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Good morning, ladies and gentlemen. Thank you for standing by. Welcome, and thank you for joining the Q1 2023 Earnings Conference Call of Evonik Industries AG. [Operator Instructions] It is my pleasure, and I would now like to turn the conference over to Tim Lange, Head of Investor Relations. Please go ahead.
Thank you very much, and good morning, and welcome to our call. And with me today, and now I need to be careful not to use the same script as for the last 6 years with me today are Christian Kullmann, and for the first time, our new CFO, Maike Schuh. And with that, I hand over directly to Christian.
Thanks a lot, Jim. Welcome also from my side, and thanks for being with us today. Today, it is another special call last time we said goodbye to Ute on our last quarterly call. This time, I'm really excited to welcome our new CFO, Maike Schuh for our first earnings call. Maike, it is my great pleasure to work with you even closer from now on, the financial background and business experience. make value the new member of our management team and a highly respected partner for me. Jointly, we will continue to work on our transformation to the world's leading specialty chemicals company. And good to have you with me already today. So you can directly take over the tougher questions.
Thank you, Christian. I would have expected nothing else. Also from my side, a warm welcome. The opportunity to shape Evonik's future as CFO is a great honor to me, and I'm very much looking forward to it. To be totally open, of course, I had the thought that the job will demand a lot of me. What helps me is knowing that I have been with Evonik for a long time and that I have a great team behind me. And I also still had Ute my side for the last couple of months. They have all done their best to prepare me well or so. Of course, as CFO, you need a good analytical understanding or very simple, if you should like numbers. I see in my new role that a good understanding of the divine behind the numbers is also important. I can only interpret figures correctly, if I know the context, the market and the product. Over the last years, in my different roles in Performance Materials, I also got to see the perspective of operations. That is now incredibly valuable for me. Everything ultimately ends up in figures, not only in your model, but also here at Evonik. And what we do with these figures and passing that on to the relevant decision makers is a very true task in my new role. In my first month as CFO, I had already the one or other investor call and analyst contact, and there will be many more to come. The dialogue of capital markets is a high priority for me and gives me also an important perspective on Evonik. So in this period, back to you, Christian.
Let's start, ladies and gentlemen, with a brief summary of our strategic milestones over the last weeks in which you and Maike have already been deeply involved both in your formal role set of Performance Materials and, of course, also in new world. At the beginning of April, we signed the Sale of Lülsdorf site. For us, it is the first deal in the divestment process of Performance Materials. Also the second one, the divesting of our superabsorbent is well underway. Speaking about our transformation, we continuously improve our existing businesses too. For Animal Nutrition, will steer the business with 2 distinct operating models. The benefit the nature of the underlying activities. This ensures a competitiveness and secured at the same time, its role as strong and important cash generator for Evonik Industry. The first of the EUR 200 million cost savings will already be realized this year. The biggest contributions will then come in 2024 and into 2025. Now after my brief strategic introduction, I hand over to Maike once again. Maike, is your stage.
Thank you, Christian. As you know, we are implementing short-term contingency measures to safeguard our earnings situation in 2023. We are executing these fine actions and have individual saving targets for all divisions and functions. We have live dashboards by cost type, and we are discussing our achievement level regularly in the Board. In Q1, we were able to deliver the first savings as planned. We reduced maintenance where possible. We used less consultants, traveled less and cheaper, reduced events and optimized IT costs. The biggest buckets are savings related to personnel and operations. These will even accelerate as a year of progress. For example, the benefit for temporarily not refilling open positions, obviously, will build over time. On with our financials. The EUR 409 million of adjusted EBITDA for Q1 were mainly the result of the strong volume decline and the corresponding lower utilization of our plants. This led to a notable under absorption of fixed costs. Pricing on group level remained positive at plus 3% despite the lower volumes and increasingly tougher comparable. This was driven by strong pricing in Specialty Additives and Smart Materials. Here, we were able to again compensate for cost inflation. Let's move on to some details by division. First, Specialty Additives. There were basically 2 reasons for the weak Q1 volume. We saw continued customer destocking in the first weeks of the year, especially in Asia. And the business is typically more of a late cycle, meaning it was robust for longer in the year. And now we have seen the weakness a bit later in Q1. But through the quarter, a clear pickup in volumes and order books was visible. On earnings level, the main driver of the notable declines were higher fixed costs due to underutilized assets. Nutrition & Care, the earnings situation in Nutrition & Care is clearly unsatisfactory. Health & Care as specifically health care, at the expected floor start in the year. Similar to last year, the business will accelerate in Q2 and mainly in the second half of the year. But the main driver of the low earnings and profitability was Animal Nutrition. Animal protein markets continue to struggle with high feed costs and low