Earnings call transcript: Syensqo Q3 2025 sees stock rise despite sales dip

Syensqo SA reported its third-quarter 2025 earnings, revealing a slight decline in net sales but an increase in EBITDA margins. The company posted net sales of €1.52 billion, a 1% decrease year-on-year, while achieving an EBITDA margin above 23%. Despite these mixed results, Syensqo’s stock rose by 2.91% following the announcement, closing at €70.04, reflecting investor confidence in the company’s strategic initiatives and cost-saving measures.

Key Takeaways

• Syensqo’s Q3 2025 net sales declined by 1% year-on-year to €1.52 billion.
• EBITDA margin improved, reaching above 23%.
• Stock price increased by 2.91% post-earnings announcement.
• Company accelerates cost-saving initiatives, targeting over €200 million in savings by 2026.
• Syensqo completed 60% of its €300 million share buyback program.

Company Performance

Syensqo’s overall performance in Q3 2025 showed resilience despite a challenging macroeconomic environment. The company managed to expand its EBITDA margin by 40 basis points sequentially, indicating effective cost management. The company’s focus on specialty polymers, particularly in the automotive and healthcare sectors, continues to drive its competitive edge.

Financial Highlights

• Revenue: €1.52 billion, down 1% year-on-year.
• EBITDA: €326 million, with a margin expansion of 40 basis points.
• Free Cash Flow: €250 million for the quarter.
• Net Debt: €2.1 billion with a gearing ratio of 25%.
• Leverage Ratio: 1.6x.

Market Reaction

Following the earnings announcement, Syensqo’s stock price rose by 2.91%, closing at €70.04. The stock’s movement reflects positive investor sentiment, likely driven by the company’s improved EBITDA margins and strategic initiatives. The stock is trading within its 52-week range, which spans from €53.70 to €84.85, indicating room for further growth.

Outlook & Guidance

Syensqo remains optimistic about its future, with a full-year underlying EBITDA forecast of approximately €1.25 billion and capital expenditure expected to be below €600 million. The company anticipates weaker Q4 results due to typical customer destocking but expects an electronics market recovery in 2026.

Executive Commentary

Dr. Ilham Kadri, CEO of Syensqo, emphasized the company’s strategic focus, stating, "Syensqo stands as a focused specialty leader with the financial strengths, the flexibility, and disciplined approach to capital allocation necessary to seize future opportunities." She also highlighted the importance of agility in managing the value chain, saying, "The companies today who will thrive are the companies who are going to manage with agility their value chain."

Risks and Challenges

• Weak industrial demand and potential automotive production decline in early 2026.
• Macroeconomic pressures and global trade complexities.
• Impact of Indonesian mine closure on the copper mining sector.
• Potential softness in automotive demand and delayed electronics recovery.

Q&A

During the earnings call, analysts inquired about the potential divestment of the Aroma business and strategies to address semiconductor and automotive market challenges. The management reiterated their focus on cost-saving measures and strategic flexibility to navigate the complex global trade environment.

Full transcript - Syensqo SA (SYENS) Q3 2025:

Rochelle, Conference Operator: Thank you for standing by, and welcome to Syensqo Third Quarter 2025 earnings call. My name is Rochelle, and I will be your conference operator today. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Sheriff Bakr, Head of Investor Relations. Please go ahead.

Sheriff Bakr, Head of Investor Relations, Syensqo: Thank you, Rochelle. Hello, everyone, and welcome to Syensqo’s Third Quarter 2025 earnings call. I’m Sheriff Bakr, Head of Investor Relations, and I’m joined today in Brussels by our CEO, Dr. Ilham Kadri, and our CFO, Christopher Davis. Similar to last quarter, we will periodically feature one of our business unit presidents on these calls, providing greater insights into their businesses. So I’m also especially pleased to be joined by Mike Radosic, President of the Performance and Care segment and our CEO elect. As a reminder, today’s call is being recorded and will be accessible for replay on the Investor Relations section of our website later today. At www. Syensqo.com/investors. I would also like to remind you that during this call, we’ll be making forward-looking statements regarding our future business and financial performance that are subject to risks and uncertainties.

The slides related to this presentation, along with today’s press release, are also available to download from our website. Turning to today’s agenda, Ilham will begin with an overview of the quarter, with Mike covering the performance of Nove Care and Technology Solutions. Chris will then go into more details on our financials before turning the call back to Ilham, who will discuss our outlook for the balance of the year. We’ll then be happy to take your questions. So with that, I’ll turn the call over to Ilham.

Dr. Ilham Kadri, CEO, Syensqo: Thank you, Sheriff. Good afternoon and good morning to everyone. The third quarter of the year saw us deliver a resilient margin and strong free cash flow performance in a challenging and uncertain market environment. Thanks to our specialty positioning, unique value proposition, and ongoing focus on what we can control. In addition, our strong balance sheet continues to be a differentiator as we navigate the shorter-term elements that are out of our control. Indeed, as we approach my final quarter as a CEO, I’m proud of the progress we have made over the past two years to advance our strategy, and I have no doubt that the action we have taken to build and strengthen Syensqo’s foundation will support future profitable growth and value creation. And in times like this, it has been.

