Ladies and gentlemen, thank you for standing by, and welcome to first quarter 2020 results call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question- answer- session. To ask a question during the session, you will need to press star one on your telephone. I would now like to hand the conference over to your speaker today, Christoph Beumelburg. Please go ahead.
Thank you, operator. Good morning. Good afternoon to everybody who is on the call. We welcome you to the Q1 2020 trading statement and earnings call for Heidelberg Cement. As always, in the room, Dominik von Achten, our CEO, Lorenz Näger, our CFO, and the IR team with Ozan, Piotr, and new to the team, Samuel, and myself. We do have prepared a presentation that you all received in the morning or at least could look up on the web, and we go through the presentation. Thereafter, we go to Q&A, and we have ample time for Q&A. I hand over to you, Dominik.
Okay, Chris. Thanks very much. Hello, everybody. Hello from my side. First of all, I hope you are all well in these interesting times. You are healthy and well, and that's the most important thing. Lorenz Näger and myself would like to welcome you to our Q1 call and would love to take you through our core messages first before we then open up for Q&A. First of all, if you go to the key messages on the first slide, clear point from our side, very strong operational performance in Q1 in many dimensions, and we were going against a fairly good Q1 already last year. From our perspective, the year for us has started very well indeed. Second point, also to be realistic, I'm optimist from a personality, but I'm a realistic optimist. In that respect, the outlook for 2020 remains uncertain.
I've already said that in the call mid-March. We do expect negative impact on our expected operating results for this year. We have to be clear on that. Because of that, we have reacted very early on, basically middle of February, to start our COVID action plan. We called it COPE, basically for COVID contingency plan execution. Very important for us is also the execution, not only the plan, but more importantly, the execution, where we basically target to save EUR 1 billion of cash for the year of 2020. This year, EUR 1 billion of cash savings. I'll come to some of the details in a minute. We have continued to work on our liquidity situation as we have disclosed in our last call mid-March. Things have further improved since then.
Lorenz Näger will go through that. The overall liquidity position is now at EUR 5.7 billion. In March, I think we were at EUR 5.4 billion. We continue to work even through rocky days on this situation because for us, as you all know, our solid investment grade rating is absolute key. On the back of that, the management board yesterday afternoon and the supervisory board last night have decided independently to propose to our general assembly in June 4th to adjust the original dividend proposal to EUR 0.60 per share. That is done from a clear position of strength, as we will explain you in the next couple of minutes. It is also based on the outlook uncertainty.
We do not exactly know what is coming. Obviously, that would preserve liquidity of another EUR 300 million that would go on top of the EUR 1 billion that I was explaining earlier. In that respect, that would be a further strengthening of our liquidity position. Last but not least, personally, as I said, we are very optimistic. As a company, we are optimistic. We will weather this storm very well. I said that already in March. In fact, we will use this crisis as an opportunity because we strongly believe that the mid- and long-term prospects for our industry are absolutely intact. In fact, they are very well intact because what we all expect is that at some point there will be significant government stimulus coming.
You already heard last night, EUR 500 billion in Europe that will come as a stimulus for the major European countries where we have a significant footprint. There will be something coming in the US. Let's wait and see how that works with all the preparations for the elections in November. We are confident that there will be something coming, and in some other countries there are similar discussions. Clear message from our perspective, we are very confident on the mid- and long-term prospects for our industry, but especially also for HeidelbergCement. With that, I would turn to page four and lead you through some of the details. I know that some of you had questions around the turnover development, like for like, - 8% doesn't look that good. Why does he tell me now that operational performance was strong?
Well, the key point is that the decline in revenue is on the back of the restructuring that we disclosed already earlier of HC Trading in our large trading business, where we have basically deliberately closed a couple of contracts that we didn't want to continue, and that has basically hit the turnover in this quarter by EUR 250 million, roughly EUR 250 million alone. In that respect, if you take that out, it's about a 2% like for like decline. On the operating EBITDA and operating EBIT performance, I think we are satisfied, both in a quarter that as of middle of March was in some of our core markets already very difficult. In light of that, we are very satisfied with our performance on the operating EBITDA and on the EBIT level.
I will go through some of the details in a minute, but you can also see here on slide four that that also has led to a margin increase quarter to prior year from 9.2%- 10.3% on the operating EBITDA. If you go to page five, you see our usual bridge. First point is that no big distortions are coming from currencies or the scope topic. We will center on the middle of the slide, where we basically see that we have again delivered on our core target to outperform any cost and volume development with our pricing development. Also to be very clear, the turnover hit that I was talking about earlier did not have a material impact on this slide here. It's very minimal, and we'll come to that later on if you wish to have the details.
Clear message here, pricing was very good, especially in North America and especially in Europe, but also in other parts of the world, on the back of our strategy that we have already disclosed last year, that we set price over volumes, and we continue to push price over volume. We have also decided to go for price increases in January rather than in the past, in March or April. That obviously in the specific situation was a very positive development. Basically, we had all our price increases done in the major markets by January and now are working off those price increases. If you go to page six, you see the split of the business line. Basically cement, like for like, - 2%, aggregates a little bit weaker and ready-mix, again, a little bit weaker. Why that?
First of all, on the percentage side, Q1 for us is a low volume quarter. In that respect, any move in absolute numbers has a significant impact on percentages. The reason that aggregates and ready-mix declined a little bit more than cement is basically on the back of a difficult situation with the closedowns in Europe, where obviously we have a significant aggregates and ready-mix footprint. Some lockdown in Morocco, that's a smaller impact. Also some weather impacts and partly market impacts in Indonesia, but also in Australia. That's basically the reason for the development on the volume side. When you go to the areas on the right side, you see very strong performance in the U.S. I'll come to that in a minute on a profit level. Clearly strong pricing, good demand growth in most regions.
