BNTGY (BNTGY) Q2 2026 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the Brenntag SE Q2 2026 Results Call and Live Webcast. Please note that the call will be recorded. [Operator Instructions] I'd now like to turn the call over to Andre Simon, Senior Vice President, Corporate Investor Relations. Please go ahead.

Thank you, Jenny. Good afternoon, ladies and gentlemen, and a warm welcome to our second quarter [ 2026 ] 2d call from my end as well. On the call with me today is our CEO, Jens Birgersson and our CFO, Thomas Reisten. As you have noticed, we have changed the procedure. We've made available a prerecorded video of the management presentation this morning, together with all the accompanying materials in the Investor Relation section of our web page. With this, we want to give you more time for preparation and the possibility to handle potential overlaps with other earning calls. Consequently, today's call will focus exclusively on answering your questions. A replay of today's Q&A session will be made available on our website shortly after the call. And before we begin, please note our safe harbor statement, which can be found at the end of our analyst presentation. With that, I would now like to start the Q&A session. Jenny, please open the line for questions.

[Operator Instructions] Our first question comes from Suhasini Varanasi from Goldman Sachs.

Two for me, please. Can you perhaps discuss the volume trends in Essentials & Specialties in 2Q? And in July, It looks like the volume trends got a little bit better in specialties. Maybe could you provide some color on customer behavior and contrast that with what you're seeing in Essentials? The second question is on your working capital. It looks like it was a heavy investment in working capital in the second quarter, but you also talked about some unwind in Q3. Have you seen any product shortages that are causing you to maybe build up a little bit on inventory? Just some color there would be great.

Okay. Thank you. So I'll take the first part and then Thomas takes the net working capital section. So volume trend without going too much into detail, we basically see it holding steady. We don't see an uptick, don't, at the moment, expect any big changes, and that's part of the reason for the up guidance because we also conclude that this Hormuz, the Middle East crisis. In one way, it has become normalized, but so has the oil price and so has the cost situation among our customers. So we haven't seen anything changed so far. Can't conclude that it's a more positive environment either. It seems to continue and then we take it month by month. As you know, we have no backlog. If we compare specialty and essential from a volume perspective, Specialty have kind of the top performer on the Material Science that we mentioned in our release. And I think that is market driven. Then on the Life Science side, we are doing quite good progress in the different deals, but maybe one exception on Nutrition, where we haven't seen so much cost increase on the sourcing side. So not much price pressure yet on that side. And then we generally don't see volumes up on the same. We are not progressing sitting flat on that one. I haven't seen a big change. And we are still preparing a little bit in the U.S. where we have some acquisitions, but have been problematic a couple of years back. So we are repairing that. But -- and if the volume -- and the volume increases on the specialty, I would also say, when I look at it, material science is clearly helped by the market, and they're doing a good job. And the sales efforts in specialty, and there are a couple of things. First of all, we are less strict with -- we don't look so much at competition. We look at ourselves and we play to our strength, which means that we are a little bit less focused on gross profit per tonne, focus on gross profit, we focus on customers. And then we start to see the first results of also making use of the central platform, the essential salespeople on smaller customers that we are working with. So those played together to the volumes we see. And nothing much of that is market-driven outside material science. It's more self. Over to you, Thomas.

Thank you, Jens. So now for the question actually on working capital cash flow a little bit. So I think what's worth noting first of all, is that this increase in working capital is what I would call actually a temporary technical effect. And I'll explain a little bit more why I actually see it that way. So the outflow from working capital in the second quarter was EUR 353 million; however, in such a strong growth situation, this increase is quite normal. And we've seen that in the past happening actually as well in the history of Brenntag. So we have seen total sales increasing by about 11%. And a bit stronger in BS, but evenly actually quite strong in BSP. I think that's worth noting as well with a 6% increase in that space. Inventory increased very much in line with that. So at about 11.8% even slightly below, by the way, what we would see on ASP at this point in time. So overall, then accounts receivable, accounts payable really increased overall as well, but in line with each other. So the main impact that we are seeing is here really coming from the pricing side of our inventory, and we have not seen a significant volume impact at all, in our inventory. So we -- and this is actually partially answering your other part of the question as well. We haven't seen significant product shortages and have been able to continue to safely deliver to our customers, really fulfilling to our purpose as a distributor. And if you look at some other KPIs, we've seen the working capital turns improving to 7.5x, which is confirming that we are managing our working capital very efficiently and effectively. And also worth to note that this temporary technical effect I was talking about actually has reached at the end of the second quarter already, it's peak so far and that evenly with the continuous positive start to the third quarter that we actually see on other KPIs, as we have actually indicated already in our release, we see that this peak actually is coming down into the third quarter as well. So in summary, as I said, very much a temporary technical effect of this increase in working capital driven by mainly the price effect and absolute BAU in line with our sales increase and improvement.

