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

On behalf of Brenntag, I would like to welcome you to the earnings call for the first quarter of 2023. On the call with me today are our CEO, Dr.

Christian Kohlpaintner, and our CFO, Dr. Kristin Neumann.

They will walk you through today's presentation, which is followed by a Q&A session. All relevant documents have been published this morning on our website and can be found at brenntag.com in the Investor Relations section.

In the same area, you will also find the recording of this call later today. Before we begin, allow me to point you to our safe harbor statement, which you will find at the end of the slide deck.

With that, I hand over to our CEO, Dr. Christian Kohlpaintner.

Christian, over to you.

Yes. Thank you, Thomas.

Good afternoon also from my side, and thanks for joining us today. I will start with the highlights of the first quarter 2023, and Kristin will then walk you through the details of our financial performance.

As usual, we are both happy to answer your questions following the presentation. Brenntag recorded a solid start into the year and achieved results in line with our expectations in the first quarter of 2023.

As anticipated, the group showed a sequentially stronger performance relative to Q4 2022. In addition, we observed a gradual monthly progression in demand with early indications for a slightly positive Q2 volume development.

Compared to an exceptionally strong first quarter last year, sales and operating gross profit could be kept stable with sales of around EUR4.5 billion and operating gross profit of around EUR1 billion in an environment of normalizing global supply chains as well as prolonged inventory control measures at our customer base. We experienced volume pressure, but continues to benefit from good margin management, which led to a high gross profit per unit.

Our operating EBITDA came in at EUR420 million, [indiscernible] compared to the exceptional Q1 2022 performance. Operating EBITA amounted to EUR345 million, a decline of 13% versus the first quarter of last year.

This development of EBITDA and EBITA level is according to our expectations and guidance as communicated with our full year results. Earnings per share stood at EUR1.40, which marks the second best first quarter result in Brenntag's history compared to EUR1.61 in Q1 2022.

Our solid operational performance supported our very strong cash flow development. And additionally, we saw a strong cash inflow from working capital compared to the prior year.

This led to a record first quarter free cash flow of EUR449 million, which is more than 9x the prior year level and once again demonstrates the strong cash generation capability of our business. Besides our solid operational performance, we made good progress on our strategic initiatives.

As already indicated at our Capital Markets Day in November last year, we successfully initiated our share buyback program in March, which aims to return EUR750 million to our shareholders. The buyback is well on track and we regularly report on the progress made on our Brenntag Investor Relations website.

As communicated previously, we also propose a dividend of EUR2 per share to the Annual General Meeting in June. This underpins our strong focus to create shareholder value and to let our shareholders participate in the strong performance of Brenntag.

When it comes to our transformation journey and our Horizon 2 Strategy to Win, we are in full execution mode, and I will share a few milestones on our progress later on. And finally, on the outlook, we confirm our full year guidance presented in March 2023.

We expect our operating EBITA to stay in a range of EUR1.3 billion to EUR1.5 billion, which is equivalent to an operating EBITDA of EUR1.6 billion to EUR1.8 billion. Ladies and gentlemen, let us now take a closer look at the environment Brenntag was facing in the first quarter.

The macroeconomic environment continued to be challenging in the first quarter. We experienced ongoing geopolitical uncertainties and strong inflationary trends.

In addition, normalizing global supply chains paired with expectations for future lower prices prolonged inventory control measures at our customer base. This impacted supply and demand globally in the markets we operate in.

However, we are observing that the destocking dynamic is gradually phasing out, and we expect a sequential return to more normal order patterns in the further course of the second quarter. This slightly positive momentum is visible in improvements of top and bottom line results compared to the end of last year.

As the markets continue to normalize, Brenntag will focus on its foundational strength to seize market opportunities both in Brenntag Specialties and in Brenntag Essentials. Let me now provide some details on our Horizon 2 execution.

In November 2022, we presented our Strategy to Win, which is the second phase of our transformation journey. Since the announcement in November last year, we have been working relentlessly and are fully focusing on the execution of our strategy.