Actually, all our regions in the U.S., including Canada, contributed to that positive development. I know last year we discussed a little bit about the Q1 performance 2019 in the U.S. and overall in 2019. At least the first quarter has picked up in that respect. We are back on track with our U.S. performance in Q1. Also Europe, strong despite the strict lockdowns in Italy, Spain, France, partly Belgium, and also the U.K. In that respect, also driven by strong pricing across all business lines, while the business in Northern Europe was surprisingly resilient despite already lockdowns in Norway. Towards the end of last year, we had a little bit of question whether Northern Europe would come off its good peaks. No, at this point it's holding up well. The same is true for Eastern Europe.
Again, Poland, very strong, stable, strong demand coming out of Eastern Europe. Asia, let's face it, did not meet our expectations. There were significant weather effects, both in Indonesia with flooding and also the bushfire topic in Australia. There's also a little bit market pressure in Brisbane, Sydney, where the market has peaked and where there is some market pressure, volume pressure that we are mitigating. Africa, again, another good performance. Overall stable demand, despite an aggressive lockdown by the government in Morocco. Also our problem child, Egypt, stabilizing on a low level, no further deterioration. If you go to page seven, you see the results performance on EBITDA level. You see what I said, the result in North America almost doubled on an absolute very low level, and the contribution, as I said earlier, it comes from all regions in the U.S.
It's not like we've overshot in one and then it's coming from nowhere else. It's really across the board, including Canada, positive performance from the U.S. and Canada. Western Europe, you see the same development. Very good, clearly above prior year, but very mixed contributions from different markets. Difficult market development, especially because of the lockdown coming from Benelux and France, but very strong development coming from Germany. Again, very strong performance, also the U.K. was pretty good on its way as well as Italy. Northern and Eastern Europe, basically strong are Poland and Romania. Also Sweden and Norway strong despite the lockdown in Norway. Overall satisfying performance coming from our NECA area. Asia Pacific, as I said earlier, Australia down. That's certainly something we can also talk about later. Australia, obviously the market is coming down and we had the weather issues.
Also Indonesia, India, Thailand, China coming down, we would say mainly COVID related. China, you know that they locked down the country earlier on. We are not based in Wuhan, but obviously that had an impact on the total Chinese market. Very encouraging signs to see in China, things are moving back up into the right direction. Overall, we hope the best is still to come in China and the worst is passed us. If you then go to Africa, as I said, good performance in Sub-Sahara, mainly Ghana, also Tanzania are two strong countries, going very well. Morocco with a clear hit from the lockdown, and then Egypt stabilizing on a low level. If you then turn to page eight, to give you a little bit of a feel how are things going since mid of March.
We have developed what we call this COVID clock, where we basically on a daily basis follow now our markets across the world according to their volume developments. We thought it would be a good idea for you to understand where are we in terms of basically no or little impact with our key markets. Where is the demand declining somewhat? Where did we have complete lockdowns by the government? Basically where we were pushed to take our production down, and where are we already in a recovery coming from worse situations. You see basically in some core countries that are very important for us, no or very little impact like Germany, Australia, Poland, Tanzania, also Sweden, Denmark, basically Northern Europe for us. There are some key markets in there that are very important for us.
Some decline in U.S. and Canada when it comes to volumes, also Indonesia. Also in Morocco, as I said earlier, some significant countries with demand decline. Complete lockdowns mainly coming from Italy, India, Malaysia, and also Bangladesh, that since that complete lockdown have all tried to climb back up, but on a fairly low level. Those who have recovered already better is what I said earlier, China probably the best recovery so far. Also Belgium, Spain, U.K., France coming back from its lows. Because of the uncertainty that is very hard to read in terms of visibility down the line for 2020, we have decided already in February on our COPE action plan, and we wanted to also disclose that to you. Basically the idea is to save EUR 1 billion cash in 2020.
That's against our operating plan, and it basically is comprised of three core elements. That is one, the cost side. Although this is a cash saving program, but it's very clear that we put a very close focus on costs by minimizing all non-essential expenses, by getting contributions from the personnel cost side. You know that is typically fixed, but as a supervisory board and the management board has decided to reduce temporarily their fixed salaries. Also, we had broad support from our global management teams in most of the countries and also in our headquarter functions here in Heidelberg.
That is really a very strong sign to the rest of that organization that we are all sitting in the same boat and we are going to weather the situation in a very strong fashion. We do have some countries where we have what we call short time pay, that's basically Europe. We also have some countries where we have already significant furloughing, that's mainly North America and the U.K. On the CapEx side, as we disclosed earlier, strict reduction of CapEx wherever possible without destroying the midterm positive dynamics for us as a company. We just give you one example. For example, you know that we are rebuilding our plant in Mittweida in Jena, which has a CapEx of well north of $500 million. That would have been a significant cash out this year.
We have reduced this cash out by EUR 75 million, but only slightly postponed the startup of the operations. In that respect, we think that's an important contribution also on the CapEx side. When it comes to tax and working capital, I leave it to Lorenz Näger to explain a little bit what we do on the tax and working capital side, as he anyway explains then also the next chart on the liquidity and dividends. Then we'll see you back for the questions. Lorenz Näger.
Okay. Thank you very much, Thomas. Good afternoon. Ladies and gentlemen, also from my side, I would like to take you through the right-hand side of slide nine and then through the slide 10 and 11. When it comes to, as you have seen from our program, we are working in all terms, especially with orientation to cash. Our main target is protecting the cash position and the financial metrics of the company. On the working capital side, we have an active management of all such items, such as accounts receivable, where we have implemented even more strict credit control than we had before. We try to collect the receivables as consistently as we want. We try to further improve our payment terms to our suppliers. Of course, we try to manage our stock.