margins. Our messily volumes in Q1 were lower than expected, especially in China and Brazil. Also, the drop in prices continued faster than expected, reflecting weak demand and already anticipating new capacities coming to the market midyear. Generally, the price decline was even faster than the decrease in raw material prices, putting pressures on margins. Smart Materials saw a good substantial earnings pickup. Volumes were also weak on the back of the still sluggish demand visible in businesses like silica or in the shutdown of our HPPO plant in Asia. However, earnings were supported by strong pricing of 10% year-over-year and long-awaited a strong performance of Polyamide 12. Our new plant in Mal finally came onstream and into a tight market. In March, we produced record volumes with both plants running. Performance Materials have seen the expected drop in earnings after a strong last year and a still solid Q4. The C4 business has weak underlying demand in customer end markets. Also, we have seen pressure from lower spreads and margins while energy prices provided little relief for us. On the positive side, our superabsorbent business delivered the expected improvement in earnings and is back on its way to show full earnings potential again. Before I hand back to Christian for the outlook, a few words on the free cash flow in Q1. Let me look at it from 2 perspectives. Sequentially, very strong year-end cash performance last year limited our cash generation in Q1. Year-on-year, the biggest impact obviously came from the lower earnings starting point. The benefit from a less pronounced net working capital outflow could not level the result. With that, Christian, over to you again.
To take it simple, we have 2 positive trends that makes confident heading into the second quarter. First, volumes and earnings should recover further. During the first quarter, each month was better than the previous one. Second, costs keep coming down with improving volumes, we will see improved utilization and better fixed cost absorption. Our raw material basket did not form much yet in the first quarter, but this tailwind will start to kick in as well now. And our contingencies will ramp up further. What ladies and gentlemen, let this lead for our full year outlook? The start into the year was weak, even weaker than we had expected. We knew that we need a recovery during the year. So it is the first positive that this recovery has now started to materialize during the first quarter. The start into the second quarter continues the improved March level. We expect a further acceleration during the second quarter and the second half of the year, which is exactly what we need to remain on track for our full year outlook. This acceleration should be supported by improving utilization rates by falling raw material costs and by the ramp-up of the contingency match. The recovery during our first quarter was especially visible in Specialty Additives and in Smart Materials. EBITDA in these divisions were more than 20% better in March versus January and February. So for the full year, we continue to expect that EBITDA in these 2 specialty divisions is combined above last year's level. In Animal Nutrition and Performance Materials with our Q4 reporting, we have assumed an EBITDA decline of combined around EUR 400 million for the full year at the midpoint of our guidance range. However, the ongoing price decline in [indiscernible] was stronger than we had expected and also volumes are below our initial expectations. This means that we do not expect the combined EUR 500 million decline. The data is fully explained by Maike. C4 is even slightly better than our initial expectations. This implies that the lower end of our EUR 2.1 billion to EUR 2.4 billion guidance range for the year is more likely. Also, for free cash flow, that means to achieve our target of a higher number in 2023. We need to step up our efforts. We had already decided to cut our CapEx by EUR 75 million. For the full year 2023, we now expect CapEx in line with previous years at around EUR 900 million. This number also includes our next-generation technologies investments to reduce CO2 emissions. So we are not dialing down on our environmental commitments. The lower CapEx is rather a reflection of the flexibility in smaller projects, maintenance schedules are debottlenecked. Additionally, to reach our ambitious free cash flow target, we need to be really disciplined with the net working capital. And as you know, we are really used to this. With that, thank you so far for your interest and your time, and we are now ready to take your questions.
[Operator Instructions]. And we have the first question from Andreas Heine from Stifel.
Before starting the Q&A, we have an opportunity to start the Q&A session. Or asked in the 2. The first question is to understand more how much earnings recovery we can expect in the second quarter. So you outlined in the first quarter, you have already seen month-on-month better trends. But on the other hand, Methionine prices will be sequentially down, and I expect that the PA12 turnaround will also cause something. Maybe you can outline what we can expect here? And also, I would appreciate if you could spend some words on how sticky prices in Smart Materials and Specialty Additives are after several quarters of lower volume and prices still being high. Can you defend this price level? Or will that come down this sluggish demand going forward? The second is on methionine. We have outlined that you will implement a new business model in Animal Nutrition, with separation of the special and the more commoditized business. What does that mean for the capital allocation? If I look on what one currently spends on the mezzanine business, we see investment in the backward integration in the U.S., the expansion in Singapore, I think 40% and improvement of the value chain in Europe as this all up, I would probably get north of EUR 200 million investments. Will the change in the business model also change the capital allocation towards this business?