Our next question comes from Martin Roediger with Kepler Cheuvreux.

Yes. Three questions actually. The first is for Jens Birgersson, -- just a clarification question to your previous answer. I understand that the volumes have been flattish year-over-year in Q2; however, I understood from your first ad hoc release on the 22nd of June that you might have benefited like several other players from some prebuying by customers in April. Did that high demand in April softened in June so that the individual months have leveled off each other?

Yes. Let me take that question. So the way we see it, it's always hard to assess this, and we try to be quite disciplined with our own inventory, as Thomas explained. And we generally see that across the industry. So in April and also to some extent, the last half of March, you saw -- you saw our customers. They have been used to ever falling prices. And therefore, they were on just in time, always wait with ordering. And then we saw an uptick. So we had 4 to 6 weeks of build-up of inventory. But our take on it is that they have gone up not to a very high -- to a normalized level where I think based on the assumption is that pricing could go up, they -- many of them expect the pricing to go down a bit but the uncertainty in the market is there, and they're not going to sit on the permanently low level. So my take on it, and it's hard to know whether you're exactly right on this, but I discussed with a lot of customers, the topic. I would say it's a normalized level and no sign at the moment that they are offloading it, and I don't think we sit on an inventory bubble. That would be my summary.

And my second question, the war in the Middle East has been positive for you in Q2, thanks to your defensive business model, you're leading positioning your price discipline, et cetera, et cetera. but it seems we have wars, which lasts longer than initially expected, started with Ukraine, now the Middle East. If these wars last couple of years from now, -- would you see that as net positive or net negative for Brenntag?

Yes. Good question. So first of all, what the general assumption we have, it seems to be very it seems to be easier to start a war than to finish a war. So our base assumption is that they continue. I think the volatility element of them the market gets used to it. Somehow the oil is getting there. So our assumption is oil will stay on 80, 90. Yes, shipping rates will be up, and it's kind of staying there. So I would say for us, we have less impact of the volatility, but we are playing on a higher price level on the sourcing side. And we see that to keep on. Then in terms of if the war stops, then we get into macro economics. For me, for example, I wonder I would think it's a good thing for European for the European economy if the Ukraine war stops, right? So that one I think is a positive if they would end. And the Hormuz one, we would probably assume that, that lower the cost a little bit and then our margin or the gross profit we make will contract because higher overall price levels are better for us and a little bit of the volatility better for us. So it's not a clear-cut answer, but Ukraine, I clearly see as a positive if it would end for the European economy, and we will benefit from that.

Thank you. And my final question is for Thomas Reisten. The personnel costs have rocketed in Q2 year-over-year and quarter-on-quarter. And this is despite the fact that you have reduced your workforce as part of your cost savings program. Can you explain what is the ordinary inflation effect on the personnel expenses and what was due to higher provisions for the bonus payment for beginning of next year? And as a follow-up to that, is the Q2 number for the personnel costs, a good proxy for Q3 and Q4?

So we've actually been into the second quarter, still clocking actually, to some extent, some inflationary trends that actually have been coming from salary cost increases actually over a year ago. That's one point. Nevertheless, the bulk of the increases is actually driven by higher bonus provisions. I mean, remember, towards the end of the second quarter last year, it became relatively clear that overall, we would be missing actually the guidance at that point in time. So -- as a consequence, bonus provisions at that point in time even went down. So what we are now facing is that we are taking bonus provisions not only up to the expected value. You remember, at the beginning of the year, we issued actually the initial guidance, and we've now increased this. So overall, we've been quite transparent that there's bonus provisions and other effects in the second quarter of about EUR 40 million in that. The vast majority of that is actually coming down to bonus provisions, sales incentives and other topics. So that's quite a significant increase that we are digesting as a consequence. And this is very much in line, as you can imagine, with what we actually have said as guidance in terms of actually the midpoint of that guidance as well. So this is then what you could actually take as well for your model to take that as a value in order to obviously normalize for this going forward. We will continue to build bonus provisions at a higher level if the performance obviously continues to be at a positive as we are expecting this. But we doing that until the end of the year and then obviously, the new budget and new target actually will come. So this is really what you have to take into account overall salary cost inflation, is very moderate from year onwards because we've been quite, let's say, conservative with those increases and really managing inflationary costs on -- salary costs and people-related costs as well. And then the other aspect, keep in mind, we've reduced over 800 people year-on-year already, and we continue to accelerate our savings program. which comes quite a lot from -- actually almost entirely from structural savings initiatives, reaching a run rate of EUR 41 million, and a lot of that is actually people-related costs at this stage. So we continue to accelerate that into this year, and you can expect that to flow through as well.

