Hello and welcome to the Vicat Q1 Sales 2022 call. My name is Judy, and I'll be your coordinator for today's event. Please note that the call is being recorded, and for the duration of the call, your lines will be on listen-only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad at any time. If you require technical assistance, please press star zero and you'll be connected to an operator. I would now like to hand you over to your host, Hugues Chomel, Deputy CEO and CFO, to begin today's conference. Thank you.
Good afternoon, ladies and gentlemen. I'm Hugues Chomel, Deputy CEO and CFO of the Vicat Group. With me today is Stéphane Bisseuil, our Investment Relations Director. I will be presenting to you our 2022 Q1 sales figures. Before starting the presentation, please have a look at Slide two, where you can read our disclaimer regarding the forward-looking statements that this presentation may contain. Let us now move to Slide three with the key points as of March 20, 2022. Vicat Q1 sales performance reflect the dynamism of its markets despite a high base of comparison. Q1 2022 consolidated sales came in at EUR 789 million, up 12.4% at constant scope and exchange rates.
Recent geopolitical events did not have any direct impact on the group business levels during the Q1 , and we recorded solid growth compared with the same period of 2021. All the regions where we operate posted growth in their sales at constant scope and exchange rates. In a global environment providing little visibility in the short term, especially regarding energy costs, we are executing our strategy to improve our production performance, make greater use of secondary fuels, and implement a pricing policy tailored to this new environment in pursuit of our operational, environment, and social targets. Let us move to France on Slide four. During the Q1 of 2022, the group performance in France moved higher, supported by a small improvement in demand compared with 2021, despite a high basis of comparison. In the cement business, operational sales rose 7%.
Given the basis of comparison resulting from the French market dynamic performance in the same period of last year, this increase reflects a slight pickup in demand and a sharp rise in selling prices at the beginning of the year. The operational sales recorded by the concrete and aggregates business rose 6%, with further expansion in concrete and in aggregates, as well as a significant improvement in selling prices during the quarter. In the other product and services business, operational sales advanced 8%. The group is expected to complete the capacity increase at the Onno plant in the Paris region, which specialize in building chemicals. This investment, which is expected to enter service during the Q1, will increase mortar production capacity by 150,000 tons per annum, helping to meet the strong demand in Paris market, as well as unlocking reduction in logistic costs.
Please turn to Slide fix. In Europe, business trends were positive in the Q1 of 2022, supported by favorable conditions. The decline in sales on a reported basis reflect a scope effect resulting from the sales of Creabeton Precast business in Switzerland, which was finalized on June thirtieth, 2021. In Switzerland, the group consolidated sales climbed 8%. In the cement business, operational sales moved up 4% through stable demand and a solid increase in selling prices. In the concrete and aggregate business, operational sales moved up 4% as volume declined in concrete but moved sharply higher in aggregates. In other product and services business, operational sales rose by 6%, supported by healthy level of deliveries in the rail sector and favorable product mix. In Italy, consolidated sales rose 36% as business trends and selling prices moved significantly higher.
You may now turn to Slide six for performance in the Americas. In the United States and in Brazil, construction sector trends remain dynamic, supported by higher selling prices. In the United States, the macroeconomic and sector environment remained favorable as consolidated sales rose 13%. In the cement business, operational sales in the region grew 18%, reflecting the momentum of construction market and the introduction of a substantial price increase. In the concrete business, operational sales rose 8% as market conditions remained positive, especially in the residential and commercial sectors. Against this backdrop, selling prices moved significantly higher. The construction of a new clean line at the Ragland plant in Alabama made progress and is due to enter service in the next few weeks.
It's worth noting that after an evolution in the regulation, demand for blended cement or limestone cement is emerging across all regions in which the group operates. This major trend is likely to reduce by up to 10% the proportion of clinker in the cement the group delivers, which will result in increasing cement production capacity and decreasing carbon emissions per ton of cement produced. In Brazil, consolidated sales totaled EUR 52 million at 32%. Against a backdrop of rapid inflation despite higher interest rates, demand remained strong in the group markets, in line with the trends seen in the recent quarters. In the cement business, operational sales were EUR 41 million, an increase of 26% in a dynamic market environment, while selling prices increased significantly.
