Thank you, Lucas. Good morning -- well, late morning also from our end.

For the first time, it's my pleasure to welcome to our earnings call full year 2022. As we will be making forward-looking statements, I would like to start out the call by asking you to take notice of our Safe Harbor statement.

With me today are Matthias Zachert, CEO; and Michael Pontzen, CFO at LANXESS. Matthias will start with a brief presentation, and then we are happy to take your questions.

I will now hand over to Matthias. Please go ahead, sir.

Thank you, Eva. And warm welcome from my side to all of you participating to this Q4 call.

And I will address the presentation instantly on page four, characterizing -- describing here the key strategic and financial headlines -- highlights. Portfolio-wise, we made strides in the right direction as far as changing our company setup, leaving behind polymers and focusing on chemicals and we are about to execute this as we speak.

If you look at overall yearly profitability, we are one of the few companies that could deliver absolute growth. We increased our EBITDA by roundabout 14% in a pretty difficult environment.

I'm especially proud that we were able to pass on completely raw material inflation and energy cost explosion as well as freight costs. So, here we caught clearly up and closed also the gap to 2021 where we were running behind.

So, this eventually we could fully achieve despite a more and more difficult economic environment in the second half of last year. Working capital was definitely a drag on the cash flow for the full year, impacting us by nearly €500 million.

First signs of improvement clearly visible in Q4. On the operational side with the clear first step on inventory reduction, which will continue especially in the first half of the running year.

As far as dividend is concerned, we looked at overall liquidity at our overall sensitivity analysis and clearly confirm our rating policy, but keeping the dividend stable and not posting another increase. So, for the time being we consider that this is exactly the right approach.

As far as climate strategy is concerned, we went out in the last year with target on Scope 3. So, after we have been very swift in our S1, S2 communications several years ago and from that point onwards implemented on a yearly basis.

We have now in all transparency and after having collected all details at global level, we've now communicated where we stand on S3 and what our targets are and I think also here we can communicate good execution in the meantime. Let's be specific.

Let's move to slide number five since here address some of the financial indicators. On the left hand side, if you look at the P&L and KPIs, as we like to say its EBITDA and EPS, I think P&L-wise, this was a successful year in light of the high volatility and all the disruptions we saw on value chains on the aggression war against Ukraine on energy scarcity, energy price inflation, and we can go on, go on, go on.

So, all-in-all, I think we managed a very turbulent the year P&L-wise relatively well. However, there are weak spots.

One is the leverage we are fully acquisition and networking capital increase, we are in a higher leverage set up. We've seen that in the last 10, 15 years before.

If you come out of an acquisition phase, you end up with more leverage and now we are in a divestiture phase and a consolidation phase, so we need to lever down. And with the steps we are taking on the HPM joint venture transaction we make big stride in that direction, more to come.

So, this will automatically from 1st of April, reduce our gross leverage and our net debt leverage substantially, but of course, more to come in course of the year. Cash flow, you saw first strides in the right direction, especially on inventories in Q4, mitigated by some other cash outs that Michael will address.

But all-in-all the operational working capital level has to move downward further in course of 2023. Lower CapEx we've guided for, so this is sustainable based on the new setup of portfolio and of course, reduction on exceptional has been announced last year.

This will be a theme for 2023, 2024. So, the two week spot leverage and cash flow will be addressed and will be already implemented in course of the next 12 months.

With this, I would like to move to the joint venture. I know there are always rumors here and there.

Six months ago, the rumors was where no anti-trust approval will come. [Indiscernible] this has been now green light given everywhere.

So, there is nothing that was -- us back from closing. The comfort [ph] has been one closing condition this has been completed and of December last year.

Anti-trust approvals are worldwide there. We expect closing 1st of April 2023.

On that day, we will receive €1.1 billion cash proceeds with little tax application and therefore that will lower gross debts substantially. As far as the 40% are concerned, there will be booked in our balance sheets with €1.4 billion and also this has been discussed, validated in debt with our auditors so that all the accounting preparations are being done and implementation of that.

You would see balance sheets going forwards. So that is as far as closing is concerned.

We are currently in the midst of -- together with Edmund [ph] as joint venture partner, with finalizing also the capital structure. I know there are rumors for the last two, three days.

You cannot comment on any rumor because Bloomberg is coming up with many speculations ongoing if it's not Bloomberg and Reuters as we use this conference call to give clarity as much as possible. The clarity that I would like to give is when we set up the joint venture, the trading was at different levels.

Both joint venture partners have agreed to support in a certain way the joint venture on a shareholders basis and here Edmund at 60%, we 40%. So, both of us will support the joint venture.