I just want to emphasize one -- just to add one thing to sum it up, that there are a couple of things happening to the personnel expense, the base salary, so to say. The one is that we are reducing quite a lot of management layers. So that means the average -- that helps the average. And then due to looking at the previous years, we had been I would say, a couple of years above market, and this year on the salary increases for 2025 and up until spring, we have been extremely tight to kind of set it more in line so that it's right over a few years. So the salary increase for the last 12 months or 9 months has been very conservative.

Our next question comes from Annelies Vermeulen with Morgan Stanley.

I have two questions, please. So firstly, just to follow up -- come back on the working capital point. Could you confirm, did you book any inventory gains in the quarter, i.e., where you sold inventory at higher pricing than where you purchased it? And if so, could we see a reverse of that in Q3 if prices come down and you're left with higher cost inventory? And then my second question was on the special cost items in the quarter, which were up quite a bit year-on-year. I think, as you said, that's mainly head count restructuring, but how do you expect those to trend in Q3 and Q4?

Okay. I think that's for me. If I'm not mistaken, those questions. So on the inventory buildup, I think -- I mean you are targeting on your question here, and let me briefly confirm that is actually asking whether we have been selling lower cost inventory at the beginning of the quarter. And then obviously, replenishment of this inventory came in at higher prices actually towards the end of the quarter. So as a consequence, having actually a higher gross profit margin initially, and then that actually to moderate down, I would say, later in the quarter. That is true, obviously, because we've had actually this lower cost inventory. Nevertheless, even now with this being -- with the replenishment costs coming through, we are seeing actually positive trends still emerging into the new quarter and towards the end of the second quarter, actually as well. So overall, you will see -- and this is even one other aspect that you see with regards to the working capital, that on the accounts receivables side, you actually have initially higher effect than you actually have on the accounts payable side. I know over time that actually catches up after a few weeks where you actually then have a bit of a balance, actually, that is coming out of that. But which is one of the reasons why we see an improvement into the beginning of the third quarter actually as well giving you another layer of detail on working capital movements. And gross profit, we still continue to see into the third quarter despite the replenishment costs going up, a positive impact and we've seen that as well towards the end of the second quarter. In terms of Q3 and Q4, if we look at the guidance, I mean, you will have recognized that -- maybe the second half is not actually assuming as much overperformance versus the previous year. That's very true. So the underlying assumptions that we have put in there for the midpoint are that over the third quarter, we actually expect gross profit to somewhat actually moderate step-by-step actually down. And then the fourth quarter, maybe conservatively is actually at a relatively similar level to the previous year. So there's opportunities and risks that are attached to that, that Jens did talk about already. which is related to, on the one hand, if actually this conflict lasts longer and inventories or respective availability of product actually will continue to be scarce and oil prices will actually remain higher, that might actually pose an opportunity for us next to the underlying initiatives continuing to actually gain traction. And then on the risk side and in our previous increased guidance, we were emphasizing on that a bit more than we do today. If we actually see demand destruction happening, which I really underpin. We haven't seen a sign of at this point in time. Instead, actually, volumes are flattish even with a good improvement on the -- with the sequential improvement in both areas. BSP and BES. And year-on-year, you see actually BSP very positive and only maybe slight decreases on the BES side as Jens actualy has said. Only if we actually see the demand destruction happening, we might actually move down on that towards the lower end. I hope that gives you a little bit of guidance on that.

Our next question comes from Tristan Lamotte with Deutsche Bank.

