Evonik Industries AG

Tim Lange - Head, IR Ute Wolf - CFO

Gunther Zechmann - Bernstein Martin Roediger - Kepler Cheuvreux Paul Walsh - Morgan Stanley Andrew Heap - Berenberg Thomas Swoboda - Société Générale Geoff Haire - UBS Andrew Benson - Citi Andreas Heine - MainFirst Martin Evans - J.P. Morgan

Yes, good morning also from my side and welcome to our Q1 Earnings Conference Call. This is Tim and with me today is Ute Wolf, CFO of Evonik.

Let me hand over directly to Ute for the short presentation and the usual Q&A session afterwards.

Thank you, Tim, and good morning to everyone also from my side. Thanks for taking the time to be with us today.

I'm pleased to report a good start into the year 2017 with an adjusted EBITDA of €612 million we achieved an increase of 8% year-over-year. This was driven by the strong performance of the majority of our existing business.

The contribution from the Air Products acquisitions was also positive and at the expected level. It is worth highlighting our broad-based 8% volume growth in group level in particular our two growth segments showed strong volume growth of 9% and 10% respectively.

In addition, the negative price trend that we experienced for some quarters now has nearly eased into one. So overall, 2017 started well for us and we are fully on track to deliver on our full-year guidance.

Moving on to Chart 4 on strategy. We have continued to execute our growth strategy based on market leading innovations and targeted M&A.

In our joint venture with DSM we will be investing roughly $200 million in a commercial sale production facility for Omega 3 fatty acids made of natural algae. This is the fast growing and attractive market as it offers the solution to the environmental problem of over fishing.

The acquisition of Dr. Straetmans is the latest example of targeted M&A into highly profitable businesses with excellent strategic fit.

This ex-tranche into alternative cosmetic reservation system closes an important gap in our product portfolio. It will allow us to further improve our position as a leading partner to the cosmetics industry.

The closing is expected during the second quarter. At the same time, the integration of our Air Products acquisition remains one of our top priority.

Starting with day one in early January, the integration has been running very smoothly. We follow an approach that incorporates the best of products to benefit from each other.

We will continue on this task to achieve the best possible joint business performance. In Q1, the Integrated Air Products businesses showed a considerable sales growth of 6%.

In absolute terms, sales were around €250 million with an adjusted EBITDA margin well above 20%. Consequently we remain on track for our full-year guidance of €1 billion sales and around €250 million of adjusted EBITDA for this business.

The next chart nicely shows that we can also prove our initial synergy assumption. Total annual synergies will result in around €7 million of which €10 million to €20 million have already been realized this year.

One-time integration costs in total will be in the region of €75 million with the majority portion spent in 2017. Coming to the first quarter in more detail, we have touched upon most of the KPI's on this side already.

The only slightly increase adjusted EPS is explained by the fact that last year's financial results included positive interest income in connection with tax refund. Our net financial position now stands at minus €2.3 billion after paying the purchase price for Air Products of around €3.5 billion in January 2017.

As expected, the free cash flow in Q1 was positive however below the strong level of 2016. Looking at our operating cash flow, we had some outflows for the Air Products integration plus slightly higher interest payments, prior year interest payments included cash inflows from tax refunds, so that would be the interest portion of the sector.

Additionally, cash outflow for income taxes was higher year-on-year. We continue to expect clearly lower cash taxes on a full-year basis but this will be more visible in the second half of the year.

CapEx was also slightly higher mainly explained by outflows for our new refining plant. Let me now move on to the performance of our operating segment.

Today and for a good reason, I would like to start with the Resource Efficiency. This high quality specialty segment now spends for more than 50% of the group's earnings.

It has delivered strong volume and earnings growth combined with an outstanding and resilient profitability level over quite some time now. Over the past 18 quarters, with only two exceptions the businesses of Resource Efficiency have impressed as we demonstrated steady year-over-year growth in sales and earnings.

Our EBITDA margin in this business has constantly performed about 20% hardly showing any volatility. The Q1 result is just another example but the same superior performance.

