Good morning, everybody. I'm very happy to welcome you in our new auditorium, which I think it is the first time we are using it, and I hope it can accommodate more people than are present today. With the progressive improvement of the health situation, I hope it will be the case in the future. We are going to present with Benoit Bazin, our CEO, and Sreedhar, our CFO, the results for the first half of 2020 and the outlook. I will give you a few highlights, then Benoit will explain to you how we have managed through this crisis. Sreedhar will give more details on the results, and I will come back on the outlook. You have seen in our press release the main figures for the first half.
Our sales are down 18.1% in actual terms and 12.3% on a like-for-like basis at EUR 17.8 billion. The operating income is halved, minus 49.2% on a like-for-like basis, with a 290 basis points in our operating margin. The EBITDA is decreasing less, 32% with a two points decrease. The recurring net income is positive at EUR 272 million, but down 71%. A very strong improvement is net debt, which is reduced by EUR 3 billion compared to June last year at EUR 9.8 billion. The main highlights of the first half, of course, Saint-Gobain has been hit by the pandemic, with sales down 12.3% like-for-like. The important thing though is the dynamic within the first half. After a low point in end of March and April, and we recovered with a very strong recovery.
June, in fact, is higher than last year, both in sales and in operating profit. Benoit will tell you what have been our priorities in terms of the management of the crisis. I just want to stress one point. I think that our new organization has helped a lot. Being a local, when you have to manage such crisis was really very appropriate, and it delivered very strong agility. You will see that on the way we reacted on cost, on cash. I think a good management of the crisis. Overall, our cost savings in the first half amount to nearly EUR 400 million, with different components that Benoit and Sreedhar will explain.
A very strong point of this first half is a very significant increase in the cash, which was one of our main focus, through both good management in terms of CapEx and working capital, and I would say on all element of cash with a strong conversion rate. We also had, linked with that, a very good decrease in our debt, which was helped also through M&A . We dispose of the Sika share, but at the same time, we bought Continental. The net debt reduced by EUR 3 billion. I remind that the cash gain of EUR 1.5 billion on the investment in Sika, a significant part of this gain has not been through the P&L, but directly into equity. Now I leave the floor to Benoit, who will tell you how we navigated this crisis.
Thank you, Pierre-André. Good morning, everyone. My main message for you to take away is that we have managed the crisis with a very clear set of priorities and towards one goal, which is to emerge stronger from the crisis. Four priorities. First, protect the health of all our employees. Second, preserve our cash. Third, act fast on our cost. Fourth, make sure that we position ourselves in a very good position to make the most of the recovery. I think we have executed very well on those four priorities, and our teams have demonstrated an exceptional mobilization and commitment. I feel confident that going forward, we are in good shape to capture, like we have seen in June, an improvement in sales and profit. Starting on health.
From day one, we have put health as the number one priority, health and safety for our teams, but also our suppliers and customers coming to our facilities. We'll continue, of course, to do so and focus heavily on health because we know for sure that the COVID virus is still around us for some time. On health, like on many other topics, people, cash, customers, et cetera, our new organization that we have put in place in early 2019 has proven to be extremely solid, extremely reactive in order to overcome the COVID crisis, and to some extent, this COVID crisis was the acid test of the newborn organization.
First, on all local decisions, they were taken locally in real time by our country CEOs that are strongly empowered to take decision, as you know, on all their relevant local topics. On top of that, of this local setup, we have also managed an excellent international worldwide coordination in order to share and anticipate the experience from one country to the other on all kinds of issues, sanitary measures, how we were shutting down and reopening plans, distribution outlets, supply chain service, cash, et cetera. Again, our teams have shown an exceptional commitment and solidarity. I don't mention the dozens of examples beyond business in the way we have produced in real time, face shields, hand sanitizers, mask, also delivered materials and partitions for temporary hospitals and a lot of other very good examples. Second priority on cash.
Here also, we have acted very fast on two fronts. First, we have launched with Fredo mid-March, a daily cash monitoring by country on top of our ongoing actions to optimize working capital. This has delivered, as you have seen, a very strong and solid impact. We have also reduced our CapEx by 35% in the first half, optimizing maintenance CapEx while we have kept most of our plan growth CapEx, notably on construction industry, facade and productivity solutions in energy markets, Mexico, India, China and life sciences. By the end of 2020, we should have decreased overall CapEx by more than EUR 500 million versus 2019. All in all, we have delivered, as you have seen, a very strong free cash flow. Second area on cash, we have secured quickly during the crisis additional financing, and we acted decisively to sell our Sika shares.
Thanks to these essential actions on cash, we have strongly reinforced our balance sheet, which is appropriate considering the overall uncertainty that we have been facing since the outbreak of the COVID crisis. Fredo will give you more flavor and figures around all this later on. Third priority on cost. We have been very active with clear-cut actions, and let me describe the four areas of actions. First, of course, we have continued our ongoing efforts on world-class manufacturing, where we had an impact of EUR155 million in H1. As you know, this impact doesn't show up as a net savings in the P&L since they more or less offset salary and other fixed cost inflation.
The second area, which you see on the left side of the slide, in order to mitigate the impact of the health crisis during the lockdown period, we have acted with temporary reduction first on discretionary expenses, travels, customer marketing events, bringing EUR 65 million of net savings in the first half. We have also used all local employment measures such as partial unemployment or furlough with EUR 95 million of savings in the first half, net of the additional extra cost related to the pandemic. Based on the recovery in terms of business that we saw in June, we have exited partial unemployment at the end of the first half. This EUR 160 million, 65+ 95 of savings have been temporary in H1 during the acute phase of the COVID crisis and we don't expect to repeat them again in the second half. Third area of actions on cost.
We have analyzed the businesses that are not going to bounce back soon up to a normal level. This is notably the case for some of our local businesses such as distribution in the U.K., some of our industrial markets within High Performance Solutions, also our Mobility market and its related manufacturing setup. There we have launched additional measures, structural cost measures and will continue to do so in the second half. These measures will reduce our cost by EUR 50 million in H2 2020, an additional EUR 150 million in 2021, so EUR 200 million in full year savings by 2021. This is not going to be a net profit gain since these businesses will continue to suffer from lower activity, but clearly our actions will mitigate the profit deterioration of those businesses and lower the break-even point of these businesses. Fourth area finally, Transform & Grow savings.
Our country and market CEOs took the opportunity to land all their local actions even faster and pushed deeper to overcome the COVID crisis. We land EUR 130 million of net savings in 2020, EUR 80 million which has been done already in the first half, and additional EUR 50 million in the second half. With that, we'll have delivered our EUR 250 million total Transform & Grow savings that we announced end of 2018, one year earlier than anticipated, and now we have all our solid and lean organizations in place everywhere. Remember that the organization, the synergies were the first pillar of Transform & Grow. The second pillar is making sure that we optimize the group portfolio of Saint-Gobain. On divestitures, we are committed to continue beyond the EUR 3.3 billion of turnover divested in 2019.
Because of the crisis, we have put however on hold some of the things we were doing at the beginning of the year and depending on the evolution of the different markets, we'll progressively resume our actions and continue optimizing our portfolio when conditions permit. One word on the right side of the chart on the integration of acquisitions, particularly the big one, Continental Building Products. I'm very happy to say that our U.S. teams have done a very good job, even during the crisis, to continue to push fast on integration despite, again, all the sanitary situation. It's going very well on many fronts. Remember that I told you end of February that the teams were already in place. We have acted fast on SG&A with some restructuring, on purchasing savings also. All that is progressing very well. The brand transition is happening as we speak right now.