The first one is just a bit of a follow-up from what you just said. I just wanted to check as a kind of -- to me, it seems like a kind of conservatism in the guidance given that 1.45 implies 680 in H2, having done 717 in H1. You just did 463 in Q2. So you could get to the top end with a big drop down in Q3 to 380 and then a 300 in Q4. So I just want to understand, -- is that kind of conservatism? Or are you really seeing that level of quite extreme drop quarter-on-quarter? Maybe leave it there for the first question and come back in the next.

The level of clarity in terms of the market environment is obviously not really improving at this point in time, right? So we -- what we can say is that we haven't seen signs of demand destruction happening at this stage. And what we can say as well is that we have benefited from the higher pricing environment. that benefit, as I've discussed on one of the previous questions is obviously higher initially in the second quarter than it will be in the future, definitely. So that is actually coming down in the third quarter. question is, is it actually going to continue to be there, given actually oil price development, given actually opening or closing of the Strait of Hormuz and in fact, as well, is product availability, feedstock availability going to improve that rapidly and the production is going to improve that rapidly when some of the manufacturing sites are still affected by this. So I mean, it's hard to predict what we are actually expecting at this point in time is really what I've said is a decrease of the benefits sequentially month by month into the third quarter and then this to level out at similar levels compared to the previous year in the fourth quarter. If that happens, is obviously a question of what I've just been saying in terms of the market environment.

And maybe second question kind of linked. I'm wondering a little bit about mid-cycle EBITDA, which gets more difficult to think about when we have these kind of quarters of over earning. But I just wanted to understand like in terms of thinking about mid-cycle EBITDA, is the kind of Q1 '26 plus EUR 20 million of retained cost savings after this year, I think if you do your EUR 150 million and retain half -- is that kind of a fair way of thinking about a mid-cycle EBITDA? Or how would you think about that from here? Like is the 2025 level of about EUR 1.3 billion? Is that like a fair starting point?

Obviously, we do have quite a few initiatives that are starting to actually have results that are affecting our overall earnings as well. So we do have improvement in commercial execution. We have improved customer penetration, penetration pricing discipline. The cost reduction program is actually giving us results as well. And I think what we've shown there is that the reason why you don't see this coming in as net savings at this point in time, I mean, to some extent, the previous question on the overall bonus provisions that we are taking, which is an effect of this over performance that we do have. And on the other hand, then as well, the temporary effect of energy and transport costs, given the Middle East effect is there. So what I'm saying is there's underlying effects that are helping us already from our strategic initiatives. And then on the other hand, there are over earnings, but the cost reduction program actually will be showing net savings into the future for sure. Because when you have actually the GP decreasing, you should assume as well that the overhead costs are actually disappearing and as well on the -- on the energy and transport costs, fuel costs actually as well. As a reminder on those costs, we are having the ability and we use it to pass this through gross profit as well. So the technical effect as you see that higher in OpEx, but we actually get these benefits in the gross profit. So in summary, initiatives starting to produce positive effects. And then on top of that, it's not all market volatility.

Makes sense. And then maybe just last one. Are you concerned about the water level for Rhine. And is that something that presents opportunities? Or is it more of a kind of risk.

We don't see it as a main factor. A few years back, there was a situation where it was really tight. I think the industry has learned to deal with it. We have more contingency plan, and we don't see it impact. We took an extra round with the businesses to check on that. And at the moment, no one worries a lot about that.

[Operator Instructions] Our next question comes from Nicole Manion with UBS.

I think you just touched on this in the previous question actually, but I just wanted to come back to it. If I look at your outlook commentary today compared to the ad hoc release in June, at least in the qualitative sense, it does seem like there's a bit more constructiveness there, as you said, not just about the environment, but also on the commercial side. Can you talk a bit more about the specifics of what you mean there and what gives you sort of confidence that you can split that out from the environment? And related to that, obviously, the cost out program is one element of this. Q2 looks like it was sort of fairly strong. I think you've talked about this as a program out to 2027. But I just wondered if there's any more details at this point on kind of the phasing of it through the rest of this year in terms of how you think about sort of splitting that total amount of '26 and '27?