Let me briefly summarize the key elements of this strategy. Our Horizon 2 strategy aims at fostering the increasing independence of our company's 2 global divisions, Brenntag Essentials and Brenntag Specialties and is guided by the conviction that both of our divisions require differentiated steering and dedicated strategies tailored to the respective markets they are operating in.

We aim to accelerate sustainable growth above industry average and to further expand their respective leading market positions. With our digital, data and excellent growth driver DiDEX, Brenntag will enhance efficiency, growth and excellence across the organization and transform the company from its core to become a data and tech-driven enterprise and industry leader.

From DiDEX, we expect a EUR200 million net annual EBITA uplift by 2026 on a structural basis. In addition, we continue to drive the sustainability agenda in our industry and aim to lead the creation of a sustainable distribution ecosystem.

And lastly, we focus on M&A as a key driver of Brenntag's growth trajectory with an increased average annual M&A guidance of EUR400 million to EUR500 million annually, which we aim to spend according to our defined focus areas. Let us look at some of the strategic achievements we made in the first quarter.

Brenntag Specialties executed several steps to implement the divisional strategy to win, including the acquisition of a new water treatment facility in South Africa and the openings of 2 new innovation and application centers, one for pharma in Singapore and one for material sciences in Mumbai. Brenntag Essentials made an important step forward with the acquisition of Aik Moh Group, expanding its industrial chemicals and value-added service footprint in Southeast Asia.

Also, we opened a new facility in Zhangjiagang in China, about 150 kilometers from Shanghai. Including this new site, Brenntag now operates 4 distribution facilities in the country, which form an excellent foundation for Brenntag to further grow its business in China.

As part of our DiDEX program, we already rolled out Salesforce applications for several pilot regions including Great Lakes in the United States, only 6 months after project kickoff. With respect to M&A, we have signed 1 and closed 2 further transactions in APAC and EMEA.

The signing of the acquisition of Aik Moh Group in Brenntag Essentials, which I already mentioned, the closing of the acquisition of Al-Azzaz Chemicals, which was the market entry for Brenntag Specialties into Saudi Arabia, and the closing of the acquisition of a new water treatment facility in South Africa. Ladies and gentlemen, in November last year, we described decisive steps to move Brenntag further into incrementally independent operating divisions, which differentiate themselves wherever differentiation is meaningful and with one clear purpose to address the needs of our suppliers and customers most effectively, while at the same time, building the specific capabilities required in both divisions.

We will continue our path of capability building and structural adjustments with the adequate speed and the consequent decision-making required to secure successful strategy execution in both divisions and for Brenntag as a whole, while defining and then implementing the required changes in our operating model. While we are very pleased with the strong Q1 performance of our Essentials business, delivering double-digit EBITDA growth in both our core regions in North America and EMEA, we fully recognize the current performance gap of Brenntag Specialties relative to our pure-play competitors.

Let me name some key reasons why this pronounced gap currently exists in our . Firstly, the actual quality of our product portfolio, which has, for instance, a strong exposure to non-branded ingredients like citric acid, a significantly lower exposure to pharma and also including lower-margin industry segments like finished lubricants.

Secondly, a less strategically developed supplier base related to our pre-project Brenntag decentral and local decision-making. Thirdly, our actual cost structure, including the required investments to modernize the company and to provide the basis for the execution of our Horizon 2 strategy.

And fourthly, a partial lack of required skills and capabilities to drive Brenntag Specialties, including the (technical difficulty). Ladies and gentlemen, as outlined in our Capital Markets Day last November, Horizon 2 has been exactly designed to address these issues.

And we work with a strong focus on the relevant topics, including the decision on our new leadership in Brenntag Specialties with Michael Friede now having joined at the beginning of this second quarter. But let me also emphasize, being a proven and prudent management team, it goes without saying that we actively explore the relevant operating model and portfolio choices to create the future strategic optionalities for both businesses of Brenntag according to the guiding principles outlined in our Horizon 2 strategy last year.

As always, we will provide updates on our progress within our regular capital markets communication framework. And now I would like to hand over to Kristin, who will talk about the financial performance in in more detail.