Moving to the next slide for a more detailed look. The exceptionally strong volume growth of 9% was driven by almost all business lines.

Prices were at lower this quarter mainly due to product mix effect. And we also delivered a considerable and broad-based earnings growth.

For example in high performance polymers driven by a solid underlying business and further accelerating growth in 3D printing powder. Furthermore high performance polymers proved its ability to successfully grow the business and to manage the increase of butadiene prices.

Another example for steady earnings growth is silicon where the performance was driven by tire and specialty silica. In addition rubber silica performed well in NAFTA and Asia while netting agents enjoyed increasing demand in Europe and NAFTA.

Coating additives has been coming off a good start in Asia particularly the automotive sector continued to drive strong sales. These developments more than compensated for the expected lower earnings in cross-linkers which came from a very high base in 2016.

The margin continues to be on a very attractive level despite some headwinds from higher raw material prices. We expect the good business momentum to continue into Q2 and we have no doubt that this segment will continue its success story also throughout 2017.

We continue with nutrition and care on Slide 12. Most of our specialty business is like healthcare and Comfort & Insulation continued to perform well.

If we leave aside Animal Nutrition, Baby Care, and the Air Products contributes for the second, the remaining businesses have delivered 10% underlying sales growth year-on-year. In health care and especially in exclusive synthesis, performance continues to accelerate; it was driven by higher plant utilization and new customer process.

In addition, we continue to enjoy attractive growth from our pharma, polymers, and service business. Our external portfolio of highly sophisticated drug delivery solutions are in high demand from the pharmaceutical industry.

The development of innovative drugs for modern medication and new therapies is the key driver for our growth. We leverage our pharmaceuticals competencies to foster the growth of the entire healthcare business including advanced food ingredients.

Sales and earnings growth for Comfort & Insulation in Q1 was driven by a favorable product and regional mix. The performance of course was supported by the Air Products business.

With the acquisition we are now that was integrated in a mean chemistry which further strengthens our already solid position in the polyurethane market. For example, we can now develop and tailor a mean base product according to customer needs.

Now we have application knowhow and technical assets available in-house while we had to go for external specifics. This allows for sponsor development.

Methionine has been a strong demand pick up after Chinese New Year and healthy volumes, admittedly against the slightly weaker prior year quarter which was impacted by customer default. The sequentially lower prices are broadly in line with our full-year assumptions.

Going forward into Q2, we see prices more or less stabilizing on the Q1 excess. For the overall segment and for first time within the last six quarters, we expect at least favorable earnings in Q2 sequentially.

It is important to mention that this is not a result of the June triennial value prices but is rather expected to be driven by the continued healthy underlying growth across the whole segment. Coming to performance materials on Chart 13, besides the ongoing strong focus on improving our efficiencies, positive market momentum in performance materials has further accelerated.

So we delivered a very strong Q1 across the entire portfolio. In MMA, PMMA, we enjoyed continued strong demand coupled with high prices [ph], the market has not yet fully recovered from the supply backlog triggered by several production offices in 2016 and the beginning of 2017.

Demand for all products along our C4 chain was also healthy especially Butadiene was very tight resulting in choppy increased spreads in Q1. Looking into Q2, average Butadiene spreads are expected to be above Q1, as we still had low levels in January.

Market tightness in MMA and PMMA was also continued into Q2. You might have noticed that we have announced substantial price increases some days ago.

So we are optimistic that the segment EBITDA in Q2 will be even as strong as Q1 level. Throughout the second half of the year and as assumed in our full-year guidance, we expect that high supply demand situation is phenomenal.

Ladies and gentlemen, let me summarize the presentation on Slide 16. Starting into 2017, we delivered healthy and broad-based growth across our specialty chemicals portfolio.

The integration and operating performance of Air Products is very balanced and also the closing of Huber Silica is progressing well. We have already received merger clearance approval in the U.S.

and Brazil so closing in the second half of 2017 is very much realistic and clearly we drive for a closing as early as possible. For the second quarter we expect the positive business momentum in the majority of our business to continue.

The start into the quarter is promising across the board. We expect to hear sequential earnings increase for Q2.

