Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Interim Financial Report January to March 2019 Conference. Call. I must advise you that this conference is being recorded today. Thursday 9th May 2019.
I would like to hand the conference over to your first speaker today, Doctor. Berna Shai fella. Please go ahead, sir.
Okay. Good afternoon or good evening or good morning to everybody. From Heidelberg. Thanks a lot for joining us for our Q Win call, which I will present you the figures together with Tomago and our Investor Relations team Ms. Andrea Shalo and Mr.
Casa. I think you have seen our numbers, I think, we have finally delivered a very reassuring Q1 result. I would say this is maybe one of the rare Q1 results which well, more or less, all financial metrics have moved into our directions. Sales are up 15%. So we are growing strongly.
EBITDA up is 26%. Pricing is strong, yes, is better than cost inflation. Williams are up except for Asia. Margins are improving. Cash generation has been strong.
Net debt is on a like for like basis down by 1,000,000, and we are well on track to deliver on our disposal targets. If you look to the areas, then I think the core message is Europe and Asia are back. We are seeing a clear recovery in Western And Southern Europe and northern and Eastern Europe continues its strong, a result trend from last year. And we have turned the curve of the wave in Asia. Asia over the last 2 or 3 years was always negative compared to the year before, driven by the difficult market situation in Indonesia.
And now we see a clear turnaround in Indonesia and also in Thailand, which has obviously supported our result in Asia, in Indonesia, in Indonesia pricing is up by about 9% or 10%, yes? And so we also have a good outlook for the coming month So the first quarter increases our confidence to each full year target. That's also underlying. We just got, yes, today evening, the preliminary April figures. And also April was a good month for us.
We are on our CO level, about 10% up versus last year. That is very significant because last year, we had Eastern, we had Eastern in March. This year, we had Eastern in April. So in our core markets, Europe and U. S, we are missing about 2 working days.
And all areas are up except for Africa Eastern Mediterranean where the trouble in Egypt continues. On Q1 overview, Chart 4, I think the numbers speak for themselves. We are on track to deliver our 1,000,000 SG and A saving target, for this year. If you look to the cement volumes, you see we grow, you would say only 1.6% whereas aggregates and ready mix is significantly higher, but growth rate what's the reason. If you look later to the region Asia, our volumes are down by about 1,000,000 tons.
That has to do that in 2 core countries, we had elections. 1 is India. That's why market growth was weaker and also our focus was more on the pricing, especially in the region south. And in Indonesia, which is our core market, we had also elections. And in the first quarter, market growth was slightly negative with, I think, minus 0.3 or minus 0.4 percent.
Chart 5 shows you a little bit the bridge and neither message is pricing is up better than cost. Main driver is here in Europe. In Europe in quite a lot of countries. We have started this price increases, not as usual, 1st April, but we started 1st January, for example, in Germany, but also in France, also in U. K.
And also in Belgium that has helped us quite a bit, yes? And pricing is, clearly stronger than last year. That's what I said the capital market already at conferences during the first quarter that we will see, good pricing in Europe. And then you see the negative impact on IFRS 16 on on or the positive impact on EBITDA level. Chart 6 gives you the split up by, by area.
And you see in, we're only down in the reach Africa, estimated to remain. That's mainly Egypt and Turkey, yes, Chart 7, which gives you a little bit I hear about the energy cost development. The message is coal is clearly down, yes? It's about 20% down. Versus last year.
That trend will continue and believe an increase now in the Q2 and Q3. Pet code is still flat and up. Pet code will come down in our opinion in the coming months. And, the only area where we are is power. That's mainly in Europe, but we are now very much hedged in Europe, and we expect power prices in Q2 to come down versus last year because in last year, we had in Europe some extraordinary, price peaks, a core message shield, energy should be our friend in Q2, Q3 and should support further market margin expansion.
And I hand over for Charlie, the 9 on the financial messages to Doctor. Nagel.
Yes, good afternoon also from my side. Let me shortly report on financial situation at the end of Q1. So, the significant improvements in both net debt position and free cash flow So, the, our portfolio review may be 25 successful. So we had some disposals, especially from the white cement plant in each shift and on the account on the other side, we had some restructuring costs for the full year. Let me say that we have closed the decline in the total, and we will see a significant negative impact on the P and L, not on the cash positioned at the Ukraine acquisition will be recited, as a return position from the Ukraine will be recited to the P and L in Q2.