In the current situation, we think that our stock levels will increase a little bit. Therefore, we also think, especially for a couple of months, we also expect our working capital to increase a little bit, and here we take action to keep that in the limits. Many tax authorities have announced to support companies, not only in Germany, but also in U.S. and in France and in many other countries. This allows us to a large extent to suspend tax prepayments for the current year, as we expect reduced net profits or taxable profits in many countries, and this directly goes into reduced prepayments. Some countries, especially U.S., also allow to use loss carryback. That means that the expected losses in 2020 can be offset against the profits and taxes paid in and for 2019, and this helps us significantly.
We think we will have cash tax savings in couple of hundred million EUR magnitude in 2020 compared to our expectations. When it comes to financing and liquidity, you can see the actual situation on slide 10. We have liquidity in the magnitude of EUR 5.7 billion, which consists of EUR 2.4 billion cash in hand and EUR 3.3 billion free credit lines, which consists of our syndicated loan with roughly EUR 3 billion and newly agreed bilateral credit lines in the magnitude of EUR 425 million.
HeidelbergCement has a very flat maturity profile. We have maturities of EUR 1.2 billion-EUR 1.4 billion per year. The upcoming maturities are two bonds, one of EUR 300 million in October and another EUR 750 million in the first quarter in 2021. These maturities and our financial needs are easily covered by our available liquidity. The company has very much reached for its access to financial sources.
Maybe you have noted that we have issued a EUR 650 million bond late March, which was then issued on 2nd of April with a 4.5 years maturity and a 2.5% coupon. As I earlier said, we have concluded bilateral credit lines with our core banks of EUR 425 million, and we have recently gained access to the PEPP program of the European Central Bank, where you can issue commercial paper, which is then bought by the European Central Bank. The total program has a magnitude of EUR 750 billion. On the liquidity side, we feel quite comfortable in this very moment. On slide 11, you then can see the reasoning for our decision on the proposal of the dividend to the shareholders meeting. The board and the supervisory board have both proposed an amount of EUR 0.60 per share for the financial year of 2020.
We have considered the scope and the extent of the COVID crisis and the very high levels of uncertainty. Therefore, we have made a judgment on our side to balance our announcement on the dividend on the one hand side, and our commitment to solid investment-grade rating on the other hand side. There we have made a decision to reduce the dividend and to suspend our progressive dividend policy for the time being, with the target to maintain our investment-grade financial profile.
This adds another EUR 317 million compared to our initial planning and announcement to our cash saving program under the condition, of course, that the shareholders meeting will approve these proposals. In substance, we do reaffirm our fundamental position that we will return back to the previous dividend policy, to the progressive dividend policy after overcoming the COVID crisis.
As you may remember, that was the commitment to have a stable rising dividend with a payout ratio of around 40% of our adjusted good net profit. We have announced last time the decision to postpone our shareholders meeting. In the meanwhile, German legislation has acted and has allowed for virtual shareholder meetings, which we appreciate very much. We will make use of that opportunity and possibility, and we'll do our annual general meeting via live stream on the 4th of June at 10:00 A.M. from our new headquarters. Voting will be electronic or by postal vote, and we will have electronic proxy authorities for that. Questions can be submitted until 2nd of June 2020, 4:00 P.M., and they will be answered comprehensively in the meeting.
The formal objection against such solutions is possible with an online tool, which we are going to install until end of the meeting. We are quite happy that this tool exists that doesn't postpone the shareholders meetings to an indefinite date. We do that at the earliest date we can do that, and we will do that as good as we can. I mean, some German corporates have done really good meetings in that way, and we will try to do that as good as we can. That's it from my side, and I would return to Dominik for the outlook.
Okay. Just from my side to quickly wrap it up again. I think we are going into this crisis on the back of a very strong Q1 performance, and we are absolutely weathered for this storm. I've already mentioned last time, we are a very experienced management team. Both Lorenz Näger and myself have been around the block already in 2008, 2009. In that light, also the fact that the outlook is uncertain doesn't scare us a bit. In essence, it has gotten us going proactively and decisively. That's where the EUR 1 billion cash savings is coming from. That's where the improved financial position is coming from that Lorenz Näger has shared. That's also where the dividend discussion is coming from. As I said earlier, we are very positive on the midterm outlook, although 2020 may be a little bit rocky.
Clear conviction on our side here is that as a company, HeidelbergCement will use this crisis as an opportunity. Okay, that's it from my side, we'll hand it back to Chris and all of you for questions.
Thank you, Dominik. Thank you, Lorenz. We embark on the Q&A section. Operator, you want to explain the procedure one more time?
Yes. Ladies and gentlemen, we now begin the question- and- answer session. As a reminder, if you wish to ask a question, please press star and one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press hash key. Once again, please press star one if you wish to ask a question. Your first question came from the line of Paul Roger from Exane BNP Paribas. Please go ahead. You are unmuted, sir.
Before we do that, Roger, if you allow, you're the first in line, that's true. Let's take another one then after you. We will collect the questions. Maybe just two questions at a time per person, because there are so many people on the line to make it more efficient.
Yeah. Okay, Chris. Good afternoon, everyone. Congratulations, I hope you're all keeping well. Just two questions. Maybe the first one to kick off on the 20th on April. I mean, obviously, you've given a bit of color with the COVID clock. Is it possible to put a few numbers behind that just to give us a sense of how quickly and severely things deteriorate in the key markets? The second one is on the variable cost outlook. I think you experienced something like a EUR 300 million reduction in raw materials in Q1. Obviously, since then, oil's come down further. If you stick at current spot rates for oil and other raw materials, how big could that benefit become later on in the year?
Okay. Let's take the next one. Elodie from JP Morgan.