More important that we are accelerating change, becoming leaner, becoming more agile, sharpening our value proposition with existing customers, finding incremental growth opportunities with new customers, and becoming a pure-play specialty company that will outgrow our markets for years to come. Now, as you can see on slide five, we have continued to advance our strategy, demonstrating continued leadership in key areas. This has included launching new and differentiated innovation to support our customers, bringing more sustainable and high-performance solutions across our portfolio, which was also recognized by our customers. Recognition also came in the form of achieving the prestigious leadership level with an A- rating by CDP in their 2024 assessments, a rating achieved by only around the top 500. Of companies worldwide. To receive this recognition is a tremendous achievement and positions us as a sustainability leader in our sector.

Another first for Syensqo and a source of great pride for the team was to win the Global Supplier Award from Bosch, a key customer in the automotive sector. And building on the comments shared on last quarter’s call by Peter Browning, the President of Specialty Polymers, we have expanded our proprietary non-fluorosurfactant sealing technologies, another market first, where we are bringing in and matching performance, targeting opportunities in semiconductor production and very demanding industrial applications. This should further extend our leadership position and support longer-term profitable growth. Speaking of growth, I was thrilled to open our first AI lab in Morocco, partnering with one of the leading universities in Africa and in Europe, Middle East Africa, focused on building next-generation agentic AI technologies for chemistry and material science. And as I just mentioned, we are accelerating how we will become a pure-play specialty company.

Of course, this started almost two years ago with the birth of Syensqo, and another important strategic milestone was achieved last week with the announced agreement to divest the oil and gas business to S&F. With an enterprise value of €135 million, this represents approximately seven times EBITDA multiple, which is actually a similar multiple with where Syensqo traced today, and allows us to focus on our high-margin specialty businesses. As we see this as both advancing our strategy and unlocking value, we are targeting to close the transaction by the first quarter of 2026. Subject to customary closing conditions and consultations. And once completed, we will be a higher-margin, simpler, and pure-play specialty company.

Now, turning to the highlights for quarter three, Chris will take you through the details in his remarks, but we had another quarter of resilient margin performance in our core segments, despite the previously flagged headwinds impacting year-on-year volume growth in the materials segment, as well as weaker overall demand environments than we expected three months ago. On an overall company basis, our primary challenge in 2025 has been the volume performance of Specialty Polymers, our highest-margin business, and the headwinds from specific customer dynamics in electronics that we called out at the start of the year. In the nine months to the end of September. This had an approximately 600 basis points impact on year-on-year volume growth in Specialty Polymers, with the remaining 80% of Specialty Polymers delivering approximately 2% year-on-year growth.

Despite this, we have continued to deliver resilient margins, reflecting strong execution of our strategy and the specialty nature of our portfolio. Looking at the third quarter performance, net sales of €1.52 billion reflected a modest 1% decline in volumes and pricing. EBITDA of €326 million. Translated to 40 basis points of sequential margin expansion. And excluding the non-core other solutions segment, our EBITDA margin was above 23%. Approximately 200 basis points higher than our overall margin level achieved in quarter three. Sticking with initiatives that are within our control, I’m also pleased with the progress we have made as we complete our separation from Solvay. Overall, we are ahead of schedule, with only a few remaining agreements to exit, and we remain fully on track to meet our year-end targets, which will allow us to drive for additional levels of simplification and cost savings.

And we have continued to reward shareholders by buying our own shares, and we are almost 60% of the way through our €300 million program. The highlight of the quarter was our strong free cash flow performance, reflecting our ongoing focus on cash generation in a weaker demand environment. Before now turning the call over to Chris, I wanted to make some high-level comments on our segment’s performance in the quarter, and I’m happy to be joined today by Mike Radosic, the President of Performance and Care and our CEO elect, to share some insights on Nove Care and Technology Solutions, as well as answer questions when we get to the Q&A session. Now, slide eight, Syensqo’s mix of revenue and earnings reflects our position as one of the leading pure-play specialty materials companies. In quarter three, more than 70% of our EBITDA was generated by our high-margin materials segment.

Composite materials saw another quarter of strong underlying demand and solid margin performance despite the continued impact of these stock index boeing. Indeed, while overall civil aerospace net sales were approximately flat year-on-year, we saw high single-digit growth excluding this. Composite materials exposure to a mix of civil aviation customers, space and defense applications, and a number of new programs demonstrates the strong value proposition of our range of products, as well as healthy mix of growth drivers. In addition, with higher defense spending announced by several countries around the globe, this is expected to support strong growth in composite materials in 2026 and beyond. Turning to specialty polymers, where volumes declined by 2%. However, excluding electronics, specialty polymers delivered 4% year-on-year volume growth, driven by double-digit growth in automotive and healthcare. And at material segment level, we saw a 130 basis point sequential margin expansion, reaching approximately 31%.

I will now turn the floor over to Mike to take you through the performance and care. Mike.

Mike Radosic, President of Performance and Care, CEO-Elect, Syensqo: Thank you, Ilham, and good morning and good afternoon, everyone. It’s my pleasure to have the opportunity to share some insights with you on the performance and care business and our quarter three performance. But before I do that, I also want to express how honored and humbled I am to take on the role as the next CEO of Syensqo at the start of next year. Having spent more than three decades with this company and its predecessors, I know firsthand the strength of our people. Our innovation power, and our portfolio. My initial priority is to build on the foundation Ilham and our teams have created, with the aim of accelerating growth and delivering sustainable value for our customers, employees, and shareholders.

