Evonik Industries AG

XETRA:EVK

Earnings Call Transcript 2021-Q2

[Operator]

Dear, ladies and gentlemen, welcome to today's Q2 2021 Earnings Conference Call of Evonik Industries AG. At our customer's request, this conference will be recorded. [Operator Instructions] May I now hand you over to Tim Lange, Head of Investor Relations? Please go ahead.

[Tim Lange, Head of Investor Relations]

Good morning, and welcome, everybody. This is the Evonik Q2 call. As always, with me today, our CEO, Christian Kullmann; and our CFO, Ute Wolf. And with that, shortly and briefly, I directly hand over to Christian for the presentation.

[Christian Kullmann, CEO & Chairman of the Executive Board]

Thanks a lot, Tim. Welcome also from my side, and thanks a lot for joining our earnings conference call this morning. I do really hope you're all in pretty good health. Obviously, the pandemic is far from over, but there is more reason to be optimistic today than a few months ago. Many countries around the world are making good progress with their vaccination programs. We, at Evonik, are making our contribution as we deliver the first volumes of lipids to biotech in the second quarter. And we were able to vaccinate more than 16,000 colleagues and their families at our Evonik facility, thereby safeguarding their health and safety. The vaccine marks a big step, a big step back to a more normal life. Hopefully, it will enable more personal interaction and even business travel as soon as possible. Personally, I'm looking forward to seeing many of my Evonik colleagues around the world, our valued customers and, last but not least, you in person again. During our Q1 earnings call, we presented a strong start into the year and a slightly more positive outlook for 2021. Back then, I described our outlook as conservative. Ladies and gentlemen, this conservatism has now definitely turned into optimism. The strong trends seen across our businesses in the first month of 2021 continued, resulting in an even stronger second quarter. And this positive dynamic will continue into the second half of this year. This positive dynamic will continue into the second half of the year, because of this kind of optimism, it is worthwhile to repeat it. So let's get started with the highlights of the second quarter. As in the first quarter, we saw strong growth, not only compared to the 2020 pandemic year but also against a more realistic ambition level of 2019. Adjusted EBITDA came in 15% above the second quarter of 2019. Our three growth divisions again stood out and delivered an even higher growth rate, 18%. With this, we were outperforming our European peer group the second year in a row, last year, in terms of earnings resilience, this year, in terms of structural specialty growth. In our discussions with investors over the last month, rising raw material prices were a recurring topic. Also for us at Evonik, tight global supply chain, highly utilized capacities and rising raw material costs limited the upside in some of our businesses. But ladies and gentlemen, nevertheless, we delivered on our promises in the second quarter, and we are really and truly optimistic for the second half as well. This optimism, this kind of strong optimism is rooted in the great efforts of our procurement team, taking actions to mitigate the supply challenges but also with the natural hedge in our portfolio. While the steep raw material price increases had a negative impact on the profitability in some divisions, Performance Materials benefits from higher oil and naphtha price. This kind of benefit will continue into the second half, just like we will continue to push through own price increases here. In other words, the full benefit of this will pay off in 2022. Our strong performance is definitely not a result of a commodity-driven cyclical recovery. It is a result of our strategy, of our strategic agenda over the last few years in respect of our portfolio transformation towards more resilient businesses, our accelerated innovation efforts and our push towards products with a high sustainability benefit for our customers. These structural growth drivers are pretty well in check. And this holds true across all -- for all of our three growth divisions. Nutrition & Care led the way this quarter. But also the two other growth divisions benefited from the innovations and structural growth drivers. Despite higher raw material prices and some temporary negative effects, all three growth divisions are above the precrisis levels. And as you could see at our three growth divisions, talking about our three division spotlights over the last month, growth divisions are making constant strategic progress towards higher profitability and returns. I would just like to highlight the recent examples from Nutrition & Care. In the growth field of active ingredients, we acquired Infinitec. With that, Nutrition & Care enriches its portfolio with additional cosmetic delivery systems and several natural-based active ingredients. In the growth field of drug delivery systems, we signed a research collaboration with Stanford University. Jointly and beyond our lipid platform, we will develop a new polymer-based drug delivery platform for mRNA and gene therapy. Both of these two examples are attractive, [ shiny ] proof points of how the division transforms itself into an even stronger system solutions provider. With that, I hand over to Ute for more details about our performance we have shown in the second quarter of this year.