If I have two, then please could you provide a split for the EUR 1 billion of cost savings between CapEx, working capital, tax, and fixed cost? That would be my first question. Second question, if I can ask on capital allocation. On the one hand, are you still looking to do some bolt-on acquisitions, or is it something that you would consider, I guess not because you want to preserve your balance sheet, but some of your peers are looking to buy maybe if opportunities are there? Just wanted to see what you think of that and what you think as well in terms of disposals, given you have completed EUR 1.2 billion, I think, of proceeds last year out of your plan of EUR 1.5 billion? Is it still on track? Thank you.
Okay, thanks to both of you, Paul, Nelly, for your questions. I would suggest that Paul, I will take your first question on the April development, then Lorenz Näger will take the one on the variable cost development. Nelly, I will take the first question on the split of the EUR 1 billion, then Lorenz will talk about the capital allocation on bolt-on and disposals. If that's okay for you. Paul, just to give you a little bit of color on April. The big lockdowns all came already mid-March, I think there are countries that you all well know that went into a very aggressive lockdown, like countries in India and also Italy. Obviously in those countries, you go all the way down to basically zero or very small amounts of sales for that period of very strict lockdown.
What you also see when those countries come back, you climb up fairly quickly, not obviously to old levels, but you leave the -100% line quite quickly. That is also true for those countries. You have other countries where the government has actually executed quite strict lockdowns, and the public perceives it as that way, but the business is actually running still in a quite sound way. That is actually true for parts of Europe, especially Holland is actually running completely. There is hardly any loss of business in Holland versus the expectations. In the U.K., you have a little bit of a bigger loss. It goes all the way to France and Spain and to Italy in terms of magnitude of losses. If you go to North America, it's a very mixed picture.
You have parts of North America that are absolutely on operating plan level or even better. There are others that are quite below on the volume side. As we said earlier, volume is one thing. We're obviously working intensively on our programs to mitigate it on the result impact. Last but not least, you have other countries like Germany that are I'm not saying booming, but that are going very well indeed. In that respect, it's a very mixed picture. That's why we try to give you the COVID clock to explain to you a little bit. It's now a very colorful portfolio in that respect. Lorenz, you want to take this?
Let's go for your question, Paul, on the raw materials. I have to clarify that, as Dominik has explained, that our trading business was very much down. This has two reasons. We have restructured the business last year, as we have announced. As a consequence of that, we have not done any more third-party energy trading. That has brought down the turnover significantly. Second point was that in month of March, many countries in half locked down so that even our normal business went down as well. In total, we had more than EUR 200 million less turnover in the trading business, and hence also the purchased materials which goes into that business also went down.
That's why our costs for material went down significantly because we did not buy these trading products like coal, petcoke, also clinker cement, and this went down. That's the overwhelming effect in that. If you take that effect out, then the development of our cost for materials is almost in line with the decline of our volumes in the second half of March. There is no visible or significant margin effect in. Now, if you look to the future, as all of you have seen that the oil prices, but also other energy prices went down. The different energies which we have had different forward buying characteristics. Diesel, what is predominantly used in decorative business for operating the quarries, that's predominantly on spot. Here we will see an immediate reduction on cost in the month of April and in the second quarter.
Whereas if you look to coal, petcoke and power, which is, let's say, roughly 80%, I would say 80% or also gas, 80% of our energy bill. There we have our normal purchasing power. Sorry. Forward purchasing policy. To this, which is more or less roughly six months ahead. Here the reduced cost will roll into our energy bill just with a certain time lag in line with our energy purchasing policy. That's what we can expect from that side.
Okay. Elodie, I would take your first question and maybe also an indication on the bolt-on acquisitions before Lorenz then talks about the disposal side. When it comes to the split of the EUR 1 billion, let me say the least, that more than 50% of that EUR 1 billion will be cost savings. Although this is predominantly a cash exercise because of the crisis situation, we are focused to, in Germany we would say, kill two flies at the same time. We are very focused also to make this a cost-saving exercise for 2020 with immediate effect, and that means more than 50% of that EUR 1 billion will be cost savings. We will also track this obviously, and we are prepared to also, as we go along with you on these calls during the year, disclose obviously how we are performing against that EUR 1 billion.
Maybe just one quick remark before I hand it back to Lorenz on the capital allocation on the bolt-on acquisitions. We try to hold the line even in a crisis situation. I said earlier in the year that we are not going to make acquisition Italcementi like or anything above billions. That's still out of scope. That's clearly not what we will do, just to be also very clear on that. It's also clear that during Q2, as there is very low visibility, we will be very restricted on any cash out, and that also includes any rapid acquisitions. As the year goes along, it is absolutely clear and the fog lifts a little bit, we will be prepared to also sneak around for good opportunities.
Having said that, we will also, during our strategy review that we are currently doing, clearly commit to a strict matrix of under what circumstances and what financial matrices we are doing these acquisitions, even the smaller ones, the bolt-on tuck-in acquisitions going forward. In that respect, stay tuned. Clear message is, we're not going to give up our business building just because the crisis came along. One reason of getting prepared also on the financial side is to be sure that there is a time after COVID, and we will clearly keep that also in mind. Maybe, Lorenz, you say something on the target.
Yeah, that was more for you. The acquisition, cash is king. It protects your money. That's what we have learned 2009 and what we have implemented even before the German politicians noted that there is a crisis coming along and they have to lock down the country. We were very early on that and we do it very consistently. We are very careful in spending any cash for acquisitions right now. On the disposal side, unfortunately, our counterparts do the same. That's the problem with our disposals. Most of the projects which we have there in the pipeline are stalled. As I have reported earlier, quite some of those had the time Italy's locked down. These are blocked in the very moment.