So we will see that, but we are very confident that we can compensate that a lot, good ARPS expense by positive income from after disposals, I will come back on that. Net financial results, the events increased against our expectation as the part of the leasing payments have been reclassified to financial costs and that overcompensate the effect from which the reducing interest payments income taxes are in line share of minority profit goes up as the profitability in Indonesia goes up also finally goes up and you need to see that's a 1 off profit from say long term EMEA. So all those positions are showing up therefore the minority share goes up. So you cash flow in our in our financial cash flow statement goes up to 1,300,000,000, roughly 100,000,000, up compared to Q1. We have to see in Q1 that our funds from operations, so the operational cash flow before changes in working was significantly up $200,000,000 based on a significant EBITDA result.
But March was a very strong month. So at the same time, we saw corresponding increase in working capital. The point is that we think that the working capital for end of the year will normalize. So this million will come back into the cash So currently, we have very good cash flow generation, and this is also reflected in the debt position, which, before IFRS improved by 1,000,000, and therefore, we are quite confident that we will reach our target 7,700,000,000 net debt position without IFRS. Now on Slide 9, you can see that guidance.
We, we had at the end of March 9,100,000,000 pre IFRS 16, on the IFRS 16, 1,300,000,000 came on the balance sheet. There is still a relatively high degree of uncertainty out, which we will continue to develop throughout the year at are changing the policy and we are not fully sure how that will effect will go down to the balance sheet. Therefore, we have a little bit increase. Our guidance for the net debt position from IFRS 16 to what's year end, which we estimate be at the maximum value of 1,300,000,000. So that would keep us after IFRS 16 implementation and total net debt position at the end of CHF 9,000,000,000.
So that's our current understanding. On Slide 9, on the right hand side, you can see how our portfolio optimization continues. As you know, in 2018, disposals reached 1,000,000 in Q1, we are again up to 1,000,000. So we are very well ahead of our of our phasing, which we initially contemplated. We have now closed the number in contract with a number of transactions as it relates to cement plants, Ukraine, as I said, Sri Lanka, the total cement terminal in the we signed a number, an agreement to sell, demand plant in Italy and outcome up at the we are very confident to achieve or overachieve our driver of 500,000,000 of disposals that are on the investment side we keep our discipline.
So currently, portfolio optimization, we are very very well on track. So we are confident to achieve our financial targets in 2019. That's more than from my side on and I expect to talk about the area. Okay.
Chart 11 gives you an overview about our areas. North America, maybe a general remark. When we had our budget discussions, late, November, December last year. And when I was in the U. S, then in January, outlook for the industry was positive, but there were some concerns about the macroeconomic situation etcetera, if you talk now to our people from, the Salesforce and if you talk to our key customers, confidence that we will have a good year and the market is solid and the order book is really coming through.
It's clearly up so the feedback from the market for the U. S. Markets are very solid. That applies a especially for the region north, which is our core region, as you know, which does about 40% to 45% of our volumes. So core markets like Mid Atlantic or also New York, New York City, but also upstate New York are clearly in a better shape than last year, volume wise, yes?
And, in the U. S. Numbers, we come to that in a minute more detail. It is also so that due to a very good weather situation in the second half of March, we had a rather strong draw on our inventories, which led to a negative result effect on our level of about 1,000,000. So the, let's say, the operational result is even better as shown.
In Western And Southern Europe, I think, It is volumes were good weather was normal, and we had a significant push from pricing. Yes, we had strong pricing all over the area. So in Italy, prices are now we're slightly about the actual cement price in Italy domestic is above 70. It's about 70.5, That's very significant. France is even up close to euro.
That's the first time. It's a long time then in France the cement prices are moving up again. Also ready mix is up in France. Germany is also up by about Belgium Holland is up by that looks pretty good. Northern Eastern Europe also here on good result development especially Eastern Europe is clearly coming back.
We have a significant volume increases in Hungary, Czech Republic and Romania, partially weather. Partially also due to production shortages in the market where we had to step in. Pricing is strong. In Poland, prices are up close to per ton, yes? Czech Republic Hungary are up by about also Romania is up by about very solid development in Asia.