[Ute Wolf, CFO & Member of Executive Board]

Thank you, Christian, and welcome from me as well. Let me start with Page 10. In terms of free cash flow, Q1 was the best first quarter ever. And for Q2, we can report the same. This proves our structural improvements also on the free cash flow side. For the first 6 months of the year, the free cash flow of EUR 413 million is double the already strong level of last year. While in Q1 we still benefited from a net working capital inflow and lower tax prepayments, these two factors normalized in the second quarter as expected. The increase in inventories and receivables clearly reflects the strong business performance as well as the rise of raw material pricing. But our strong operational performance more than compensated these two factors. So we are on a good track for another year of 40% cash conversion. With that, we will expand our history of absolute free cash flow growth for the fourth year in a row. This translates into an impressive CAGR of more than 15% since 2017. Let's now have a brief look at our operational performance by division. Specialty Additives has seen unchanged strong demand across virtually all industries and regions. Additives for coatings and PU foams performed particularly well. Crosslinkers continued on good levels as well. In terms of profitability, we experienced the expected normalization from the extraordinary high Q1 level. Nevertheless, EBITDA margin stayed on a group-leading level of above 26%. In Q2, the division started to feel the impact of rising raw material costs. While we see our own price increases coming through more and more, the nature of the Specialty Additives business model is value-based pricing. So there are no broad-based pass-on clauses or regular price negotiations based on raw material impacts. We will adjust prices further, and we will see the positive impact from these measures in the next quarters. The full effect will even pay off next year, hence supporting the 2022 earnings and profitability levels. Nutrition & Care delivered a clear step-up in earnings, both compared to the prior year as well as quarter-on-quarter. The strong performance was broad-based. Beyond the well-selected higher prices in Animal Nutrition, the first contribution from lipid sales to BioNTech and strong demand for active cosmetic ingredients were the drivers for the higher earnings level. Again, we expect these structural growth drivers to continue into the second half and into the next year. More shorter term, we expect another satisfactory quarter for the division ahead, again confirming their newly achieved 20%-plus margin level. Smart Materials continued its performance from Q1 with unchanged positive demand across all business. The division faced temporary higher costs, like for the ramp-up of our new PA12 plant and unplanned outage in the existing PA12 chain and for [indiscernible] managing a tight logistics situation and higher raw material prices. But these were compensated by the prevailing recovery in automotive and the high demand for eco-solutions like active oxygens specialties and gas separation membranes. While raw material price pressure is less pronounced here with a higher share of inorganic raw materials, the division has also started pricing initiatives, which will become visible from Q3 onwards. Performance Materials has lagged the general cyclical recovery for quite some time. Now they are finally returning from trough levels to a more normalized earnings level. Higher volumes for all main products in the C4 business and higher spreads are driving the recovery. The natural hedge in our portfolio against higher raw material price is working. Most of our C4 products have naphtha-based price formulas. Our value creation for these products is x times naphtha. So they suffered from a low oil price and now benefit from the higher level. Into Q3, we expect markets to remain tight while expected lower raw material availability and own planned maintenance turnarounds will play a role as well. With that, back to Christian for the outlook.

[Christian Kullmann, CEO & Chairman of the Executive Board]

Thanks a lot, Ute. Ladies and gentlemen, let's have a deep dive into our full year's outlook. And listening to Ute, you could have reckoned that Evonik is in good swing. And that's what will remain for the rest of the year and will become even better in 2022. So on the back of the positive first half of this year, the continued positive dynamic, we are confident, we're confident for the second half of the year as well. That is, while we upgrade our outlook, we now expect adjusted EBITDA to come in between EUR 2.3 billion and EUR 2.4 billion. We do expect a pretty unchanged positive operational performance in the third and fourth quarters. The third quarter on, you will see some effects from maintenance shutdowns, mainly in Specialty Additives and Performance Materials. And in the fourth quarter, the usual year-end seasonality of, give or take, around 20% below the average of the first through the third quarter. So all in all, going to sum it up, from today's perspective, all signs are clearly pointing to the upper part to the new range. And as I know that you're already today, in the middle of the year, looking beyond 2021, let me try to give you our long-term perspective as well. Over the last years, we have put a lot of work in optimizing our portfolio and strengthened our innovation and sustainability activities. As a result of this, we have proven our portfolio resilience in the crisis, and we are now set for sustained structural growth in 2021 and definitely beyond. So the other part of this year's guidance marks a 5% EBITDA CAGR since 2017. And by the way, these have not been the easiest years. We'll continue on this structural growth path in the next years as well, obviously always assuming no global economical downturns. Or to put it more bluntly, with none of our businesses at a cyclical peak with healthy structural growth trends as well as shorter-term growth drivers, we are confident for another year of attractive structural growth in 2022. For free cash flow, we continue to guide for a cash conversion of the high prior year level of around 40%. Since we today upgraded the EBITDA outlook for 2021, this translates into higher absolute cash flow for 2021 as well, coming very close to EUR 1 billion of free cash flow. And by the way, at accounting share price level, this is a free cash flow yield of 7%. With that, ladies and gentlemen, we thank you so far for your interest and your time listening to us, and we are now happy to take your questions.