The fine-tuning of this is being done as we speak. The likelihood is that LANXESS provides a certain amounts of money through a financial fixed income loan with market respective interest rates and therefore this is something we are contemplating, maximum amount is going to be €20 million periods and the fine-tuning, the communication on this we will give once the joint venture has closed and therefore this is yet to be finalized and agreed between the joint venture partners and once the closing is done, I think the contractual returns will be finalized and then of course, we will do respect the communication.

I stress again, there's no equity contribution. This is a pure financial fixed income instrument with markets respective rates.

This is all. At the end of the day, there is some further fine-tuning on closing accounts, et cetera.

It might well be that the €1.1 billion that we achieved might also be after the loan has been subtracted in the area of €1 billion because there are other closing conditions that lead to further cash proceeds. So, therefore the final clear communication we will do once all closing conditions are implemented closing accounts and purchase price are prepaid.

With this, I would like to move to page number seven and here the dividends. So, as I stressed before we are living in shakier times.

2022 was tough, but we managed well. We assume that 2023 is going to be a tough one as well most likely in the first half.

The industry will suffer from what happened in the last six months in 2022, i.e. high energy prices, high raw material costs leading to high product prices and having softer demand now in the end markets.

So, for that very reason, we assume that 2023 is going to be a tough year and from everything that I've seen from my peers, I conclude this is being confirmed industry-wise. Nevertheless, 2023 is a year where our gross debt should go down through divesture proceeds, but also through a visible inflow from networking capital and the light of this our financial position holds strong and thus we can stick to our dividend policy, but keep it stable as long as we operate in all our times.

I think there is also a prudent approach that you are used to in our company. Now, let's come to page eight sustainability.

As far as Scope 2 is concerned, we achieved record results last year. For the first time, we reduced our emissions on Scope 1 and Scope 2 below 2 million tons CO2.

Please take care or please recall that when we in 2018 announced our S1, S2 target, we stood at 3.2 million. So, within the last few years, we clearly executed deliberately and reducing S1, S2 below 2 million.

I think this is first-class. But also on Scope 3, if I look back where we stood in 2018, our emissions were at 23 million tons for Scope 3.

And we've now achieved through portfolio changes, but also through sourcing differently, putting new sourcing streams in place. We've mentioned a few here on the slides to reduce from 23 million tons in 2018 to 11 million tons in 2022.

This means chopping basically half of it off. And there are not a lot of companies who done that in a short period of time.

And that's pretty much the reason why sustainability rating agencies are giving us best results, a lot of credit for what we are doing as it relates to CDP being ranked in the A list that related to Dow Jones Sustainability where we are taking up the number one position in Europe, number two worldwide. But also if you go to EcoVadis or MSCI, where we achieved AA rating.

I think all of that gives somewhat proof that we are really executing swiftly and in a focused way. I'm pretty happy about the fact that also SBTi has given us the clear feedback that we are fully compliant with the 1.5 degrees roadmap COP21 Paris is concerned.

There are not a lot of companies who can say that. So, with this I move to Q4, solely and hey, that was a bloody tough quarter.

2022, if I look at 2022 was characterized in the first half with an environment where our order books were full. I mean, we could not ship as much as customers wanted.

The reason behind was pretty simple. Rebound being caused by the pandemic because product was scare.

We had disrupted value chains. I mean, recall 12 months ago, we had on daily harbors being congested and containers not being de-loaded, that was just 12 months ago.

So, we were living in environment of inflation. That's not over as we know, but the first half of 2022 was characterized with customers, ordering as much as possible.

They were not ordering 100%, they ordered 120%, 130% of volumes because they knew when they order 100%, they will get 80%. And on top of that, customers hear that's later on during the year due to inflation, prices would even be higher than on the day when they ordered their products.

So, we were living an environment where customers overstocked. That has changed.

We are now in Q4 and in Q1 experiencing completely different customer behavior. Customers destock.

Customers are now getting enough products because containers and logistics are no longer disrupted. So, this has come to a complete change.

On top of that, everybody's sees energy prices going down. So, people assume product price erosion to come.

So, right now, we have the opposite trading patterns with customers from ordering more as much as possible clearly Q4 the key theme destocking and it continues. So, destocking will be a theme also in Q1 and we saw it in Q4.

So, some businesses were little impacted like consumer protection. We saw only a volume decline in single-digit.

But if you look into the group, we posted the volume decline in Q4 of 13% and in advanced industrial intermediates and inorganic pigments reports as you see from the reporting at 22%. This is tough.

Despite that, we managed profitability reasonably well being somewhat at par with Q4 last year's level, but it was a quarter and I do expect that Q1, we will continue having tough volume trading due to destocking still being visible. With this I come to page number 10.

So, guidance for the year 2023, we do expect recessionary environment in the first half of the year. And then in second half rebounding, the industry definitely has us challenged to address basically the still high costs and high value inventories in the books because what we have in the books has been produced with Q4 raw material prices and with energy prices, which in Q4 were still sky-high.

