Ladies and gentlemen, thank you for standing by, welcome to the full year 2019 results conference call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. I must advise that the call is being recorded today, Thursday, the 19th of March, 2020. Without any further delay, I would now like to hand over the call to your first speaker today, Chris Beumelburg. Thank you. Please go ahead.
Thank you, operator. Good afternoon, ladies and gentlemen. My name is Chris Beumelburg. I am heading the IR and communications function at Heidelberg Materials. Thank you for joining our full year 2019 earnings call, especially at these challenging times. With me today, as always, Dr. Dominik von Achten, our CEO, and Lorenz Näger, our CFO, as well as Ozan from the IR team. As always, we have made available the presentation for this call on the IR section of our website. Without reading it aloud, I would like to draw your attention to the disclaimer language on the last page of the presentation. With that very short introduction, I hand over to you, Dominik.
Okay, Chris. Thanks so much. Also hello from my side. Welcome to our full year result call 2019. Chris was mentioning it, I would say interesting times. They are challenging as well, but they are interesting. Welcome to everybody on the line from my side, and we'll do it in a way that I just briefly do the overview, then I hand it over to Lorenz Näger, our CFO, as we are mainly talking about the results below the line because the ones above, we basically shared already with you in the trading statement in February. I will go through the overview and then Lorenz Näger will take over for the rest of the results of 2019, and then I will lead you through the current business update and also our sustainability efforts.
In that respect, I'll turn to the first key message page, I think it's fair to say that the performance was very solid in 2019. Good improvements around most of the key financial matrices. We'll go through details in a minute. We also had a very good business start into 2020, despite a strong comparison of the Q1 2019. The first two months of the year actually were very strong. Obviously, in these times, everybody asks about liquidity. Lorenz Näger will share with you the details on that. From our perspective, we have significant liquidity headroom from today's perspective. It is absolutely clear that as a company, we are absolutely determined to take all necessary measures to mitigate the impact of the COVID-19 or coronavirus situation. I just want to make one general remark.
Both Lorenz and myself have already been at the table in 2008, 2009. I myself was managing the rather volatile business in North America those days. Rest assured that we know what we need to do, both in terms of content and in terms of speed. I have no doubts that we will weather this in a very strong fashion. On the back of a local decision here in Baden-Württemberg, where Heidelberg is based, we had to postpone our general assembly because the country of Baden-Württemberg has decided to not allow any assemblies, regardless how big they are, until June 15th. That's why we had to postpone our general assembly beyond June 15th. We'll come back to you with a new date once we'll share with you some of the details and backgrounds around that.
Last but not least, although the targets may have been pushed back a little bit given the current crisis situation, we want to also share with you our progress on CO2 because we are absolutely convinced this is a short-term clear dip. The midterm and long-term sustainability targets will come back eventually. That's why we want to stay focused on what we have achieved there and will continue to push. With that, I would ask you to turn to page four and I'll just go through some of the key items. Revenues up 2.1%, like-for-like EBITDA operating-wise, also up 2.5%. EPS before adjustments up 23% to EUR 6.40. The cost saving continues even before COVID-19. EUR 135 was the achievement on the SG&A savings that we have already communicated, I think, in the trading statement.
We, as you all know from that call, we have another minimum 15 million to go, but that's before COVID-19, so I'm absolutely convinced that we need to further tighten the belt once this is over. For the time being, we continue to work on the already agreed savings. We have also optimized the portfolio. As you well know, the disposal amounts to EUR 622 million without any major EBITDA impact. The debt in these days, quite important, came down on a net debt basis by EUR 1.2 billion to a net debt EBITDA ratio of 2.3 x. Last but not least, shareholder return. Both the board and the supervisory board this week decided to raise the dividend to EUR 2.2 per share. That would be in 5% increase and a payout ratio of 40%.
Obviously, the payout only happens once the general assembly has been taken. With that, I would hand over to Lorenz Näger to share with you the details of the financial results.
Okay. Thank you, Dominik, for this introduction. I would very briefly lead you through the financials. To start with page five, that's our return on invested capital, our main measure to measure the efficiency of the use of capital in the company on a like-for-like basis. Pre-IFRS, we have reached 7.1% against a weighted average cost of capital of 6.6%. Again, we have earned our cost of capital. After IFRS 16, this reduces by 0.2 percentage points down to 6.9%. You can see that we have been very disciplined on the capital. We come from EUR 25.5 billion capital. It went up pre-IFRS 16 to EUR 26.2 billion and IFRS 16, that's another EUR 1.3 billion in financial debt to the capital. The return on invested capital continues to benefit from a low level of tax cash payments.
You know that we use cash tax payments to reflect the tax factor in that. That's a little bit away from the standard which has been established in the meanwhile. We use the same definition since 2005. Now we consider to redo the calculation mechanism and the definition for 2020. That's just for your information. We will inform you about the impact when we publish our new strategy in autumn. On slide six, you see the development of the dividend. The situation is so that we had to declare a dividend to finish the year and closing under German law. Now we cannot hold the AGM, the shareholders meeting, due to the legal restrictions in Germany around the coronavirus, as the authorities have closed down any event until 15th of June. As a consequence of that, the payout of the dividend is not possible now.
We will need to find a new meeting date for the shareholders meeting. We will publish this as soon as we know how things are going on. Under German law, we have eight months of time. We need to have it done by end of August. We will see how we can do that. We will inform you as soon as possible, if we know when the shareholders meeting will take place. On slide seven, you can find a number of financial key information. The turnover is up 4%, like for like 2%. That has been broadly communicated in the trading statement earlier this year. RCOBD up 16% reported and 2% like for like. RCO up 9%, like for like 5%.