[Operator]

[Operator Instructions] The first question is by Andreas Heine of Stifel.

[Andreas Heine, Managing Director]

Three questions if I may. The first is in Nutrition & Care, it was quite a strong increase in sales sequentially in Health Care. Is that something seasonal or project-driven? Or can we extrapolate this into the second half, maybe driven by the BioNTech deliveries? That's the first question. The second is do we have any number or guidance, what you can say how big the impact was on the two industrial divisions and if it comes from supply constraints, raw material increases, logistic costs and higher bonuses? So all these negatives combined, have you anything you can say here? And then lastly, on Baby Care, Baby Care is a value chain based on acrylics. How is it to pass on through higher prices for this business? Or has that seen quite a drop in earnings in the second quarter, which was then obviously significantly more than offset by the C4 value chain. Anything you could share on this would be helpful as well. These are my three questions.

[Ute Wolf, CFO & Member of Executive Board]

Yes. Andreas, thank you very much for the questions. Nutrition & Care, the Care sales is Care Solutions and Health Care together. So we also have a very strong structural trend in Care Solutions as we really worked on the product portfolio, integrated some of the acquisitions. So overall, of course, Nutrition & Care will continue the earnings resilience and -- in the second half. And that will, of course, be supported by a sequentially stable methionine prices and also further accelerating contribution from lipid -- from our lipid business. So the second half will be the main weight of that. And as I said, a strong demand for our active cosmetic ingredients and, of course, also the structural work that this business line has undertaken in the last years. With regards to the supply constraints, I think we have some influence here. It's, I think, in the divisions, it's maybe high single-digit, low double-digit amount. If you take logistics costs, some things can be passed on according to the terms and conditions as we deliver. Of course, the bonus level across the board is a double-digit influence as, of course, we are now really on a very positive side of our scenarios for the outlook for the year. So I think that are maybe the main influences here. For Baby Care, they have a 2 to 3 months pass-on of propylene price increases so that will also now come in the next quarter.

[Christian Kullmann, CEO & Chairman of the Executive Board]

Yes. Andreas, good to hear you. Let me try to provide you with some color about our lipid businesses. As you know, we've started our new lipid capacities in the second half -- sorry, in the second quarter, so a few weeks ago. And this is because we have built this up in a record time right from scratch. In other words, the first shipments, we have done in the first half of the year. But the much more larger volumes, you will see in the third and in the fourth quarter. And here, you will see a definite very positive impact coming from this. You might remember that we have already upgraded -- updated you and your colleagues on our MENA sales contribution for this year. And we have lifted this up from double to triple digits. And one thing is for sure, having said this, that we will see higher sales and a higher sales contribution in the next year. Reason for this is as simple as possible that it will be the first year where we will see 12 months of sales contribution coming from the very attractive lipid business field, [ nano lipid ] business field of Evonik. But there's more to say. Our growth in Nutrition & Care is definitely not relying and focusing on one product, one customer or one project. Nutrition & Care will have, in this year, EUR 200 million higher earnings compared not to 2020 instead of to 2019. And this is now coming back to the perspective's broad base. Yes, think about our drug delivery systems. Here, I think about the pretty attractive and progressively accelerating positions in our active cosmetics ingredients. Actually, I do think about methionine and sustainable nutrition, too. This kind of broad-based growth, yes, I dare calling it broad-based growth. We do also expect mRNA activities. Why is this? We are a full -- sorry, we are a fully integrated solution provider, and we are the one who cover the whole value chain from the exceptions to manufacturing. That translates into the perspective and that leans into the potential that we are able to serve the whole mRNA market beyond, ladies and gentlemen, beyond the current [indiscernible]. Right now, we are involved in a double-digit number of mRNA projects. And this means that we will deliver the constant, sustained and sustainable growth. What we have shown in the last, we'll demonstrate and we will deliver on -- in the incoming years. And that was about our mRNA position. And then you've asked something about Baby Care. Let's keep it simple. Ute has already provided you with the main information. So here is to add that there is an antidumping case, which the European authorities have initiated -- have started in the first half of this year. And for us, it might be prudent to see what will come out of this and then to discuss next steps as we have announced it. I guess, that is what I could add from the perspective, talking about the future of Baby Care -- current future of Baby Care. I guess, that's it, Andreas.