Energy prices started to soften in January onwards. So, in the balance sheet and the inventories, we have high priced inventories and in Q1, we see soft volume.

And of course, whilst customers expect a reduction in product price, we still have to defend product pricing level in Q1 because we have to mitigate here the high value pricing in our inventories. So, that's the challenge that all of us have to work with and of course, that is what we operationally address.

Now, what we have to deal with in Q1, unfortunately are force majeures. We have a ugly force majeure on chlorides rights notably in Northern Australia, particularly in [Indiscernible].

This impacts the chlorides in F&F quite heavily. And here Q1, we will most likely lose something like €5 million to €10 million because simply we are not able to produce -- chloride.

And then we have to see when the force majeure of our supplier will be lifted. In US, again, we experience winter storms, impacting some of our big sites and -- but fortunately, it seems that this should again be dealt with and Q2 will no longer be an issue in our Additives business.

Now, China, I got a lot of questions here over the last four to six weeks. And China, our hope was that we will see China being present, the order book more and more after Chinese New Year, that's not the case.

We don't see really volumes starting to pick-up in March. So, Q1 will not be quarter of China.

I mean at the end of the day; the customers need to buy, they were the ones not going to shopping centers, et cetera, until China continued with the zero COVID strategy. Now, the customers are back in the shopping malls, but until the value chain is really stocking up and production is going to be started again most likely, three to six months are going to pass and therefore, our view is China ordering with be earliest seen in May, June, but potentially might only be a theme of third quarter onwards.

Of course, that could be positive in its entirety for macroeconomic industries perspective, but notably also for the chemical industry because China when they order, they do not only order for the local markets, it also set pricing impetus on global pricing. So, this will be net-net positive everywhere.

As far as LANXESS is concerned, we basically expect full year with the economic scenario I've just explained. We expect full year to be around 2022 level give-and-take.

As far as now cash or balance sheet targets are concerns, working capital to say, is in ratio we will pursue further. We need to go back into the lower 20%.

We have reduced from 28 and 29 at September level to somewhat 25%, but it needs to get lower, we used to be in ranges of 20% and we have two go further from the 25% into this 20% direction. So, working capital optimization reduction will be seen that we will focus on and therefore more look at cash than on P&L priorities.

CapEx should be lower because of course HPM leaves the consolidation parameter and thus leading to lower maintenance CapEx on an annualized basis and in a more asset-lighter portfolio setup, so €400 million includes growth. We are not running the company only on maintenance with this.

So, this clearly is the CapEx approach. And as far as probability concerned, when we give guidance, I mean, this is a process where we go region-by-region, business-by-business, the process started two, three, four weeks ago and our conclusion at that point in time was EBITDA between €180 million, €220 million should be a good corridor.

Today I would clearly reinforce to all of you for sake of cautiousness and for approach and taking reality trading books into consideration. I would rather be in the lower end of the guidance for model security than on the upper end.

I would rather consider that as of today, we will be here in the range of €180 million, €190 million and it would be the right approach if I would be your choose, I would take this more into consideration than anything else. With this, ladies and gentlemen, presentation has been delivered.

And now I would open up the call for your questions.

Yes, good morning, everybody. I've got two questions.

Thanks for the opportunity. So, the first one is on Consumer Protection division.

If I go back to the Capital Markets Day, you sort of said profit potential in 2023 was for growth, admittedly that was mainly for MPT and Saltigo. Is that now still possible considering the chlorine issues you have and considering the comments you're making on Q1?

So, that's the first question. Second question, I'm looking at the back of the report accounts, and I see that the HPM sub-segment made roughly €180 million of EBITDA last year.

If you exclude an exceptional item, I wondered if you could comment on what that exceptional item was? So, my point is I'm trying to get to what I might consider a clean number to work with for the value of the remaining stake?

Thank you.

Thank you, Andrew. Let me address the first question.

As far as CP is concerned full year, my today's view despite the force majeure, it's still clearly that we will be above previous year level. Nevertheless, we know that the force majeure will impact Q1 for sure.

We now have to understand the technical implication how long it takes on the supplier side to correct that. Should this be an element impacting us for the entire year, i.e., there is a shortfall for the entire year, of course, we would not simply take the €5 million to €10 million and multiply this by four.

We would see if we can somewhat find for chlorine other way of sourcing. Transporting chlorine is not easy.

It has restrictions. You need to follow certain strict regulations.

So, nevertheless, this is something we would investigate how we can go for alternative sourcing, but this is something that is operational work-in-progress. As of today from everything that we know, our conclusion is that material protection will be better than last year, that liquids purification technology will be at last year's level or slightly above.

F&F, we had seen at or higher compared to previous year. Now, we have to consider that it might be softer.

