Is now being recorded.
Together with Guillaume, I am happy to present you our first half results and an update on outlook and strategy. I'll start with, as usual, with the main highlights. Guillaume will take you into our first half results. And then I'll come back on outlook and strategy. So in terms of the main highlights, with a very strong finish to the half, we are delivering a good first half, especially with the 4.9 percent internal growth, which is a very good level.
We say that 20.8 1,000,000,000. The actual growth is 1.9%. Guillaume will will go into it mostly because of the big exchange impact. Operating profit is up 0.03percent@ actual level and 0.1+1.7 percent, like for like. We had the good growth in our recurring net income, 6.8 percent, with an even higher growth in terms of the net recurring net income per share with the reduction of the share count that took place in the first half.
Our as expected, our net income is, is very significantly up, mostly thanks to a very, large gain we made on the TICAT transaction, which this gain being higher than I initially indicated. And the debt with the investments we are doing in Sika and the growth, the acquisitions is growing, but stays at a very, reasonable level. So these are the main figures And they are linked with growth in all our geographies. I think we benefit from a good environment, Sangou is doing well in this environment in Western Europe after difficult weather first weather related first quarter. It's not that the weather was particularly bad, but we are at 2 2 years in a row without any winter.
So we had a that impacted the first quarter and even April in a number of geographies. We had a good, a good, 2nd quarter and especially good May June. Whether it is in France, I would say, despite the May, which was heavily impacted by an unusual low number of days. And in the other European countries, a good return, I would say to the normal trend that we had seen in the last, in the other quarters, in 2017. North America, very strong momentum throughout the quarter, both in our industrial markets and in the construction businesses, we are posted very solid growth in the United States.
And everywhere else, I would say, we have had good trends with an acceleration in the 2nd quarters, despite the, the strike we had in in May, which impacted Brazil, but Brazil, despite that, had a good growth. I was expecting even stronger growth, but we have had a good growth in Latin America. So the main highlights for this, in terms of events and actions into the first half, First, as we explained in May, we have, we have done a good transaction on the Sika situation. And we have acquired 10.75% on Sika, which allows us to, so to post a good, a good impact on the net income. Guillaume will come back to that.
We have continued and stepped up our acquisitions program, small, medium, sum accretion with 13 acquisition in the first half and 3, which will be, are finalized in July. Our capital expenditures are focused on growth in emerging countries on our productivity as we explained before and a step up in what we our digitalization of our factories and productivity, in all geographies. We are on track on our cost saving programs announced and revised last year. So EUR 150,000,000,000 in the first half. And we have had active buyback policy in the first half, where we have, acquired more shares than what we've done on the a total year last year in 2017.
So now I'll give the floor to Guillaume. We'll go and a bit more into detail.
Thank you, Cameron, and good morning. So as was, just mentioned, the internal growth figure for the first half is at 4.9%. The actual sales evolution is lower at +1.9%. This is mostly due to the exchange rate effect, which is lower in management than in Q1, where it was minus 4.7%, but still substantially adverse at minus 4.4% in H1. So trend, however, is positive as we finish the semester with less than 3% exchange rate for the month of June.
This negative effect was partially offset by the structural effect, which represents the positive consequences of our active acquisition policy, which led us to buy 28 companies in 2017. And as Pierre Andre just mentioned, 13 companies more in H1 2018. And I will let Pierre Andre give more details about those during the strategic part of the presentation. The organic growth is almost perfectly balanced between price and volume. Price is a satisfaction for us as we are able to post an accelerating performance during the first half with 3% price in Q2 despite the comparison basis in 2017 becoming more difficult.
Most of our market are now accepting the fact that inflation has come back, even if obviously the situation is different from country to country, And from market to market, for example, in the same country, you can have both an excellent performance in one business and a more difficult in another. That's been the case, for example, in the U. S, between interior solutions on one hand, where we had a very good price effect and roofing on the other hand at the beginning of the year. So good figure on the pricing side, and this was an absolute must as we continue to see our cost of raw materials, energy and transportation climb in parallel. Our latest expectation for the year is that the amount of cost increases we'll have to offset is in the EUR 500,000,000 ballpark, transportation, particularly exploded in several countries, which usually played in our favor in the long run as we have a dense network, but forces us short term to pass these surcharges to the market.
Volumes increased by 2.4% in H1, with an acceleration to 5% in Q2. And driven by every sector and every geographical area. I'll come back in more details, to this good performance, even though you remember that year as a comparison basis was easy because of the cyber attack last year, which costed us around 1% for the first half. That being said, Even if you restate from this, the growth remains very solid. Of our organic growth, where you can clearly see what I was talking about on the previous slide, acceleration of pricing, record growth performance in Q2, weather impact in Q1 and cyber attack in Q2 last year.
One word maybe on working days to remind you that they wait on Q1 2018 by around minus 2% and positively impacted Q2 by around 1% with differences by country. However, the second half of 2018 should see a slightly positive impact from working days overall with Q3, stable and an impact of around a plus 1% in the 4th quarter. Operating income, as Pierre Andre mentioned, a good growth overall translate into growth of operating profit, but with a subpar leverage, as you can see, that the operating profit like for like growth is plus 1.7 percent. This is not a surprise, as we had mentioned in June, but clearly, our performance was negatively impacted by several one off events. For example, a bad weather in Q1 followed by an acceleration of volumes in Q2 created an irregular load pattern, which impacted our efficiency.
Also, as we mentioned, in the past, we also experienced industrial headwinds in several plants in the glass sector. Overall, our margin remains very close to last year's level, but we would have done much better if not for those factors. One word of updates, maybe on those one off issues to say that most of them are behind us. Like the Romanian Fluid Glass Repair or the Brazilian truck driver strike or at least a Q1 weather. Some of them will last into Q3, but not Q4, like the Egyptian or the Polish floats, which are going through a longer repair process and the Romanian note and will both restart in September.
Profit below the operating profit line. There's also some explanation. The non operating costs are decreasing sharply going from minus EUR 166,000,000 last year to minus EUR 54,000,000 this year. This is due to the CCAP transaction, a part of which is positively impacting the other expenses line. The opposite, we accelerated the restructuring of our pipes business in Europe and in China, where we stopped one of our two plants, which led us to book charges, both on the other expenses line and an impairment on the global pipes activity, three lines below.
In fact, Excluding the exceptionals of Sika and Pipe, nonoperating costs decreased year on year. On the asbestos side, we charged a 1,000,000 to the provision like last year. All the figures are in line with historical trends and even slightly positive if you look at H1. So not much to say, here, the evolution is according to expectations. Going beyond the business income line in the ENLs, the most important event remains, circa.