So let me answer that, and then Thomas can add. So on the commercial side, I think we need to get used to that to get growth in many segments. If you don't have industrial, the link between GDP growth and market growth in chemicals, it's not a hardwire link. I think it's quite disconnected. So level of industrial production drives a lot of the demand -- and I think we, as a distributor, we have to get used to getting growth with market share increase, growing with customers that see the value maybe shifting some of their noncore sales over to us in the mid- and low-end segment and get better than that. So a lot of volume growth will have to come with on the specialty side, innovation, customer proximity. And in our case, also the fact that we are full line that we can leverage all the sales people we have. And what I see is that is starting to happen to kind of build a commercial machine and get the people out in the street. What we see now on volumes in the market environment is in my mind, a lot of that improvement is because people are selling more. We are working better together. We worry less about the split. We are starting to correct and motivate people better, it's still a big job to work our sales incentive. And if you look, for example, at the pharma business, we have had quite a lot of success in having the domain experts focus on the big accounts and then leverage essential salespeople to help opening doors to accounts maybe where we were not so active. So I think there is a big self-help element and that has to continue. And I think the underlying approach to growth in, for example, Europe will be that we need to really, really be good at selling at cross-selling, upselling data about the sales, seeing the trends. And also the pricing. We have started in the quarter. And I don't want to AI wash anything. But for example, we have started now to use some. It's actually been quite some good work on AI and pricing. And we start to apply these things. We also start to apply now customer information, analyzing our customer interactions with AI. And there's so much left to do on that front. With our scale, if we can find this balance. I think that's the main growth element in our business. What was your other aspect of that question?

It was around cost actually and expectation, what is in the second half?

Okay. Over to you...

So I mean let me add a few things actually, there are really -- and I'll get to the cost topic as we I mean one of the things that I found in our results quite striking is actually as well as the quality of earnings in the BSP space. So what we have actually seen there is a positive development of the gross profit per tonne I mean, in general, we would not really talk about that figure too much. But in absolute terms and overall, actually in qualitative points, we've actually grown that quite healthily. What does that mean? This is above the level of the ASP increases even. So the price increases have been outperformed by the gross profit increase, and that's not because of actually significant price movements on actually the inventory in the BSP space. So overall, this is actually leading to an improvement in the gross profit margin of 0.6 percentage points. So quite a healthy increase on that and EBITDA conversion even increased by 3.3 percentage points to 38.6% in -- so quite good progression, which is coming from these initiatives Jens was talking about and the success actually in that space. Just to give you a few more numbers actually around that as well. If I then turn over to cost. The run rate in the second quarter of 41, Jens spoke actually about the -- what we are planning for this fiscal year. And our initiatives would actually come to something around EUR 150 million actually in this calendar year already from the initiatives that we are running in our cost efficiency program. So we've achieved this run rate of EUR 41 million. We've had in the second quarter, we've had EUR 27 million in the first quarter to get to EUR 150 million. That was our target and continues to be our target. -- you actually only need to continue that run rate. So we can be quite confident that we have the right initiatives in place. As I said earlier, they are structural in nature, so they will continue to give us benefits into the future. And then we will get to the target level of EUR 200 million to EUR 250 million next year. I guess that gives you a quite good split of what we're expecting to pull forward in terms of savings in an accelerated fashion in this year versus then continuing that program actually next year and delivering more.

And just to add to that we -- Brenntag announced a number many years back. The EUR 250 million that we are talking about now is just proving it to ourselves and proving to you that we can execute and is progressing. Obviously, to be competitive long term -- I mean, the goal is to get to more a big company with more scale effects, that is more competitive, that is more efficient on the supply chain. So it's not a hard stop to the EUR 250 million. We will discuss that more later in the year. the Capital Markets Day. But obviously, this is just the beginning of a productivity raise and competitiveness raise, but we should radically shift our whole platform for how we approach business and that will keep going. So this is just a proof point that we are doing and a much needed proof point because a lot of these costs that we are taking out now is about unleashing the organization, removing bureaucracy, putting the business in the forefront and find this balance between localization and global management and coordination. And so this is just a start of a long journey. We still need to dig into operations much deeper than we do and we need to do the same in sales. But on the sales, our primary focus now is really to get people out on the ground and work together and go after success in a little bit of success for ourselves in volumes, while we are careful with our pricing and hold on to it. So more to come.

Our next question comes from David Symonds with BNP Paribas.

Two for me, please, and I'll take them one at a time. The first one, I think it might have been asked but I didn't catch the answer. Was there an EBITDA benefit from revaluing inventory upwards due to market prices in the second quarter? And if so, how big is it, please?

Yes, I didn't quite catch your question. EBITDA improvements from revaluing the inventory. Did I catch that correct?

Yes, that's right. Yes.