Turnaround is supported by Indocement, Indocement Authority their Q1 result a week ago at the end of April. I think the market reaction was very positive. We were clearly leading the sector in Q1. Our sales price was up by about 9%. Energy cost inflation, clearly slowing down distribution costs more or less flat.
So Indocement is back on track. And we had also a very good run-in Thailand and also in China. In Africa, the key challenges are mainly Egypt and Turkey. In Egypt, the market is down minus 5%. And at the same time, the army has started to pump cement, from the new plant into the market.
You go to Chart 12 and you look to North America, I look to LCO, then you see a like for like, it's up 7.3%. You take the consolidation of white cement out and also dollar for X, but, the increase in LCO is rather low, but at I told you, we have about close to 1000000 or 1000000 we have on inventory impact because we had a significant draw on our in the course. If we look to the sub regions in the U. S, region North is very strong where the LCO is significantly up versus last year about 20,000,000 dollars, $21,000,000, yes, whereas in whereas the region West had a difficult first quarter for us volumes were down double digit due to very wet weather, yes? And the result is down versus last year by about 1000000 or 1000000.
South was okay. Canada was a little bit weaker, but only to weather outlook for the U. S. Is good. April was in the U.
S, a good month, especially reaching north did very well. Canada is coming back. So outlook is okay. Western Southern Europe, we have explained the result. I think the result is driven by improvement more or less in all countries, a strong improvement in France and Bene, both up versus last year by a are 1,000,000 on LCO level, driven by better volumes, better pricing, and especially no hiccup in production, which has kept down the result last year a little bit.
Italy is also up. UK is up Germany is also up. Outlook also is good. April was again in that region was very solid taking into account the Eastern effect. Then Northern Eastern Europe, Central Asia, resided is, clearly up, also here negative inventory impact of about 1,000,000, especially in the Nordics, because been at winter retail in Norway and Sweden, yes, and the restyle is very much up, in at Romania, Bulgaria, Poland result all up about 1,000,000 versus last year.
Outlook remains strong, volumes, our group pricing, is strong. Asia Pacific also clearly up. All markets were growing Alma as all the profitability in all countries is up, except for Brunei. Brunei is suffering from the introduction of the sharia law which did not which wasn't very well received by foreign investors, yes, and also Bangladesh was a little bit down, yes, due to increased input costs, higher clinker price and lower sales price, whereas the other markets financially are all up and mainly Indonesia with about 1,000,000 but also Thailand significantly up China up India up So overall, Asia Pacific outlook is okay, confirmed by a good it April results. The only area where we are born is, Eastern Mediterranean Africa and Europe we are down about 1,000,000 out of which 11,000,000 comes from Egypt.
The rest of the countries are okay. Morocco, our K. Ghana, we have more competitive pressure due to new market entrants. If you look to group services, maybe 3 messages. 1st of all, clinker free on board Shanghai is moving upwards because China has stopped exporting.
China has importing clinker and that has limited the surplus in Asia. And then we have a totally different development in the Mediterranean. In the Mediterranean, there is more clinker available due to the market. Collapse in Turkey where the market is down in the first 3 or 4 months by about 40%. And also Iberia became a cement exporter So we talk now about clinker prices below $30 per tonne And on the energy side, coal is down 20%, twenty five percent, especially in the past about also, South African code for Europe.
Petcoach will follow in the coming months. Outlook, Chart 19, we had we have not changed any guidance.
We said, what is it, a modest or whatever
moderate or moderate increase in profitability under German definition, that's between 3% 9%. I am told by Investor Relations that the consensus is at 5.5. We feel confident at the moment or even more confident that we are in line with that consensus, maybe we are leading a little bit, are seeing an upside to that. Message for the next quarter should be 2 things should play in our favor. Energy is our friend.
Yeah, that should help in the margin. And the second one is the pricing trend is good in Europe, and we expect also in North America and in core markets in Asia. So we should see from the margin side, we should see a good development, and we will continue to have strong free cash generation, and we're going to stay disciplined on CapEx, yes? So, that's it. From our side.
And obviously, we are now happy to answer any questions, which you might have.
Thank you. You. Okay, sir. Your first question is coming from Rakesh Paki. Please go ahead.
