Good afternoon, ladies and gentlemen, thank you all for standing by. Welcome to today's preliminary overview Q4 and full year 2018. At this time, all participants are in listen-only mode. There will be a presentation followed by a question-and-answer session. At which time, if you wish to ask a question, you'll need to press star and one on your telephone keypad and wait for your name to be announced. I must advise also that this call is being recorded today, Tuesday, the 19th of February, 2019. Without any further delay, I would now like to hand over the call to your first speaker today, Dr. Bernd Scheifele. Thank you. Please go ahead.
Hello. Good afternoon to everybody. From Heidelberg. Welcome to our trading statement for the full year numbers in Q4. I sit here together with Dr. Näger, CEO of the company, and the investor relation team with Mr. Schaller and Ozan Kacar. Let's go through the pictures. I start with the chart with the overview. You saw we had a good run in Q4, especially on the top line. For the full year, we reached sales of about more than EUR 18 billion, which shows that we are growing with our business model. 2018 was a difficult year. A high increase in energy costs in absolute terms, about EUR 100 million price-wise against last year. We had very bad weather in the U.S. in Q1, but also in September in Q3, very much in Texas.
We had lower asset gains than last year in the range of about EUR 60 million, which brought our operating EBITDA down. You see in Q4 on the right side, we are down versus last year, about EUR 45 million. If you take out the Carroll Canyon gain, we are up. Carroll Canyon was last year with an exceptional gain of about EUR 79 million. Q4 overall volume growth in cement was 2.4%. We had a good run, mainly in Europe, Western Europe, Germany, U.K., Italy, also BeNe, Eastern Europe, Czech Republic, Poland was strong. Whereas Africa was also good in Togo, Tanzania, Ghana. We had a mixed picture in North America, where the Region West was very weak.
California had the fire, in Q4, volumes went down by about 12%, whereas Canada, including Washington, that means for us, Seattle, Vancouver, Portland, was up double digits. That was a little bit the situation. On the next page, chart four, we show you the bridge, what it shows you is we are stable. If you exclude the lower asset gains from disposals, which are in total about EUR 60 million less than the year before. Our normal run rate on a yearly basis is about EUR 100 million-EUR 150 million, these are typically exhausted quarries. We have about, I think, 600 or 650 quarries globally. Typically, lifetime is about 30, 35 years. We have a run rate of about 15-20 quarries which go out on a yearly basis, where we try to commercialize the real estate.
Another point, I think, which is important if you look a little bit long-term back to the company, is the Forex impact. You see we show a negative Forex impact against 2017 of about EUR 130 million. This is the third year in a row where we had a significant hit on Forex. The last year where we had a positive impact from Forex was 2015, and over 2016, 2017, and 2018 on EBITDA, we lost in total around EUR 295 million. Last year it was about EUR 130 million. It is interesting to see that it's quite evenly split. We lost about $14 million against the US dollar, AUD 15 million against the Aussie dollar, and we lost about IDR 21 million in Indonesia and INR nine million in India. It's not all emerging markets. We also lost significantly against mature markets, for example, in Canada.
We also lost on RCOBD on Forex about EUR 9 million. We hope as a management team that maybe 2019 we are a little bit luckier with the Forex. Normally these things come back, that we have maybe a positive swing on the Forex side. Chart 5 gives you a little bit an illustration what happened during the year. You saw a very slow start in Q1. You see Q4, we had volume and price did overcompensate the cost increase. That's what we see here. Chart 6 shows you a little bit the EBITDA growth per region, also in graphic form. We start with North America. North America, clearly 2018 was overall a disappointing year. Various reasons. We come to that later. First of all, as a comparison base, 2017, we had very good figures. We had record figures in North America.
We had outperformed the market. It was difficult as a starting point. We had the bad weather in Q1, and also later in September. In Western Southern Europe, I think we had a strong run, especially in Q4. We clearly improved in core markets like in the U.K., but also Germany had a good run, France had a good run. Overall, EBITDA in Western Southern Europe is up against last year, 1.1%. The main problem in Western Southern Europe was the slowdown in the U.K., where we lost on LCOB11 about EUR 40 million compared to last year, which was then compensated by positive results development, mainly in Italy, France, and Germany. NECA had a very strong run, about 11% up, driven by strong results in Poland, Czech Republic, and Northern Europe, which were all up double digit.
