Operator: Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining the LANXESS conference call. I would now like to turn the conference over to André Simon, Head of Investor Relations. Please go ahead.

André Simon: Yes, thank you very much and a warm welcome to everybody on the phone to our Q2 conference call from LANXESS in Cologne.

As always, I have with me our CEO, Matthias Zachert; and our CFO Michael Pontzen. Please take notice of our Safe Harbor statement. And with that, I'm happy to hand over to Matthias for a brief presentation. And afterwards, as always, the Q&A. Matthias, please go ahead.

Matthias Zachert: Thank you so much. And welcome from my side. I will jump into the presentation directly Page 4. And brief comments on the key highlights for second quarter. All in all, we see that volumes are back on pre-COVID levels.

Earlier than expected, clearly, I have to change my view here compared to where we saw the markets beginning of the year. So this is positive. We see a strong recovery in the divisions that were heavily impacted in Q2 last year. So especially as far as additives is concerned, and engineering materials profitability, clearly strongly rising because they had seen sharp drops last year. As far as EBITDA is concerned, we are nearly back to 2019 levels with €277 million this is of course an increase of roundabout 24% that could have been more at shipping not been a constraint to us in especially as far as cross ocean shipments were concerned.

But say this is something that is going to normalize in the quarters to come even though for the second half of the year. The shipments will still be a rare good. As far as M&A is concerned. We were active on both sides of the M&A markets one on the divestment side. We closed the organic leather transactions in Q2 and collect the proceeds.

As far as Emerald is concerned, we went out last week, on 3rd of August close the transaction and I welcome immediately our new LANXESS team members roundabout 500 chemical experts had a townhall with all them globally. And on Friday last week, I had a one hour session with the newly formed management team all cleared chemical experts pros and positive vibrations. I felt good afterwards. And I hope they felt even stronger as well. Focusing on organic investments, we opened up an R&D development centers APAC in the Shanghai area so called Gibbs Chemical Park, one of the best chemical parks in China but one of the most modern parks also internationally.

So all in all, I think it was an active second quarter with some financials on improving financials and sound moves on the strategic side. Pitch wise let's move there. We give the cornerstones financially on the MR transaction This is how 2020 was just the heads up for you guys in order to update your model accurately. This is a business truly specialty very nice stretch with the products and our consumer protection segments around about €80 million EBITDA was last year we will bring this business in the three years to come to something like 22% to 25% this is what is embedded in our business plan. So we consider here the business to develop nicely, but of course it will be work that has to be done.

Moving now to page number six shows you how we integrate the business in our portfolio. So basically, as far as the consumers facilities are concerned the preservatives animal health products, flavor fragrances. We bundle this business also with the ingredients that we have an intermediates for flavor and fragments. So that will be bundled together. But we will fall on the basis of this the - I would say the leading player worldwide on Ben's products with a chemistry of Ben's or pulling chlorination, taurine, oxidation.

We are world scale with five plants here across the globe. This is unique. And of course for this uniqueness, we see the prime businesses on the FX. The industry clearly is our biggest customers combined with the beverage industry, that we also supply to. So this is going to be a strong business going forward.

And it fits very nicely as a new business units into our division consumer protection. As far as the polymer additives are concerned. This is a business branded with the name K-Flex that fits well to our Mesamoll products and plasticisers additives. So we have here substantial sales Mesamoll since the parts of emeralds that have this ends industry exposure are going to be added to our polymer additives division and of course here under one of the biggest sales Mesamoll that exists in the industry. So leading to of course, most likely good top-line synergies going forward.

The glance on Page 7 shows you that we make our slides in the direction of further upgrading our recognition and awards, list and rankings in as far as ESG is concerned and/or MSCI is very high on your radar. And here getting a double upgrade within 12 months speaks for itself. We are now in the AA ranking, which I would say is a further nice recognition. Next to the platinum upgrades we got for by EcoVadis also this is the rating that is known like platinum, and more of this hopefully to come. Page 8, quick update on guidance.

Despite all the uncertainties that persists on geopolitical issue that still are out there. On the pandemic, we are looking positively into the second half of this year, we think that industries will continue to be on a good momentum. Basically, all of our industries are improving some not as quickly as others like aviation, I think this will still take time. But all in all the businesses and industries are moving in the right direction. Of course, some regions are going to stabilize and if we had a very strong rebounds in Asia already last year and the second half and therefore growth definitely is going to be softer there.

