Azelis Group (Euronext:AZE) Q1 2026 Earnings Call

0:00 Good day and thank you for joining us as we present our trading update for Q1 twenty twenty six. As usual, we have Anna Bertone, Group CEO, who will give an update on our operating progress year to date. Boris Cambon Lelem, Group CFO, will present the financial results, and then Anna will say a few words on the outlook. After their presentations, we will open the call for Q and A, but until then, you will be on listen only mode. As a reminder, this presentation may contain forward looking statements that are subject to risk. We will make a recording of this call available on our website later today. I will now hand you over to Anna. Thanks, Ben, and good morning to everyone. Let me start with the most important messages regarding Q1 twenty six.

0:47 First, we saw mixed trends across our regions during the quarter. Some end markets are stabilizing and others continue to be very challenging. In this quarter, we have seen some, but still limited pre buying from customers, but we expect this to change as the Middle East conflict continues. The relatively limited pre buying suggests that there are at least part of the stabilization that we have seen in some end markets, and that has been demand driven. I will go into more detail per region and end market in the next slide. Second, we generated broadly the same amount of cash, despite lower EBITDA during the period, translating into a 113 cash conversion. This performance is another demonstration of the asset light, cash generative nature of our business.

1:39 And this is actually a good segue to my third point. The Middle East conflict has further increased volatility across our markets, highlighting the need to balance growth and take the right actions to protect our profits. And this is exactly what we are doing. We are on track with the implementation of strategic programs, while at the same time prioritizing cash generation and remaining disciplined on costs. This means managing our own costs, as well as passing on the cost to customers, as a result of price increases from principles and logistics. Now, let's move on to the key highlights from the first quarter on the next slide. In this quarter, we generated a revenue of 1,000,000,000, which is broadly stable versus the prior year in constant currency.

2:29 This was driven by the 3.9% organic revenue decline, being offset by a 3.3% contribution from acquisitions. We achieved an adjusted EBITDA of 104,000,000 and a very strong cash conversion ratio of 113% during the quarter, Once again, demonstrating the benefit of an asset light cash generative business. Overall, market volatility persists and this is evidenced by diverging trends across regions. Generally, where we have seen stabilization, it was mostly driven by volume growth. The pricing picture remains mixed across end markets and did not change materially in quarter one versus quarter four last year.

3:16 Now let's look at the drivers of our organic revenue growth. Clearly, the largest supportive driver in our revenue performance was APAC, which is 20% of our group revenue. The region turned positive for the first time in ten quarters and generated a 4% organic growth. The constant focus on commercial programs and the pruning of our portfolio is delivering results. In the markets that generated growth, it was mostly driven by a volume increase. Another positive in Q1 was the sustained momentum in US food, based on volume growth and stable pricing. And we also saw green shoots in personal care and F and F in US, which both turned positive in Q1, supported by volume growth. These positive trends were offset by some challenges.

4:05 Europe recorded a significant organic decline due to the tough comps, as the demand environment across all end markets was challenged compared to Q1 of last year. This is also valid for EMEA, but there we have seen an acceleration in negative momentum since the start of the conflict. LATAM did not grow organically, especially Mexico and Brazil have seen pressure on both volume and price. And lastly, in APAC, there are still pockets of weakness, and specifically in ANZ, and that makes up 20% of APAC. Their volume decline persists, and if you take this weakness of ANZ into account, it means that the growth in the rest of APAC was even larger than the 4% organic growth.

4:53 While we manage the short term challenges, we remain focused on executing on our strategy. The strategy that we presented in '24 remains unchanged and is based on segment leadership, being an active consolidator, and building one agile Azelis. We have three important strategic programs to achieve our objectives. Customers first choice is focused on strengthening the value proposition to our customers and equipping our salespeople with better tools. From our global customer satisfaction survey, we know we are good, but also where we need to improve. The program is elements contributing to improving top line performance and gross margin management. Winners of the Future is about expanding our cooperation with companies that provide a portfolio of innovative, high quality and sustainable products.

