Brenntag SE

XETRA:BNR

Earnings Call Transcript 2020-Q3

[Christian Kohlpaintner, Chairman of the Management Board & CEO]

Welcome, ladies and gentlemen, and thank you for joining today's virtual event for our Q3 results 2020. I am Christian Kohlpaintner, and I'm here together with our CFO, Georg Muller.We decided to host this earnings call in a slightly different format because later today at 3:00 p.m., we will start our capital markets update presentation on this very same platform. At our capital markets update, we will provide a comprehensive update and details on Project Brenntag, the transformation program set up to drive our sustainable organic earnings growth in the coming years.But let us now start with our business development in the third quarter 2020. I will talk about the highlights of the quarter and Georg will provide further details on the financials for the past 3 months. As always, Georg and I are both happy to answer any questions you might have after our presentation.Now let me provide an overview of our earnings development in the third quarter. The COVID-19 crisis impacted the overall business conditions also in this quarter of 2020. In this continuously challenging market environment, Brenntag managed to report strong results for the third quarter, and we were able to once again report organic earnings growth for the third consecutive quarter this year. Overall, we are very satisfied with this development, and it again demonstrates the resilient nature of our business model.On group level, we generated a gross profit of EUR 690.6 million, which is on previous year's level on an FX-adjusted basis. Volumes are sequentially slightly better than earlier this year, but are still below previous year's levels. While unit gross profits, on the other hand, sequentially softened, they do remain above previous year's levels. In combination, the delivered gross profit is on previous year's level.Operating EBITDA grew by 4.9% on constant currency, amounting to around EUR 264.4 million. The free cash flow of EUR 421 million was exceptionally high and clearly above the previous year's level. Finally, our earnings per share amounted to EUR 0.76 in the third quarter.In September, we reinstated our guidance for the full year 2020. Brenntag expects operating EBITDA for the full year to be in the range of EUR 1 billion to EUR 1.040 billion, but we also continued to work on the long-term positioning of our company.In September, we announced the first milestone of Project Brenntag, our future operating model. Starting January 2021, we operate our business with 2 global champions, Brenntag Essentials and Brenntag Specialties. We also published a change to the structure of our management board, which will also come into effect from next year on.Last week, we announced additional measures of Project Brenntag, including our financial framework. We will talk about this in detail later during our capital market update. We know that you have a lot of questions on Project Brenntag and the financial framework in particular. Me and my colleagues and the management board will be happy to answer all of them later today.Unfortunately, COVID-19 is still affecting our personal lives and our business environment alike. However, at Brenntag, the impact of the COVID-19 pandemic on our business activities and on our financial performance was limited so far. Despite the difficult conditions in all parts of the world, the company continued to stay fully operational with only a few exceptions in countries with very strict lockdown policies. We continued our global crisis management also into Q3, and the health and the safety of our employees and of our business partners continue to have the highest priority for us.Overall, Brenntag has handled the crisis well so far, and we are confident to handle any future volatility that COVID, for sure, will bring. Our sound financial profile and the strong cash position put us in a solid position for the rest of the year.With this, I would like to hand over to Georg, who will lead you through our results in more detail.

[Georg Müller, CFO & Member of Board of Management]