Andreas, good to listen to you, and plastered with our questions. And maybe I'll take the first one about the pricing expectations. Let's give you like this. Yes, it is an increasingly more challenging situation to push for further pricing treats. This is what goes without saying. The reason for this is mainly that customers cannot pass cost increases on to end customers anymore. So still in the first quarter, pricing for a warning was hold up pretty well here we talked about overall of plus of 3%. And especially in our specialties, with Specialty Additives, we talked about 5% and Smart Materials, even 10%. It is worthwhile to mention. On the other side, declines -- our most severe is indicated in Animal Nutrition and in our commodity-based and C4 business. Now the second part of your first question before when I will hand over to Maike also about what do we expect for 2023 in this kind of instance. So let's keep it like this. For this year as a whole, we expect raw material prices to fall. That is what we can already see. That is what we can already observed. And this process will maybe even become stronger during the second quarter on the world. So in other words, in Specialty Additives and it's Smart Materials that should definitely result in a positive margin contribution. We project -- well project, as we have shown in the past, our prices as long as possible. So it is the -- somewhat of the reversal of negative margin effect from 2021 to 2022. And with this, I hand over to Maike.
To your question regarding earnings recovery in Q2, you mentioned rightly that we have seen the recovery has started to materialize in Q1. So we have seen a month-by-month improvement. Also, our order books are improving, and that means that the start in Q2 will -- that's how we expect to continue on this improved level from the end of Q1. We also continue to expect an acceleration during Q2. This should be driven by the following factors. On the one hand side, China continues to pick up after reopening, then we will see the utilization rate of the assets improving. Christian has mentioned the falling raw material costs, while we keep our prices as long as possible and also the contingencies are ramping up in Q2. If I go maybe by this vision because you asked also methionine and PA, but I give you for the sake of completion, I give you the overview of all divisions. Starting with Specialty Additives, there are actually a couple of reasons for a better Q2. We expect a clear improvement in production volumes and order books from actually a very low level through Q1. So we expect a good auto-related business and also finally, the end of destocking in coatings. This again, results in a better plant utilization and fixed cost absorption in Q2. And as mentioned before, we expect the raw material costs starting to fall, especially as to lean, while prices in Specialty Additives should stay robust, and that will widen the gap between cost and price development and lead to margin improvement. So Specialty Additives is expected to be clearly up in Q2 versus Q1. Regarding Nutrition & Care, methionine and of course, Cash Solutions Healthcare. We have seen a solid start in CF solution, and we expect even some catch-up potential in Q2. After some sales delays and active ingredients and often unplanned maintenance shutdown in the Cleaning Solutions in Q1. Also, Healthcare, we see a slow improvement as usually. We see this business is typically more weighted to the second half -- towards the second half of the year. Animal Nutrition, however, is slightly -- will have slightly higher volumes, but we see another step down in prices. So overall, EBITDA is expected to be stable quarter-over-quarter, better health care, lower Animal Nutrition. And maybe one more sentence to Animal Nutrition. Volumes, we expect to be lowest in Q1, improving in Q2 and then stable from their onwards. The prices, we see a declining in Q1 and in Q2, but they should stabilize during Q3. Healthcare, as I said, expected much stronger second half of the year and also the efficiency program and the contingency measures at non-nutrition will give us more support throughout the year. Coming to Smart Materials and your PA12 shutdown, you already mentioned Andreas, the performance materials business line, where we expect that we continue in a very tight market. We have own capacities limited in Q2. That is -- so because you mentioned that we have this plant planned maintenance shutdown of our existing first plant in May. Active oxygen will have positive signs. On the one hand side, early signs of tightness for the hydrogen peroxide in the U.S. But Asia will have a potential restart of our HPPO plant based on the improved spread between PO and propylene. [indiscernible] should we see an expected demand increase, especially China is improving, and also catalysts should improve in -- regarding the order intake. So overall, Smart Materials, we see an EBITDA Q2 to be slightly above the Q1 figures. As I said, positive -- we have a positive business momentum, but the capacity limitation in our PA12 business plant in MIL. Last but not least, Performance Materials. We expect that with regards to Butadiene, we have slowly recovering bad spreads in April and May. Actually has kept up very nicely. And now we see the start of the running season ahead, summertime and shorter markets. So we expect to keep that MTBE will keep up even further. INA showed positive signals from Asia. So that gives us hopeful recovery in Q2. And also the plasticizer business shows positive signs of stabilization and also Q2 has typically a high demand for plastic fibers. Super positive will stay with the improved earnings in 2023. So overall, EBITDA of Performance Materials is expected above the Q1 level.