Kristin?

Thank you, Christian. And also from my side, a warm welcome to everyone on this call.

I will now talk about our key financial figures for the first quarter 2023, and I will start with the development of our operating EBITA. As a reminder, when talking about growth rates, we generally talk about FX-adjusted rates.

Please have a look at the bridge on the left-hand side of Slide 7. In the first quarter 2022, we reported an operating EBITA of EUR394 million.

The translational foreign exchange effect in Q1 this year had an impact of EUR3 million. Our acquisitions contributed EUR2 million to the operating EBITA growth.

Overall, we reported an operating EBITA of EUR345 million for the whole group. Compared to the very strong prior year performance, this represents a decrease of minus 13%, which was in line with our expectations.

On the right-hand side, you'll find a more detailed view by divisions and all other segments. Brenntag Essentials continued its growth path and delivered strong results in Q1 2023 despite the ongoing challenging market conditions.

Brenntag Specialties reported weaker results, but according to our expectations and is reflected in our guidance for the full year 2023. The business results of Brenntag Specialties were affected by negative volume development and compared to exceptionally strong prior year earnings in some focus industries, which could not be repeated.

Operating EBITA growth for Brenntag Specialties was negative at minus 26%. And for Brenntag Essentials, the growth rate was plus 3% year-over-year.

In absolute terms, Brenntag Specialties reported an operating EBITA decline of minus EUR55 million whilst Brenntag Essentials grew by EUR10 million compared to Q1 2022. The positive translational FX effect of EUR3 million on group level was entirely driven by Brenntag Essentials.

Acquisitions contributed EUR1 million in Brenntag Specialties and EUR1 million in Brenntag Essentials. The group EBITA conversion ratio came in at , which was 500 basis points below the very strong prior year quarter.

Our group results were overall characterized by the continued destocking trends coupled with demand weaknesses in certain end markets, which put pressure on our volumes. At the same time, gross profit per unit was strong on an ongoing high level, which led to a stable operating gross profit development year-over-year.

The weaker bottom line results on group level are therefore mainly driven by an increased expense base compared to the prior year period. The OpEx increase is driven by various factors, which I would like to comment in more detail.

Around 30% of the total cost increase is related to our acquisitions. Therefore, we need to exclude this and look at the organic cost development.

And here, I would like to mention 3 effects in particular. First of all, IT and supporting consulting costs increased significantly in the context of our strategy execution and our DiDEX initiatives.

This accounts for more than half of the organic cost increase in Q1. The second largest driver is our personnel expenses.

Here, the increase is partly driven by an increased number of FTEs in the context of building new knowledge and competencies on central level entered in our division and by doubling certain functions for a limited period in the context of the establishment of our shared service centers. In addition, the increase in personnel expenses is driven by general wage inflation, partly offset by lower variable compensation.

The remaining part is related to our cost of operations, which increased due to general inflationary trends. This includes transportation, fuel and energy, rent as well as repair and maintenance costs.

I would like to add one more dimension to the numbers. The prior year's cost base did not include project [indiscernible] costs because we reported them as special items below operating EBITDA and operating EBITA.

This is now different for all our strategic initiatives, including DiDEX. These costs are fully reflected in our general OpEx line.

Against the background of the ongoing economic challenges and uncertainties, we prudently review the necessity to adjust our cost base according to our business expectations. We will update you due in due course on our conclusions in this respect.

Coming to Page 8. Brenntag Specialties reported an operating gross profit decline of minus 9% to EUR388 million in the first quarter.

Operating EBITA declined by minus 26% and reached EUR153 million. As already mentioned, this is according to our expectations and already reflected in our full year 2023 guidance for the group.

The EBITA conversion ratio for Brenntag Specialties was around 39% below the exceptional prior year level of 49%. The results of Brenntag Specialties were affected by negative volume development.

However, from a pricing perspective, average gross profit per unit slightly increased compared to the prior year period. Our focus industries, water treatment and lubricants performed well.

