Thank you for standing by, and welcome to Hyatt Delberg Cement, Insurance, and report January to September 2019 conference call. At this time, all participants are in a listen only mode. At the Institute's presentation, there will be a question and answer session. And to ask questions during the session, you need to press star $180 phone. Message ID.
This is something that will be recorded today, Thursday, 7th August 1 2019. I would like to have conference over for speaker today. Chris, so please go ahead.
Thanks, Rebecca. Good morning, everyone, and welcome to Helubic Simmons. Q c call earnings call. Thank you, Johnny. Up to earlier today, and, you know, previous calls just to see if you did a schedule we have, today, meetings.
You've had such in London. As usual, we have, Doctor Shydler, Nia, as of today, they will post status through the presentation. Also in the room, we have, Doctor Vanessa, our deputy PO and the IR team with Ozan and I'm a fabulous introduction. I'll hand over to you, Mister Shatler.
Okay, Mister Dolores. Thanks a lot. Hello. Good morning. Here from London, Francois joining us for our 2 free call, and if you'd like to speak to the operational results, Mister Mayer, we'll concentrate on the financial report.
I start with the overview on child sleep. If you look to q 3, what are the key issues think that Tiffany continues to grow. Top line growth of hard work is strong. That is good. The operational result is up we we look to the regions, obviously, it's a little bit of mixed shock.
I think we had an, very well invested in Northland Europe and keep in Europe. And also Asia, was good at, clearly improving, and we were able to shop to know from the right form, with the reasons that I will explain that. For our team's call is that, these quality of earnings had really improved and continues to improve. Our test conversion is significantly up, versus last year. Operating cash flow, has, put in significant stuff, and that's why we have, upgraded our net target before IFRS 16, it can come down to 11.4.
So the company is well on track to reach its target which we announced at the last time in the market, they just wanna add to our network better by 2020 2021 to 7,000,000,000. We are dealing in that respect ahead of our and schedule it. If you look then to chart 4, that shows you the key message messages also on the disposal on our way, we have reached about 400,000,000. In Q3, we sold off 2 cement plants initially to proceed and, also, we show it, a a a variety of different things in Germany, and, we're gonna continue, with the disclosure strategy in Q4 and also, each year. Chart 5 to speak with the overall, the overview on our fee numbers.
And maybe I spend shortly a little bit of time on the volumes to to then also finally resolve it. If you look through the if you look through to end volume, what you see is an absolute number of cover will you top down by about a 2.7000000tons per September versus last year. And the question is from the manager to come from. This is the reason for about half about 900,000 students comes from disposals that, you know, we have stowed our ingrained business. We need to also stow it in advance.
It could be that for September is about 90,000 tons. That in Europe, we stopped fixed calling in Europe mainly from Spain and Northern Europe which is a lot of about types of thousands of people to do the CO2, flight 2. Another key issue is Egypt. As you all know, in Egypt, the market is negative to give you a couple of minus for Williams are bound by about 7 medical concerns. And then in case you are, we are bound.
I'm all living in the in the country, for Virginia. The market was weak due to the collection campaign heavy rain. We focus clearly on price increases, especially integration styles. Our prices in India, are more than 10%. So in India, we lost about the other one is Indonesia, where the market was also plus September still negative and where our volumes are found by about 300,000 tons.
If you look to the text business line, aggregate, you see it in aggregate volumes are more or less Let me see for the participants about maybe 250,000. And what is that? It's still in the end. If you look for the pre aggregates complete of Iowa Broad, for for countries. 2 are bound when it's up, when it's flat, flat, if you pay, US is topped by about 3 and a half 1,000,000 tons.
Australia is down to the city. Unfortunately, residential in Sydney especially by about 2,200,000 tons and also Canada, but from Canada is down due to the downturn in three provinces by about 2,200,000 tons and the rest is more or less, washout. Okay. And then, if she keeps her proper teeth down, that has to do with the trade off our grain business, which triggers, a loss of a mini accounting driven in dry affairs of about 740 a €1,000,000 at this, main item. The profit purchase of Chart 67.
I think they are more or less self expertory, you see that prices, especially if you look to up 7 are clearly up till you see prices especially in Europe are up And last, it's between 5 to 16%, that you see the impact of the increase CO2 price, which is now reflected also in the prices in the market. All European countries have more or less increased prices, quite significantly. Shop 8 shows you the properties for food to be, and you see that for us, the the, development days was, especially in North America. This is the one that was in North America. They've also included last year of the same offer quality, appraisal for quality, up in 5,000,000.
And in Norway, we have sold land in our Kundra plan, which we are about to close now in Q1 to about 2020, the Select Plant in Estonia. And I think it was about €15,000,000. Energy is found. You see that from top 9 that shows to the cement the issue. We have 2, different developments, codes, and tech technical cards nearly down, whereas select FCC is up and, there are, an interesting issue with a positive reduction of about 29,000,000,000 we expect this trend to continue in q 4 because we are using in q 4.
Now the code and echo to we have TDC port in May, until July August. And we made a purchase of difficulties low levered. Then on CO2, obviously, you have the issue now from the industry to see on child 10 our reduction target on the CO2 emissions a ton of, supplement freedom. And, what, what's, what's the message. If you know, we are part of the European trading scheme and the current trading period in 2020.
By the end of that period, travel board will be long, roughly around, close to 5, big importance. And we are covered until 2020. Mid or end of 22, mid or end 22. And, we have set up now a master plan for future reduction to client level. The very detailed, measure, seal responsibility, and have incentivized plant energy, chemical management, and all is also the board.