APAC is down 4.4%. A very different development we had in the first half year. Still a very challenging and difficult year with Indocement, which turned clearly positive in Q3 or in September, the month of September. Also in Q4, we had a clear positive swing. At the end of the day, on LCOBB in Indonesia, we were still down about IDR 45 million against last year, which was to a large extent compensated by better results in China, better results in Thailand, and also better results in Australia. In Africa, Eastern Mediterranean, results are slightly up, driven by good results, Tanzania, Ghana, good results in Morocco, but also in Egypt. Chart 7 shows you our main management targets.
Cost management. We have started the SG&A saving program, aggressive commercial excellence and disposal policy, and that we limit the gross CapEx to total EUR 700 million over the next two years. Chart eight shows you the SG&A initiative. Target is to get EUR 100 million. We are well on track. We have included in our operating plan, 2019, a saving of EUR 53 million, which we will get. Overhead costs are clearly coming down. If you look to our SG&A in percentage of revenues, if you compare that now in 2019 for the plan, the plan is around 8.3%, so clearly below 9%, which we think is a very competitive figure. On the disposals, we are on track to deliver the EUR 1.5 billion, which we are targeting for three years. We have reached already EUR 600 million in 2018.
We are well on track. The impact on EBITDA is very limited because we typically want to get rid of underperforming assets. We have a clear action plan on that. Chart 11 gives you an overview on the regions. I think we go immediately to the areas. You see in Q4, North America was down. Okay, if you take Carroll Canyon out, we are still down, driven mainly by weak volumes in the Region West. You see Western Southern Europe clearly up compared to last year, driven by good result developments in Germany and U.K. North of Eastern Europe, as I mentioned, good result development in Czech, in Poland, Sweden, Norway. In Asia, as I said, Indonesia, second half year turnaround. China up, Thailand up, and also Australia up. That explains it.
If we look now to North America and we look to Q4 operating income, you see we are down by about 34.5%. Okay, you have to take out the one-time effect of Carroll Canyon. Anyway, Q4 in U.S. was not good. Mainly two reasons. We had a footprint issue with the weather. We had a heavy rain again in Texas that was also reported by our competitors. We had early winter in the North, that has hit us. We had a very weak Q4 in the Region West in California, where we had the problems with the bushfire and whatever. Volumes in the Californian cement market were in Q4 down about 15%, very significantly down, which has hit us, and which was compensated in Q4 by a strong Region Canada and Washington, which was up by about 12% or 13%.
If you look to the margins, you see in aggregates, margin is down. Okay, you have to neutralize a little bit the Carroll Canyon effect, but obviously the margin in aggregates this year was clearly under pressure by the increased fuel costs. Fuel costs by average went up by about 25%-26%, which has really impacted the margin. In cement, you see the margin in Q4 is down. There's a de-stocking effect, lower volumes in the Region West. We had a problem in Vancouver because we had the gas explosion. The pipeline exploded in Vancouver, and we had to switch energy, which has impacted our result quite a bit. If you look to Western Southern Europe, Chart 13, you see Q4 is like-for-like up 76%. There are no asset disposal gains or whatever. It's all operational.
We have refilled stock partially in France and also in U.K. We have good operational performance in Germany, France, Italy. U.K., as I mentioned, is for the full year down by about EUR 40 million, driven by high energy price inflation, partially Forex-driven, and also due to weaker markets volume-wise and competitive pricing, namely in ready-mix. If we move to Northern and Eastern Europe, that's the next chart. What you see here, the result like-for-like is up in Q4, 26% for the full year, 18%. All countries are up versus last year. We had a very good run, especially in Poland, but also Russia was okay. Czech Republic was okay. Hungary was strong. In Eastern Europe, we see a clear recovery driven also by residential, because the buying power of the population is going up because all governments push very much for wage increases. Minimum wages are up.