All in all we are highly pleased with our earnings profile is much more balanced and in the past we are ready and set for profitable growth in 2017 and beyond. This closes my brief presentation.

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

Hi Ute, good morning. Thanks for taking my questions.

Two if I may firstly very strong volume growth not just in the cyclical part of the business but also in nutrition and care. Could you just highlight what the main driving factors are and then particular Methionine how much of a volume growth was on the weaker comps from last year?

How much possibly was restocking and where do you see the underlying demand at this point? So that's my first question.

And then the second one specifically on silica Solvay said they see pricing pressure in precipitated silica in Asia. Is this something you see as well or their some reasons where you can differentiate?

Thank you very much.

Yes, good morning, Gunther, thank you for the questions. I will start with your last one comparison or cross-read for Solvay.

We have a much broader and more diversified portfolio in our silica business. So we do not experience price pressures in any region or any specific product so may be that has been the difference for our silica business compared to Solvay.

The volume growth was really strong across the board. We had very good development in all of the businesses to a certain extent of course that is the result of new capacity we have introduced over the last years and ramp them up.

Concerning the signings we had very strong and robust growth in Asia and South Asia especially the Chinese demand and big industries picked up very well now after the Chinese New Year. So from this point of view and the Asian growth may be a little bit more pronounced than the other one -- other regions.

But we also see North America and Europe stable business growth remain stable there. We have seen as in the last year, some more sluggish development in some office, South American countries if you look at Venezuela what's happening there, I think that's very well understood.

Last year's Q1 you might remember that we surrendered on volumes in the signings to really accompany the price development in the right way. So from our point of view we are more or less now back on normal growth patterns if it comes to volume of course the comparison is somewhat lower than last year but if we look at from the signings business on a quarter-over-quarter basis, we will have also sequentially higher volumes in Q2 compared to Q1, so we are more or less here now back to the normal growth patterns than the signings market growth 5% to 6% per year and this is expecting what we see and what we participate in.

Thank you and good morning, I have three questions. First on your midterm prospects, I still think you have this long-term target of at least €3 billion EBITDA for 2018 in place, using the mid-point for this year there is a €700 million delta needed to achieve your 2018 target, how serious is your target for 2018 would you be prepared to do sizable acquisitions like the deal you did with Air Products Performance Materials and would you still see excellent growth as a way to increase free flow by paying the acquisition price with own shares.

That's my first question. The second question is on high performance polymers you see it will be impacted by rising raw material costs in the second quarter.

Can you help me to understand the time duration of the raw material supply contracts and the selling price contracts? And the third question is on your Omega 3 Fatty Acids joint venture with DSM.

When do you plan to start production, how do you plan to ramp up and how you will -- how do you intend to book this joint venture, I guess it will be an equity consolidation but I'm not sure if this is this means for you that will included in the EBIT figure or in the financial results line? Thank you.

Okay Martin, thank you very much for the question. I will start with the last one PERACLEAN Ocean will start in 2019, it will be a 50:50 joint venture which will be consolidated pro rate both will run with a 50% portion to our full profit and loss statements.

High performance polymers the pass on the raw material cost is between one and three months, so I think that is the normal pattern and we have already seen in Q1 that this business was very well able to manage sales and profitability in an environment where Butadiene is also rising where I think it is really a proof of the strength of the market position and the quality of our product that we are able also with higher somewhat higher raw material prices to have a good growth and a very good profitability. Towards the mid-term target, I think we also in the past elaborated that these targets were designed under different circumstances at this time it's now four years back growth prospects were higher for the full whole worldwide economy, oil prices were higher, so I think that is some influence from different assumptions back in 2013 compared to what happened in the years that we experienced.

We also admitted many, many times that we would not do any acquisition just to hit a target in a given year but that is not our acquisition strategy. But this year the focus is clearly on integrating the Air Products business then Huber Silica when it comes well that is why some work to do, I think our teams are more than busy in doing that.