You have CO2 issues down. After 2022, which was started, that, the allocations, which will get the next trading period are sufficient, to cover our CO2 emission so that you do not have to buy additional certificates. We think we are well on track with that card. We concentrate mainly on 3 carryout, a decrease of customer disulays, decreased cleaner content, that we have technicians that we use for the last year, we can do better. And thirdly, that you use more and more cautious free raw materials in order to avoid process deletions in So 11 shows you the price of the CO2 price development.
We can we will be So we will we will benefit from that development because we are long until 2022. Some competitors are already short nowadays. Uh-huh. We're now And, secondly, what we see is that pricing, especially in Europe is clearly influenced by the COVID, the rising CO2 price, and, furthermore, we expect capacity consultation. If we go now to the area, let's look to chart 13.
If you look to chart 15 on volumes in North America to see volume was flowing, slightly for us, we had, 2 areas which control is to close rates around 5% of our rich north and south South Especially, Texas, Alabama, Florida, whereas Canada, Western Canada can, especially also, California, So very weak, especially California, the same market, which for the first time, and I think down 6% Western Canada is also down at least 3 to 5%. And, let's say, overall, to a small, increase if you look now, if you look now through the operational, results, you see the result is, like, like, down And that has, mainly, 3 reasons, Canada, which is quite a very profitable region, very high margin. Williams, that's really we talk, and, they have the result. It's really negative. The same applies to the Richmond Bank, California, the result is heavily down, but as the result is up, mainly in the region north and slightly down in the south.
I bet it has more to do with, a production schedule which we will recoup. And by inventory, like, in 24 submitting messages. Canada was weak. I was just reaching the Paris of interest with Calacombia was weak. And if you look to the volumes, sir, you'll see the volumes are up 6.5%.
And then the retired account, what's the problem. The problem is that the mix of our business change. We lost a bitterness and volumes in markets with high margins, like, especially in Western Canada, whereas the growth of particularly in the south of US and in the north, Southern Martin, are smaller. In the south, also partially, the amenities are covered by the officer into Florida. We also see some options is significantly lower and on how our cement says in Edmonton or Calgary.
So the mix effect plays quite a significant role. If you look to margin on aggregates, you see very clearly, I feel the margin was, it's influenced by a land. It is obviously going to suspend. This year, we are at 35.4, which is still a very good one. And get pictures.
The numbers we go to Western And Southern Europe. That's for star 40, and that's just you can be on the volumes. If you look to cement you see Williams are slightly down. What's the reason? One is, export stopped in Spain from our mobile client of 300,000.
And secondly, we saw it immediately, sent to us, that you could see, which is about 400,000 tons. And then you see that the other markets. They're all positive. From a result point of view, result is significantly hard All countries except UK has been clearly settled. Germany is clearly up.
Italy is clearly up. France history. Oh, all countries are relatively solid volume growth, such as advanced was 84% pricing in order for it was strong and then she got the flattish or brown. And the only problem, UK was a little bit louder, but I'm just gonna have a 1,000,000 against last year. The calls confuse out.
Have seen a, you know, a, and that was, you see, you also introduced a good margin, the standard margin went up to 5, a percent point. Well, you see the clear impact of pricing. If you look to the Northern And Eastern Europe, that's first have a look on the volumes. You see that the land volumes are also down by close to 700,000 tons, which is the reason, first of all, deconciliation of Ukraine. It's a couple of thousand tons, and then we stopped also in, we stopped X Corps to, it's called due to the COVID, which is about 200,000 dollars.
And then we lost all the volumes in the post market, the market affordability protection weeds. The main reason is that we have led up price increase including the CEO of about 15% and theft, had a clear price in first policy, which has caused us some premium. The auto markets in Eastern Europe are very strong. So, Romania is good. Hungary is good.
The tough time is good. Even Russia is coming back. And if you look to the result, it's easy. They are. Is, slightly down, but that is explained by the deceased bill of land including the last division in case of about 15,000,000 if you take that, then it's overall, it's overall sluggish on a high level.
We had a market. We have a market weakness in Norway, and excuse me, Norway, it's mainly the, double checked, the prepayment contract in Oslo. So that has finished, and we'll, getting a new lower ticket prospect shop. Some time to check, you know, so next year, and in Sweden, residential is weak. And that, let's say, that's slow down on resolving the monthly 185.
You will start improvements in this from, you know, Kingisha Pacific. Let's look. What I'm So up 16 also, you see volumes are down close to 700,000 tons. That is mainly due to the complete I mentioned earlier, these guys found and also Indonesia, is found. Most countries we had collections, whereas the volumes, are due to China, how, okay, and Thailand is closed to be finished.
We look to the results And you see, results are, up in Asia, and, we have recently where results are really long, but right now, and it was sitting on the residential tech book at the in Brooklyn, but, she also in Sydney, is clearly negative with William Close of minus 10% at minus 15% and that has affected the result. Negative speed, whereas, if you have a significant result in 2 especially in Indonesia. If you look through the first time, manage your power results in euro terms, in Indonesia, have more than sir. Very clear pricing is up 10%. EBITDA is also purely up to pricing up 10%.
China is from, you know, Thailand has a very strong recovery in all this more than, overcompensate the market interest in Australia. If we go to, East Africa, Eastern Mediterranean, also here, you see the cement volumes are slightly down. That's driven by the Egyptian market, which is weak. And also Ghana and the market is down 5%. So Food markets are in total down by about a 1,000,000 tons.
