Thank you very much, and good morning, and welcome also from our side to our Q2 earnings call. My name is Tim Lange, I'm Head of Investor Relations.

And with me are Klaus Engel, CEO; and Ute Wolf, CFO of Evonik. I know it's a pretty busy reporting day and some other calls ongoing.

I would like to hand over directly to Klaus Engel for the presentation.

Thank you very much, Tim, and good morning, ladies and gentlemen. Welcome to our earnings call for the second quarter of 2014.

We do have quite a packed presentation for you today so I suggest that we jump right into it to leave enough room for your questions afterwards.

Let me start with the highlights of the second quarter on Page 3. We were again able to accelerate our business with volumes growing by 5%.

This is good news. It demonstrates the ongoing demand and support of our key customers.

Combined with further easing pricing pressure and only moderate currency headwinds, this resulted in a sales increase of 1%. This was the first the quarterly sales increase in 2 years.

And certainly, although 1% is not a big number, it nevertheless marks a turning point with continued strong volume growth and easing price deflation.

Adjusted EBITDA came in at EUR 473 million, which was a 2% sequential earnings increase. Our investment program is progressing well.

On the one hand, our major approved strategic growth projects are on track, cost and time wise. On the other hand, we have carefully reviewed our midterm investment portfolio according to recent demand and market needs.

For the full year, we specified our outlook. We continue to expect sales to come in slightly above last year.

We also continue to expect an adjusted EBITDA between EUR 1.8 billion and EUR 2.1 billion, and now anticipate an outcome rather in the lower than in the upper part of this range. I will provide more details on our assumptions behind this as usual at the end of the presentation.

Moving on to an update on the execution of our investment program, Page 4. Overall, as I've said, we are satisfied with the progress we are making with our growth projects, our major investments are on-time and on budget in the first half of the year, we have started up 3 new facilities in China as demand here is constantly shifting to Asia and key end markets are developing positively.

The new capacities are needed to meet growing demand of local and also multinational customers.

In Shanghai, our new plant for organic specialty surfactants is now up and running. Over the course of the quarter, customer certifications were finished and also first commercial volumes have been delivered.

Also in Shanghai, our new integrated production facility for isophorone and isophorone diamine entered the start-up phase. This plant completes our global set up of fully integrated production platforms and enables us to serve our growing Asian customer base with locally manufactured products.

Production commenced as well for our hydrogen peroxide plant in Jilin in the North of China. We are now delivering product fence to fence to our Asian customer who was licensed also the HPPO process from us to produce propylene oxide using hydrogen peroxide.

Furthermore, we just recently announced new projects in the year Resource Efficiency segment, which we see as one of our key future areas of growth. We are planning to build a new plant for precipitated silica in Brazil, which will be the first local production site for highly disposable silica.

And we will set up new facilities for silicon compounds, including fumed silica in China. These are important milestones to further strengthen our market-leading positions in the high margin and also resilient silica business and to tap dynamic growth in key emerging markets.

Nevertheless, we continue to pursue a disciplined approach in implementing our midterm investment opportunities, projects that have not yet been started are, as you know, constantly reviewed in line with the updated and recent market development.

For instance, markets for M&A had been difficult for quite a while now especially in Asia. The reason here is that competitors have established capacities over the last years based on stronger growth assumptions.

We have therefore, for the time being, postponed our plans for a new MMA plant in the U.S. despite the availability of a very competitive high-cost, efficient, evenly production process that we have in our desk.

We will reassess the feasibility of a new plant during our regular strategic planning process. Moreover, we are also rescheduling the construction of a new polyamide 12 plant in Asia.

Here, our strategy going forward is twofold. First of all, we want to fully focus on bringing the existing plant in Germany back to full utilization.

Here, we have recently finished a favorable de-bottlenecking. And secondly, we will also put greater efforts into research and development for a bio-based route to polyamide 12, a pilot plan for polyamide 12 based on palm oil is currently taking on production in Marl, which might be an interesting option vis-à-vis the classical petrochemical route.

Page 5, let me now spend some more time on our plans for the strategic reorganization of our portfolio and management structure accordingly, which we presented already to our supervisory board, end of June. After Evonik's successful evolution from an industrial conglomerate to a specialty chemical company, these plans mark an important further strategic milestone and set the framework for more focused growth and capital allocation in our higher-margin specialty chemical businesses.

The backlog is here that the global chemical industry is obviously operating in a constantly evolving market environment, competitive structures are changing and demand is shifting towards Asia. At the same time, the efficient use of raw materials and competitive energy is more and more important.

And for successful players in specialty chemicals, effective innovation is becoming increasingly significant as a major differentiating factor in global markets. We are addressing these structural challenges actively with these planned measures that will enable a more focused capital allocation into those of our markets and businesses with strong barriers to enter and above-average returns on invested capital.

