Earnings call transcript: IMCD Q3 2025 sees mixed results amid challenges

IMCD NV reported its third-quarter 2025 earnings, revealing a mixed performance in a challenging market environment. The company experienced a 5% growth in gross profit on a constant currency basis, reaching €927 million. However, the net result decreased by 9%, reflecting the ongoing macroeconomic pressures. The stock price saw a decline of 1.51% following the announcement, closing at €88.78. According to InvestingPro data, IMCD shares have declined 37.15% over the past year and are currently trading significantly below their Fair Value, suggesting potential upside for investors willing to look beyond short-term challenges.

Key Takeaways

• Gross profit increased by 5% on a constant currency basis.
• Net result fell by 9%, highlighting economic challenges.
• Stock price dropped by 1.51% post-announcement.
• Six acquisitions in 2025 added €340 million in revenue.
• Focus on digital initiatives and AI for business optimization.

Company Performance

IMCD’s performance in Q3 2025 highlighted resilience amidst global economic headwinds. The company managed to grow its gross profit by 5% on a constant currency basis, despite facing pricing pressures and currency headwinds in the APAC and Americas regions. However, the 9% decrease in net results underscores the challenges posed by soft demand and increased competition, particularly from Chinese firms.

Financial Highlights

• Revenue: €927 million, up 5% on a constant currency basis.
• Earnings before interest, taxes, and amortization (EBITRA): €394 million, up 1%.
• Free cash flow: €284 million, slightly lower than the previous year.
• Gross profit margin: 25.2%, a slight decrease.
• Cash conversion ratio: 71%.

Outlook & Guidance

Looking forward, IMCD remains confident in its long-term outlook, expecting the pharmaceutical market to normalize in Q1 2026. The company aims to maintain a high cash conversion ratio, targeting the high 80% to low 90% range. With a leverage ratio around 2.6x EBITRA, IMCD sees potential for mergers and acquisitions in 2026.

Executive Commentary

Marcus Jordan, CEO, remarked, "Despite the ongoing uncertainties in global trade and tariffs, our business model has shown resilience." CFO Hans Kooijmans added, "It is not so much about permanently increasing your margin percentage. It is more about growing the absolute amount." These comments reflect the company’s focus on sustainable growth amid challenging conditions.

Risks and Challenges

• Macroeconomic pressures: Global economic uncertainties and soft demand could impact future performance.
• Competition: Increased competition from Chinese firms poses a threat to market share.
• Currency fluctuations: Currency headwinds in APAC and Americas regions may affect profitability.
• Pricing pressure: Ongoing pricing pressure could squeeze margins.
• Supply chain issues: Just-in-time deliveries and limited order visibility present logistical challenges.

Q&A

During the earnings call, analysts inquired about the stability of pricing and the impact of Chinese competition. Executives noted that pricing remains stable with minor fluctuations, and while competition from China is present, it is not significantly intensifying. The food and nutrition segment was highlighted as the most stable, while the pharmaceutical segment is experiencing temporary softness.

Full transcript - IMCD NV (IMCD) Q3 2025:

Conference Operator: Welcome to the IMCD 2025 First Nine Months Results Conference Call, hosted by Marcus Jordan, CEO, and Hans Kooijmans, CFO. For the first part of this call, all participants will be in listen-only mode, and afterwards, there will be a question-and-answer session. If you wish to ask a question, please press pound key five on your telephone keypad. I would now like to give the floor to Marcus Jordan. Mr. Jordan, please go ahead.

Marcus Jordan, CEO, IMCD: Thank you very much, Alba. Good morning to you all and a warm welcome. I’m Marcus Jordan, and I’m here today with our CFO, Hans Kooijmans, for the 2025 First Nine Months Results, which we published in a press release earlier this morning. The first nine months of 2025 were generally characterized by challenging market conditions as a result of continued macroeconomic uncertainty, particularly around tariffs across all regions. This resulted in softer demand across a number of markets, limited order visibility, and just-in-time deliveries. Moving on to the first nine months’ numbers, you will find a summary of our financial results on slide four, whereby, considering these continued challenging macroeconomic conditions, I am pleased with our gross profit growth in the first nine months, which is up 5% on a constant currency basis to EUR 927 million.