Going forward, our strategy -- our growth strategy comprises innovation organic growth via organic investments and targeted M&A. From our point of view the last deals that we've done, I think they demonstrate very well how we process this would be the fifth on product scale what is the financial team that we see behind that and I think that is the pattern also for potential further deals in the future.

May I ask a follow-up question on Omega 3 asset joint venture with DSM when you say the start will be 2009, I guess you mean the end of 2019 and may be you can help me to get a better understanding about the ramp up?

I'm sorry. Yes, I do not have the specific quarter here at hand but I think it's still two years away maybe it is what also be a little bit over sophistication to exactly [indiscernible].

We are starting already today to negotiate and test with big feed producers of the products and so our sample volumes already are marketed that gives us confidence on price and usability, really see a slight in the end in the fish farm. So we are in already in close contact and close discussions with the big fish producers which then as we get more and more to watch the production stage we will then be formed into concrete and precise contracts with volumes.

But the test or the pilots quantities that we produce they are already apply they are already sold and I think the experience is very, very good here and makes us very confident that this will be a big success in the end. And what is also important for the marketing is not only targeting the direct customer, it's also really looking at the whole value chain that we need or will have a strong pull from the retailers within the end then able to have better and more sustainable fish in their price there so that will be big support mainly from the customer or customers, NGOs and so forth, so that is where we are excess and I think with these different channels that we will be there.

Yes thanks very much. Good morning, Ute, good morning Tim.

Three questions from me please, first question on the comments you made around the second quarter, lot of companies have started the year well but have been a little bit more cautious in Q2. So I would like to get some insight to see where you see the acceleration in strength in Q2 versus Q1 you have already talked about the C4 chain, so if I can tick that one off but in terms of what you're seeing in the other parts of the portfolio.

Point number two is on the Methionine, you talked about stability at quarter end prices, I wonder if those quarter end prices include the 7% price increase you announced in Europe i.e. are those sticking and it's also not lost on the raw materials Methionine are currently falling rather aggressively, so could there be some upside risk to margins in Methionine as we move through this year.

And then just final question you talked about targeted M&A and discipline on capital allocation. I wonder if you could just more explicitly rule out larger deals say for example the AXO specialty chemicals business.

Thank you.

Yes, good morning, Paul. Thank you for the questions.

I will start with the more specified discussion of our outlook on Q2. At the end we already discussed.

So I think there is quite some evidence that Q2 will enjoy good margins in C4 and also very healthy demand for MMA and PMMA. So I think that's hopefully transparent.

In Resource Efficiency, we just will see the continuation of the growth that we've seen in the last quarters. Q2 is normally also a very strong quarter for these businesses also for the Air Products division.

So from that point of view there is some seasonality that also worked in that direction. But again they are really now ramping up and start up new facilities, marketing new products, so this is what they really find throughout the last quarter and that will continue.

For Nutrition and Care the methionine prices, Europe had a quite tough price competition especially in last two quarters, I think that has now come more or less to an end. We see a clear stabilization in Europe, and we also see a price stabilization to what the end of Q1.

So our expectation is that the prices will be more or less stable on the Q1 excess level of course you could add some fluctuations a couple of cents up or down but that's the normal range we see. The positive volume trend also continues so the volume in Q2 for methionine should be higher than Q1, this is more or less returning on the normal growth patterns that this market show.

Okay. And on the M&A point?

And on your specific question on AXO I can only reply we cannot comment on any specific targets. I think the same rule apply it has to fit into our portfolio, it has to make our product portfolio better, bigger, larger, more competitive as to demonstrate good growth prospects with good margins, very much innovation driven.

This is what we really want to see if we think of acquisitions maybe larger or maybe smaller if you look at the smaller acquisition I think the same criteria applies. So I think that's all I can say to that at this moment.

Good morning, Ute, and Tim. Could I just ask on Nutrition and Care you said the business outside of methionine and baby care did 10% organic growth, could you give us an idea of how that is split between volumes and pricing and how you see pricing outside baby care and methionine developing this year in light of raw materials and secondly could you quantify the impacts of the MMA shutdowns you have on your available capacity this quarter?

Thanks.