We have our supermarkets, especially, togo, uh-uh, but also, came in, you know, Prasco, Congo, and whatever. From a result point of view, you see, I think it's a very good result for Africa. Our result is up by, 20,000,000 new law, even when the market was very negative in kitchen and Turkey, where our results are significantly down versus last year, a good performance in what other African companies have more than compensated, the recital beacon has in Turkey and Egypt. And you'll see also in Cement that the auction is clearly up that has to do with a good, market in Togo and also our new kill line can, combo clearly contributes now to a very positive, result on group services trading. What you see is the result of this award is here or why we have form, we have, you know, a cautionary position on, our food receivable from a trading business teacher's cost.
That's about 17 euro. And, if you look to the normal activity, what we see at, trading at the overall so we are on if we look to Google, can we see that bigger prices in the Mediterranean due to the all the capacity and weak market in Turkey are coming out with low $30 open whereas at the same time, the Flintoclass action I well, Shanghai, I was clearly up because China is importing, this year of our holding to 50,000,000 students, And that's by a single in Asia, kids shop, and gigabytes in Asia are up, whereas in Europe, they have a significant pressure. Chart 19 some jobs. So, we speak to our, guidance, we're gonna we are happy to increase our shipping target for SG and A to 1,000,000. You have already achieved our 100,000,000 euro and strong cash flow is very strong, and that's why the net debt, guidance has been reduced 27,400,000,000.
That means we need to re reach our 7,000,000,000 target, which we announced in the last single market day ahead of I do. With that, I hand over to Doctor Nagon, for financial report. Yeah. Thank you very much, Mister Shaquille. Good morning, from my side, to all participants, I will lead you through the financial messages, and, we will come and fly to If you look for our future property to be drafted for this, the ordinary result, we are in line with a player.
Yeah. So, and and they'll reach 827,000,000 Yes. Below the operating results, some, accounting effects which pay on the result. Additional ordinary results is the, on exchange rate loss from the sale of the entire unit business is handled €40,000,000 despite the change for process during our operation of Ukraine and business between 2005 to 2019. And this will only be deconsolidated, and the whole business is deconsolidated, and that's how I came into our account.
The financial result is hit by a decrease of 600 for provisions. And, you can be it makes about 20,000,000 in participation. Of the portion of police and by IFRS 16, it makes up to 23,000,000. Please explain seems to be found as financial result of the funds financially inspire at least 40,000,000. You are interest payments.
If you know, they went down by roughly 30,000,000. Due to, to re to reduction in the interest rate of our newborn and the maturity of our electricity food bonds, ma'am. 6,000,000 to 3, €40,000,000 in the past month, which is, up roughly 80,000,000. This primarily due to higher fixed base returns here and the release information in the previous year. So that makes around 80%.
We maintain our guidance towards the end of the year of 25. Cents. Now, it's sort of to the cash flow. We see a significant deleveraging, the free cash flow increased significantly to €1,700,000,000, in the check on the other hand, we do it by 1,100,000,000, which is a great achievement, based on this strong, free cash flow, the higher cash conversion rate and a very strict CapEx, discipline, especially in the area of growth that constitutes a very favorable development of our net position. Our portfolio Okay.
My tuition continued. You have turned it off of 103,000,000 in the third quarter in Tiaraville, and looking to reach our target of 1,500,000,000 over the 3 of, 2018, 19. And 20. Based on this favorable development, we have taken down our NetApp card from 7.7 to down to 7,400,000,000 by end of this year and difficulty for IFRS 15. So on slide 22, you can see statement is up low, results from current operation.
You see additional ordinary results. Terms for a positive 94 to a negative 65. It's it's it's it's it's financial results 2892245. This is gonna be fixed and income taxes, higher taxes, and a release of provisioned previous year, I think, from the the US American, this brings us to to to share our profit of 752 to 7952. This year, adjusted for additional all in salary charge is 20¢ compared to 821 23 of 1¢ If you look to cash flow, but, statement on slide 23, you can see that we have 2 main area equipment.
It is the operating system. It is not roughly 400,000,000,000. And if it's by roughly 200,000,000 by Yes, sir. It's 16. So, this has, because we do not show in 2019, to these payments as part of the deferred income, but it's on the financial free flow.
So this has a certain contribution, but even if you take that out He has a very, very flavorful development. He has 3, 2, 3. 2nd main element is a pickup 53. We spent 762,000, cash investment. Compared to 1,200,000 in the same period of the previous year.
Do you remember that this year in uploaded 2 major acquisitions, which was a Valencia, Italy, and an express to our. And, just providing this in the in Australia to subscribe to the development in cash flow. 5 20 far, then, review the portfolio optimization. We have now reached 961 from our target of 1.5, Julian. They are down 21 months from, this early 6.
So we are blown away. And we are very confident to achieve our partner funds from 5,000,000,000 private lender just for your memories. So let to remind you that almost all of this private schools have no impact on the CIA of the correct result because as predominant access, we cannot, require to do our our business. So I'm sorry. Computer.
Okay. So what? Sorry. I have a problem with my computer. Okay.
Then you can move to slide 5. On slide 25, you can quickly and it's a bridge. You can see on the, the green line development of free cash flow. This is operating flow minus 3 in Business CapEx. This goes up to up 1.65 students coming from 1.1 you, as I said earlier, the IFRS 16 effective at this property, 200,000,000.