They will also increase our strategic flexibility for active portfolio management. And we are actively tackling the currently unsatisfactory performance in some of our more raw material-driven businesses.

The planned strategic reorganization is the logical consequence of this strategic shift. The goal is clear here.

We, as I mentioned board, want to focus more on Evonik's strategic development with a management holding structure and to emphasize the importance of strategic development and portfolio management on a group level. Our supervisory board has appointed Christian Kullmann as new board member and Chief Strategic Officer effective July 1.

For the 3 operating segments, Consumer, Health & Nutrition, Resource Efficiency and Specialty Materials, the plan is to establish 3 fully functional legal entities. This offers them opportunity of a more differentiated management tailored to their specific key success factors, as well as higher operational flexibility even closer to their respective markets.

The portfolio roles and differentiated strategies for the individual operational businesses are broadly characterized on the next slide, 6. The specific needs for managing and running the 3 segments already today vary considerably given the different market requirements.

The business model for the Consumer, Health & Nutrition, and Resource Efficiency segments is based on providing customized individual innovation-driven solutions and they operate primarily in markets with high margins, growth rates and entry barriers. In these segments, we want to generate above average profitable growth mainly by selective investments and also acquisitions.

As a more product-driven energy and raw material intensive supplier, the Specialty Materials segment is characterized principally by integrated technology platforms and efficient processes. We want to raise efficiency and effectiveness even further in order to strengthen these competitive advantages.

In the future, it is our target to concentrate on strengthening and extending the good market positions by our more selective investments and, where appropriate, alliances. To cut it short, ultimately Specialty Materials will be run for cash while rather than growth.

And this approach is becoming visible also in the 2 aforementioned delayed investment projects in this segment.

The new management holding will define vision and strategy on group level and break it down into a broad strategic framework for the operational segments. Also, strategic M&A decisions, capital allocation and target setting 4 operational segments will take place on this group level.

And the individual segments will, as single legal entities, have greater entrepreneurial freedom in the operational management of their respective activities. Within the defined projects, CapEx allocation and individual structuring of operational processes will, of course, be possible.

We have already taken the first implementation steps connected to the new structure and we have appointed the heads of the future legal entities so we can jumpstart the next necessary organizational, operational and strategic measures. They will be presented to the supervisory board during the course of this year.

And we expect to go over to Ute for a more detailed look on our second quarter financials.

Thank you, Klaus. Good morning, and welcome also from my side.

Claus already said it, we managed to grow volumes once again in the second quarter reflecting the good demand of our products. Also price pressure is easing further after minus 6 in Q4 of last year, price has now only declined by 2%.

This trend should continue into the second half of 2014 where we will be facing easier comparables as well.

Adjusted EBITDA was EUR 473 million, a sequential improvement of 2%. Looking into Q3 we expect to continue with this positive earnings development.

The adjusted interest results came in a bit weaker than in Q1, and the adjusted tax rate was a bit higher than expected, leading to EPS of EUR 0.37. Nevertheless, we anticipate an improvement of the adjusted net interest expense by around EUR 50 million and an adjusted tax rate of around 28% for the full year.

In May, we held our first Annual General Meeting after which we paid out a dividend to our shareholders. This payment, as well as outflows for our investment projects, turns a net cash position from the end of Q1 into a net financial debt of EUR 150 million.

Before diving into the details of the segments, Slide 9 provides you with a quick overview of our group’s development over the last 5 quarters. You can see a stabilization trend across the group over time, and small improvements in every segment from Q1 into Q2.

As mentioned earlier, we expect this positive overall trend to continue into the third quarter.

But let's now have a closer look at the performance of our segments. As usual starting with Consumer, Health & Nutrition.

Sales improved by 3% from Q1, mostly driven by a positive volume development in amino acids, and also earnings were up again sequentially after several quarters of decline in earnings. In consumer specialties adjusted EBITDA was lower both compared to prior year and prior quarter.

Additionally, to a normalize trading environment and superabsorbent, this was partly a result of ramp-up costs for our new production facility for organic specialty surfactants in China.

Moving on to Health & Nutrition. We saw a methionine is in good demand and the positive sequential volume development across all regions.

After a weaker year 2013, consumer confidence is returning again, and we expect full year 2014 demand growth to come back to historic level of 5% to 6% again. We are aware that recent hikes in Chinese and, partly also, in European spot prices caused some speculation about the impact on our financials.

There are several important facts to note about that.

Due to the global diversification of our methionine activities and the contract nature of our business, especially in Europe and the U.S., we are generating less prone to short-term movements in regional spot prices. In Europe, generally, only very minor quantities are at all sold on the spot market.

Hence, a small change in the supply and demand balance can cause a strong price effect on these spot price quotations. The price development in China is not the one and only decisive factor for our performance in Asia, the South East Asia is equally important for us.