And as eager as I am to fully engage with the financial community, my responsibility for the rest of the year will remain focused on the Nove Care and Technology Solutions businesses while I finalize my handover with Ilham, which is well underway. As a reminder, performance and care consists of the Nove Care and Technology Solutions business units. And as the segment name reflects, our value proposition, which is about delivering solutions that enhance performance, boost efficiency, and optimize resource utilization in applications across all our markets that we serve, while prioritizing sustainable innovation through the introduction of natural, renewable, and biodegradable solutions. We have a broad but highly specialized portfolio that serves a wide range of attractive end markets, and you’ll find our solutions at the heart of iconic consumer brands and products used every day.

Nove Care’s business of surface chemistry solutions and deep formulation and applications expertise is dedicated to innovations for natural and sustainable solutions, with leadership positions spanning the home and personal care, coatings, and agricultural end markets, while the technology solutions business is a global leader in specialty mining reagents and technical service to maximize performance in metal extraction and mineral processing for copper, alumina, and battery metals. In addition, and complementing Syensqo’s materials segment, performance and care has the characteristics to deliver short and mid-term growth with low capital intensity, serve a diverse range of attractive end markets where customers value high performance, such as in coatings and mining. Benefit from rapid product development cycles driven by innovation and sustainability trends, and leverage our advanced labs, deep formulation, and application expertise, as well as our close customer collaborations across the globe.

Since the separation, our customers have appreciated our greater focus and execution. This is also supported by innovation, both on M&A such as our Genome Bio acquisition, as well as several joint innovation partnerships that leverage our combined capabilities to better serve our customers with higher performing and more differentiated solutions. Turning back to our Q3 performance, starting with Nove Care, where despite a challenging market environment and uncertain demand, we continue to see volume growth in agro and home and personal care supported by market share gains. Over the course of 2025, we have seen particularly strong volume growth in agro as demand has returned to more normalized levels after an extended period of destocking, most notably in EMEA and Latin America, with a more wait-and-see approach for customers in North America given ongoing tariff uncertainty.

In the home and personal care segment, we have continued to outperform the overall market in a highly competitive environment. We have also seen the impact of trading down by some consumers toward more private label brands, as well as the impact of higher input costs, most notably oleochemicals, which has driven margin pressure over the past few quarters. And in the coatings and industrial applications, the broader market has been impacted by weaker construction activity throughout 2025, particularly affecting our business in North America. Despite these challenging conditions, I am pleased how the Nove Care teams have managed to selectively flex our pricing to capture incremental volumes while continuing to deliver solid margins. Turning to technology solutions, which had a strong quarter, delivering 10% year-on-year net sales growth driven by higher volumes in mining solutions supported by market share gains and new mine wins.

A large portion of our mining reagents are used in copper separation. And the underlying demand for this critical metal is expected to remain robust over the medium term. We also benefited from higher sales of phosphorus specialties for diverse high-value applications, which helped to support our strong overall margin performance in the quarter. At a segment level, performance and care margin of more than 18% remains healthy, although lower year-on-year, following a very strong quarter in Q3 of 2024. With that, I’ll turn the floor over to Chris, and I look forward to answering any questions you may have in the Q&A session.

Christopher Davis, CFO, Syensqo: Thank you, Mark. Good morning and good afternoon to everyone on the call. It’s fair to say that the third quarter of 2025 in the specialty chemicals sector has continued to be defined by macroeconomic and foreign exchange headwinds, weak industrial demand, as well as cost inflation pressures, which has led to changing and less predictable order patterns impacting visibility across the broader value chain. This is reflected in our third quarter performance. With that in mind, let us turn to slide 10, which summarizes our third quarter financial results. Overall, we delivered another quarter of resilient performance. For the third quarter, net sales totaled €1.5 billion. Volumes were down 1% year-on-year, primarily due to the lower demand in specialty polymers and to a lesser extent in Nove Care. This was largely offset by strong year-on-year volume growth in technology solutions.

I will talk more about the sales drivers of each business segment in a later slide. As we have previously mentioned, we remain committed to defending our gross margins, as this reflects our value proposition as a specialty chemicals company and how we manage both our sales and cost of goods sold. In this respect, our gross margin at 32% continues to reflect our specialty value proposition. On a sequential basis, gross margin was stable, as higher gross margin in specialty polymers was offset by unfavorable mix in Nove Care. Over the past seven quarters since the inception of Syensqo, we have continued to demonstrate our ability to defend pricing and maintain cost discipline over the period, particularly in the materials segment, regardless of the impact of volumes. Finally, we delivered an EBITDA of €326 million for the third quarter of the year.

Turning to operating performance by segment on slide 11. Within specialty polymers, sales revenue reduced by 9% compared to the prior year. Excluding the translation effect of FX, specialty polymers revenue was down 6%, primarily due to the expected lower volumes in electronics. Within automotive and battery applications, we saw double-digit volume growth driven by innovation in peak and cell phones, partially offset by a planned and selective price decreases to customers to sustain competitiveness. Additionally, and as Ilham has referenced, we also saw double-digit volume growth in healthcare, industrial, and other chemical segments in our specialty polymers business. Revenue from composite materials at €277 million. Showed a decrease of 5% compared to the prior year. Excluding the translation effect of FX, composite materials revenue improved in the quarter.