And as far as Saltigo is concerned, I mean the [Indiscernible] industry is doing well. We would consider that Saltigo would be at or above previous year level.

So, the message on Consumer Protection that I conveyed last year, I would confirm today yet, of course, we still have to investigate the force majeure on the chlorine side. Michael, you take HPM?

Yes. Andrew -- hi everybody for my side as well.

With regards to the reported number on HPM, you're right operationally we were at an EBITDA pre of give-and-take €180 million and the reported exception is in the amount of roughly €20 million was largely related to the carve-out, which will currently -- which we conducted in quarters of 2022. That was the remaining closing condition on our side to separate the HPM business into a legal entity structure and these were majority which were relating to the exception as reported.

Okay. Thanks very much.

And just to follow-up on HPM. On your comments, Matthias at the beginning, can I just check that you said the following, it is likely we will do a loan to the JV, which will be repayable, I think, in FY 2026 and that that loan will have a maximum value of €20 million.

Well, we said it’s a loan, so there was the question that it could be equity. This is not the case.

There's no intention on our end to step away from the deconsolidation, so that’s the message number one. Message number two from our side, of course, we are good shareholder, but we have our restrictions and other priorities, so €200 million is the max, nothing more.

And third, its fixed income instruments. We have not talked about duration.

We only talked about the Scope or the magnitude and fixed income instruments at fixed income coupon. And I stated as third elements, this will be markets pricing and that's basically it and all other details we would communicate once the thing is contractually finalized.

Perfect. Thank you very much.

you're welcome Andrew.

Hi. Good afternoon, Matthias and Michael.

Thanks for taking my question. So, I wanted to ask on your cash flow outlook.

I think we've had another fairly kind of disappointing quarter and it's an area that you know the market is incredibly focused on. So, if I take a look at all of your building blocks and the outlook, implies a cash inflow of up to about €500 million.

So, I just wanted to ask if you could confirm that run through the various moving parts? And then maybe give an idea of where you expect to end the year on a net debt to EBITDA basis if you also include the proceeds and maybe the loan for the Engineering Materials JV?

Thank you.

Well, Michael, we definitely address this question specifically. I would, however, like to shed some high level comments on this as well.

We know that cash flow is something we are going to improve. I made that crystal clear in my presentation.

And if you look into Q4, you'd at least see that on the CapEx side, we executed respectively, lowered CapEx versus Q4 CapEx 2021. Second, for the first time, you see inventory reduction.

So, we walk the talk on what we have communicated in November. Now, Q4, what took us by negative surprise was the low volume momentum that was lower than we originally had anticipated.

So, of course, when you have lower volume, lower utilization are you a higher idle costs that you need to absorb. We operated, believe it or not, in Q4 with the utilization slightly below 60% Delivering profitability of €175 million with a utilization below 60%, I could not have imagined a few years ago.

So, Q4 was really a tough, tough quarter in terms of volume decline. It's the theme in the industry.

Most of our peers had a collapse in profitability versus previous year. So, we mitigated that basically for change in portfolio over the last few years, but cash-wise, we definitely suffered as well.

So, despite reducing inventory by more than €120 million, we took a hit on cash. Then second, in Q4, if you look into the details, you see that we had some cash outflow throughs for legal technical rulings that date back to 2014, 2015.

I think Michael can explain that in further detail, it has to do with the renewable energy legislation on Germany. And therefore, we paid our dues according to a new regulation and we executed this respectively, which was by large €50 million cash outflow where this is dealt with.

And therefore you saw hits on the Q4 cash flow respectively. But you can look at this from a negative standpoint and here if you only look at the absolute numbers, I fully agree with what you said.

If you look at what we had communicated on November, you see, we start executing on CapEx. We start executing on working capital.

And all other themes that we would like to implement in order to improve cash flow, we will continue going forward into 2023. Now, net debt EBITDA range, I give you feedback on cash proceeds.

So, net debt EBITDA will go down. We don't give a guidance here.

We simply say that we would like to with an investment-grade and we are not giving an absolute cash flow targets on the financial side for the models. I think this is some work that you can do as analysts.

We give indication where we would like to be networking capital-wise in terms of ratios and what our priorities are, but Michael can be more specific at his discretion. Michael?

Hi Georgina. So, giving a little bit more plans maybe at firsthand hand on the Q4 changes and other assets and liabilities.

What Matthias said and you find it as the first bullet on the slide exceptional cash out to German EEG, which is the renewable energy law. In the past years, we built accruals in our P&L, while we don't have a P&L effect in the fourth quarter, but the final settlement now was done in the fourth quarter.

And that is why you don't find a P&L effect no longer because the accruals were done over the past years, but the cash out and that is then reflected in that line. The second element which we highlight here is variable compensation and that goes kind of in the same direction.