So still taking that, our people have to pay by improvement and, of course, the cash flow on the growth CapEx, you have a very small amount, very disciplined approach here how our disposals, in the first in the last 12 months, exceed our total CapEx spend with a possible balance of 2 This allowed us to pay down €1,100,000,000 in debt. And, 417,000,000 for high fortement and 170 for 2 months of falling interest in those of our subsidiaries. Slight, 52 then shows you the net at the bridge. We started in the account with last year through the the quarter. 9.5,98,000,000,000 IFRS 16.
Okay. 1,300,000,000 is more than initially at The term default should keep on 1 to 1.2. The reason to come in to 2,000,000 rupees per place the top, you know, now our lower, but then we expect it in this increase in the first value of our So you can payment for each amount of 1, 2, 3, bringing forward in a debt like for, like, a post, 10 in September to 10, 8, 30. We have added in the last 12 months, 100 and 50,000,000 new leasing contract, put down the free cash flow 1651, and we have a dividend, net growth to act in the small accounting items. If things are now down to 9,800,000,000.
If we are here, it's roughly, 300,000,000 ahead of our plan, and we do not TV that this would change until end of the year. This brings us to, to to tighten the card for our net debt position end of the year to 8.6, if you can see on Slide 20 7. And, our midterm target history announced in the last month, day, 2 years ago, 7,000,000,000 SDR for 16. That's right. It's 8.2 plus k for 16 and We are very confident.
We will complete our journey to reach the system for the registration earlier, 10 issues. This, slide 28 and, shows the balance sheet, I mean, small. But for example, the the services for up to 2,100,000,000. This includes the 1,300,000,000 5 to 16, write a few tests. That's the main driver.
The remaining 700,000,000 are 3 to 4,000,000 in exchange rate changes or or you've also expensive placements, 200,000,000 between US dollar and that is reflected here as well. 700,000,000 of increase in fixed item. That's it. In the financial part, and I would like to. Okay.
So many of those, isn't it? Yeah, I've looked we can keep it resolved. Also, this is to change the stick to our products. We have created our net targets. From a result point of view, we are, you know, we are okay with the contributors and see that you're gonna teach also our result targets.
This year. Okay. That's it from my side, and I hand back to mister Mivert in order to, my national day to any session. Thanks a lot.
Thank you, Donita. This is Angela. Operator, you wanna start the Q And A session?
No problem, sir. Let me send something in. We will now begin the question and answer session. As a reminder, if you wish to ask question, you need to press star 1 or a telephone and wait for your name to be announced. And if you want to cancel your request, just press the hash key.
Once again, please press star 1 for a question and hash key to cancel it. So our first question comes from the line of Cole Roger from in GMV. Sorry, ma'am. Please go ahead. Your line is open.
Yeah. Good morning, everybody. So just two questions to start then, please. So the first one is on Western European volumes. And you mentioned that you're quickly exporting back due to CO2.
And just keep
in mind of how much you still export from Europe and whether there is exports that you
are still doing, whether there's falls further? Now that's the first question.
The second question is not for the discounts to go to. Now if
you look at slide 10, you're very helpful
to provide the emissions reduction bridge actually, it doesn't seem to include things like new products, such as green demand or power capture, designed as well to help you with conditions further, I'll make that potential quite limited. Okay, Mister Oscar. Hello. Thanks a lot. As a general policy, we have called in from Europe because CO2, applied each wire, and our 2 export plans was mainly the half in America or in the south.
And then from the Norwich, you know, that typically traditionally content, they have always supplied North America. For us, our put in terminal in New York and also in Florida, and we have stopped this export, and we have sent them to our Turkish operation in Shanghai, sir. So at the moment, no exports from Europe and for to your office, you'd take you know that from our competitors, we have Western Southern Europe. That's been 300,020 in the knowledge it's, 200,000 tons from Norway and Sweden. So Europe is total.
It's about 1,500,000 vehicles, that's the message. And the second one on CO 2, you're right. The picture on the top then shows you only the messages that within the next trading messages at short term bible board. That's not a problem. Second message is we can manage waiting scheme and the period in 2020.
By with a clear target, to come more or less to a 0 position as far as a process of education additional education is concerned. And you have to bear in mind, that the numbers which are flying along, that was also recalled out last week or yesterday from UPS. This assumes always that the economy in Europe continues like this. There is a recession, you know, the position on CO2 allocation for the industry and also private, but we'll, again, obviously, improve because we are, long in quite a lot of countries, which we acquire for me personally, because they are the district. A recession was very different.
They have have not recovered yet, like Italy or, like, saying partly also Eastern Europe where we have allocated whereas in the Nordics and Greece where the economy is already back, like in Germany, on our Poland or Nordics, we are short, we are long. And now the question is beyond 2030, what can we do in order to reduce CO2 emissions further. And here, we have really set out in public that we are partnered for. We have the vision of a country country complete by 2050, and we are working or mainly on 2 in two areas. One area is called carpet capture storage.
That means the separate, and capture the CO2, which is created in the process of cement production and then we can either reuse the CO 2, for example, in order to press oil out of air fields. That's the project which we do in pigments, And the other one is the famous North Life Pro Check in Credit where we are with our semi client, baby, to celebrate Statoil and Athilomitile. Where we wanna, set up, an Amina project and where we're gonna catch up, keep the percent of the CO2 emissions of our credit plan 400,000. Yeah. That's the carbon tax exercise.
And for, we are running also to do go check Germany, one in Frankfurt and our plants, together with Linden, where we, do a carbon capture uh-uh a trial project with a partner to cut the cash off for 50,000 20. And then we have a different technology, which if you would So we have set up a joint feature to settle this link with car and good team, in order to test that technology. And the other area where we are working is by using in future more CO2, the raw material in the production process, and that has to do with recycling. Meaning, we wanna reside the concrete. And if you recite the concrete, you get weather, stone, you get sand.