5:47 I am personally spending considerable time on this, and I'm pleased to see we have been successful to add new mandates with existing and new partners. Future Fit is a program that is shaping our organization to become more customer focused and more agile. As we are shifting certain activities to regional structures, our local teams can focus on what really matters, our customers. This also enables us to accelerate the rollout of our digital tools for business operations. And we are currently in the middle of the implementation of this program. Digital and AI play an important role in especially customers first choice and future fit, both supporting the commercial side as well as the back office processes.

6:34 We are making good progress on the three programs and more information about the impact will be shared with you later in the year. With that, let me turn you over to Boris, who will take you through the numbers. Thank you, Anna, and good morning, everyone. As Anna mentioned during the business update, Azelis once again generated robust cash flow in a difficult market. But first, let's get started with the group P and L. In the first quarter, Azelis delivered a revenue of EUR 1,000,000,000, representing a 0.7% year on year decline at constant currency. This performance was supported by a little growth in Life Sciences, which was up by 0.2%, while Industrial Chemicals declined by 2.1%, both expressed at constant currency.

7:24 Gross profit in the first quarter was EUR $246,000,000, a year on year decline of 2.3% in constant currency, corresponding to a margin of 23.7%. The 43 basis point margin contraction reflects the negative mix effect across the group, notably an unfavorable country mix in Asia Pacific. Adjusted EBITA in the first quarter was EUR104 million, a decline of 7.9% in constant currency versus prior year. However, the EBITDA in Q1 last year included about EUR 5,000,000 favorable one off items that are not present this year. So adjusting for those and still at constant currency, the EBITDA decline would be limited to 4.4%, corresponding to an EBITDA margin of 10.0% compared to an equivalent of 10.4% last year.

8:23 This evolution was driven by the lower gross profit, but was partly offset by the full benefit from our cost saving actions implemented last year. As a reminder, we announced in April 2025 a $20,000,000 run rate cost saving program that was fully implemented by the end of twenty twenty five and that is now fully impacting the 2026 P and L. The conversion margin remained a healthy 42.4%, which although lower than Q1 of prior year, shows an incremental improvement from 36.2% in Q4 twenty twenty five and forty one point five percent in Q3 twenty twenty five. Now let's move on to the overview of the regional performance.

9:11 In EMEA, which makes up 46% of the group, revenue was EUR $483,000,000, representing a year on year decline of 2.3% in constant currency, driven by organic revenue decline of 9.5%, with most end markets weak. Gross profit was EUR 123,000,000, implying gross profit margin of 25.4%, with strong margins in Europe offsetting continued weakness in Middle East and Africa. Adjusted EBITDA of EUR 58,000,000 resulted in a margin of 12.1% with cost discipline and contribution from acquisition partly mitigating top line pressure. Versus prior year, M and A in Europe delivered plus 7.2% in sales, plus 8.6% in gross profit and plus 9.3% in EBITDA.

10:07 In The Americas, which makes up 34 of the group, first quarter revenue was million or 1.2% behind last year in constant currency, reflecting organic performance during the period. The organic performance was driven by stable life sciences, where we have started to see tentative signs of stabilization, as Anna mentioned. This was offset by Industrial Chemicals, which remains weak. Gross profit in the region decreased by 2.1% in constant currency to EUR 83,000,000, and the adjusted EBITDA decreased by 9.8% to EUR 36,000,000, resulting in EBITDA margin of 10.2. The margin contraction was largely due to dilution from lower EBITDA margin in Latin America.

10:58 In Asia Pacific, which makes up 20% of the group, revenue in the quarter increased by 4% in constant currency compared to the prior year to EUR $2.00 8,000,000, reflecting the organic growth in the region. We saw some early signs of stabilization in some end markets, with revenue growth in the region driven by volume growth in industrial chemicals and stable life sciences and stabilizing prices across most end markets. Gross profit in the region was EUR 40,000,000, a decrease of 3.3% in constant currency, driven by negative mix effects as well as competitive pressure in the region. The strong cost control in the region translated into an adjusted EBITDA of EUR 20,000,000 and a conversion margin of 49.8%.