I assume that in Europe, this will be good market environment growth wise also in the second half of this year than Q4 most likely also with softer growth rates. But all in all business environment seems to be healthy. Now as far as LANXESS concerns light of the organic developments of the business. But also due to the inclusion of Emerald Kalama business we up our guidance to €1 billion to end to €1,050 million. So this is what we see as of today.

And with this, we would love to open up the call for all of your questions.

Operator: Ladies and gentlemen, at this time we will begin the question-and-answer session. . And the first question is from Christian Faitz with Kepler Cheuvreux. Your line is now open.

Christian Faitz: Yes, thank you. Good afternoon, everybody. I have two questions maybe. First on logistics, can you please give us an idea by how much percentage points or basis points, the higher logistic costs ate into your group margins? And which segment was the most affected? And how do you see logistic costs evolving throughout the remainder of this year? Will you also push through higher pricing to compensate for the higher logistical costs? And then second question, very simple one, how do you see working capital evolving for the remainder of this year? Thank you.

Matthias Zachert: Of course, thank you for your question, Christian Faitz.

So we will pick them one by one. And Michael will take working capital, which obviously follows our off seasonality, I will take up logistics. On logistics, we've seen now in second quarter a high single-digit million incremental impacts partly this could be absorbed, partly it is still outstanding. And we have to merge that into our pricing going forward. So that should clarify the impact here on financial.

So it's definitely a drag. Not a huge one, but it's visible one. Second, however is the delay in shipments that we for instance, faced from U.S. to Europe, U.S. to China, China, definitely was a constraint, as you've seen in the press, it was completely stocked in some of the harbors congestions everywhere.

I've not seen that so far as heavily as we currently see. And that's impacting everybody not only us. And very clearly, I spoke to one of the CEOs of the big European transportation companies that met that container capacity, and he clearly indicated to me, this is going to be a topic for the next six to nine months, because new capacities will only come within 2022 and 2023. So for the remainder of the year, it will be a drag. Fortunately, I mean, we worked on this internally.

Fortunately, our company has reserved close to 100% of our expected volumes. So we basically have capacities reserved. But even when you have capacity reserved, you sometimes face one to two months shipment delays. So that's basically the situation on logistics and Michael will hammer out the answers on working capital. Hello, Michael.

Michael Pontzen: Hi, Christian as well, hi everybody from my side. Yes, thanks for the question. And you're touching a point when looking in the cash flow statement, which obviously is an eye catcher. But unfortunately to the negative, at least for the time being. As you all know, we do have this typical seasonality throughout the year that in normal years like in 2021, for example, we have the increase in working capital in the first couple of quarters, and then the stabilization in the third and then the release of cash in the fourth quarter.

And at this point in time, I do not see a reason why this usual pattern should be different this year. It was of course different last year, and that is the major deviation, which you find in our cash flow statement. If you look last year, we were able in the second quarter, given the circumstances to release around €56 million, and this year, we had to spend €165 million and if you deduct these numbers from the operating cash flow line, you will recognize that we had a rather good operating cash flow in the second quarter. And in fact, it was the best operating cash flow pre-working capital changes in the past four years. So the focus on our side is clearly as well on generating cash but the pronounced development in the working capital in the second quarter was even, let's say over pronounced because there were three, four, let's say additional effects next to the obviously highly sharp rising raw material prices which did obviously have an effect on the inventories and on the receivables, then on the receivables as well, we were in a position to record for a very strong month of June which in fact then leads to a relatively high number of receivables at the end of June.

And the third and fourth element and that is the user seasonality is the preparation for turnarounds, which you usually see in the second half of the year. And finally, Matthias was referring to it, some shortage of shipments which they test as well as small impact on the volume. So to cut a long story short, there should be the usual seasonality in place this year.

Matthias Zachert: Wow, that was a long answer. I hope that clarifies everything.

So let's move on.

Christian Faitz: Thank you, Matthias, thank you, Michael.

Matthias Zachert: You're most welcome.

Operator: The next question is from Matthew Yates, Bank of America. Your line is now open.

Matthew Yates: Hi, afternoon everyone. A couple of questions. The first I think you've raised the guidance for your exceptional items this year by about €15 million. I guess some of that relates to the Emerald deal. But can you disaggregate the moving parts in that, particularly if it's anything relating to IT spend, for example, why your assumptions now were different versus earlier in the year? The second question is around your Lithium project.