Additionally, the Chinese spot market has a certain speculative element and is generally more volatile. Therefore, it is not a good proxy for our prices.

Consequently, we had been experiencing stable prices on average in the second quarter, with a positive pricing trend towards the end of Q2. So we are cautiously optimistic for positive business development in the second half of 2014.

We are currently sold out with our volumes, and new supply in the market is also limited for now. These are good preconditions for the startup of our new plant in Singapore, which will deliver first volumes in the fourth quarter.

The new capacity is desperately needed to meet the fast-growing demand from our customers.

As already mentioned during the last earnings call, the same does not apply for all lines of business. Average prices in the second quarter had even further decreased from the already low levels in the first quarter.

First positive signs of capacities being taken out and prices being increased have become visible in Europe and Asia, but yet, to a lesser extent, in the U.S. We will continue to monitor the development very closely.

Resource Efficiency recorded another strong quarter. Sales and earnings increased compared to prior years resulting in a strong EBITDA margin of 23%.

This development was supported by both business units alike. In organic materials, we saw good demand for our silica products for all major applications.

We recorded strong sales to our tire customers, especially from Mazda. Towards the end of the quarter, we announced price increases across our silica petroleum.

In Coatings & Additives, already Q1 has been stronger than last year and this development continued in the second quarter. Please keep in mind that we incurred the usual cost burden related to the startup of our new isophorone facility beginning in Q2 and this will persist in the quarters to come.

In Specialty Materials, sales increased by 4%. Good volume development supported by still increasing polyamide 12 sales offset negative pricing.

The situation in PA12 was broadly unchanged from Q1 and demand was overall solid, with good demand, specially, from the automotive industry. Last year's insurance payments left a certain gap to current earnings level.

Market in the [indiscernible] stable but not on a satisfying level. Price increases were partly successful for plant maintenance shut downs across all global locations hampered earnings progression.

The performance of advanced intermediates was equally dissatisfying. While volumes increased the price recovery was notably slower than expected.

Prices across the C4 chain take more or less on the levels seen in Q1. Additionally, Mazda prices increased for the second quarter leaving their trace in our earnings.

We are still convinced to see a price recovery, even though, it will likely be slower than initially anticipated. Results both in services and the corporate other segments were pretty much in line with the prior quarter's orders, hence, the earnings development here reflects our continued strict cost discipline.

So far to chart 13, let me now continue straight to our net debt's overview. We started into Q2 with a net cash position of EUR 583 million.

The dividend payment and outflows for our investment programs led to a net financial debt position of EUR 150 million at the end of the quarter. Given the outflows for our CapEx program of up to EUR 1.4 billion and further planned CPE funding of EUR 200 million in this year, we expect to also end 2014 with a moderate net financial debt position.

However, as you may have heard already, we have received a notification from the Consortium of the Municipal Utility providers that they intend to exercise their call option for the remaining 49% stake in STEAG. Based on this announcement, we expect the transaction to take place in the near term and, hence, will reclassify our 49% shareholding as a discontinued operation from Q3 onwards.

This means that our full year adjusted EBITDA, which is excluding the result of discontinued operations, will be lower by the EUR 24 million dividend we received from STEAG. Hence, with the sale of our stake and stay at materialize before year end, which will then have a net cash position again at the end of 2014.

That was it for me. Klaus, please take over for the outlook.

Thank you, Ute. Ladies and gentlemen, let me now conclude the presentation with the outlook on Page 16.

Looking at the global economic development, we saw slightly weaker than expected growth in the first half of the year. And the stepwise recovery of the global economy is affected by increasing structural challenges in the emerging markets, and also the uncertainty arising from ongoing political disputes and military conflicts in particular, in the Middle East and also in Eastern Europe.

Therefore, we do not anticipate better dynamics for the second half of the year, and will assume that the global economic conditions will not improve as much as expected at the beginning of the year. We also estimate that the raw material costs will rise slightly more than previously predicted.

When looking at our businesses in the second half, another positive volume trend should continue, also driven by the completion of our first growth investments. On the price front, we assume that the stabilization that has been evident so far will continue in some businesses such as methionine, a slightly positive price trend, as Ute remarked, is clearly visible.

However, up to now, this does not apply to the Specialty Materials segment, where our price trends have remained below our original expectations in particular, in the [indiscernible] and C4 value chain. Given these circumstances, we are confirming and specifying our outlook for the full year.

We still anticipate that sales will rise slightly, and that adjusted EBITDA will be between EUR 1.8 billion and EUR 2.1 billion. If the situation described above should continue for the remainder of this year, we currently assume that adjusted EBITDA would probably be in the lower, rather than in the upper part, of the EUR 1.8 billion to EUR 2.1 billion range.