Throughout the whole year, we build an accrual for especially or namely our let's 13 salary, which we're paying back in the fourth quarter. And that is why you usually find in the fourth quarter, a negative cash out of €30 million to €40 million every year.

We did not display that last year because we had positive effects last year, which we're compensating that effect. And the last effect is -- and that is happening from time-to-time when we are recording IFRS 15 earnings because IFRS 15 earnings usually do not come in line or let's say in par in terms of timing with cash-ins.

You usually have this cash-ins at a later point in time and that is the third element on that line. And as each of the elements account for give-and-take a third, you can see that the hit which we were taking in that line was way over-exaggerated.

As I said, usually fourth quarter, if you look back the past three, four years, the number is between €30 million and €40 million give--and-take. For the outlook for next year or let's 2023, I think Matthias mentioned the major element, I can as well only reflect to what we were saying at the Capital Markets Day, we said from working capital, indeed, there should be -- or could be and we're targeting an inflow something between €300 million to €500 million from the number which we were displaying in the first nine months.

We knocked down now working capital by €126 million in Q4 already, but if you dig in a little bit deeper, you recognize that the inventories and receivables come down already to a good element. So, we were in a position to knock down inventories and that was to some extent driven by prices and by volumes and that is what I would like to add for the cash flow statement.

Okay, great. Thank you.

Yes, thanks for taking my two questions. One question is on -- for the handout page 16.

Thanks for this chart. It seems that pricing catch up in 2022 in absolute terms is more pronounced than the pricing gap you suffered in 2021.

What makes you confident that customers will not put pressure on you to give back the windfall profits? And the second question, it seems to change your mind on the intended 300 million share buyback program, obviously due to feedback from investors.

Is it right to assume that primarily European or German investors are against share buyback? And is it because they want to see a leverage first?

Thank you.

Well, thank you for your questions, Martin. So, on pricing, basically, we always said that 2023, we would like to catch the delta of previous years, so the lag that we saw on energy is notably in 2021.

So, we did that. And therefore, 2022 was on pricing a very good year.

So, we executed well and I think this was visible quarter-on-quarter throughout our three divisions. Now, as far as price, you mentioned windfall profits, what we now have to do and this is operational orchestration, we have to make sure that in Q1, whilst everybody is seeing energy pricing going down that we still defend our product prices because our inventories are still priced on the energy prices of Q4 and raw materials of Q4.

So, this is the challenge that all of us in the industry have. We have to defend our product prices, whilst we still have high-priced and inventories on our balance sheet.

So, we need to defend this in Q1. And then of course in Q2, we have to see where demand is and based on this, we will then decide on pricing going forward.

But the challenge in Q1 is basically digest the high-priced inventories and defend that through product prices that are still at quite robust levels. Now, on share buy back, I will not be country specifics.

They are definitely differences in the regions, but by-an- large, all investors clearly give us the feedback preferences for liquidity or net debt reduction gross debt and net debt reduction, that’s the clear key theme for 2023. So, preference here is net debt reduction and some investors, not only in Germany basically say your enterprise value is okay and whatever you reduce and debt will be 1:1 reflected in equity.

So, the feedback is net debt and gross debt reduction and theirs is, of course, what we take into consideration. And for that very reason, the decision on the communication we've done today.

Thanks.

Further questions, please.

Hi. Thank you for taking my question please.

Just the one. Just coming back to the €20 million loan, I think you said that the €1 billion will be post the €200 million subtracted, just wanted to confirm whether that -- if I had that correctly?

And with regards to be actual loan €20 million, I should understand that as being a genuine loan and therefore there's no repercussions on the 40% stake of LANXESS and the JV for that which the name in case. Just want to clarify that.

Thank you.

So, I will reiterate what I've said. Before it's the loan and the loan is a loan.

Second, it will be maximum €200 million and this is basically -- it has nothing to do with our 40% stake. And now the final comment, we will get €1.1 billion proceeds on 1st of April.

And now we have to see in closing accounts or when you finalize the joint venture, of course, you have to look at closing accounts, there are certain contractual mechanism like working capital, balance. And if you have -- if you deliver more working capital, you get cash, if you deliver less working capital, you get no cash.

And therefore, my feedback here is, we will get €1.1 billion at least. It can be more -- and -- it will not be less.

And then of course, we have to look at where will we net cash stand after purchase price has been settled. But it starts with €1.1 billion and then it can become more depending on closing mechanisms.

And that's the reason why we will only comment on the net cash proceeds once we have finalized the calculations on the closing mechanism and also agreed with Edmund on the capitals report that we get to the joint venture.

Understood. Thank you.

You're most welcome. Next question please.

Thanks. I'm sorry to harp on this, but this €200 million loan, could you just call us from -- it's the actual contribution given that you, as a shareholder, are giving a loan to the JV?