[Andreas Heine, Managing Director]

Yes, basically. But going back to the last point, that means that you wait for the outcome of the antidumping case before you proceed with your strategic options. Is that the right understanding?

[Christian Kullmann, CEO & Chairman of the Executive Board]

Yes, definitely. There are a lot of options we could take, and we do expect the results of this antidumping investigations in due course, that means in concrete, September, October of this year, end of September, 30th of October, we do expect the announcement of the European authorities in this respect. And then we will discuss internally next steps and then inform you how and what we will do further on.

[Operator]

The next question is by Gunther Zechmann of Bernstein.

[Gunther Zechmann, Research Analyst]

Can I just seamlessly follow on from Andreas' question, please, on the lipid systems? You're guiding now for a triple-digit million sales for this year. Can I just clarify that you have growth next year from just annualizing that sales, i.e., to something at least EUR 200 million in sales next year and then you expect some growth on top of that, so ramping the annualized run rate? So if I could just clarify that as a first point. And does that change in any way your view of the EUR 5 billion in sales potential for the overall market for lipid systems? Or is that tracking in line with what you were expecting? And the second one I have is, given the strong recovery in Performance Materials, does that change your view on strategic options in any way on the C4 part of the value chain, not just the Baby Care part of the business? And where are we tracking on that, please?

[Christian Kullmann, CEO & Chairman of the Executive Board]

Thanks a lot for your questions. I take the second one and I could keep it very simple. And it is a two-letter answer because it is no. I hand over to Ute.

[Ute Wolf, CFO & Member of Executive Board]

Yes. My answer has more letters, so -- as we said, the market in the mid-term is the EUR 500 million sales that more or less corresponds with the EUR 5 billion. Of course, that market, in general, I think, has a dynamic as, of course, new applications are now underway. And what is seen at BioNTech, also looks for malaria and other vaccinations. So of course, we'll start just at the beginning of this innovation cycle, I think. That will, on our side, ramp up gradually. Of course, next year's sales will be higher. The EUR 200 million are possible. But of course, that also depends a little bit on how the projects ramp up and also how the government play their role in the vaccination certainty and all that. So from that point of view, clear growth rate from this year, EUR 200 million may be a little bit high, but the EUR 500 million in the mid-term until '25, I think that's clearly what we can confirm.

[Operator]

Next question is by Nicola Tang of Exane BNP Paribas.

[Nicola Tang, Analyst]

First, I want to ask a little bit more about the outlook. So you've obviously upgraded the EBITDA guidance, but the qualitative comments for the divisions, apart from the other line, are pretty much unchanged. So could you talk a little bit about what's driving -- or which divisions are driving the upgrade? Is it fair to assume that it's mainly coming through in Performance Materials, given the beat that we saw in Q2? Or have you changed your thinking across some of the other divisions as well? And second question, just around CapEx, more thinking about into 2022. So it's been relatively stable at low-ish levels for the past few years. And you're now ramping up with the PA12 plant so that CapEx should be coming to an end. So could you give us a bit of a steer on CapEx into '22 and beyond and call out any sort of key growth projects that we should be aware of?

[Ute Wolf, CFO & Member of Executive Board]