Yes. So at the beginning of the second quarter, what we have actually seen is that we have been able to sell inventory that we had already in our warehouses at the respective market price. So the EBITDA is not from revaluing actually that inventory. It is from the gradual obviously move, the move towards higher price points at the same time using actually cheaper inventory in that context. So GP, as a consequence, GP margin was actually higher. Now over the course of the second quarter, the replenishment costs adjusted to what we actually would see in terms of market prices for the replenishment and then our gross profit margin continued to be higher, albeit it not as high as obviously at the beginning in terms of the delta. So that you see as well flowing through then on the cash flow in terms of actually building up in line with sales, as I was saying to you earlier, obviously, the overall inventory levels with the replenishment costs because that's all completely driven by price. And on the other hand, actually accounts receivable accounts payable, stepping up in line with each other in that period as well. So the back of the working capital increase is coming from the higher prices of the replenishment and not from a change in the volume of inventory. And in terms of gross profit, I just explained at the curve that you actually have observed in the second quarter, initially higher impact towards the end, a lower one. Nevertheless, really good performance. And as we have been saying, in terms of volumes, we see this broadly stable overall, slight decrease in BS in the essential side and actually improvements of volumes on the specialty side.

Yes, that's very great. So I guess your inventory turn was so high that you didn't have any inventory to revalue upwards the end of the quarter basically.

Exactly I'm sorry, actually is indeed improving continuously. So the efficiency that we manage actually working capital is continuing to increase. And if you look at the overall situation towards the end of the quarter, that was probably a peak, at least so far, it was the peak of our working capital and we are even seeing towards the beginning of the third quarter, an improvement already in releasing some smaller amounts of working capital.

Great. And then my second question is on Nutrition in Life Sciences. So you mentioned higher demand for value-added products, but overall mix volume trends. Could you talk about what was the drag on Nutrition? Was that higher Chinese competition? Or is that something else?

No. We are sourcing quite a lot actually from China Nutrition. It's quite a developed flow. And we don't see that impact. So there are one temporary aspect, and that is the U.S., where we suffered a bit from point regression of some previous acquisitions, and we are fixing that. So there, we see a volume down, but it's improving. It was worse. I mean, we are getting our arms around the situation step-by-step. The other aspect on the volume is that we haven't seen the price impact, one would expect with fertilizer and a lot of the raw materials that come from Middle East on fertilizers, that would create upward price pressure and then people maybe get a bit more inventory, the producers, our customers. But we haven't seen any of that in that business. So the whole April, March, April, we didn't really see it in Nutrition. So we would expect that the pricing in Nutrition at some stage will increase -- as you see, the Middle Eastern effect coming in, in a delayed manner through mainly fertilizers and materials for fertilizers where a lot of it comes from the Middle East. So that's the next harvest, so to say. But -- and then on nutrition, if you look in Europe, where we are pretty much flat. There, the question is, does eating habits impact the business or not. I'm still too new to the game to say if that's the case and if we need to work harder to refocus the business or because we haven't seen an uptick, but it's not is not bad either. It's just that the market we see is very flat in Europe, and we are quite big in Europe. So that's yet to see. But all the efforts you see on cost reduction focus on sales, working together between the essentials and nutrition that is happening. And we are also sharpening sales incentives. We're getting into that. We are still at the early stage of that experiment we did. So let's see over the coming quarters, how that develops. And also, let's see if -- my gut tells me that we will see a price impact start to come into nutrition -- coming towards the end of this year. But let's see.

Our last question comes from Eric Wilmer with Kempen.

I think versus your peers, it seems that both the sequential and year-on-year jump of your growth and operating margins for the specialty business was somewhat behind your pure-play peers. I know that you said some -- what you said about the flattish Food & Nutrition business, but does the difference also say something about the overall pricing strategy on the specialty side, on the life sciences side, perhaps being less aggressive? Or is it perhaps mainly explained by a difference in product portfolio? And then second question, can you also talk us through what you're currently seeing in terms of Asian competition, obviously discussed a lot previously, now a bit more to the background. But are you seeing any signs that things are perhaps normalizing in Asia itself. And hence, the Chinese suppliers are starting to refocus on the now higher European price levels?