And the second question, which -- a lot of investors these days given the low profitability of the joint venture right now, how -- that it will cover the interest payments and the restructuring, which potentially does JV needs to capture the synergies given a strong complementary between the two assets? That's my first question.

And then the second question to shift gear. Can you give us any update on the [Indiscernible] the project that you have orders on a lithium project that you have around the radar?

Yes, Jaideep, the line is not very clear, but I think I've understood your questions. So, I will take them one by one.

So, €200 million I said this is the maximum. So, we can take this as assumption, but again contracts are not finalized, but there would not be more than €200 million at max in the contract.

And this is something that we contribute on our end. Of course, we only do that because the joint venture partner does that as well.

So, there is a support in the way we can support the joint venture because we clearly acknowledge that at the outset of the joint venture, we had assumed a better trading for the industry, for the joint venture, and the trading, of course, in second half 2022 definitely was softer than originally planned. So, for an interim period of time, we would like to give support to the joint venture.

That's basically it. Now, second question this joint venture starts with despite the current economic downturn and down cycle our assumption is that trough in the markets we have seen in Q3 and Q4, whilst Q1 already starts to improve.

And therefore, our view is the joint venture doesn't start with now low probability, the businesses that we reported in summer last year where it's without synergies at levels of roundabout sorry, €500 million EBITDA. There are substantial synergies that will be delivered.

So, if this is in place, our view clearly is the joint venture will be able to pay its dues. And of course, once industry is rebounding, not only paying its interest, but also generating enough cash in order to lower leverage.

By-and-large, the portfolio of the joint venture should be a cash machine. We have only one point or one part of the value chain, which is upstream, but the caprolactam polymerization that we contribute into to the joint venture, that's to some extent, the backbone to the compounding, which is worldwide.

So, it gives an integrated value chain. And the caprolactam production piece taken into consideration.

There was one competitor who takes one capro off-stream. So, our capro plants in Europe is world scale to 30 kilo to 40 kilo tons.

So, this is the monster plant here in Europe at very competitive input costs. And even more competitive now that the industry landscape is consolidating further.

This is clearly considered as an add-on for our automotive OEMs. They like the integrated value chain and therefore, on your second question, once the markets somewhat improve, come back to normal trading, I think the joint venture will be a real strong cash machine.

Now, as far as lithium was concerned, I mean we made clear feedback in November that this is something for end of Q2 beginning of Q3 because studies are running and there is no change in timeline. So, now dear Jaideep you need to simply wait as we are waiting, operational work needs time and they're doing the studies and studies will be finalized end of Q2 beginning of Q3 and once we are end of Q2, beginning of Q3, I think appropriate to raise the question again before that makes no sense.

Any word on Tinci?

Well, on Tinci we are meeting and the plan is that we will meet them again in Shanghai in the second quarter and then we would see. But if there had been a contract or anything close to it, we would communicate.

As there's no communication, we are still in the discussions with them.

Great. Thanks a lot.

You're welcome.

Yes. Thank you.

Three questions. Sorry for coming again back to the joint venture and the calculation.

So, the €1.5 billion showing up in the balance sheet, my understanding that is the equity value. So, whatever the enterprise value is minus debt and then you have the equity value 40% is your part and debt is €1.4 billion.

And adding to this, the loan of €200 million, I would think to show up as financial asset on top of that, so that we will actually see the €1.4 billion plus €200 million in the balance sheet. Whether that's true, I'd like to confirm as my first question.

The second is, can you give an update on the IFF consolidation? You said you behind of basically the former one of us behind in increasing prices.

Is there any progress you can report on? And the last one is on networking capital.

So, -- was a very weak one, which we receivables very low and inventories were very low. If you assume that the second half we'd show and pickup in the economy and then usually, you would assume that receivables go up and the requirement of inventories as well.

So, if you plan for some networking capital decline our inflow, then it has to be your management in improving the whole networking capital management within the firm? Is that the right reading or do you plan for, let's say, lower raw material prices, helping on its own for the networking capital at year end 2023?

Thanks.

Thank you, Andreas. Michael will take questions one and three.

I would start with IFF and give also the comment on number three net working capital. So, IFF, yes, I mean IFF is -- we saw with IFF also volume contraction and destocking.

Not in all industries, but we saw that also here and industries where in most of the end industries of microbial control, there was a balance sheet cleaning at the year-end as well. That was definitely not as pronounced as we seen in other industries, but it happened there too.

As far as the pricing is concerned, the journey on pricing is still a catch-up and not a decline. So, that will be the theme for IFF.

Now, on your third question, you're totally right on ratios, networking working capital to sales, and your analysis on second half this year is valid. However, if there's a rebound in markets, there will also be a rebound in topline therefore the ratios are then nominal-wise increasing.