Thank you, Christian, and good afternoon.We delivered a quarter with organic earnings growth and very strong cash flow. Operating EBITDA amounted to EUR 264.4 million in the third quarter. I will walk you from the third quarter 2019 to the third quarter 2020 for operating EBITDA.The unfavorable effect of foreign exchange translation amounted to a negative EUR 11 million and resulted mainly from the weakening of the U.S. dollar. Our acquisitions contributed EUR 3 million to the EBITDA growth in the quarter.All regions grew organically with the exception of North America. EMEA, Latin America and Asia Pacific showed very positive organic earnings development. All 3 regions reported double-digit operating EBITDA growth of 10%, 33% and 36%, respectively. North America declined by 12% organically, mainly driven by the ongoing weakness in the oil and gas industry as well as the ongoing implications of the COVID-19 pandemic on the North American economy.Let me provide some more details on the business development in our regions. I would again like to emphasize that we managed to keep our global site network fully operational with only very few exceptions. I'll start with EMEA.In EMEA, our Q3 performance was, again, very positive. The trends we have seen the last couple of months broadly continued into Q3 as the performance was supported by customer industries like personal care, home and industrial cleaning and also pharma.We were able to grow gross profit by 4.8% on a constant currency basis. The growth in gross profit was primarily driven by higher gross profit per unit, which more than offset the softness in volumes that we have seen compared to the previous year.So operating EBITDA increased by 11.3% year-over-year. It is the third strong quarter in a row. These results once again underline the strength of our business and our strong market position in the region.I'm coming to North America. We are still facing several headwinds in this region that, again, led to overall weak and unsatisfying results. Gross profit declined by approximately 9% on a constant currency basis. The strongest headwind in North America is still related to the very weak demand from customers in the oil and gas industry.On the level of gross profit, oil and gas accounted for approximately 6 percentage points out of the 9% decline. Additionally, we saw continuous impact of the COVID-19 pandemic on the North American economy.To counteract, we applied a very stringent cost management and decreased operating expenses in North America by around 8%. However, those measures could not fully compensate the decrease in gross profit. EBITDA declined about 12% on a constant currency basis. Latin America, again, reported very good results even though the general economic environment remains volatile. The past quarter, we managed to grow gross profit by about 16%, which is related to volume recovery compared to Q2 as well as good margin management. Operating EBITDA increased significantly by around 40%.Asia Pacific saw a significant acceleration in trend. China again reported good results and India, which was severely affected by the impacts of the pandemic, largely recovered in the third quarter of 2020. Gross profit increased by 12% on a constant currency basis. Operating EBITDA increased by 36%.In summary, we were again able to report strong results. This is a very satisfying performance in a continued challenging environment. Overall, we have handled this crisis very well, and we are prepared for the rest of this year.On Slide 8, we show the full set of figures for our segments for your reference.In our income statement on Page 9, I particularly focused on the lines below operating EBITDA. We report special items amounting to an expense of about EUR 15 million, which are mainly related to Project Brenntag and smaller efficiency measures. Depreciation amounted to EUR 62 million. The financial result amounted to a net expense of EUR 16 million. Earnings per share stood at EUR 0.76 compared to EUR 0.83 in the third quarter 2019.Free cash flow has been very strong. The free cash flow amounted to EUR 421 million and was the highest free cash flow we ever reported for a single quarter. This exceptionally high free cash flow once again underlines the cash-generative nature and the resilience of our business.Our net financial liabilities amount to EUR 1.6 billion. The leverage stood at 1.5x at the end of September.I would once again like to mention Brenntag's strong funding profile. We have a very balanced and long-term-oriented maturity profile. The first main maturities come up only at the end of 2022. Also, this financial profile provides us comfort in this unique business environment. Working capital amounted to EUR 1.5 billion at the end of the third quarter. In the past quarter, annualized working capital turnover reached its second-highest level this year and was above the previous year's figure. [ Recurrence of ] working capital, 7.1x. Despite supply chain challenges in course of the COVID-19 pandemic, the measures to improve our working capital management are yielding results.In summary, we are very satisfied with the financial results of the quarter, especially considering the difficult economic environment. We delivered earnings growth and, once again, a high cash flow.Thank you very much. I hand it back to Christian.

[Christian Kohlpaintner, Chairman of the Management Board & CEO]

Thank you, Georg.Now let's come to the outlook for 2020. In early April, we, as many other companies, suspended the forecast for the financial year 2020 due to the considerable uncertainty over the future effects of the COVID-19 pandemic. Throughout Q3, we saw a development that was in line with our expectations and gave us the confidence to reinstate our guidance for 2020.We expect operating EBITDA for the full year 2020 to be between EUR 1 billion and EUR 1.04 billion compared to roughly EUR 1 billion, which we had in the year 2019. The new forecast assumes that there will be no further significant government measures to contain the pandemic and also related negative effects on the economy. Furthermore, the forecast does not envisage any special items or significant changes in current exchange rates in the further course of the year, and it also includes the contributions to earnings from acquisitions.The COVID-19 pandemic will accompany us for the rest of this year and most probably also into 2021. Particularly against the background of rising COVID-19 cases around the globe, we expect business conditions to remain challenging. Of course, The health and the safety of our employees and our business partners continue to have the highest priority for us.So far, we are very satisfied with our performance over the course of this year, and we also feel well positioned for the rest of 2020. Having said this, we, of course, also look beyond 2020.As you know, we have been working on our long-term positioning of Brenntag over the last months. We recently published our future operating model, including our 2 global divisions, Brenntag Essentials and Brenntag Specialties. Additionally, we are going to have a new management board structure. Steven Terwindt will take over responsibilities as the Chief Operating Officer for the Essentials business; and Henri Nejade will take on the role as Chief Operating Officer for the Specialties business. All those changes will be effective from January 1, 2021.Furthermore, we just announced additional measures and further details on Project Brenntag, in particular, the expected EBITDA uplift of EUR 220 million, which we aim to reach in full scope from the beginning of 2023. We are fully aware that you are keen on getting more details on Project Brenntag and that you have a lot of questions in that respect, so please just bear with us a few more moments.Our capital markets update will start at 3 p.m. today. Therefore, let's now start with the Q&A session on the Q3 results in particular. Thank you very much.

