date then maybe they were even a quarter ago or six months ago. That's kind of first question on catalysis.

And then second question just on natural resources. What level of visibility do you have on orders, especially new oil and gas business activities, I mean are you able to see order books out to months because -- you are going to grow in the second half though?

Alright. Starting with the catalysis, it would be hard for us to give you an exact figure about what is the refill portion and the first fill.

However, quite a significant part our petrochemical for instance source has been coming from first fill from actually installation from one competitors in couple of areas there so it is quite an additional business coming in. And then we look for a way ahead, we do have quite significant projects in the Middle East but also in China in particular that has been getting more concrete and we have planned a few going to 2019-2020 and 2021 already.

So overall, the whole environment looks more sound and quite in line with what we have hoped for when we guided for this - one and a half year ago all the way. When you look at natural resources, I think it's not really orders.

In that case it is actually more contract and tenders where you really feel for a certain period of time want to do for years and therefore we are quite confident on the business volume. It always depends once you have gained the oil field or the oil field.

How fast changeover happens from the previous company and how fast a new field is actually is being exploited by the company. That's why you see the delay depending on the situation of each customer.

So there is always a matter of a couple of quarters where you actually or know exactly the pace of the ramp up but it is quite certain that we have that people and that this turnover will come. The certainty is not on the weather but more of the timing.

And if we look at the project that business unit is reporting and so we do have a nice hit rate particularly in the U.S. so we are very confident.

Also because of the gaining market access through the acquisitions we announced in the fourth quarter last year that we are indeed progressing quite well when you look at it in the mid-term. It is more what is the actual pace of the ramp up which is a little bit more tricky to forecast.

Okay, probably - maybe just one last one. What is your expectation for the cash exceptional items this year?

I know you're obviously targeting to get that down to 1% perhaps, but you can just give us some sense, where you think 2017 might end up.

What I think will be close to just 1%, a little bit more. I think normal course of business.

We obviously do have now merger cost which were not a part of our guidance previously. I think whereas we near Q3 and have a clear picture of the process and across the board the preparation we are doing today we'll be able to provide you with a guidance by then for the full year cost of the merger activity.

Okay. Thank you very much guys.

You are welcome.

Thank you, good afternoon. A few largely clarification questions please.

Firstly on going back to that the catalysis topic. You booked a $10 million game on the Indian joint venture.

Is that in the clean EBITDA, the CHF49 million of Q2? Sorry a very naïve question I'm sure.

But is it in there or is it netted off against the restructuring charges took I think CHF4 million of restructuring in the catalysis business in the first half. So is it in between number of in the adjustments and further on that you mentioned you saw the EBITDA margin in catalysis is more likely to be sort of the same level as last year was in that area.

That would imply actually lower absolute EBITDA in the second half of the year than the second half of last year. Is that the message we should take from that or is that just a too much of a simplification?

Secondly, on the natural resources again, if you are talking about slight growth in oil and mining it suggests that functional minerals business actually had a bit of an acceleration in the second quarter. So I wonder if you could just talk a little bit more about that unit please that does feel us it was very strong in 2Q.

And finally on the cash flow, I am afraid I don't entirely understand the other current assets and liability line it's been a bit of a bug-bay historically. There was a small positive number last in that line, CHF15 million it's minus CHF73 million this year.

Is there difference there that -- reimbursement timing and we should basically expect the current assets and liabilities to be placed to zero for the full year of how should we think about that item on a full year basis?

Alright Peter. Starting with the EBITDA catalysis, the two questions are actually related.

When I say that the EBITDA margin of the year-end will be very close to the previous year which means that the lower end of our guidance it really affects the fact that the current performance with an EBITDA in the second quarter of 27% is also boosted by the consolidation of the joint venture in India which includes the CHF10 million that is disclosed in the financial review. So if you deduct the CHF10 million as an exceptional item, let's say the one-time income and the profitability of the joint venture just to look at the organic business.

We still have a progress compared to previous years in terms of growth and in terms of EBITDA margin. We are still in the 20% EBITDA range, but we are not at the 27% you obviously see.

Therefore we are pretty close to previous year on the good side of the previous year and would expect the evolution otherwise to continue throughout the year therefore situating us pretty close to the previous year without any impact.

So your comment about the full year margin is making an adjustment for that CHF10 million is it?

Correct.

Taking it down.

Correct. Just EBITDA is causing effect.