This increase is driven by a combination of organic performance, successful acquisitions, and resilient gross profit margins. EBITRA also increased by 1% on a constant currency basis to EUR 394 million, and our cash flow of EUR 284 million was a bit lower compared with the first nine months of 2024, driven by a combination of a slightly lower EBITRA and a modest increase in working capital investments. As we mentioned in the half-year call, we are actively working on reducing our inventory amounts back to historical levels, but I also want to stress how important it is that during these uncertain times, we have inventory in place to fulfill the demands of our customers. If we now look at M&A, we announced four acquisitions in the first half of 2025, and in Q3, we were very happy to add another two.

In August, we announced the acquisition of Tilmans in Italy, which operates across a broad range of markets, including coatings and construction, food and nutrition, and water treatment. Tilmans have 78 people and had a revenue of EUR 143 million in 2024. I’m very proud of this acquisition as we become a real powerhouse for our partners, teams, and suppliers in Italy. In October, we also announced the acquisition of Don Young FT in South Korea, a company active in beauty and personal care. With 14 people and EUR 34 million in revenue, we strengthened our position in South Korea, which, as you know, is one of the most innovative and largest beauty and personal care markets in the world. On a full-year basis, these six acquisitions will add around EUR 340 million revenue and 185 employees, based on their last full-year numbers before acquisition.

Looking at our business segments, we have seen pharmaceuticals, food, and nutrition having the most solid performance in the first nine months, and our beauty and personal care and industrial segments being generally soft in demand across the three regions. Related to demand, we get a lot of questions around Chinese competition in our various markets, and during this year, it is fair to say that we have seen more competition from China. Whilst we are somewhat protected from this due to our specialty-focused portfolio, we have seen some pricing pressure, primarily on the semi-specialty components of our portfolio, and especially in the APAC and LATAM countries.

It is important to highlight that competition from China is nothing new to us, and as we have done throughout the history of IMCD, we regularly review the portfolio we have in all countries and markets to ensure we are for the longer-term competitive and, where necessary, adapt our portfolio accordingly, again with the long-term growth of the company in mind. To summarize, despite the ongoing uncertainties in global trade and tariffs, our business model has shown resilience during the first nine months of the year. We are further intensifying our efforts to drive cost-effectiveness and commercial excellence throughout the company and ensuring that we have the right people in the right positions for the future. We are in the process of further strengthening our sales organization, both those on the road and inside sales specialists.

At the same time, we’re taking advantage of our digital initiatives to optimize other areas of the business. Overall, this will result in a reduction in the number of FTEs going forward. We are well positioned for the future through our adaptable specialty-focused portfolio, geographic and market diversity combined with advanced digital and supply chain capabilities, and we remain confident in the strength and long-term outlook of our asset-light business model. I would now like to hand over to our CFO, Hans Kooijmans, who will give you an update on the numbers.

Hans Kooijmans, CFO, IMCD: Thank you, Marcus, and good morning, ladies and gentlemen. I will, as usual, briefly summarize IMCD’s results for the first nine months before we go to Q&A. I would like to start on page seven of the presentation. On this page, you can see forex-adjusted revenue and gross profit both increased with respectively 6% and 5% compared to last year. Despite the challenging conditions Marcus just mentioned, we still achieved a modest level of organic gross profit growth, along with a 4% increase as a result of the first-time inclusion of acquired businesses. Gross profit in percentage of revenue slightly decreased to 25.2%, and about half of this 0.2% decrease is the result of the negative impact from acquisitions, acquisitions with, on average, a lower gross profit margin than group average.

Furthermore, we saw the usual fluctuations in our product mix, currency impacts, and changes in local market conditions. Forex-adjusted operating EBITRA, which increased 1% to EUR 394 million, and this increase resulted from an organic decline of 3% that was more than compensated by the positive impact of the first-time inclusion of the acquisitions. The reported EBITRA and conversion margin both decreased, and this is mainly the result of gross profit growth that could not fully compensate inflation-driven own-cost growth. I mean, when you look at the own-cost growth, the year-to-date organic own-cost growth came down to just below 4%. Compared to September 2024, the number of full-time employees normalized to the impact of acquisitions slightly decreased. Forex-adjusted net result on the next line decreased 9%, and in our trading updates, we usually do not break down this difference in detail.