If it comes to what we call below the line, meaning below the operating income, we had a net expense of EUR 143 million non-cash effect from the deconsolidation of the Ukraine business, which is included in the additional ordinary result. This is a pure non-cash accounting effect and is required by IFRS standards to clean up the exchange rate differences in the equity. A pure accounting effect. Our adjusted earnings per share increased by 23%. Dividends per share, I just explained, to EUR 2.20. We had a year with excellent cash flow. I will come to that later on. Operating cash flow as reported up by EUR 700 million. This EUR 700 million do include EUR 285 million from IFRS 16. On a like for like basis, up EUR 411 million. We see this as a major achievement.
The company has a very strong ability to create cash, and this is also due to the fact that we have a very disciplined investment, EUR 1.3 billion compared to EUR 1.7 billion previous year. Finally, on a like for like basis, pre-IFRS, this led to a reduction of net debt of EUR 1.2 billion, brought us down to EUR 7.1 billion, pretty close to our midterm target of EUR 7 billion pre-IFRS. On slide eight, you then can see the income statement. Just again, your attention to the additional ordinary result, minus EUR 178. This includes the EUR 143 from the deconsolidation of the Ukraine business. Financial result, I may explain a bit because it's counterintuitive. It goes up to EUR 375 against previous year, EUR 353.
We had EUR 49 million decrease in interest expense, this was offset by negative accounting effects from IFRS 16, which came with an expense of EUR 45, and the change in the discount rate for the measurement of provisions, which came to EUR 28 million, both negative due to accounting effects. That explains why the financial result went up a little bit. Income tax is EUR 358 against EUR 464. We have higher current tax expense, which is an underlying trend. Our tax expense and also tax payments increased, that was in the current year, fully compensated by lower deferred tax expense, which was EUR 264 million, less expense than previous year.
Previous year, you may remember that we had to make an allowance to our carryforward losses in U.S. due to the reduction of the tax rate in U.S. after the Trump tax reform, but also from allowance which we had on the deferred tax asset, because it was unclear what part of our interest carryforward we can use in future. That had now a reversed effect a little bit and we came down with tax rate, as you can see it here. Slide nine, again, the cash conversion rate. We are now pre-IFRS cash conversion rate is 45%. These are pre IFRS 16 figures on the left-hand side. EBITDA EUR 3,250, and then tax interest payment, working capital, sustaining CapEx brings us to a free cash flow after sustaining CapEx of EUR 1,468, cash conversion rate 45%. If you calculate the same after IFRS, the cash conversion rate is 49%.
On the right-hand side, you can see the net debt development, EUR 8.3 billion at the end of 2018, strong free cash flow generation, very disciplined net growth CapEx, where the disposals exceed the gross growth CapEx by EUR 125 million. Dividend payout and currency comes to EUR 7.1 billion and IFRS 16 brings it up by another EUR 1.3 billion. That's a very good start now for 2020. By the end of the year 2019, we couldn't foresee the coronavirus, the very stable cash generation and the low net debt helps us now, going forward. By that I give back to Dominik, to lead you through the current business.
Okay, thanks Lorenz. We'll move then to page 11. You see on page 11 that we started very strongly into 2020. First two months, volumes were clearly up in cement, also aggregates and basically flat in ready mix. Overall a very strong start, especially if you keep in mind that we're going against a good comparative last year. We thought it would be interesting for you to understand the very latest development. We basically pulled everything together last night to try and give you a brief glimpse where we are in the different areas. U.S., first two months, volumes are clearly up in all regions, including Canada. You know that Canada was a little bit of a problem in terms of volume development last year.
Canada for the first two months potentially also helped a little bit by weather, was good in the first two months. Those of you who are listening in from the U.S. know that also the U.S. right now is slowing down a little bit. Some of the bigger cities have already stopped or put on hold the public works. Boston, I think, San Francisco also Pennsylvania, PennDOT is going down with their public works. We assume that some more of that will come in other states and cities of the U.S. during this week and next week. In Europe, the picture looks a little bit different and also varying for the different countries. In fact, U.K. and Benelux were a little bit slow for the first two months in terms of volume development, while Germany continues to be very strong even into this week.
Italy was good until two weeks ago. Since the COVID-19 development accelerated in Italy, volumes were also coming down this week. A further reduction in Italy. Eastern Europe actually very strong. I just talked to my colleague in the board about Eastern Europe last night. Poland still very strong in development, but let's wait and see how that moves down the line for the remainder of March. You know that most of the countries have now closed their borders and we'll have to see what that impacts the local construction development. In Asia, again, a mixed picture. Thailand and India, volumes were actually pretty good for the first two months. China, as you all well know, also Australia and Indonesia, somewhat lower than prior year and our expectations in the operating plan. Africa, mixed picture again. Slow down in Israel and also partially in Egypt.
Not so much because of Corona, but more because they have hurricanes we hear, first time for a long time. Egypt and Israel were a little bit slow. Morocco and Sub-Sahara are still going okay. In that respect, the global picture is very mixed at this point. Clearly, as you see in the U.S. and also partially Europe, the COVID developments still unfold. That's the current situation for you to understand. If you go to the next page, we just wanted to explain to you how we are seeing the world from a plant production perspective, and also what we have done in terms of reaction to this situation.
First of all, from a plant perspective, up until yesterday, our plants in Lombardy were down, not so much because of volume decline, but because the local government of Lombardia has basically ordered us to take down the plants for safety reasons. That's why we took down our three cement plants in a coordinated fashion to avoid any damages for the midterm. In that respect, that has taken place. The rest of the country is actually running for now, as planned. In France, we see now the first developments that the government is trying to put the country on hold to some extent. Let's wait and see how that plays out. I had a call with Kevin Gluskie, our colleague in APAC. Malaysia has obviously also now ordered that all plants must stop.
There is a mixed picture here and there, but for now, most of our markets are still running, and we do not have a material impact yet, based on the COVID-19 developments. It is clear, and I mentioned that at the very beginning, we need to be quick on our toes here, and we are, rest assured. We have taken, as one of the first public listed company in Germany, drastic actions already in February, when we put on hold completely international travel. Hindsight, that was a quite smart decision. We have put in place crisis teams, not only on group level, but in all key countries. On the back of that, we have gone down to national travel bans and also changed the working patterns. For most of the administrative functions, we've moved into smart working, basically working from home.