Our pharma business developed very positively and showed an encouraging strong performance. However, due to its comparably small size within our life science markets, this did not fully compensate for lower demand in the life science industries, where customers reduced previously built up inventories.

As a consequence, nutrition and personal care/HI&I showed negative operating gross profit growth, also in light of exceptionally strong prior year earnings, which could not be repeated in the actual year. The strong prior year performance was, to a large degree, driven by non-branded ingredients such as citric acid, which saw weaker volume development and price declines compared to the prior year.

The performance of the material science sector continues to be negatively impacted by muted construction activity in light of the higher interest rate environment. In addition, an overall weaker performance in the APAC region impact our specialties results in Q1 2023.

On a cost perspective, our results reflect the general inflationary pressure compared to the prior year period. Also, investments related to our strategic initiatives led to an increased cost base compared to Q1 2022.

However, we do see positive developments when looking at the performance compared to the fourth quarter last year. Let us take a closer look at Brenntag Essentials.

Brenntag Essentials showed a strong performance and achieved encouraging growth rates in Q1. Operating gross profit grew by 6% year-over-year to EUR648 million, with operating EBITA reaching EUR224 million.

This is 3% above previous year. The EBITA conversion ratio for the division came in at around 35%.

This is 90 basis points below the prior year period. EMEA and North America showed a particularly strong operating EBITA development with double-digit growth rate, which was almost entirely driven by organic growth and mainly related to strong gross profit per unit.

While the decline in the APAC segment was caused by lower demand in all APAC regions, particularly in China, the Latin America segment was impacted by a sharp drop in demand in Brazil. On the cost side, our Essentials division had to deal with general inflationary pressure, particularly higher repair and maintenance expenses as well as higher fuel and energy costs compared to the prior year period.

In addition, investments related to our strategic initiatives increased our cost base. However, also for Brenntag Essentials, I would like to mention the positive development we observed compared to Q4 last year.

Compared to the last quarter, we saw higher volumes combined with relatively stable gross profit per unit. At the same time, operating expenses were lower compared to the fourth quarter last year.

Let me briefly address the development in all other segments. In all other segments, we recorded a negative operating EBITA contribution of minus EUR32 million.

As expected and indicated in previous earnings calls, this is driven by the general inflationary environment, but also related to higher advisory expenses in connection with our transformation program and higher IT expenses. As a reminder, all costs related to IT investments and our DiDEX program are reported in our operating expenses and therefore are fully reflected in operating EBITA.

Summary, the results are in line with our expectations in a continuously challenging market environment. Moving to Slide 10, where we look at the income statement in more detail compared to Q1 last year.

We generated stable sales of around EUR4.5 billion. Our operating gross profit was also more or less stable at around EUR1 billion.

Operating expenses, excluding special items, increased by 7%, as already mentioned, in light of the general inflationary environment, but also due to our ongoing strategic investments and activities. Special items below operating EBITA had a positive effect of around EUR5 million.

This is mainly driven by a reversal of provision of EUR7 million for excise duties in relation to lower-than-expected tax decision notices for energy tax payments. Depreciation increased by 9% to EUR75 million.

Amortization remained stable [Technical Difficulty]. Net finance cost increased to EUR35 million compared to EUR24 million in Q1 2022.

This is mainly related to higher net interest expenses due to the change in general interest rate levels and the classification of Turkey as a hyperinflationary economy. Our financial performance translated into a profit after tax of EUR217 million and earnings per share of EUR1.40.

Let me emphasize that this is the second highest EPS Brenntag has ever achieved in the first quarter. Coming to Page 11 and the free cash flow.

In Q1 2023, we reported a record first quarter free cash flow of EUR449 million, which is more than 9x the prior year level. The significant increase in free cash flow generation is due to the cash inflow from working capital, whilst we reported a significant outflow for investments in our working capital in the prior year quarter.

On Page 12, you can see more details on our working capital development. Working capital amounted to around EUR2.5 billion at the end of the first quarter.

This is a decline of around EUR136 million compared to the end of 2022. Our working capital turnover was lower compared to the average working capital turn of last year and stood at 7.2x but is sequentially improving recently.

