Dirk Elvermann: Yes. Thanks for your questions. Maybe on the interest cost first. Yes, we are in a higher cost environment, but it’s a mixed picture because, on the one hand side, we are financing in the various regions. China, for instance, is still a low interest cost region. And all together, you also saw that we were able to keep our debt level on the level of last year same time. So, therefore, yes, the interest cost is going up. You see that in our financial results also, but the effect is limited. We are talking on the short-term time for the commercial papers. We are talking roughly 30 bps. And on the longer term financing, we are talking roughly 25 bps, and this has an impact on the financial results, I’d say, roughly in a double-digit area.
On the inventories, as I said, we vigorously will go forward, trim the inventories further without sacrificing because we feel that we are sitting on a to big back of inventories. So, what we are doing is rather structurally optimizing over time, but there is no arbitraging. Cash is more worse than the earnings, but we really try to balance that out. And rather, I see it like bringing inventory levels back to the healthy level rather than sacrificing anything else.
Jaideep Pandya: So, the inventories are more on the finished goods or on raw materials? Or is it–
Dirk Elvermann: You have it everywhere. You have it on the raw materials, on the finished in transit, all categories we are looking into.
Jaideep Pandya: Thank you.
Stefanie Wettberg: So, now we move on to Andreas Heine, Stifel. Please go ahead.
Andreas Heine: Yes, two very quick ones. The first is on the volume sequential decline. Is that what you think is a normal seasonal pattern? Or is that in some areas, more pronounced? May you can highlight where you see still a downward trend in demand. And lastly then on inventories, you have shown the various indicators in industry. So, if I look on one from the chemical industry itself from — there, inventories are seen as much too high and the chemical industry is an important customer for BASF. How do you see within the chemical industry inventory levels?
Dirk Elvermann: So, the first one on the — excuse me, could you mute yourself. Thanks. On the volumes for the sequential decline, I think it is important to understand without Ag, which is, by its nature, a cyclical business — sorry, a seasonal business, we do not have seen volume decline between the second quarter and the third quarter. So, i.e., without Ag, which is a seasonal business, we have flat volume development, as was already indicated by Martin also in the Q2 call that we see a bottoming out in terms of the volume trend is exactly what has happened. Inventories, we talk about our inventory management. And of course, we are also seeing inventory efforts going on at our customers. And this is also explaining why we currently have this supply/demand balance where it stands and the margin pressure that we have.
Ultimately, this is now going on for quite a while. And we see and believe, talking to our 82,000 customers or at least many of them, that the destocking and tight inventory management as it was done is coming to an end. So, we see that bottoming out and will eventually then also see demand again coming up. The magic question is when exactly is the tipping point. But for the time being, of course, this prudence in inventory management, also in our sectors that we are servicing, of course, plays a role.
Stefanie Wettberg: Okay. So, with that, we move on to Laurent Favre, BNP.
Laurent Favre: Yes. thank you, Stefanie. Good morning. First question is on the rating. Dirk, you mentioned you’ve highlighted that you’ve got a stronger rating than peers. I was wondering if you could remind us why is it so important for a business such as yours to have a A rating? And is the rating more or less important, keeping a stable dividend? First question. The second question is — but I’m a bit confused on the Zhanjiang site and the — the €4 billion CapEx. Martin, you’ve mentioned that you may comment on budget on — doesn’t seem to be the area where you’ve got the CapEx cut. So, are you still — I guess, is it all about cutting everything else? Or are you also implying there’s a change in the start of Phase 1 and Phase 2 of 2025 and 2028. So, is some of the cut in CapEx just falling FY 2027? Thank you.
Dirk Elvermann: Yes. Maybe I’ll take the first question on credit rating. Indeed, I can confirm that an A credit rating is important for us. We’re also able in this challenging year maintain the A rating. We are at A- now at Standard & Poor’s and equivalent at Moody’s, and we are at A flat at Fitch. It is an evidence of our strong balance sheet that also Martin talked about. And so therefore, also, of course, a, I think, sound justification for strong dividend because what we try to do is really balance out for the equity and for the debt capital markets. And we are demonstrating here with the strong rating, also the strength of our balance. And second one, also the very strong cash performance that is taken into account by the rating agents.
So, it is important for us. It is not the one leading indicator for us. Of course, we are looking into other things as well, but it is one of the cornerstones of our financial policy. And thus, we are happy that we can also in difficult times, preserve a strong A rating.
Martin Brudermüller: So, Laurent, maybe again a little bit on CapEx. I mean, first of all, we are very happy that we made great contracts at the right moment, I have to say, for Zhanjiang. As basically most is signed, there’s not a huge risk anymore that things could get out of control. The only thing you have is the RMB-euro exchange rates because we account everything in euro. So, from that perspective, we feel really good when it comes to that project. And I think I mentioned that we might even come out at the very end, a little bit lower than we expected over there. We also talked about supply/demand and everything. And you know that if you have such a big project that you have the timing — the best time to enter the market.
You can never really plan this. So, I would say the Phase 2, which is then going to come where we work on. We will look into this to a later time and we then really also know what is the right products. Is there some products that go into a Phase 3? Others go from 3 to 2. So, we have not defined that final part, and we might take adaptations depending on the market situation, but that’s too early to say. What we really want to do is that we take savings out through the whole portfolio through all the businesses. I think you know that we have normally more projects than actually capital, which is good because all the investment projects are in a natural competition also internally. And we will look then on the different market perspectives, how we stagger them, how we prioritize them.