Okay. Thanks a lot Maike. And now Andreas, you could see why we are positive in gaining the lower end of our given outlook because there's very good chances in for the incoming months. And now coming to your last question about the role of methionine. You will remember that we have always been very clear about the role of missing the function of methionine in our portfolio. It is not a specialty kind of business for us. It is our cash count. And I'm not the butcher, I'm not a butcher of our cash flow, so I'm not willing to slaughter it instead of that we will better the market position of machine. That means, first of all, cut costs once again. And as you know, we have announced to reduce the cost of around EUR 200 million in this business, which is also translating in a reduction of headcount of 200 employees. Second, we will lift up the efficiency of our methionine business, which translates into smart and CapEx-light debottlenecking initiatives like we do to activate further potentials in our site in Singapore. And like we do start with the backward integration of [ Metromar ] carton in our site in Mobile U.S. Having said this, you should please check in mind the stainability of this business. over the last year have generated very strong cash flow, and that is cumulated over the last 10 years. It was twice high in comparison to the CapEx we have spent, for example, in our own assigning plans. So sum it up. It is a cash cow. We will not butcher it. We will grow this cash cow by, first of all, cost cutting. And second, by efficiency improvements like I've given it to you to make sure that this cash generator will also in future payoff in a way like we have seen in the past already. Thanks a lot for the question.
Next question comes from Georgina Fraser from GS.
It would be helpful if you're able to quantify the PA12 maintenance impact so we can think about the size of an improvement into the third quarter. And then you mentioned that there's ongoing strength in demand. I assume automotive related, but have you seen any changes in terms of what the end markets, which end markets have been driving the strength in PA12? And then my second question is on CapEx. I think over the last couple of years, we had a kind of increase to the midterm CapEx outlook that was related to sustainability or decarbonization investments. And then we have this reduced CapEx guide today. Does the challenging demand backdrop that we have mean that the rate of sustainability projects is slower than you would have hoped? Or what kinds of investments are we seeing being impacted by the reduced spending?
Okay. So I'll take you 4th and second question. with regards to the PA shutdowns. So as you rightly mentioned, the PA12 plant is a good part of our sequential improvement regarding Smart Materials from Q4 to Q1. So yes, totally right, it is coming from PA12. So we expect that the Q2 will be slightly lower with regard to cause of the planned maintenance. However, Q3 will be strongly up with both plants running. And regarding your end market development, so we see across all markets for PA12, that there is -- that they are driven by tightness. We are market leader for PH, and we offer this entire range of high-performance plasticizers. The market shows still a long-term growth of 5% per year. And this is why we see that we see an unchanged strong mark or within all markets.
I'll take the third question in respect of talking about our sustainability investments. I just saying that in this respect, we have the lucky chance of chemicals industry. Why? A good amount of our businesses, we call the next-generation solutions fits already to the sustainability, for example, government in Berlin or in Brussels have declared to reach so around more than up to more than 40%, around 40% of our business already fit to it. That means investing in these businesses. What we will do means nothing else than being on our way to invest in the future of green growth. Second part here, you have asked about, I guess, it was next-generation technologies. And obviously year, it is not to be very clear about it. It is not that we will slow down our investments in this next generation technologies. There is no cut of our investment plan. So everything is running here like we have announced it during our Capital Markets Day last year. Everything is here well placed, no changes in this respect. I guess that is my answer to your question.
The next question comes from Gunther Zechmann from AB Banca.
A couple of questions from my side. Thanks for Slide 17 to provide the month-by-month trends during the quarter. We don't usually get this data. It would be good to have some context. Could you describe as quantitatively as possible the scales of that chart? And you've given some numbers, I think you mentioned, Christian, 20% improvement in the specialty division, Smart Materials and Specialty Additives. Can you help us square it up with, I think, these are group numbers and how that looks like. So that's the first question. And the second one on the divestment of the polymeric superabsorbent. You mentioned it's well underway. Could you give us any detail around the number of bidders, the level of interest and the time lines? And likewise, I don't think you mentioned the same comment with regards to performance intermediates, any update on how that divestment is going as well would be greatly appreciated.