It is important to note that the third quarter of 2025 is the fourth highest sales quarter in US dollars on record since 2019. Despite the expected impact of lower sales to Boeing, increased sales to other commercial aviation programs resulted in flat sales to civil aviation programs compared to the prior year quarter. This reflects the strong underlying demand and diverse customer base within composite materials. Sales to space and defense applications improved in the quarter. Going forward, we expect further improvements in composite materials driven by the completion of the destocking effect at Boeing and the full year effect of improved pricing in 2026. Whilst the destocking effect in 2025 is a short-term impact, we remain bullish on the sector, with Boeing announcing an increase in production rates for its 737 MAX aircraft to 42 planes per month.

The improvement in the overall civil aviation supply chain, alongside the expected increase in defense spending, are expected to deliver significant incremental revenues over the medium term and as build rates get to maturity. Looking back at the third quarter, the net result in our materials segment is an EBITDA of €267 million and a strong EBITDA margin of 31%. Nove Care delivered sales of €327 million, and technology solutions sales were €169 million. Within Nove Care, agro and home and personal care volumes increased 7% and 5% year-on-year, respectively. This was offset by weaker demand from building activity. This has impacted Nove Care’s coatings business throughout 2025, resulting in an unfavorable product mix given the relatively higher margin we generate in coatings compared to agro and home and personal care.

Technology solutions continue to benefit from customer wins and higher demand from existing customers in copper mining, as well as improved performances from phosphorus applications and polymer additives. EBITDA margins and technology solutions are the second highest in Syensqo’s overall business and continue to be strong, benefiting from an improved mix of sales to mining customers. The net result is that performance and care delivered an EBITDA of €90 million in the quarter and an EBITDA margin of 18%. Within the other solutions segment, EBITDA was €9 million in the quarter, with an EBITDA margin of 6%. The net effect of what I’ve just described is reflected on slide 12. As mentioned on the previous slide, stronger volumes were experienced in a number of sectors, including healthcare, battery applications, home and personal care, and mining applications compared to the prior year.

That said, the lower volumes in electronics continue to be the single largest driver at a Syensqo group level of the year-on-year decline in EBITDA. Absent the lower volumes in electronics, specialty polymer volumes improved by almost 4% year-on-year, reflecting the shorter-term headwinds in fab construction activity. Whilst we did experience a sequential growth in both volumes and sales in electronics, the recovery is turning out to be slower than we originally anticipated, impacting the second-half performance in specialty polymers. Ilham will cover this when we discuss our updated outlook for the year. Stripping out the effect of foreign exchange translation, composite materials EBITDA improved against the prior period, driven by an improvement in overall operational efficiencies and pricing. Within materials, cost savings, particularly in specialty polymers, resulted in a reduction in fixed costs in the quarter.

The net result is a decline in EBITDA of €26 million in the materials segment compared to the third quarter of 2024. In performance and care, increased volumes in technology solutions were offset by lower volumes and higher labor and input costs in Nove Care, most notably oleochemicals, where prices have increased due to weaker harvests in Southeast Asia. In addition, Nove Care experienced an unfavorable product mix given the weaker-than-expected coating sales. This resulted in a year-on-year EBITDA decline of €27 million in the third quarter of 2025. Other solutions improved by €3 million compared to the prior period. Finally, the corporate segment saw lower year-on-year costs, benefiting from ongoing cost savings initiatives. The net result is EBITDA of €326 million for the quarter, which includes an adverse variance of €12 million year-on-year associated with a stronger euro against our basket of currencies, including the US dollar.

This impact is purely translational for Syensqo. As we enter the final quarter of the year, we have commenced a temporary slowdown in production to address weaker demand in certain markets and to carry out maintenance activities, providing us with a stronger starting point for 2026. Turning to capital expenditure. Our total capital expenditure for the quarter was €140 million, bringing the capital expenditure for the nine months year-to-date to €420 million. This remains in line with our expectations and in line with our capital expenditure envelope of less than €600 million for the year. Included within the €140 million is growth capital expenditure of €58 million, including. Spend related to the specialty polymers facility in Tivo, France. Expansion of Technophlon production capacity. Investment in gelding capacity for electronic customer applications, and capacity expansion in adhesives for aviation applications.

As a reminder, 2025 is expected to be a peak year of capital investments, driven by significant spend on the Tivo site and modernization of our IT infrastructure. Our focus going forward is therefore on leveraging our existing spare capacities that we have today to meet future volume growth. This requires no additional capital expenditure. Secondly, investing in smaller and faster organic growth opportunities where the market exists and where we are at capacity, thereby accelerating our strategy. This includes increased investments in adhesives capacity and composite materials, debottlenecking our Welland plant in Canada to increase capacity for mining customers, and an increase in capacity to service semiconductor demand. And finally, our focus will be on maintaining our investment-grade credit rating and rewarding shareholders in line with sustainable cash generation. As we enter 2026, we have performed a zero-based design of our capital allocation.