In most of the critical areas, we have clearly introduced safety measures in terms of, let's say, a 50/50 shift pattern, or we have taken teams from larger rooms apart into other rooms to mitigate any risk on the business critical functions. We have also looked at our IT department to ensure that we are able to continue to deliver IT services, which become more and more important in these days. We have also, obviously, for our plants, clear contingency plans in place, how can we ensure that the business continues? Because one thing is very clear, while the measures look swift and strict, our overall targets, first of all, safety for our employees, and that's clear, secondly, keep the business going as good as we can, and serve our customers as good as we can. Those are the two top priorities.
On the back of that, if we see demands declining, we react immediately appropriately. If you could go to the next page 13. You see basically the key points that we have addressed, also having in mind our key cost items. If you look to the people and personnel cost side, we have moved, as I mentioned earlier, to smart working wherever possible. We have put in place a clear hiring freeze that includes open positions. We will strictly limit third-party providers to the business critical issues only, as I mentioned before, mainly with the focus to keep the plants running. We have already started to reduce overtime, make sure that vacation days are taken, and we also start to consider and partially introduce short pay and also unpaid leaves on a voluntary basis at this point.
From a business perspective, we are working obviously now in different scenario situations. That is especially true for our plants, so production planning, but also for the relating energy demand. You could argue, why don't you take advantage massively of lower oil prices or lower coal prices or lower pet coke prices? Yes, we clearly get a tailwind there, but we also want to be a little bit cautious not to overdo it in order to not get into a take or pay situation on some of these forward buying topics. In that respect, we watch the situation on a basically hourly basis. I think that's also good proven practice that we have done in the past, and we have discussed this intensity also in the board, so well prepared in that respect. Last but not least, also very importantly, cash conservation.
We've stopped all non-essential CapEx, also with a focus on rolling stock, because the trucks you can run for one or two more years if necessary. As I said before, Lorenz explained it to you, cash is king right now to make sure that we also manage that in a professional manner. Overall, message on the COVID-19 issue, from a company perspective, we are absolutely well prepared to handle the topic. We have low visibility. I think that's true for most companies at this point, but the good news is we are a management team that is used to low visibility from the past. In that respect, I'm very confident indeed that we will weather the situation in a strong fashion. Maybe, Lorenz, you explain once more a little bit the situation around liquidity and our headroom.
Yeah. I will do that. Welcome back to the 2009 chart. We talk about liquidity, headroom, et cetera. The big difference is that the company is in a really strong situation, far away from any situation as we saw it in 2009. Our available liquidity is EUR 6.5 billion. This consists of EUR 3.6 billion cash in hand at the end of 2019, as well as EUR 3 billion undrawn, committed, confirmed credit lines. Total liquidity available is EUR 6.5 billion. As you may know, we have done a lot of financing in the Q3 and Q4 of last year and have covered all maturities at that time when the conditions were quite favorable. In 2020, we expect three maturities, two of them pretty close to now.
One bond we repaid just today with cash in hand of EUR 750 million. There is another one with EUR 750 million coming due in two weeks' time, on the 3rd of April. For this, we also do have the cash in hand already now. There are two smaller maturities during the course of the year. We have ample headroom, more than EUR 4 billion currently. Our committed confirmed credit line is a syndicated loan. This syndicated loan matures, I think, in three years or so, 2025. Okay, five years' time. There are covenants in. There are no covenants in the bonds. There are covenants in the syndicated loan.
In case EBITDA over the full year would drop by more than 25% and debt would go up by more than 25%, which is a very unlikely scenario, in that case, we still would have ample headroom under our covenant. The company is very safe on the liquidity side. We check our cash position every single week. We exactly know where we stand, and we always have a lot of time to react in case things would really come bad. On the liquidity side, we have no headache at all, and we have comfortable space, and that's a part of our strength to manage us through the crisis. Dominik.
Thanks a lot, Lorenz. We would continue with sustainability. We've talked about the short-term issues. This is clearly a mid and long-term issue, which is absolutely relevant for us as a company, but also for us as an industry. In this respect, page 16, you see that we have put significantly more focus as of 2019 on this topic and moved quickly to also see the first results. You see that we are now down 22% versus the original baseline of 749. This is specific net CO2 emissions in kilograms of CO2 per ton. In 2019, we came down to 590 kilograms of CO2 per ton of cementitious material. You know that our target sits at minus 30%. While we were down 20% in 2018, we did another two percentage points between 2018 and 2019.
I think we should be well on our way to clearly meet our target in 2030. The key levers are, you see here, mainly alternative fuels, energy efficiency, and also the clinker and cement factor, which by the end of 2019 was at 74.5%. Clear target is here to get towards 70% or even below. Those of you who have followed us in the past on this topic know that we were the first company in the cement industry with science-based emission reduction targets. You know that there is initiative, and they gave us a certificate around that. Not that we need this to get going, but I think it's also important for you to understand that this is done in a very professional manner. If you turn to page 17, you see the key projects that some of you already know.
The two carbon capture projects on the top left and top right side. Basically, the one in Canada that we are doing together with CCS Knowledge and also the one in Norway that we do together with the Norwegian government and Equinor. Both are in an industrial scale, targeting to capture CO2 in a big fashion. For example, the Norwegian one wants to capture 400,000 tons of CO2 per year. In our Brevik plant, that's more than 50% of our annual production. We have the catch4climate initiative that we do together with three of our industry partners in Germany. It's also known as the Oxyfuel project, where we have already signed the NDAs and are currently negotiating with the technology suppliers.