Nicola, thank you very much for your questions. First part on what drives the improved outlook, that is broad-based by all our divisions. And I think it's especially important that we point to the structural growth that we see. So we do not really see a growth in our growth divisions, which is just backed by economic recovery but really the strategy execution that pays off here. And if you look, if you compare to 2019, I think you can see that quite well. So the positive dynamic, of course, continues into Q3. We see strong demand patterns across the whole portfolio, raw material prices and availability, of course, that is a factor to watch. But on the other side, we also managed it very well in the last quarters. So from that point of view, I think we are able to manage that. On the sales side, we continue to implement our price increases. As I explained, that takes a while until that is now then coming into the numbers. Maybe that's more a support factor even for next year than for this year. Performance Materials, we discussed. If you look at the divisions, as we said, the positive trend in Specialty Additives is virtually across all businesses of all regions. Crosslinker is doing well with a focus on renewable energies in Asia. As we said, the price increases are now coming into effect in Q3 and 4. We had some maintenance shutdowns in crosslinkers in Germany in Q4. So maybe that might be a little bit of track on the cost side. But again, these are all things that happen more or less every year or every second year. Nutrition & Care, Christian explained the earnings resilience. Of course, solid volumes and sequentially stable pricing methionine. That's one factor. On the other side, we have worked very much on Animal Nutrition, that they are really improved their operating cost basis, SG&A cost base. So they are really quite weatherproof now. Then further acceleration in our contribution from lipid business or other projects in Health Care is back-end loaded this year as they have really campaigned production and there is -- the heavy weight is coming in the second half and a very, very positive development in our Care businesses, which now also last for some quarters, but that will also accelerate not only in the second half but also into next year as they really worked on the structure of their portfolio, be it products, be it size or other things. Smart Materials, they also continue. They're strong. They also see continued strong demand across all industries. Now we have some higher costs in the first half from our PA12 ramp-up. But that will now start up in the second half. So we will see the first contributions from that. We also had some outages here in our main plant in Marl, which weighed a little bit on the earnings in Q2. That will not reappear in Q3. So that is a structural improvement. And also, we have a new silica joint venture in China, which also will start in Q3, so we will have additional contributions in those businesses on top of the overall strong demand we see as well. Performance Materials, we discussed that. They will continue to benefit from tight markets. But again, they are more now on normalized levels than at peak levels. I think that's also important to keep in mind that they are now more back to normal from the trough we have seen.

[Christian Kullmann, CEO & Chairman of the Executive Board]

Okay. I would give you some more about -- on CapEx. Let me keep it like this. When I've taken the helm in summer 2017, we have something like the amount of CapEx which was as high as Mount Everest. And from this point onwards, we have reduced it. We've shrunk it into a level of, as of today, which is around EUR 900 million. And this is the level we and I do feel comfortable with also in longer term, so with the perspective over the next incoming years. The peak, our peak, in this was -- CapEx was, because of the polyamide 12 plant in 2020. And thinking and talking about polyamide 12, PA12, we talked about an overall CapEx volume of around EUR 500 million. In other words, the completion of this project will definitely give us enough headroom to execute our growth strategy in each division sufficiently and even more. So thinking about Specialty Additives, we'll continue with this successful kind of CapEx-light approach. This CapEx-light approach is definitely, let me say, a symbol of our Specialty Additives business. And that is what we [indiscernible] for the future, too. Might be that the high utilization rates require some modular expansions and debottleneckings. In respect of Nutrition & Care, we are well invested and the asset base is pretty well invested. So here is limited CapEx needs going forward. Focus will be here, debottlenecking on more customer finance projects going forward. And as you've seen during this conference call, there are pretty attractive opportunities for those products. So to sum it up and keep it in a nutshell, first, yes, we feel very comfortable with the level of EUR 900 million as of today and for future. Second, CapEx-light innovation projects, we will finance by this and smart modular expansion and debottlenecking as mentioned. So in other words, this translates into leveraging of new capacities. And this leveraging of new capacities will result in higher free cash flow and higher ROCE over the next years. So that is what I could give you to CapEx.

[Nicola Tang, Analyst]

That's very clear.

[Operator]

The next question is by Mubasher Chaudhry of Citi.

[Mubasher Ahmed Chaudhry, Vice President]

Just one on the near term and then one of the longer term. So when looking at the EBITDA margin in Specialty Additives, can I just look at your expectations going forward? There was a sharp decline in the second quarter. Should we expect that to decline further as [indiscernible] kind of remain/move up a little bit? That's the first question. And then the second question around capital allocation. You talked about the structural improvements in the portfolio. Should we take that as future M&A is likely to be focused on kind of small bolt-ons and we shouldn't expect anything large ticket to take place from an acquisition perspective?