Looking at our balance sheet, our net financial liabilities amounted to EUR2.3 billion at the end of Q1. Our leverage ratio, which is net debt to operating EBITDA remains on low levels and stood at 1.3x.

[Technical Difficulty] accounted for in these numbers with an amount of around EUR500 million. On the right-hand side of the slide, you can see our current maturity profile, which visualizes our strong financing structure.

And with this, I would like to hand back to Christian.

Well, thank you, Kristin. Ladies and gentlemen, let me briefly talk about the outlook for 2023 now.

We confirm our guidance, which we provided at our full results in March. Hence, we expect the Brenntag Group operating EBITA for the financial year 2023 to stay between EUR1.3 billion and EUR1.5 billion, which is equivalent to operating EBITDA of EUR1.6 billion and EUR1.8 billion.

For 2023, we expect a continuously tough operating environment characterized by geopolitical concerns, macroeconomic challenges, but also a sequentially recovering demand. We already experienced a slightly positive volume momentum since the beginning of the year, and expect the destocking dynamics to phase out in the course of the second quarter, which should provide for a more positive demand environment in the second half of 2023.

Nevertheless, please keep in mind that the second quarter last year was exceptionally strong, and creates a very tough comparable basis. Now let me conclude this two final statements.

Firstly, being a proven and a prudent management team, it goes without saying that we actively explore the relevant operating model and portfolio choices to create the future strategic optionalities for both businesses of Brenntag, according to the guiding principles outlined already in our Horizon 2 Strategy last November. And secondly, while balancing out the fundamental requirements for our strategy execution with the cost framework of our regular business activities, we carefully see the rate of our resources to be built up, and prudently review the necessity to adjust our cost base according to our business expectations.

We will update you in due course on our conclusions. With this, I would like to close the presentation now, and thank all of you for participating in today's call.

We're looking forward now to your questions. Thank you.

I have three, please. At the time of the full year results in March, you very helpfully gave some color on how you see sequential trends on profits.

Can you help us out again for your Q2 expectations, please? Under normal seasonality patterns, Q2 profits are usually sequentially better versus 1Q, but given the macro risks, given the normalization of supply chains, do you see any risks to the sequential pattern?

That's the first question. The second one is on volumes, please.

You've indicated on Slide 4 that you have seen some gradual volume improvements at the Group level, and some slight positive momentum towards the end of the first quarter. Is it possible to give some color on how the trends have been Essentials versus Specialties?

And then the third one, please. In the Essentials business, you've indicated that you benefited from higher GP per unit contribution in EMEA and North America.

Can you please elaborate on what drove the strength, please, despite the normalizing supply chains and your expectations for the next quarter?

So I might take the first three, all of them, and then ask Kristin to jump in if she wants to add. Let me start maybe with your second question because that's determined to Germany, the rest of it.

The volume improvements we are seeing sequentially is strongly focused on Essentials. We don't see this yet on Specialties.

We see it a little bit, but not to the extent beside on Specialties. So, when we talk about of a gradual volume recovery for the Group, I would say it is still strongly driven by the volume recovery we see in Essentials, and it's also more pronounced in North America than it is in Europe at this moment and Latin America, also totally different game in Asia as well.

But the volumes momentum we see continuing into the Q2. So, this is why I said clearly that the spectrum of positive volume and demand picture in Q2 relative to the previous quarters.

That does not necessarily mean that the sequential profit's going the same direction. This is now at the end the question about pricing.

Basically third question you asked and how pricing will impact those results for the time being. We still are able to hold on to good pricing schemes and applying our commercial capability, and our commercial excellence to maintain higher margins, but you don't know how that in the second quarter will play out.

We only can you see from a demand and volume side. Now, we need to see how the pricing sensitivity and elasticity will come, and that's also related to your third question about the margins, gross profit per unit.

We see that as still driven strongly by the Essential's capability to play really that game of supplying material. If it is even short in a region with our global reach underlying, I would say, the largely underappreciated story around Essentials that you can really play out, and balance out global reach with local execution.