We have the Omega Green project with our colleagues in Morocco, where we basically capture CO2 through an algae project. We have the LEILAC project. If you skip to page 18, shows you a little bit the scope of this project. This is a project we do together with some of our industry partners and other industrial companies. This is funded also through EU money. We have successfully completed pilot phase I that has proven the technology, and now we need to scale it up, and we are in negotiations with the EU to go to pilot phase III and beyond. We are very hopeful that this will happen. This should come in the coming weeks, the okay to go ahead in that respect. Again, as I said, this is based in our Lixhe plant, on the border between Belgium and Holland.
To sum it up, I think, the focus areas for 2020 are clear. COVID-19 back or forth, clearly operational excellence will remain our clear focus. We continue to focus on driving the top line as we have started already last year in a very successful fashion. Let's wait and see how that works out during the year 2020. We will continue and potentially even increase our cost focus and cost management in a tight fashion. We will remain focused also on margin development. As I shared with you, the coronavirus mitigations, we are well on our way, well prepared and, if you have this little sign here, also in close contact with our Italian colleagues who are hit the worst right now, in this difficult situation. Cash is king, and we are watching our cash generation and allocation, as well as our sustainable growth.
I shared the details with you, and as you know, we have worked on carbon neutral concrete for 2050. We use the strategy update to review whether we can tighten those targets and whether we can basically break them down into annual or semiannual or five-year targets in order to make it more tangible, and also for us to increase even further the focus on this topic. With this, I just sum it up with the key takeaways again. Strong cash flow generation that continues into the beginning of 2020. Lorenz was explaining up until now, the cash flow generation remained strong. We are absolutely well prepared to fight the potential impacts of this COVID-19 or coronavirus situation. We will continue to work on our carbon footprint. We've progressed well 2018 over 2019.
As we communicated before, we stick with the idea to give you a strategy update in the late summer 2020, targeted date is around September. With that, I hand it back to Chris, and we're looking forward to your questions.
Thank you, Lorenz. Thank you, Dominik. We'll now embark on the Q&A session. We have, as always, scheduled roughly one hour, so we do have ample time. I'm not sure whether the Q&A session has worked ideally last time, so may I please remind you to limit your questions to two at a time, and really two at a time, and not embed any other questions in those two questions, to get everybody the chance to pose the question. If you all stick to this procedure, yes, everybody will get a chance to ask and let's get started now. Operator?
Ladies, gentlemen, we may begin the questions. It comes from the line of Paul Roger, sir.
Yeah. Good afternoon, everyone. Sorry, can you hear me okay on this line?
Perfect, Paul.
Perfect.
Welcome.
Yeah. Hi, Dominik. Good afternoon to you and team. Okay, I'll just have two questions to start off with. You've mentioned, obviously your previous experience and being ready to act in response to the virus if needed. Could I ask you specifically how much scope there is to cut working capital and how much of the EUR 300 million growth CapEx that was planned is actually discretionary versus committed? Just secondly, what impact do you think the virus, and presumably weaker demands could have on pricing, especially in markets where utilization rates are quite low, like Europe?
Yep. Okay, Paul, thanks for your question. Let me answer and then if Lorenz has something to chip in, maybe I'll pass the working capital piece to Lorenz and he can comment on the working capital situation. I would take the growth CapEx and the pricing piece of your question. We have clearly stopped the non-essential CapEx, and we are on our way to also review the growth CapEx bucket. I have not got the final number for you now, what exactly is committed in a way that we could not stop it at all. We have reviewed the big-ticket items, and obviously in each of these projects, you then get into a discussion, is it wise now to fully stop it? Because that would come at additional cost and a midterm damage. Or is it wiser to continue?
We basically have done this for the key large projects and those who are business critical, also from a midterm perspective, we will continue, also on the basis of what Lorenz has shared with you on the overall liquidity situation. Those who are not business critical, we will put on hold for now. On the pricing side, we have started well into the first two and a half months. For now, we do not see across the board big negative pricing impacts. Paul, you are long enough around the block to know that the year has 12 months, and with a situation like this, it is very difficult to assume what is the impact on pricing.
I think what is, from our perspective, was a little bit helpful is that last year, as we have shared with you, we have switched in some key countries to price increases as of January and not like in the past, as of April. In that respect, some of the price increases that we have planned have already taken place. Whether they hold fully for the next 12 months under this scenario, Paul, difficult to say. We clearly stay focused on pricing as long as we can.
When it comes to working capital, you know that in 2009, when the financial crisis came, the working capital dropped sharply off. We had quite strong cash flow just from reduction of working capital. We have worked on that item, and our working capital since 2009 has reduced by more than EUR 1.2 billion in absolute terms. Today already, the working capital is much tighter than it ever was in 2009 and earlier. That will lead to a situation where we will not see such high working capital backflow as we saw in 2009. I would see that rather on the stock side. Currently, we have full stocks. We had a good production run end of the year 2019. We went into the year with good production. We're still holding our production. We see some countries where demand has a little bit lower.
I would more see this effect if we really see a shutdown in the operations to come from the stock side, and I would guess EUR 300 million or EUR 400 million, what we could get in on that side. That's my guess on the accounts receivable, accounts payable side. It's a bit difficult to forecast as our DPO, DSO balance is close to zero. That's my best estimate. As I said earlier, we check the cash position of the company every single week, very close, very precise. Any deterioration of the financial situation, we could immediately identify.
That's great. Thanks, guys. Stay well.
All right. Thanks, Paul. Next question comes from Arnaud Pinatel from On Field Investment Research.
Yes. Good afternoon, gentlemen. I would have two questions. The first one, just to try to understand the situation. You mentioned that there is an inflection currently, obviously, in terms of volumes, I guess in terms of demand in your market. If we take Italy as a leading indicator of what could happen to Europe, could you please quantify the drop of volume you have seen in the recent week, in the recent days? We have seen in China that January, February production was down 30%. Are we talking about this type of order of magnitude, or should we read the newspapers when they are mentioning that most of the construction sites are closing in Italy as a leading indicator that the drop of volume could be much more than what we have seen in China?