That's why on slide eight we have on bullet point three on the right-hand side, "Let disposals proceed." That's one of the negative impacts which we expect and which we try to counterbalance with our other measures. What comes back during the year is difficult to forecast, but as things stand today, we would rather believe that we will not reach the target of totally EUR 1,500 million over the last three years, including 2020 due to corona. I think that we will catch up then as soon as possible.
All right. We have two more in line with Nabil Ahmed from Barclays and then Arnaud Lehmann from Bank of America Merrill Lynch. Over to you, Nabil.
Yeah, good afternoon. Thanks for taking my questions. My first question is on the United States public side of things. This year we had the FAST Act expiry. We had in the past talks around the highway bill. Now we hear a lot about local state funding shortfall to declining gas tax. How does the management of Heidelberg think about all this?
Do you think there are higher chances given the situation to see an infrastructure package later this year? Or that conversely political priorities are shifting towards healthcare and therefore there is maybe a less favorable environment for infrastructure spending? My second question is maybe just a point of clarification on what you said earlier regarding working capital. I think at some point in the presentation you mentioned that the severe drop in volumes related to the COVID-19 disruption is leading to a temporary increase of working capital.
That's a bit counterintuitive. Could you please elaborate on that? Is that related to inventory buildup or maybe an increase in receivables? Thank you.
Okay. Arnaud, you want to just add on to that? Arnaud, the next question. Operator, you want to put Arnaud Lehmann through?
Can you hear me?
Yes.
Now we hear you, Arnaud.
Now we can.
Excellent. Thank you for taking my questions. Maybe two and a half from my side, if that's okay. Firstly, could you be a bit more specific about the CapEx reduction that you are planning? How easy is it for you to either postpone maintenance or stop some of the growth CapEx? Secondly, have you started thinking about any more medium-term implication from this crisis? Either when things go back progressively to normal, maybe slower pace of construction because of social distancing. On the other hand, maybe any acceleration of automation of building sites that actually could improve productivity. Did you give any thoughts about this? Lastly, are you still planning a strategic update later this year? Thank you.
Nabil and Arnaud, thank you very much for your questions. Very good ones. I would suggest that I take your first one, Nabil, on the U.S. infrastructure, and then Lorenz would take the working capital question, and Arnaud, I will try to answer your questions then. Nabil, from a U.S. infrastructure perspective, we give you our best view right now. You know things are fluid. Personally, I believe there will be something coming. The question is when and in what magnitude. You know that there is election coming up in November. One theory says the Democrats will not allow Donald Trump to do a big infrastructure bill, but there is also another theory that they probably need to do something, because otherwise Trump will blame them for blocking everything. Our perspective would be more in the latter camp.
Potentially there will be something coming. That may take a little while. There will be something coming and the magnitude is difficult to say. Typically these bills need to be somewhat meaningful in order to have an impact, because otherwise you might as well leave it. We are more in the second camp and if there's something coming, it should be a meaningful impact. Then there is a second point that I remember very well from my North American times when we were hit in the last crisis. The government topics is one thing, but the municipal and the state programs is another thing. What I found very encouraging that I understand that as a municipality in the U.S., you can now actually issue bonds if you want, and they are actually Fed backed.
That means that the municipalities and partly also the state, are able to finance their own programs as they go through this crisis, with the backing of the Fed. You have on top of that the DOT discussions on state level, but you know that probably better than I do. In that respect, these are the thoughts on the U.S. infrastructure. Lorenz, you want to take the working capital question?
On working capital, on slide eight we expect temporary increase in working capital and then on slide nine, we say we try to get it down. How does that fit together? It's relatively easy. What we face currently is that our base volumes slow down, especially as you know in the second half of March, April, and also in May, will certainly extend. We on our side, we have built up our stocks and continue to produce as much as we can in the existing plant, even if the front end markets were down, so that our stock levels will be increased. The second effect which will kick in now in the second quarter is that, as I say, we had weak sales second half of March. We had weak sales in April.
We will have low cash collections in June and July and second half of May. Nevertheless, we have to pay the bills of our suppliers. This will lead to, as I said on slide eight, a temporary increase of our working capital. In the second half of the year, we have to manage that down. We have to make sure that our customers really pay. That's why we have implemented even stricter credit controls. We collect the receivables as much as we can, and we try to manage our accounts payable on the other hand side and go out of the year with a reasonable working capital level as we did in the past years. That's about our working capital management.
Okay. Arnaud, I would like to take your questions knowing that you are a very strategy focused colleague. We like that. Let me just try to answer your core questions. Just the most important one for you up front. Yes, we are sticking to our September review of the strategy. That might slightly look different after the crisis, but we stick to the date and give you obviously an update as we go along in the already communicated September date. On the CapEx reduction, the timing of this program, we said we started basically in February and towards the mid-end February date. We had completed most of our winter repairs already. You know that in the cement industry, most of the maintenance CapEx is actually coming from the winter side. We want to keep our assets fit. That's very clear.
There will be a time after the crisis. In that respect, we don't want to save on maintenance. We want to make sure that the things are in good shape and are fit for purpose as we come out of this crisis. There we deliberately did not destroy anything on our asset base. When it comes to the growth, obviously, we are pushing out some of the growth CapEx. That's clear. Some of the very strategic growth CapEx that we need to do also to stay ahead midterm, we will still be able to do towards a later stage in the year and make sure that we don't miss the train on some of the very core pieces. We've postponed it for now, but are able to bring it back up as the situation clarifies towards the second half of the year.