The relative ratio can still be in line. The second answer to your networking working capital to sales question is running the business for more cash instead of profitability will still be a theme for 2023.

We stated in November that we will work on leverage and working capital in order to improve cash flow and lower indebtedness. That will be, of course, the consequence.

If the consequence is to have some more idle costs, for instance, in order to swap out inventories, be it -- then of course, we will take a hit on profitability, but deliver on cash inflow. And therefore, the ratios we've communicated will be management decision in light of the priorities that I've just mentioned.

Michael, why don't you take the first one and potentially drill further on the third one?

Andreas, Hi, yeah, your assumption is totally right. So there are two lines which are affected obviously the investment in equity assets here you will see the residual from the €2.5 billion enterprise price value minus the at least 1.1 billion in cash, which is then around 1.4 billion.

And if we grant the loan, it will be a financial asset, which will be then totally separated from this at equity line. With regards to net working capital, there is not fully much to add.

Of course, there always the third certain seasonality to it within our overall let's say development in the net working capital. But hey at the end of the day, we have to knock it down and there is a good amount of management behind it that is clear.

Sorry, Michael to ask again on this joint venture to be absolutely clear, I know that the 1.1 plus 1.4 is exactly the enterprise value you were mentioning when you announced the deal. But my understanding is what you show in the balance sheet has to be an equity value.

So it is the enterprise value. Minus the debt and then you're 40%.

Is that right? So what you see is the equity value what you should then receive you sell the stake -- is that fair?

That's fair. And then in future, you will have then the deviation of the equity of the joint venture being reflected in our equity consolidation and the impact in the P&L you find in our financial result.

Perfect. Thanks a lot.

Thank you, Andreas.

Yes, hello, can you hear me?

Loud and clear.

Okay. First of all, I was quite impressed to see how your gross margins were holding up despite the huge inflation.

So this is quite a good kind of strength. I would be wondering if we gas prices in the future will definitely be higher than in the past in Germany?

And if we consider, like a future price for LNG to be like something like Henry Hub plus transportation costs. So, how would that influence the long term competitiveness of your advanced intermediate segment that would be my question?

Thank you.

Well what we have to look at in Europe is where the new normal on energy prices. And this is something that you can -- you can make certain arithmetic calculations on that like we have done.

If you assume that entire Europe will be priced on LNG then the gas price in Europe should be somewhere in the area of €35 to €45 per units. I think the precise calculation would be in the high, but therefore, let's give the range of €35 to €45.

If you look at the futures now for 20 six, seven, eight we see that gas prices TTF forwards for Europe are already going in that direction, we are now in the 40s and we used to be in the 150 three, four, five, six months ago. So it the gas pricing somewhat stabilizes.

However, if you look at Norway or Netherlands gas through pipes. Definitely the pricing is lower.

So there is also rational why futures can even obtain lower pricing than the -- 40s we currently see. With this set of assumptions of course, we have to go through our assets through our P&L and we've done that.

When we look at the current future pricing, EETF being at roundabout 40, 45 and assuming that the gas price will dominate these electricity pricing and 100% of the energy prices in Germany, which is not the case because EEG or Renewable Energies are on the rise, But if we take the most conservative assumption, we will have to go through our portfolio. And then it pretty much boils down to the assessment we've provided in May last year when we reflect that there are three plants out of 53 that are more gas intensive, energy intensive and they might have more pain and lower profitability going into the future.

And for these three respective plans, we now need to analyze also of course what customers are thinking and if they have access to second and third supply sources. And that might in the next 12 months to 18 months be a decision factor for can they be competitive or not.

But if you look at the majority of our sites, the majority of our side in advanced industrial to intermediates is competitive. But the two, three sites that in northern on Australia are under the pressure are the ones we have normal money.

Okay. Thank you.

You’re welcome. Next question, please.

Yeah. Good morning.

Two questions from my side. First a small question on the winter from effect in Q1, mainly and could you give us -- and second you recently invested heavily in the -- your potential subsidized power prices change your investment full growth in Europe.

That is my second question.

Markus, can you maybe repeat your question please? We had difficulty understanding you?

Yeah. First question was on the magnitude of the real customer storm effect in Q1.

I understood that this is basically editors mainly? And the second question was on your investment policy.

And the path invested quite a lot in the year. And my question is the potential subsidize invested power prices change your investment focus in Europe.

So the question on what the store, Michael will take the investment policy, what was the question where do we invest?

Now, basically question from a regional perspective, right? Exactly a regional perspective is our potential subs subsidized invested power price and Europe and in particular Germany this is coming would change your investment focus?

Yes, very valid. Michael will take the winter storms.

I will more look at the some parts and come to your second question. If we look at the United States, I mean, they are if you look by and large into the macroeconomic institutions let's see what the United States has done over the last several years.