So I think the 10% very well across the board. We have highlighted healthcare and Comfort & Insulations as they continue to be very strong.

We also see good development in personal care and household care, so it's not really that it is one business that really drives the whole segment, it's really a broad-based growth in volumes. Of course if you look at the whole segment, the methionine volumes are a little bit dominating with also the other business lines that performed very nicely here.

The shutdown of MMA is smaller single-digit, smaller to mid-sized single-digit Euro million amount. But again it’s now that we have this market situation which is very tight we have to see how it really works for the company.

Yes good morning, can I try here three questions please. Firstly performance materials you rightly indicated this business is very likely overshooting this year.

Could you please give us an update of what you think a normalized EBITDA for this business could be to the best of your understanding that will be very helpful? On cross-linkers you said there was already some weakness as expected in Q1.

Do you think this is already done or should we expect more weakness sequentially speaking? And thirdly coming back to pose question on methionine and the raw materials, you are more optimistic I think for good reasons for Q2 there should be some sequential improvement, what I would like to know is whether this is purely volume price driven or is your optimism on methionine also supported by tailwinds from raw materials.

Thank you.

Yes, Thomas, thank you for your questions. I will start with raw materials from our point of view a normalized EBITDA margin is in mid-teens, so there may be in the first and second quarters somewhat overshooting necessary but if we look at more normalized scenarios that will be margin that we would perceive as normalized.

Cross-linkers of course they have a high comparison towards last year they had an extraordinary good development last year. So may be weakness is from my point of view not most suitable word here.

From the market side, we have a new competitor coming into the market Manhua that was already expected last year, so this year they are coming but this is something we knew from the beginning and this handles very well. We have somewhat weaker demand from the wind industry in China.

So that is demand type on the profitability side, they had very low acetone prices last year especially in Q1 partly also in Q2. So I think that describes the overall space.

So cross-linkers will be soft for the full-year Q2 compared to Q1 more stable than weaker this was at this moment but please keep in mind cross-linkers had a very, very good performance last year, so they more or less delivered the growth of more than two years in one year. So may be that gets a little bit of comparison of the performance this year.

For methionine your question we see price is now more or less stable. The differences between the several regions has also now become much, much smaller so that is all indicators for more normalized pricing situations.

The volumes we see clearly growth in the market, we participate in that growth, so that I think for the overall profitability is an important factor. Raw materials that is little bit of an effect but I think for the whole segment not the most driving force.

So we see it more really see the volume growth having the prices more or less stable at the levels where we are now be [indiscernible].

This is very helpful, thank you. I just would like to follow up on performance materials, the normalized margin that helps already thank you for this but in the past this segment was extremely volatile.

I'm just wondering if you could talk a little bit more on this absolute level, I mean is €400 million to €450 million in the current environment -- given the supply/demand dynamics and normalized level we should be going forward, do you see rather towards €300 million. Thank you.

Yes, Thomas. I think it makes more sense to relook at the margin.

If you look back five years or so will be different oil prices, different naphtha prices which of course influences the absolute amount of sales and earnings. So from that point of view the mid-teens margin level I think that's a fair guidance.

I'm sure you have your assumptions on oil prices and naphtha and then I think that in the end given the absolute range to look at.

Good morning, thanks very much for the presentation. I just had a couple of questions; two of them are confirmation questions.

First of all on methionine pricing, given the fact you said that prices have stabilized is it fair to then assume that the 7% increase that you announced in March for European methionine prices has largely not been accepted by customers. And secondly you commented the Q2 for Resource Efficiencies will be impacted by raw materials but from your comments particularly in HPM you seem to be implying that you were more than offset -- you're least offset raw material pressures.

Can you just confirm that? And then finally, in your cash flow you have a big swing in receivables and I think it's minus €189 million, could you just explain what is driving that?

Thank you.

Yes, Geoff, thank you for your questions. Regarding methionine the price increase and the overall health stabilize the European markets you might remember that we had this toughest competition there some two quarters ago so I think that was in the end the impact of that.