There is a third element that you have not mentioned in your question, to be also fair. We obviously have some, let's say, carryover from last year of some of the bigger projects that's still in there. One is the Elementia project that you all know about, where we acquired a cement plant in the northeast of the U.S. That has not closed yet, but that's a substantial amount that also sits still in that CapEx number. That's also one of the reasons why in our EUR 1 billion program, the majority of that is basically cost and not CapEx. The last point, your medium-term question, we will try to address that in our strategy review, Arnaud, in September, to get our arms around what is the impact of automation. I agree with you, and I can read a little bit between the lines, even over the phone.
Absolutely, that's also our experience now during the COVID crisis. There will be a different perspective on some of these things also in our industry when it comes to automation, digitalization, and also the business cases of these topics may change a little bit, the same as for CO2 and other topics. In that respect, stay tuned, but I would agree with you, certainly the crisis may have accelerated or slowed down certain of these topics.
Thank you very much.
Thank you both.
Thank you.
The next two questions come from Yassine Touahri from On Field, and then next one from Gregor Kuglitsch from UBS. Yassine.
Yes, sir. Good afternoon. Two questions for me. First, could you explain the dynamics of the EBITDA increase in Western and South Europe despite the volume decline? How much cost did you cut? Is it mostly savings? Is it mostly because you had price increase and energy deflation? Is it because you benefited from the help from the government when your employees had to leave the plants? Would be very helpful to understand. Quite impressive. The second question would be on the overall pricing outlook for 2020. Have you seen some price increases that have been canceled or are you confident, especially in your key market like U.S., U.K., France, Australia? That would be very helpful.
Okay.
Thanks, Yassine.
Thank you.
Gregor
Gregor.
Can you hear me?
Yes. Now we can.
Okay, good. Thank you. I guess there are kind of two and a half follow-ups, if I may, on some of the questions. It's the 7th of May. Are you prepared to give us directionally in what kind of band the volume decline was in April? Are we talking 20%, 30%, or is that off the mark? First question. Second question, I think in the last call, if I remember correctly, you were talking about drop through, that you're able to broadly mitigate half of the normal drop through. Obviously, you've announced lots of cost savings today. Can you give us an update how you think about the operational leverage in this current year? If we lose EUR 1 billion of sales, how much would you expect that to translate into lost earnings or EBITDA?
Finally, I know you gave lots of detail on the CapEx, are you just prepared to give us how much it actually is? What are you actually talking about in terms of absolute number, including the Elementia? Are we talking about billion or just to give us some numbers to work with? Thank you.
Okay. Thanks a lot, guys. Yassine, I would start with your question on the EBITDA development WSE. It is actually on the back of a superior price performance. Volume was suppressed as of mid-March, but until then, it was actually good. Costs are actually also favorable. Overall, a very strong pricing performance. We continued with our strategy that I disclosed earlier on this year and also at the back end of last year. Overall, development on WSE was very much on the back of strong pricing. That also leads to your second question, how are the price developments going? I said already earlier that globally, we are targeting in most markets to go for price increases as of January and not in March, April.
That has also been our strategy this year. That means that in most markets, we have actually executed our planned price increases. They also materialized in most of our markets. Currently, pricing developments that we see is obviously, as you indicated, a market-by-market issue. In general, we see our core markets being quite price resilient. We will do from our side, that remains our strategy to also continue that focus on pricing. There is uncertainty in the markets, that's clear. In our core markets, like in the U.S., like in WSE, even in the core parts of Australia, we do not see any significant price deterioration at this point. In that respect, we are optimistic on the pricing developments as we go through this crisis. That's our current perspective. Gregor, on your questions.
On the May 7th, what's the volume development, as you know, we don't disclose any specific numbers, but it is clear. I think your indications are probably not way off, but we do not disclose any specifics around volumes in April from a numbers perspective. What I can tell you is your second question on the 50% rule. Yes, we are very focused on this 50% rule. You remember that very well. We have also remembered that very well. I can tell you, we have large countries that actually keep that rule, that they have been able to beat that rule, also to our surprise, to be honest. That is actually interesting internal competition. Obviously, there are countries that stay below that, but in general, on average, we are very focused on that rule and are not far off in that respect.
On CapEx, I think most of that has been said, and as we said, it's part of the EUR 1 billion, and we will track the EUR 1 billion as we go along and disclose that. You know that our original plan for 2020 was EUR 1.7 billion, that we are obviously taking down, as we have discussed.
Okay. Thank you. The next two questions. I think we have two more rounds now. The second last round would come from Robert Gardiner from Davy, and then Christian Korth from HSBC. Robert.
Hi. Yeah, two quick ones from me. One on Asia Pacific, just wondering, you had a big positive performance in Southwest Europe. It's quite negative in Asia Pacific, specifically the negative leverage in there. Just wondering what's behind that in terms of margin. Is it one particular country doing all the damage there, or why that kind of negative leverage was so damaging in the first quarter? Two, just go back on some of the countries where you've had very strict lockdowns, the likes of the U.K., Italy, France, Spain, and I'm just wondering what they look like in recent weeks as you talked about them reopening. Have they gone from, I don't know, 20% of normal back up to 40%, 50%? Just wondering on those particular ones that were locked down. Thank you.
Okay, Christian.
If you could maybe shed some light on your discussions about the dividend. Obviously, you're committed to paying the dividend. Did you also take into consideration to potentially cut it entirely? Maybe give us some idea how you came or why you came to this amount now. Secondly, maybe just a confirmation of the assumptions you gave on the working capital development. Is it fair to assume that the higher amount of stock is also done to optimize production costs, so that you do not have to restart and then stop production again, so that you can produce for some time, then stock up, and then potentially stop production? Thank you very much.
Okay, Christian. Thanks a lot. Robert, I would take your questions, and then Lorenz takes your questions, Christian. I think that's a good split up. Robert, on APAC, you were unfortunately not easy to hear, but I understood that you wanted to understand a bit more what's going on in APAC. As we said earlier, the major decline is basically coming from Australia on the back of a slow start in Australia into the year. You know that's the upside down seasonality to Europe. They typically have a very low season at the beginning of the year.