Please note that this outlook covers all currently visible opportunities and risks, also the recent positive price trends, in methionine.

Let me quickly summarize the key takeaways for today. First, we managed to repeat our strong volume performance on the back of sustainable customer demand, while at the same time pricing pressure is clearly easing.

We see this as a turning point and hence, are cautiously optimistic for the second half of the year. Second, our reviewed investment program is progressing well.

And thirdly, strategically, we have set the framework for more focused growth and capital allocation in the future. We will consequently work out the details for our new corporate structure, and we'll, obviously, keep you up to date as we progress.

Thank you for your attention so far. Ute and myself, we are now happy to take questions.

My first question is basically on your reorganization. Can you tell us why -- in the new structure, what is going to be your way of managing the PA12 and the PF business?

Because you obviously are saying that you want to manage Specialty Materials for cash, so does that also include then PA12 or this is not the case. Then secondly, just want to get an update on the CapEx program.

I mean what -- considering the couple of projects that you are pushing back, what should we expect as a guidance for -- on the CapEx side. That's my second question.

And then thirdly just on methionine, I mean, as I understood before you were going to smoothen out the rollout of your new plant by taking, maybe, some capacity out in Europe, and considering the fact that you are sold out now. I mean, do you think that this is still the case or are you going to roll out the new capacity, as well as maintain the current production.

And just finally, just if you can update us on what is the level of startup costs that have burdened your business this year.

Okay, Jaideep, this is Klaus. First question, very good, PA12, you're absolutely right.

We have not decided on the final -- the fine structure of the segment. And as you rightfully noted, of course, PA12 is a very interesting and also differentiating high-performance plastic.

It could be, given the performance of this product, that also support very much the idea of Resource Efficiency. So you might recall that we sell this material to customers for lightweight construction in cars and automotive, that we will reorganize this into the Lease Source efficiency.

That has not been finally included yet, but we're thinking into this direction. So we like this business very much, and there's a high likelihood that we will run this show on our own, given the good performance and also the good future for this particular kind of specialty material.

Update on investment program guidance, I've mentioned 2 explicit bigger examples here, the delay for various reasons. On the one hand, we have technological option in the case of PA12, which could be a biotechnological route to the material.

Very exciting, but we also have to see could leverage [ph] here that current capacity that we do have is enough to serve the customers. We could de-bottleneck our current plan commercially, very attractively, so there's also from the market point of view, a known need for more capacity.

MMA, I mentioned as well. All in all, I would say, it might be, give or take good 10% to 15% haircut to our overall program.

So that gives you, from today's point of view, of the magnitude how we see are the spending in the next year, this year. Methionine.

Well, we can maneuver here very much on short term. We will not mothball or shutdown capacity here.

We monitor very closely the market. In the last weeks, the market has been rather tight, but the message here is we are now very flexible.

We have plans as you know in the U.S., in Europe and Singapore, very close to the markets. And we'll decide on short notice how we'll utilize those plans, also according to the regional market needs and the logistical situation that is more or less favorable.

Startup costs, Ute.

Yes, I think we discussed this also several times and always indicated that for 2014, this is a mid-double digit million amount in startup costs for this year. And for all projects that go live this year.

This does include the methionine plant.

Absolutely, yes.

Just 2 if I can, or maybe 3. Firstly, can you just elaborate a little bit on the change in the corporate structure, and what that means going forward?

I mean could we ultimately see the rest of the Specialty Materials being made noncore and being kind of becoming useful. As far as the phasing of the ramp up of the methionine plant, how much capacity do you think you have available to sell onto the market this year?

And if my memory serves me correctly, you've got about 430,000 tons of methionine capacity pre-Singapore. And then the last point on the balance sheet, clearly with the STEAG cash coming in, about EUR 500 million, you're going to be net cash again.

How are you thinking about the use of that balance sheet?

Thanks for your questions. Corporate structure, I think I've made clear that we are actively here addressing changes in the competitiveness, in particular of the European.

Specialty chemical industry, we have to see the squeeze here between the high-growth market stock has in terms of energy. And I think the challenge that we see for ourselves, we do share with a couple of more European players, we do have parts in their portfolio, which is more energy-intensive and also more dependent on competitive raw material access.

And I think this offers also the chance to team up and to do alliances and to try to -- we will -- we have several options for our business here as well. The problem is not that we have a weak balance sheet, so we do not want to generate the more cash.

But we think this is the right time to react proactively. The business is profitable, all in all, but I think the mid to long-term perspective of those businesses calls for action right now, and we want to be first movers in this change of the competitive environment.

Secondly, I think from the more from the organization of the third group it's clear that we will slim down the corporate structures, and will give more responsibility to the operational business, so that should lead to a smaller corporate center. Availability of methionine, I think the number you mentioned, all in all, that would be the 100% full capacity is correct.

