Joshua Spector: Thanks, Guillermo. And if I could just ask specifically on Personal Care. I mean it was interesting double-digit pricing. So that stepped up from where you were. I think a lot of other specialty markets, we’ve seen pricing more level off. I guess, is there any risk that you’re losing share going after that additional pricing?
Guillermo Novo: No. I think if you look at the numbers and we’re seeing it already in January, again, we can’t — our initial — like everybody else, initial view was, look, quarter was down. It must be the market. We try to align the first explanation to the narrative of the market. The markets are down. Therefore, it must be that the markets are down. As we did our analysis, what we saw is, well, no, it’s China and Europe distributors with the majority. So 50% — probably the gap was China and 50% was distributors. I mean there’s an overlap on the two. But it’s — these reset items, obviously, were the big impact, I would say, versus prior year. Versus expectations, we have seen some softening in demand. But if you see in January, the orders have bounced back for Personal Care.
If we look at demand and we put control — upper and lower control limits. We’re just not looking at one number. But demand has bounced back to the midpoint of our control limits in terms of demand for Personal Care in January. It contrast that in Specialty Additives, we have seen an improvement, but demand has bounced back into the control limits, but they’re more at the bottom end of the control limit. So our view is, pharma remains strong, Personal Care normalizes as we move forward, these reset items get more behind us and perform more in line with historic parameters. And our Specialty Additives, it’s going to be a little bit of a mix, depending on the segments that we’re on, but it’s going to continue to improve, but probably will be a little bit softer than we expected at the beginning of the year.
Joshua Spector: Okay. Thank you.
Guillermo Novo: Okay.
Operator: Thank you. Again one moment please for our next question. Our next question will come from David Begleiter of Deutsche Bank. Your line is open.
David Begleiter: Thank you. Good morning. Hi, Guillermo. Just on price cost tailwinds, what were they in Q1? What do you expect for Q2 and what’s embedded in the guidance for the full year?
Guillermo Novo: Okay. So our assumption is that we will continue to recover any inflationary pressures that we get. We did it last year, I think, in the first quarter. More — it wasn’t broad-based like last year, more specific to product lines. Like we said, cost for example, is a significant cost increase for us in the first quarter, and we took action on those items. So I think, as we move forward, it’s going to be much more surgical. If needed, we probably will see things slow down from an inflationary pressure, but again, we’ll have to react as that moves forward. Most of the inflation has been around energy, especially in Europe and specific raw materials where the supply demand imbalances had a big impact. And again, a lot of that has mostly been driven in Europe.
So I think we’re starting in a good point. We don’t have to recover. We’re not behind the curve. We’re on the curve. And as we said, last year, we took actions to protect our margins. We didn’t improve through inflationary pricing. We just did what we need to do to stay whole, and the improvement was driven more by that mix improvement. And we will continue to — the mix improvement is not just because of the supply demand dynamics, that’s part of our strategy, of which areas we want to focus on long term, where are we going to be investing. That mix improvement is driving our portfolio to the areas where we’re making all the capital investments in the coming year.
David Begleiter: Thank you for that. And just on your outlook slide, you talked about the potential need for more inventory control and absorbing actions. Could you give a little more color on what you mean by that?
Guillermo Novo: Yeah. I think although we’re forecasting that we’re still in demand, this quarter, for example, as we said — I think we said in the last call, we weren’t going to take — we were not going to take significant destocking actions because we were — there was a lot of uncertainty, and we didn’t want to get caught into a situation like 2021, where something happens and suddenly things get very tight. So that was sort of our position there. So the issue is going to be more if demand comes down. The one thing that’s not in our model is, if we had to reduce production to meet us up, that would be a headwind for us that is not in our model. And we didn’t want to highlight it for everybody that, that’s just one of the risks.
Everything we’re trying to do now is, given what the uncertainty is, make sure that we’re transparent. We don’t know where it’s going, but let our investors decide if they want to — what perspectives they have on some of these areas. And I would say, absorption would be a potential headwind if things continue to be or get softer as we move forward. I don’t think that — that’s not our current model right now, but it’s something that we continue to monitor. We are not going to rebuild. We’re not going to drive absorption by building inventory. Working capital discipline is something that’s very important to us that we’re going to maintain.
David Begleiter: Thank you.
Operator: Thank you. One moment please for our next question. Our next question will come from the line of John McNulty of BMO. Your line is open.