And if you, recite it very fine, you have, a soft product. You have what you called complete. It's a mixture of cement, obviously, chemicals and some very fine sand. And this concrete base, yeah, is, Timothy with CAO, CAO, the hot CO2, and we can use this material. We can use in the kiln again instead of limestone and then in the process itself there would be no CO 2 created anymore.
Yeah? And we are working also on this recycling piece. So, long term, long term, we can we can reduce concrete, you know, carbon neutral waste. Yep. That's on COVID.
I want to know, but I think it's important to understand, what you're doing on research beyond in for to realize conditions of a powerfully concrete. Thank you. Great. Thank you.
We can answer the question. Comes from the line of 7 echo First from other VHF. Please go ahead. Your line is open.
Yes. Hello. Thank you for taking my question. The first one is on Europe. I would like to better understand the cost dynamic between North and South looking at cement volume, it seems that the cost inflation has been lower and soft than it has been even off.
So we did a fair assessment. Is it going to price, meet yourself, or to to be able to quote the the volume on the on the actually, I think you you you closed down a plan to be treated. Has there been any any cost that you might have a teacher? On the second one, you don't need Indonesia. Repress recal threat has been reporting the fire at your city of transfer your computer.
Can you confirm that this is the only to conveyor, therefore, your production has not been impacted?
Yeah. Okay. So on, on, Indonesia, I worked there, because it's an afternoon out to Toronto, October, or whatever. So fire on our conveyor belt from Detroit, to our plan. But, we, we, we need to stop we could, handle that, the relative fee, within what else we gave the course more than, the cost of the equipment.
In the Nordics, responder. We also have a cost structure. You are right. In the, we have booked all the closure costs already in the 1st 9 months. Yeah.
And that, that effect will help us now in Q4. So just because they really come down. I think you had an additional burden of children's closure. Of course, it's been 8 to 10,000,000. Which we have already, which we have put already to take on those of our buttons to to drill, and that will phase out now, over the next, yeah, in the next quarter.
Thank you very much.
Thank you.
One comes from the line of associates winner from Maine First. So please go ahead. Your line is open.
Yes. Good morning, gentlemen. Thanks for taking the question. Two questions, if I may. Number 1, you kindly show this here in your presentation in the queue free cash, you know, you're down to in Boston from minus 17, minus 76, respectively.
Probably a question for for the David, could you kindly also break that down for pre for previous years, q 3 is the last year you put them together into a minus a 165 just to
see respect to impact tax,
how they diverge. That's number 1. Number 2, please, with regard to Canada, Western Canada, just remind us, and and and, California reminders of their respective exposures or percentage, profit contributions in in North America and what you expect from those 2 regions going forward into 2023?
Mister Olona, on Canada and, California just to give you an idea for Canadian restyle past September on LCO level in Euro Services are down to 68,000,000. Yeah. That's quite significant. And also, Western Reaching is down around 12, €30,000,000 and that has to compensate it by our performance in the region north and to pay in the region's hours. That shows you a little bit that our memories are the significantly impacted by Canada and by our social in California.
And if you compare our numbers to our competitors, which we obviously also do, you have to look at that footprint. We have a quite a little bit of a unique position if we cement time in California where I was our president, and our vaccinating position is also very, significant. And what's very forward, we would, California, I personally was, disappointed, everybody knows the North American market. It will feel that residential in, in California, our own pressure housing starts our one of your council friends, but I would have expected that the infrastructure program of the state of California would have a much, so impact process roll out preliminary receipts, slower than expected. And, for Western Canada, I would expect that, also next year, the market, in the very provinces, etcetera, do not really And so, positive, I would expect that to save, flattish.
Okay. So when I have checked it, I think you have the city of the last, the previous year figure, I will check that the city is but it's really just it's completely different because the last service is just for, energy cost inflation is 2, 2, 3, but I really have to check it and and tell you. Thank you very much. Okay. Thank you.
This question comes from the line of Arnold Lehman from Bank of America. Please go ahead. Your line is open.
Thank you very much. Good morning, gentlemen.
I have 2 questions, if I may.
The first one is
on your debt. I'll get, as you said, you you you to €7,000,000,000 of net debt, a couple of years ago. On the other hand, you know, since people ask me to ask you do the the macro risks or don't have the the big situation, etcetera, and maybe the meantime, your EBITDA didn't grow as much as you you hope years ago. So, are you happy with this, 7,000,000,000 target, or would you consider, pushing it a little bit slower? That's my first question.
My second question is
just to follow-up on CO2. You mentioned that you were expected to cancel to assist you closer from from some of the smaller competitors. Can you give it more specific about in which countries? You if that's what happened, may you tell me, you know, or or Germany on on your side, would you also consider closing capacity, or just not to do if if the cost of you to go that too much, that's my second question. And lastly, could you give us a feel for your pricing output for 2020, especially for for Europe, as if we're seeing, as you mentioned, most cable trends because side, still two prices have been more or less stable in the last month.
So it is up to 2.50,000 plus interest in Europe next year.
Okay. Mister Limonard, to talk about pricing activities a little bit early for 2 reasons. First of all, we haven't had our budget meetings yet. And secondly, I could, put out now a very steep number and look to my colleagues, Mister Martin, say, hey, now you're trying to live off. But we do not work that way in onboard.