Of course, we will bring in this capacity, as we said before, into the market swiftly and cautiously over the time. So how much this will be is hard to say during the year, but I think our first ambition, as Singapore is a very cost-efficient plant, we'll try to utilize this as much as we can.

Again the market conditions being permitting this, we are aware of our responsibility here as market leader. I think in the meantime, Ute has worked on the STEAG net cash issue.

Yes, I have. Yes, I think we discussed this several times with the community, the use of cash of a strong balance sheet.

I think the priorities did not change. First of all, it's our CapEx program focus on the gross [ph] business that we have.

There is still some pension funding in the pipeline, I mentioned that. We also expressed in the last calls that if M&A opportunities might arise, we have now the capacity to participate in that, unless the same priorities that we have discussed earlier.

And now just to be clear on the latter point regarding M&A. I think you sort of talked about opportunities of between EUR 50 million and EUR 1 billion.

Is it sort of still within that scope?

I think we also expressed that midsized deals could be thinkable, but I think it's not a question to spend the money, it's just really the question to develop here the company and the business in the right way, so I think that should be the first priority.

My 3 questions. First on lysine.

You said that there's moderate signs of improvement, so sequentially do you see prices recovering in lysine. And how much of lysine is spot and how much is contract business.

Second question is about the business momentum within the second quarter, and this question is more related to, Resource Efficiency and Specialty Materials. Can you talk about how the business develop during the second quarter.

We heard other companies indicated that M&A were poor but June was quite strong. Does that tick to your observation and grow forward?

You mentioned that already your optimism for the second half, do you see in your order book that demand is quite encouraging at the beginning of the third quarter? And the third question is on your expectations about raw material cost slightly rising.

Can you mention on which raw material cost you are most concern. Is it not to deride or also other raw material costs which are a concern for you?

It's me, Mr. Roediger, Martin.

Business movement in Q2, it's hard to say. If we get the orders, if we deliver amongst this quite a short time, so I think we should take this with a grain of salt.

I would say June was a more stronger month of the quarter. That does not mean that April and May were weak months or were below our expectations.

But it's probably fair to say there were some momentum, yes, to the end of Q2.

Okay. Then I'll continue with the raw material prices.

There has been a slight increase on the overall group level. I think there is a differentiated picture just byproducts in consumer specialties, we have seen prices rising relatively sharply on and propylene.

In Health & Nutrition, we have seen a cost decrease in the corn prices. For ammonia we had some price increases and organic materials.

Raw materials were mostly flat. So just in performance polymers, methadone, acetone, we also mentioned that in first quarter, prices are here currently stabilizing on high level.

And in advanced intermediate, we have an increase in [indiscernible] C4 prices change, too. Normally, we managed to pass on via contract or via market position these prices.

I think, for many of our business, if that holds true. In advanced intermediates, I think today, the situation is a little bit more difficult as we have relatively low prices of butadiene, we have lower price compared to last year in MTBE and rising raw material, so maybe, that is a little bit a field of concern.

Then to lysine, I think we had seen price decreases in Q2s versus Q1s. So I think that there's no real turn in pricing yet.

On the other side, we have seen that a Chinese competitor, global biotech, is taking out 200 KT capacity in China, so we see the market reducing capacity and trying to increase prices. We see also different price levels by region, so Europe and U.S.

are the markets where there is the biggest price competition, and Latin America is a little bit different story. We continue with our countermeasure that we are working really on the increased efficiency of our plant and also optimize the efficiency of the raw materials.

As I said, the corn prices are relatively low, so that is a little bit of support here.

My 2 question. The first, probably, one on the new group structure.

Can you help us with any financial implication for the implementation of the new structure on the cost side, which you expect to come up here. And also, first, the idea what the outcome might be on the savings you already mentioned that you are a bit coming down the cost centers from the in essence, any implication here also on the savings in the longer run.

The second question on methionine again. You mentioned that you are sold out in the second half.

Does it mean that you have only limited chances to participate in potential price increases because it only contracted prices for the second half or is this a wrong view?

Thank you for your question, Lutz, regarding the new concept here related one-time costs, it's probably too early to comment here too much in detail. There could be a small negative one-off impact in 2014, some implementation or advisory cost are probably here on top of what we currently have in place.

You know our programs here that might be a small 1-digit number. It is of course depending on product positions and we will update you here in the course of the year.

Regarding methionine, I said we are sold out today and I think Klaus already explained, we are flexible with our capacities so I think we are ready to really serve the market and the need of our customers.

Two questions, if I may. One could you elaborate a little bit about the FX impact on your EBITDA was in the first half, and what you expect for the full year on today's FX trends eastern rights?

And secondly, you had said that the haircut the CapEx program will be in the magnitude of 10% to 15%. You provided last year some kind of guidance, about the additional earnings you are expecting from these investments.