And I know there's still a lot of work here being done to evaluate and get all the answers before sanctioning. But I just had a question around the structure of the project. It potentially is a very sizable CapEx investment for the group. So I'm just wondering, what sort of equity share you feel comfortable with in order to capture the long-term potential profit opportunity here, but also manage the shorter-term execution risk and what is potentially quite a complex and unproven project. Thank you.

Matthias Zachert: Matthew, good to hear your voice. So Michael will address exceptionals and I will pick up Lithium, so on Lithium in light of the fact that Standard Lithium is now also listed at the NASDAQ Stock Exchange, of course we have to be very humble on making any statements relating to other companies, this is at least the legal advice. So I'd share what can be legally shared, the structure on the joint venture we have explained already in our Capital Markets Day event in November 2019. The equity share in this joint venture will be according to the underlying - understanding of both parties between 60% and 70% and this is the working assumption as we speak. And of course, we would only inject money once proof-of-concept from our perspective is fully there in all aspects.

And lastly, what I would like to say is, of course, we're advancing now more and more, not at the speed of light yet, but we are advancing in the positive direction. And once we have a new information that is worth sharing, we would share it, of course with our investor base as well. And Michael, please explain in transparency to exceptionals.

Michael Pontzen: Yes, hey Matthew. Thanks for the question.

In fact, there are two major drivers, which basically hit one-off, that is clearly the Emerald Kalama effect, which we're expecting as we have now the signing already done - the closing already done last week. So we think we are able to already put some money into the system this year. And the second is clearly the M&A project on the one-hand side, all the project which came to an end in Q2 like to still in touch the divestiture of the leather business. And then in the third quarter, obviously the closing of Kalama and as we all know and recognize as markets are picking up globally, when it comes to, let's say operational markets, we see as well clearly a pickup in the M&A market. And that is as well an aspect which is driving the expectation on our side with regards to spending on exceptionals.

Matthias Zachert: Yes, we have been in one to further projects recently over the last few months that did not materialize, but we're in further projects going forward and perhaps one or the other might materialize, but we're quite active…. …going forward. And perhaps one or the other might materialize, but we are quite active in this regard. And therefore, we will take of course then always legal charges, bankers charges you name it's because we go into DBS in the professional way we really turn around every stone so that we don't buy black cats in a dark baskets, whatever the saying is.

Matthew Yates: Thank you guys.

Matthias Zachert: You're most welcome, Matthew. I hope we will see as soon in-person. We are all vaccinated I guess.

Operator: The next question is from Chetan Udeshi, JPMorgan. Your line is now open.

Mr. Udeshi, you can ask your question. Your line is now open.

Chetan Udeshi: Yes, apologies. I was in mute.

Just one question from my side, which is in second quarter does price increases that you guys put through? Did that offset entirely the inflation in raw materials and logistic and energy? Or did you have to or do you have some catch up to be done on that regard in second half of this year?

Matthias Zachert: Chetan good to hear your voice. The mute thing is something that always have on my side as well. But this time, I don't need to touch the button. So it says so far not happens. Your question is a very good one.

And let me address it in the following way. Rolls by and large, we have in second quarter, you can see that 10% pricing. In Q1 we had basically 0% price increase. So the 10% clearly show you that we have been extremely active. And by and large, I would say we will have nearly all rolls over as some catch up here and there potentially still lagging.

But majority wise, we address this. Energy is still out there. And my assumption is that I mean, energy is definitely more difficult. Because in many of our contracts, we have long-term contracts where energy prices are not included, because normally we don't have these swings. This from my point of view will be a not only this year activity, it will take us most likely 12 to 18 months to address contract-by-contract.

If you have big underlying contracts, that simply takes longer and the discussion is not done from one day or one quarter to the other. But the positive statement to you is loss basically, nearly all addressed. Energy we are working on it. And therefore, I mean, let's see how we advance in this regard. I hope that clarifies your questions Chetan.

Chetan Udeshi: If I follow-up, of course you've given a full-year guidance, which is useful. Can you help us understand how do you see Q3 at the moment? It seems that in the past, we've seen a bit of seasonality at Q2. Q3 is slightly lower than Q2 and then bigger seasonality in Q4 at this point. Would you say there is any reason to believe it could be different than that in Q3 and q4, just from a normal seasonality point of view?

Matthias Zachert: Well, I don't think with that we will see some dips. I think overall, the word is still bringing things back in place in order.