On raw materials we have different impact in our segments. Let me just give you a little bit of detail here on Nutrition & Care, Baby Care, rise in propylene prices that is normally a two month time lag for that is partially compensated in Q1 but also partially in Q2.

For methionine there is a smaller potential negative effect but again -- but the overall discussion I think that's not the driving push for the others I think they are really able to have the value-based pricing and increased price volume. Resource Efficiency as we talked about high performance polymers they will be able to pass on the experience told that is one to three months of spending on the product consistent specific and on the market and how end market to the customers.

For Q2 there might be some headwinds from raw materials on the other side if we look at Q1 they already managed it very, very well as the raw material increases they had, I think cross-linkers we discussed acetone impact and butadiene and we discussed PM there is more or less a direct path on our raw material increases that will expand to higher sales and somewhat higher earnings should raw materials increase a bit. Does it answer the question?

There was a third question could you repeat that. Third.

Yes sorry the third question was in the cash flow your receivables in Q2 went out by €189 million, what was driving that?

Yes we have some initiatives to improve the networking capital. But on the other side if raw materials rise that drives the absolute volume of working capital as well that goes to receivables, inventories, and to a certain extent also in the payables.

So if you look at absolute amount of inventories on working capital components the influence of raw materials is quite significant. Also you have to really look at how are the ratios over the last 12 months sales or other KPIs.

Okay, thank you.

It's now we're at 14% working capital over sales which is better than we've had throughout the year 2016.

Thanks very much. A few questions on methionine can you just perhaps little bit insight into the competitive dynamics given the additional Chinese competition and also where you're positioned your new plant and I presume you're going ahead with that no matter how the price unfolds.

But obviously there are some promise is there anything else you can do to address your own profitability there in an environment over supply. Number three how much do you think the volume growth in the first quarter could be attributed to restocking and given where the oil prices has gone in the last couple of weeks are there any signs that that maybe likely to unwind is there anything unusual in terms of order intake in the last few days given the oil price correction.

And lastly on restructuring, over the last couple of years you have talked a lot about both fee admin expense they're coming little bit on scope but obviously all of those programs ended in 2016 is there anything further that you all that is likely to in order to sustain your competitiveness? Thanks.

Yes, Andrew, thanks for the question. I will answer the two last ones and then Tim will speak to the supply/demand situation for methionine.

Two parts I think gradually the situation stabilizes and gets little bit better here and there but overall no change to the overall market consolation. We still have sizable overcapacity the market growth into that, so that is something we see market growth, demand growth is good but it will still take one or two years until that demand supply situation is more balanced.

From the demand or the ordering behavior we work very much on frame contracts where we have certain volumes which more or less are not fluctuating so much so from our point of view we did not see a significant stocking effect here with that. With restructuring you're right, in the last year we were reporting exclusively on the programs now that we have had these success in the last years, it's more or less incorporated into our normal performance discussion, normal budgeting process every year we have to compensate €110 million to €120 million effective cost increases but that is now part of the normal goal setting target setting for the year, so there is no specific program named anymore but that does not mean that we don't do it.

And I think the contrary it is really part now of the day-to-day business and the amount are more or less same like you know that €110 to €120 million per year that we have to compensate to really support our margins.

Andrew on the timing supply actually not much changed in all the projects that are online and coming I think most of them have already were up and by now should have reached pretty good overall plant utilization rate for the overall industry, so the high plant utilization and overtime shrinking stocks should have also resulted in the strong volume growth that we've seen or contributed to the volume growth that we've seen in Q1 and overall this confirms the situation that we have described of the market otherwise.

Shall I'll just come back on it because the volume growth for the Group 8% I know clearly lot of your kind of industrial type peers when they direct medicine are also seeing reasonably strong volume growth well above industrial production and well about GDP, you are telling there is no stock effect in that one or do you -- are you convinced with that and why you convinced when the delta between GDP is great?

Yes, Andrew of course there is also always some effects on stocking or restocking but we have not seen a really dominating part of that. You might remember other quarters where we really saw very dominant stocking destocking or restocking effect, this is not what we have seen across the board, it might be in some of the products, where we might have seen some prebuying in expectation of higher prices to raw materials but it's not that I would say that it is X percentage points of the volume growth.