So that will be three questions that we answered. Hope that's okay for you.

Two questions from my side, also going more or less in the same direction. This very strong Essentials business, had this also to do with the change in trade flow?

And if so, as the energy costs came down in Europe, and several chemical value chains now became again cost competitive for our business in Europe, should we expect the good Essentials earnings level to worsen over the 2023? That's my first question.

And then second question is, again, on the guidance. If you take Q1 as a run rate for the full year, this would bring us to the middle of your guidance range.

Q1 had a destocking effect, and also, as I understood, a lot of one-off costs for our Strategy to Win, but so far no savings from this program. So, the lower end of the guidance range looks rather conservative.

Is this a write-through or are there any kind of moving parts I forgot to take into consideration? That's all.

I will take both of them. On the Essentials side, of course, there's still -- DiDEX felt strongly about the energy scenario, which we saw in Q1 in Europe very strongly.

I mean that was undeniable. Still energy prices were very high.

You had shutdowns of large manufacturing assets in Europe, and then shortages of key materials which we could bring from different parts of the world into Europe very successfully, again, underlying that capability on the central side. We still believe that going forward, there will be disparities between the competitiveness of the various industries, in the various continents in particular out of the U.S.

into Europe, but also more and more out of China into Europe, which, again, Brenntag is well positioned to draw on that imbalances, and offering those opportunities. So, overall, that means that Essentials is performing quite robust in this environment, and we see also a good trend into the second quarter with robustness maintaining.

At the end, it all will be decided what the price elasticity will be and the price movements will be going forward, but currently, we don't see any dramatic fundamental shifts in the pricing pattern as we go forward, it's a more gradual normalization really or falling off the cliff. That still is the big question about impacting also our guidance, and we have, I would say, a little bit opaqueness on the pricing side, we have slight encouraging slides on the volume side.

Balancing that out brings us to the point that we believe we are in a good spot with our guidance, and this is why we are reconfirming this.

I just had a question or actually I have a few questions. I'll start with the first one, which was, you referenced citric acid and I'm sorry to say, but I personally would not consider citric acid to be a very specialty product, and I'm just curious on that basis, within your Specialty portfolio, how many of these monomeric products would you have like citric acid?

I don't know if you classify the vitamins as specialty because we've also seen the prices collapsing for some of them, displaying more commodity type behavior. So, I'm just curious in your classification of your Specialty and Essentials, like what sort a of yardstick have you used because clearly I was a bit surprised to see citric acid being called out as one of the products impacting the profits for Specialties.

The second related question, Christian, if I hear you, it feels to me like, clearly, the quality of the specialty chemicals business is not to the level where you feel confident or comfortable spinning it off as an independent business at this point. Is that a right impression, or am I interpreting that too much?

And the last question was, just going back to the Essentials GP per unit, you were referring to, in one of the examples in the previous quarter, of how caustic soda prices have gone up dramatically in Europe, and you were sort of sourcing from other regions of the world, et cetera, et cetera. I mean clearly that dynamics has completely changed in Europe now.

We've seen the industry has restarted production, the caustic prices have collapsed. So, I'm still surprised that the Essentials GP per unit is not coming under pressure because I would have thought, given the dynamics that we see now where caustic soda might have been in tight supply previously.

Now, it seems the inventory of caustic soda is at historically high in Europe. So, why is that not showing up in GP per unit in Essentials, as we speak?

Let me start with citric acid and I think we just used this example to describe to you what we call a non-branded ingredient, and the non-branded ingredient is an ingredient which is still applied across in many Specialties applications. So the way we have defined our product baskets for Specialties and for Essentials, and I know that's now two years ago when we explained this to the market, it was guided by the principle of which industry segment are we serving the certain products, but only those products who really end up in the final product of that industry.

Let's say citric acid ending up in the foods application is counted as a Specialties sale. If let's say a caustic soda is sold to cleaning machinery in the food ingredients manufacturer, this is an Essential sale.

So, it is defined where the product is applied, and is it ending up in the final product, or is it just the process. Again, the cleanup machinery is just one example.