[Operator]

[Operator Instructions] And the first question we received is from Tom Burlton of Berenberg.

[Thomas Edward Burlton]

I've got a few if that's okay. I'll go [indiscernible]. The first one is just on -- you talked about the unit margin impact you've seen in the quarter and the sort of sequentially lower impact from that. I just wonder whether you could sort of give any more detail in terms of quantifying sort of the breakdown between volumes and sort of unit margin when we're thinking about the sort of gross profit development in the quarter.And then a sort of -- another one on the quarter and sort of cadence of growth through the quarter perhaps. I know you historically used to give the sort of monthly growth rates, which I know you've moved away from doing, but I guess just in terms of sort of seeing renewed lockdowns and so forth across Europe, I think people would be particularly sort of curious to see how growth has sort of trended through the quarter and how you're exiting maybe in September. So that would be helpful.And then just specifically on North America if I could, on the unit margin piece, you called out EMEA and LATAM, in particular, I think, in the statement where you've seen a unit margin benefit. Just curious at sort of [indiscernible] ex-oil and gas, North America was down around 3% or so. Just wondering sort of why you thought you weren't seeing that unit margin benefit in North America? Sort of what's going on in that market? What's going on differently there sort of relative to EMEA or LATAM where you are getting that benefit? That would be helpful, please.

[Georg Müller, CFO & Member of Board of Management]

Yes, Tom. Thanks for joining us this afternoon.You asked for unit margin impact relative to volume. You've seen that on an FX-adjusted basis, our gross profit in the quarter is around flattish. Volumes are down mid-single-digit for the group. So you can imply that the per unit margin is mid-single-digit up for the group.When it comes to the cadence throughout the quarter, as you rightly say, we don't want to give monthly growth data any longer. We stopped that at the beginning of the year already. Our business is typically seasonally low, seasonally low in July, and to a degree in August, maybe even more in August. The business did come back after the summer holidays. It seasonally came back, as you would expect. It still is a good message that in times of a pandemic, the business does return after the summer holidays. When it comes to growth rates relative to previous years, I really don't want to give a differentiation on a month-by-month basis.When it comes to margin effects, gross profit per unit effect in EMEA and in North America, both regions benefited. So we do see a helpful gross profit per unit benefit on both sides of the Atlantic. Indeed, the effect was somewhat stronger in Europe, but that should not diminish the success that our North American organization had in managing the gross profit per ton.What is different? I would point to the oil and gas business in North America, which is a particularly difficult business for most volume-wise, but it's also more difficult to achieve appropriate gross profit per unit margins in the pandemic on that end of the business. And I would point to the fact that our business in Europe typically distributes smaller orders in the North American business, which also gives us better opportunities to manage margins.

[Operator]

And the next question received is from Rory McKenzie of UBS.

[Rory Edward McKenzie, European Support Services Analyst]

It's Rory here. Firstly, just on the volume trends, across the economy, activity has clearly improved significantly Q3 versus Q2, whereas, I guess, your share volume declines didn't improve by quite as much. And why is that? Is it that you saw lots of new customers come in maybe through the disruption and they haven't been that sticky? Just interested in how you see your volume trends.And then secondly, following up on Tom's question, the GP per unit, of course, as you said, is now softening sequentially. What's the safety assumption for next year? Should we assume that you can hold on to these higher levels? Or would you expect all that GP per unit to revert to a pre-pandemic level, say, as we eventually get out of this disruptive period?

[Christian Kohlpaintner, Chairman of the Management Board & CEO]

Yes.