That will be my first question, and if you can help us to quantify it, obviously, very helpful. The second question will be on your dividend. I was surprised that you increased it. I understand that the general assembly will have to finalize and approve it. Is it really a signal that you are so confident on your cash flow and also you are so comfortable on your covenants? I know that you helped us during the call and give us a little more flavor on your covenants, but based on our calculation, it would imply a 3.5 net debt on EBITDA covenant. Could you also confirm that, please?
Okay, Arnaud. Thanks very much, Mr. Pinatel, for your question. Let me take the first 1.5 questions and the 0.5 question I give to Lorenz on the covenant. I'll get to your volume and your dividend question, and then Lorenz will go to the covenant point. On Italy, Mr. Pinatel, the volume development up until two weeks ago was actually good. We were basically on our plan. Then for the first week, we saw a drop of about 10%, roughly, both in ready mix and in cement, while ready mix held up actually a little bit longer than cement, which also tells you a little bit about the supply chain. Now, in the last week when the shutdown came across all of Italy, the volume drops were more pronounced. I think more in the magnitude of 25%, 30% that you mentioned.
Now it remains to be seen how this unfolds, how many construction sites are still going to continue. I'm not the government, you can make different arguments around this. There is obviously the argument you have to be careful and safeguard also the people on the construction site. There could also be the argument, don't take down all the business in a country, because I'm not a medical guy, the question is whether the infection risk on large construction sites is actually very increased. There are different arguments, I think, that are currently also discussed in the associations and in the government. I think for now, the governments, at least some of them have started to reduce public work. Whether that's going to continue or not, it's very difficult for us to say. That opinion also may turn. That's the magnitude.
We are working with worst case and best case and middle case scenarios, and there may also be small parts of the world or regions of a country where the construction sites come to a bigger stop. Very difficult to argue what is the right number. There will be good parts and not so good parts, because the world is big. I know that many of you in the past have argued, you are in 55 countries. In this crisis, this also may be an advantage to be in 55 countries, because we already see some countries are hit worse than others. Let's wait and see how this plays out. You know that I'm by nature, a positive guy. I'm trying to be realistic and careful, but in essence, I'm positive. I think there are also some positive signs around the world.
There may also be some negative ones and some negative surprises, that's clear. On the dividend. Obviously, we had a discussion around the dividend, how to handle that. Yes, you are right. From today's perspective, especially also with the current cash position, also with the current development of the volumes, there was no real reason for us to say we scrap the dividend or we even reduce it. I think it was absolutely fair to say also to the capital markets guys, based on the current knowledge, there is no reason to scrap the dividend. Formally, yes, there is a chance that we can adjust it and potentially need to adjust it. From our perspective, as Lorenz and I sit here today, there is no reason to believe that. That's why we said we don't panic.
We don't now take crazy decisions on just speculation. Based on the current knowledge, we said we stick to our dividend of EUR 2.20.
Dominik, let me add. Under German law, the board has to take a decision about the dividend if it wants to close the annual account, and we wanted to close the account. As we didn't have better knowledge, we decided for that dividend, which we think is appropriate in the light of the business year 2019 and our current knowledge about the year 2020, including what we see from Corona as of today. Finally, the board has to decide about the dividend once we call for the shareholders' meeting. There we still have a couple of months to go, and we believe that over that three months, we will gain much better knowledge about the potential impact of the coronavirus on our financial key parameters.
If things really went sour, we still have the possibility to correct that decision and do whatever is needed to keep the company safe. Yeah. That's this point. It's in a way, a decision, but as I say, if things go badly wrong, really badly wrong, we even have the possibility to still change that proposal.
Covenant.
Covenant. Mr. Pinatel, we are far away from where we were in 2009. The headroom is ample. Yeah. We do not want to disclose the covenant, yeah. Because then we only get even more questions, which do not help. Yeah. Therefore, we can tell you there is so much headroom in the moment we cannot even see to come in the worst case scenario, even close. The cases in China, the crisis went two to three months with a drop of 30%, 40%, 50%. Yeah. That's what we can weather easily. If in Europe things went even worse by stop for more than four, five months of the whole production, we feel still at the safe side. Safe for this moment, and we just take it from here. Things evolve day by day, and we take the decision as they are needed.
Right.
Thank you very much.
Thanks, Arnaud.
Those were actually three questions.
Oh, five.
No, no. One and a half he means
Next one comes from Elodie Rall from JPMorgan.
Yes. Hi, good morning. Can you hear me? Good afternoon, sorry.
Yeah.
Yeah.
Okay. Hi, sorry. Can I first ask on plant closures? You mentioned that you've closed three in Lombardy. Do you have any more plans to mothball some plants now that other countries in Europe are going in full lockdown. Can you explain to us the cost associated with closing and then reopening those plants? My second question is on cost flexibility in general. I understand it's difficult to answer this question, depending on whether you think it's going to be a short-term impact or a longer-term impact. If we assume it's a longer-term impact, what do you think is the right cost flexibility that you see in your business in general? Thank you.
Yes. I will gladly answer your questions. Thanks so much. First point on the plant closures. As I shared with you, the current plant closures, and the better word is mothballing. Because we don't close the plant for good, it's what we call mothballing. We basically temporarily close parts of the plant. Even when we talk about a plant closure, then it can also be that we stop running the kiln, but we continue to ship. Let's not forget, when we talk about a plant being affected, that's the production of clinker. In parts, we even continue to produce cement, so we use the grinding mills to produce cement. As Lorenz was saying, we still have ample stocks, and we continue to ship for quite a while.