Okay, so on the specialty, we obviously have -- we're a different company than some of the 100% , the so-called pure-plays into specialty. So it is a little bit hard to compare. And I think when I look at the numbers, you could say the margin uplift and the commercial uplift was probably better than some of those. And then on -- so it varies with how we compare with them. And I don't spend so much time on it. But I think that when I look at the businesses, Nutrition is a part of it. That's our biggest specialty business, that we are reporting on. And there, we had flat volumes. So then we had one of the businesses where we grew well into double digit, where we know we did better than many competitors. So I think maybe our portfolio with a relatively strong position in Nutrition could have weighed down on that. That doesn't mean we don't really, really like the Nutrition business is one of our absolute core business and probably our most mature specialty business. So I wouldn't put too much into it. And I would also say that we have removed the quite high focus on gross profit per tonne. We allow ourselves to be more aggressive, but we don't -- we haven't gone extreme on it. We have unleashed it, and I see volume improvements in alot of markets and we want to protect volumes in that business. Beauty & Care, for example, has developed really, really nicely in the quarter. And a lot of that is because we went into some segments where we before held back growth. And now we are going after the growth. So yes, we have some work to do to be a bit more aggressive. I would also like to say that being not the absolute leader in many of those compared to the so-called pure-plays. We also have some opportunities that we see in the market that we are not quite as tied up. So when it comes to sourcing, for example, from Asia in some segments, we are more free than other people, and that might turn into benefit going forward there. So that's that. If we then look at the Chinese we would expect -- I mean, the market in China is relatively flattish. There is overcapacity on chemicals. So we expect the Chinese to come back in Latin America. We see in APAC that they're back and they're pushing for volumes aggressively. So it's happening, and that's we have considered some of that in our guidance also that it will be a bit tougher environment here in the second half year.

Yes, sure. Yes. So I mean, just a few things to add. I mean, in particular on this topic, you have been raising on the quality of earnings, I guess, and the improvements that we have seen in the BSP space. So I mean just I'd like to actually just make a few comments on that. So what we have seen quarter-on-quarter is really healthy sequential improvement on volumes in both BSP and BS but as well and in particular, on BSP. We've seen also just really underpinning again the volume improvement year-on-year in the specialty space. So Material Science, as Jens was talking about, actually has really significantly improved Nutrition, obviously in line with expectations, but not yet that outperforming compared actually to Material Science. Then the other part that is important to note in that is that whilst we don't focus on gross profit, but on, we have seen quite positive development in that year-on-year as well. So overall, let me reemphasize, and I think that's quite important to compare here and look at our organic improvement gross profit margin, actually, we have overall increased 0.6 percentage points, and the EBITDA conversion actually increased in BSP by 3.3 percentage points year-on-year. So quite a significant improvement versus the last year. You can take those numbers and compare them with what you want to compare it to.

That's very helpful, Thomas and Jens. And maybe as a very brief follow-up on what you said, Jens, on the Chinese competition coming back the expectation that it will come back in Latin America and that they are back in Asia. Is this fully about Essentials? Or are you also seeing that this is starting to happen in -- on the specialty side of things?

I think there is no one can ignore the Chinese in the specialties on the specialist side and distribution is much needed for a lot of that. So it's easier -- it's much easier to bring in essential product., on the specialty side is quite cumbersome to get them into the market. So I think it's a different dynamic on the specialty side. I see it as a benefit. And the more untied your hands are the bigger the benefit for you. So I see us as a benefactor of the Chinese on the specialty. And then on the essential, we need to work more on it and embrace it instead of seeing it only as a threat and at the same time, where there are other ways into the market. We need to be more aggressive for example, in Latin America and fight back in a different way. So you have the whole -- you have a couple of dimensions of it. But I don't see it as something that -- it's a different dynamic on the specialty, as I see it.

Our final question comes from Chetan Udeshi with JPMorgan.

I had a few questions, maybe hopefully quick. So based on your comments on Q4, my calculation was you're implying that your Q3 assumption on EBITDA is somewhere between EUR 400 million to EUR 420 million. I was just curious if you can confirm that. Second, in terms of bonus provisions, it seems you have increased the provision by about EUR 40 million in H1, if you have similar in H2, I don't know. But I'm just curious, when you look at your bonus provisions for this year, how does that compare to your normal year? Would it be in line with normal year? Because I assume that last year, you had probably cut to 0, so you're just getting back to normal year now. So in other words, this is not something that we will necessarily reverse, you probably won't have the same level of provision next year, but you probably shouldn't reverse in the bridge. And the third one is to Jens. You were talking about success with commercial sales force, but I'm sorry, I don't see that in your numbers to some extent on volumes because you said volumes are basically flat. So how do we see that in your numbers? Because it feels like the big increase that you've seen in your GP is all GP per unit, because as you also have referred to the volumes are actually flat. So how do we see that traction in terms of commercial success going forward? And the last question, maybe can you remind us what is your cash out that is left on restructuring programs. So in other words, how much cash do you have to pay out and also the litigation on tax. I remember from memory, you had like low double-digit million of provision, how much of that has been cashed out? Or is this still going to come in the future?