There are 2 important things to mention here. First of all, as we mentioned in May, the way we account for it is to freeze the gain in P and L at day 1, which means that this is the last time you will hear about it in the P and L apart from future dividends. Future variations of the CCaa share price will impact the directly equity, be it positive or negative, as well as a sale, partial of total, if we were one day to decide to sell our shares. This is one important point to remember The second point has to do with the way we account for the CCAT transaction in our P and L. And we do that on two lines one that you already saw on the nonoperating line for 1,000,000 and a financial gain that you can see here of 1,000,000 and EUR 1,000,000.
This is due to the fact that we separate the transaction in two parts. 1 is the pure execution of initial contract with SWH, which triggers a financial gain based on the ICA share price on May 11th. And the other one is what we gain in excess of that, which is the EUR 118,000,000, which is treated more or less as a result of a litigation on the other expenses line. I hope this is clear. This makes the P and L a little bit more difficult than usual to read, but worth the effort as the total impact is EUR 781,000,000.
So significantly more than the EUR 600,000,000 order of magnitude that we had given in May. The rest of the finance costs are down compared to last year as we continue to replace expensive debt by cheap debt. And we benefit also from an improvement in financing costs for pensions thanks to the contributions to the pension funds that we have done in recent years. Taxes are also down in rate as well as in absolute value. And in the end, as a result of all of that is a jump in net profit of 61.7 percent and a progression of 6.8 percent in recurring net profit and substantially bigger figures when looked at on a per share basis as we were very active as Pierre Andre mentioned, buying back shares during this half.
This graph on cash flow generation deserves also additional comments. As you can see, cash flow generation is broadly stable. As we mentioned at the beginning of the year, we continue to implement an ambitious CapEx plan, focusing especially on emerging markets, logistics and digital. Add to that, the fact that Our investment program this year is more front end loaded as unusual, and it explains why the CapEx figure is 31% above last year. Now as a reminder, our criteria for all of those projects is to have quick payback and an internal rate of return north of 20%.
And also, a second reminder for the full year, the objective announced in February remains valid at 1,000,000,000 CapEx for the group. Working capital remains at a good level at 40 days, But this level is a very slightly less good than what we had last June. I wouldn't read too much into that. Remember that last year's or half year viewpoint was right in the middle of the cyber attack, which had both accounting consequences and physical like the fact that we weren't able to pay suppliers for good reasons. Also, we are measuring working capital after a very of June 2018, which is never favorable.
Overall, we are able to maintain our working capital under control at a historically excellent level. As far as other financial transactions, I mentioned Sika At length, I will just remark that the economic value, of the 10.75% that we own represents almost exactly the double of what we have bought it for, which we are financing perspective, financial prospect is very satisfied with, obviously. We continue to be very active in acquisitions, with 1,000,000 spent, which is 162 percent up compared to last year. Carmondre will develop that more in the strategic part, but let me just mention here again our financial threshold that are very important for us. Which is to make sure that we know in our business plans how to get above the work of the group after 3 years maximum.
And finally, we spent EUR 389,000,000 in share buybacks, which means substantially more than usual in line with our goal of reducing the share count and in fact, the number of shares went down materially in 1 year from 5 54 to 547 1,000,000 shares. Finally, let's look at the debt and equity evolutions. On the debt side, you can see that our debt increased from the same date last year by EUR 2,500,000,000. In those 12 months, we spent 1,800,000,000 in acquisitions, including sticker, 1,700,000,000 in CapEx and 1,300,000,000 was returned to the shareholders in dividends or share buyback. So that is 1,000,000, sorry, in total spend, and we generated 1,000,000,000 in cash.
To give you additions, 1.4 in CapEx and 0.9 return to the shareholders, so CHF 2,700,000,000 in total compared to CHF 4.8 during this last 12 months. So overall, more acquisitions in line with our strategy, more CapEx as we flagged at the beginning of the year, with also H1, H2 timing effect that I talked about and more return to shareholders. Our debt ratios remains, remains very solid, but you see that we are now closer to a range in terms of ratios. We feel it's a range where we should more or less stay for the future. Now let me get into some more details business by business, starting with innovative materials.
Innovative Materials had a good first half, even though it would have been much stronger without the industrial one offs that we experienced in glass, nevertheless, a very solid growth with 4.2% volumes accelerated between Q1 and Q2 at 5.5% in Q3 and price effect accelerating also between the two quarters from 0.6% to 2.9%. What is interesting is that all regions contributed nicely to this volume in Q2, North America, Western Europe, Asian Emerging Countries. Innovative Materials is where you see the biggest variation in CapEx compared to last year H1, two 1,000,000 compared to 1,000,000 last year. And this has to do mostly with the timing of large CapEx in glass, both like the refurbishing of our plants in Poland and in Romania or the growth CapEx in Automotive Glass. I now turn to each of the two businesses, which are part of innovative materials to give you more details, flat glass, had a very mixed, first half with a combination of on one hand, good underlying markets and on the other hand, several one offs operational headwinds.
Organic sales were up 3.5%. Pricing was up 2.2% for the half, accelerating to 3.1% in Q2, driven by transformed glass in Europe and Automotive Glass. We saw a good trend in Automotive Glass, especially in Asia And Emerging Countries. As discussed at Q1, the that we are also in the process of ramping up our industrial capability to follow the market demand for our high end solutions is temporarily, putting pressure on our margins. In construction, we saw good trends overall everywhere, but we were penalized, as I mentioned, by several negative industrial effects which I'll take a moment to detail to you.
Oops, sorry. At the end of April, our Egyptian float plant was hit by sterious floods, which impacted the region. We have therefore been unable to produce from the floods since then as it is under repair until the end of Q3. You will also remember that on our Q1 results call, we discussed our need for an accelerated repair schedule in our float glass plant in Europe due to heavy use resulting in two plants being under repair during the first half. Together with the Egyptian float, this meant that 3 out of our 30 float plants globally were impacted in the first half in a tight supply environment.
The combination of these temporary issues weighed on our operating profit margin, as you can see on the graph, which contracted to 8% from 9.9% in the first half of year. Many of those issues that I talked about are behind us and a vast majority should be solved during Q3. High Performance Materials had a really excellent first half with self up 9.2%, driven by, all regions with a strong growth in Asia and emerging markets, the U. S. And in Western Europe.