Good morning, Gunter. I'm starting with your first question on the Chart 17. I'm glad that you like it. So we have shown you that we have this clear improvement in March, even slightly above our expectation. And also, April continues on the improved March level. It is on a -- as April has less working days, it is so basically depending on the region, it is on this level on the last 14 days. And we expect an acceleration that materializes during Q2 in May and June. So we are well on track to reach our expectations in Q2. So as I said, if you take the maybe March level and you take it in April, May and June and then a further recovery in the second half of the year, we are basically on track for our forecast.
I'll take the second question. In respect of our C4 chain business, Performance Intermediates business, we carve out with processing pretty well. So in other words, it is as planned. Here, we will monitor the M&A market to see where its best starting point for -- to start the process of the divestment. Worthwhile to mention that in this respect, we are not under pressure in no way and talking about Baby Care that was you're the second part of your question, we do as of today, observe that the market dynamics are improving and that we, therefore, would have a good positive a good and positive financial outlook for 2023. In other words, divestment of our operator business is Idea Fasol well underway, and we are optimistic looking to Maike, we are still optimistic. We are optimistic for signing in the course of 2023. And if you would now give me a second question about it, I can't dismantle any more. Otherwise, Mikae will start to trust and that can't be what you would intend. So with that, let us answer the question.
The next question comes from Matthew Yates from Bank of America.
I'd like to just go back to Slide #6 and the new Animal Nutrition model. Can you expand a little bit on the GBP 200 million of cost savings? I think you said that's 200 headcount related cuts. I assume there must be other savings around asset closures or something. If you could expand on that? And what are the challenges of implementing this plan, both internally and then also from a customer perspective? Because a question why it hasn't been run like this historically, if you think this is the better business model. Christian Thanks for that question to give a little bit more color about the EUR 200 million of cost savings. It is first that we have now started to optimize our production and our technology positions here, we need cut fixed costs and cut variable costs to further optimation of our businesses. Second, that goes to the market and sales area of Animal Nutrition here it is worthwhile to adapt the role model to a more, let me say, to definitely exclusive commodity approach that translates into lead commodity sales teams. And by this, we will enhance the digital competence of this business that will definitely become stronger. And last but not least, thinking about the supply chain management here. We have started strong initiatives to reduce to optimize cost in the outbound logistics so this is what will really be paying off over the course of the next year. And that is what will help us to reduce the cost positions of around EUR 200 million up to 2025. And that is also what includes what includes EUR 200 million, the reduction of 200 jobs worldwide. And with this, Maike is really keen on giving you some more color about this. So I have to hand over to her.
Regarding your question, why did we start earlier. Actually, we have already improved the efficiency and the reduced cost in methionine over the last years. We had a program called justin 2019, and we closed our restyling plant in 2021 as most recent examples. And now the next program is the next step to aim at a new organization with commercial and operational excellence. And I think it's safe to say that we are proactive to secure our cost and competitive position in the business and to secure the effective margin of methionine.
And can I just follow up? I think it was Georgina's question earlier on the CapEx. I think you said you're still committed to the major kind of growth next-gen projects. That GBP 75 million of savings then. Is that some debottlenecking that you've deferred because demand is. Can you just talk a bit about what's been changed within the budget?
Yes. Matthew, you're absolutely right. So for me, it's very important for us, it's very, very important to make sure that the next-generation technologies are still included in our CapEx, our CapEx. So the EUR 75 million that we have taken to reduce the CapEx are not the EUR 75 million that were linked to the next-generation technology investments. However, what we did is that we reflected a -- yes, we have shown a certain flexibility for smaller projects for maintenance schedules or for a couple of the performances. And we have already started actually with activities regarding our next-generation technologies. For example, in Arnsberg, we have a site-wide heat integration with a heat pump or waste. Heat recovery. In Wesseling, we have replaced a [indiscernible] drier by an electric drier. And in HANA, we have various measures for heat integration and waste heat utilization. I hope that helps.
The next question comes from Martin Roediger from Kepler.
Can you provide more color about the weaker end demand for nutrition in China and Brazil? Is that due to any diseases in shrinking herd is? Or is that structurally lower meat production? And secondly, regarding the disposal of Lülsdorf site, to [ ICIG ], you agreed not to disclose the price. But maybe you can review whether the multiple you get is well above or well below Evonik's own multiple? And if you expect any book gain or book loss attached to this disposal?