As I said in my ride around the globe on the pricing side, pricing is resilient in some areas of APAC, and in others, you have an effect that you typically see on pricing as well, especially in aggregates where you have the mix effect, where then the volumes go up significantly because you have large projects of lower value materials. It's hard to read the average pricing in some of the elements, especially in aggregates. Overall, pricing was resilient across Australia, and the volumes were somewhat down, and that was driving then also the EBITDA decline that I disclosed earlier. In China, clearly driven by volumes, pricing is resilient. A clear volume drop that you've also seen in some of the publicly listed companies in China. You know that the volumes were down in the magnitude of 30%-40% in China in the first quarter.
India, as I said earlier, pricing resilient, but volumes down somewhat, but not in a massive magnitude. The same is true for Indonesia and Thailand in a smaller scale. I think it is very important to understand that while the volumes down are in Indonesia and India, our margins are actually resilient. In that respect, we also indicate that there is not an effect on the pricing side to be seen. When it comes to the rebound in Europe, it is a very market-by-market driven answer. As I said, unfortunately the drop to 100% is very quickly because if the government say, "This is it," then they ask you have two days to close down the plant. We make sure that we do it in a professional manner, it basically very quickly goes down to zero.
In all the markets that you have mentioned, you then also climb up fairly quickly. As I said, not necessarily to 50% or even better than the old level, but it takes a little bit more time. It really is a day-by-day exercise. I give you the example in Spain. For example, while you come from a lockdown, then they say, "It's opening up," then it jumps immediately up 30, 40% from the bottom. That can change day over day. A very dynamic situation. That's why Lorenz and I sit here and watch the developments market by market daily.
We have a very transparent cockpit here where we can steer our business on a daily basis, and we then take the appropriate decisions together with our country managers and our area board members and follow this situation in a very dynamic pattern because it actually changes so quickly day over day. I hope that answers your question, Robert, and then we'll move to Lorenz on the other questions.
Yeah. Okay. Thank you very much for the question. The first question went on the dividend. As you can imagine, it was a lengthy discussion before we came to that conclusion. You have to keep quite some arguments in mind if you take a decision on the dividend. First of all, it's our announcement from the Capital Markets Day 2015, where we said we commit to a progressive dividend, but also we commit to a solid investment rate rating. We had these two points. When we announced that policy, we were asked from quite a number of investors and analysts, what would we do in a case when we face a crisis like 2009, which of course was not visible in 2015, but then we clearly said, in such a case, we would suspend the progressive dividend policy.
The second what we did was that we had quite a comprehensive sounding during our roadshow in March. During the roadshow, it turned out that there is a significant number of big shareholders who would accept a full slashing the dividend, that we go down to the minimum dividend or even go down to zero. We also learned that there is an important part of our investor base where the dividend is an important part of their investment rationale. As usual, we try to keep our big boat in the middle of the channel or somewhere in the channel and don't touch the corners. Taking all that into account, financial metrics, announcement progressive dividend, solid investment grade rating, we, the board and also our Supervisory Board, we came to the conclusion that the EUR 0.60 is the right figure.
It's a clear signal for financial stability and stabilization of the financial metrics. As we said, the management board, our top management, a big part of our employees contribute a part. The shareholders now contribute an important part of EUR 370 million, therefore we think that's the right figure. It's a clear signal to support our financial strength, it is a clear signal anyway that we want to continue with our dividend policy, we do not forget those shareholders who have invested in our shares with the view on the announced dividend policy. We think it's the right balance.
Working capital.
Secondly, working capital. Working capital is slow. In some of our countries, we had a shutdown of the markets on the front end, but we still were able to operate our plants. In those plants, of course, we produced as much as we could in order to have full stocks, and then at a later stage, for example, in France and Italy, also our production sites were closed down, and we were very happy now to have good stocks as markets come back. That's on the one hand side. On the other side is the other way around, where we have now produced to full stocks and the markets now open up, but our plants are still closed, so there we still have product to deliver. The main rationale in that respect is that we want to keep our ability to supply.
That's the most expensive if you run out of stock. That's the first rationale, the second rationale is to keep production costs low and stock the goods as rarely as possible. Out of that, we expect, as I said, that at the end of the second quarter, we will see elevated level of working capital coming from higher stocks, lower proceeds from the months of April and May, still these have to pay our accounts payable. What we will probably see is higher level of working capital by end of Q2.
Thank you.
All right. Let's finish off with a round of three. We have Tobias Woerner from MainFirst, Cedar Ekblom from Morgan Stanley, last but not least, Pavlin Kumchev from Brigade Capital. Tobias?
Yes, hello. Thanks for taking my questions. Two to get on. Number one, up to EUR 1 billion. If you were to assume going into next year, theoretically, that you are rebounding the full 100%, just theoretically, how much of the EUR 1 billion would you have to give back in terms of cost and cash savings? That's number one. Number two, you've obviously done very well since the global financial crisis to improve your balance sheet and also your liquidity. Having said that, in relative terms, compared to some others, it's a little bit behind.
The question here really is, Mr. Lorenz and Dominik, if you look to your strategic review, would you take this crisis as a catalyst for change in as far as you say, there are some companies in the sector which have actually a single A rating, not necessarily in the cement sector, but in the building material sector, that you would want to pursue such a strategy that you are always well-positioned in any kind of downturn, i.e., that your net debt EBITDA moves close to one rather than two?
Okay, thanks, Tobias. Cedar?