[Georg Müller, CFO & Member of Board of Management]

Yes. To the market, to the business, particularly in terms of higher volume orders, that this has a little bit of dampening effect on gross profit per unit, but it -- in our experience, that should balance out to a fair degree.When it comes to the state of the -- of our expectations for the state of the market into next year with respect to margins, for sure, the pandemic is not over. And even though I don't have the crystal ball, in all likelihood, it won't be over end of December. It will be with us in a good -- for a good part of next year. The point I want to make is the market situation that we currently face, also with respect to gross profit per unit, we would generally expect to continue this for a while. We would not expect a sharp change.When it comes to your first question, I'm not sure if I got the exact point of the question. If it implied some thing like you see in other industries' volumes coming back more strongly, I can't really comment on that. Our volume trajectory has been pretty stable to us -- throughout this year. And we are actually pretty positive that after the summer holidays, the usual seasonal return indeed occur.

[Rory Edward McKenzie, European Support Services Analyst]

And just one last one on the finance costs. Obviously, quite a big step down there. Should we assume this run rate continues from now? Obviously, you dig it a bit. Is that the main impact?

[Georg Müller, CFO & Member of Board of Management]

Yes. There is -- when it comes -- what you see in the quarter, there is an underlying interest expense. And that's a good run rate, what you see there. There can always be a little bit of volatility quarter-by-quarter from FX effects. This quarter didn't have any. So to cut the long story short, use this quarter's figure as a run rate or maybe put in a little bit of caution, a couple of millions.

[Operator]

The next question received is from Laurent Favre of Exane BNP Paribas.

[Laurent Guy Favre, Research Analyst]

Two questions, please. The first one on the Q4 -- on the implied Q4 EBITDA guidance, I think it's implying a drop compared to Q3 sequentially of 10% to 25%. It looks more, I guess, pronounced growth compared to the past 5 years. I was wondering, are you -- I guess, it would be understandable to be extremely cautious given the uncertainty. But I'm wondering, are you just being cautious? Or are you already seeing, in terms of [ knock-on ] activity or in terms of further normalization of gross profit per unit, something -- and saying something that would justify this level of drop sequentially?And then the second question, on free cash flow. As you said, exceptional cash flow in Q3, some of that being working capital. Should we assume that working capital improvement is an area of focus for you also on Project Brenntag? So are you seeing some exceptional effect in Q3? In other words, if you want to [indiscernible] from Q4 [indiscernible], do you assume the normal seasonal boost in free cash flow in Q4?

[Georg Müller, CFO & Member of Board of Management]

Laurent, thank you.Taking your first question, when it comes to the guidance, our guidance for operating EBITDA for the full year stands at EUR 1 billion to EUR 1.040 billion. And I think it would probably not be too helpful to guide you to what the one or the other end of the range. There is still a quarter to go -- almost a quarter to go in a world which is currently a little bit volatile. In many countries, we operate in Christmas, and Christmas holidays play a significant role. So in many countries, there is basically December only a 3-week, sometimes even only a 2-week month. So there is nothing -- no message included on the implications that Q4 is forecast a little bit lower than the other quarters.Free cash flow, let's speak a little later in the capital market update about our specific initiatives also to focus and refocus working capital management, which indeed positively impacts free cash flow. You have heard us say on the Q1 call and the Q2 call that we were not fully satisfied with working capital management. And we did put a lot of focus and emphasis on the topic already. So from my perspective, we had a good catch-up in Q3, which, honestly, we should have had in Q1 and Q2 already. We nevertheless expect also a good free cash flow in Q4 and going forward.

[Operator]

And the next question is from Chetan Udeshi of JPMorgan.

[Chetan Udeshi, Research Analyst]

Apologies if I missed this point previously, but did you talk about how much impact you see in North America from oil and gas declines? So in other words, what was the magnitude of oil and gas-related gross profit decline and [ expat ] in North AmericaAnd second question was just around, I mean, have we seen any benefit from Project Brenntag already in terms of how we imagine the business in terms of cost management, et cetera? Or is that something that will only kickstart once this is formally announced today, et cetera, et cetera?

[Christian Kohlpaintner, Chairman of the Management Board & CEO]

I will take the second one about the benefits of Project Brenntag already in this year and then Georg will say a few words about the oil and gas impacts in North America.Yes, indeed. I mean, I think we have talked previously about the so-called early wins or the quick wins we see out of Project Brenntag. And the most visible one is indeed the working capital improvements and the very strong cash flow created. Then we have, of course, other measures we will talk later in the capital market update about it like indirect procurement. We see already also some savings materializing this year. And so you can imagine that there are already some impact of Project Brenntag, but again, I would not overemphasize them as we are still in preparation for the full scope of the program. But indeed, there are some benefits already visible in Q3 and how we are actually managing the company.So maybe, Georg, you then answer the oil and gas question.