In the concrete and aggregate business, operational sales were EUR 17 million, an increase of 54% in line with the trends seen in the cement business. The steady improvement in the market condition was accompanied by a rise in prices, both in concrete and aggregates. Let us now move to Slide seven for our performance in Asia. Business in India grew throughout the period, supported by solid demand, especially in the public sector. The group posted consolidated sales of EUR 100 million in the Q1 of 2022, up 8%. In an inflation environment, price rose significantly, especially at the end of quarter. Consolidated sales in Kazakhstan came to EUR 12 million, up 8%. This performance was achieved through a significant increase in selling prices, which largely offset a temporary decline in volumes delivered over the winter period. Please turn to Slide eight.
In the Mediterranean region, sales moved sharply higher in both countries as a result of contrasting situations. In Turkey, although the macroeconomic and sector environment remains upbeat, the winter conditions significantly affected demand during the Q1 , without that representing a change in trend. Overall, the Q1 , 2022 consolidated sales totaled EUR 27 million, up 68%. In cement, the far less favorable weather conditions that ran in the Q1 of 2021 impacted business trends. As a result, volumes delivered were much lower during the period, even though demand remains solid. In a high inflation environment, significant price increase were introduced. As a result, operational sales in the business climbed 47%. In concrete and aggregates, operational sales rose 113%.
As in the cement business, there was a significant rise in selling prices, even as tough weather conditions at the beginning of the year dragged down concrete and aggregate deliveries. In Egypt, consolidated sales totaled EUR 26 million, up 68%. Following the market regulation agreement that entered into force in July 2021 between the Egyptian government and cement producers, selling prices in the domestic market continue to improve during the Q1 , supported by a solid increase in demand. Finally, on Slide nine for performance in Africa, where the group continues to benefit from a dynamic sector environment despite the political crisis in Mali. In cement, operational sales in the Africa region grew 9%, reflecting the strong momentum of the markets in Senegal and Mauritania, which offset the decline in Mali, where the market was disrupted by policies restricting imports.
Selling price rose in both these regions. In Senegal, the aggregate business, supported by the gradual resumption of major government construction projects, recorded operational sales of 8% or EUR 8 million, up 10%. On Slide 10, I turn to the changes in the group financial position at the end of March 2022. At March 31, 2022, the group shareholder equity was EUR 2.6 billion, up from EUR 2.46 billion the year before. The group net debt was EUR 1.5 billion versus EUR 1.27 billion at March 31, 2021, given the significant increase in the working capital requirements. On Slide 11, I'll begin with a focus on the situation caused by the conflict in Ukraine.
As a reminder, the Vicat Group does not have any industrial or commercial operations in Ukraine or Russia. As things stand, there has been no impact of the group on the group business. That said, the conflict is likely to affect growth in Europe and worldwide, and thus the group operations in potentially exposed countries. In Egypt, as discussed previously, the implementation in mid-2021 of an industry-wide agreement has enabled to bring EBITDA back to breakeven point in the second half of 2021 and early 2022. There is no visibility on potential renewal of this agreement beyond June 2022. In addition, the group has consolidated its shareholding through a simplified public tender offer, raising its equity interest from 56.2% at December 31, 2021 to 67.2% at April 30, 2022.
On Slide 12, you have an update on energy cost. Given its hedging policy, the group estimates that at current energy prices, it would need to raise its selling prices by 15% in its cement activity over the full year to fully cover the increase in its energy cost. As things stand at March 31, 2022, further price hikes are thus needed in France, Switzerland, Senegal and Brazil to meet these objectives, all other factors remaining equal. Accordingly, the group remains focused and confident on its ability in the current environment to introduce the requisite increase in its selling prices to cover the inflation in its energy costs, situation permitting. Naturally, this estimate is likely to be reviewed in case of marked change in our operating environment. To conclude on Slide 13, you have here the key points of our updated outlook.
In 2022, the group anticipates a strong increase in its sales and are propelled by an increase in its activity levels and a sharp progression in selling prices. EBITDA generated by the group in 2022 is likely to grow, but by not as much as in 2021. In light of these elements, the group expects erosion in its EBITDA margin in 2022. Judy, we can move to questions.
Thank you so much. As a reminder, if you would like to ask a question on today's call, please press star one on your telephone keypad. To withdraw your question, please press star two. You'll then be advised when you can ask your question. The first question is coming from the line of Paul Roger from BNP Paribas. Your line is unmuted and you may go ahead.
Yeah, good afternoon, Hugues. Good afternoon, Stéphane. Thanks for taking the questions. So maybe we'll start with the comments about further price increases then. You're talking about these in four markets. Can you give us some indication of how big they're likely to be? Just so I understand it correctly, you are guiding for margin squeeze this year. Are you implicitly saying that they won't be enough to offset the energy costs? Then the second question, clearly you're pushing for these big price increases. Obviously, the price of everything else is going up as well. I was just wondering if you're seeing any signs of demand destruction, maybe in terms of project cancellations or delays, anything like that at the minute?