11:50 Overall, foreign exchange remained a significant headwind, mostly in Americas and APAC, with top line impacted, respectively, by 7.4% negative and 8.8% negative versus prior year, driving gross profit down by negative 4.3% and EBITDA by minus 4.8% on this FX impact. Showing now usual breakdown of the performance in this detailed table, let's move directly to the overview of our cash and its biggest operational lever, the working capital. Net working capital to sales is down to 13.9% at the end of Q1 twenty twenty six versus 14.7% prior year March and versus 14.1% at 2025 year end.

12:40 This reduction reflects our continuous focus on working capital management and cash generation as reflected in the incremental optimization of working capital intensity from the end of twenty twenty five. Though, let me be very clear, we're reducing the inventory we don't need, like the slow movers, while managing strategically the inventory we do need. Free cash flow was EUR 119,000,000, broadly stable compared to the prior year and represents a free cash flow conversion ratio of 113% compared to 100% in the prior year and is further improvement from the 106% reported in December 2025, again reflecting your group's strong focus on efficient management of working capital.

13:30 This relentless focus on working capital efficiency and cash generation allowed us to further drive down our net debt at the end of March to 1,500,000,000, a 4% reduction compared to the end of December twenty twenty five. Although the EBITDA decline is keeping leverage ratio above our target to three x, we will continue with our cash focus to drive down our leverage ratio. Now let me hand you back to Anna for some words on the outlook. Thanks, Boris. When I presented our strategy in '24, I stated that volatility is here to stay, and that insight has proven to be highly relevant. The persistent market fluctuations have reinforced our commitment to staying agile and proactive.

14:17 Rather than relying on short term trends, or waiting that situations improve, we focused proactively on robust long term strategy to navigate uncertainty and deliver value. So, while indeed we are seeing tentative signs of stabilization in some end markets, volatility makes it difficult to assess whether it can be sustained. Anticipated price inflation and growing risk of supply chain disruptions may trigger pre buying, but so far we are not seeing broad substantial pre buying from all of our customers. And in any case, we believe that an uplift from price pre empting and stock building is unlikely to be in the same magnitude as the post COVID disruption, given the weaker demand environment prior to the year.

15:06 Ultimately, inflation can bring also a demand recovery in jeopardy. We are well positioned to capture growth, whether it is from significant pre buying or structural end demand improvements. We remain committed to cost management in general, cash generation while volatility persists. So this concludes our presentation and we are ready to take questions. So operator, you can open the line. We'll take our first question from the line of Sushaneeth Varasani from Goldman Sachs. Your line is open. Hi, good morning. Thank you for taking my question and thank you for all the color by the different regions. It was really helpful.

15:56 Just want to dig into some of the commentary that you had given regarding the Middle East conflict. Clearly, you've seen some element of pre buy, but you've maintained that it's not across the board. But apart from Asia, were there any other regions that saw some element of pre buy? And have those trends changed in early April? How does your order book look? That's the first one. And regarding price increases on chemicals, your commentary in the press releases suggested stabilization in some areas, but just want to understand if things have changed towards the end of the quarter on pricing and in early April as well. Thank you. Yes, so let me start first on the pre buying comments.

16:41 The pre buying has been limited. We have seen some, I would say the most pronounced that we've seen was in APAC and The Americas, and very limited actually in the European one. On the outlook, as you know, we are not really giving I would say, very detailed outlook. What I can say is that what we can expect with the price increases that you also mentioned, yes, there have been large price increases announced and we are passing them on to our customers as we have done also in the past, and that is in our business model. Any color on order book or early April trading, please?