Could you give also an update on this number please?

Yes, thank you, Andreas. The haircut, I can confirm the number again, 10% to 15%.

I think regarding the earnings related to this it's probably not the best approach to combine this one by one as we are also tackling other earnings potential in between new projects. And I think we might come up with a new number here, I would say, I'm looking at Ute, probably during our Capital Markets Day.

So it must -- take it positively, it must not necessarily mean that we fully -- we would not see the earnings allocated to this. We set between the lines that we will accelerate our M&A activity.

We have also shifted some of the resources into innovations and new projects. So we would summarize all of the effects, I would say more carefully when we meet at the Capital Markets Day.

FX?

FX effect on the EBITDA we have in sales around 2% and it's more or less the same magnitude on the EBITDA level.

That's also going forward, a good level, so 2% on last year's level.

Think, looking at relatively strong euro versus yen versus renminbi, I think that's a good assumption, yes.

I have 2 questions for me. The first one is on C4 pricing other than butadiene.

Could you give quick update on trends there? And the second is on Chongqing uni spender and just checking the plant is still not operational and whether there's any change and if it seems like the plant is going come back on stream, your view?

Yes, Oliver, thank you. I would start, it is difficult for us to comment what is going on and why it is going on.

I can only confirm, just from our market intelligence that as we always predicted, the competition has a hard time to really to establish the new technology. This is in line with our statements that there is a substantial technological hurdle to produce the material also in an environmentally safe manner.

This does not rule out that new capacities will come, but they will not come as easy as one or the other has believed. We get information month after month.

I can't confirm that there are delays from our intelligence that we have, but to predict when it will come, is really hard and I cannot comment too much on the activities of competitors there. Ute will say something probably about the other prices.

Yes. C4 stream I think we see in Europe, overall, very high volumes and utilization.

This is a result of high run rates of crackers, so there is of course a price pressure across all products. I think butadiene, that's quite transparent.

For MTBE, the MTBE factor as I said, is behind a very strong Q2 of last year and even slightly below Q1 of this year. We see somewhat weaker MTBE demand because currently, the fuel consumption is somewhat lower.

Kilometer driven are going down in all regions and things like this. In 1-butene, I think price development is solid.

We have good demand for polyethylene. And in prices there also below last year sequentially stable because we have still some overcapacities of benchmark products in Asia.

So when we look forward, I think what we expect the volume to stay this on these high levels. I think the prices are currently bottoming out, but it will take time until they recover.

So price increase only slowly during the remainder of this year. Overall, of course the price levels will be below the average of last year, but I think this is also something that we expressed several times.

It relates to the reorganization, and you may have touched on this, I missed the first 2 or 3 minutes of the call. But two questions in particular, first, could you give a little more clarity on what being an independent legal entity actually means, particularly in terms of whether or not they'll be able to arrange for their own borrowings.

And secondly, have you discussed the implications of this if any with the rating agencies.

Bob, thanks for the question. What does it mean?

Of course, what we have in mind here is to have more flexibility on the portfolio management to prepare for a more active portfolio management. But also we want to make sure that we have more entrepreneurial freedom.

And therefore, fully functional legal entities. This does not mean that we'll give up synergies on the group level here, so we'll keep these benefits and I think finance will clearly something that we'll keep together as the synergies here are obvious.

And I look at Ute and she is confirming this. I don't see here any problem with the rating agencies.

Greater degree of freedom is how they reach the defined targets, which we will set for them, operational management of the business, CapEx allocation in line will be defined attack budgets for the group level, also the definition and the structuring of the operation processes, personal matters and also the way how they address the specific market needs, which are obviously very different from segment to segment.

Okay, if I could just make sure I understand what you're saying here. If I understand it right, there will not be separate levels of borrowings at these different legal entities, borrowing from -- or will there be.

No. I think that would not be efficient.

I think the whole group can borrow much better at better terms more efficiently than a subsidiary could.

Okay, because the issue for bondholders, of course, will be does this create any potential issues in terms of subordination at the holding company.

No. That's not part of the plan.

That will not happen.

Again it's another question or maybe the same question on your reorganization, great structure. Just in real terms, Klaus, whether you could give us some tangible examples as to how this might change the internal functioning within the group.

Because it's obviously the same, essentially the same people, or the same staff, the same customers, the same products, and I'm just struggling a little bit to see whether this will become a material new impetus within the company or to what extent essentially more of a cosmetic change.

Martin, thanks for the question. Of course our goal is clear is to go beyond cosmetic things.

And I think again, twofold. Structurally, we are much better prepared and we've given the indication in the future where our focus on growth is.

This is Consumer, Health & Nutrition and Resource Efficiency. And for Specialty Material, we will focus much more on cash generation than growth.