Good afternoon, Paul. Thank you for these questions. First of all, regarding price increases, what we can say is, price trends are solid at the end of March, as you have seen in our reported figures. We are quite confident in our ability to price further price hikes. Sorry for that. We have already announced $10 in the U.S. on July 1. We are announcing currently EUR 10 in France for Q2, as well as a little bit less than 5% in Switzerland. As a context, I would like to remind you that as you know, cement costs are relatively limited in the total cost of construction, and that the inflation of cement is relatively limited as compared to other materials over the recent period.
We are quite confident in our ability to reach our target to offset the energy inflation. Just maybe a quick comment on the four countries that we have mentioned. This was the comment we have made regarding France, Switzerland, Senegal and Brazil was regarding the situation at the end of March, where the price hike did not yet compensate the cost to date. We will certainly move our pricing higher in all markets where it is needed on a full year basis.
Okay. In terms of any sign of demand destruction, are you seeing anything like project cancellations in Europe or elsewhere, or not yet?
We don't see any signs yet of cancellation linked to inflation. We do see a few delay in U.S. Due to a constraint on supply of building materials, cement or steel. Nothing leading to inflation at this stage.
Okay. Just if I can just sneak in one final one. Just struggling a little bit to understand your performance in France, because you're saying on the one hand that volumes are slightly better, you've had significant price increases, and yet if I'm interpreting the slide correctly, it looks like like-for-like sales were only up 3%. I would've thought given the dynamics you described they'd be higher than that. Am I missing something or is there something else going on?
Just as a reminder, we comment on operational sales for each of the activities and the like-for-like figure is given for the French consolidated sales. I believe it's just merely the effect of vertical integration.
Okay. Got it. That's great. Thank you very much.
Thank you so much for your questions, Paul. The next question is coming from the line of Yassine Touahri from On Field Investment Research. Your line is unmuted and you may go ahead.
Yes. Good afternoon. Couple of questions on my side. First, last six months ago, you were talking about an increase in energy costs estimated at 30% for 2022. Have you... No, you are not quantifying it precisely, but you are mentioning that you need 15% price increase. Is it fair to assume that you're expecting more energy cost inflation in 2022, since some of your competitors mentioned energy cost inflation of 40%? Is it close to what you're expecting or could you give us a figure? And then, the second question on the... No, I think that will be my first question actually.
Just the energy cost inflation that you're expecting for 2020.
Hello, Yassine. Thank you for your question. The line was not very clear, but I guess I understood the general expectation. At the time of the full year 2021 publication, we were indeed banking on an increase of 30%. We are now expecting a rise that would be markedly higher.
Yassine,
Yassine, can you mute your line, please?
Yeah. Thank you.
Thanks. As you well noticed, we did not give a global estimate. The situation is quite different from one geography to another, and even in some cases, from one plant to another, based on the energy mix of each plant, the currency situation, and so on. We figured out that it would be easier and clearer for everyone to give you the price increase needed to offset this impact. As far as we are concerned, we believe that, as mentioned in the press release, 15% price hike in cement globally would be adequate to fully compensate energy inflation.
On the basis of the Q1 performance, we have been able to price on a very solid price increases, and we are confident that the further price hike will stick.
Just for us to understand, when you're mentioning that, in Q1, I think your like-for-like growth was approximately 12%.
Correct.
Is it fair to assume that most of it is pricing, that you have a double-digit price increase in the Q1 ?
Indeed. As mentioned in the press release, we have a slightly negative volume effect in Q1 globally, and therefore, all of the increase is selling price.
Just to follow up on the price discussion. The 15% price increase is what you need to just recover the cost or will it be enough to keep your margins stable?
It is to offset the cost.
If you get price increase of 15%, everything else being equal, you would fully offset the cost inflation, but margin could be a little bit under pressure?
Exactly.
Is that correct?
Yeah. It's correct.
I can imagine that if prices are not yet 15%, you would expect a bigger margin pressure in the first half of 2022 than in the second half of 2022, is correct?
Mechanically, as we have announced, we have already announced significant price increases in France, in U.S., in Switzerland, and we will continue to pass them on as needed.