[Christian Kullmann, CEO & Chairman of the Executive Board]

I may take the second question and Ute the first one about M&A. During the course of the last years, we have proven that we have a decent and disciplined M&A approach, which is focused on, we call it, bolt-ons. That means, in other words, we are focusing on strengthening our already strong positions in markets where we are [indiscernible]. That translates into saying, if I know my competitors, if I know my customers, if I know the technology positions of them, if I know all those pretty well, that is -- which is really supportive in respect of minimizing any kind of integration risks. And by having said this, there's a second side of this coin. And that means that there is much more synergy potential than if we would change this position. So no change in respect of our M&A strategy. That means focusing on disciplined M&A approach by those bolt-on acquisitions in Specialty Additives, Smart Materials and Nutrition & Care. And I guess, that is your -- that is the answer to your question. I hope it is satisfying you.

[Ute Wolf, CFO & Member of Executive Board]

Okay, then I continue with your first question, Specialty Additives. If you look back into the past, always had a margin around 27%. I think that's the structural margin that they are good for. We also flagged in our Q1 reporting that they had an extraordinary high margin level in Q1. So that was not the normal margin. So we now see a normalization and going forward, as said, they will be around this level as shown in the past.

[Operator]

The next question is by Chetan Udeshi of JPMorgan.

[Chetan Udeshi, Research Analyst]

Maybe a few questions. First, on PA12, can you remind us how should we think about the earnings contribution from this plant in 2022 and whenever we get the full ramp up? That's first question. The second question was, and maybe this is for Ute, how should we think about the total incremental cost this year from higher bonus provisions, raw material price inflation, energy costs. And as we head into 2022, of course, it's early days, but how should we think about the evolution of some of these costs more so on, say, bonus and some of the other costs which might be under your control in general? And last question I had was just looking at the Smart Materials business, a little bit surprised the prices were actually flat in Q2 year-on-year when clearly the raw material prices have been going up since Q4 of last year. So maybe it will be useful to just understand the dynamics on pricing in Smart Materials business.

[Ute Wolf, CFO & Member of Executive Board]

Yes, Chetan, thank you very much for your very detailed questions. First, on PA12, as for every other project, we have a multiyear ramp-up phase, of course, to full capacity. This year, as the ramp-up costs, of course, the product costs are in the full year, there is more slightly negative earnings -- sorry, last year, it was a slightly negative earnings contribution as we had some parts of the ramp-up. This year, we will have a positive contribution. And again, the market is very, very tight. We really start up in a very high-demand situation, which is very positive. And also PA12 goes into a lot of eco-solutions, if you enter, let's say, for instance, the gas filtration, gas separation, I think that is all very, very good tailwind. It will clearly have triple-digit sales once fully ramped-up. So that's more in the 5-year time horizon. And the margin level is clearly above the division margin level. I think that is what we gave as the guidance for PA12 and that is still the case. On the total incremental cost, I think, of course, there is always a flip side to that. We have also now better cost position as we have higher capacity utilization, but that has to be taken into account as well. On the bonus, it is, as I said, a good double-digit amount that we will have this year, but again, of course, on the back of a much better business performance. With the other costs, I think they have to be seen in sync with better cost basis because of higher capacity utilization, I think, that to isolate that, maybe lifting here and there. Thanks to Smart Materials price development, they have started with price increases already. Do you see that also in our numbers? Of course, that will become more visible in Q3 and Q4 as it was just starting. They have not such a high influence from rising raw material prices as they have more inorganic raw materials and for energy prices that they have, in many cases, part of mechanisms as well. So from that point of view, I think they are able to pass on the energy prices by definition and, of course, with the price increases step-by-step then come through in the next quarter.

[Operator]

The last question -- we're closing the Q&A session here. There are no further questions, so I hand back to you, Mr. Kullmann, for closing remarks.

[Christian Kullmann, CEO & Chairman of the Executive Board]

Yes. Thanks a lot. Ladies and gentlemen. Before we let you go, one final remark regarding our Capital Markets Day. As you know, we had initially planned to update you on our growth strategy and especially on our sustainability and innovation strategy on the 2nd of October this year. This event will be postponed into the first half of next year, and there are a couple of good reasons for that. First, the ESG environment is highly dynamic right now, and we want to make sure to get our strategy and our communication right on such an important topic. Also, we have just finished a series of three Division Days. And let's keep it like this, understandably, the Investor Relations team is totally exhausted for the rest of the year. So it is fair to say that if we will give them a well-deserved break between the quarterly reportings and leave some exciting content for next year. And finally, and that is from my and -- from Ute's and my side, we do hope the chances for any physical presence increase in 2022. So ladies and gentlemen, that is what closes today's call. Thanks once more for your attention today, hoping to see soon in person. And in the meanwhile, stay healthy, see you soon. Bye.

[Operator]

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.