In 20 -- was it 2018 or 2019, the tax reform, which was massive under the previous administration was put in place, making the tax based one of the most competitors one for businesses and industrial players. So the tax taxation for corporate's in the United States is first class.

With the IRA, or the Inflationary Reduction Act, I mean this was just past in August last year and there still drafting that needs to be done and interpretation that needs to be done. But I mean this is still fresh.

But here the second element comes into play that investments are being supported and tax credits are given. So if you look something that all of us know this discounted cash flow calculation and you have a low tax rates and investments are being subsidized or supported any discounted cash flow calculation looks mouthwatering.

Now, if we look into the United States, over the last five years, we've enlarged our asset footprint from something like 10, 11, 12 percentage points to more than 26 percentage points. So it has substantially increased.

And it's the reason why we are looking at our projects in the United States we clearly prioritize organic investments in the United States. I will myself be next week in the United States, also informing myself on the Inflationary Reduction Act, I will meets politicians in order to strengthen our connections and relationships in the United States.

We clearly can see that -- we clearly see that the United States is the place to be in terms of production and investing. So should we have the choice to invest between Europe and North America, to-date we would decide if all things being equal on other perspectives like customers and markets, we would definitely decide for the United States, because this is from the economic setup from the market size, technology friendliness, et cetera tax regime, and pragmatic administration, the preferred place to be.

So that's on your second question and now Michael you will address winter storms.

Yes, Markus. The effect from the winter storms is in the same ballpark, like the effects which we're highlighting for the and first measure of our suppliers to around 5 million to 10 million.

Okay. Thank you.

You're welcome.

Yeah. Thanks.

Two quick ones. First is, thank for flagging some of these one-offs on cash flow line.

I was just looking at the cash flow in detail. It seems there were cash tax refunds both in 2022 and 2021.

So can you maybe help us understand how you think about the cash access in 2023 because we've seen with some other companies some sort of a catch up in 2023 in terms of cash taxes phasing. And the second question, I just curious in terms of what you see for order book, I think materials referred to China, not showing any improvement yet.

But what about Europe and US is that similar pattern that you see in terms of your order book looking into Q2 given that we are almost in the middle of March now? Any color on what you see for Q2 will be useful just from an order in intake sector?

Thank you.

Yeah. On cash flow Michael, will make a call.

And on your second question, we make comment on Q4. We give color on Q1 and on Q2, we will make comments when we report Q1, Michael.

Chetan, you're absolutely right. We saw some refunds from the down payments which we did in previous years in 2021 and 2022.

And if you look into the balance sheet, you will still find some receivables which we have from income taxes. So you should for 2023 not applied the P&L tax rate, which we guide now down 1% from 28% to 27%, but at an even lower number.

It's hard to really judge and guide now a tax outflow. But clearly, you should that number should be lower than the P&L tax rate, which you will find.

But there will be an outflow due in 2023 in total.

That's clear. Thank you.

You're welcome.

Yeah. Hi.

Thanks taking my question. Just one left again, just going back to some of the components around the guidance.

Just on the Capex number of €400 million, how that is that going to be phased throughout the year? Because I suppose last year, that was quite back and loaded.

So, just curious how we should be modeling that this year. Thanks.

Thank you for your question, Rikin, I will immediately take it up. You will see the usual phasing as well in 2023.

That's the plan. You usually see that in the fourth quarter, we spend around 40% of our overall CapEx budget that is due to the fact that the majority of our let's say good number of our maintenance turnaround is happening in the fourth quarter.

And that is why usually our earnings number is lower in the fourth quarter on absolute basis compared to the other quarters. So to cut a long story short, you should expect as well back and loading in 2023.

Thank you.

You're welcome.

Thanks a lot. And apologize guys for asking again.

But just wanted to understand the just or putting off 200 million and -- when -- it is to support the business through a low point to the cycle and to maybe when quicken the restructuring needed or if from the -- for the equity shareholders to put more or capital for more confidence. Just want to understand the motive behind?

Thanks a lot.

So the motive is weather it very simple. We think this is a temporary situation where the shareholders need to help.

If we would consider that this would be a long time structural difficulty, most likely the financial instruments would be different. But our clear assumption here is this is a temporary difficulty where the economy and the industry has gone downwards, and we know that businesses go down, but they also go up.

So, for the current downturn supports, but once the business has implemented synergies and markets are rebounding, then we assume that we can basically lift and reduce the financial support again. And that's therefore the answer to your question.

Thank you so much.

We have really used a lot of your time. Thank you.

Matthias may be some closing remarks.

Well, thank you very much to everybody and thank you for dialing in. Michael and I -- with the IR team will be on road show.

So looking forward to seeing you, stay healthy and positive until then and take good care bye-bye from Cologne, bye-bye from LANXESS.