IT integration is planned for the end of the year. All this is progressing very well. On top of that, we have, as we speak, very strong volumes right now. We'll get at least EUR 15 million of synergies in 2020. We had roughly EUR 3 million in the first half and additional EUR 12 million in the second half, better than planned. We announced more than EUR 10 million in February. We'll get EUR 15 million in 2020, and we are very confident that we'll create value by year three as planned. Our first priority is making sure that we make the most of the recovery, first, by accelerating on digital. If I take, for instance, our La Plateforme du Bâtiment, distribution business in France, we have a full omni-channel solution with, of course, online ordering for our customers.
Also we have put in place very quickly SMS interaction with salespeople via Instaply, also online real-time payment with Paytweak. After a huge peak in April and May, almost 10 times what we had before, digital sales in our French distribution business in June is two times higher. We can say that June is a normal month, it's two times higher than what was the case in June 2019 as a percentage of sales. If I take another example in our Danish distribution business, we have very quickly put in place a self-scan application allowing our customers to scan their products and leave the store without interaction with our staff. Digital clearly accelerating and helping us in our business.
Second, making sure that we have preserved our skills, our people, and we have made sure that we have also this local proximity with all our customers, delivering excellent customer service. One example on the chart, which shows the kind of consistent performance over the market that some of our distribution networks have delivered in France, gaining share month after month, and gaining a lot of new customers. As a conclusion on this part, how we manage the crisis, I can tell you that we have done in a very tight way with a small set of priorities, the four I mentioned, being very agile, being very decisive, also to adapt ourselves to a very fast local changing environment, sometimes by the day, by the hour, or by the week. Thanks to all this, we have delivered sales and profit growth versus June 2019 and June 2020.
This bodes well for our short-term and midterm perspective that Pierre-André will present to you later on. Thank you, and I'm now leaving the floor to Sreedhar, who will drive you through all our results.
Thank you, Benoit. Good morning, everyone. Let me give you some more details about our results of H1 2020. Starting with the sales bridge, sales decreased 18.1% as reported, and by 12.3% like-for-like. The like-for-like decline was driven by the weaker Q2 volumes as a result of coronavirus pandemic. We saw a negative exchange rate impact coming mainly from the depreciation of Nordic krona, the Brazilian reals, and other emerging country-related currencies. The structural impact was negative due to the divestments we made as part of the Transform and Grow initiative in 2019, partly offset by the acquisition of Continental, which was integrated in February 2020.
If you look at the breakup of volume and price, here we can see how after a very good start to the year in January and February, Q2 volumes were hit as we saw the effects of the pandemic spread beyond China to the rest of the world from March, with a very different trends by country and market. Like-for-like sales hit a low in April at around 60% level, but improved sharply in June, up 3.7%, also benefiting from two additional working days. For Q2 as a whole, there was no calendar effect. Prices held up 0.4% in H1 in a slightly deflationary environment. By and large, we were able to hold on to our price levels. Looking at operating income, there's a sharp decrease in volumes, as you know, in Q2.
Usually the most important quarter for the first halves led to a like-for-like decrease of 39.2% in operating income. The operating margin has decreased by 2.9%. Three-fourth of the group activity resisted well with a very limited impact on the margin decrease. The main drop came from the U.K., Mobility, certain industrial markets, and float glass operations, which serve the automotive market. We had a positive price-cost spread with around EUR 50 million net benefit. Let me give you some more details about EUR 395 million savings in the first half, which Pierre-André and Benoit mentioned. We have the one-time discretionary savings related to the pandemic of EUR 160 million. We have the additional savings of Transform and Grow, which is EUR 80 million in the first half, EUR 80 million in the first half, which will be a recurring net savings.
The savings of EUR 155 million from our usual operational excellence program that enabled us to offset the salary and fixed cost inflation. Here you see business income and EBITDA. We have recorded business loss of EUR 49 million, resulting from the lower operating income and also the asset write-downs. This asset write-down consisted mainly of EUR 581 million write-down of intangible assets in the U.K. distribution business due to the tougher environment post-COVID and ahead of Brexit. We have launched several cost reduction initiatives, including shutting down the least profitable outlets. EBITDA decreased less than the operating income, with stable depreciation and lower non-operating costs. Remember that we no longer have the EUR 45 million impact of US asbestos , which we had in June 2019 first half results. Coming to the recurring income, you see here the details.
You have the net financial expense, excluding Sika dividend, was slightly lower compared to the last year. The average cost of borrowing came down to 2%. The recurring net income was down by 71%. Now coming to the free cash flow generation. Free cash flow is up 143% in spite of the drop in EBITDA, and the conversion ratio is up to 129% from 33%, which we had last year in June. Cash has become a clear priority for all the country CEOs. During the last three months, the daily cash in, cash out was reviewed, and we see its impact on the working capital management. This is where our effort on cash throughout the organization is really paying off. In addition to the good working capital management, please remember, there is also an impact from the lower activity level in the last quarter.
It was also helped by lower maintenance CapEx. We had already planned to reduce the overall CapEx spend for 2020, and once the pandemic hit, we increased the reduction target to more than EUR 500 million for the year. Finally, turning to the net debt, we have seen a significant decrease in our net debt with a reduction of EUR 3 billion compared to the end of June last year. This is mainly due to the proceeds of divestments net of acquisitions for around EUR 1.5 billion, along with the reduction in working capital requirements and capital expenditure. Overall, our balance sheet and credit metrics remain very strong. Let me get into the details of results by reporting segment. Starting with High Performance Solutions, like-for-like sales in High Performance Solutions fell 18% over the first half, with a sharp reduction in April and May, before a gradual improvement in June.
Mobility was particularly hard hit, as you can see from the figures here, even though we continue to outperform our market. In Q2, Mobility sales were down nearly half, particularly in Europe, with only China seeing growth. Things are improving, and June saw activity at around 85% as compared to last year's level. Industrial markets were hit by the wider slowdown, but construction industry held up better and life sciences continued to see growth. The operating margin for the segment decreased to 7.4%, again hit by the lower Q2 volumes, especially in the automotive market. Northern Europe. Like-for-like sales in Northern Europe fell 8% over the first half, with a steep decline in the U.K. in Q2. June saw a clear improvement, with the sales up 5% like-for-like for the region.
The Nordics showed growth over the first half, especially in the distribution where we gained market share. Thanks to our strong digital investments and logistics capabilities following the past investments we did. Sales were even up in Q2 and saw a strong June, supported by a strong renovation market. Germany and Eastern Europe held up relatively well over the first half, despite a greater impact in volumes and prices in Q2 in the float glass plants, which were affected by the reduced capacity utilization linked to the low volumes in the automotive market. The U.K. saw by far the most significant impact, and its sales were nearly divided by two in Q2. All operations were at virtually standstill throughout April before restarting slowly in May and progressively improving in June. Despite a positive price-cost spread in the region, the operating margin decreased for the region only due to the U.K.