Yeah, maybe, yeah, I think just to remember, but I think it was something that we've mentioned many times. We in H1 this year have a high basis of comparison, and we always say that the H1 this year will be tough compared to H1 last year. Your comment is right. Taking also into account that the price increases that we've been passing since the beginning of the year and that we pushing now will have the full effect in H2.
It's possible to keep your margin stable in H2, or is it too early to say?
Probably too early to say. Once again, depending on the evolution of energy cost and how much the price increases will stick, and the ability for the customers to fully accept those price increases.
Very last question. Have you quantified the savings that you could generate from your new line in the U.S. in 2022, or is it too early and the effect will be only visible next year?
We have of course evaluated it, and I think we have shared it with the market, together with our full year in 2021 results. We expect a 30% saving compared to the 2021 production cost. This will obviously materialize gradually as the plant is ramping up. Of course, this is bringing 50% additional capacity and this again will ramp up with time. In the context of demand but is today lacking supply. We'll do our best to ramp up as soon as we can. Always need some time.
Thank you very much for your brief answer.
No problem.
Okay, thank you so much for your questions. As another reminder, it is star one on your telephone keypad if you would like to ask a question on today's call. The next question is coming from the line of Brijesh Siya from HSBC. Your line is unmuted, and you may go ahead.
Hi, good afternoon, James. I have two as well. The first one is on volume. You report cement volumes are down close to 5%. As I look at the commentary, all the countries are kind of saying that it's picking up except Turkey and Kazakhstan. If you could kind of quantify how big those declines in Turkey and Kazakhstan, so you could just make it out how other markets also performed. Now on pricing, it's helpful to kind of give a number around how much you require. It's interesting that India is not part of it. Does that mean end of March for the price increase you have done that's enough at this point in time to fully cover your costs?
If you can, give a little more flavor about it. Related to pricing here as well, if you could, tell us as of today, how much of that 15% you have already kind of implemented, and how much more you need to do over the course of Q2 to kind of, as you stand today, can fully recover that.
Hi, Brijesh. Thank you for your questions. Regarding volume, the, as you very rightly spotted, the main market where our volumes have declined is Turkey. It is in a very substantial manner in a context of tough winter environment compared to the previous year. So we have almost all the decrease, which is in Turkey and it is very seasonal and it does not reflect a demand trend in our view. Regarding pricing, indeed, you know, the comment we made regarding some countries is the price effect or year to date end of March, compared to the cost effect year to date end of March, country by country.
Indeed, in India, we had enough price increase to cover the increase of cost. We will need more coming forward to fully offset the coming increase of cost as well, because this really depends on each country's situation in terms of hedges and inventory. We do expect to have to increase price further. As you know, there has been price increases in India in April. We are yet to see how much sticks.
Can you comment how far you have been to that 15% number you gave at the beginning?
Well, I think the best approximation you can get is from the global commentary we made a few minutes back regarding the global trend, where almost 100% of consolidated sales growth is price. Again, this needs to be seen on a market-by-market situation to be precise.
Gotcha. Thanks.
Thank you so much for your question. The next question is coming from the line of Jean-Christophe Gacel from CIC. Your line is unmuted and you may go ahead.
Hello. Thank you for taking my question. I have three question, if I may. The first one is about your hedging policy against energy cost inflation. Could you give us some more detail about it? The second question is about the price and volume effects influenced by business units, cement and aggregates. The third question is about the inflation in Turkey. How do you deal with it?
Hi, thank you for these questions. Regarding hedging policy of the group, just as a reminder, our total energy cost last year was EUR 400 million. 57% of it was fuels, the rest of it was electricity. As a reminder again, the breakdown of fuel is 46% of the amount is coal, 26% is alternative fuels, 24% is petcoke, and gas is only 3%, which actually concerns only the U.S. As I mentioned before, the energy mix and the sourcing situation is very different from one plant to another. We are tailoring our hedging policy on a plant by plant basis. We are usually hedging at 3- to 6-month forward.
Obviously we are continuing to push very hard to improve the energy mix and to continue to increase substitution to decrease our sensitivity to fossil fuel costs. Regarding your second question, well, I'm not in a situation to share the detail of the volume and price evolution per market and per activity. I think it's too precise information to be shared.
For sure.
Regarding Turkey, we are indeed facing a high inflation environment. It is probably very close to a hyperinflation situation if the situation stays as it is. We are adjusting price on a very regular basis, several times per month. We so far have been successful in adjusting our price to a difficult cost situation. Because on the general energy cost increase, we had the currency depreciation. It is an ever-moving environment, but so far we have been able to compensate for the landed cost inflation.
Thank you very much.