But I would say on Europe, what you see, what is very positive, and you see that clearly in our numbers that flights plan in Europe this year was really good. If you look now for 4. For example, they are the prices in Germany are up close to 5% in a more than 5%. Even France, you should see almost raising cement prices over the last years. We stopped by more than 4 per 4%.
Yeah. Italy is up, up close to 10% in the UK in a restricted market. It's up to pricing was clearly strong and totally are up 15% to your, Romania, Texas application. So we had a very strong price in Momentum, and I do not see that he will change this push to spreadsheet in our budget meetings, our message is clear. CO2 price is probably gonna go up and send in price that to stay ahead of the game, and that's why we will continue to push.
So I personally would expect And I just looked it up as an athlete, not so. So we would expect positive pricing from Europe, clearly, to continue hard work will work very hard, on in that respect, and we have a concept of special training, It's in your core hours of course, in order to make sure that we get, a very good, execution. On the, reduction, rationalization of the civil clients, I will process those already that small clients in Cederham. And, we are about to close, and, we're gonna close the plant in a Surinameleon plant, which was developed on CO 2 emissions. And then we have done a little bit of workshop, and we obviously have still, a little bit restructuring, which then keep Italy.
We will have a look, social to central Italy, and then France is for us also an issue because in France, we have 2, 3 clients with a relatively good production technology. We are working, on that. And, I would expect that smaller independent will also follow. And if you are currently available, I would see consolidation of those of Actually, it's it's also spinning. It's under heavy, heavy pressure, at least a little bit, so I think that you will see movement.
And on that card, it's 7,000,000,000, we feel very happy with that because, that's the card as well, for which we had a explained that our Capital Markets Day are in furthermore. Yeah. And, I think, they're now away and the 7,000,000,000 is of a company cyber type of products and disability, good number, and that would be good. And, also, it's our own 2, and if that's easy to pay out, if that's around 2, around 2% plus minus. Turning on for an issue.
You know what I mean? And that is the leverage where we think we can, conform for our component to live with. But if we look to our entry, portfolio, which is more on the mature market, tied, we are less exposed to emerging market research and on the product portfolio where we have restricted the very stable and try it with here, you can, fish in this, and that's why we, search for the roadside. You can see the right thing right should see is also different to the best level of that. So you think it's the right right level of that?
Okay. Good afternoon. Thank you very much.
Another question comes from the line of regards with, sir, from u s UBS. I'm sorry. Alicia, may I have your line as open?
Hi. Good morning. Just a few questions. Can you just remind us sort of what changed on the cash? And maybe if you
could update you to kind of
all in CapEx times, I guess, from where I'm seeing that probably the biggest difference. And perhaps the top of detail, I think you've done 2 deals in the second half. I think one is the US, and then the other one is in Morocco. How are these in the numbers this year?
If you could fall into next
year, it's a little bit of a detail point And just let me check on on CO 2. So can you just confirm how you think about it in terms of the shortfall you estimate you have everything else equal. I say 20 22 on a small basis. It was kind of reduction that implies you here around 15% to 65% of European Carbon emissions per ton that you need to reduce by. And in that, regard, you also up with us and your latest thinking on, import rules into the EU if if you have any.
Thanks.
Yeah. As soon as the Googleage, we we are not doing any deals in Morocco. In Morocco, we reduced our stake in our public interest company. In the cool way. We bought ocean.
Yeah. We made an investment in ocean air that, we're in the in the south coast to Lion. Ah, you are really following the market. That's a little bit it's a lovely place. I'm sorry.
I've been there. Oh, yeah. Yeah. ID is supposed to be executed in December, and it's,
you know, in my report,
you never know whether it happened to December or in December. So but normally, that's in our plan that coming to December. Whereas the other transaction with regards to the high value, that's the 154, acquisition that will come into 1, or maybe in Q2. Uh-uh, depending on the Federal Trade Commission decision. Yeah?
And, that's within our So and then on CO2, you know, I'm a simple man. I can tell you only, the following. We that's totally related. And that's always the assumption I told you earlier, and that's also in your recall that's on the key that you got on the So I did, you know, I see a solution that there is no cyclical economy anymore. All that means Europe runs economically on the same speed as it does at the moment.
That will let the case be it's trading free. So it's just a recession. The whole thing, obviously, looks again different and more positive to the industry. As we said, we're going to cover for June in between the 2. And then, without management action, yeah, our capacity, our yearly deficit would go up over the years to maybe 3, maximum 3.5,000,000 tons.
Yeah. And, we have set up now and, last plan on plant level, where we think we will reduce emissions by about 2, 2.5. And if I add in my carbon capture storage, it's about 400,000 tons. Yeah. Then you see we can reduce by about 3,000,000.
So our target is then for for the the management target is to get to come into the in in the next place here in order to be positioned where we do not have to buy additional fuel to allocations. And, the 3 main levels are alternative fuel, and, the second one is, which and as I've seen earlier a little bit, to, to Mr. Watchhop, is the use of carbon free raw material. And and just to say that we are not only talking about that, you know, that in Germany, try to modernize our future planting. But there we are in for, for Genesis, an insure team, and in these two plants, we go from a iPhone of due rate of 40¢, we go now up to 80 or even 90% that there is a significant, emission reduction what we can, what we can, what we can do.
Okay?
And the impact rules, please? Any any comments?
I didn't tell you. That's very difficult. The new commissioner, miss Fundament, is not in yet. I think this is, like, between your coffee cup and, it's possible tomorrow. I think that's great and clear at the moment.