Pricing rose 1.3%. We are benefiting 1st of all, from excellent industrial market throughout the world, be it on the investment side for refractory on the consumable side for abrasive or on the technological side for plastics. We are also seeing the success of our strategy based on tailored co innovation, which is a concept which is gaining more and more traction. All of our HPM businesses, grew over the first half, particularly ceramics, which, with exceptionally strong refractory sales as we started to see in the second half of last year already. The operating margin grew significantly by 230 basis points to 17.3%, a record level, benefiting from the strong volume growth and demonstrating also strong leverage.
Turning now to Construction Products where we saw 6.8 percent organic growth. Operating income decreased slightly to 1,000,000, and the operating margin tightened to 8.6% impacted by Exterior Solutions. We spent 1,000,000 on CapEx over the 6 months, including on plasterboard plans in India and Vietnam. Interior Solutions grew 7.1% over the half year with an acceleration in pricing during the half to achieve a price effect of 4.4% for the 2nd quarter and 4.1% for the 6 months against a still inflationary backdrop for raw materials and energy. Western Europe regains a good rhythm in the second quarter after the tough Q1 impacted by the half winter weather there.
North America continued to trend well, both in price and in volume and Asia and emerging markets continued to grow strongly. The operating margin remained stable at 9.9 percent, held back by the tough 1st quarter even the harsh winter weather and the continuation of the transition towards natural gypsum and away from synthetic gypsum, which is a product from coal plant and which is resulting in some additional costs across the industry as we talked about last year. This was mitigated, however, by your positive spread for first half in terms of price versus raw materials and energy costs for this sector. Exterior Solutions delivered organic growth of 6.6% in the first half, with pricing up 2.8%. Exterior products in the US showed a strong increase in volumes, helped by the easier comparison base in the second quarter.
After remaining stable in the first quarter, we were able to achieve increased prices at the end of the first half. Against the backdrop of increased inflation for asphalt and transportation. In pipe, we exceeded increasing prices, but volumes remained negative overall. Given the difficult profitability environment, we are continuing the restructuring of our European and Chinese factories. Mortars saw a good rebound in the second quarter, particularly in Europe, which saw a tough start to the year given the half winter weather resulting in solid growth over the half.
Asia and emerging markets continue to benefit from strong growth overall despite this truck driver's track at the end of May in Brazil. The margin for Exterior Solutions, overall contracted to 7% from 8.4%, impacted by the lag between pricing and raw materials and energy cost inflation in exterior products in the U. S. Despite the improvement at the end of the 6 months. Moving to building distribution, building distribution saw organic growth of 3.1 percent, driven by the rebound in the 2nd quarter of +6.7 percent.
Which was partly supported by the positive working day impact and also this year comparison basis, given the cyber attack less jumming. The start of the year was impacted by the harsh weather in Europe, but we saw a return to good trends in the second quarter. Placing was up 2.3% for the first half. France continued its recovery, driven by growth in both new construction and renovation, The Nordics regained dynamic growth trends in the second quarter, both in Norway and Sweden. The UK improved with a strong rate effect on less volume erosion, which we think was probably linked to a partial catch up effect following the poor weather at the beginning of the year.
Germany grew slightly after a difficult first quarter given the harsh weather and Brazil remain weak. The margin of building distribution remains stable compared to year at 2.7%. On one hand, we benefited from good rebounding trends in Q2 after the difficult Q1. Which is a clear positive, but the volatility in demand between Q1 and Q2 created inefficiencies, which weighed on the overall margin Also, we were impacted as planned by the operating profit effects of our accelerated investment plan in digital. Distribution, mirrors the group in the overall story, a slow Q1 and a very encouraging Q2.
Let's now look at the trends by region where we saw organic growth in all four regions over the period. France grew 3.1% like for like in the first half, benefiting from a return to good trend in the second quarter, in both the new construction and renovation markets after the top start to the year, given the halfway the conditions. In the rest of Western Europe, we saw a similar rebound to good trends in the second quarter after a tough Q1 and support by the easier comparison base in Q2 given that June 6th cyber attack to end the 1st half, up 3.6% on a like for like basis. We saw a good reason of growth in the Nordics in all four countries. In the UK, we grew slightly overall, with a strong price impact, but a smaller decrease in Q2 in volumes.
The environment still remains uncertain for, in the UK. And lastly, Germany saw slight growth. North America saw strong growth overall. We sales up 9.5% like for like for the first half. The United States are clearly on an excellent momentum.
And what is comporting is that this growth is very homogeneously spread on the 2 main engines of our business there, construction and industry with all industrial businesses contributing. And finally, Asia and emerging countries had another good half with sales up 8.2% including an acceleration to 9.7% in the second quarter. Latin America progressed strongly in all the main countries, even including Brazil, despite the impact of the truck drivers strike in May, Asia benefited from the good dynamics in India, and Eastern Europe performed well supported by Poland. In terms of operating income by the operating margin in France widened to 3.3 percent from 2.5% in the first half of twenty seventeen. Boosted by a few exceptional effects and with underlying trends positive in most businesses, in all businesses, In the rest of Western Europe, however, the margin contracted to 5.4% from 6% in the first half of twenty seventeen.
Impacted by the harsh winter weather conditions at the start of 11.8% in the first part of 2017, with the price increase achieved in exterior products in the U. S. Lagging the increase raw materials and energy costs, as I mentioned. And lastly, Asia And Emerging Countries saw their margin increase slightly to 10 0.8% from 10.7% in the first half of twenty seventeen. Now we finish with EBITDA and CapEx by region.
Just to remark is that this slide shows how we continue to focus CapEx investments in the most attractive markets and region. With a very clear end phases on Asia and emerging market. I will now pass over to Pierre Andre, who will outline our strategic acceleration and the outlook for the rest of the year.
Thank you, Guillaume. So let me start with the outlook. For the rest of the year. So in terms of the economic climate, I think that, after the first quarter. We returned to good conditions, and our underlying markets have been good in the second quarter, and I expect them to remain very solid overall for the rest of the year.
I think in France, we are continuing to enjoy a good economic activity in our construction market, both in new construction for the rest of the year and also on renovation. In other European countries. We expect, all a region that we set to stay dynamic, whether it is Nordics, Southern Europe will continue to be very good. Germany is continuing to grow. Probably a bit better in the second half than the first half.
And UK remains uncertain given the the political situation, which is starting to have an impact progressively. Growth in North America should stay extremely solid in the second half, whether it is on the industrial markets or the construction market. And we expect a good momentum to continue in Asia and emerging countries. So overall, good economic conditions for Saint Gobain in the second half of the year. And in this context, we expect continued growth and good margin levels in innovative materials, with, with clearly improvement in terms of margins in, in Flat Glass.