Thank you for your question. The next question is coming from the line of Michael Niedzielski from ROCE Capital. Your line is unmuted and you may go ahead.
Yeah. Hi, everyone. My first question is on the debt. If you could just come back on the reasons why, you know, the debt is, you know, a little bit higher than I think some of us were expecting. My second question is on Egypt profitability. It's good to see that you're, you know, now breakeven at EBITDA level in Egypt. You know, what are your thoughts as to when Egypt would come back to a double-digit EBITDA margin, if at all possible? Thank you.
Good afternoon, Michael. Thank you for your questions. On the debt, the increase in the debt is fully linked to the increase in working capital. The increase has been quite significant both with strong increase in sales as well as the inflation on raw materials and combustibles on inventory. We are facing a significant increase in the working capital requirement, and we are obviously working on it. Regarding Egypt,
Can I ask a follow-up on the debt?
Yeah, please.
What do you think, you know, is a reasonable estimate for the, you know, year-end net debt? Is it gonna be closer to EUR 1.5 or, you know, below that?
We have not shared any guidance to the market yet, so I'm afraid I'm not able to comment at this stage.
Okay. All right.
On Egypt, as commented before, we are back to, I would say, a breakeven or slightly positive EBITDA level. Obviously, the short-term forecast and situation very much depends on the evolution of market regulation agreement that was passed last year. It is too early to tell today what the situation may be. On the positive background elements, we have seen the consumption in the market recovering since 18 months after COVID, basically. We see, I would say, something around 5% evolution, positive evolution of consumption, which is positive, but there is still substantial overcapacity in Egypt, so it will take time before we are able to come back to, I would say, a normalized profitability level.
At the same time, we are quite confident in the long-term drivers of this market. We've strong population and population growth with naturals resources coming on stream. I would say the medium-term prospect of the market is positive. I'm not able to give you a date on when we expect a positive. I mean, a normalized EBITDA level considering the situation.
Okay, thank you.
Thank you so much, Michael, for your questions. The next question is coming from the line of Sven Edelfelt from Oddo. Your line is unmuted, and you may now go ahead.
Yes, good afternoon, and thank you for taking my question. I would have three. First one, you mentioned four markets for additional pricing, but you didn't quantify Senegal, or maybe I missed it. I understood, I mean, U.S., France, and Switzerland. Second question, when I look to come back to Yassine's question, at the operational sales in cement, pointing to an increase of energy bill of roughly 70% versus the 30% you were pointing out previously. Is it a fair assessment of the situation? That's the second question. You mentioned some sort of a pricing of, let's say 11%-12% in Q1. What was the pricing end of March, so we can have a better view of the trend?
Good afternoon, Sven. Thanks for your questions. You did not miss Senegal price increase indeed, because I did not comment on it yet. We have not announced any price increase yet in Senegal. As you know, cement is a very visible commodity for end consumer in emerging countries and specifically in West Africa. As such, it is very sensitive, and the political authorities are paying attention to it. What is very clear, and I think is a shared understanding with all parties, is that considering the increase of cost, we need a substantial price increase in Senegal, so we expect it to happen. It is not yet clear on the date.
Again, this is under discussion locally, but we are confident we will be able to pass it at some point this year.
Price increase.
On the sequence of price increase, I mean, we are able to give you a, I would say, a spot view at the end of the quarter. I think the average indication is already quite substantial. We did as well mention that the further increase we are considering in key markets, as well as the fact that in quite a few emerging markets, we are able to adapt prices regularly as we go along. I reiterate, we are quite confident on our ability to reach the 15% target and to offset the energy bill.
Regarding the quantum of energy price increase, well, I see where your figure is coming from. It is a very different situation from one place to another. I mean, depending on the percentage of substitution, depending on the source of energy, depending on the currency situation. We figured out that it would be more meaningful for everyone to express this as the price increase needed to offset the cost rather than continue to have the global inflation figure that is made of many very different things. As a reminder that we do express this as a cement price increase.
If I understand correctly, the 70% is not meaningful?
I mean, it's your calculations then.
Next question maybe.
Okay. Thank you, everyone. As a reminder, it is star one on your telephone keypad if you would like to ask a question in today's call. We do have a follow-up question coming from the line of Yassine Touahri from On Field Investment Research. Your line is unmuted, and you may go ahead.
It's just a follow-up question on this 15% increase necessary to offset energy cost inflation. Is the 15% increase only enough to offset the energy cost inflation? Or will it be enough to offset all the cost inflation including other costs such as raw material, labor, taxes, and.