Otherwise, the margin would have, in fact, increased for the region. Coming to the Southern Europe, where you have the like-for-like sales decrease 16% over the first half with a good start to the year, but a steep decrease in Q2. However, June sales were up 7% like-for-like. The recovery was driven by France, which improved sharply towards the end of the period. After coming to a very low point at end of March, trading was 50% mid-April, more than 80% in May, and virtually back to normal levels in June at the comparable number of working days. Distribution benefited from the past investments in digital and from the good momentum in the renovation market. We see clearly energy efficiency solutions coming back to growth.
Spain, Italy, the Middle East, and Africa also improved in June after being hit harder than the average of the region earlier in Q2 by the strict lockdown measures. Showing how different things can be by country, first half tradings in Netherlands was relatively unaffected by coronavirus pandemic. This was due to the volume decreases in most countries for several weeks in Q2, which usually the most important quarter for the first half profits, despite a positive price-cost spread. Americas. Despite a good start to the year, like-for-like sales in the Americas decreased 6.5% in June, with the region up 7% like-for-like. North America sales were pulled lower by volumes and lockdown measures in certain states in April, which impacted trading.
However, the sales improved in June, driven by Exterior Solutions and Gypsum, which delivered double-digit growth volume, helped by the sustainable, good, successful integration of Continental. Latin America was hit by several disrupted construction markets in March and April, generally prevented the construction industry from operating. Sales hit a low of 40% mid-April, but rebounded strongly with growth in June. Brazil continued to outperform the market, thanks to the sales synergies linked to the new organization, which is by channel. Particularly, Gypsum, which actually reported a double-digit growth in first half. The Americas operating margin decreased to 7.1%, hit by the tough trading environment in Latin America. North America, in fact, reported an increase in its operating margin, again, like-for-like, driven by productivity improvements and a positive price-cost spread.
Asia-Pacific sales fell 17.5% like-for-like in H1 and saw a progressive improvement in June with a double-digit growth in China, stabilization in Southeast Asia, and relatively smaller decrease in India. China growth in Q2 was particular driven by Gypsum with our new plaster plant opened last year, now running at full capacity. After a good start to the year, India has been severely hit by strict lockdown measures, which continue to be present in many states. In June, trading was at around 70% of 2019 levels, with a clear week-on-week improvements and market share gains. The situation in other Asian countries varies by country. Disruptions were very limited in Japan, but more important in Thailand, for example, and then Vietnam reported above-market growth, thanks to the success of our local strategy. The operating margin for the region decreased 7%, affected by the sharp downward in India in Q2.
Excluding India, the margin would have, in fact, increased significantly. In a nutshell, even though the first half results were impacted by COVID, recent trends are encouraging. You saw Saint-Gobain taking decisive steps to adjust the cost structure wherever necessary. There is a strong focus on cash and also the commitment to keep the balance sheet strong. We are clearly prepared to bounce back very strongly. Now, I hand over the floor to Pierre-André, who will talk about the outlook.
Thank you, Sreedhar. Talking about the outlook in such a volatile environment is not easy. I would distinguish three time horizons. The first one where we have some good visibility, I would say, is the third quarter, where I think we'll have a good third quarter. I can tell you that the trading in July is very good, is above the trend that we have seen in June, and we have good visibility for the months of August and relatively for the month of September. The fourth quarter, there are still uncertainties, both from sanitary standpoint and its impact or not impact on the economy. At the moment, I would say that when I look at what's going on in Brazil, where we had a very strong June, there is a disconnect between sanitary situation and economic situation. Is this going to continue after the summer?
Today, we don't know. Also the impact of the macroeconomic situation globally on our sector. If I combine those two horizons, it means that for the second half, we anticipate a very significant improvement on the first half, but it's difficult to quantify the magnitude of this improvement. The third horizon, which is, I would say, when we get out of this crisis, the world post-COVID, I think is very favorable to Saint-Gobain. I think the Saint-Gobain growth profile post-COVID will be better than the Saint-Gobain pre-COVID. Why? If I look at the trends that are going on and how I see the world after COVID, I would say this world will be more local, more digital, and more sustainable. The strategy and the axis of direction of Saint-Gobain that preexisted is going to be favored by those trends. More local.
More than 80% of our businesses is local, and we are extremely immune from sophisticated and fragile worldwide supply chains. Our organization has reacted very well. I think we are going to be in a world which will be more local. For Saint-Gobain, it is an environment in which we will feel very well. More digital. This trend existed before, but I think in the construction world, the trends of digital have been lower than in other words. They have accelerated, and we have in the area of e-commerce, for instance, Benoit mentioned that, but it's interesting to see that they are accelerating, that they will not be only digital, the sales. I would like to come back to example that Benoit said. If you take our platform sales, they are back to 10%. They were at 5%, and they went to 75% or 90%.
You can see it both ways. First, it's not going to be online, and I think that's very well fitted to our model where our customers want to have physical contacts in our stores. On the other hand, it will be omni-channel, and the digital will play a role, and we have double. If I look at what's happening with our employees, I think, and the relation with our customers on many fronts, whether it is training, whether many example, I think this crisis has made us, because we have the tools ready, and we invested a lot in that before, make in three months the progress we would have made in three years, two or three years. A big step because of digital. We are well prepared and ahead of the game in that in our sector.
The third point, of course, is I think the post-COVID world will be more sustainable. During this crisis, public opinion and governments have made a strong link between health, well-being, and protection of the planet. I think this is going to stay. The recovery plan, which are launched, especially in Europe, but not only in Europe, I think in the future, will be based on an acceleration on the energy transition. Providing sustainable solutions is at the core of the business model of Saint-Gobain, as well as having sustainable operations. This is encompassed in our CSR roadmap, where you can see here with that we monitor a number of KPIs in many direction. There are just a few here, which has allowed us to get a number of awards and I think have a leadership position in the way the specialist agencies look at us.
There is one, I will just mention one, you see some of them on the right, which I am very proud that we are on the CDP A list. Just to mention a few items, business ethics is, of course, and compliance, which is expected from all our stakeholders, is very strong in Saint-Gobain. Health and safety, where we have in the last 10 years, we have reduced by a factor 3.5 our incident rate, and we are achieving a good level in 2019, and we are still going to continue improve. We have launched, last September, a program overall for Saint-Gobain employees, a care program, which provides a floor in terms of all benefits.
Climate change, of course, and circular economies, which are very much linked, where we are working hard at the moment to establish a roadmap to the 2050 agenda to be net zero carbon that we committed last fall. There is a huge enthusiasm within the Saint-Gobain employees on this agenda. We don't start from scratch. You see that from, if I take absolute reduction of emission, we have reduced 40% in the last 10 years, and 14% if we look at constant level of productions. We are on our way for 2025. We will establish other objectives to put us in the good way to 2050. Also we have, in terms of inclusion and diversity, very strong programs that we continue to strengthen every year. Sustainability is also at the heart of the solution that we offer.
Around 60% of the solutions that Saint-Gobain is putting on the market are contributing to CO2 emission. Our biggest market is renovation. Renovation, when it happens more and more, and I think it will be even more the case in the future, will have an improvement on the energy efficiency of the buildings. If I look Mobility, our growth is fueled, and we have performed the market, it grows on the fact that we are delivering solutions which go with the electrical vehicle and where we play an important role. You see a few examples on this slide of some new launches, products that have a clear impact when they are put in place by our customers.