Given the limited visibility in the current environment, we will remain disciplined and agile, carefully managing capital expenditure and cash to balance our shorter-term targets with longer-term value creation. Moving to operating cash flows on slide 14. The generation of strong operating cash flows remains a key focus for the business. As we previously communicated and in line with our expectations, the third quarter delivered strong cash flow generation with operating cash flow of €331 million, bringing the last 12 months’ cash flow from operating activities to €872 million and a cash conversion of 76%. The key drivers for the strong cash flow include the previously disclosed receipt of €92 million. From Edison SPA following the recent dismissal by the Italian Supreme Court of Edison’s appeal, consistent with our free cash flow expectations from the start of the year.

This more than offset cash outflows related to taxation, the use of provisions, and costs incurred to complete the separation from Solvay. Free cash flow to shareholders for the quarter was a positive €250 million. As previously mentioned, 2025 remains a year of transition from a cash perspective. With the separation from Solvay in late 2023, separation costs have been incurred in 2025 so that Syensqo can operate as an independent company. As we head into 2026, these cash outflows will improve significantly, with reduced spend on separation activities and a finalization of growth capital being spent on the Tivo site. Together, these account for approximately €200 million of cash outflow in 2025 that will not repeat in 2026 and beyond. Turning to our financial position.

I am pleased to report that we continue to have a strong balance sheet, with our net debt at €2.1 billion, a gearing ratio of 25%, and a leverage ratio of 1.6 times. We continue to have strong levels of liquidity available, as demonstrated by the €1.7 billion of undrawn committed bank facilities and a further €1.4 billion of cash on hand as of 30 September 2025. Importantly, the signing of the sale and purchase agreement for our oil and gas business for €135 million. Will close in early 2026. Resulting in further cash proceeds and an improvement in net debt. With that, I’ll now hand you back to Ilham. Thank you. Thank you, Chris. So now looking into the fourth quarter, there remains a lot of uncertainty in the world.

From ongoing trade and tariff dynamics to the temporary closure of a larger copper mine in Indonesia, as well as potential supply chain disruption in automotive, the near-term environment remains challenging across global value chains, coupled with shorter order cycles and limited overall visibility. In addition, we have seen a further strengthening of the euro versus major currencies since our quarter took hold. So given all of this, we remain focused on what we can control. First, costs by accelerating our restructuring savings and completing our social dialogues. Second, exiting the last 2% of the TSAs we still have in hand and unleashing the benefits of our new ITIS GBS systems. Next is scaling GenAI to generate further productivity gains, organizational efficiency, and open new growth opportunities. Obviously, continuing to transform the portfolio towards becoming a fully independent, pure-play specialty company. And.

Continuing to nurture the hunting mindset to drive new sources of incremental growth, which I know Mike will take forward as one of his priorities. Now turning to our outlook for the balance of the year. At a high level, our updated EBITDA and free cash flow outlook is broadly aligned with current consensus expectations. Going into more details, the approximately €50 million change in outlook is driven by three things. More than 50% is driven by a slower than previously expected recovery in electronics volumes in both quarter three and quarter four, as customers manage near-term inventories with the uplift now largely pushed out into 2026.

Approximately 25% is due to less favorable foreign exchange movements, with the balance driven by a combination of the extended destocking at Boeing, as well as the expected impact of a temporary closure of a large copper mine in Indonesia following a tragic incident. And on behalf of Syensqo, I would like to share our deepest condolences to those impacted. Mitigating the resulting lower volume outlook, we are accelerating our cost savings initiatives and continue to target more than €200 million of run rate savings by the end of 2026. Now, from a free cash flow conversion perspective, the implied target for the year is unchanged. Putting this all together, we now see our full year outlook as follows. Underlying EBITDA of approximately €1.25 billion. Capex to be below €600 million. And free cash flow of approximately €325 million.

Now, before we take your questions, and as this is my last earnings call as a CEO of this company, I want to reflect on our journey and share a few personal thoughts about what we’ve built and what lies ahead. Nearly two years ago, we launched Syensqo, following almost five transformative years since I began as a CEO of Solvay. Throughout this period, we have navigated extraordinary complexity and global uncertainty. Consistently emerging stronger and more resilient, each time reinforcing our ability to deliver sustainable value well beyond the numbers. So our strategy has been and is now clear. Syensqo stands as a focused specialty leader with the financial strengths, the flexibility. And disciplined approach to capital allocation necessary to seize future opportunities. These foundations, laid through hard choices and bold ambition, ensure we are well positioned for long-term value creation.

As we move to a new chapter for Syensqo, I have every confidence that Mike will bring the dynamism and the unwavering commitment to performance as our new next CEO, and I look forward to supporting the transition. I’m also deeply grateful to our investors for your enduring trust, to the analyst community for your rigor, questions, and engagement, even between you and me if some of your challenging questions and reports kept us on our toes. To our customers, partners, and above all, the Syensqo team, our dear explorers, thank you. Thank you from the bottom of my heart for your commitment and passion, which have made this journey possible. Together, we have created more than a new company. We have set a new standard for innovation, for resilience, and for value creation in our sector.