So we saw that Q3 last year markets rebounded. So the comparative basis volume vise at least are better than Q2. But we still see distortions in the system. We set as things are normalizing. We now provide guidance on full-year and so basically don't really see the necessity to slice quarter-on-quarter into pieces.

But by and large we see a softer seasonality compared to the historic average. Of course August always tends to be softer in some countries like Europe, Southern European countries. But we will not have - I don't expect anywhere a sharp summer break because the business and industries are on the rebound still.

Chetan Udeshi: Very helpful. Thank you.

Matthias Zachert: We always like to be helpful. All the best to you and next question please.

Operator: The next question is from Andreas Heine. Your line is now open.

Andreas Heine: Yes, a small number straightforward questions, please.

If I take these rubber chemicals out this let's say margin of zero, then I get in specialty additives to 18% in Q2, which is basically where you were in 2019. I think the ambition is 2020. And you outline that the high margin aerospace loops and oil and gas is not back. Is that coming back now, next year is that something which would be on the agenda to lift yet especially additives margin including the business were Emerald Kalama to this target of 20%? That's the first question. The second the comment on exclusion, could you clarify whether in any way LANXESS might be affected by this in your operations.

And in the industrial and advanced industrial an intermediates, you have produced also some products, which you have in Emerald Kalama. Will the marketing from of those products been out done from the CP segments led by Mr. Emerald Kalama or will that be still separate? These are my questions.

Matthias Zachert: Valid questions. I start with your first one.

You're completely right. If you back out the numbers of the businesses that have been transferred into additives by EV rubber additives. The business would be roundabout at 18% already, despite aviation still lingering and lowering diluting margin. So overall, you see that the division additives rebounded nicely and it should rebound further. At least this is our expectation next year.

The second point to this is, however, the rubber additives will never be a 20% margin business. So this would clearly linger and dilutes the underlying margin of this business. So this needs to be kept into perspective. Now to your third question, the K-Flex products are margin wise lowest one in Emeralds. I don't think they will lead to an improvement in the margin, they will be where the market will currently rather is in the area of 15, 16 percentage points.

So it will not be an incremental booster. The consumer products they are the heavy hitters. The K-Flex products are below the average of definitely below the average of consumer protection products. Now the marketing to your last business question the marketing will all be in one business unit. So the S&F products that are currently embedded in the intermediate division and the sales reps and marketers, they will all join the new business units otherwise, we create complexities.

So we clearly make a management carve ops products. Business carve ops completely, so that here really a champion is being created in the S&F space. And it's a difference if you have 500 people 500 pros on S&F compared to 1000 pros on S&F with five assets with scale worldwide positions. Then in just one region being positioned. So here we clearly make a step change.

In terms of facilities supplier to the S&F industry globally, we see that all big accounts are with us. This is a unique setup, and therefore it will be a unique strong unified team. Let's under one business structure and let's see how they are going to accelerate in the years to come. So this is basically my feedback on the business, then you've addressed horrible accidents that really has emotionally hit everybody here. And even though we are not directly impacted you feel, you feel sorry.

You feel convalescence, which we express to the entire car rental family on behalf of the board on behalf of the employees, our employees, I mean these are so called brothers and sisters. I think that is the that is what weighs heavily. Financially, there will be something like €5 million to €10 million operationally losses. This is embedded in our guidance on everything that is higher than this. We have protection, financial protection through insurance, et cetera.

But this is just a side point the big point is the accident itself and the shock to the environment and region. And now we need to work on it something like this simply may not occur. Next question, please.

Operator: Your next question is from . Your line is now open.

Unidentified Analyst: Yes, good afternoon. Thank you for taking my questions. I have two questions left. First, in the view of the good volume demand this year, do you see a need for capacity expansions that they - that you did not expect before? So maybe there's a segment or a division where this is now possible earlier? And the second question is, do you expect an increase in administrative costs or bonuses this year to do the elimination of COVID measures? Thanks.

Michael Pontzen: Very valid question .

Thank you. On capacities. I mean, the one thing that of course, we would like to flag are, we are still in the process of working on battery chemistry. And so this is something where when we step in, we will step in and we'll need CapEx. Second for Emerald we clearly already flex that here.

We do see opportunities on the bottlenecking, the ultra-purified benzoates this is something that we will engage in. Because see the market is pretty tight. This is a super duper growth area in the beverage industry in biocides. You name it. We are short of capacities.