17:30 It's continuing, I would say, in the right direction. Thank you. Your next question comes from the line of Hannah Holmes from BNP Paribas. Your line is open. Morning. I just wanted to understand conflict, whether it's changing your strategy around M and A? And also on the cost savings side, I understand that that is not implemented in 2025, but can we expect any new announcements for 2026 given your advisory need to manage cost? Thank you. I'll give an answer on the M and A and then Boris you can maybe take the question on cost savings.

18:17 So our strategy has not changed. Consolidating and being an active consolidator remains a part of our strategy. As you know, due to our leverage, we are prudent in our M and A, I would say, execution. But there's also another reason, I also think that still at this moment the asks from selling companies is not in line with what we think it should be. So we are pacing this due to that reason as well. Lars, maybe you can Yes, on the cost saving, Anna. So, this is the set of actions we announced last year. And again, we have fully implemented these actions at the end of twenty twenty five. So that's why in Q1 twenty twenty six, you see the full benefit, as we mentioned in our last earnings call, you see the full benefit now coming into the P and L.

19:08 Do we have other cost savings action to announce later in the year? We remain very agile depending on the on the situation. And if needed, we will take necessary actions. But of course, today, I have nothing to to to share with you on that, but we will remain agile all over the year. And again, as needed, we'll act accordingly as usual. Your next question comes from the line of Chetan Udeshi from JPM. First, Anna, are you able to source all of your raw materials? Or you are seeing shortages in sourcing raw materials? That's my first question.

20:00 The second question is, from your perspective, when we look at 'twenty one, 'twenty two to now, why would you say you're not seeing like a broad based prebuying yet? Because to some extent, this potential destruction to supply could also be quite significant if this fate of a good blockade of continues. I know you would have thought your customers should be preempting that supply shortages and buying now. So from your perspective, why are you not seeing a broad based pre buying? Is this because maybe there are healthy level of stocks in the system?

20:48 Or do you think there are there are some other reasons why you may not be seeing it? Thanks for your question. So in the Q1 result, are no impact on shortages, but we expect they will come. And that's a bit the chemical industry is very intertwined. And some input chemicals that might be short end up in chemicals that we buy from our principles, that you would not maybe expect at the first moment. So even for example in the processing of food ingredients, you have certain chemicals. Before that is all clear, that takes a little bit of time, but I'm expecting absolutely shortages coming up and there can be severe shortages.

21:34 I think it first will impact more the industrial segments, but I expect that also, for example, some personal care ingredients will also be impacted. It's true that we see less broad based substantial pre buying from customers. I think there's a number of things there. It's not because stocks are high, because we actually think that stocks with customers are lower than I would say in the more normal years before the pre COVID problems. I think there are two things. First of all, at that time end demand was healthy, and the end demand was not at the same, I would say, healthy level before the war. Second thing is, I believe that customers have been burned at that time, in the sense that they bought a lot and then they sat on stock for sometimes a year, and they don't want to repeat that same mistake.

22:38 So they might be a bit more reluctant to do this large substantial pre buying. That's just my, I would say, observation. Just to follow-up, you said you expect shortages, but so far in month of April, are you seeing any shortages? It's starting Our to principles, and we are in very close contact with them, because we rely on them, they are yeah, as soon as the war started, of course, they are looking into what can be short and whatnot. We are in close contact with them about that. It's taken some time to understand the impact for them probably as well, what's going to be short and what not. So, I expect that shortages will soon start.

23:29 Got it. Thank you. Your next question comes from the line of Sujin Demeester from ING. Your line is open. Yes. Good morning. Thanks for taking my question. Two, if I may. Firstly, on China, what growth have you seen in Q1 now with the region evolving? And has the pressure from Chinese exports into Southeast Asia and LatAm dissipated? Or is this still ongoing? And secondly, on The U. S. Case segment, we've seen some announcement by the coatings producers of strong price increases to offset higher inputs. Since underlying demand still seems quite fragile, do you believe that the market can digest these increases in U. S. Case? And maybe a final one on the principal behavior and then the debate that we had in recent quarters on principal insourcing. Is this trend still ongoing? Thank you.