You guys reported zero like-for-like volume growth in the aggregates business in North America in Q1, and most of your peers have reported double-digit aggregate volume growth. Can you give us a little bit of color on what's going on in North America, specifically in the aggregates business? Could, similar to Tobias' question, I'd like to try and understand of the EUR 500 million cost-cutting program, which is about 3% of last year's OpEx before D&A, which is a very sizable number. How much of that is actually permanent savings, which you retain should we get a demand recovery, versus simply temporary maintenance reductions, raw material cost reductions that actually reverse in full if demand comes back? Thank you.
Thanks, Cedar. Lastly, Pavlin.
A pretty good quarter vis-à-vis your EBITDA performance given the context. Most of my questions have been answered, just at a high level, it seems like EBITDA went up year-over-year while your like-for-like sales were down 8% and your OpEx seems to be relatively unchanged. That's just somewhat surprising. I know that your goods purchased for resale went down massively, it almost implies that you had a kind of negative margin on your trading business. Can you just speak a little bit about, is that sort of a lag effect? What drove your increase in EBITDA given the decline in sales, and why did your goods purchased for resale went down so significantly, and what's the matching percentage decline of sales of that business?
Okay. Sorry, you were broken off here. Can you repeat your line and your second question, Pavlin?
Yeah, just at a high level, trying to understand what really drives, in the context of flattish OpEx, what drives an improvement in EBITDA margin if sales are going down by 8%? Seems like it's largely driven by the significantly higher reduction in goods purchased for resale and other raw materials. Want to understand, is that sort of a permanent decline or is that a time lag effect, and what was the decline in sales of the trading business, and is that a positive or a negative EBITDA margin today? Thank you.
Yeah. Pavlin, I would say that those two questions I'll leave to Lorenz Näger. Tobias and Cedar, I would address your questions. If I understood them right, there is an overlap on one of the questions around the resilience and question around permanent saving of this EUR 1 billion. In that respect, from our side, the clear message, one step after the other. For us at this point, cash is king, and we are trying to push down the cost for 2020. That's our core task for the time being, and that's why we deliberately said we're going to target this EUR 1 billion and get it in 2020. That also leads then into a second question, but that's again to be done in a second question, how much of these costs are just going to be pushed out?
How much of the CapEx is just going to be pushed out, and how much is going to be a restructuring effect in terms of reduced cost base or reduced CapEx base? We deliberately do it in those two steps because, as we said earlier, the visibility is low. No one of us knows whether the business comes back in June or July to 100% globally, or whether it's going to stay depressed for a while. We need to, and want to have that flexibility. That's why we have reduced our spend on the cost side and on the CapEx side drastically. We then bring back these costs and/or CapEx as the situation moves along. That's basically the very simple answer to that. On Tobias, your second question on the catalyst for change. Bear with us.
We are getting our arms around the strategic review at this point. We'll answer that question then in the Capital Markets Day in September. Cedar, you had a question around aggregates. Our aggregates performance in North America was positive in terms of volumes, but very mixed in terms of local and regional setup.
You have parts that are very strong. For example, the West region was very strong. Also the Midwest, the Northeast was very strong, while the South, for example, was more depressed. Canada was also okay. Just to give you a picture, this is not one figure for all of North America. It's a very mixed portfolio of local areas, and you see very mixed volume performance in North America. Overall, slightly positive development on volumes in aggregates in North America. Lorenz, you want to answer that question of Pavin?
Yeah. The mechanics which you see here, that turnover goes down by 8% like-for-like. Whereas the RCOBD and the RCO show an increase comes from the impact of the trading business. The trading business has a turnover of roughly EUR 200 or more than EUR 200 million, and this trading business included a lot of energy, our fuel trading as a coal, coke, et cetera, et cetera, third party, which we decided to stop last year because it has a high risk, but doesn't really contribute to the margin. We stopped this. The turnover went down by more than EUR 200 million due to that. This is associated with a margin of very low, single-digit EUR million, one or EUR 2 million. That's why you see a substantial decrease in the turnover. This has no visible impact on the EBITDA.
If you take that out from the turnover, the turnover decrease from second half of March without this trading business is no more than 2% on the whole quarter. If you take that out and run the figures, you see that we still have a moderate increase in margin, but that's quite limited then.
Let me just come back to the question on the aggregates on North America, just to be very specific here, because you also have the numbers. I think in that respect our aggregates performance on the volume side is not overly satisfactory for us, although the overall result in North America is good. From a volume perspective on aggregates, we are slightly down. I think it's a couple of hundred thousand tons. Basically flat to very slightly down. You've seen the numbers, the pricing is very strong. Again, it's a balancing act. In that respect, while the volume may be a little bit depressed, the pricing is very strong. I would be very concerned if I have a bad volume performance, and then also my prices are sluggish, then I have a clear concern.
While in cement, we very much watch our market share development. In aggregates, this market share discussion is a little bit difficult, because it's a local-by-local market decision, and in the end, you can only sell your stone once. To sell it for inferior pricing from our perspective, does not make sense. In that respect, again, what I explained earlier, clear price over volume strategy, and that's also true for our colleagues in North America, and that's what you see here also a little bit in our numbers in North America aggregates. Hopefully, that's a little bit more precise than my earlier one, Cedar. Sorry.
Okay, that concludes our call. Any last words, Dominik?
No, Chris, I think thanks very much for all your questions. That was very interesting discussion, like always. Happy to continue the discussions. Our IR team around Ozan and Chris, and the others is happy to follow up if there is any follow-up need from your side, from Lorenz and myself. Thank you for joining and then again, keep safe and healthy. Thanks a lot.
Yeah, we meet you over the next couple of days and weeks, at least virtually, then we see each other latest on July 30th for our Q2 call. Don't forget the Capital Markets Day in September. We scheduled it for September 16th. Thank you and goodbye.
Thank you for participating. You may all disconnect.