So this is something we would definitely take on board because of the juiciness of the business plans that I've seen so far and need to be double checked. Now we own the business. But this was one of the fundamental drivers for our business plan and the M&A analysis. So we look at this quite positively. Now on your second question, definitely I mean, this year we will pick up more SG&A costs and one big driver for that is a bonus.

Last year, the management boards, among others cuts the bonus to 50% max. I hope and I would be happy that the entire managerial greats worldwide will get a bonus 100% or above if we excel. And therefore that of course, paying boney something that for the entire managerial grades worldwide is always double-digits amount. If it's 50% it's of course half of what you have. When you have 100% though, therefore this is something that will lead to an increase in the admin costs for sure.

Second driver but not as big as AP as bonuses traveling, our assumption is that not traveling will occur again in the second half gradually increasing. At least we've communicated now since August. After discussion the management board that everybody who is doubled vaccinated is allowed to travel was not vaccinated has to stay wherever he is in home office or in the office. But traveling is then not allowed, but vaccinated people can travel from now on as long as borders are open. And of course travel costs therefore will also increase going forward.

Unidentified Analyst: Thank you very much.

Michael Pontzen: Most welcome. Next question, please.

Operator: Your next question is from Jaideep Pandya on Field Research. Your line is now open.

Jaideep Pandya: Thank you. I just want to basically look at the cash flow that is in LANXESS today. I'm sorry, but I'm going to compare it to the old days this is offered when you were the CFO and rubber was in the company. The CapEx to sales those days were 7% and these days is also 7%. And then on top of that you guys are spending, let's say about 1% to 2% on exceptionals for the last sort of couple of years.

So in principal, when we think about a billion, billion €1.1 billion EBITDA range. By the time, you know, we did that CapEx and exceptionals. We're left with €300 million, €400 million in the bank. So the question really is, what is the underlying CapEx. Maintenance sort of CapEx level of LANXESS? Today and are you spending a lot of money in projects, which we haven't seen EBITDA for yet, where hopefully you will give us some longer-term EBITDA guidance or earnings guidance on May 5 - sorry, November 5, which will allow us to sort of see the growth profile of LANXESS, because obviously, right now, there is a very frustrating circle where despite all the recovery.

Cash in the bank at the end of the year is, if I may use the term disappointing? That's my first question. And the second question really is around your roaming business, you're sort of Western peers have about 50% or so of longer-term contracts. And so if you can just give us some color of what is the contract profile for LANXESS and our longer-term prices adjusting every year, and therefore, the sharp rise in roaming prices that we've seen this year, should be reflected really in the P&L next year? Thanks a lot.

Matthias Zachert: Yes, well let me just take note of your questions. Let me give you a high level answer on cash and if this suffices fine.

Otherwise, you can come back to it and then Michael will pick up on the details. On if I look at cash flow, if I look at operationally, of course, we saw last year the inflow through the implosion of prices, so we had a strong influence on networking capital. And this year, we would see the opposites which the entire industry is facing. So there is no change here. You will see also that our second half year cash flow is going to improve.

So there is no change here. The two topics you've addressed was CapEx and exceptionals. Now on CapEx, there are two elements that currently drag on CapEx and lead to the six, seven percentage points to service that you have mentioned. The one related to upgrade of plants, we bought and deliberately pointed out that the plants that we bought in the U.S. needs to catch-up on investments in order to reach the standards we have, this will by and large, still be something for 2022 and will then move downwards.

So this is one element on CapEx, second element on CapEx, which we also state is activation of software costs that we incur. We're running here big project that would come to an end for the big countries next year that was adding to the CapEx envelope around about €40 million, €50 million. This is happening every 10 year when you upgrade SAP and the like, the likes. So this is something that currently drags on CapEx. But automatically these two points will come down.

Second, then on exceptionals, I would clearly like to mention two points. We're in a heavy portfolio management circle right now, you've seen projects, you've seen in every year that we engage on big projects, like rubber divestment in '16, rubber divestment in '18. These were big projects, on such projects alone for bankers fee, lawyers fee, environmental tax, you pay on average for projects which are in the billions. I mean, each rubber project was leading to €1.2 billion, €1.4 billion of cash on the account, you have something like €10 million that you expense, if you look into current, I mean you are in the double-digit millions, if you look into Emerald, you're on double-digit millions, et cetera, et cetera, et cetera. I think all of these M&A projects were taken positively by investors, because either we got proceeds, like on leather chemicals, we got good cash and the commodity business went out.