I take the first question about the weakness of the signing in China and over -- that is because, first of all, that the customers in these areas do suffer from the inflation. That is that in China, we have a strong rebound in the food services because of some shortages the so-called day owned chicken in February in Brazil, in is, as mentioned, that is the same what is only true for China. Here, we talk about inflation and that in this year in this respect that the chicken producers are suffering from some oversupply and below chicken trics and taking all these things in consideration that is contributing to the lower-than-expected volumes in this region -- so it is mainly because of the present -- of the current economical situation. But nevertheless, we will see that consumption is recovering, especially in China, and that will help over the course of the year to lift the volumes up. That is first. And now second goes to Maike.
With regards to your question of new staff. Let me comment it like this. It was more important for us to access this more cyclical business and to reduce the complexity of our portfolio. And also talking about sustainability to tackle one of the few challenged technologies in the term of the NGS classification in our portfolio because you are well aware that the mercury electrolysis in little staff will not have an operating license beyond 2028. So maybe put it like this, the purchase price was rather low.
And any loss book gain or book loss attached to that? We can't actually comment on book losses.
The next question comes from Jonathan Chang from Morgan Stanley.
Just on the lower order pattern for Health & Care. How do you desegregate the weak demand or destocking effects versus the typical seasonality? And then my second question would be just on the order book. You briefly touched on the Specialty Additives. Could you comment a little bit on the -- across the other divisions? Do you see destocking coming to an end on all the other portfolios? And how do you see the regional mix as the 2?
Okay, Jonathan. I take your first question. The -- what we mentioned is that we have seen a slow start in health care. But this is actually -- this is a usual lower order pattern for the start. So we see that Q2 will remain challenging overall, but the business is -- we expect that the business is becoming sustainably positive from May onwards. But this is similar, actually to last year. And the strong operating business in the oral drug delivery part could also partially compensate for the low Olympic sales. With regards to Cash Solutions, our other business line with regards to health and care, we have seen a very solid performance in Q1. But actually, we have sales delays in active ingredients. And there, we expect to see a catch-up effect in Q2. And we have already burdened -- we have also burdened by an unplanned maintenance shutdown in the Cleaning Solutions plant. So there, again, catch-up in Care Solutions is expected for Q2.
Jonathan, I'll take the second question. Yes, of course, we do have a broad-based weak demand, which is combined with continued destocking across most of our businesses, what we've seen, especially in the first weeks of this year. But you know what, even the most elite spring way will and have come to an end sometimes. And this is the same, which is only true for the destocking, which means, in other words, that we see already rather increase in our order books, so they are picking up. But in this, it is worthwhile with this. It is worthwhile to mention we are picking up slowly. So nevertheless, the direction is the right one, and that is so far what I could see what we could see across the board, giving you a little bit more details in this year that the inventory levels of our customers -- they will -- by saying this, they will come over the course of the last -- in coming months, they will come to a lower level, and that is what will help us, as mentioned, picking up in respect that what we could see picking up in our order books, but in a slow way. So that is what I could give you about this question.
Okay. And on the regional mix, those data are pointing to U.S. slowing down. Do you see the same in your order book?
In respect to the regions, it is that we see the most -- the strongest impact is in Asia. The strongest impact is in Asia, and we see -- let's take it like this. Let's come from the first quarter. Here, we see a strong macroeconomic recovery in China. As I have already mentioned, in consumption, that was the strongest driver. On big tickets for items, we will see that the globally the economy in China is still more cautious spending money on big tickets, like, for example, real estate or automotive, but it is relevant. Therefore, it is worthwhile to repeat it and to underpin it. We do expect a stronger recovery in the following quarter in the following quarters, which is also enhanced by incentives, for example, increase in domestic demand in China. U.S., not to forget about the U.S. Overall, a softer environment in the first quarter. And as mentioned, we do see here a decent increase over the cost, the rebound was already visible in March, and that is what will continue in April, why is labor markets are, give or robust automotive businesses continue on a relatively good level, even slightly up mainly in the area of OEMs. And not to forget, our crosslinkers volumes expect to remain strong, for example, in respect of our contribution to windmills and to rotor blades in this area to.
Ladies and gentlemen, in the interest of time, we have to end the Q&A session now. I hand back to Christian Kullmann for closing comments.
Ladies and gentlemen, it was great having had you today. We have tried our very best to provide you with sufficient amount of answers that ends our call for today, and we wish you a good summer and hope to meet you soon in person by...
Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephones. Thank you very much for joining and have a pleasant day. Goodbye.