Yes. Thank you.

Just to guide on the ongoing. When you look at the natural resources, we actually had a quite a good Q1 and Q2 and it function - I think the acceleration has taken place in the oil US business - but Latin America has come down.

So it is more - in the oil and mining business which leads to the filtration of natural resources more than an - of functional minerals. The functional minerals per say is going at a very nice pace still as we still benefit from investments we made in prior years particularly in Indonesia or in Mexico to serve the edible oil market and we are able to be very successful in those areas.

Now looking at the cash flow question, indeed we do have this difference as I was mentioning before you have two elements in the negative $70 million figure of this year compared to the small positive speaking of 2016. One is a payment contribution to our PP investment of our partner in the previous year which favored a bit the number and the other one is a major shift of - repayments into early July instead of end of June.

So this is quite a biggest part of this million shift from one year to the other and that has already reversed - of July. That will not impact and we do not expect a major impact on year end from those…

So that line, the last couple of years that line has been give or take plus or minus 10 is that sort of number, we should be thinking about the full year 2017.

Yes, they are typically temporary differences. Alright.

Okay. Perfect thank you.

You are welcome.

Hi, good afternoon. Two remaining questions, one is again additional revenues synergies.

Can you clarify this 2% that is coming that's basically taking the combined to excluding the - sales then - as of date and then by when do you expect the figures additional revenue synergies and this 20% EBITDA margin for the synergies is that this kind of new run rate you expect going forward or why do you see this very high margin on this revenue synergies? And then lastly on the care chemicals, what kind of impact came from new product launches as care chemicals alone and group level?

Thank you so much.

Alright Markus, so starting with the 2% additional growth and 20% EBITDA which today disclosed in our merger update. It is the potential based on the combined sales so we're talking about a combined CHF13 billion sales basis, so it's quite a significant figure around CHF250 million, off the top of my head as an additional sales figure.

And that is the base for any calculation you should put in your models. There is certainly a ramp up period.

Not all the additional sales are available. On the one we talk about crossing selling from the geographic point of view is that is the easiest part and then you have obviously going through existing customers with the new product portfolio developing applications, trials with them and developing new chemistries.

So, there's a ramp up of this figure over a couple of years. The exact timing of the additional sales will only begin at the later stage, at a later merger update when we can work out of a way - away from this let's say this clean team approach that we have today and that the - and we can then go down even a level further about concrete business plans and product launches, and so on.

This will be done at a later stage. But there is a ramp up in this figure.

And the 20% EBITDA is linked merely to the fact that we are certainly will broaden sales of products which are on the higher range of the portfolio. This will take advanced materials, running through the arch, 21% I believe 22% and that is - that would typically be therefore a normal margin of additional sales and we probably will not have a lot of - will not focus on additional sales revenues on the lower end of margins.

The combined entity already will have a combined EBITDA of 17.2% when you take the synergies, and therefore, we are on the upper side, but not far away from the actual average of the new group. Now when you look at care chemicals, I think it still is difficult.

I wouldn't have the figure now at present to tell you how much of new product has been part of growth, but as you have seen from the evolution of the margin as well, we have been pushing volumes. Volumes are being pushed particularly on the lower end of the range, so on same-door EODs, even outside the relative to fill capacities and compensate for the maintenance shutdown.

This has been the highest growth in terms of product groups. So, it's been rather for the mid-teen levels is favorable in Q2 and rather pushing existing lower end products more than the high end.

However, I would say if you look particularly at the crop solution for instance, we do have an excellent quarter in crop. We actually highlighted I believe in our communication that's being the main driver in our consumer care business in Q2 as personal care and home care were - yeah let say in the mid-teens crop was certainly much higher than that.

Back to double digit growth and that is really based on new products and the new introduction that you may recall we have talked about in the past. This is now coming full swing into our figures.

Okay, perfect. Thanks so much.

Just on the inventory buildup in at the end of Q2, Hariolf, I think you mentioned and expected favorable demand in the coming months and quarters. Can you give some color on what areas you see that favorable demand and what your visibility and confidence is there?

And the second one, just to be crystal clear on the sales synergy potential from the Huntsman merger, is this 2% that we understand it on the whole combined entity, so it's not specific to you mentioned performance products care chemicals and natural resources.

Thanks again, Gunther. Starting with the inventory, indeed we have -- we haven't had that will as actually be the main operational delegation right compared to previous year.