Typically, that's two to three weeks of stock that we can still use in order to ship. The cost of up and downing of plant is minimal, because let's not forget, we do winter repairs where the plants are taken down also. I think it's still well-established process, running up and down kilns. You cannot compare this with closing a full automotive factory for four weeks. We do these, if you wish to say so, plant mothballing, on a routine way, basically every year for each of the plants during the winter shutdowns, as we call them. In that respect, it's not at no cost, but it's not a huge number to mothball a plant and bring it back up and running. Obviously, the question of cost flexibility, you're absolutely right.
That's exactly what we have studied over the last two to three weeks in a very intense fashion. If you look at our big cost items, I'll just share with you a couple of the big tickets. The biggest cost item for us is EUR 3.3 billion or EUR 3.2 billion of personnel costs. Then we have another EUR 2 billion, EUR 1.85 billion, EUR 1.9 billion of energy-related costs. Those are the big cost items. In general, costs are around 50% variable. The remainder is more or less fixed, but I'll come also to the fixed part. On the variable cost part, the main part being energy and also repair and maintenance material. On the energy, obviously, we have some tailwinds. You know the developments of the energy costs, oil, on the back of that bitumen, petcoke, coal, all coming down significantly.
In that respect, we see a clear tailwind that will go into our cost base over time because we do have some hedges in place. We will clearly get some tailwind on that. We cannot take them down fully to zero, but those should drop drastically if we take down plants. Obviously, the variable costs go away on that end. When it comes to the personal cost side, first of all, we do have some flexibility in there when it comes to the measures that I shared with you before on reducing overtime, on getting the vacation days out. That's not cash conservation, but it clearly helps you on the cost base.
As you may have followed over the past couple of days, most of the governments that are infected heavily by COVID-19 have put in place or are putting in place now significant measures to support companies on things like short pay. Obviously, we follow that situation country by country also very closely. It is very clear if we have to temporarily close certain locations or part of the business in certain countries, we will obviously also go for these elements that will conserve our cash out and also reduce our cost base. The personnel cost obviously is not fully flexible, but there is a part of it that we can still flex. Let us also be clear, these are unprecedented events, and we may have also to take unprecedented measures, even also on the cost side.
There are now people coming to say, "Can we go on voluntary leave? We know this is a difficult situation. I only going to work for two days because I have my family at home. I'm fine with a two-day pay per week." We look at every possibility in every corner. As always, you're typically taken by surprise to the positive if you really ask rigidly what is possible and what people are also flexible to do. I have to share with you, I see big solidarity in our workforce across the globe on this topic. That doesn't mean we can completely go crazy on these things, but we will find a way to navigate through this.
All right. Thank you very much.
Thanks, Elodie. Next one comes from Robert Gardiner from Davy.
Good afternoon. Robert Gardiner from Davy, here in Dublin. Most of mine are already answered, I guess. In terms of your customers, can you give us some sense of what your customers are saying to you in terms of projects going ahead or being delayed, deferred? You talked about a couple of countries as well, where the government or local authorities are restricting construction activity. I wonder, could you add some color on that in terms of who exactly is stopping construction work? Obviously, it's happening in Italy, in Boston and San Francisco. It'd be helpful if you give us some indication of who else is stopping work. Thank you.
Yeah. Robert, thanks for your question. On the customer side, the picture really looks very, very different, country by country and even city by city, as I was sharing you the events of Northern Italy and also the events in the U.S. partially. To give you the opposite call, I'm not sure, but I just share that with you. Yesterday was the strongest shipping day ever in Germany. I think things are crazy. In that respect, we see everything from the very left to the very right. It's not all doom and bust. There are also positive parts in a large company, that's the beauty. We do know that some of the governments are thinking about closing some of their public construction sites, but the public construction sites are also not 100% of the business in a country.
I mean, some of the private companies do keep going. In Austria, one of the big customers has now announced that they will close nationwide their sites, but we are not big in Austria. Austria is for us, a minimal country. Let's wait and see what other countries do. We are looking obviously to the U.S., we are looking to France. We will eventually also look to Germany. For now, there is early indications that this could be a measure, but I would be surprised if this goes across the world, and it's happening in all countries. You will see a very varying picture across many countries.
Thank you.
Okay. Thanks, Robert. The next question comes from Nabil Ahmed from Barclays.
Hey, good afternoon. Can you hear me well?
Yes. We can.
Thanks for taking my questions. Thanks for sharing with us the last few days' events and talking through what you're seeing on the demand side and also on your manufacturing capabilities. I was wondering also if you could update on potential disruption you're seeing across the supply chain, in terms of workforce. Do you see workers no longer willing to come inside? Have you seen disruption related to that, logistics, third party contractors? Is that having an impact at this stage or not really? My second question was, on the strategic review that you mentioned during the last call, I think on 18 February. Does the COVID situation changing in a way or another the way you approach this review? Is it accelerating as well, the process? Thank you.
Nabil, thanks for your questions. Let me answer the first one, disruption on the supply chain or workers showing up or not. We are monitoring, and Lorenz is actually overseeing the purchasing piece very closely the global supply chain. We do not yet see any major disruptions when it comes to our necessary of our materials. Now, keep in mind, that's the beauty of our business. We are producing locally and we are selling locally. We are not very significantly depending on international supply chains. There is minimal trade going on between the countries. The one piece that obviously we are watching is the repair and maintenance piece. You know that for the winter repair of our plants, we do need some refractories. We do need some spare parts. Some of those spare parts are coming out of China and other parts of Asia.
We are in very close contact with our colleagues in China. As some of you know, the business has actually come back a little bit in China already. For now, we have identified alternative sources in cases where China was not able to deliver. We have not yet seen any significant impact on any supply chain issues across the globe. When it comes to workers showing up, in our own workforce, we have not seen any significant problems. As you know, in France, there's always a discussion that's very much union driven, but that's more a French specific issue. In Germany and other parts of the world, we do not see a significant impact in that respect.