Your line is open.
JPMorgan.
Yes, hi. It's Rajesh Patki from JP Morgan. Couple of questions from me. On the previous conference call, you said that you expect energy costs declined by 60,000,000 this year. Do you still think that is the case or how has the situation evolved since?
And second question is on pricing in Indonesia, which you said was up 9% in the first quarter year on year basis. And given prices have moved sequentially through last year, where do you see the year on year price trend for the full year for 2019? Thank you.
Okay. So in Indonesia, it is so that in the first quarter pricing was up 9% and that is mainly driven by bagged cement that is, I think, up 11% and by course more or less flat. That's a little bit the message, And, what we plan to do, oh, that's what that's not how we have guided the market in the conference call of Indocement is from a volume side of your point of view, the first quarter confirmed our view. I told you the market should be flat. First half year because we have election, then we have Ramadan blah blah blah.
So and then we expect the market to grow 6% to 8% in the second half and we confirm that outlook, yes? And on pricing, we expect, that we will, that we can carry out a similar pricing strategy as last year, meaning after Ramadan to do 2, maybe 2 or 3 price increases in back increased bagged cement prices by another 5% to 6%. What what is then the average price increase for the full year? I have not calculated, but that's our pricing strategy. And that would lead us from a margin point of view in the direction of about 2017, yes, we are on our way back.
We discussed it also in one of the last course, EBITDA are cement margin. And we said we should come back to about 25%. This year, I would say, 21, 22, maybe 23% depending on energy price and whatever, but that would be really up. I think last year, we ended up in an interconnect divisional only with 18% or 19%. So we are on our way back on margin recovery, yes?
And on energy, I think it's the funny you got me wrong. I said we might be about 60,000,000 below budget, yes? If I compare it to last year, the numbers are very simple. At the moment, our estimate is that energy, all in, including volume and ForEx impact. The vehicle euro doesn't help us because energy price in dollars will remain flat.
So we would expect it to be at about 2 point 12.11. And that would be spot on compared to our energy bill of about life. Year, our budget was about 2.160, yes? And there might be a little bit even more upside because at the moment pet coke has not moved yet, and we would expect pet coke to come down and to follow a little bit the trend of coal, okay? Thank you.
Your next question comes from the line of Bill Roseberg from Bernstein. Please go ahead. Your line is open.
Hi, good afternoon gentlemen. Congratulations on the good results. Just going back to the question on energy costs and your Slide 7, I just wanted to know how to interpret this this slide because you talk about forward rates. Are those rates that you have locked in, both on coal and on and on power? Or are they just forward rates that's out there?
I just want to sort
of understand how secure these sort of benefits that you might get across the next few quarters would be. The second question, again, we saw margins improve in the first quarter. I think if you correct for IFRS, I think they go up from 6.9% in Q1. 18 to 7.5% in Q1 'nineteen. Correct me if I'm wrong.
But this compares to a sort of a 10.1% that you had in Q1 17. So my question is, as we progress through the year and obviously, Q1 is a volatile quarter, But can we, is the target to get back to 2017 margins, or is this something that will take more time? Yes.
Mr. Ostrach, I saw your note already. We had our general assembly, where we have to deal with all these environmental freaks. And so also I had to come back to the real world now. And I saw your note, or when I was coming back in the car to the headquarter, Sorry, I just shortly checked.
It is always the Q1 is always difficult as you know, you're on the industry inside. Q1 is about 10% of our results. So, let's be reasonable. That's why we also changed didn't want to change our guidance, yeah, because that's too early And the point is Q1 weather is always the key to 'seventeen. There was no winter at all.
That's why the result exploded, if you want. 2018 was a disaster and 2019 is somewhere in between. You know what I mean? So it's reasonable. We have not checked.
Again, you can go back to Ozan and whatever, but that's the main message. So 2017, no winter and, and so on. And also then what you have to see on our margin, if you look to our group margin, you have to be a little bit careful, yes? We have a very strong trading business, yes? And if our trading borrowers, yes, sell fuel like coal in the rest of the world at a margin or I don't know what $0.30 per ton, yes, that is maybe nice for volume and sales, but level that helps our margin on group level.