Serving Syensqo has truly been the honor of my career, and above all, I’m confident the best is yet to come. With that, we are ready for your questions. Back to you, Sheriff. Thank you, Ilham. We’ll now move to the Q&A session. Rochelle, can we please have our first question? Certainly. Your first question comes from Sebastian Bray with Berenberg. Please ask your question. Hello, can you hear me? Yes, we do, Sebastian. Yes, hello. Thank you for taking my questions. I would have two, please. The first is on the. If I think about business structure, since the split, it looks as if the performance and care business has come under a bit of pressure. Is there still any rationale to keeping it together in materials? My second question is on the. Divestment of oil and gas to SNF.

The SNF already has quite high market share in oil and gas chemicals. How long do you think it’s going to take to get regulatory approval? And what makes you confident the regulator is going to say yes? Thank you. Great question. Thank you, Sebastian. I’ll take them. Well, listen, on the Novocare and Texol, I mean, obviously. This is a specialty business at the power of two splits. You may remember, Sebastian, we agreed what goes to new Solvay, what comes to Syensqo, and we were pretty clinical, agnostic, just looking at the specialty nature of the business. And. The PNC complements the material in a way. It’s a specialty. Businesses, both our specialties, material and performance and care with strong value proposition. They have different innovation cycles and obviously level of capital intensity, which we like, by the way, PNC being low in capital intensity, material higher.

So it’s provided a nice balance. And they have this complementarity as well in market exposure, right? The mining and home and personal care, agro versus more automotive and aviation or mobility in general. But that said, Sebastian, I think we have. Demonstrated that there are no taboos. I mean, in the seven years I’ve been in the job, we. Divested, you remember the polyamide, the amphoteric with Mike, by the way, who’s sitting in front of me, right? He did a great job with. Novocare businesses, all the commodities. We even did a spin-off from Solvay, and we left the commodities behind. And we have a very analytical, rather than emotional view about our portfolio as whether we are the right owners or not and how we can unlock or create value for our shareholders. So be with us.

Mike will be on the road, and you will hear the words also from him. I think this company is about unleashing the potential of the specialty Syensqo more than anything else. On your SNF question and oil and gas, I cannot comment on the specific approvals we are doing, but we are confident, Sebastian, to have a closing in quarter one 2026. And in assessing the preferred buyer of the asset, we considered, among other things, the likelihood for deal completion and regulatory hurdles. So that was part of my assessment and our assessment. So given that antitrust filing will only be made in a few minor jurisdictions, we do not expect issues that would result in a delay to the completion of the deal as we speak. Sheriff? Take our next question. Thank you, Sebastian. Your next question comes from the line of Thomas Riggelsworth with Morgan Stanley.

Please ask your question. Thank you very much. Two questions, if I may. The first is you called out double-digit growth in auto in the quarter, if I think I’ve understood that correctly. But what we’ve seen in the broader global auto picture this year has been a demand pull forward. I think global auto is expected to be up 2.5% production growth, but then it’s expected to dip in the first half of 2026. So. Is that the right picture that we should be thinking for your business? How do you see the auto outlook over the next six months, whatever visibility you have? Second question, if I may, is on technology solutions. As I understand it, that business has been constrained on volumes. You’ve debottlenecked it.

Could you give us some sense of, from that debottlenecking, if you were to fully load the business, what the incremental sales is from potential? I know it would take time to fill, but give us some understanding of the potential that that debottlenecking allows for the high-margin business. Thank you. Thank you very much, Thomas. I will take. The automotive, and then Mike, you take the next one on Texol. Listen, Thomas, you’re right. I mean, S&P, you’ve seen the. Light vehicle. Builds went from 3.5% in the beginning of the year to 4.4% last quarter, and now is decline. We know that in the first half of next year, it will be a decline year on year. But as you’ve seen, automotive volumes in specialty polymers increased by around 10% in the quarter ahead of the global light vehicle production, which was around 4%, according to S&P.

At the same time, there are obviously. Volumes which can travel from one quarter to another. There are variations between the external and internal data points. Given differences, it can be by region, by customer exposure. It can be due to inventory levels across the value chain. So not going into. Specific guidance by end market, we don’t do that, but we clearly expect a weaker quarter four in automotive compared to quarter three, also driven by the typical industry seasonality and what we know from S&P, and that was based in our guidance. Now. Beyond that, and allow us to. Come back to you in 2026, we remain cautious on near-term trends in auto. They are not helped by potential supply chain disruption that have been in the news over the past week and some of the comments from OEMs we have received.

And as we have stated throughout the year, customers are also adapting their demand weakness and uncertainty, which has reduced in a way to reduce our visibility. So it’s difficult to talk about trends now by the first. Half of next year, and I want to be cautious, prudent, and respectful of Mike coming in. He’s busy with the budget, with the team, and by the end of February, we’ll come to you with our guidance for next year. But definitely, we see what you say, Thomas, about auto, yet I’m very proud about us outperforming our markets and our peers. Mike on Texol? Sure. Thank you, Ilham. The 10% growth that you referenced, Thomas, is largely driven by the improved volumes that we saw in the quarter. Pricing had largely no impact for the quarter.