[Georg Müller, CFO & Member of Board of Management]

The perspective I gave in -- when I gave my little speech was that North America in the third quarter had gross profit decline of about 9%, and 6 percentage points actually relate to the oil and gas business. So 2/3 of the decline in gross profit in North America relate to oil and gas.I can add an additional perspective. The oil and gas business in North America accounts for, order of magnitude, 25% of our business in North America, now actually a little less given the trajectory oil and gas currently has. The first quarter was still almost stable, but in the second and also in the third quarter, we see a decline in the gross profit of the oil and gas business North America of about 1/3, so about 30%.

[Chetan Udeshi, Research Analyst]

Understood. And is that now stabilizing at those low levels when you say sequentially you've got it from Q2 to Q3 or Q3 to Q4? Or is it still trending down even sequentially at the moment?

[Georg Müller, CFO & Member of Board of Management]

Yes, happy to answer that. It's stabilizing, but not improving.

[Operator]

[Operator Instructions] And the next question received is from Rajesh Kumar of HSBC.

[Rajesh Kumar, Analyst]

This is Rajesh Kumar from HSBC. Two, if I may. The first is 9 months into 2020, the most bizarre year [ and of what ] would have been. What is the nature of discussions you have with your suppliers? Are they asking or more on different kind of outcome from a key marketing partner such as Brenntag?And second one is related to the suppliers again. On the supplier rebate side, if I understand correctly, most distributors accrue supplier [ pay ] based on certain volume and value targets, and it varies to a great degree. Can you just run us through how have you accrued the supplier rebate in your business? And is there a potential that if you see a pickup in volumes or a decline in volumes, you might have to change those assumptions?

[Christian Kohlpaintner, Chairman of the Management Board & CEO]

I will answer those both in one topic. When you look on our suppliers -- and of course, we have and continue to have intensive discussions with the suppliers navigating through this challenge jointly. I think what you can feel is that, of course, suppliers looking for a reliable partner in such difficult times. And Brenntag, given its size, given its leading market position and given its global presence, has been a very reliable and a very strong partner during those crisis times and continuing right now.Of course, I mean, you have seen that the chemical industry is adjusting. It's adjusting to the decline in the volumes, the suppressed market conditions and the demand pattern they see. And there is, of course, a lot of discussions going on. What does this mean in a supplier and distributor relationship as we move forward? So we talk about safety, security of supply. We talk about many, many dimensions.In previous calls, I -- when I was asked about the outsourcing trend, I always emphasized that the outsourcing trend is not just a unidirectional trend. So there are give and takes as typically we move forward in developing certain businesses, but there are also certain cyclicality where in times when chemical manufacturers are rethinking about the cost base or rethinking about adjusting their complexity. There are increasing talks about can distributors reduce complexity and also follow their volume and their value strategies. And I think this is one of the unique strengths Brenntag has. We will talk about this specifically in the capital market update in more detail, how we are addressing these needs. And I would say the trend is in general there, but it's even a little bit more pronounced than in normal times, I would say. And I hope that answers that question to some extent.

[Rajesh Kumar, Analyst]

I appreciate that answer. And just on the base side?

[Georg Müller, CFO & Member of Board of Management]

You'll get that set.

[Christian Kohlpaintner, Chairman of the Management Board & CEO]

What was it? I don't...

[Georg Müller, CFO & Member of Board of Management]

Can you give me the [ number ]?

[Rajesh Kumar, Analyst]

The rebate -- supplier rebate, how have you accrued it so far in the year, given that the volumes have been unpredictable?

[Christian Kohlpaintner, Chairman of the Management Board & CEO]

So I'm not sure if I understood the question now where we can -- can you maybe go a little bit closer to the microphone or something?

[Rajesh Kumar, Analyst]

The supplier rebates, how have the supplier rebates progressed so far in the year? And if you see a volume pickup or volume decline, would you have to readjust your accruals of such rebates?

[Christian Kohlpaintner, Chairman of the Management Board & CEO]

Okay.