That's many questions there. Thomas, I suggest you start with the first two or three.

Yes. So your first question was around actually the fourth quarter. So -- and in terms of sequencing of the guidance, what I had said is that -- if you look at obviously the year-to-date overperformance that is, I think, relatively clear if you compare that actually to the previous year. And then what we were saying what I was saying is that in the third quarter, we are expecting actually this overall performance month by month to gradually decrease. And then -- the midpoint of the guidance assumes that for the fourth quarter, this actually normalizes back, if you like. So you are closer to the previous year figures and far away from it. It's probably as much as I would like to give you the details on that earlier, but I think it should be helpful for you to understand that. In terms of bonus provisions, then what should you assume? Why are we showing this in the bridge? Because the previous year, we were constantly reducing the bonus provisions from the normal level down in a negative -- into the negative territory. Because I mean, ultimately, there were some regions in which we still had smaller payouts. But if you look at the total company perspective, this was relatively small and minimal compared to this year. So obviously, this year then, with the really good performance compared to our initial guidance. The bonus provisions are moving into positive territory from the normal level. So as a consequence, if this then normalizes out in a year where you are performing according to your expectations and what you actually have said is as guidance and incentive systems, you actually land somewhere in the middle of such provisions. But the year-on-year comparison obviously has to take into account that in the previous year, we have been underperforming. That's why we show you this, I think, quite transparent in this context. So then the next question was on the cash out of provision with regards to which topic? Remind me because that I missed actually -- can you repeat that, please, which provision you were referring to.

Restructuring and the tax litigation that you've been having for past many years in the U.S.

So I mean, on the tax side, there's not much payout at this point in time, and we are well provided to deal with this risk in accordance to the risk profile that we are seeing there. So there's not -- there's no increase in the risk profile as we actually see this at this stage, but no real resolution of it as well but that's why so we continue to be in the same spot that we actually have been a couple of quarters ago. So no payout actually happening. In terms of then the restructuring provisions that we are building every quarter or in fact, every month, whenever we are touching topic that is actually subject to restructuring provisions. It depends a little bit how fast this gets actually resolved. So obviously, I mean, when you're a restructuring team and you are setting free head count and you're concluding that you don't need to call that head count anymore. -- then over time, this will be paid out. So expect this to be a revolving topic across using these provisions so that we will be continuously paying this out, and we have already paid out, against some of those provisions. So this is more whilst you're doing transformation, a normal process that is revolving every month. Hope that's clear.

Yes.

Okay. There was one left on the volumes Okay. We don't disclose volumes per business. And so you can't see it in the numbers with the volumes. And obviously, we have a sum of all the businesses, and I give very broad brush comments on volume development. So I think the volume development has been encouraging. And when we look at share of wallet and winning customers back, I'll give you an example where I see it as an improvement in the market, we just take in the U.S. where -- we have done a drive, and we see the number of days and a number of customer visits, number of opportunities. And just this year, we have 1,000 customers that didn't buy from us that have been dormant that we have gotten back on the start to buy from us after a lot of activity with them. So I'm encouraged what -- how we are progressing on the commercial side and how much more time we spend and how our hit rates and volumes improve share volumes improve. But again, it's early days in this, so a lot more work remains. But I'm not going to sit by business, a volume of this market volume of that, and we did this, we don't disclose numbers on that level. Okay. I think, Andre, we need to finish because we have another activity starting now soon, Andre.

Thank you. This concludes the Q&A session. I will now hand back to Andre Simon for closing remarks.

Yes. Thank you, Jenny. This brings us to the end of the conference call. In case of further questions, please do not hesitate to reach out to us in the IR team. Our results for the third quarter this year will be published on November 11. And let me please also remind you on our Capital Markets Day 2026, which will take place on November 12. So ladies and gentlemen, with that, thank you very much for joining us today. Have a good day and good bye.

This concludes today's call. Thank you, everyone, for joining. You may now disconnect.