I believe the guidance we have given is that this 15% would offset the energy inflation.
If we include the labor cost and all the other costs, we will need more than 50% to keep your cash generation stable. Is that fair?
I believe you. I would drive you to look at our global guidance again. If we consider everything, we still believe that EBITDA will grow to a lesser extent than last year, but this is the same guidance as before. We just point out that considering the strong increase of sales linked to sharp selling price increases, we do expect an erosion of the EBITDA margin.
The guidance integrate any volume growth? Or is it fair to assume that it integrates only a moderate volume, it doesn't integrate a lot of volume growth even what you've published in the Q1 ?
As you have surely seen, we give elements on a market-by-market basis for the activity levels. We do point out an increase in the activity level globally, but that is likely to be moderate, but more favorable in H2 than in H1, given the respective basis of comparison.
The very last question on the US. Have you seen any building activity related to the stimulus program? Do you expect to see any benefit at the end of this year or in early 2023? Or is it too early to assess what will be the timing of this infrastructure stimulus and what it will be?
As you know, this stimulus is expected to be substantial. The PCA has pointed out on a very substantial impact on the coming years. We do not expect any significant effect before late this year and more most likely next year.
Thank you very much.
Thank you so much for your question. The next question is coming from the line of Harry Goad from Berenberg. Harry, your line is unmuted, and you may go ahead.
Good afternoon, and thank you for taking my question. Just one from me, please. I guess it's circling back to some low carbon products. Back at the time of the full year results, I think it was you talked about a new product you're developing. I think it's the first time you talked about it. Can you please remind me, you know, the specifics of that product, how it's progressing and any updates on it? Thank you.
Good afternoon. Thank you for your question. Well, obviously, we have not disclosed much detail regarding this product, but I may reiterate what was shared so far. This is a new binder that has, depending on the resistance expected of the different types, a neutral or negative carbon footprint. This contains elements that are acting as a carbon sink. We are now implementing test sites. We have constructed a few of them so far.
Based on this, we will seek ATEX authorization to be able to further move to commercial stages later on, probably next year. It is still the early stages of the development, but it is moving forward as expected.
Thank you. If I can just add one follow-up on that please. I mean, just to be clear, is this a product that will be made in a traditional cement plant and/or is there anything you can tell us about the raw material mix?
What we are trying to achieve is a cement that has the same properties and behaviors as a traditional cement. As mentioned, this can be referred to as a binder since it is not a normalized product, but we will certainly try to have it behave as much as possible as a normal cement.
Okay. Thank you very much.
Thank you, Harry, for your question. The final question is coming from the line of Tobias Woerner from Stifel Europe. Your line is unmuted and you may go ahead.
Yes. Good afternoon, and thanks for taking my question. There's just one. You may be pleased to hear. You said earlier that in India you've already or you're already overcompensating or compensating the higher energy costs. That actually seems to be quite a surprise to me given the significantly higher coal prices in Asia. Can you shed a little bit more light on this, what sort of level of price increases you've seen in your region and what your energy costs have increased by? Thank you.
Yes. Just maybe a little bit more clarity. Obviously I'm not able to disclose price levels by quarter, by region and so on. What I would like to point out is that, depending on what was the policy, the hedging policy and what is the inventory situation, the coal price and globally energy price increase is hitting the P&L at different times. What we have mentioned is just that as of the end of March, the price increases have offset the evolution in costs. This is not if you look at the full year guidance, we mentioned that we believe that the energy, the full year price increase may not be sufficient to fully offset the energy bill on a full year basis.
We will of course do our best to try to compensate it. This was just an end of March situation, which.
Sorry, I'm a bit confused. You set out in your guidance now or in your statement that 15% should be enough to compensate the higher energy costs, so now you say the opposite.
As a total, but regarding India.
India. Okay.
We state in India much better. You can look at the detail by country and regarding India, we mentioned the strong rise in energy costs should only be partially compensated.
Which leads me to a follow-on question, if I may. What level of your energy costs are hedged at this point in time?
This is very variable from one plant to the other and so on. I'm not able to give you a precise overall indication.
Okay. Thank you very much.
You're welcome.
Thank you so much for your questions. There are no further questions in the queue, so I'd like to hand it back over to you, Hugues Chomel, to conclude today's conference.
Thank you. This concludes our call for today. I'd like to thank you all for your interest in Vicat and à bientôt for our Q2 results in end of July.
Thank you so much everyone for joining us on today's call. You may now disconnect your handsets. Hugues, please-