If I want to drill down a little bit to what's going on presently, especially in Europe, the recovery plan which are being designed are emphasizing very strongly in Europe what they call a Green Deal, but it will encompass a Renovation Wave in September where they will be giving it. Many countries, like France, are developing programs based on a significant improvement on energy renovation. The money at stake is very significant and the growth rate it will imply for Saint-Gobain is quite important. It's an obvious topic in terms for governments. It's local job creation, and it's improvement on the energy consumption of the country, and it helps the country to go in the direction of their objectives in terms of climate change. A lot of money is going to be earned then, and I think it will foster very significant energy renovation.
Saint-Gobain is uniquely positioned to get the benefit from that. If I take just the European Union, we have EUR 10 billion of sales which are linked with this topic. I show you here an example of, in France, of a building, and you see that with our different brands and product solutions, we cover most of the items which are needed to have, and solutions which are needed to have a renovation, given very good performance from an energy standpoint. Saint-Gobain is unique from that standpoint. I think we are going to demonstrate in the next few years our strengths from that standpoint. If I wrap up, our priorities for the rest of the year. First, continue to ensure the health and safety of all in a health environment which remains uncertain.
Second, based on what Benoit told you, we are going to continue to implement our adaptation measures and continue our focus on free cash flow. Attention to price-cost spread in an environment which is, in terms of the cost, more favorable. Acceleration of the cost savings and the realization of our objectives in terms of CapEx. The third priority is to have a very strong balance sheet. It has improved significantly. Based on the situation at the end of June and the outlook that we see, especially for the third quarter, the board has decided that we anticipate our medium-term objective to get to 530 million shares, and we will do that by the end of this year. Fourth opportunity, of course, to position ourselves in the best manner to take advantage of these recovery program that are going to be launched.
I think they are going to be significant. In France, it will be announced in September, but I have very good confidence, and I've been working on these topics, that we will have good measures being taken. We are constantly looking at strengthening our portfolio of solutions, which help us to improve the energy consumption of building. I think we have, coming out of this crisis, the prospects for Saint-Gobain in the medium term are reinforced, and we will improve our growth profile. That's the message of this first half results and outlook. Now with Benoit and Sreedhar, I'm at your disposal for any questions you may have. Thank you. Wait. I think you have to, if you don't mind, the micro is not going to you have to go to the mic.
[Foreign language] Good morning, very happy to see you again. I have two questions mainly. First, a commercial question. In your current organization, the construction products are in majority sold to the distribution in-house or to competitors to Saint-Gobain building distribution. Do you try maybe to increase the share of the construction product directly sold to contractors, maybe? First question. Secondly, if we look at the presentation, we have a collapse of the distribution margin over the first half. Is that due only to U.K.? Can we have more flavor to the split, maybe, between France, U.K., and Nordics? Maybe a follow-up question on distribution. Where do we stand with the logistic improvement in Nordics and also in France? Many thanks.
Benoit?
Yes, I can take those questions. No, we don't favor. As you know, we have arm's length relationship between our distribution network and our manufacturing of construction products. We have a lot of exchange in terms of market knowledge, in terms of marketing actions, et cetera. We continue to be independent. Now, depending on the situations on the job site, you could have a bit more direct, you could have some movements in the routes to market, but there is no major move, and we play with what the customers ask. Our distribution business has been extremely efficient during the lockdown. Our platform remained open all the time, so it was a good way to market when some of the big job sites were closed. The small craftsmen from the small job sites, they were buying a platform, which was delivered by our construction products business.
There is no big move in terms of route to market, and we continue to be arm's length. Second, on the distribution margin, the good news that we have improved our margins in the Nordics throughout the first half. Our margins, it's up in France. When you exclude the months of mid-March to mid-April, because when you are shut down, the margin cannot improve. If you exclude the short-term impact, we improve our margin in France. The main reason behind the negative impact of the margin is, one, the short-term stop, I would say, in France, when you shut down for some days and you are just at 20%, 25% activity, you cannot improve the margin. The U.K.
In the U.K., it's the most severe lockdown we have seen around the world, where not only there was a total lockdown, but you have to be on essential activity, even the craftsmen, in order to work. The difference of France, where all the job site, the small job site of renovation were open. In the U.K., if the small job sites were not related to essential activity for hospitals, for prisons, you could not work. The impact in the U.K., as Sreedhar said, has been half of the sales altogether in Q2, which is two, three times more than what we have seen in any country around the world. Therefore, the vast majority of the margin drop is clearly in the U.K., because in the Nordics we are up, and in France, excluding the peak of the sanitary crisis, we are up again.
Third question was on Lapeyre?
No.
No, sorry. On logistics, yeah. We continue to invest. It could have been-
In the Nordics.
In the Nordics, we continue to invest. We have a very strong setup in the Nordics on logistics. Same in France. We have invested a lot over the years in France. We have a very good setup. In the Nordics, we are well-placed with distribution centers in Norway, in Denmark, in Finland. We continue to expand that. We have best-in-class service, which allowed us, I think, to gain market share during the confinement. On top of that, as I said, we have invested a lot in digital. We have some self-scan tools so that you don't have any physical interaction. It's helpful at the time of lockdown. The Nordic distribution has a very good setup, both in terms of distribution center, digital network. We continue to make some small add-on acquisitions in distribution in Nordics.
How are you in Lapeyre?
Sorry. Lapeyre, there was a severe lockdown because it was B2C activity. For six weeks, we decided to close the Lapeyre store. We have a huge ramp-up of Lapeyre orders in the last eight weeks, well above last year, and we may actually be on par with last year end of July. Catch up in just June and July, what we have lost for eight weeks between mid-March and mid-May. There is a very strong catch-up, which means that people now they've been confined, they didn't spend their money on restaurants, on concerts or travel, and they spent to renovate residential. They have worked on home office. Maybe they have realized that their home office is not fantastic in terms of acoustic, in terms of place, and people are spending a lot on residential in the U.S. and in France.
Lapeyre is benefiting from that, and also we might, depending on the market conditions, continue to make progress on the strategic evolution of Lapeyre in the second half.
Lapeyre will be loss-making this year from the.
Interesting enough.
It's too early to know.
Interestingly enough, we might be on the profit side end of July, on par with the end of July last year on Lapeyre. Offsetting the eight weeks of lockdown. The next question is from Yves Bromehead on the phone.
Yes.
Hopefully you can hear me well. Just had a few questions. I'll take them one by one. My first question is on free cash flow. You published a EUR 1 billion increase with a significant reduction in working capital, which given the seasonality of working cap, is quite extraordinary. As you mentioned in your outlook, as trends are recovering, should we expect quite the opposite in H2 and maybe you're building some working capital needs leading to a nice flow in H2? Just some color on what to expect here would be really useful, and then I'll take my next question after that.
Sreedhar, you want to answer that one?
Yeah. The working capital, you're right that we have a seasonality impact. If you just take the numbers, we have EUR 1.1 billion improvement in working capital. Out of that, EUR 400 million is coming out of inventory management, and the rest is between the receivables and payables. In theory, again, I'm saying in theory because it's a very particular situation we are going through. In theory, normally, the receivables and payables are directly linked to the activity. Then you have working capital of anything to do with the inventory management is really the management's effort, management's focus, and I would consider that it is clearly, it's a discipline that should continue to be there. There is also one element because the June was significantly a good month for us, so there will also be some impact of that in the inventory.