So that was a very clear definition we took, and we see the pros and cons of those definitions. You saw, for instance, excellent results in our Specialties business last year in Q1 and Q2 that makes the comparables extremely tough where we had a good run on our citric acid capabilities, and delivering them and sourcing them globally.

You asked about vitamins. Yes, again, we need to differentiate between water-soluble vitamins and fat-soluble vitamins, totally different game.

So, I think there is always a mix in our portfolio, but it is for us, very clear that portfolio and the composition of that portfolio of Specialties is something which we need to work on in improvement. This is what we have clearly said on the Capital Market Day in November, there is a more stronger shift to life sciences, and a stronger shift to value-added services.

And so, I think this is all pre-defined while recognizing that structural, I would say, weaknesses we have in our portfolio at this moment. When it comes to the quality of the Specialties business, no, I mean it's very clear.

I'm not happy where we are performing. I'm not happy with the performance gap we are seeing.

I believe the rationale is we, on one hand, fixed the fundamental topics in that business, and I made four examples of how I see them. We are working full time and full speed on that topic.

As we have outlined in the Capital Market Day and Michael Friede now taking over the helm, we'll clearly, clearly address those issues, and that needs to be clearly separated from what kind of optionalities we see for the business going forward as being either within Brenntag or without Brenntag. This is the current debate.

But it requires for us as a management team to carefully assess all those optionalities and think what is the most value-creating step for us going forward, and what is really in the interest of our suppliers and customers, and also at the end for you as our investors. So this is what we have indicated.

We have clearly announced a Capital Market Day later this year. We just drew our conclusions here, but now we just need also the time to work it through, and really figure all these optionalities out.

On the Essentials question, when you look at the gross profit per unit, well, I would not say that prices have collapsed. There's still quite a price differentials and it might new that caustic soda is normalizing, but then you have other materials where this is not the case across the whole portfolio.

Still, there are disparities, still there are arbitrage opportunities. When you look at the big three regions, North America, Europe, and Asia, which, again, Essentials after having created the new operating model, is now for the first time really, really able to play that game, and that is maybe also reflected in this performance of our Essentials, which if you would compare it with some numbers, which have been floating around recently, and from other parties quite remarkable performance, underlying that capability only Brenntag has in the Essentials business.

So, I hope that answers the questions, Chetan.

Hopefully two simple questions. The first one, you've talked a lot about operating costs in the first quarter, salaries, inflation, IT expense, strategy expenses.

Historically, you suggested that operating costs would be -- well, certainly operating costs that were were predictable would be managed into pricing, and so Brenntag was able to largely offset those costs, but it appears not to be the case at the moment. Could you tell us whether these are unusual, whether it's more difficult to passing through to customers, particularly the employee expenses, which, I guess, you have a reasonable amount of visibility into?

And then the second one, just a point of clarification, can you confirm that you said your average gross profit per ton was higher year-on-year in Specialties? Did I hear that right?

I will hand it over to Kristin. She will answer both questions.

So first of all, inflation pass-through to our customers, I think, that went quite well also in the first quarter. However, we had those investments into our future.

I think here it's not possible to all partners, to all customers, but if it comes to inflation for the employees, that is more or less really what we did also in the first quarter. I'm quite confident here that this is still happening.

The GP per ton in the Specialties business is also higher compared to what we saw last year all in all. However, there are differences in some of the product lines as Christian already explained.

And also, the increase is not that high compared to what we saw in Essentials. I hope that did answer your questions.

So if I could just pick up that point again, so you had I think a contraction in EBITA currency neutral of about 25%. So if GP per unit or GP per ton was slightly higher, then, you're saying that 25% contraction was all down to volumes, and non sort of investment in the future costs, if you like, that you can't pass through.

I just wanted to understand the moving parts between Q1 '22 and Q1 '23.

That is right. We can confirm that.

Yes, two questions from myself. Just firstly on Essentials, I know you've been adding some new sites into the network.

Can you just maybe discuss what the current plan is in terms of adding further new sites into the network, and where are you targets are in that respect? You've added some in Argentina, in North America, and in China.