I think everybody liked that. But you need to pay for it. And the portfolio change process is not over. And therefore we're doing the second, there are innovation projects that we have in exceptionals like , but it incurs costs in low double-digit millions. This is booked in exceptionals because somewhat is an exceptional project.

One day we will open up if this continues to be on a successful path, we'll open up, when we open up investors hopefully will see proceeds. If we don't consider this as a viable project, we will stop it. And then we will no longer pay €10 million, €15 million on a yearly basis. But then we will basically make sure that cash drain is reduced. But from all of what we see right now, we think this is a viable project, that should explain, I think to questions on CapEx and exceptionals.

As far as bromine contracts are concerned, the volatile markets definitely here is the Asian market, the Chinese markets, China is on spots. As far as Europe and North America are concerned, you are normally on a contract basis. So most of the projects here have products here contracts here has one to two year duration and whenever prices in general move up, which they currently do, you see a positive pricing impact in one, two years following the tightness of the market. I think that answers both questions.

Jaideep Pandya: Thank you so much.

Thank you

Matthias Zachert: You're most welcome. Next question, please.

Operator: The next question is from Mubasher Chaudhry, Citi. Your line is now open.

Mubasher Chaudhry: Hi, thank you for taking my questions.

Hi, just a couple from me please. The results didn't really have an impact on the auto, ship shortage in the second quarter. Are you seeing some sort of restocking from your customers and when should we expect more of an impact into third and fourth quarters? And then coming back to the bromine comments, are you seeing increase from your side, given one of your peers is having issues with their own bromine commitments. So, is that leading to more volume queries on your side, are you kind of fully committed and therefore, we shouldn't expect a volume up lift? Thank you.

Matthias Zachert: Very good questions.

Thank you, Mubasher. So, let me address one by one. While first Q2 is concerned, we did not see I mean, look into the engineering materials division, the pricing volume was extremely strong. So, we didn't see any impact on the ship difficult word, ship shortage, I hope I pronounced that correctly. On the ship shortage in Q2, I discussed with big CEO in the automotive industry on his feedback pre-Q2 earnings call, and the feedback I got there was and he gave an example for the industry, the industry could have gone up higher.

But basically the industry went up in many of the regions round about 10, 11, 12 percentage points, this could have been three percentage points higher. But anyhow 10% to 12% is strong growth, of course, on a modest basis, but in Q3 and for the full-year, if they continue growing double-digits, then everybody would be happy, but their growth could be even more pronounced. The rebound in the automotive industry however is stronger than the decline or the shortage of the semiconductor industry. So we currently don't see that in our order book, we still see that the automotive industry tries to stock up, but they can't because we cannot produce as much as they want. We also see now that the polymers or the polyamides are kicking in for e-mobility, we always said that e-mobility heaps or longs for more specialized polyamides which we have prepared.

And therefore we now see a strong pull from the electromobility industry for our products called Pocan, this is a PBT product, but also for our polyamide. So as far as Q3 is concerned, we see a strong volume coming from the automotive industry and multiple reduction due to shortage of semiconductor chips. Now on bromine second question, yes, hey I mean we could sell more, but I mean our bromine wells, as you know are in El Dorado in Arkansas. And first of all, what you have to do is you have to have trucks to ship, trucks are - truckers, truck drivers are a rare species in the United States. You need to have more truckers, we find them but not enough.

Once you found truckers, you need to get ship containers. Also, this is very rare species in the harbors. And therefore, anybody who has a shortage on chlorine, whatever, we could sell more, but we need to find truckers and ships to export the products which are scarce at this point in time. I hope this answers both questions. You're most welcome.

Operator: The next question is from Jeff Heard from UBS. Your line is now open.

Unidentified Analyst: Good afternoon, it's Jeff Heard from UBS. Just wondering if I could ask two quick questions. First of all, would you be able to give us what the exceptional costs will be for Emerald please.

And then also, you mentioned in the statement that you had new long-term contracts in Saltigo, what does that translate to in terms of numbers?