Construction products should have a good volume and pricing with catch up in our U. S. Businesses where we have been lacking where, but where the the pricing is gathering momentum in exterior solution. So we are focusing on this price cost spread. And building distribution should benefit from what I mentioned in terms of the overall economic climate in Europe.
So in this framework, our priorities for the 2nd half remain very much consistent with the one we had for the 1st half. So a focus on sales prices. I think that you have seen that there is a good momentum there, but it is absolutely a key for us to continue because cost especially in the energy side of our are not, I've not gone in the last quarter in a good direction. So it's in more pressure on cost. I think we are succeeding in our price increase.
We will continue our cost cutting program with targeting savings for this year overall compared to the cost base of last year of around 1,000,000. I think we are on track with that. Our CapEx program is, as mentioned at the beginning of the year. So we have had this year for a reason that Guillaume mentioned, the year marked in the 1st half. That's true.
That's the 2nd half should, should, in line with what we targeted at the beginning of the year, same focus in terms of where we are, putting our CapEx, ongoing commitment to invest in R&D, which is helping our differentiation strategy with more value added products and a focus on cash flow generation in the second half from that standpoint. Will be better than the first half. So in this framework, we clearly confirm our objectives for the full year, which is to increase our like for like operating income. And I expect for the second half that this increase will be clearly above the level achieved in the first half. So this is for the outlook for the second half.
And now I would like to talk a little bit also on our strategy. As you have seen, the first half was quite busy with Sika transaction and with a step up in our small acquisition strategy. But I would like to step back and tell you where we are in line with that we explained at the investor day 1 year ago, and at the last General Share meeting, last General Shareholders Meeting high focused on one priority for the other, for the coming years, which is to increase significantly in agility of the group. And I would like to, to talk to about that a little bit more and explain what I mean in three areas 1st in terms of divestments, in terms of acquisitions, and in terms also of our organizational agility. So, divestment is a topic where we, you will see an acceleration in the next 2 years.
I, we flagged that at our Investor Day 1 year ago. I, we are going in the next in the next 18 months to divest at least 1,000,000,000 of sales by, as in terms of sales, of businesses before the end of 2018. I expect a positive impact of these divestments to be relative to be around 40 basis points on our operating margins. You will want more details on that. And you know, I'm not going to give you more details as we consider that it is important, for the good execution.
But I can remind you what our criteria, when we look at the businesses from that standpoint, first, are the prospects good for, in itself for this business? 2nd are the synergies, and this can vary, in the long run, important enough with the group. And third, is it a good timing? And the reason why we are going to accelerate is because we think that compared to what we said when you ago, the time is right now to execute more. So we'll hear more about that when we do the announcement.
The goal will be, of course, to have more current and value creative portfolio of activities within Saint Gobain. 2nd point, which is our acquisition strategy, And let me first say that I am quite happy about what we have done in the last few years and where you see on the graph on the left that we have a speed up our acquisition strategy. We have, 1st half is again, significant and in line with this acceleration. I am quite happy about the result of that strategy. You see on the right, what has been the kind of multiples we have acquired those business for, less than 8 in terms of EBITDA and multiple before synergies, and less than 6 after synergies.
We are on track on that. We measure that very we are very disciplined on that. And we see that progressively on an impact and an impact of this acquisition on our P and L. 3 priorities, which are quite, have been quite consistent in the last few years, and we will continue in that direction. Either bolt on acquisitions where clearly the model is to get cost synergies relatively quickly to consolidate our positions, enter into new geographies, which has helped the group to jump start in that geography and give us an initial platform.
And the 3rd, I guess, adjacent technologies, our business model, which complement generally in one geography, what, our portfolio, and then we can roll that out around the world. Let me give you three examples in this area, what we have done in the last few months. If I start with a niche and additional technologies, a small acquisition in the first half in Flat Glass, which is a company in Italy, which is, having accessories, which are put together with glass, whether it is facades or interior glass. And these, these companies it's not a completely extremely high-tech, but it is very quick on innovation to, adjust to market needs And clearly, when you see that with our flat glass, there are very network in Europe. There are strong prospects to increase the rollout of these sales of this product, which have been historically, mostly in Italy.
2nd example, we acquired early this year Kimco, which is a leader of Glass wool in Kuwait and, I would say, in the Gulf area, which is an area where clearly the growth prospects in terms of insulation are very significant, and 3rd, an acquisition we have done in Norway, in the Nordics, where we have acquired a very strong position in the north of Norway. So it's a very good company in itself, but we are also going to benefit from additional cost synergy, mostly, combining, purchasing with the rest of our activities in Norway. So 3 types of acquisition, which are very a good and quick return. And we plan on average to do around more than a bit more than 1,000,000, depending on the opportunities, but the pipeline is quite strong at the moment of these acquisitions during the next 2 years. Now 3rd point, which is about our organization.
And when we I talk about organization, I think it's important to start by talking about strategy, which drives the organization. And as I have said during the last few years, the orientation towards our customers and our market. What are the main trends we see from that standpoint? If I take 3 main categories, which are very important for us. 1st, our industrial large customers they are generally behaving more and more globally, but at the same time, they required more and more tailored innovation focused personalized production.
2nd, our contractor, which is an important important customer. Our contractors, they are their main in the next few years, their main objective, whether they know it or not, by the way, is to increase productivity. And I think that our solutions debit in distribution or debt in, in, manufacturing are quite important, and we can bring a lot in that direction, where, by the way, the boundaries of our solutions are evolving. And for category, which is not directly our customer, but which is becoming a very important a very important agent for us is the end user of our product. We sell generally all our solutions.
Saint
Gobain is a B2B company, that the end user, whether it is the homeowner, whether it is the occupant of a large office or whether it is a car driver, even are becoming the end user is becoming extremely important. And I think our solutions based on the combination on comfort and sustainability are clearly very important, but we need to take that into account more and more and to use this power of transcription to increase our sales. So starting from those premises, I have, an in line with this need for agility that I expressed at the AGM. I've launched a review of our organization where the goal is to align more of our organizations with these customer different customer needs, which means that for construction related activity, a stronger priority to the original, their local content, you understand from what I said as a local content is quite important, while maintaining business synergies. And clearly, the digital transformation that we see in our markets, not only internally in Saint Gobain, is also going to drive some changes in the way we present ourselves to the market.