And just to be clear, the incremental debottlenecking of the capacity at the Welland, Canada plant, it’s expected to increase capacity over the course of 2026 in a phased approach. As we complete elements of the project, and that’s well aligned with market demand. And as you said, these are high-value products and technologies, and we want to make sure that we can supply. Thank you. Thank you, Tom. Thank you very much. Next? Next question comes from Katie Richards with Barclays. Please ask your question. Hi there. Thank you. One question from me, and also thank you to you, Ilham. I just wanted to ask a question on how you see the trends into Q4. You’ve just referenced potentially weaker automotives. I’d also be interested. For some comments on electronics, and you’ve also referenced a potential impact from a landslide at an Indonesian copper mine.

Specifically, do you expect the incident to affect your Q4 numbers? And when would you expect it to reopen if you feel the impact is significant? Thank you, Katie, as we have Mike with us. Mike, can you comment on the mining? Sure. Hello, Katie. As far as the mine, it is a large mining customer with operations in Indonesia. And they had an unfortunate landslide impacting its people and its operations. And I’d like to share our deepest condolences to those that were impacted. It is also expected that the mine will not have full recovery of operations until late 2026. So our focus for now will be on supporting both our customer and our people at the operation as they deal with this unfortunate incident. It is a large mine site, and it will have. A small impact on our technology solutions business Q3 and throughout 2026.

Chris, you want to talk about the trends? Yes. So let me just talk about Q4. I mean, typically, Katie, as you would have seen in our business, and this is actually quite a strong trend. Q4, we generally see customer destocking, which historically results in a sequential decline in the fourth quarter compared to the preceding third quarter. Our current outlook is a decline of approximately 15%, yet historically, that range has been up to 25% against Q3. Now, like any quarter, we have a balanced view to our outlook, and we’re going to strive to achieve the targets we have set and focusing really on what we can control, such as managing our costs and managing our cash. Is there anything you want to add on? No, I mean, Chris, you said it. I mean, the auto steel soft, we address it with Thomas’ question.

And Katie, the electronics demand is pushed to 2026, and this is consistent with the outlook. Thank you. Thank you, Katie. We’ll take our next question. The next question comes from Chiefan Odashi with JP Morgan. Please go ahead. Yeah, hi. Thanks for taking my questions. My first question was on specialty polymers business. And it’s good to see some volume growth after a prolonged period of declines in the last two years. But again, that volume growth is excluding electronics. So I guess to. Just be blunt here, it seems polymers, there’s always some or the other reason why we never see an inflection in this business. And I’m just curious. How much of this is just a reflection of the fact that, like we see across the sector. The competitive environment is structurally far worse than it used to be maybe even two years back.

And at what point do you think we actually start to see this business returning to proper. Volume and earnings growth? Can 2026 be that year, or you still don’t feel. Confident enough to. Call that inflection in this business? Because eventually, this is. The key. Business within Syensqo that everybody cares most about. The second question was. Just. Following your oil and gas divestments, any thoughts on what we should expect on Aroma? Is that something that you expect to still. Be announced before the end of this year? And. What are the dynamics in that business now, given that you’ve secured anti-dumping tariffs at the—I think it was in the middle of the year, both in the US and Europe? Thank you. Thank you, Chetan. I know you told me to accelerate. I hope you are happy with the oil and gas. Divestiture done.

Well, listen, let me start with the specialty polymer one. Obviously, I think we discussed the electronics. Thing. I mean, indeed, it didn’t happen the way we were expecting it. But anyway, I think the resilience and meeting street expectations shows that we. Rebalance things. Your question actually is more structural, right? I think, indeed, the biggest challenge at Syensqo level, and I mentioned it, I mean, Mike knows it, has been the volume, not the pricing, not our contribution margin. I hope, guys, that by now we’ve been, and I’ve been with the team, proving that our net pricing stickiness and all of this is behind us. Even now, composite material, I’m very proud of them. They reopened the contract, and we have now. Exercising new pricing as we. Renew our contract. And the contribution margin are really good. And we follow.

Closely the volumes, and we are able to see volumes, margin by products, customer, and market. What I can tell you, Chetan, is that what we see, we are not losing market share with our customers. That’s clear. The second derivative. Is whether our customers are winning or losing market share. It’s not only about us. And what I told the team as. It’s time for me to give them feedback as a gift is about. Let’s look if we are with the. Winners and the losers out there, right, around the globe, and look at what’s happening even more for our customers, which is not as straightforward to measure accurately in real time. So from the data we have, our contribution margin in specialty polymer has remained extremely resilient. Our volume performance, excluding the headwinds we talked about in electronics, has demonstrated growth.

I’m not going to comment in 2026. It’s a fair question, but give us time with. Courtesy and respect to Mike, who is also engaging into. Budget exercise as we speak. I truly believe, as I told you. Since seven years and even in the past two years, focusing on Syensqo’s portfolio, we have a unique portfolio. We have an end market exposure no one else has and customer relationship and our innovation track record with vitality index of more than 20% with products. Less than five years old, best-in-class vitality index score and position us to outperform over the mid-long term. So this is coupled on the last point before I address your Aroma question. We have existing capacities. The leverage is huge when the volumes are back.