That's a different story. So we had to see a little bit also the sales mix and trading place from a sales point of view in Q1 and over proportionally, a big role compared to the full year. So that's a little bit the point. On the coal side, what you're saying is, I think what we show now are not the secure. That's just the actual forward rates, but it's also clear, We are clearly longer in our coal and energy position this year than we have been last year.
We changed a little bit the guideline. We introduced a minimum long position, yes? And that's why we expect a clear tailwind from Q2 onwards because as you know, typically in Q1, we are stocked. We are stocking for the winter in October, November. Where prices are still relatively high.
And we are now securing new volumes. And at the moment, the spot prices are even below the forward prices at the moment. So I would say, so you should see a clear margin support in Q2 as in Asia and in Europe from the energy side, okay? Thank you.
Just on that question, mean, how far are you hedged forward or on what sort of percentage, just as a sort of an understanding of what is locked in and not
So it depends, on what commodities you look at certain commodities we cannot really add. So we do not add, we do not have financial hedge. So this is mainly all fueled for our CLO machinery, mainly in the aggregates business. There are the markets not allowed to do it on a forward buying basis. And also, for example, in Indonesia, we cannot contract or we can contract forward, but it won't parts because if, our contracts are favorable for us, then we do not, then our suppliers have not delivered for us.
And we have no way to import such things in the leisure. So to put it together on the power side, we are pretty long, maybe mean, at least 8% of volumes are covered for the remainder of the year. In the fuel side, it may be around 70%. And in the, I don't know, in coal and headcount around 70% on an diesel, it may be trading to 30%. We're very rough, you know,
Thank you very much.
Next question, please.
Hello, sir. Your next question is coming from the line of Paul Roger from Exane BNP Paribas.
It's Paul Roger from Exane. I'm going to say a couple of questions, I guess. The first is actually on net debt. You're obviously sticking to your tide of 1,000,000,000 for the year end. On my calculations, I think you can get there actually without any further divestments.
And unless I'm missing anything, I mean, is that something you agree with? And given what you're commenting about these divestment pipeline, is there any reason why you can't do much better than that? Maybe you can hit the 1,000,000,000, which is obviously a 2020 target maybe a year early. And the second one is on Western And Southern European Margin. I think in 2018, you lost about 110 basis points Given what we're seeing in Q1, accepting what you've said about it being a small quarter, but also the price cost trend, is there any reason why we can't get back that 110 base points margin in Western And Southern Europe in 2019?
I'm still just on the margin Western Southern Europe. I, you look on the region and I look, obviously, always on country level, I would say, margins should be okay, Germany, we will see margin improvement in Italy. I would expect also Spain France as well. I would still make a little bit of question mark on the U. K.
Where the volumes are come see, Comstock pricing was okay, yes? So I would
be recent, but I would expect maybe
2 thirds we should
recover I'm not sure whether we're going
to do 100%.
But obviously, a key target of the stronger price increases to recoup of the margin as much as, as possible. Okay. And on the net debt, I leave that to Doctor. Mega, but I think overall, your direction is not totally wrong if I Yes.
Basic understanding. I don't
you're right to the
extent if I say
the net growth CapEx would stay on the level that we need, yes. As I said, our disposals are a bit front loaded, so that's done very much in the first quarter. There is something coming in the second quarter. And, we do not yet have the full visibility for quarter 3 and 4. So, this is the framework on the upper end.
Our growth CapEx, we had very limited sense in the first quarter. Now that's a bit, a bit back loaded. So we will get something, on the growth CapEx back and how that balance is out, let's have a look. But for balance at the year end, as we said, it should be close to 0 SDR And there in the moment, we are a little bit ahead with the disposals. On the upper hand, as I said, we have invested in the first quarter much more into working capital than the previous year.
So we think that we will get back with more money in the remainder of the year and how that balances out at the end, as you know, depends on ethics, depends when the winter comes, when winter comes earlier, we have higher flowback, we think the comp play off, flowback is lower. Comparison of last year. It's more like a normal year. So there are quite a number of components. I think we are pretty confident to reach the 7.7 and there is a certain potential that we will be able to go even below that.