I also have in mind to simplify our decision making process, to increase efficiency, to increase agility. So and also to realize some additional savings. So from that standpoint, this review will be, undertaken during the next few months and I have in mind to present this new organization structure before the end of the year. So the goal, again, flexibility, agility and proximity to our market and customers. Now I'd like to finish by this slide which is the one we presented to you at the Investor Day and to try it after a bit more than 1 year look where we are in terms of the main element of our cash allocation policy.
In terms of cash generating by operations, we are above the average of the last of the last few years. And the first half was a little bit below because of this timing of CapEx. The second half will be clearly better. On disposal, I just mentioned that we are going to accelerate CapEx, we are in line also with the plan. Guillaume talked to you about our, our return to shareholders policy and clearly also on acquisition, I explained to you where we are.
So I think on this plant, we are well advanced in this road map. And I am quite confident that this will, we are going to deliver with this plan additional value for our customers and for our shareholders. So I am very confident about that. So this is what we had to to present to you today. And now with Guillaume, I am at your disposal for any question you may have.
Ladies and gentlemen,
Good morning. Joseph Pujal from Kepler Cheuvreux. I have two questions, please. The first one is on your operating figures, despite seeing a very good Q2 volumes are up 4.9% If I recall Not volume, internal growth.
Sorry, Judith, yes, yes.
Sorry, okay. Volumes are good in Q2. Despite that, despite that, operating profit on a like for like basis is only up 2% for the first half. So could you help us to better understand the impact of the one ops you have mentioned, but we would appreciate very much some fears of ranges about that. What is the impact of Brazil of Egypt and weather?
I don't know if you can measure weather, but I guess that you could give some indications about, what was the profitability of the Q2 versus Q1? Would be a way to look at that. And my second question is on this reorganization. Just to understand, when you talk about giving more power to the, I would say, region, translate this way. Are we talking about transferring competencies from the headquarters to the regions?
So are we talking about adding a new layer at the regional level.
So Guillaume will answer the first one, and I will second one.
I will, yes, I will answer the first one, which is, I mean, I understand the question about the impact of the one offs. You know that measuring as you, as you said in your question, in fact, measuring the impact of the one offs, especially when it comes to loss sales, especially for example, for the weather impact, is extremely difficult. And, we try to do that, but we have no precise figures. What I can tell you is that, you remember that last year, we had a negative impact in operating profit due to the cyber attack. It's very clear.
That the one off impact in H1 for us was substantially greater than this figure. I won't go much beyond that, but that's what we are talking about in terms of order of magnitude. Now in terms of Q2. As Pierre Andre mentioned, I don't think we'll give figures in terms of profitability, but as Pierre Andre mentioned, the trends are going in the right direction, both terms of growth, especially in the last 2 months of Q2, also in terms of price cost spread, which is improving as Q2 progressed. So we are exiting H1 with a good momentum.
So concerning the second questions, I will repeat my the objective of this reorganization, which to be aligned more with the customers, to increase agility and speed and efficiency. And clearly, I'll expect from that to reduce cost overall. Now I'm not going to give you more detail at this stage. I'm launching this review. I, I'm going to study and work with my team during the next few months.
I will present that in more detail when it is ready by the end of the year. But of course, it's not to add a new layer.
I have two questions more, more strategic. First, the main concern for investors today and also the main challenge for Saint Gobain is to improve a return on the capital employed of building distribution, which is a bit disappointing. Can we assume a quick improvement of this number in the coming years? And secondly, you mentioned the logistic issue. Can we have more a flavor on logistic improvement in progress?
Okay. Well, the return on capital of distribution is slightly below the average of the group. But as you know, there is a much lower, capital intensity of distributions. So with a slight improvement, you have a much bigger improvement in German capital. So I don't think that, the issue is the fact that it is a bit lower at the group at the moment.
It's mostly linked with fact that the European situation is still in a recovery mode, but I am, I'm not very concerned about that. This, there is also, so now the improvement in the margin and distribution, which are going to drive improvement in the return of capital are linked with 1st volume recovery. And we had, which was minor in the first half mostly because of a bad Q1. And it's clear that when you have high volatility in the demand, with a very, very bad March and so bad the start of April, and then you have a much better event. You don't, you cannot take the volume of of the 2, of the two parts at the same time because you, we don't decrease the fixed cost as quickly when there is a drop in the sales in March.
So that means that we cannot average the first two quarters and then say the leverage is not good enough. So that's the first point on the short term. So that's why I expect an improvement going from where we are today. Now on your question on logistics, I think that we are quite well advanced in logistics. The investments which are in the middle at the moment and not finished are more due to our IT transformation, and that there are some significant CapEx at the level of the group.
These CapEx are, we are on a low asset capital business, but for distribution, they are significant. And these CapEx have also an impact on the OpEx And I think we are now at a peak about these impacts. They will continue for around, I would say, 18 months, where we are going to have still a significant OpEx linked with this IT transformation, progressively, then this will reduce. This is weighing compared to the past on the margin at the moment, but we think that this investment is very important. At the moment, it's more ITs and logistics.
We are, I think, on logistics, we are well, our plan is, month, but I think, it's weighing that's not what's weighing on the margin. Next question? Paul Roger, I understand.
The next question comes from Paul Roger, Exane BNP Paribas. Sir, please go ahead.
Hi, good morning gentlemen and congratulations on the results. Just three questions for me. I think firstly, can you say a bit more about the timing of your decision to accelerate divestments I mean, is that just about your view on market conditions or maybe you're reacting to feedback from some stakeholders, for example? The second question is on high performance materials and to what extent the margin benefited in the first half from a positive mix effect and where you see a more normalized margin going forward? And then the third question is on the balance sheet.
What do you think is the right level of leverage for Saint Gobain? And given the group is deleveraging very quickly, should we maybe expect even bigger buybacks in the future?
So in terms of the timing of decision, yes, clearly, the market position are a bit better. What I'm talking about timing, it's both our internal timing in terms of the situation of the various companies that where we have identified, if I take my 3 criteria, I remind the 3 criteria. Is it a business which has a good prospect in it as a standalone business? Are the synergies and the link with Saint Gobain strong enough. And that, historically, that that may vary over a long period of time.