So the existing capacities we have will support the volume growth when it returns and should support our margin and improvements of the returns. I remind you to look at probably 2023 was a peak of performance and our returns at that time. So when the volumes are back, we’ll be at the rendezvous. Chris, you want to take maybe the Aroma one? Yeah, just on the status of the divestment of Aroma. We are really committed to advancing the strategy to become a pure-replace specialty company. And you can see it in the divestment of the oil and gas assets. As we’ve previously stated, Aroma continues to be an attractive asset to the right buyer, and it certainly will thrive under the right ownership. Now, as the divestment process is actively progressing, we will provide an update at the right time.

And as you know, similar to what we did on oil and gas, we will ensure we try and get the right multiple for this business. So on oil and gas, we got seven times, and we’ll take it as we need. Mike, do you want to add anything to Aroma? Yeah, I think Chetin also had a comment about the anti-dumping measures. And pleased to finally see that the anti-dumping measures have taken hold. As you mentioned, it’s about 131% in Europe and 232% additional duties in the United States. And really, it’s leveling the playing field for our business. So we should see improvement in the Aroma business going forward. It will take a little bit of time to become visible in our numbers given the level of inventory that customers have purchased ahead of the rulings.

The benefit should come, though, through 2026 with the potential to be a very meaningful driver in our future profitability. Thank you, Mike. Next one? Thank you, Chetan. Yes, our final question comes from the line of Tristan Lamotte of Deutsche Bank. Please go ahead. Hi, thanks for taking my questions. First one is, I’m just wondering if there are areas of the portfolio where you’ve seen an acceleration of competition from imports. Since Liberation Day? And if so, where in the portfolio is that? Yeah, Tristan, thank you for the question. Well, I mean, obviously. The US tariffs on Europe and the dumping of. Asian and Chinese products into the EU has been a bit of a chaotic moment in my 30 years career and 11 years as a CEO.

Well, the good news for Syensqo is that, as I told you, 40% of our revenues are generated in the Americas, with 50% of our assets in the US, and 35% of our revenues are in Asia. So the smallest region is where we are sitting here in the headquarters, Europe. At the end of the day, I really like these demographics, right? We were very agile in the tariffs, right? I mean, and when the tariffs came in, and we had a real. Risk management. Exercise across the company from the supply perspective, from suppliers, but us where we produce, we start onshoring activities, for example, compounding in China extremely quickly. Which was good for us, getting even closer with the customer without any risk on our IP, etc.

We started looking where we can move the flow of goods from the US to Europe because you have the 15 to 0, as you know, unless you have exempt. Where we had. Issues like the Aroma, Mike just talked about it and gave you the numbers. They were a bit slow to come in Europe in terms of tariffs and anti-dumping measures. But we argued, and this is a level playing field we want, and now we are reopening our line in Syensqo. So yeah, I mean. The companies today who will thrive are the companies who are going to manage with agility their value chain, right? Their supply chain, both from the supplier and the manufacturing, and build resilience and flexibility. But frankly, we cannot do it alone, even if we have what I would call ideal footprint around the world.

You need to do it with the customers because you need that demand, right? So you need to have a very close relationship with your customers. I can specify Bosch because we were recognized recently. It’s almost an open book where we can be closer to them, where we can support them, and it’s a win-win. So more and more supply chain will not only matter, it will be a differentiator. In the competitor area. But so far, we are managing it very well. And actually, we are more suffering from the effects than the tariff as we speak, right? And hopefully, the EU competitiveness will help. But this is my hat as a CEFIC president, will help the. European players to build competitiveness and resilience and save the chemical industry. You’ve seen how it’s hurting the commodities.

But so far, Syensqo has been really doing well, proud of the team. Back to you, Sheriff. I don’t know, Tristan, you have any follow-up questions? Yeah, maybe just one more. I was wondering if you could give a little bit of detail on the trends that you’re seeing in your semiconductors business. And how you see that shaping up over the next few quarters, the demand, the inventories, etc. Yeah, I mean. That was a bit of our disappointment. The H2, but at the end of the day. We came back. Beating expectation and doing exactly what we told you we were going to do. So that shows resilience and. The complementarity of our portfolio. Listen, it’s about the inventory built in the system as we speak.

And frankly, I promised to the team before I stepped down, we’re going to ensure we call every single customer and ensure we understand. What they have, what they don’t have, etc. So we believe it’s a tailwind. We believe it’s something which is going to stay very strong mid-term sector, very strong one in electronics, in chips. So despite the short-term volatility due to the stocking and these macro headwinds, the demand for semiconductors. Are huge, right? The smart devices proliferation and the next generation of electronic architecture, the GenAI demand is huge. You heard about. The news about whenever the chips are missing, it impacts. All of us. So as these stocking and winds. Normalize inventory levels, will be rich and are expected to return across the value chain, setting the stage for a more constructive demand environment in 2026. So be patient.

Mike and the team will come back to you in the February earning with more clarity on that. Thanks for the question. Thanks, Rachel. I will now turn the call back over to the company for the closing remarks. Thank you, Rochelle. I believe we have no further questions. So that ends our session for today. Thank you for your participation and for your great questions. And as usual, the investor relations team is here to answer any remaining questions. So have a great day, everyone. Thank you. Thank you. That concludes today’s call. Thank you all for joining. You may now disconnect. And we’re back on private mode. Thank you, everyone. Thank you, Rochelle.

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