Yes, it's great. And just a follow-up on
Southern Europe is interesting because you haven't really flagged the UK that much this, this quarter in the slides and everything. I think remember it's now only doing about 1,000,000 OI a year. So presumably, it's not a massive headwind anymore that will pull back your margin performance? No, no, no,
no, no, no, no, no, no, no,
no, no, no, no, no, no, no, no, no, no, no, no, in absolute terms. We have suffered a lot in the U. K. So I think we have reached a certain floor level, but obviously, the whole Brexit is remains a concern and the London market remains weak, yes? Pricing overall in the U.
K. Has been relatively good.
So I would say the sweet spot or the critical point in Western Southern Europe at the
moment is mainly U. K. As the other markets in our opinion are in pretty good shape.
We got another question comes from the line of Robert Gardiner from Davy. Please go ahead. Your line is open.
Thank you. Good afternoon, gentlemen. So two for me. So when you mentioned the strength of your order books in the U. S.
And you're increasing confidence among team there. Is that helping you on pricing? You mentioned the north was in previous calls, the north was difficult on price because of imports. Is that order book helping you there in terms of price? And one clarification, maybe you mentioned a strength of April.
You mentioned 10% up year over year. Was that an EBITDA number like for like or I'm just wondering what number that was? Okay. Last one, that's LCO like for like, yes, without ForEx in IFS, yes? And The other one end on the U.
S, it is so that
if you look to pricing, yes, in the region, north, we would expect for the full year, maybe pricing up $0.50 or whatever. So, not that much. That has to do mainly with the effect that in the region Northeast, and then in the region, New York. Boston, we still see clearly pricing pressure from McInnis and also from, competitors which have not which have still capacity, last year. And that is then compensated by relatively strong price increases, especially in the Midwest of about $5 to $6 Also, if you look to the region mid Atlantic, that's Virginia and Washington where also we think we will get $3 to $4 to $5.00.
So that differs really a little bit. And the impact of of McInnis and the Northeast obviously flattens a little bit the pricing development in that area. And in the rest of the region, in the adult, it's different, yes, we see or we think we will get good pricing in the region west of 6 to 7 maybe dollars up versus last year. Also, the region south should be up maybe $2 or $3. And in Canada, we also think we will get Canada including Washington.
We will get maybe $6 to $7. I think that's a little bit where we are on Cement. And on aggregates overall in North America, we expect, for us, a volume growth between 5% to 6% and on pricing, we would say around 4% up, that should work, okay?
Thank you. Thank you.
The next question comes from the line of Jose Pappajal from Kepler.
So 2 for me. The first one is on the cement price increases in Europe in Q1. Please could you quantify the increase? And how much do you think it will be left in Q2 when the base effect plays into account? Because you said that you increased prices in January instead of in April as traditionally?
And by the way, do you expect other price increases going forward in the year? That's my first question. And my second one is on disposals, you announced 1,000,000 of disposals between last year Q1. And you say in the slide that you expect practically no impact on EBITDA. What were the entities which were losing money to get to this neutral impact on EBITDA, please?
Thank you.
Okay. So on the cement prices, as I said, we have in Europe all over, good price increase ranging from a maximum in Poland of close to to Germany, maybe. We had about in Italy. We do not foresee, except maybe for the UK, the 2nd round of price increases, during the year, So, pricing overall, I would say, very, a very solid And I cannot give you an average number for Europe. Sorry.
That does not work. We have 2 areas in Europe. We include Hungary. That's for in currency. This British pound, then we can divide it.
That doesn't make sense. We have to go country by country. So those are business, they're local currencies. That's why I cannot give you an average number. Know that makes you a lot difficult because you have European volumes and you want to calculate what's the margin impact, but sorry, our business is a more complex and your exosheet and that's why we can only talk a country by a country.
It's about, what do you say, 8% So I just get from controlling the smart guys. They told me average 8%, but I don't give you a guarantee on that because that includes precurrencies, which move around between slotty, trash, ground, and whatever. I thought about 8%. It's still the above inflation. That's the message.
And the disposals are linked to Doctor. Nagel to explain.
Yes. On the disposals, there is actually a very limited impact on EBITDA. It's is quite a number of house making operations, which is especially Ukraine, it's probably the highest. But also a little bit of more commonality share, but there's an impact on that, but there's only a little bit of impact on bottom line and in Egypt has no EBITDA on the other higher classes, which we sold, like a new plan, etcetera, has no positive impact. Clearly, ours, nothing, in multi credit very limited, so we are right.