Overall, in the free cash flow, I would again insist that there is a strong focus. You have seen that consistently. In the last 18 months, we have delivered consistent improvement. I don't see any reason why this focus will get diluted in the second half. The focus will be there, the discipline will be there. As I mentioned during the crisis, the country CEOs looked at cash on a daily basis. The cash review, cash focus has become part of the DNA on a day-to-day basis, day-to-day operations. I remain confident in terms of focus on cash flow.
Thank you. My second question is on pricing. In Q2 2020, if we look at the pricing in the High Performance Solutions division, it has deteriorated. Could you comment on what you're seeing here and if you could split this between HPM and autoglass, that would be really helpful.
Right. Yes, pricing has been certainly tough in automotive, building Mobility segment. Otherwise, industrial segments could hold on the prices. life sciences continues to remain in good shape. The impact is coming mainly from the Mobility part of the High Performance Solutions.
Okay. My last question is on the 530 million share count at the end of the year, which is about EUR 400 million of buyback at today's price. Just wanted to reflect on that. You mentioned before in Q1 that you would update the market on shareholder return policy. Is this one of them? Can there be more? Any comment on that would be really appreciated. Thank you.
The objective we have is for this year. We said we would review our shareholder return policy in November. Given the situation on June, we have anticipated that.
Just so I understand correctly, this is the shareholder return update or can there be another one again in November on, for example, dividends?
In November, we will update on our dividend policy.
Okay. Thank you so much.
Next question?
Next question from Sven Edelfelt from ODDO BHF. Please go ahead.
Yes. Hello, good morning, gentlemen. I understood most of the craftsmen want to work in August. Given the good dynamic going into Q3, shouldn't we expect a double-digit growth in volume in construction activity for this quarter, for Q3? Is it, in your view, realistic? That's the first question. The second one, can we have an update on Pont-à-Mousson? I believe you're going into a legal reorganization on a regional basis. Does that mean exiting is no longer an option on your planning a breakup sale?
I will answer the first one. Yes, as you heard me, I think we are going to have a good third quarter. I am not able to give you a precise figure yet for the month of August. I just want to say on your comment that August is usually a low month, we expect to have a much better August than usual, Well, in Southern Europe. In Northern Europe, the low month is generally July in Northern Europe has been quite good. Yes, we are going to have a good summer. I will not quantify more, I think it's going to be a good summer. On the pipe activity, Benoit?
August is a bit of a French story historically, so.
In Southern Europe.
In Southern Europe.
Southern Europe.
We have reorganized our teams to make sure that we have teams ready to serve customers in August, which is good. On pipe, the legal reorganization we have done to have Asia, Latin America, Europe, and our soil and drain businesses separate legally, it's something we wanted to do to have clarity on the profitability and the management entities of each of those different sections. It's internal reorganization of pipe. There is not much to read beyond that.
Next.
Thank you very much.
Next question from Robert Gardiner from Davy. Please go ahead.
Good morning. It's two from me. Just wondering, one, on your additional cost savings, the EUR 200 million, I'm just wondering what kind of longer term assumptions you're making about places like U.K. distribution and if the measures you're taking in Mobility and other industrial businesses, is that capacity closures or what that is there? You mentioned as well a number of benefits you had in H1 from kind of temporary savings, government schemes. I'm just wondering to what extent they unwind in H2, including tax deferrals, for example. Thank you.
Benoit?
If I take, for instance, the mobility market, you can read a lot of different assumptions. Whether it's going to come back to 90%, it varies by geography. Clearly, we don't expect that to come back to 100% in the next 12 months- 18 months. What we are doing, for instance, in this market is to accelerate our positioning on electrical vehicles, where we have a kind of double-digit, strong double-digit growth. Clearly, we don't expect to come back 100% on mobility anytime soon. In the U.K., there is still this uncertainty around the Brexit. We think that some of the non-residential investment in the U.K. could be delayed. We don't take for granted that we are going to come back to 100%, but a bit below that, could be a single digit below that in the next 12 months- 18 months.
Then on the temporary savings, as I said, we exited the partial unemployment measures, exceptional measures that were put in place end of June. We don't expect to capture that going forward. On discretionary expenses, if I take just travel, by definition, we are not going to travel extensively in the second half, there might be a bit of that again in the second half, so far it's not the same magnitude of what we have seen for sure in the first half. There is no tax deferral or things like that. We have paid all that on time, and we didn't capture those kind of additional extra benefits. It was a cost saving based on unemployment or internal expenses that we have delayed.
Next question?
That's great. Thank you.
Next question from Giuseppe Gaspari from Cheuvreux. Please go ahead.
Yes, hello. I have two questions, please. The first one is a follow-up for Sreedhar on the working capital, please. Are you suggesting that by the end of the year, given that inventory is something that you manage yourself, that it will be the working capital positive, a positive change? Also if on that you could give, please, the days of sales that working capital or inventory, what you prefer, represented at the end of H1 2020 compared to H1 2019. It's good for us to see these figures. My second question is on this Renovation Wave in the stimulus packages around energy efficiency and so on. Do you think that it's different this time, that it's more powerful than ever, or it's something that has been quite regular in the past in a lot of countries?
If yes, are you, I would say, happy with your portfolio, or would you like to reinforce in some areas or go to new areas? I don't know. You talk also about digital, and I guess that electrification will also be an important trend there. Thank you.
Sreedhar on the first question, and Alain can answer the second.
Yeah. Giuseppe, the focus on working capital will remain, and again, I say that I'm very confident that the fact that the country CEOs are looking at it on a daily basis, there is a lot of focus, rigor, and it's happening at the grassroot level. It gives you a lot of confidence that the working capital is being managed. Coming to your question on what is the number of days, if you just look at the end of June, it's not the right reference because we are talking of nine days improvement, which means no, because you are talking at a different volume level. I don't want to even claim that this eight days or nine days of improvement is something which is going to sustain.
That's why I said that you have to keep that in mind in your working capital, that the part of inventory, which is EUR 400 million improvement, and that's something we should see improvement and not again the EUR 400 in the same sense, because there is also some impact of the June sales, which was very good. I expect inventory should be certainly better. At the least, I would expect at the end of the year is the number of days we should see at least in line with the last year and or maybe better than that. I don't see any reason why there should be any deterioration in working capital in number of days, even at the end of the year.
Concerning the programs on renovation, I think that, if you look at the programs that have existed in the past, there was, and successfully so, a lot of focus on new buildings. I think in Europe, we have had in the last 10 years, coming from Brussels and then implemented in the various countries, a big improvement on the way new buildings are done. In terms of renovation, we have had much less emphasis. I think there is a very strong new focus, and it's different from what has happened. That's the first point. For Saint-Gobain, around 50% of our sales are in renovation. It's a much bigger part. The second point is, I think that the climate issue, which was not present the same way, I would say 10 years ago. It was more reducing the energy spend, which is still a very important element.
I think contribute to the CO2 reduction is going to be seen by many consumers as something which they are interested to do. When I look at the young generation, they are very interested in these topics, and they want to give a contribution. I think that if there are subsidies or help, the number of renovation which are going to be implemented will be more significant. The impact will be more significant compared to the amount of public money than it was before. The third point I want to make is that, we are focusing a lot on Europe on that, because that's where the announcements have been the most visible. I would say that despite what's going on at the federal level in the U.S., the U.S., there are a lot of local states, government cities, which are implementing programs in that area.
I think this topic is going to be important, also in the U.S., where we have, at the moment, a good dynamic. I think it's really going to be a powerful engine of growth for Saint-Gobain in the next few years.