We had a build-up in inventory, I mean working capital overall. I think the receivables were pushed up by the good demand in June, in late June, so it is now being collected, but for the quarter end it was a little bit unfortunate and the inventory ramp-up is clearly driven because most of our business continue to see quite a good demand.

I would particularly highlight there the additives businesses, which is performing well in terms of growth and has only I would say limited capacity, therefore produce on full steam whole steam across say the months just to be sure they have enough products. And as well as capital as we talked before in the earlier questions of the call.

Our good Q2 was not a forwarding of Q3. We expect a good Q3 and there again we have been producing to be able to match a good swing and then typically strong Q4.

So they are running at full steam and that has increased a bit the inventory levels at the end of the quarter.

Now looking that the sales synergies, I repeat it - it's a good figure, there is no issue about repeating it. It is about the combined sales of CHF13 billion and refers to obviously the sales - additional sales potential for the whole combined group.

And that really comes from, as we were highlighting before, not only the performance products, care chemicals, ethylene oxide chain, which we talked about qualitatively early on and is one of the major more immediate sales revenue expansion opportunities, but also about advanced materials with additives, about mining and amines, so about quite a wide range of the portfolio actually. So, it refers to the combined sales of you know both in total.

Very clear. Thank you, Patrick.

Hi, guys. Thank you for the presentation.

Just a quick question, I know you can't comment on the EC investigation itself, but do you anticipate the investigation to create any sort of issues or delays in closing the Huntsman Clariant merger? Thanks.

No. I think we have two different processes next to each other.

As I said, we do not have very much details concerning the investigation of the European Commission. We just have now to wait.

What will happen mid to long-term and this can take a long time as we saw in other companies involved in these kinds of issues. The merger management as its Clariant and Huntsman are, as we said, well on track.

We started already very closely after the announcement and when we came back from the first two weeks roadshow. And as Patrick already said, we have now 35 to 40 teams with more than 100 people from each company working on different kinds of work streams, cost synergies, or the operating model or other issues before.

It's a different process and in this process, we are well on track.

Okay. Thank you.

Good morning, couple of questions from my side. I just want to clarify, not very much has been said again about care chemicals, so I was just simply wondering regarding the implementation of the glucamide plants whether you can give some update with regard to these and also on the Easter impact whether you do have - whether there is some material impact from Easter.

And see the last questions again, in terms of guidance upgrade with regard to care chemicals. One of your competitors Croda, they have been a - they have been telling that they have been actually - they have updated their guidance for personal care for the portfolio from I guess 3% to 3.5%, 4% of the activity caused by the favorable business environment in these markets, I was just simply wondering where the - your sort of like on the same track or whether you see kind of favorable performance also for Clariant in personal care market and whether you consider updating your guidance?

Okay, Victoria looking at the dynamics in care chemicals, I would say the new plant of glucamide is on stream. It's ramping up, but an update has been a major factor in the sales growth that we have seen today.

I was mentioning before there has been a high focus on the fitting up capacity of the ethane - of that chemistry, so it's all about filling China, Indonesia, the U.S. and Mexico, and that usually with lower margin products.

Independency of the maintenance shutdowns we have had in those areas which affected the P&L. The glucamide itself is not at the level in terms of sales where it actually materially impact, neither positively nor negatively at the performance of care chemicals.

The Easter impact was felt I think when we talked about Q1, we had quite a nice sales development in Q1, but buoyant. You certainly have seen that the growth dynamics in Q2 has receded a bit.

If you take away catalyst and that is certainly just the sum of those impact, right. So, Easter, or the April month was very weak and then May was okay and June was very good and that is shared the normal evolution.

I think there is no difference in the trend. You have just to some March, it was very good and a weak April, but overall the trend is quite a strong underlying demand all above the world a part as we previously discussed for Latin America.

Looking at guidance of Care chemicals, I have not looked at guidance of our competitors. We actually see, as I was mentioning before currently a sales growth in the mid-single digit, therefore slightly higher of the mention that you previously - the figure you previously mentioned and that excludes crop which is very well into double digit growth.

Thank you very much Hariolf and Patrick. Ladies and gentlemen, this concludes today's conference call.

Should you have any further questions, the Investor Relations Team of Clariant is available to answer any questions you still may have. So, thank you again for joining the call today.

Have a good day and bye-bye.