However, it’s fair to assume the main factors are similar to what you saw in our half-year results: lower reported EBITRA and higher finance costs as the main drivers. These higher finance costs in year-to-date 2025 are mainly the result of a bit more forex losses and lower gains from fair value adjustments of different considerations. Further, we reported and will report additional costs related to one-off adjustments to the organization. These additional cost items are partly compensated by lower tax costs. At year-end, you could expect higher-than-usual additional costs related to one-off adjustments to the organization. You know, and we told you before, that we are always cost-conscious and prudent with our cost structure.

However, as indicated also by market, current market conditions, but also opportunities as a result of our digital investments, allow us to reduce our fixed cost base and adjust the organization to changes in market conditions. Of free cash flow, we report a cash conversion margin of 71%, which is slightly lower than the same period of last year. As mentioned in our previous call, we took additional measures to reduce our working capital investment, whereby we are careful to carry sufficient stock to fulfill our customer requirements. In our previous call, when we discussed the end-of-June figures, we reported that our working capital days were six days higher than the same period of last year.

End of September, we were able to reduce this gap to three days, and we feel confident that we will report at year-end a cash conversion ratio somewhere around a high 80% or a low 90% number. On the next page, slide eight, you will find a summary of a few key figures split into the various regional operating segments. When looking at top-line and gross profit, we were able to grow organic, as you can see, in all three regions despite these difficult market conditions. We also had quite some currency headwinds when translating local results into the EUR, most significant in APAC and the Americas. This currency translation impact is easy to quantify and report as a separate line, but more complicated is calculating the operational impact of these currency fluctuations. It’s obvious that these currency fluctuations had a negative impact.

In regions where it is common to quote in dollars and invoice in local currency. Therefore, it is fair to assume that these currency fluctuations this year negatively impacted our results in LATAM, APAC, and a few EMEA countries. At the bottom of this slide, you will find EBITRA margin, conversion margin per segment, and we report a negative development in three of the four segments. The only positive exception is holdings, where the cost and percentage of revenue ratio slightly improved due to lower holding cost. EMEA reports the biggest EBITRA and conversion margin deviation compared to last year. As mentioned in the previous call, you should keep in mind that the majority of the global business group costs are reported in the EMEA region, and this then automatically leads to an, in general, higher cost base.

The biggest swings in results during the year were reported in the Americas and Asia-Pacific. The Americas and APAC reported, respectively, a positive 21% and 7% organic EBITRA growth in the first quarter, which turned into a minus 4% and minus 3% year-to-date September. Marcus gave you already a bit of color on the background. On page nine, a summary of IMCD’s free cash flow. The absolute amount of free cash flow was EUR 16 million lower than last year, and the cash conversion ratio was 71%. Lower EBITRA, slightly higher working capital investment, were the main drivers of the difference compared to last year. As mentioned before, we are confident that we will report at year-end a cash conversion ratio somewhere around a high 80% or a low 90% number. Page 10, update on net debt and leverage.

Whereby net debt at the end of September was close to EUR 1.5 billion, slightly lower than end of September last year and EUR 228 million higher than the end of December. The year-to-date increase of our net debt position was, amongst others, impacted by a combination of on the one hand positive operating cash flows combined with cash outflows of EUR 281 million as a result of acquisitions and EUR 127 million dividend payments. Our reported leverage ratio, including the full-year impact of acquisitions done, was 2.6 times EBITRA, which is similar to the leverage based on the definitions in our loan documentation. Last but not least, on page 12, you will find our outlook for 2025, and I assume everybody has already read the text in the press release. Therefore, I don’t want to repeat it again loud.

I would like to hand over to Al, by the operator, to open the lines for Q&A.