We have pulled down the plants in Italy, as I shared with you already, in order to make sure that we don't get into a situation where we risk an infection outbreak in our plants of larger scale in Northern Italy. On the strategic review, we have deliberately decided to stick to the date. Yes, obviously, as we go along, we get more clever. Whatever we learn out of this situation now in COVID will also go to some extent into the strategy review. This has not been decided last year, and then we just keep going without looking left and right. Clear question to your answer. We stick to the date and give you, in any case, an update in September. Obviously, clearly, we also need to take into account what we learn through this COVID-19 developments.
We are not going to pull anything up front just because of COVID. If you not take the measures that we have disclosed to you now as such. Clearly, if you want to talk about cash conservation being part of the strategy or specific demand management, then yes, this has been pulled forward, and there may be other things that we need to do in order to mitigate the coronavirus impact. In general, we stick to the timeline of the strategy update.
Let me add from a supply chain side. First of all, we have high manufacturing depths. Right now, we have no suppliers who bring pre-products to our main product that comes out of limestone, which comes out of the ground. That's very little. The second point are spare parts, which come from abroad.
You know that our main need of spare parts is over now in springtime. The kiln stops with the main repairs are in late autumn, either December, January, February. Here we have done most of our jobs. Here we also do not see major issue. We see China already starting production again, and we get first products again from China. For the next season, starting in December, we already start sourcing, and currently we do not see any lockdown in this respect.
Okay. Thanks, Nabil
Thank you.
The next one comes from Tobias Woerner from MainFirst .
Yes, thank you for taking my two questions. Number one, I just want to understand the pattern in China a little bit better. Could you, from your partners, do you hear that the recovery or that there's a recovery ongoing as we speak? I have seen some numbers where actually there were some good numbers, and whether that recovery is sort of matching what is happening in Italy. Again, I saw some numbers in Italy down this week, somewhere around 40%-45% in terms of volumes. Just the second question, fiscal spending, i.e., infrastructure programs. What sort of feedback do you get from your markets on those? Germany is obviously the most discussed one around the world, whether this will come, fiscal spending. What's your sense?
Okay, Woerner, thanks a lot for the questions on China. I had a call with our Asian colleague, who is currently based in Australia because traveling to Singapore is also restricted. Yes, indeed. We have two joint ventures in China, one more in the south and one more in the center in the northwest. In that respect, yes, what we hear from there, the business is coming back to some extent. But it's not yet, at least to the best of our knowledge, on the old level. There is still room for improvement. Let's also keep in mind that the lockdown that the Chinese government has put in place end of January basically was coming to us in a delayed fashion because we are taking a lot of sewage sludge in our cement kilns in China.
In fact, the government actually asked us to continue to run our plants in order to be able to take that sewage sludge. In that respect, you have country by country, kiln by kiln, again, a different answer to your question. In overall, and China is a huge country, we see a rebound, but we are not back to old levels. In Italy, there are pockets, I do not disagree. There may be pockets where the business is down 40%-45%. That potentially is the case. Again, Italy is a large country. In Lombardy, we do see these drop offs, but in other parts of the country, they are less pronounced. Have we seen the worst in Italy yet? The infection numbers are not materially coming down at this point, so very difficult to predict.
On the infrastructure programs, again, if this ends up to be a recession in countries or around the globe, the historical answer of governments was to push infrastructure programs. Yes, there is clearly a chance to hope for infrastructure programs. I'm at this point seeing governments more trying to tackle the problem of potential unemployment and not ending up with a huge amount of that. That I think has the first priority, and then I think we'll come to the question of infrastructure program. Yes, the historical answer to these recessionary issues was typically infrastructure. Okay. Thanks, Tobias.
Thank you very much.
Five more people on the line, in the Q&A line. Next one comes from John Messenger from Redburn.
John?
John, you still here?
Yes. Can you hear me okay?
Now we can. Yep.
Oh, brilliant. Two, if I could. One is just if it's above the line, Could we just understand around other income, because obviously the group historically, a lot of volatility, just so we understand where our base EBITDA pre-COVID sits as we go into 2020. Obviously your other income fell to about EUR 431 from EUR 524 in 2018. Is that level something that we should take as the new normal, or is that elevated or depressed? I'm just thinking of things like the Stockholm property transaction. Is that something that will happen in 2020, or does COVID make that unlikely? Is the base EBITDA one that you're comfortable for us to take as the like-for-like base? The second question was just coming back on covenants, and just reading page 41 of the full annual report, just so we're all totally clear.
I understand if you're not going to give us the covenant on the main credit line, but could we understand, is it an old IFRS, pre-IFRS 16 or post? Does it include the JV income or does it exclude that? For the bonds, which I think, Lorenz Näger, you said have no covenants, is that correct if you were to lose your investment-grade rating? In that the wording in the report suggests that some covenants would kick back in if you were not investment grade. Just to understand the mechanics so we can all think around the balance sheet and clearly it's the big issue for everybody right now.
John, thanks for your question. If you don't mind, also in the interest of time, let's have the next question already in the line, and then we'll answer them in a package, okay?
Cool.
We'll come back to your point, John. Thanks.
Good. Next one comes from Arnaud Lehmann, Bank of America.
Thank you. Can you hear me well?
Yes, we can.
Okay. I'll just stick with one question, please. Could you give us an indication of what might happen to your pension liabilities? Interest rates are going lower. Financial markets are also going lower, so you could have an increase in your liabilities and your asset base could decline. Have you an estimate of potential increase in the pension deficit?
I think we should park that as well.
No, we will take the questions now that are in the line, then we'll take them as a package.
Just in the interest of time. We move on to Cedar Ekblom, Morgan Stanley.
Hi, everyone. I've just got one question. Can you tell us how much it would cost you to draw down your credit line today if you decided to do that? Thank you.
Okay. Another financial question to get parked. We move on to Sven. We'll answer those questions. Don't worry. We'll go down to Sven Edelfelt from ODDO BHF . Sven?