24:24 I'm not sure if I understood your second question well, but let me first start with because the line was a bit blurry. Your first question was about China and what you see there. China actually performed well for us in the first quarter and we've seen both on the life science and industrial recovery. And I'm expecting of course that when shortages from and that's not so much our own, I would say, our own performance in China, but from Chinese suppliers. I'm expecting that as there will be shortages, they will protect their domestic demand, and probably we will see less export outside of China, flowing into our markets, which should also help us further into the recovery of Southeast Asia.

25:17 On the coatings, I understood that you asked about how if the coatings market was still fragile, and I can confirm that The US case business is, I would say, stabilizing, towards stabilizing, but definitely not back on track again. On the principal behavior in sourcing, as I was telling probably also in the last call, when you have, I would say, challenged market conditions, we see principles acting in opposite ways. Some of them might take customers direct, so that they can benefit from the margin internally. Others are actually doing exactly the opposite and outsourcing more as they reduce their sales force.

26:08 And yeah, that is something that we've seen every time that market is getting difficult, and that's not different from any other situation, I would say. Okay. Thank you very much. That's clear. Your next question comes from the line of Matthew Yates of Bank of America. Your line is open. Hey, good morning. Thanks for taking the question. In the presentation, you mentioned that last year, the CHF 8,000,000 exceptional benefit in the Q1 profit. Perhaps it's my oversight. I can't recall that being pointed out at the time. I just had a quick flick back through your press release and the time.

26:57 Can elaborate a little bit on what that was and where it was disclosed? You. Boris, maybe you can take it. Yes, Matthew. Thanks. Yes, we wanted to highlight this one because we made some accounting adjustments in Q1 last year. The primary adjustment that was made last year was in response to a weaker than expected performance in Q1. So we're talking mostly about the variable remuneration. Last year, early in the year, it was probably clear that the performance would be below the expectations, and therefore, adjustments were made. A few other adjustments were made on the balance sheet, and that's not repeating in Q1 twenty twenty six this year, And that's the main reason why you see this difference. And we wanted to single that out in order to actually be better presenting the actual performance that we're delivering this year.

27:52 Thank you, Boris. That makes sense. And maybe as a second question. Just curious about how you are looking to manage this situation and potentially capitalize on some of the opportunities that may arise because the leverage is still quite high. And I think Anna said in the introductory remarks that the priority is still cash generation. Does that limit your ability to take any sort of strategic inventory positions that may help your customers and and bring trading opportunities through the coming weeks and months? I was a bit surprised that your inventory wasn't higher at the end of March, particularly if you're saying that April is continuing in the right direction. Do feel that your balance sheet constrained right now?

28:47 No. Actually, what we are doing, Matthew, is that we're working on deleveraging. As I was saying repeatedly, the main reason why the leverage is not going down significantly mostly because the EBITDA is not supporting. The net debt actually is going down. We have a healthy cash generation. And actually, this is being seen in the reduction of the net debt as we highlight. What is the situation limiting us to do is on M and A, as we discussed. So today, we don't have a pipe anyway that is inviting us to be sad about this. So we don't see opportunities that are being missed.

29:36 And it is a limiting factor for M and A, but we are actually working on the balance sheet and cash generation without missing opportunities. That's our reality. When it goes to stock inventory, it is not a limiting factor. Stock is a strategic asset for us, distributor, and we are managing this very strategically. And our balance sheet situation is not a limiting factor for that management. Though what we're focusing on, that's what I said, is we're focusing on the stock we do not need. So we're actually cleaning our inventories of stock that we don't need, and that give us some power actually to work and buy, you know, the stock we do need. Okay. Thanks very much.