Are there any sort of other regions that you see as being particularly interesting at the moment? And then, the second question was just on the Specialty side of things.

Obviously, just taking into account your comments, Christian, I suppose the question is when you look at some of your competitors, obviously, they make a lot of money. [indiscernible] being exclusive distribution agreements with producers.

Is that an area you feel that you are currently weak, and is that something that can be resolved through organic means, or is that something where you're going to have to do some M&A on to improve things there?

On the current sites topic, yes, we show where we're adding new sites, while we have also executed the shutdowns of first wave of Project Brenntag. Going forward, you should expect us having less and less sites, not more.

And why, because we are also investing into EMEA sites. We have already indicated we will make larger investments to make really the future of chemical distribution locations in the regions, and at the same time, shutting down particular smaller sites and consolidating them into one of those mega sites.

So at the end, you will see less sites for us going forward and then more with the exception that if your acquisitions should bring a large number of sites and other changes, but it's not typically the case, but we always have a clear plan to get and have less sites than more and again, we will also update you on the developments going forward. On Specialties, I'm not 100% sure that it is an issue about exclusivity because we have also numerous exclusive relationships with our suppliers.

What I mentioned in my call is actually that, historically, the decision whether to work together with a certain supplier was a local decision, sometimes a legal entity decision. So Italy, for instance, decided which is my right supplier for certain product.

This has changed in Project Brenntag. Everything now has come from the market, define what industry segments we need to add and how we address them successfully and what are the best suppliers which we need to have in place with us to provide product portfolio and be successful in the market.

And that is something which we need to change because that strategic supplier choices, as again I've said, has not been one of the strengths of Brenntag in the past coming from a full line distributor model. Now, with the more and more differentiating with the Specialties and Essentials, there are more, I would say, deliberate choices which supplier to team up in what region for which product group, and that's going to be more decisive than, let's say, an exclusive supplier relationship, which, again, we consider ourselves not too far away from that.

I have three questions, please. Firstly, can you comment if you have seen any inventory devaluation measures in your business during Q1, and do you expect anything going into this direction in Q2?

My second question is on the working capital reduction. Could you talk around how that has developed for the two different segments, please?

And thirdly, I'm just wondering, I mean, about these potential price reductions going forward. Is there anything you can do to prepare yourself to manage the impact if that should materialize?

I'll ask Kristin for the first two questions and I will talk about the price reductions.

Thomas, we have not seen any extraordinary devaluating impact in our inventories in Q1. That was partly different in the last quarters, where we saw some prices really declining.

But in Q1, that was not visible. And of course, depending on the price development, we also do not foresee that to take place in Q2.

If it comes to the working capital reduction, we have not fully separated the working capital for the two divisions, therefore, we also do not disclose that division. But what you can see is quite similar trends that we see, first of all, a slight reduction, which comes out of the revenues and also a gradual improvement in the working capital terms because that is also what we said in the last call that we are working on improving the terms again and because of the destocking everywhere also with us, we can also see that the working capital is [Technical Difficulty].

I hope that this answers your question. I hand over to Christian.

Yeah. And Thomas, for your question on the price reduction, I think it comes back to the commercial capability of our organization, which again, I have say it's remarkable to manage price volatility up and down quite successfully, and playing, so to speak, demand, supply pricing question is quite, quite well.

And as I've said, we have been positively, again, surprised and convinced by our people that they even in times where prices have normalized and we talk about many normalized prices [indiscernible] has mentioned that we still are able to manage our commercial margins quite well. So I think you can rely on the capability of this organization that we can minimize margin squeeze out of price volatility down to the maximum extent.

Thank you, Anika. Ladies and gentlemen, this brings us to the end of the conference call.

Thank you very much for your interest in Brenntag and joining us today. If you have any further questions, please don't hesitate to contact the IR team.

Our Q2 2023 results will be published on August 9, 2023. Until then, we are looking forward for further discussions with you.

That's it for today. I wish you all a good day and a great week.

Thank you and goodbye.