Conference Operator: Thank you very much. Ladies and gentlemen, we are now ready to take your questions. If you wish to ask a question, please press pound key five on your telephone keypad. Our first question comes from Annelise Vermeulen from Morgan Stanley. Please go ahead.

Hi, good morning, Marcus. Good morning, Hans. I have two questions, please. Firstly, could you talk a little bit about how pricing has developed over the quarter? We had talked earlier in the year about stabilization, but I’m just wondering now how the combination of tariff-driven inflation and some of the increased competition you mentioned is driving pricing and how that has trended relative to your expectations. Secondly, just on the competition from Chinese suppliers, I think we spoke about this at the half-year. Could you talk a little bit about how that has developed during Q3? Have you seen that competition step up, particularly as tariff noise has increased, and do you expect that to continue for the foreseeable future? In that context, you mentioned keeping the portfolio under review.

Are there any structural changes that you’re considering if you assume that that competitive pressure will continue? Thank you.

Marcus Jordan, CEO, IMCD: Good morning, Annelise. Thank you very much for the questions. I think in terms of pricing, what we can say there is that we haven’t seen any real significant change during the quarter. We’ve seen, I would say, a little bit more normal pricing behavior where for some product lines we’ve seen small increases. Also, related to your second question, we have continued to see pricing pressure in certain areas and business lines on the semi-specialty side from China. I would say nothing, I would say, changed significantly since the last quarter. Moving on to competition from China, again, I wouldn’t say that we’ve seen a very significant increase in the third quarter versus what we’ve seen in the past. I think generally we have seen more competition this year than last.

I think also important to stress, as I mentioned, Chinese competition is nothing new. I think then related to the structural change and how we review the portfolio, I think important to mention that we’ve had Asia sourcing offices in place in India and China for more than 20 years. Historically, those were very much focused on some of the product lines that actually were predominantly manufactured there. Pharmaceutical actives is a good example. As you can imagine, we also use those sourcing offices sometimes to look at what are the white spots that we’ve got, particularly in countries that we’re maybe freshly entering into.

We do keep a very close eye on what is happening within the, let’s say, China manufacturers, looking at our portfolio, still remaining very loyal to those long-term partners that we have, and always being, I think, looking at the long-term growth of the company, making sure that we do not do knee-jerk reactions to what could be short-term market conditions. Again, I think the beauty of our business model is we have got a very agile product portfolio. We can adapt where we need to. Again, let’s be cautious and make sure that we are doing that with a very long-term view.

That’s very helpful. Thank you.

Conference Operator: The next question comes from Matthew Yates from the Bank of America. Please go ahead.

Hey, good morning, everyone. I’d really like just to continue on the theme of that competitive pressure, really. Looking at your Asian performance, it’d be helpful to unpack that a little bit. I mean, flat-ish top line. Feels respectable in light of the tariff uncertainty that the world is operating in. Then the 13% decline organically in EBITRA. Suggests some competitive pressure or investment that you’re making to drive future growth. I don’t know. Marcus, when you talk about portfolio review, that to me just sounds like walking away from business and accepting that there are product lines that are no longer profitable for IMCD to operate in. Is that fair? If so, how much of the portfolio are we talking? Is there anything else you can do to sort of reinforce the business model and the pricing pressure you have in light of these challenges?

I appreciate you’re saying it’s nothing new, but equally at the same time, it does feel like it’s intensifying or accelerating. Thank you.

Marcus Jordan, CEO, IMCD: Okay. Good morning, Matthew. Maybe if I speak a bit about the first point first and the Asia-Pacific numbers. I think the standout there, Matthew, is related to India, where we do see, I would say, quite a softness from a performance perspective during the third quarter. If we dig a little bit deeper into that, I think that we can talk then the most, I would say, the largest effect is related to pharma. I think we all saw the pharmaceutical tariff discussions which took place during the third quarter that caused, I would say, in general, quite some uncertainty. There was a big pharmaceutical exhibition in Frankfurt called CPHI last week. We had the opportunity there to speak to a broad range of our own suppliers and customers. I think everybody saw the same trend of that softness in the third quarter.