30:27 Your next question comes from the line of Christian Lamott from Deutsche Bank. Your line is open. Thanks. First question is, I was wondering if you can maybe give a little bit of color on kind of what proportion of your business is linked to oil, either directly or indirectly, and would kind of 50 to 60% be a reasonable estimate? I can't give you that answer. I'm sorry, I don't have that, because as I said, you have derivatives going into, for example, processing aids in the food industry. So, I really can't give you that precise answer. Got it, and then maybe second, I guess in specialty, which is the majority of your business, you need to call up customers and ask for price increases in most cases.

31:26 When you're having these conversations so far and through April, are customers kind of generally accepting those price increases, or are you seeing some pushback, and what kind of retention are you seeing? It's a mix. I mean, price increases are never really, cheered upon, by customers, I think by no one. So it's not that they are glad to accept it, but everyone needs to read the newspaper, and therefore it's also something that is expected. The thing is, of course, this is not caused by, I would say, one company that has force majeure and therefore is out and we happen to represent them. This is really global and broad based, and that means that if they are trying to find alternatives, they will find exactly the same conditions, and that helps us of course to pass these price increases through.

32:25 Very helpful, thanks. Your next question comes from the line of Nicole Manion from UBS. Your line is open. Good morning, Anna and Boris. Just a follow-up please on the working capital and specifically the inventory. Boris, you talked about being strategic in terms of inventory. You don't need an inventory, you do. But I wonder if you could say anything more specific here about what you mean and what you're tracking, are there specific sort of product categories or end markets that you've got in mind that are sort of still oversupplied and vice Thank you. Thanks for the question. We are focusing, when we talk about cleaning, on the inventory that are slow moving.

33:13 So we have some categories, and it's very depending on markets, what slow moving is. So we have different markets and different buying pattern. On average, our DIO, as as you know, is in the fifties. That gives you an idea on how fast our stock rotate. Though in some markets, we have longer and some others, have shorter. Really, the cleaning happens on when we have, you know, some products that are not moving, that are not sold anymore. We're trying to find some way to sell them, clearly, to recover the cash. Of course, that is rather limited in our portfolio, but it's still some value that we can actually monetize in the balance sheet.

34:00 The buying strategy, we are a very large distributor serving different markets. So I won't be able to give you how we manage that. This is at our core competence panel actually to manage this inventory and listening to the needs of customers and conversing with our principal, we determine what is the best buying pattern. But again, we have kind of a diverse rhythm of buying in different markets. So there is no blanket answer I can give you now. Got it. Thank you for the detail. And your next question comes from the line of Shanoi from Barclays. Your line is open.

34:55 Yes. Hi. Good morning, everyone, and thanks for taking my question. Two from me, please. The first one is that you just confirmed that you will see some shortages in the coming months supply shortages. So are we to understand that if there are these supply shortages, then Azelis will see confirmed benefits because of that? I'm asking this because in 2021, 2022, the benefits that you saw were more from pricing and less from volumes. I remember you saying about 40% volumes and 60% pricing. So this time, if there are supply shortages, maybe the volume benefit may not come because of the demand. But should we should we be sure that we'll see some pricing benefits there?

35:45 And will that come in the coming quarters? So that's my first question. And the second question is on the competition from China. So you said that the competitive pressures from China had persisted all year in 2025. And you also said that the pressure from China was getting beyond APAC to Brazil and Mexico as well. So have you seen that getting better in Q1 twenty twenty six? And on that note, do you see that do you think European principles may see structural benefit because of the disruptions from the Chinese players? Any color on that will be very helpful. Thank you so much.

36:31 Thanks for your question. Let me start with the shortages. Obviously, when you have a shortage, it impacts volume, so you can never have a volume increase. When you have shortages. It's price driven indeed, as you were saying, and depending on where the shortage is, how long it takes, and if it is, I would say, in a product category or just an input material that can really not be replaced, the prices go up, because volume is scarce. It's very difficult to predict what's exactly going to happen, and that's why I keep on my statement, the volatility is here to stay, but it makes it also difficult to make the predictions how and where exactly we will benefit from it. But that we can benefit from this, that's absolutely true, and that's also what happened of course in the post COVID period.