I reminded you that when we dispose of Verellia, the main driver for me, that's a very important synergies with existed historically, which we are linked with the fact that we have the same, I would say, very similar furnaces, what was becoming less important versus what I consider are the market synergies for me, the main criteria. So I would say that the evolution of the synergies of the businesses of Saint Gobain, one with another one is not necessarily constant, if I take a long term perspective, so this is the 2nd criteria, our assessment of this going forward. And the 3rd criteria, which is one we have made our, where we have made an assessment on the first two Then is the timing, and timing is linked, clearly with the situation of the various companies internally. And second, also, 2 market conditions, and that's the combination of those 2, which leads us at the moment to consider that it's good time to accelerate. Of course, Paul, we always listen to our investors and a number of them have made the same assessment from outside as the one I am making from the inside.
Which is HPM margin. Well, HPM margin, I have had these questions regularly for the last 2 years. Because they have been going in the right direction. And we say it's a record. And we are generally cautious about a record, whether we are going to be able to maintain that level.
I would say that the level we have add in the first half, I will make the same answer. I would say the level we have had in the first half is very, very good, very significant. There were there was a very good mix with some very strong high margin good volumes in some of our businesses. So I cannot promise that we will stay at this level. But I think we will continue to have good margin in HBM in the second half.
What I can say is that I expect the margins for innovative materials to be, in the second half, above where they have been in the first half. Now, in terms of the right levers, you want to answer?
Yes. On balance sheet, you've seen the figures. We have increased net debt because mostly of the addition of CCAR, but not only by 1,000,000,000 in the, during the last 12 months. And overall, our net debt on EBITDA, I mean, net debt on EBITDA ratio is now at 2.2, which if I restate that to the beginning of the year is around 2, I guess. This is a level where we are comfortable with, which is consistent with our rating.
You know that we look at our leverage and our balanced situation based on the rating situation we are in. And so, we estimate that it's right where we want to be in the sense that it gives us a room for maneuver in terms of following our ambitious strategy. And it's not too aggressive from this point of view. In terms of share buybacks, can we expect more in the future? I will restate what we have always said in terms of long term which is to say that we want to get back, to 530,000,000 shares.
We have progressed in the last 12 months in this direction materially. And you have seen that we are serious about this objective. So we will continue to do that, but at the timing, in which we will decide.
Thank you. The next question comes from Peter D. Rowe, JPMorgan. Madam, please go ahead.
Hello. Good morning. So I have three questions, if I may. First of all, can you remind us again on your differences in terms of geographic exposure between you and Owens Corning in the U. S, because there are always material differences in the trends
of
the 2 companies? 2nd, do you see an impact on Saint Gobain's raw materials exposure and energy from U. S. Tariff increases? And third question on CapEx, they were up quite materially in H1, but given you confirm your guidance for flat CapEx.
Can you just confirm that that means H2 CapEx should be done year on year? Thank you.
Yes. So geographically, do you want me to answer for roofing? Okay. Geographical exposure of our roofing business, yes, we have a different geographical exposure compared to Wenskony. We are much more on the East Coast and especially we have good market chains in Northeast.
Oenskony is stronger in the center of the country, which, you know, in some years, is benefiting to when it's coming. That's what we had said last year. In the storms year, typically, Owens County will benefit a little bit more from us from that. In a non storm year, by comparison, we will probably have a slightly better market than the ones currently. So that for the first one.
The second one was the impact of the U. S. Tariffs overall. I will let Pierre answer on this one.
Honestly, on this sorry, actually, I didn't understand the question. Actually, it was on energy. On the U. S, Kari, first of all, I would say that not very easy to know what's going to happen. It seems that it's changing day after day.
So I think we have to be very cautious on what it means. Second, I would say, as you know, most of Saint Gobain activities are local. And if I look at what our exports today from Europe to the U. S. Or U.
S. Asia to the U. S, it's less than 2% of Saint Gobain sales. So I don't expect a significant direct impact, and we have a very small business. We have had an impact already from China, and we have been able to increase our prices.
So there is no material impact. And when you are in a very I would add that generally for the Saint Gobain businesses where we have where we have flows between Continents. There are the journey, the more technical niche, specified businesses where I think we have, and we are really co developing with the customers. So I think that they want to stick with us, and we try to find a way to do it. So it's not an issue for Saint Gobain.
Now if there is a war and the real war, which I don't know, on tariffs at a big scale, this will have macroeconomic impact, which I think will be negative. San Gobain will not be immune. Saint Gobain, we have a, but I would say it's compared to to compare to most activities, we are very, very less effect very little affected compared to most companies on that topic for because of the
On the third question, which was on CapEx. So everybody, we have not said that we would keep CapEx flat in 20 in, we have said that, we would have a level of CapEx of around 1,700,000,000. You remember that last year was slightly above 1,500,000,000. In the first half, our CapEx level increased by a little bit less than 140, which means that the second half should see less increase, but should see increased nevertheless, if we maintain things in this direction. So overall, what I said is that our CapEx program, and it was known from the beginning of the year was front end loaded, which was also reinforced by the fact that we had to accelerate some repairs.
That's not something which, changes our plan for the full year.
So what is flat is the projection.
Yes, what is flat is a projection, not the CapEx level compared to 2017.
Thank you. The next question comes from Zen Eleselts. Please go ahead.
Yes, good morning, gentlemen. Two questions for me. Firstly, you have announced some investment at Contribution, beginning of June. Could you elaborate on for the investment. I think they were announced by Benoit Bazon.
And does that mean that this division is not part of the 3,000,000,000 disposals. 2nd one, you mentioned some impact from your Polish and Egyptian Flat Glass in Q3, could you quantify?
So I will answer the first question. So if the answer is a trial to get me to precise what is our business and program, I will not answer this question. If the question is limited to the CapEx we are doing in pipe and that Benoit announced, I think that there is a need like in all our businesses to, to invest in productivity And as you know, we have a difficult situation with our pipe business in France. So we have a plan to restructure this company, which, was announced last year, which is progressing well. And as part of this plan, we have to reduce our costs significantly.
And some of these reductions are requesting some productivity CapEx. So that's what I guess Benoit and is confirming that I announced at the beginning of June.
The second question was about, trying to put a figure behind the impact of the Polish and Egyptian growth figures in Q3. I think they gave a quite a precise guidance on what we're expecting in terms of overall operating evolution for the second half. I won't get much beyond that, but just to reinstate the fact that most of the industrial issues are behind us, and some of them are lagging to Q3 and should be stopped in Q3 as those two ones being the biggest ones.
Yes. I can go a little bit further. To say that the level of profitability of Flat Glass in the second half should be close to what we have had, in the last few quarters. So that means much close to 10%.
Okay. Thank you. And perhaps can you quantify the CapEx on the contamination segment?