Changing your portfolio or adding things.
Sorry, I didn't answer the last point.
to your portfolio to better benefits.
You have seen on the slide I presented that in France, in France, we have also a very strong distribution. We cover a lot of things, either through manufacturing and distribution. Our distribution activities is also a good way to see what are the areas where we could also be interested in terms of manufacturing. Yes, we are constantly looking at optimizing our portfolio. I think, one topic, as you know, we have an interest in construction chemicals. I think there's a growing theme that we see is driving a big growth in our distribution in sanitary, plumbing, and heating, is the air quality.
Another trend which is growing, and it is driven also by the efficiency and the circular economy to be more efficient with the material, is the off-site manufacturing, which is also helping to address one of the issues that we have had in our sector from a customer standpoint, which is the labor, which was not always available. I think with this crisis, it's going to be less of a problem. I think it's important also, and governments are working on that to make this sector more attractive, because there is a need in that area. I think also to address the shortfalls in skills and to be more efficient also in terms of use of resources, off-site manufacturing is growing, and it's different country by country, but we are also looking at all that is maybe small moves to complement our portfolio in that direction.
We've done that in the U.K. two years ago. We have other ideas in this direction.
Thank you.
Thank you. Next question from Arnaud Lehmann from Bank of America. Please, go ahead.
Thank you. Good morning, gentlemen. I have three questions, if I may. Firstly, maybe for Pierre-André, what's your view of the outlook for housing and commercial industrial construction for Europe and the U.S.? I guess in the medium-term, there's a view that maybe housing is recovering nicely, but potentially non-residential construction has downside risk into 2021. What's your view of this? Secondly, maybe a word on Asia-Pacific. I think you mentioned that it was still down in June, driven by India, I believe. Could you give us a bit of color on that and when you would expect the Asia-Pacific regions to be back to growth, if possible, maybe by the end of the year? Lastly, regarding your cash position, I think you have about EUR 7 billion of cash in the balance sheet at the end of June, which is obviously very comfortable.
It's now meaningfully higher than your usual cash position of EUR 3 billion-EUR 5 billion. I guess maybe some buybacks are possible this year, but what would you expect to do with the cash once the business conditions normalize? Thank you.
On the first question, I think it's probably different from a housing and from non-residential. They are two different questions. On housing, I am overall optimistic about the outlook. There may be some hiccups because of some slowdowns in the delivery of authorization of permits, and it varies by country. There are some countries where we have some hiccups where there may be a slowdown in terms of issuance of permits. There has been a slowdown of issuance of permit, clearly in France for two, three months. Is this going to have an impact? It's too early to know.
What I think is that for housing, the trend emerging from COVID is, to some extent, and I don't know whether it will be huge, but I think it's going to be existing, at least as a short-term trend, which is important, of going back to individual housing versus living in a flat. Confinement or being in a flat for a lot of people in large cities, you see a movement toward a desire to have a small garden. I think that for housing, I see a trend towards individual housing is going to be, in my view, positive clearly in the U.S. I see that also in a number of countries around the world. Non-residential, on the other hand, maybe, depending more on the macroeconomic and the speed of the recovery.
Maybe if I take the three components, renovation, which is going to be bullish in my view, new housing, which is meant to be okay and good, I think non-residential, which is, for us, the smaller segment. I think it's around 10%. I am not very optimistic about the growth of this segment in the next 18 months. That's the way I would describe it. Asia-Pacific is very contrasting between India and China. Maybe you want to give some color, Arnaud?
Just to add on the U.S., Arnaud, if you take the home sales right now.
Yeah.
it's very hot.
Yeah.
The housing market right now is very hot.
That's why I said that, yeah.
We have double-digit growth in some of our product lines as we speak with very strong backlog of orders. It's a very hot residential market in the U.S., which is good for volumes and prices going forward. On Asia-Pacific, it's fully linked to India, because if you take Asia-Pacific outside of India, we were down only 2% on volumes on the overall Q2 and up in June. We were up double-digit in China, up double-digit in Vietnam. As you know, the sanitary situation in Southeast Asia has been quite complex between Singapore, Malaysia, Indonesia, but they are smaller countries. I feel very confident that we'll be up in the second half in Asia-Pacific outside of India.
In India, which is a large country, the lockdown and the sanitary situation is complex, and we don't expect to come back to a normal level in India before the end of the year. Unfortunately, we were running at 70% in June. Fred is, of course, the specialist of India, but it was 70% in June, and we don't anticipate to have this huge country to come back to normal before the end of the year. The rest of Asia is already strongly up and might offset, depending on how fast India does catch up, might offset India.
Yeah.
coming back to normal in the second half.
With a good growth in China in Q2.
Very good. Double digit in Vietnam and China.
Cash standpoint, the goal is to have, as I said, a stronger balance sheet, and to reduce the debt. I don't know. You don't need to give more detail.
No.
additional comment on India?
No, India, I think that the fundamentals are very strong, and I remain extremely bullish on India. It is just a question of managing this transition of the crisis. Otherwise, Saint-Gobain is so strong, I think it will bounce back very strong manner. I would say in India.
Next question.
Thank you very much. Thank you. Next question from Nabil Ahmed from Barclays. Please go ahead.
Good morning. Thanks for taking my questions. Can you provide some idea on what would be the implementation cost of the new saving initiatives and the reorganization you mentioned? Maybe related to that, you're ahead a year ahead in terms of reaching your targets on Transform & Grow. Have you identified new saving initiatives? You seem to be pleased with the new organization and the way it's progressing. Are there potentially new initiatives, savings initiatives, related to Transform & Grow? The second question, I was wondering if you could elaborate a little bit on the U.S. Roofing outlook. How do you see the second part of the year? Any specific storm activity that could impact the business? Also wondering if you could comment on price in Asphalt Roofing and how you see the margin going forward. Lastly, broadly similar question about the U.S. Gypsum market.
If you could comment on the outlook, what pricing has done following the steep decline last year and how the CBP integration is going.
Okay. We are trying our best to forecast the economic outlook, but I don't think we have any competence in terms of forecasting storms. Benoit will try his best. On the cost of the additional program, Sreedhar.
Yeah. The cost of the additional program, in the first half, we had around EUR 40 million. I would expect it to be much bigger in the second half, close to EUR 100 million in the second half. Just keep in mind that the cost related to Transform & Grow would be half the level of what we had last year, even slightly less than half. Overall, I think the restructuring cost, I expect it to be less than EUR 400 million. Last year it was EUR 421 million.
On the Transform & Grow, Benoit?
As you have heard, it's Transform & Grow. Now that we have the organizations in place, I don't expect additional savings. Of course, each country CEO will continue to optimize the team, the customer service, the logistic cost to serve, all that. I would say it's day by day, and it's execution in the details in normal life. Our ambition now is to grow. I've shown you very good examples on how we capture additional market share in our distribution business in France. I could have shown you our double-digit growth in Gypsum in Brazil. We have a lot of commercial synergies that are capturing a lot of growth. This is for sure. It takes a bit more time than the hard savings, but it's Transform & Grow.
Our ambition with the solutions of Saint-Gobain to capture the renovation, to capture new solutions on many areas and all the richness of the portfolio is to truly leverage the richness of Saint-Gobain within each country, with our CEO. That's the growth part, which I'm very confident on. Now that's the ambition of each of the country.