[Georg Müller, CFO & Member of Board of Management]

Yes. First of all, let me make some point: You should not overestimate the relevance of supplier rebates in our business. In chemical distribution, most of the pricing between supplier and distributor actually runs on a net basis.To the degree rebates exist and to the degree rebates are subject to the certain volume triggers, we accrue in course of the year based on the expected volumes that we make throughout the year. But obviously, the softness in volumes is with us all year already. And whatever estimate we have taken, we take that into account already. So at this stage, I do not see a particular risk in having over-accrued supplier rebates.

[Operator]

And the next question is from Isha Sharma of MainFirst Bank. .

[Isha Sharma, Analyst]

Could you talk a bit about your performance in Asia where we saw such a strong organic EBITDA growth and a jump in the conversion ratio? Also how we should think about this going forward, please?The second one would be, is it fair to assume that the majority of your net working capital inflow in Q3 might be attributable to low inventory levels in anticipation of the demand? If that is the case, should we expect this to reverse somewhat in Q4 as volumes hopefully pick up? And in the course of 2021, what would that mean then for the free cash flow?And the last one, please. The leverage ratio is now at historically low level that we have seen at Brenntag. What is the leverage that you are comfortable with in the midterm? And what are your priorities in terms of use of cash?

[Georg Müller, CFO & Member of Board of Management]

Let me answer the question on free cash flow and then probably Christian is best suited to give more color on our Asian development.On the working capital management, which influences free cash flow, we internally typically measure in terms of working capital turns. So we not necessarily hold our general management teams responsible for an absolute level of working capital, but more for a turn, so the amount of working capital deployed in the business relative to sales.But indeed, volumes are down this year. And at one moment in time, we expect volumes and therefore sales to pick up and then we will have to give a little back. But that's notwithstanding that we primarily focused now on stronger working capital turns. And we do expect the positive turn trajectory to continue. So in that sense, I would not expect the full amount that we released from working capital in Q3 to go back into the business over time. If you permit me to park the question on leverage and our leverage target because we have prepared a statement on that for the capital market update.

[Christian Kohlpaintner, Chairman of the Management Board & CEO]

Hello, Isha. In answering the question about performance in Asia, strong performance. Recovery in Asia, I must say, besides Latin America, the strongest we have seen this year, particularly, China, going back to very good and decent levels, I have to say. We also have excellent performance in Vietnam. Also, India coming back after the complete lockdown, which we have faced earlier this year.So overall, a very solid and stable recovery in Asia. We are, predominantly with the exception of China, we talk about our Specialties business. So from that perspective, very pleased with the volume development, with the growth overall. And I would say the conversion margins and the conversion ratios you have seen, they are satisfactory and going in the right direction. I don't believe that they are really a onetime effect, but it shows again our presence and our position in Asia being quite strong.

[Operator]

And the last question for today is from Dan Hobden of Credit Suisse.

[Daniel James Hobden, Research Analyst]

Just 2 for me, if I may. One, I was wondering if you could talk about the competitive dynamics. Given your size and scan and scope, if you have been taking market share given the strength of your supply chains relative to maybe some of your smaller peers across these troubled times?And then my second question, EMEA, when you speak about the areas there that performed particularly well, it feels very specialties-driven. I was wondering if you could maybe give us a feel as to how Specialties grew through the period maybe relative to what we're now calling Essentials.

[Christian Kohlpaintner, Chairman of the Management Board & CEO]

Competitive dynamics, I must say, overall, relatively stable. I think there was currently supply security, stability of supply, making sure that our customers are getting the products even [ here ] and borders were closed and other things, actually effects which just started to happen again is currently the most critical one. I believe we have fared quite well in that arena and performed according to our expectations, what we believe is the underlying market growth.We have seen, of course, different by industry, industry segment, and that leads me to your question about Specialties. Industry by industry segment, you see different growth patterns. You see more of the industrial space showing a lower growth rate. We talked about automotive in the past, that one has now recovered. We talked about construction chemicals and other things, that one has stabilized. But still good business when we talk about pharma, when we talk about nutrition, when me talk about personal care, as I have mentioned. So I would say, overall, a good trajectory also for our Specialties business.We will talk later on the capital market update, give a little bit more flavor on our Specialties business. So please hang out there. And as we move forward, you certainly will get more transparency on the performance of those 2 segments relative to each other. So please bear for us for a couple of minutes, and then we talk about this.

[Operator]

Ladies and gentlemen, thank you for your attendance. We came to the end of the Q&A.