And the second thing I think which we have mentioned is that we'll actively look for alliances and partners to strengthen this business in the future. It's a matter of fact that the universe in the chemical industry is diverse.

The key success factors for the various sectors as you all know, are very, very different and there are various concept, how to run the show here. But I think it's common wisdom in a time where more flexibility in the portfolio is requested.

It is much better to operate with a setup that we have chosen compared to a more closer situation where about [ph] managers all the same businesses in the same way, independent of the energy intensiveness, independent of the question how important are economies of scale. In my personal experience is also, it's important to have the managers with the right mindset for those businesses on top of the businesses.

But that does not mean that specialty material is bad as such per se, but they do need a very specific and a very particular nonset and management approach and I think as you all aware, that has also led us examples in the chemical industry where reorganization of businesses and consolidation has, over the time, led again also to healthy business models. So we're not in a drama situation here.

We are preparing for the future, but we thought also from an organizational point of view, it is wiser to take action earlier rather than be really run here into severe trouble regarding the prospects of the future.

I guess following up on Martin's cosmetics, one more question on the reorganization. You talked about teaming up an industry structures.

Should we think about this more potentially as horizontal teaming up or could you potentially also look at verticals in the C4 chain in Europe, I guess, I'm referring to. And secondly maybe a more specific question on silicons in Europe, I see a few announcements maybe about greater competitive activity.

Have you seen any of that yet or is that something you anticipate going forward?

Thank you, James. I think both is possible here, so both upstream and both downstream alliances, in theory, are possible.

And I think time will tell which part of the value chain go along here, that is always the question, which choice you make in the value chain and this can be very important for the profitability of the business. But my guess would be that we would see more moves here in the future, it can be both, up and downstream.

Silicons in Europe here -- Ute will say a few words to this.

Yes. I think we have a very strong business performance in Q2 with high utilization rates.

All product lines are showing volume increases year-on-year, especially the specialty product contributed strongly in food, feed, pharma, cosmetic applications, special oxides, but also from methane agents for the coatings industry, and of course a strong development in tires in Europe and the U.S. Now we have a good timing for our price increases we announced.

Price increases from the 1st of June onwards, so I think that should be visible also in the second half.

I was very late to the call so please if I repeat please put me together with the investor relation after the call. First thing, now that[indiscernible] is exempt from the EVGA until does that ease your long-term concerns on the perch then Germany across the unit production there.

Second question, how do you see the trade-off between the speed of ramping up Asian methionine capacity relative to, I'm not saying controlling pricing in the market, you can't control the pricing, but managing health managing pricing in the market, you say it's very tight, does that mean you can ramp up faster than you originally thought. Some products supply and demand in 2014 going forward.

Your current rating in the product line place. And the last 1, can you split up, or spell out, or call the growth rates in personal care, excluding the Baby Care business of cosmetic ingredients, how is the -- what kind of growth opportunities do you see there in the market?

Thanks, Thomas. A couple of questions.

I will start with the regulation. Let's put it this way, I think the worst has been prevented so it could have come much worse.

Is this -- does it go into the right direction, does it help the competitive of the European chemical industry, clearly not. There are still a lot of questions to be sought, here right now and, all in all, it does not go in to the right direction.

Luckily enough, not all of the segments are as energy intensive. That is the question of dead or alive here.

But for those industries that do have or those segments of our industries who do have a hard strong part of energy cost in their balance sheet, that of course is not something that will support us in the future. And you're all aware of the competitive gap that we have vis-a-vis the U.S.

here gas prices and so on. So I think we will see a more shift here in competitiveness into other regions.

We, ourselves, we are not affected as much here so we can live with the current regulation, it's okay. Methionine is according to our expectation.

I think given the hiccups, the bird flu events in the past, we'll see, all in all, in 2014 probably a year with the growth of methionine that is in line with the historical growth what we already, what do we say 5% to 6%, so this is what we expect for this year and what we can expect in midterm growth. And yes, we will execute our plans here as we set.

We are pretty much here in line and our ramp up and what the short-term issue, I think we have dealt with this already. We have flexibility here with our plans and we can act very short term, very swiftly according to the market needs.

Overall it should be an okay year in line with historical methionine growth. Superabsorbent polymers, I think you're all well aware that last year, was a little bit extraordinary situation because major competitors had problems with events there, so there was a clear shortage.

This shortage has been overcome so the situation in terms of demand and supply has become a little bit more relaxed there, also with implications on the spot price, at least. But here also again, please bear in mind that a lot at least of our business is not subject to spot market prices, but to midterm contracts here.

On the growth rate of personal care...

I can do that. I think we are seeing good volume development and in the majority of our businesses, surfactants, multipliers and especially active ingredients.