The salaries of the public sector are increased significantly, that puts a huge pressure also on the private sector to get wages up. That's why the outlook for Eastern Europe also for this year, in our opinion, is pretty solid. Asia Pacific, chart 15. You see Q4 was up versus last year. That's driven by Indonesia. We see clearly the recovery. For the full year, we are still down 5%. That's without Forex, obviously, that's about EUR 22 million, and where we are down. If you go to Indocement, I'm not sure they have published the full year figures or not yet, you will see their LCOBE in Euro terms is about down versus last year, EUR 45 million-EUR 46 million. That was compensated by a clearly better result in China with about EUR 22 million. Australia was up, Thailand was also significantly better by EUR 8 million.
That has compensated more by 50% still the downfall from Indonesia, which was coming from the first half year. Okay. That's Asia Pacific. If you go to Africa, you see Q4 is more or less flattish, like-for-like. Result is up 3.7%. We had a good result improvement. We had a result improvement in Ghana. Also Morocco did well. We had a strong year in Tanzania and also in Egypt. Finally, we could harvest part of our efforts, which we have then reduced the personnel. In Egypt, we have reduced the personnel by 2,500. We had really a renovation fitness program for our operations. That's why the result in a very difficult market in Egypt went up quite significantly. Okay. On trading, you see our result is year-to-date up slightly 1.9%. That's chart 17. We reached a record volume of about 30 million.
The trend is unchanged. China becomes an interesting spot for importing clinker. That is interesting, importing clinker and cement. That's why clinker prices in Asia are high, whereas in the Mediterranean, due to the crash in the Turkish market, clinker prices are clearly coming down. Okay, that's it a little bit on the outlook. You see a little bit global cement demand. Overall, we would expect this global cement market ex-China to grow between 2.4%-2.5%. We expect China to be more or less flattish. We see a clear downturn in Turkey, obviously. We see a clear downturn in Saudi Arabia. Iran is also really negative. Russia, flat. I think that's it. Africa. In Old World Europe, we see overall a flattish or slow growth. Germany flat on a high level. U.K., we would expect flat. Eastern Europe up 5%-6%. Spain, we would expect 10%.
North America depends very much on the region. We would expect a stronger growth in the Region West due to the infrastructure program of California. We expect a solid market, especially in Texas, especially also North from Texas, where we are a little bit mixed, is more on the East Coast. If you look to the result, we would expect that we will see a result improvement in margin increase in 2019. Obviously, what do we expect? We would expect that, what I understand is that the consensus is on EBITDA about 5%-5.5%. That's a number which we feel, for the moment, pretty comfortable. I think that 2019 is for the company and for the industry an easier year than last year. Last year we had as a comparative phase 2017, which was very high.
We had a very negative weather impact, then we had rising energy costs. For us, what you see, we see Indonesia clearly turning positive. Also general result was clearly better than last year. We see the market at the moment in Indonesia in the first 2 months as expected, slow or flattish. We see a very weak infrastructure bagged cement market due to the elections, pending elections, so infrastructure programs are not really moving ahead. Bagged cement residential is okay. Pricing in bagged compared to last year is up 10% or 11%. Bagged is more or less flat. We see the one competitor who sold his business still very aggressive, searching for volumes. That's going to go over now. On the cost side, we see coal clearly down in January. Newcastle was down about $8 against last year.
Last year, we had about $106 per ton, in January we had about $98. The other point, which is very important, the Forex, the Indonesian rupiah, has gained during the year in January, February against the U.S. dollar. That's very important because you have to bear in mind that two-thirds of the costs in Indonesia are in U.S. dollars. The exchange rate plays a good role. I think we are at the moment doing okay. In U.S., we think volume growth should be fine. What we see in the market, it's still early. The price sentiment is better than last year. That has to do also with the weather, generally was relatively mild. Volumes were good, that's been a good timing for price increases. The sales force is still positive. What you will see, if the trend continues, is a clear tailwind from energy costs.