37:29 Now, competition from China, in the first quarter, as the conflict of course happened at the end of the first quarter, we have not seen yet what I was describing, that shortages from producers in China make them focus on their domestic market and therefore export less, but I'm expecting this. I'm expecting this and we see a little bit already of some signals here, that Chinese principles are keeping more, obtain their list prices, instead of reducing prices heavily to gain market share. So we see it already a little bit now, it's early in the quarter, but I'm expecting this to continue indeed.

38:15 Is this a structural benefit for the Western principles? No, I just think that it is a temporary benefit. But please don't forget that these shortages are also impacting the Western principles. So, it's not that it's only hampering the Chinese ones. So, we're all in the same boat. Thank you so much. That's very helpful. Your next question comes from the line of Erik Wilmer from Kempen. Your line is open. Good morning, everyone. Thanks for taking my question. Could you talk a bit about the pricing attitude of your suppliers? I mean, you talked a bit about it before, but are you seeing differences? And I'm actually referring to specialty specifically between your Western and Chinese suppliers in the magnitude of their pricing actions, maybe even difference between U. S, Europe and China?

39:14 And could you also give us a sense of your current visibility on pricing from your suppliers? And did this reduce? Is this now very ad hoc based? Then the next one, how is your specialty your semi specialty or commodity part of the portfolio navigating the current conflict? Is this potentially an explanation behind some of the pre buying you referred to and a strong APAC in Q1 as the semi specialty part might see some recent benefits? And then last question, you highlighted these potential shortage issues. And I think in this context, surfactants and coatings have been mentioned, which also have a skew towards The Middle East. Would this turn out to be a net positive for Azelis as this may drive demand towards your EU based manufacturers? I think that has been kind of answered, but still want to press a bit on this one. Thank you.

40:09 The prices from principles depend. I can't give you, I would say, all the details. They range from price increases from, I would say, five to even 30%, 40% price increases. It depends of course for them, whether it's what is exactly impacted in their production process, and it's I would say in various parts of our portfolio, it's not only in industrial side, it's also products that go for example in home care, personal care, and as I said, they might also, at this moment not yet, but they might also end in food ingredients, as some products are used as process aids. Some chemicals are used as process aids in the food processing industry.

41:03 Now, you were asking also about the effect of pre buying and semi specialties, and if that was having the uplift in APAC, actually APAC we've seen improving month after month, so that's what I said. We think that and there is some pre buying, but it is limited, So we don't think that the APAC return to organic growth is solely based on the conflict and the pre buying. It's a trend that's positive and we see that continuing. On the last question surfactants and shortages, let's not forget that some input materials again are coming from that region or are coming sometimes from China and are exported, these are precursors, China to our principles in Europe.

42:01 So the European surfactant manufacturers are absolutely impacted as well. And then maybe just on that other question in between on on your visibility from your suppliers. So I I I would believe that there's probably some visibility generally with regards to pricing, not all immediately quote based. Is this now more ad hoc? Our principles have been probably what I've seen, and because we are very close to several of them, as soon as the conflict started, they of course scrambled to understand what the impact would be, and where they would see price increases, whether it was to higher input prices for them, or whether it was by expected price shortages, which would make them benefit.

42:54 So, they have compiled lists of their price increases. So I don't know what you mean by ad hoc. I think it's a well based structured approach that we have seen from our principles. Of course, we don't have insight in their complete production process, which is also not necessary, of course. That's very helpful, Anna. Thank you. There are no further questions on the conference line. We have come to the end of this call. I will now hand over to Chief Executive Officer, Anna Bertone, for her closing remarks. Thank you for spending time with us today, and we have given you insights in our progress as we navigate the very volatile business environment, but also how we are positioning ourselves for the longer term.

43:48 Yes, there are challenges, but we know where we want to be and also how to get there. And with that, I wish you a good day and I'm looking forward to seeing you or speaking with you again soon.