So the contrary we see this volume growth more as a confirmation of strength of our business. We've done really a lot in the last years to tailor-made the product really optimize our mix towards the customers at the capacities in place to be able to deliver and this is now paying off step by step and Q1 is just one example to that.

Yes most questions have been answered and some are left on the C4 value chain, you speak about the normalization of the butadiene margin, how do you see the press of Ena 1-Butene and MTBE is it also something where we have to be cautious in regard of a normalization or is that more stable. The same question basically on MMA, PMMA is your price increase just announced your own maintenance and the market is that lasting longer than just this first half so is that normalization in that market more issue of 2018 or 2019 and last but not least coming back to the answer of the methionine the supply demand situation, do you see now NHU in the market with real commercial volume or is that still to come?

Thanks.

Yes, Andreas thank you very much. Maybe to really take the last one first, NHU has announced mechanical completion in the beginning of the year.

So normally the ramp up that would take place in Q1. We are not seeing meaningful quantities that they deliver so that's fully is in line, fully in line with our general expectation, it takes time to ramp up from methionine plant especially it is the first time you do it so from that point of view pretty much in line with what we expect.

Before I think for Ena and 1-Butane we have not seen these are same spikes that we have seen in butadiene, so that is more a normal situation as well MTBE now we are approaching the summer season. There is normally more demand for MTBE.

So we have seen that here and there that this pickup is already taking place and of course the question is there are some maintenance shutdowns in the overall industry still questions that present effect demand and prices for MTBE besides that Ena and 1-Butene more or less in the given price range that we have seen in the last one to two years. For MMA and PMMA we see we think that the tight market duration will last into Q2 but then in the second half there are new capacity ramping up from everything that we can absorb in the market they are on schedule.

They will ramp up, they will come, it is hard to say will it be Q3 or Q4 that is hard to see from outside but it's really reverse scale, at least are coming, the first to be expected is MRC and SABIC with 250KTs MMA, which include then 40KT PMMA. So of course the market knows that this is coming and I think more or less that will arrive in the second half and then for Q4, Aramco Sumitomo, I expected for some 90KTs and there are 50KT PMMA, so that will affect the market, sooner or later.

It's hard to say which quarter it will affect specifically but this is what we see and that is what we have in full-year guidance.

Yes, thanks. I don't want to preempt what the new CEO may or may not say on June 1; although I guess she would only have been in the job about a week.

Imagine we won't see anything particularly new. But can I just in terms of big picture for the Group can we just talk a little bit about way you see the direction going because we've obviously had a bit an acquisition scene, restructuring scene, and yet you appear to be sort of even more commodity than ever, and if you're looking at your guidance, if you take out the products contribution for this year your underlying business will be flat to down again.

Has it sort of raised any questions internally about more radical disposals and I'm thinking in terms potentially of methionine given the problems you've had with it and whether you might be looking to consider else some of items obviously run it for cash, or if you got a potential purchase you look to exit that business because it does seem to be more than offsetting the work you're doing elsewhere in the Group portfolio overall? Thanks.

Yes, Martin. Thank you for the question.

I think the goal of today's call is really to talk about Q1 trends for Q2 and potentially the full-year. I think it's a privilege of the new CEO to give you the broader picture from this point of view on June 1.

So I really ask for some patience here, we will then answer all these questions or address all these questions and you'll have then maybe a update on the broader picture that you're looking for.

Yes, thank you very much. That brings us to the end of today's call.

As you're aware we will be on the road in the next couple of weeks in London, Frankfurt, Paris, Edinburgh, Dublin, Vienna. And also, I'd like to mention as also just addressing the call and invite you to a special event in London on June 1, strategy update with Ute, our CFO, and our new CEO, Christian Kullmann.

I think we'll tend out to save the date today and more details on the exact location and time. We'll follow shortly.

So we're looking forward to meeting you either on the road or on June 1. Thank you for your attention today, and have a good day.

Good bye.

Good bye.