We would expect 5 k. Finally, we expect that the European Commission is very open to CO2 for the adjustment very clear. They have understood that if they allow non CO2, country is known through trading countries to talk into Europe, and we have to carry the heavy CO2 price, but that there is not a check on the system they have understood. That's why I would expect on the long run that I will be a CO 2 over a second. This underlying is really in, open to that And as you know, the French, for example, are also rather complete.
So Germany and France are politically theory and civil of, auto protection on social. Also, the German Greens, by the way, are in favor. Thank you. Okay. Thanks.
Hey, Truman. We have a quite a number of question is on the line. So can I please ask you to limit your questions to one at a time, please?
Another question comes from the line of Arnold Pinnettau from On Field Investment. Please go ahead. Your line is open.
Yes. So I don't think I'm having trouble with that. As I'm just returning to one question, I will ask the other one for the hope tonight. But, just from Canada, can you share with us a little bit the pricing issue for Canada? Because we, you are Yeah.
The fact that CO2 prices are and regulation are driving the pricing for finance in Europe.
Is it happening is it
happening also in Canada at the moment when, you know, the Canada Internet has also implemented the in it. Yes. And could you share with us a little bit more, favor on what was the pricing trends in Q3 in, in the US? Yeah.
I'm just a bit of a low. Yeah. In Canada, you have to be you have to be very clear in becoming more details. Okay? In Western Canada, we have 2 different markets, which are very different.
We are very strong in the Vancouver PC market, you know, and Vancouver, NDC, are still running very strongly. No problem. The problem is in Paris provinces. And businesses, etcetera. That's what we, where we have, we have a market issued that means our border telegally, Edmonton, Saskatchewan with China, and also it's called the Paris.
This is a raw material resource driven business, which has suffered a lot on the mister Trudeau, and they are at the moment under a bell, under a special. And, pricing overall in Canada has been stable. We had only the affected by lower volumes, such to be precise for you. For example, our, supplies to the oil patch industry, this meal are about 120,000 tons down versus, last year. Normally, in a normal a normal year, we we supply about 30300 50,020 to the oil patch.
This year, this is down to 120. 120. That is a very high margin, contribution, margin, there is maybe 60, 70, $30 in terms of the hazards, to give you an idea pricing is not down. So I think in in Canada, overall, it's about $4.40 50 up. It's about it's about 100 and 82 Canadian dollar.
So, it's not a price, but it's a volume, volume, it's a volume impact.
Okay. If you don't see a tier 2, the tier 2 cost in Canada, driving the pricing, indicating They don't know. Yeah. Or
Yeah. I see that Canada has a very similar regulation, that, as in Europe, they have CO2 tax, especially also in carbon, which drives electricity up, etcetera. And, that has obviously impact on the market and on, pricing. I see catalog, you're you're you're you're at the computer. Canada the Western Canadian are now at the moment in a downturn, but this is still, highly profitable and cash generated business.
So I would say you complain on a relatively high level but it disturbed a little bit. See, our numbers, because in Canada, our numbers are clearly down, and they have your on the October Mac membership. Okay. And did you speak
to Sean, right, in the US to it's an an idea of, you know, you mentioned you have to supply your own growth policy within court. From your integrated plan as an average are already very honest
with you. Yeah. We can decide that. And I think I would say we are around 80% Central in the middle of which you have some capacity left in the Midwest and in our plant close to, Toronto Whereas in the south, in Leeds, we are we are sorted out. And that's why due to the growing market in Florida in Alabama, we had increased imports And, you know, what I mean?
That's fine. But revenue in our most American business is fine. You know, what I mean? But to make change, to have good volumes in Florida, whatever, but the margin is very low and volumes are low in the oil patch, which has a very high margin. And if you, keep paying a little bit the difference between things, settlement and customer wants to expedite it.
Okay. Thank
you very much. Thank you. Bye bye.
To get another question from the line of John Fraser from HSBC. Please go ahead. Your line is open.
Thank you. My question is North America, and this issue you're having in in California. Can you talk about the infrastructure there? You you you also mentioned in your your presentation, you've got a good order from you for accepting catch up or delayed projects in q 4. And so also in Q4 in North America, where where are you with, quality sales?
You've you've indicated that's gonna revert in q 4. We know that Carol Canyon was the was the big profit in Q processing. So where
are we? 181924 on Coricel? Mister Fraser, tell Kenny, and that's a long time ago, that's not with the event. It's really industry history. So it's an agriculture to do that industry today.
No. You know, that we have always a program where we sell our exhausted quality and that has to do then also with permitting. With stoning regulation that's always a little bit difficult to predict. And that's why we had, we had, we have a significant let's say, access plan still in the Cool. Washington and also in the Oregon area.
So we talk about Seattle in Portland. And, we have one transaction. We are working at the moment, which is close to Redmond, reference to server, Microsoft Techwall is So it's a little of the fees, but, there was some delay. And for us always to advise, it's important and not that the hit your expectation on answers in, on a constant visit. So that's why that's, that will come, but, you know, we think it will come in Q4, but it could also be that it can send, next year.
Okay? And on, California, obviously, the firewall in the set, you know, for tomorrow, it's also not helpful. You saw the firewall was again, very strong in the telephone. You know, we can see in telephone and expiration for tomorrow. What we see is, we see all of the professional art styles, everyday, speech, or, and what we also what was market weakness for us, also what was reaching in the best performance modes for us also the Seattle market.