I've been traveling a lot in the first 6 or 7 weeks of the year, what we see in our operations, that energy is clearly going down. We had, as you know, energy cost of last year was in total maybe about EUR 2.1 billion for Heidelberg. If I look now forward to 2019, if the actual trend continues, I would see an upside on energy, maybe against last year of about EUR 50 million. That's driven also to a large extent by freight rates. If you look to the freight rates at the moment, especially after Chinese New Year, you see freight rates come significantly down. Since coal and petcoke is transported a long way, freight rates are a very important cost factor. At the same time, we see petcoke, coal, and also bitumen come down.
The fuel price is clearly lower than last year. We don't see that increase. We had an increase in the U.S. of about 27%. We're not going to see that this year. I would expect a clear tailwind from energy, and you will see that in improved margins, mainly in asphalt aggregates, but I think also in cement. The downside on energy is electricity. Electricity in Europe is still increasing, but compared to last year, we are much more hedged for the full year than we did last year. The risk or the exposure on price hikes in electricity is significantly reduced. Pricing improvement is also going well at the moment. We see good price increases in Germany, namely Poland, BeNe, U.K. Overall price sentiment, especially also in Europe, is pretty good. That's it from my side. Dr. Näger, from you nothing to add?
No.
That's it. Okay. I would say we go for Q&A. You can start with the Q&A session, please.
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. As a reminder, if you wish to ask a question, you'll need to press star and one on your telephone keypad and wait for your name to be announced. If you wish to cancel the request, you may press the hash key. Once again, that is star one should you wish to ask a question. Okay, our first question is from the line of Benaud Adolf. Thank you. Please go ahead.
Yes. Hello, good afternoon. I had two questions from my side. I understood you recently met with Anhui Conch . I'd like to understand whether you would like to share with us the kind of cooperation you are looking for. Is it disposal? Is it a JV or is it a technology? I have another question on the Mediterranean Basin, the clinker surplus. Is that a threat or an opportunity for you given your trading position in Africa? Also regarding Italy, maybe.
Thanks a lot. I think it's part of my job description to meet the key global players, and Conch is undisputedly a key player. That's why I regularly meet with the Conch guys in order to have a cup of Chinese tea over what's happening in the world and what we could do together or not, and that's it. That's always interesting. You always learn, and that's it. I think there's nothing more I can say on that. The second point is, you're right. We have in the Mediterranean Basin, the clinker surplus, the Turkish market is really going down. With our trading organization, which is based in Bosphorus, we try to help to manage the overall capacity in Turkey. For our African unit, that's an opportunity because clinker prices go down.
On the other side, it's also clear that the export threat to Europe is also increased. That's correct. Okay. Thank you.
Thank you.
Our next question is from the line of Pierre Rosburg. Thank you. Please ask it.
Good afternoon, gentlemen. Just a couple from me. The strong operating leverage that you saw in Q4 in Western Southern Europe and in Northern Europe, how much of that could you attribute to the price-cost dynamic already? Can we expect that trend, price-cost in those regions to carry through into Q1 and the rest of the year? My second question is just on your portfolio optimization. From what I understand, you're divesting assets on the basis of their individual attractiveness, it seems. What is your vision for the overall portfolio as a whole? For instance, what do you think it should look like in terms of split EM/DM regions activities over the next few years? What are you going to achieve with this big program?
Mr. Rosburg, hello. On the operating leverage, you can expect the trend in Northern Europe to continue. I think that was a very solid trend, we reached now obviously a very high level. I would say the upside potential in 2019 in Northern Europe, it's still there, not to the extent what we have realized in 2018, since we see a certain slowdown in the residential in Norway and Sweden, which we expect to materialize in the second half. We have big infrastructure projects also there, with infrastructure, you never know what's happening. In Western Southern Europe, I would tell you that we had a good Q4. That's a little bit what we told you during the year, that we had some problems on production, which were solved. We had now a solid performance.
We had also better pricing. It is clear message for 2019, we expect a further quite significant result improvement in Western Southern Europe by better pricing and lower costs. That is for sure. You have to understand, if you have, in a plant, a production problem, which happens in cement plants like in steel plants, whatever, if you have more than 100 plants in the world. If you have a production problem, you're not losing volumes, you have to ship the stuff from far distant plants, that brings your distribution costs quite significantly up. That's what has hit the results in Western Southern Europe in the first six and nine months, mainly in the U.K., also in France. That what we did not see then in Q4.