We are nothing. So if you take all that together, I mean, this simplifies the organization, reduce investment costs and on the EBITDA level, we have a very, very limited impact.
That's my question, sir.
Another question comes from the line of Yatin Sohari from on field investments. Please go ahead.
Yes, good afternoon gentlemen. A couple of questions on my side. First, could you comment on the latest volume trend that you've seen in April and maybe at the beginning of May in Europe and the U. S. Know that the sales effect is a little bit more normal.
But as you've been notably impacted by the flooding in the U. S. And then my second question is more on capital allocation. You've been very proactive and successful with the disposals of a number of assets. And you might be in a good position to redeploy capital in the next few years.
Could you tell us how will you choose between investments in mature markets emerging markets and maybe some return to shareholders. And regarding emerging market, it seems that local players are gaining market share through acquisition and new investments? What is your position on the emerging market? Do you want to keep the leadership or are you with the new landscape? [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:]
So in emerging markets, that differs from company to company, I think we are with our portfolio. Principally, we are buying. That's why we do not plan any major disposals. So, for example, we do not plan and exit now from, let's say, from Indonesia, from India or whatever. Or from Ghana or Tanzania.
There are smaller markets, which we think, which are not so attractive like Gambia, Mohretania, Sri Lanka and Ukraine, yes, where we have questions, what's the outlook midterm And that's where we say we want to get out. That includes also Kuwait and Saudi Arabia and all these more or less attractive countries, But in the core emerging markets, we obviously want to keep our positions And because we have to be careful, the capital market moves its opinion regularly. Sometimes the emerging markets are really the song to sings. And then for 1 year, it's only mature markets and we cannot at that our portfolio always to the songs to the U. S.
Song in the markets, and that's why we think we are relatively well positioned, yes? And on the volume side in April compared to last year, we are in cement, more or less flattish and ready mix slightly up, but you have to see, we have about 2 working days left. That's very significant. And what we see is that in Western, Southern Europe, overall, the positive trend has clearly continued, and also in, in Northern Eastern Europe, overall the trend is clearly, is clearly good Eastern Europe And Central Asia is even in April about 10% close to 10% us versus last year. And also North America was relatively strong.
We are overall about 8.5%. We had been down in Asia a little bit But overall, especially North America and Europe, the trend is very good. And in Asia, it's mainly the impact of the elections in India and Indonesia. And our Ramadan is starting, so we expect anyway a slowdown, but we expect the once in the second half of the year. Okay, thank you.
Your next question comes from the line of Robert Muir from Berenberg. Please go ahead. Your line is open.
Thanks very much. Good afternoon, everyone. My first question is on Poland and the price increase of that you recovered in that market. I just wanted to understand, what's driving that increase? Is there any impact from, for example, having players having to buy carbon in the open market there?
And then are there any regions across your European portfolio where you're moving carbon too. So I know you've got I assume you've got surface in places like Italy. Are there places like maybe the UK or France which are in deficit and you're supplying cars into those markets? And is that affecting people syncing up the pricing? Thanks a lot.
Okay. I think the so I think that's what we said earlier. We see it already last year. It is clear that the development of the carbon CO2 price has obviously disciplined the market and changed a little bit the attitude versus price increases. That's what we see now happening in Europe because people start to calculate into their calculation.
Also the increase of the CO2 price. And that's obviously helpful. I think, pricing is compared to, Germany and also Czech Republic is still lower and there is a certain catch up exercise which needs to be done. At the same time, the market in Poland is relatively strong. Residential is coming back.
The government has done a lot for increasing the purchasing power of the local people. And at the same time, infrastructure projects continue to run at relatively high speed. And then overall in Eastern Europe, as I mentioned earlier, a little bit, the situation in Czech Republic, Hungary, And also Austria and Poland is also helped by the fact that there are some production shortages in the market, which means that the product is short. All the markets are partially sorted out And that obviously makes price increases, could definitely be easier than if, than if we have overcapacity in the market. Okay.
Thanks a lot. We take 1 more. We take 1 more, yes, okay. Mr. Charlotte, so last question.
Okay, sir. Your last question comes from the line of John Fraser Andrews from HSBC. Please go ahead. Your line is open.