Yeah. In Seattle, we had clearly, delaying projects You have reached, Robert. We have, stopped in the new Microsoft network at the multi billion dollar project, in Redmond CFO, where we are the prime, supplier, but there was, delay in that road check, but, it's from our management talking to them in October, Williams are clearly, decreasing. Yeah. It's not that the road is not very small, sunny.
Issue. So, if the level is okay, she would have a strong finish, in that aspect. Thank you. Yeah.
Just just quickly, the the q 4 2018, Corey sale profit in in the regional work, please?
I don't know. He's gonna call you tonight. I don't know. I don't know by heart. Katie Katie.
Katie. Katie. So totally cool, but I'll see if I can hear you.
Thank you. Thank you. I'm gonna ask you two more questions, please.
I have a question. I'm from the line of trying to send your rep from our representative. Please go ahead. Your line is open.
Hi there. Maybe just on that last comment made, can I just confirm that's implied with in the 4th quarter because it seems a surprisingly large number just so we're all clear? And that I can improve this. I'm sorry. Yes.
I'm sorry for every question.
Move form. Okay.
Yeah. In terms of just Middle East Africa, obviously, when you think about year to date or for the quarter, could you just give us a, obviously, you mentioned Egypt is a negative EBITDA. To you, sir, I was. Can we just have an idea of how that is evolved in the third quarter? And what is your kind of prognosis for both Egypt and for Turkey?
You think your next year for the end.
Okay. Yeah. Yeah. Miss Mehton, so I think I mentioned that I think I think we can be really part of our results in Africa in Q3. And if you look also for the full year, we have just a couple of millions below last year.
And then shows you, even with the 2 very bad markets in Egypt and Turkey, we can compensate by better results in our African countries and just to be very clear, our Egyptian results on LCO levels is found off this last year for the period. That's a lot of money. The search is also down close to 9 or 2,000,000. At least 40,000,000 for the 1st 9 months, we have more or less compensated by federal results local medical records in, Tanzania, Ghana, etcetera, that shows you that our portfolio describes Ellens can come to see even the problems market, by, performance in other markets. The outlook for each of these for the group for all metal.
For 2 reasons, first of all, we have to make a cut and cough watch for each of you, and we have totally closed the famous tour up by Anshya. The tour up on board, set up by a whole team on the 20th hour of pretty much methionine. That's a very old institutional plant. We have closed it down significantly. We have also closed one line in our sweat plant close to the right sea, and we have already laid off 70750 full time employees again in Egypt.
Since Hyderabad took over as high payment, we have paid off to to 3500 people. So that's what we do. And, that's why the cost 50, 60, between the pound. And what we see now, you know, coal for that market came back. Right?
The market was actually 54, negative minus 6, minus 7 until the Williams are very strong. And, we have also let a price increase in Egypt October by about 15% which seems to stick. So I couldn't see, but at the moment, the actual trend is our friends at put it at this time. And, that's it. Okay?
So I'll hold the right off for sure. Is that all been taken, or will is in the
first place. That was all, that was there. That's all in our facilities, obviously. Yes. Of course.
That's why for me. Our retired improvement for Egypt will be significant, with the target TLCO breakeven because we have a cost saving, Williams, and 5 things all changed of about €50,000,000 on an annual basis and €5,000,000. That's a lot. Thank you. So we have taken a few days here.
Okay? Thanks a lot. Alright. Thank you.
Thanks, Tom. Last question, please?
Okay. Last question comes from the line of Raja Zabotsky from Vicky Morgan. Please go ahead. Your line is open.
Yeah. Good morning, everyone. Just one question then. Put you on Indonesia. That's very strong in Q3.
Do you see home for further improvement in pricing in the market? And also volumes were a bit soft in the third quarter. Are you already seeing the pickup in the quarter?
Yeah. The Indonesia, I have to say, our market assessment for the full year was 2 positive if you recall, we said into the election shall be flat, the top of the flat, and then we said, at the top, you said we would cents, and then you would see 4% for the full year. That is not realized because in September, you can check with the authorized user in the United States. Was down to, like, 2 negatives even more. So, October was, again, not complete from So what's, you know, for us, especially as we are, you know, 2 or more, like, on last year's volume.
So, but it's not, you know, what I mean? It's not, to whom the problem is that the commercial part is to, whether it's the, week or they basically of the new government, you know, that all the ministers haven't been appointed yet. And, the administration is not to be settled in, and that's why also chief trust trust for at the moment is, relatively slow. For next year, we would expect Indonesia needed to grow, again, 4 to 5 percent. On the pricing side, that needs to be watched on the market, what we see now, pricing is 18% we have been not very pushy on price increases in backpacks for some, strategic reasons.
And, we will see next year, the market will be busy. The September rating is pushing from the hosting branch to their own branch that we create some, a rental market for Willow. So are you happy with the current level of margins? Not fully yet. We gave guidance that we wanna go back in the main to a ETCA marching off in the 5.
And if you look to our members in Indonesia, I tell you what about, you know, at the moment, at 23 point something. So there is still a little bit uh-uh right now, into those cases, we have found 19%. We have significantly improved some option this year by 4 or 5% system. Great.
Thank you.
Thank you.
Thank you for for asking. I'm sorry to, you know, cut the rest of the question was asked. So we have for the time of the night at the Analyst Center. We will also be on the road today in London tomorrow in Dublin next week in the US, but then thereafter, you know, we're going to attend the, Central America Merrill Lynch conference in December, for example, room, you know, for, reaching with us. Thanks for joining in today and speak to you all later.
Thank you very much.
This is for a conference for today. Thank you for participating. You may now all disconnect.