Pretty much everybody is also speaking confidently that that will be turned back to some kind of normality during Q1. I think that this is a short-term thing. I think with regards to then walking away from business, that’s definitely not the case. Firstly, if you look again at those long-term supplier relationships which we have, also important to state that with the partners that we have, a lot of those partners also have assets in China. They’re able to also keep competitive. When we talk about reviewing the portfolio, again, this is nothing new. We constantly, country by country, look at what are the white spots that we’ve got. How can we strengthen the business? How can we strengthen the portfolio? Also looking at, which again, nothing new, is are there pieces of business or particular product ranges where we can’t be competitive?

Typically then that business has already deteriorated or is very small. It is more of a case of looking at how do we boost the business and grow the business again for the future rather than walking away from business that we have.

Thanks very much.

Conference Operator: The next question comes from Suha Sini Varanasi from Goldman Sachs. Please go ahead.

Hi, good morning. Thank you for taking my question. Just a couple from me, please. Can you maybe discuss how conversations with your customers are progressing? Are you seeing any signs of volume stability on a sequential basis at this point? Any color on the order book would also be helpful. If you think about the gross margins in this quarter, it has deteriorated quite significantly versus the first half trends. You mentioned half of it was M&A, but the rest, is that basically the price pressure that you saw effectively? Thank you.

Marcus Jordan, CEO, IMCD: Firstly, I would say on the customers and kind of the volume stability or outlook, whatever, I would say that there’s no change, unfortunately, in terms of the visibility that we have. Still a very volatile order book, I would say, minimal forecasting, a lot of just-in-time deliveries. I would say, unfortunately, no general improvement there. On the gross margin percentage, I think Hans kind of already covered that, where I would say that there’s nothing exceptional there, a little bit of dilution from the M&A impact, maybe product mix to a certain extent, but I would say nothing material.

Thank you.

Conference Operator: The next question comes from David Kersten from Jefferies. Please go ahead.

Good morning, gentlemen. I’ve got two questions, please. First of all, on the stable organic revenues in the third quarter, that seems like a good performance against a substantially tougher comparative. I was wondering, can you highlight maybe some product-market combinations where you see this improvement sequentially relative to the second quarter? The second question is on the balance sheet with leverage going up to 2.6 times EBITRA and the Tilmans acquisition not yet closed. How do you see that leverage ratio develop into the fourth quarter towards the year-end and after the closing of Tilmans? Does that still leave you with sufficient headroom for further M&A going into 2026? Would you temporarily allow higher leverage given the short-term unfavorable market conditions? Thank you very much.

Marcus Jordan, CEO, IMCD: Good morning, David. I think with regards to the stable organic growth, I think behind the scenes, there’s obviously an awful lot of work going into making that happen. I think if there’s a market which has maybe stood out from a stability perspective, it’s the food and nutrition space. I wouldn’t say that there’s significant change between the quarters, but out of the different market segments, that’s the most stable and robust that we’ve seen for this year. On the M&A and leverage, Hans?

Hans Kooijmans, CFO, IMCD: David, good morning, Hans here. On the leverage side, I do not want to predict the leverage number for year-end, and you are right. I still need to pay. I also need to close Tilmans. That we expect to do in the last part of this quarter if we get all the formalities done. If and when that happens, yeah, leverage will hover around that 2.6 number, I expect. Sufficient room to do further M&A. Typically, working capital will come down towards year-end, what we indicated as a cash conversion ratio should lead to an additional cash inflow. I am not concerned at all about our firepower.

Okay, great. Sounds good. Thank you very much.

Conference Operator: The next question comes from Nicole Monio from UBS. Please go ahead.

Morning. Just one question from me, please. Can you elaborate a bit on your comments around the cost base and particularly FTEs? Obviously, there seems to be a nod to the volatility of the environment at the moment, but you’ve also linked it, I think, to ongoing digital initiatives, which might suggest it’s a bit of a longer-term project. I’m not sure if you can share any more details here, whether this is something you’re looking at across regions, what’s in scope. Yeah, any sort of color would be helpful. Thank you.