Newspaper for these plants in France is a kind of EUR 20,000,000 to EUR 25,000,000 over 3 years. So we are not talking about anything significant. And as Pierre restructuring, we announced 18 months ago, which is underway with several 100 of headcounts decrease. It's a cost saving program, including productivity.
Redburn, Kepler.
Good morning. Thank you. Three questions as well, if I could please. First was just around given that you've been giving some margin commentary for the second half in sorry, I'm not sure if I dropped off there, sorry, in terms of distribution, would you be sorry?
Can you start to get your question because sorry,
yes, I think my headset dropped off apologies. Yes, the first question on distribution was whether you think the second half margin can improve on the second half of last year. Obviously, the first half was broadly flat The second was, I guess, still staying in distribution, but when we look at your cost savings, and it was last year's cost savings, but the slide 42, which breaks out the cost savings from last year, only 1,000,000 were attributed to distribution. And I understand that industry 4.00 is more about the industrial businesses, but to what extent why is that such a low share of the savings? And could distribution share of cost savings increase potentially in the future?
And then the last one was just around disposals. I think you've given us the guidance around what it means for the change in operating March. So we can back out, but I think it means that you're selling businesses with about a 3% on average underlying operating margin. So there aren't many candidates. That have got such a low margin.
Obviously, it would lead us to think about distribution, particularly, I think you've got 10% of that division that's outside of your 4 main kind of countries and regions. So is it fair to say that distribution non core is on the block? And I guess probably, again, it comes back to the previous question, but it does look like pipe is a potential one as well there, because there can't be many businesses in your group making as low as the 3% margin. But I guess any help there? And does it change your expectation of 1,000,000,000 of proceeds which was the previous way in which you communicated your hopes for disposals?
Thanks.
On the first question on distribution, Yes. I expect a slight improvement in the margin in distribution in the second half compared to the second half of last year. Concerning the 3rd question, once again, it's, I will not comment on what are the businesses, which are part of this program. What I can say is that, a program of that size doesn't mean necessarily large businesses. It can be a collection of a number of small businesses.
And in any business of Saint Gobain, you have a pocket of, underperformance. So we have, always a review of that, and there is no taboo on that. And so it it, there will be, there will be assets in all our equipment a business, which may be considered for that. So, and I am not going to be a more precise
The second question was about the low share of sale and distribution. You're right to ask the questions. There are two reasons for that. One is the fact that we measure much more systematically, in industry when we talk about, we, you know, we have a world class manufacturing system, which measures very systematically savings that we are doing, which doesn't mean that we are not working in distribution on our cost base. The second thing is that you will see that accelerate anyway because of the efforts of distribution on two sides.
First of all, is what we mentioned already in terms of investments in logistics and digital, which is increasing both our customer promise, but also our productivity. And overall, the ongoing effort on productivity that this distribution is pushing very hard. So you will probably see that share increase in the cost savings, yes.
Okay, thank you. And so just returning to disposals, would it be fair to say that your efforts still amounts to broadly what you've perceived to be about 1,000,000,000 of proceeds overall?
Oh, yes, sorry, I forgot to answer that question. The timing of the 2 the timing of the 2 is not the same. So yes, I can say that the 2 objectives are maintained, but the timing of the second is not the is shorter than the timing of the of the first one. So I want to go through the signal
and acceleration.
Yes. So I confirm what I said last year, What I am saying this year is that there is an acceleration in terms of time. And second, that there is a focus on low performing businesses.
The next question comes from Nabil Hennet, Barclays.
Yes, good morning.
Thanks for hosting this call and taking my questions. Actually got three questions as well, if I may. First one is on, and sorry, Guillaume, it isn't correct exactly everything you said about the volume prices in Q2 per segment. Could you please give us the volume and prices impact by the subsegments for the second quarter? Sorry, do you want me
to There was a question.
So the second question is you mentioned now estimating about 1,000,000 raw materials and energy cost inflation. I was wondering if you take your prices at the end of July and you assume there are flights until the rest of the year, what sort of price impact you'll have in the industrial businesses? I mean, how much of that cost inflation would you cover? Do you still need price increase in the remainder of the year? And is it fair to say that in roofing in particular, that's where you would need more price action to cover the cost inflation.
And finally, just to detail that you got a positive 1,000,000 in truck group adjustments in operator income. It's usually a negative number. I was wondering why you've got a profit in that sign and what we should expect for the remainder of the year. Thank you.
Okay. I guess three questions are for me. So, the first one is easy, about the volume and the price in Q2. So I will start with Flat Glass. We had a growth of 6% in Glass in the second quarter, with 2.9% in volume and 3.1% in price.
HPM 11.1% internal growth with 8.4% in volume and 2.7% in price. In interior solutions, We had a growth in the second quarter of 9.7 with 5.3 in volume and 4.4 in price. Exterior Solutions 11.2 percent, growth in Q2 with 7.9% volume and 3.3% price and distribution, 6.7% growth in Q2 with a 4.3% volume and 2.4% price. Now, where do we feel we are in terms of price to costs spread at the end, at the end of June. And do we need more price increases?
I think I mentioned during the call that At this stage, broadly, we are offsetting, on the industrial side, the cost of raw materials, energy, and transportation with the price increases, which doesn't mean that we should stop there. And in fact, we are quite active, in all of our segments but with particular phases on some segments where we have been lagging in terms of price versus cost, And one of the main ones is roofing on which we have announced price increases. We have announced price increases in May, June. We have announced another price increase in August. So we are pushing hard.
And in fact, we finished the, the first half with a good momentum in terms of, in terms of pricing, but it doesn't really mean to that, because, you know, the difficulties that the analysis cannot be done in static, because we are, for example, seeing continued inflation in transportation, in the price of gas, in the price of fuel, which is pushing us to continue to increase pricing in not only roofing, but also other segments which we are doing. The third question was very technical about, I guess, the operating profit contribution of the holdings you're very precise, and you were right to note that usually it's negative this time. It's a positive. This is due to the fact I think I mentioned last year that we are, one area on which we are working is to optimize the cost of pensions especially in the U. S.
So we had done so last year. We have continued to do so in the first half of the year, which has resulted in additional profit, which has gone to the holdings. This is also something we are going to continue to work on the functions in general I cannot guarantee that we have quarter after quarter, a regular result on that, but we continue, we continue to work this topic, which is a topic in which we think we have opportunities.
Okay. Maybe just to follow-up on Exterior Solutions. I mean, been rightly precise on your margin expectations for the second half of the year, for glass and interior solutions. Do you think given the comments you just made about pricing and continued effort, do you think external solutions could see an improvement in margin in H2 2018 versus H2 last year?