Roofing and Gypsum.
On the U.S., Roofing is very strong as we speak. A bit more storms indeed than last year. What is good, we have one of the highest backlog of orders as in the recent history, so that's good, and we are going to announce some price increase in the coming weeks. I think it has already been announced by some of our distributors, so that's good news. The price-cost spread should remain favorable in the second half. It's a good momentum in Roofing. Clearly, the question as we speak is to make sure we can deliver the products based on all the sanitary constraints up or down, country by country, state by state, sorry, in the U.S. On Gypsum, also strong volumes, double-digit in June, double-digit in July. It's a very good integration with Continental Building Products.
We have kept the senior leadership on manufacturing and the former CEO of Continental, the integration is doing very well. Transition of brands is happening, as we said. We optimize now the individual setup to make sure that we have the lower cost to serve from each plant to customers. Reaction from customers has been good. I would say the starts are aligned, and we should have a very good second half in Gypsum. The prices have been slightly down in the first half by roughly 3%, but we have also seen some of our Gypsum dealers announcing price increase to the home builders going forward. That should support a better pricing environment in the second half.
Thank you. Next question.
Sorry. Thank you. Next question from Gregor Kuglitsch from UBS. Please go ahead.
Hi. Good morning. Thanks for taking my questions. I've got two questions. One is short-term, one's a bit longer term. The short-term question is, in July you said you're up, I think 3%, 4%, but with trading days you probably are still down. I don't know if you could care to quantify. I was interested in your comment that July has continued to be solid or strong. I don't know exactly what word you used. I want to understand, do you see that as a sequential improvement? If you can give us sort of a directional figure, I don't know if it's some 5% growth or something of that order of magnitude in July, could help us to quantify that, because for me, obviously, the trading day impact is quite material actually in June. I just want to get a sense of the underlying trend.
The second question I've got is on renovation. You've quantified your exposure to EU renovation at EUR 10 billion, so that's give or take, I think a quarter of the company. Then you said you expect meaningful growth contribution from that. Now, again, it's obviously difficult for you to quantify precisely, but if you can give us some sense, based on what the European Union has announced, what you think the growth for this part of your business could be if all of those things come to fruition? I appreciate there's a big uncertainty around that. Thank you.
On the current trading, yes, the number of days was unfavorable in May, favorable in June, and unfavorable in July. Overall, it matches. There is a clear recovery if you take out the number of days, and I would say at constant number of days, July is significantly Well, I have the number up to two, three days ago, so I don't have the full numbers for July. The trending of July, so I cannot quantify exactly, but will be significantly above the level we had in June. There is a constant recovery. Having in mind that in June, we were at a constant number of days, we are very close to last year if you take out HPS, huh?
Yeah.
HPS is continuing to be a drag to a lesser extent, because Automotive is also picking up at the moment nicely. I don't think we will reach the level of last year in the second half, as was said in Mobility. The second question. What I said is that we had around EUR 10 billion of sales, which are linked to renovation. How is, and which speed, and what is going to the impact on our work sales from the money injected at the European Union level or in the countries. Today, it's still guesses, so I'm not going to give a number. I think over the next three, four years, it's going to be significant. Especially because I think the question is what is the multiplier from the money on the work done?
The individual owner of a home is going to do renovation, generally he does renovation when there is a move, or it's not necessarily for only energy goals. The idea is that when there is a renovation, it is taking on the energy component, the energy efficiency component. The multiplier between what he can get as subsidies or grants or tax and the amount of work is not necessarily known in advance. My belief is that this multiplier is going to be better than what it has been, because the general environment is supportive of everybody working in those environments and contributing to climate change, especially the young generation. The young generation, I change the subject, but it's quite important to have that in mind.
For me, I cannot hire somebody in the young generation without them asking questions about what Saint-Gobain is doing on those topics. I think you would find that across the board everywhere. I think the sensitivity of the young generation, which are the one who are going to invest, is very significant. The multiplier is going to grow.
Thank you for your answers. Thank you.
Thank you. Next question from Tobias Woerner from MainFirst. Please go ahead.
Yes, good morning, gentlemen. Thanks for taking my questions. Two questions, if I may. Number one, in your industrial businesses, can you give us a bit of a flavor, maybe in terms of the momentum of the book-to-bill ratio? I suspect that's rebounded quite strongly from the trough. What is the latest momentum from June into July? Is that slowing or is that still accelerating? The second question is about the price-cost spread, which you talked about, for the whole group. If you could give us a bit of a flavor there, and I'm particularly interested at the price component, in as far as your view is for the second half pricing situation for the wider group and maybe also some flavor across the divisions. Just lastly, energy cost as part of the price-cost spread, what you make of those. Thank you very much.
The first question, Tobias, I'm not sure it was on HPS or on all the-
Industrial.
All the industrial activities? Okay. I start with, globally in Saint-Gobain, we are in businesses where there are not long orders in most of our businesses. Within HPS, we have the ceramic part where we have generally long lead time. I would say the situation has been globally improving. It was low at the end of last year. It was low entering the crisis. I think it's globally improving. In automotive, we don't have a huge order book. Clearly in automotive, there is a significant improvement in July versus June. From lower standpoint, there is a significant improvement. The rest of our activities, in non-construction related markets, I think are all improving. They are behind construction. On the construction side.
And I would say-
There is not a lot of order books, but the order.
I would say we monitor very closely what was restocking of distributors.
Yeah.
whether it was for abrasives and all kinds of construction.
Yeah.
manufacturing businesses, and I think we are beyond that. The improvement we see across the board from July to June is now a normal, sustainable improvement. As I said, in some of our businesses-
Yeah.
For instance, in the U.S. or even in France right now, the goal is to deliver the products. It's very strong order book for the next weeks. As Pierre said, in Q4 we don't know, but in Q3, yes, the book-to-bill is accelerating, and we are beyond what was kind of exceptional restocking from some distributors.
On the cost spread, Sreedhar?
Yeah. On the cost spread, as we said, EUR 50 million is the impact the spread for the first half, and the large part of this is coming because of the decrease in the gas price. Keep in mind that in our energy bill, the electricity is quite a significant amount. If you just take the bill eligible for the first half, which was EUR 550 million, and 55% was electricity. Electricity still saw some inflation. All in all, the spread is positive, and if this trend continues, what we see now, I would expect that we should continue to have some deflation and deflationary trend should continue. Again, nobody can make an assertive statement because it remains quite volatile. If that continues, I don't see any reason why we should still not see some tailwind.
Yeah.
Again, at the end of the day, the spread is the right way to ask because you also asked about what is our expectation on price, and we would continue to push price, as Benoit also said. We have clear actions in North America. We have actions in glass price to push. This is something which we'll keep doing it. I think we will focus on spread, and having a positive spread will remain the topmost priority for us.
We have a lot of actions also on purchasing as we speak in a volatile.
Sure.
environment. It's good to renegotiate months after months, trying to leverage the current situation.
I would say that globally, we enter the second half with a better feel on that than the first half.
Yeah.
Yeah.
We should have some additional tailwind on this price-cost spread in the second half.
Thank you very much.
Next question?
Thank you. Next question from Sreedhar, from Morgan Stanley. Please go ahead.