Marcus Jordan, CEO, IMCD: Great. Thank you, Nicole. Yeah. As I mentioned, it’s not something new, but it’s fair to say that we are intensifying our efforts to really drive that cost-effectiveness, but also making sure that we’re delivering premium customer service. As we’ve spoken about before, the expectations of customers, they are evolving, this omnichannel way of working. For us, that means very critically making sure that we’ve got very highly skilled technical development resource on the road, visiting those customers face-to-face, but also having very highly qualified inside salespeople so that regardless of the way that the customer wants to interact, they’ve got immediate contact and we’re able to react in a very timely and effective and efficient way.

What we’re doing is really looking at making sure that we’ve got the right people in the right positions to really, again, be the leader from that sales excellence perspective to drive the long-term growth, but also using the digital tools that we’re very proud of, basically to optimize other areas of the business. I think if you look at just one example, through the use of AI and different topics, things like the marketing side, the way that we’re able to handle that and to drive that in a more efficient way, I think that’s a good example. Again, it’s not something new to us, but it’s fair to say that we are intensifying the focus there, also because of the pretty challenging market conditions that we face. Again, I think what is important is looking for the long-term growth.

Great. Very helpful. Thank you.

Conference Operator: The next question comes from David Simmons from BNP Paribas. Please go ahead.

Hi, thank you. Just coming back on the gross profit. You mentioned some impact perhaps from M&A and maybe some impact from mix. I’m just curious, given that you’re trying to bring down inventories and you’ve done a better job on free cash flow conversion in the third quarter, is there any inventory effect on gross profit margins at all? Maybe a little bit of a sort of outlook question. Again on gross profit margins. Do you expect the sort of, I mean, we didn’t really see any pressure on gross profit margins in the first half of a flat year-on-year, but they’re down 90 basis points in Q3. Would you expect that to reverse in the quarters ahead, or is that sort of a new level based on the different mix and the different new M&A you’ve done for the next few quarters?

Hans Kooijmans, CFO, IMCD: David, honestly, I understand your question. If you look historically at IMCD’s numbers, there is always quite some volatility in the margin percentage between the quarters, and there is no exception in this year. It is often driven by slightly changes in the product mix, M&A having, in this case, a bit of a negative impact on the overall margin percentage. For sure, here and there on the more commoditized products, there was a bit of pricing pressure that played a bit of a role, but that also already happened in the previous quarter. In the end of the day, it is not so much about permanently increasing your margin percentage. It is more about growing the absolute amount. The focus of our salespeople is always linked to having an absolute amount of margin target and not a percentage target.

If this is the new normal, I don’t think so, but let’s see what the future will bring.

Thank you.

Conference Operator: The next question comes from Eric Wilmer from Kempe. Please go ahead.

Hans Kooijmans, CFO, IMCD: Hi, good morning, everyone. I’ve got one question. Does the ongoing demand pressure and competitive pressure at European manufacturers have any implications for the level of outsourcing that they work with? Some manufacturers, I think, including today, have announced new incremental cost-savings measures. Could this actually be perhaps another source of outsourcing? Does the growing Chinese presence give you leverage towards your existing suppliers, potentially for a larger share of wallet? Thank you.

Marcus Jordan, CEO, IMCD: Thank you, Eric. I mean, this very much depends on a supplier-by-supplier basis. But as I think we’ve spoken before, the general trend is to outsource a greater percentage. I think that as our suppliers go through these tough market conditions, I mean, we do hear about quite some redundancies and headcount reduction that they’re making. They really then, I think, value us even more as their outsource sales and marketing partner. Yes, I think it’s fair to say that in general there are greater opportunities when there is more market uncertainty, but it differs supplier by supplier. We’re in continual discussion with not only our existing suppliers, but also potential new ones to look at how can we further expand the relationships, both geographically and across more product lines.

Hans Kooijmans, CFO, IMCD: That is it. Thanks.

Conference Operator: Ladies and gentlemen, just as a reminder, if you wish to ask a question, please press pound key five on your telephone keypad. The next question comes from Karl Rainsford from Vedenberg. Please go ahead.