Thank you. My two questions, please. Firstly, in Indonesia, behind the 9% sales price rise, Can you sort of say what's happened? What's behind that? Is there a driver, from the consolidation there between number 1 and number 3 players?
Can you also comment on, what's happening to some of the smaller companies that were underwater and where they stand and whether that's impacting prices? And then the second question is in Africa, Middle East, I see that Egypt and Turkey accounted for almost all of the of the decline. So rest was flat, but can you give a little bit more detail? Is that sort of Morocco up and sub Saharan Africa down or what was going on in the key countries, please?
No, Mr. Peso, as I said, we are down in by we are down in Egypt by about 1,000,000, I think, no, in Egypt, 11,000,000 and 2,000,000 or 3,000,000. In Turkey, it's mainly currency driven in Turkish Lira. We are even flat. So our guys are doing very good job.
But just to be clear that you have a certain feeling in Turkey what's happening, the volumes are down, I think, 40, 45 We have now led a price increase in the market. We have a market leader with about 15% just to give you an idea of how the market is. If you borrow if you put if you change your British pound or whatever your currency is in Turkish lira and you put in a deposit, choose a good bank, then you get 25 percent interest, yes? If you go to a Turkish bank and you want to borrow Turkish lira, then you pay 41% And if you know our industry a little bit with interest 41%. Construction market is dead.
Forget it And that's a little bit, the situation, yeah, and that's not very nice. And in Egypt, the message is a good general. It's maybe a good general, whether it's a good put additional another question, but it's clearly it's not a good businessman. So the army is behaving in the market not in a very responsible way. They are pushing pumping all their volumes down the market, they have put down prices, yes?
And that is not very helpful. On the other hand, yes, the other markets like Morocco all, Morocco is up and also Tanzania is up. And the other smaller markets, toobou is up Ghana is about flattish. So the other countries are okay. The main point is Egypt in Turkey.
I think we'll seeing we are doing a good job. We are well positioned. Our company is debt free. We will see banks taking over Turkish cement companies now in the coming months because a lot of players are already under the water and they cannot finance the business anymore. So that offers for us some rather opportunities.
But so the real trouble for us is Egypt, the rest of Africa is okay. On Indonesia, the price increase, which you have seen in our Q1 numbers is only a timing effect. As you know, we have spent price increases starting from September last year, whereas last year in the first quarter prices were still going down. And what is important is that in the first quarter, where the market was flat or slightly negative market growth in Indonesia first quarter, according to the data of we, as we expected flat due to the election campaign and the pricing remains stable. That was the good news because our concern was that pricing would go down.
And we had budgeted internally for a decrease of prices in the first quarter of about 2% or 3%. And then recoup in the second half with stronger volumes. And what I told you is that, as Christian said to the market, we will we will try to repeat the pricing policy of last year. That's starting after Ramadan will increase bagged cement price in 2 or 3 steps with the target to increase by another 5% to 6% from the level where we are at the moment. And that should be supported from a margin point of view by lower distribution costs and also energy coming down.
And that's why I think, midterm from our portfolio, we should move back. We should be on our way to come back to EBITDA margin. Cement of 2017. That's a little bit, the message. Yes?
Thank you. And your competitors, the the number one player is, is he leading on cement and the smaller competitors? What are they up to?
I'm trying to better ask the result. These are very good response to the companies, but in the market, especially if you talk about pricing to get it as you know, if you know Indonesia, the market is about 2 thirds or 80% is bad and 20% is bulk. And we are clearly the market leader in bagged cement with our premium brand Tiga Vodai, where we do the TV ads and whatever And when we talk about price increases, we lead price increases typically in the bagged cement. And the whole question in the market what is our premium, yes, in pricing versus the next compatible? Because we get a brand premium, and the key question is if increase our price.
Then the question is, do the competitors follow in order to keep the price distance between our premium brand and their brand at the same level or do they not follow? And then if we go too far, then the consumer said, okay, forget about the brand. I buy the cheaper product. That's the whole game. So if you talk about price increase, it's all about bag, yes, whereas Spirec remains sluggish.
Thank you. Okay. Thanks a lot. That's it. Thanks a lot for your interest.
Have a good day. See you on the latest at our Q2 call in July. Thank you.