I have not Benoit, you want to answer that question?
We should see some improvement because clearly in exterior solutions, we have the negative impact the first quarter, particularly on markdowns with the weather. And as Guillaume mentioned, we are pushing hard on pricing in North America. With some good momentum in the last few weeks. So we hope that price increase of August, that I will stick, and therefore, we'll head to margin in the second.
Okay. Thanks a lot.
Thank you. The last question comes from Arnaud Lehman, Bank of America. Please go ahead.
Thank you very much. Good morning. I have two questions, if I may. The first one is regarding your exposure. I think you made the comment that in autos, the Flat Glass business was still doing okay.
However, we've heard some automotive manufacturers complaining about business trends, which were deteriorating somewhat unrelated to the trade war. So have you seen any an impact in terms of automotive demand. I think you've made some comments, but can you come back on that? My second question is regarding your net debt at 1,000,000,000 year on year considering all the spending that you detailed. Would you expect that year end net debt to increase by similar amount.
So probably accounting for working capital at year end, somewhere between 1000000000 and 1000000000. Is that a good guidance for year end net debt?
I will answer the first one, Arnaud and Guillaume will answer the second one. So on Automotive, I think that the markets are still globally very very, very good. And there is the expectations about the market for the second half are a bit lower than they were in the first half. Depending on the region. But for us, the trends are maybe different from what you hear from, from one company.
So the next, first, I would say that what are the big trends at the moment in, in automotive? They are very related to the evolution of the motorization. So there are big three shifts between diesel to electric or diesel to non diesel. And this as for various companies, big impacts. Whatever the car is, whether it's a diesel engine or whether it is a normal gas or whether it's an electric car, the windshield or the automotive glass is not affected.
And I would say that even I think I mentioned that last year at the Investor Day. I think that the electric car is, is global trend is globally positive for us in terms of the value that we expect in terms of windows in the car. So globally, I think the market for us in the second half to answer your question is going to stay, to stay good. We have good positions. And for us, what is more important is what are the new models where we are versus others and the geographical mix.
We have good prospects in emerging countries. Automotive in Europe may flatten a little bit, but even what we have in mind in terms of our models, we expect the trend that we have seen in the the first half to continue in the second half.
On the debt evolution between now and the end of the year, Arnaud, you've seen the past track record, you know, it well. There is a swing due to working capital of approximately 1,000,000,000, usually. And if I look at the last 2 years, as an net debt has decreased by 1,000,000,001 year 0 point 8 another year. So I think it's safe to assume that we're going to see the same kind of order of magnitude. Now that being said, It depends also very much on the acquisition, on the acquisition level as well as the share buybacks level.
But overall, I think the other manage you're giving between 8% 8.5% is the right one.
Thank you. The last question comes from Eric Lemarie, Bryan Garnier. Sir, please go ahead.
Yes, good morning. Just Good morning. Thanks for taking my question. Just two on my side regarding the supply business in France. Do you see any rebound of the market along with the civil works recovering in France in particular as a local authorities more active on that side or not?
And otherwise, on the pie business, have you seen some return of some export contracts too in this business? And a second question on Flat Glass, do you expect or do you think further closure for maintenance or flat glass or float are likely in the near future?
So on Pipe, on the Pipe business, the situation is a bit different between our domestic markets in Europe and and export, maybe even why you want to give more color?
The French market was very strong last year. It's a bit flattered this year, but midterm, it continues to strong, the government launched some big analysis on the water market and the structure in France. So we are very optimistic for the long term on We have some good momentum on Northern Europe and Eastern Europe, which is very positive this year, on the large export, the Middle East, Africa, it's not a good evolution. It's flattish also. So no big change there, but really more upside on the Eastern part of Europe, Northern Europe, with a lot of Hastroker Products.
For export, I think we have some prospects, but it's only 6 times, but more next year, in terms of float repairs. No, I think what happened this quarter was, of at least 1st half, is that we have more than usual. They are always float repairs. I would say that we had 3 events this first half. 1 was completely scheduled,
but it's
a big one was in Poland. The 2 others, that we mentioned, 1 with the flooding and the repair that we didn't have in mind that well in Romania have waited significantly. I, we will have further repairs next year, but I would say more on the normal thing than the Polish 1, but the Polish given our the importance of our Polish business. This was expected. I had that in mind, but it was a significant, when you compare the profitability of the of last year versus the profitability of the first half second half from September, it will be a contract.
So I
would say, Patrick, there is no are going to go back to something more normal, but there will always be 1 or 2 flows repair every year.
Thank you. We have no further question over the phone.
Yes. So questions on the internet, We have two questions from Robert Gardiner. The first one is in Fred Glass, as you any further maintenance downtime in plants outside of Egypt, Poland or Romania? I think you just answered this one. And the second one is, can you please repeat the Q2 price effect in division.
Thanks. I think I also answered this one, but, just to make sure flat glass plus 3.1% price in Q2, HPM plus 2.7 percent, interior plus 4.4, exterior plus 3.3 and building distribution, plus 2.4. And then there was one specific question of rigor Kuplitsch from UBS, which is, can you please provide the H1 effects and M and A impact operating profit? And can you also guide on what you expect for 2018 as a whole for both? The impact of FX and structure on operating profit is around 1,000,000 for H1 2018.
For the rest of the year, as I think I mentioned, I mean, I mentioned it on sales, but the FX effects on sales is clearly improving. And I said, I think that we were finishing the first half with an FX effect on sales, which was less than 3%. In fact, given the momentum, we should see a substantially less a negative exchange rate effective exchange rate where to stay at the end of June, and we know it's very theoretical. Now when it comes to operating profit, that's going to depend a little bit on the mix, obviously, on geographies, etcetera. That's all.
Very good. Well, there is one more question. The room at least up.
Pierre Andre coming back to France and we have a good surprise and a good improvement of, the French profits. In term of EBIT, where does it stem? Is that stemming from distribution or from industrial business lines?
All our businesses have recorded improvements in the profitability, in France. And they are some close ones.
We have exceptional in terms No, overall, there is a clear progression of operating profit, but in all businesses, but what I said also in my comments is that there is a little bit of one offs linked to the, tax effect for the import share on the operating profit and the timing between H1 and H2, which is helping but nevertheless, the picture remains the same directionally progression of operating profit in France.
Finally. Okay. Well, thank you very much, and good holidays for those who are going on holidays soon.