Thanks very much. Hi, gentlemen. I've just got a question on the restructuring costs and your plans to make more permanent restructuring in the U.K. and in your Mobility segment. You've guided to a little less than EUR 400 million of restructuring costs this year. How do we think about the restructuring costs for next year associated with that EUR 200 million program?
It will be done.
A second question, what would motivate you to extend the review of assets beyond those two that you've earmarked for more permanent right sizing? Are there any assets potentially which could be next? Thank you.
Sreedhar, I'm not sure I got understood completely.
No, the first question was on U.K. The second was-
No, the first question was on the restructuring cost.
Yes.
The restructuring cost, now all the actions have been launched already end of the first half and will have been launched end of 2020.
Yeah, absolutely.
You should not expect additional restructuring cost for that in 2021.
Exactly, yeah.
That's first question. The second is, we looked at the markets or the businesses where we don't expect them to bounce back to normal. Beyond Mobility, we have a very small business on aerospace. For sure, aerospace will take some time, we take actions there also. Beyond Mobility and the U.K., as of today, we don't see other businesses bounce back to normal.
I would say, no. In fact, we should invest for growth next year.
Exactly.
When I look at the prospects, and we are revisiting, like every year, our CapEx plan and for in terms of growth. As Benoit said, very shortly, in July and August, our priority is to deliver our customers on time. We like to be in that situation, and we are satisfying our customers. It's pretty tight at the moment.
Okay. Just one follow-up. The assets that you are right sizing, the U.K. and the Mobility business, can we assume that the sales associated with those businesses is roughly equal to the restructuring costs? Just to try and work out the scope impact.
No, no.
Savings, you mean?
The savings are more or less in line with the restructuring cost.
We try to have a payback of roughly two years, one to two years.
One year.
on those actions.
Depends the country.
Depending on the country, and in the U.K., it's a very quick payback.
Yeah
restructure our distribution network in the U.K., it's less than one year payback. On average, between one and two years.
In Mobility, it can be less, yeah.
In the savings and the restructuring cost.
Okay.
There is no relation to sales, yeah.
Yeah. Okay. Thanks very much.
I have the question on internet. Sreedhar, I have to read them?
Yes, you.
Yeah. No, but-
It will be-
I have Élodie Rall from J.P. Morgan. Can you confirm that you have three different cost savings program going place at the moment, Operational Excellence, EUR 145 million expected in H2 completed or more to go. Transform & Grow, EUR 50 million in H2 completed or more to go. A new COVID-related savings plan, EUR 50 million in H2 and a total of EUR 200 million. Yes, all that is correct. On operational, the difference is that Operational Excellence, yes, I think it's alive. We will have more on that in the coming years. Transform & Grow, Benoit answered no, it's finished. Now we are on Grow. The new COVID-related savings plan, which is a plan which is related to the activity, which are being hurt and will be hurt for a while, it's also a comprehensive plan. Yes, your detail is correct.
Does that mean that you have EUR 245 million savings plan for H2 versus EUR 395 million in H1? Is that correct?
No, actually-
I have not made the calculation.
I think you made one mistake, is that in H2, we'll have the EUR 50 million that is on the slide related to the business which suffer, Mobility U.K. Second, we'll have an additional EUR 50 of Transform & Grow. Third, on World-Class Manufacturing, sorry, on average, we have EUR 300 million a year. We have EUR 155 in the first half, we should have around EUR 150.
Yeah.
in the second half. If I add up all that, it's EUR 250.
That's what she said.
Sorry.
No, no. You agree with Élodie.
Okay. Right. Yeah.
Third question. Then what is the reason for having three different programs running at the same time? How do you measure the success failure of each of one of them individually? Well, I think the answer is obvious. They are very different programs. Transform & Grow was linked to the reorganization, and it's mostly a SG&A program. The new COVID-related is really addressing specific businesses, where we consider the prospects are below what they were before the COVID crisis. The operational excellence program, I would say, is a manufacturing. That's very different from Transform & Grow. How you measure the success failure for each one of them individually, I can tell you, Sreedhar has put in place a lot of measures at a much more detailed level for each action plan.
There are business plans where expected savings linked with restructuring money, and this is followed extremely-
Closely.
Closely. Second question from Élodie Rall. The Next Generation EU will naturally benefit Saint-Gobain. Can you talk about when you expect ground to be broken and how soon you expect the announced stimulus measures to positively impact performance? Can you remind us of your portfolio of energy efficiency solutions, please? I think, if I look at the portfolio energy solutions, you have a good description on the slide I gave on this house in France. We don't have exactly all solutions in all countries the same way. The basic ones are there. When is it going to land? I think the European part will not hit the ground this year. It's probably more next year. The different plan by country, I can tell you, the French program, I think may have an impact in the first quarter, start to have an impact on the first quarter.
There have been already things that have been announced in terms of individual housing, and I think this will trigger more things in the second half. I think on the French plan, there is going to be also a significant part on public buildings, schools and hospitals, which is, by the way, a very important element of the European program. Oh yes, by the way, this is going to balance a little bit my answer to Arnaud Lehmann's question, is that the non-residential, I was thinking about more building and offices, but school and hospitals are going to be growing significantly. It is really a single act at the European level, and I think that the various countries will adjust to that. That's clearly what the French government is doing at the moment.
They are going to spend in France, in my view, EUR 3 billion-EUR 5 billion in that, and that will be public money in public buildings. That, I think, is not going to materialize in 2020, that should start in 2021. I have questions from Yassine Touahri and Arnaud Pinatel. Could you give us more colors on pricing in distribution and margin in distribution? Will pricing be positively impacted by lower end of year rebates given a weaker volume environment? Will purchasing prices be positively impacted by lower end of year rebates? That's the same question.
It was pricing and purchasing on rebates. New reports suggest that there has been some COVID-related disruption along the distribution supply chain. Has this created shortages for some products that could translate into better pricing power? You want to give some color on that, Benoit?
As you know, we always have a pricing spread slightly positive on distribution to make sure we manage our margin. As I said, if you think of the Nordics, of France. We have been improving our margin in the first half and including the second quarter. There is always this rebate negotiation. We did say that in 2009 and 2010 during the last financial crisis. In those times, usually we manage to actually increase slightly the % of rebate in our distribution businesses. Why? The suppliers are hungry to get some volumes, and we are a steady, reliable distributor with no credit risk. That's the way we manage. As we speak, that's what the teams have done successfully so far. I feel confident about the rebate in %. Of course, in volumes, you don't get exactly the same if you have less volumes.
You are right that we have seen for some suppliers, some stock-outs. Here again, being a reliable distributor means that we have a better inventory and we have a better service to end customers. Some products have been stocked out. We manage on our side on manufacturing. That's our number one challenge, like Pierre-André said, is to make sure that we deliver all the products, whether it's in the U.S. or in Europe, in France. Yes, the challenge of some of the building products manufacturers today is to make sure that they are not running out of stock, out of inventory, which in general is a good support for pricing. Last question from the same two, Yassine Touahri and Arnaud Pinatel.
What level of public support do you expect for construction and renovation in Europe and the U.K. in the context of the Green Deal and recent announcement by government? I think I answered already those questions on having in mind that in France, I think it's pretty clear what we are going to get now. It will be announced at the end of August, but there have been some elements, so I think it will be significant. In the U.K., there have been also announcements recently. If I am correct, this ends the questions. I thank you for your participation, and I wish you a good summer. Stay safe, and I'm looking forward to a good second half, and see you in February.