Matthias Zachert: Hi Jeff, I would take Saltigo and Mike would take your Emerald question. Basically, if you look at the - we brought into the comments of our quarterly, just in order to explain the price effect in CP and consumer protection. So, this basically relates solely to Saltigo, in fact people we have with some of the big customers agreements on contracts normally long-term, one long-term contract came to let's say an end and was renegotiated. And basically here, we made the agreement in this particular case that we take ownership of the entire value chain for the managing of raw materials et cetera. Normally, what you have in these contracts often is the big customers provide certain intermediate to you, which you further go and synthesize, because we only make the high value synthetic steps that this particular contract, the customer agreed to, we can also take care of the precursors, which we like to do because we saw opportunities here to improve the pricing.

Bottom line therefore means prices for the product were adjusted. However, this margin wise is a positive loss and volume wise we get more volume. So, bottom line financially, this is clearly now turning into a long-term contract, which is more accretive to the P&L than before, but you see a negative pricing effect which we try to explain so that nobody needs to bother. But that's behind it. I will not give numerical details because this is business intelligence.

But I think it explains the question in fully fledged to you and Mike will address Emerald.

Michael Pontzen: Hi, Jeff. So for this year, we expect the exceptionals in the ballpark of roughly €15 million. The same number holds true for upgrading the assets like Matthias said, and the synergies should sum up to around €5 million, that is for '21. Then for the next three years, we expect further exceptionals and CapEx and of course synergies and they will sum up to in total some €25 million on synergies, on exceptionals, €35 million on CapEx, €55 million and we provide a split over the next years in the slide deck in the backup.

Unidentified Analyst: Thank you.

Michael Pontzen: You're welcome. Next question?

Operator: And the next question is from Rikin Patel, Exane BNP. Your line is now open.

Rikin Patel: Hi, thanks for taking my questions.

I just got two left. Firstly on Emerald, you've mentioned the 22% to 25% margin targets, can you just give us some color on what profitability will look like this year. And any comments on organic growth in F&F would also be helpful. And then secondly, you mentioned came on this earlier, just any update on how the monetization models are progressing and how your customer rollout has progressed as well in the last quarter would be helpful. Thanks.

Matthias Zachert: Well, Rikin thanks for participating today and for your questions. So the 22%, 25% is of course the margin guidance. For this year, the incremental EBITDA is stemming from Emerald in euros. And based on our current understanding, I mean, we now need to do the technical stuff with converting from U.S. GAAP into IFRS, we've done that high level wise but it needs to be, of course make 100% clear.

Then we need to look into, how they report cost wise, category wise and bring that into our own accounting standards reporting guidelines. So these are rough numbers, Michael will give a more precise update on Emerald numbers, latest with Q3 but on the basis of our knowledge today, the incremental EBITDA stemming from Emerald for the remainder of the year is €35 million. And of course, going forward, we're not going to report business unit numbers, we will always keep them on divisional level, I think this is standard in the industry. Now as far as monetization commodities is concerned, we're still out here and testing the difficulty that we currently have on platforms, not only ours, but also other platforms. You've seen that last year in terms of pandemic platforms, we saw around the globe that traffic on platforms just exploded, because everybody went digital.

And now the opposite is happening, not on the customer side so much, but on the supplier side, because as you know, as we report as everybody report in chemicals, products are short. And what people are doing right now is that suppliers rather sell to their A and B customers, platforms are basically another outlet. But as you are here, rather trying to find outlets for your incremental volumes that you cannot get into other channels, you currently let the supplier offering. And therefore the platform currently commoditize not - has not a reduction in buyers, buyers are extremely active on the platform. But the offering of the suppliers in the last three months has reduced by 30, 40 up to even 50 percentage points that we need to basically wait until the suppliers come back on the platform, the time will come.

And then of course, we will see here that the matching to orders will go up again. But therefore the monetization that we basically had on the - that we brought into the platform, we now need to change gears and work on bringing first of all suppliers back on the platform, which will take some time and then we will test the monetization again. So this is where we stand on , I hope that clarifies everything.

Rikin Patel: Thanks.

Matthias Zachert: You are welcome.

Next question, please.

Operator: We have no further questions. So I would like to hand back for some closing remarks.

Matthias Zachert: Hey, so then hopefully we've answered all the questions, Michael, and myself. We will thank you for your attention for your time and your interest.

And we will of course, will be on Roadshow now in the digital or physical way at least to Oliver and Michael are now going physically on the road. I would be digital wise on the road and hopefully physically then in the months to come. I wish you all the best. Have a good summer time and stay healthy until the next call. Thank you from LANXESS in Cologne.

Bye-bye.

Operator**: Ladies and gentlemen, thank you for your attendance. This conference has been concluded. You may disconnect.