This article first appeared on GuruFocus .
Release Date: July 30, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Returned to year-over-year growth in Q2 2026 with 5% volume and net sales growth.
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Composite materials delivered an outstanding quarter with 18% year-over-year sales growth.
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Specialty polymers returned to year-over-year growth driven by semiconductors and automotive.
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Gross margin expanded by 100 basis points to 34% due to top-line growth and pricing discipline.
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Updated full-year outlook expects low to mid single-digit volume growth and EBITDA of at least EUR1.1 billion.
Negative Points
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Underlying EBITDA of EUR311 million declined 6% year-over-year due to higher variable compensation costs.
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Specialty polymers faced selective pricing pressure and increased costs for commercial execution.
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Performance and care EBITDA fell 7% year-over-year due to weaker agro and coatings demand.
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Geopolitical uncertainty and uneven industrial recovery limit visibility for the second half.
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Incremental costs in specialty polymers for operational improvements are not expected to recur beyond 2026.
Q & A Highlights
Q: Regarding the strategic review of Performance and Care, what is the framework for how you could use the proceeds to support Materials? A: (CEO Mike Rodosic) Our intention is to further sharpen our portfolio to become a pure-play specialty materials and advanced technologies company, focusing on high-growth areas like aerospace, defense, electronics, healthcare, and energy. We are evaluating a range of strategic options for the Performance and Care segment with an emphasis on maximizing long-term value for shareholders. We have appointed advisors to help with this process and will provide an update next quarter.
Q: How much of the 18% sequential sales growth in Specialty Polymers was due to pre-buying, and how is pricing evolving given raw material inflation? A: (CEO Mike Rodosic) There was no pre-buy. The sequential increase was largely driven by higher volumes from stronger underlying demand in electronics (semiconductors), automotive, and industrial markets. Pricing remained flat quarter-on-quarter. We implemented pricing actions and surcharges at the start of Q2 to offset raw material cost increases, so we do not expect that to be a significant driver.
Q: Can you provide more detail on the semiconductor recovery? What is the potential incremental EBITDA if the business returns to historic levels, and how is the growth phased? A: (CFO Christopher Davis) Electronics is ~8% of net sales, with two-thirds serving semiconductor applications. In Q2, semiconductors were up double-digit year-on-year, driven by recovering demand and share gains. We expect stronger year-on-year growth in H2. We won't comment on specific margin levels, but Specialty Polymers is our highest margin business. We are seeing a reduction in stock levels, which should support a recovery.
Q: The variable compensation weighed about 200 basis points on EBITDA margin. Is it correct that this will continue in H2, and should this impact go away next year? A: (CFO Christopher Davis) Your calculation is accurate. Variable remuneration is accrued in line with 2026 performance. In 2027, we will accrue based on the performance targets set for that year. The incremental costs in Specialty Polymers to support operational improvement are not expected to recur beyond 2026.
Q: How should we think about Q3 EBITDA development in the context of a strong Q2? Is a sequential acceleration fair? A: (CFO Christopher Davis) We remain committed to our full-year guidance of EBITDA of at least 1.1 billion. The third quarter is expected to be broadly in line with the second quarter, though we continue to operate in an uncertain geopolitical environment which limits visibility.
Q: What are the main drivers for the automotive and battery business within Specialty Polymers? A: (CEO Mike Rodosic) Volume growth was broad-based, led by automotive, industrial, and building. In batteries, we had more than 20% year-on-year growth, driven by robust demand for separator coatings and NMC binders in Asia and new program wins. Excluding batteries, automotive saw mid-single-digit growth, driven by market share gains and new customer wins, such as our Technoflon heat-resistant sealing solutions.
Q: What are the incremental costs incurred in Specialty Polymers to support execution, and what changes are being made? A: (CEO Mike Rodosic) Q2 reflected low double-digit incremental costs to support commercial execution and operational improvements, which are not expected to recur beyond 2026. These include targeted commercial initiatives to strengthen customer engagement and accelerate new business wins (e.g., leveraging AI), and operational changes to simplify processes, improve productivity, and identify structural efficiency opportunities.
Q: You noted high single-digit growth in space and defense, but the outlook at the beginning of the year was flat. What are the drivers, and is this a one-off? A: (CEO Mike Rodosic) We had forecasted space and defense to be flat year-on-year coming off a record 2025. There is always quarterly variability. Use of defense assets does not immediately translate to material sales, as it relies on stockpiles and field readiness. We remain positive on the medium-term outlook, supported by continued strength in defense spending, while recognizing quarterly growth rates can fluctuate.
Q: If NovCare and related businesses are divested, what is the implication for the tax rate of the remaining group? A: (CFO Christopher Davis) The exact tax rate is impacted by the mix of profits in the countries where they are generated, ranging between 27% and 29% in any given year. The sale of either NovCare or Aroma makes no material impact on the effective tax rate going forward.
Q: What drove the large increase in admin costs in Q2? A: (CFO Christopher Davis) The increase is mostly explained by the reload of variable incentives, as well as incremental costs in Specialty Polymers to support operational improvement and hiring in Composite Materials to increase operational output. The incremental costs in Specialty Polymers are not expected to recur beyond 2026.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