Pricing overall was down, it was also a little bit of the question of a product mix. And also the competitive environment in surfactants and conditioners has really increased price sensitivity in our customers.

From a regional development, overall, we had a good volume growth. Europe and Asia supported that very much.

U.S.A was a little bit weaker due to the competitive environment.

It was a question around the dividend. Obviously, you've outlined already from what I've heard about some of the issues around the half but it's clear, EPS will be down in the year.

What your current thinking regarding the commitment to the dividend.

Yes. I think we have stated our dividend policy in a way that we said it's around 40% of adjusted EPS, plus a dividend continuity and I think we will apply it that once a year, full year show us the result and then decide on the dividend.

If I can just come back, when you said plus dividend continuity, what exactly do you mean by that?

Dividend continuity means that keeping dividends stable is an important influencing factor.

It relates to the EUR 750 million bond coming due in October. Now that as a barrier exercising the production on your stake in STEAG, do you intend to use the proceeds to repay most of that bond, or are you keeping all options open for further financing.

Yes. I think it is a very relative question.

I think we have been establishing on our name on the bond market, and I think frequent issuing or issues -- regular issuing is part of that. I think we are flexible.

I think we are we ready to issue a bond when needed. As I said to be in the market, to be present in the market is also something which we look at very carefully.

I think it's too early we need to say how we will precisely repay the bond, I think even today we would have enough cash on the balance sheet to do that, but I think maybe that is a little bit one dimensional. So I think we have a reliable policy here to the bond markets and we will pursue with that in the future.

First is just on the butadiene expansion CapEx program that you were suggesting earlier. Could you just provide us an update whether you're still going ahead with this, or this is also a project that you are sort of rethinking.

And then the second question is just on methionine again, sorry. But there is going to be a new market entrant in Asia in H2 from a different production process.

Could you just give us an update as to what are you seeing there. Has some of your customers switched or do you not see them making a dent on the market.

Yes, thank you for your question, Jaideep. On the -- Yes, we are in a middle of establishing this plan.

I think we have taken very cautious assumptions here on the economics of this investment and there's still some time to go and we'll see how the market will evolve there. So we'll go ahead and we still expect in the midterm of course that this investment will be profitable.

We have also the option to optimize some of the raw materials inflow here, so we'll work on this option as well. Methionine, I ask for your understanding.

It's very hard for me to make comments or to judge on the technology or on the strength and weaknesses of competitors. Here, the only thing I can say is that there is of course, also with our key customers here, a considerable effect of customer bonding that is in part, coming from the application of methionine, but also from the services around here, so as usual lives so some people switch more easier, but it does not mean that there's so price-sensitive that they easily switch off.

So as you know we provide services on the analysis of the feed sources. And I think that the question of technology is probably more how competitors wrestle with a technology as such compared to the question if customers would accept this or not.

I think at the end of the day of course, they have to meet certain quality standards, which are high. We, as a market leader, we are setting those standards and that's the first hurdle for everybody to meet at least.

So I'm not sure whether this answer your question satisfactorily.

Well, I mean I was just referring basically because obviously the CJ process where they claim at least is a higher price point compared to the traditional methionine sources. So just wanted to know do you -- considering how the market is, how do you see, because, I guess, your sort of the price point that is, let's say, second best to them.

So I just wanted to understand whether you've seen more of your customers talking about it or not, basically. That was sort of the direct question.

Jaideep, very clear answer. I cannot comment on this.

Probably CJ can better answer this.

One question from my side again, it's also on the organization, how to see the portfolio of Specialty Materials. You already classified that the high performance polymers might be reallocated.

And you having the Specialty Materials also define chemicals with Pharma polymers and you have also the HPPO plants that you have still investing heavily. How do you see this, in other words, is what your concerns are not only more drapes down to the C4 value chain and the MMA PMMA value chain.

Andreas, just to clarify. First of all, I think the most interesting -- let's put it this way.

The most raw material-dependent and more energy-intensive issues within the Specialty Materials areas, we've talked about this morning, I think for good reasons as well a lot is see the C4 value chain and methacrylic chemistry. That's talking about the monomers and also PMMA.

The other businesses, you have touched upon sort of HPPO and hydrogen peroxide is something that can easily find a new home as Resource Efficiency, as well. And Pharma polymers is already today part of the Consumer, Health & Nutrition segment because there's a lot of market synergy and it makes sense to market this in the healthcare industry.

All right, folks. This brings us to the end of today's call.

We are certainly looking forward to staying in close contact with you. Just to let you know, we will be on the road quite actively in the next days in Frankfurt, London, Paris, also in the U.S.

Ute, Tim and myself and I would also like to highlight our Capital Markets Day, which is scheduled for October 2, and the safe day will follow shortly. Once again, this ends our call for today.

Thank you for your attention, your interest in the company and have a great day. Bye.