Good morning, everyone. Just two from me, please. I just wanted to ask about your comments around food and nutrition being the most stable end market segment this year. Previously, pharma was seen as, I’ll paraphrase this, by far the best-performing segment, judging by comments from yourselves and peers in the first half. It feels as if there’s been a significant slowdown in Q3 based on your comments, sort of more around food and nutrition now. Is that a fair assumption? The second question. I just wanted to focus on the comment around decreasing FTEs over time again. Presumably, you mean decreasing the absolute number even as revenue increases. This business has always been about relationships and sales and high service levels, and the AI opportunity in theory was useful for cross-selling.

Could you discuss why you think you can maintain the same levels of sales and relationships alongside an increase in cross-selling and at the same time decrease the number of FTEs, enabled to be on the road, use omnichannel ways of working, and the same service levels, really? Or just considering your answer to Nicole’s question earlier, is it more around the marketing side you’re considering that? Yeah, thank you very much.

Marcus Jordan, CEO, IMCD: Good morning, Karl. Firstly, on the first question related to food and nutrition and pharma. As I mentioned before, we did see in Q3 a bit of a softening in the pharma market, but predominantly in the India space because of the tariff conversations. Because of that and also the feedback that we had at CPHI last week, that was the reason for my comment of not including pharma in that. I mean, overall, pharma, when you look at it across the year, it’s still performing well versus last year. As I said, a bit of a softening in the third quarter, but we expect that to come back relatively short term. In terms of the service levels, I think it’s really important again to reiterate that if anything, we’re further investing in the commercial organization and infrastructure.

When you look at the FTE reduction, that’s definitely not reducing the people out on the road. It’s not the people that are interacting with customers or suppliers. It’s really looking at how can we bring better efficiency through the digital tools on more of those, let’s say, support functions. Hopefully that helps.

That does indeed for a reassuring. Thanks, Marcus.

Conference Operator: The last question comes from Stefano Dofano from ABN Amro Odo. Please go ahead.

Hans Kooijmans, CFO, IMCD: Yes, good morning, Marcus and Hans. Two questions remaining for me. Apologies if the first one is already answered, but I missed it. Regarding the Americas, can you maybe provide a little bit of, just some highlights, some light on what you are seeing there in terms of end markets and also the consumer? How the consumer is behaving? The second question is more of a general question. I mean, you obviously, throughout the years, have seen quite some cycles. Is there anything different in this cycle compared to the past cycles where you say, "Well, this might be here to stay. This will continue to have an impact." Or is it just one of those cycles where you say, "Give it a take for whatever, one, two years, we will definitely go back to a normal environment"? Thank you.

Marcus Jordan, CEO, IMCD: Thank you, Stefano. I think with regards to the Americas question, I think the standouts there, if you look at, let’s say, more soft performance, I think the two countries maybe that we mentioned, and it’s for different reasons. I think the US, in general, from a demand side, consumer confidence. We see that as being soft at present. Then Brazil is one of the countries, when we speak about Chinese competition, and maybe greater competition in that semi-specialty space in APAC and LATAM. I would say within the LATAM region, Brazil definitely is one of the countries which has been the most affected there. Then coming on to the cycle difference, I do think that this is very different to what we’ve experienced in the past because we’re not going through a normal kind of market cycle.

I think that there are these kind of shockwaves that come in. Through things like the tariff discussions where we’re kind of getting back to a more normal kind of market cycle as we were coming through the end of last year and the beginning of Q1. You saw the performance, I would say, more normalizing. The shockwave of tariffs and then the uncertainty around it, also with the continually changing messages about what is the tariff percentage, but also what are the products included in the categories within the tariffs. I think that we just need some kind of clarity and stability on those kind of topics. Hopefully we’ll get back to a more normal type of market cycle.

Appreciate it. Thank you.

Conference Operator: With that, due to time constraints, I will give the word back over to Mr. Marcus for any closing remarks.

Marcus Jordan, CEO, IMCD: Great. Thank you. On behalf of Hans and I, a big thank you all for joining the call this morning and for your questions. We wish you all a very good day. Thank you very much.

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