Yes. Thank you very much for taking my question. I understood union are putting pressure to stop production in France. Can you tell us if it's the case as well for you? That's the first question. On the second one, you commented about the volume development until March. Can you as well comment about pricing, please?
Yes, I'll come back to that. Is there another one?
That's just the la-
On the call.
That's the last one, and I think we'll conclude the Q&A, from Gregor Kuglitsch from UBS.
Hello. Can you hear me?
Yes, we can.
Great. I got two questions and a slight follow-up questions. The first one is on the CapEx. Kind of, if you take it all in, how low could you go? I think last year you had, just looking at the pure CapEx and the cash flow was like EUR 1.2 billion. If you really had to pull all levers, how low can that number reduce to? The second question is, and it's kind of tying up on the cost and flexibility and all that sort of stuff. If you maybe simplify it for us, in your own scenario analysis, if you lose, say, EUR 1 billion of sales, how do you think that would convert into EBITDA? EUR 1 billion of sales lost because of coronavirus volume lost, how many million EBITDA do you think you will lose?
Obviously, including your mitigation and everything that you've talked about. Just sort of for us to get a sense.
Okay, let me answer maybe the ones of Sven Edelfelt, the first one, Mr. Kuglitsch, Gregor, on the CapEx piece. Then I would hand back the questions to Lorenz Näger on the financial side about other income and the covenants on page 41. The pension liability, whether it's impacted by the change in interest rates and the costs of drawing down the credit line. Then last but not least, the question of cost impact, EUR 1 billion sales. What's roughly the impact? EUR 1 billion sale loss, what's roughly the impact on EBITDA loss? Let me answer the ones, Mr. Edelfelt, on the union pressure. You know the situation in France very well. The French are, in essence, very much intertwined with their unions when it comes to industrial production. I had a long call with our French management last night, also around this.
You know that Monsieur le President has chosen to use very drastic words when it comes to this crisis. "France en guerre." This is quite dramatic. He has, on the flip side, given a very generous way of handling this, because he has basically told everybody, "Don't worry, you can go home and the government will pay you." I'm now giving you a little bit the black or white picture. Now the unions are saying, "Oh, but when we go home, we don't only want 84%, but 100% of our pay." We argue, "Sorry, guys. What's this? If you don't work, then we're not going to pay you the remaining 16%." There is a nice discussion with the unions in France, and we'll still need to find a settlement with them. We are very experienced in handling the union situation.
Let's wait and see how that plays out. It very much also depends on the further movements of the government, because what I hear last night, the government has woken up also a little bit and started to make a calculation. If really everybody in France goes home and the government is paying that, then you have a different problem in France. I think they probably will come back during this week to put some more precision on how to handle the situation from a government perspective. On the volume developments, I think I've commented already quite well. I think there is, from my perspective, not much to add in that respect. On the CapEx side, EUR 1.2 billion on average. We take it there from day to day. There was the earlier question, how much do we have already committed?
I now make a wide guess, but it's not EUR 500 million that we have committed. We have gone through our winter repairs. That is typically the most costly exercise. Beyond that, there is a lot of flexibility in everything. If the mood comes down, rest assured, we'll address that and we can clearly, in a crisis scenario, pull our CapEx below EUR 1 billion easily, if that is necessary. From today's perspective, we do not have a worry around not being able to conserve our cash through drastic CapEx measures. With that, I would hand over to Lorenz to answer the other open questions on the finance side.
Yeah, okay. Let me go through some financial finger exercise. First, if we lose 1 billion turnover, what would happen to the EBITDA? Typically we lose 50% on gross margin as the main variable cost. We would lose EUR 500 million on variable cost. With our measure, typically we compensate 30%-50% of that loss. The loss in EBITDA would be in the range of EUR 200 million-EUR 300 million. That would be my best guess. The second is on the bonds. You are right, John. Sorry for that. I forgot about it. In case we were non-investment grade, there is a very high level interest expense covenant, which is more than 5 x away from our current level.
That means that interest cost would quintuple, is before we come close to that covenant, and we needed to be non-investment grade. When it comes to the syndicated loan, the syndicated loan matures in 2025, so the five years ahead. The covenant was adjusted by the IFRS 16 effect. It is like it was agreed in 2017 and then coming up with the IFRS 16 in application, it was adjusted through that. There is no impact from this accounting change to the covenant. As I said, and the calculation of EBITDA is pretty much as it is, as you can find it in the reports. Yeah. We have a slight adjustment in the net debt position where we exclude the obligations from puttable minorities.
It's per balance a little bit better than what we report as leverage covenant. The JV result is included in the EBITDA, that's a pretty standard situation. The cost of the syndicated loan are very limited, currently significantly below market rates. The interest is still below 50 basis points at the moment. It's variable and depending on our leverage, not on the rating, if I'm not mistaken. It's on the leverage. This is a very efficient way of financing in case we needed it. Currently, we plan our financing so that we do not really need to draw the syndicated loan.
Pension.
Oh, pension. Yeah. Pension liability. You have seen we have reduced the pension liability on a like-for-like basis significantly. Our pension funds, so the financing side to about 70% is by what we formally call zero bonds. If the interest rates change, the discount rate change our funds do actually breathe in parallel to the pension obligation. The gap should be, either the change in the gap should be very limited amount compared to the size of the pension fund. Currently, it is EUR 450 million. This should not, if we consider one or two percentage points in change of discount rate. The change should not be more than EUR 100 million or EUR 200 million in the net open position.
Okay. Have we answered all your questions? Anything open? Okay. Thanks a lot to everybody. Thanks for being on the call, and we'll talk next with the Q1 results, I think on May 7th. That's what we have published. Despite the fact that we have pushed the AGM, we obviously get back to you on May 7th with the Q1 results. Stay tuned. Okay. Thanks so much.
Thanks for dialing in. Bye-bye.
That is conclude our conference for today. Thank you all for participating. You may always disconnect.