You're right, we will expect that recovery to continue unless the British go for a full hard exit with the recession scenario. Okay. You are probably closer to me to judge that risk. The second one is on the portfolio. You are right. At the moment, we do not have a strategic vision where we see like the Bible, our portfolio should be 70% mature market, 30% emerging markets. What we do at the moment, we just try to clean the portfolio from unattractive market positions or structurally underperforming assets. What we have not in mind, that's different from peers, that we would sell a fully fledged position, for example, Indonesia or whatever. That's not our strategy. We try to sell Sri Lanka, for example.
We have sold in Ukraine, and there is maybe the other or a Central Asia country, whether you have it or not, that's not really natural. Yeah. That's a little bit the point on the portfolio strategy. Overall, we believe, maybe the market sees it differently. We believe that the portfolio of HeidelbergCement is a very nice mix on geographics, with North America about 30%, then about 40%, 45% in Europe, and the rest is then Asia and Africa. We think we have a nice mix of stable cash flow, stable markets, and also exposure to emerging markets which gives you growth. We do not see a need for a radical portfolio restructuring. Yeah.
Okay. Thank you.
Thank you.
Our next question is from the line of Robert Gardner. Thank you. Please ask it.
Good afternoon, gentlemen, too, from my side as well, please. Thanks for the numbers around the energy bill, the EUR 2.1 billion. Can you give us some indication of the split there between coal, petcoke power, and how much you hedge or have hedged for 2019? I know you mentioned you hedged a lot of your electricity in Europe. You mentioned also in the presentation, I think you mentioned a number of net debt around EUR 8.4 billion. I'm just wondering, is that your year-end position, or does that include the EUR 600 million disposals that you announced? I'm just wondering where that number comes from. Thanks.
Sorry. Could you repeat the second question? Was that concerning to net debt, or what was the question?
Yeah. You have a net debt number in the presentation of EUR 8.4 billion. I'm just wondering, is that the year-end position, or are you factoring in disposals agreed but not received?
That is the year-end position for this year. That's the 31st of December 2018 number. The target for next year is that we reduce by another EUR 700 million and to get the net debt down to EUR 7.7, EUR 7.6. We think this is clearly feasible by accelerated disposals and secondly, tight discipline on growth CapEx, as we announced, only EUR 700 million over the next two years. Cash generation in the company is very good. That's why we think we're going to hit these targets. These are MBO targets for Dr. Näger and myself, and normally we are the guys who try to hit our numbers.
On IFRS, sorry.
It's before leasing.
Yeah. Okay.
Okay. Then on energy, just to give you an idea, so our energy bill is about EUR 2.1 billion for 2018, out of which more than EUR 900 is electricity and coal is about EUR 440 and petcoke is about EUR 200 million. Then you have about EUR 100-EUR 120 natural gas and about EUR 280-EUR 300 fuel, that's oil and diesel. What we see is electricity still going up, whereas coal, petcoke and diesel are clearly coming down. That together with lower freight rates. I just talked to our purchasing department yesterday afternoon a little bit because I thought that's interesting. We expect that at the moment we have maybe an upside of about EUR 50 million, that the energy bill overall should be in absolute terms lower than in 2018.
The ones who follow the company for a long time, they know in 2017, the energy bill was about EUR 2 billion. EUR 1,966 is the number we published, and it went up this year to EUR 2.1. We would expect if the trend continues after Chinese New Year, it could go down to EUR 250. Which would be compared to 2017, 2018, a positive swing of EUR 150 million. Last year, energy increased by EUR 100 million. This year, we would expect EUR 50 million down, and that's why I would expect to have tailwind from energy. Okay. Thank you.
Thank you.
Next.
Our next question is from the line of John Messenger. Thank you. Please ask your question.
Hi. Good afternoon. Just I think actually two from me as well, if I could. Just on when we look at the group numbers, particularly the two developed divisions, North America and Western and Southern Europe, Dr. Scheifele. One of the big advantages, obviously the group put forward is vertical integration, just to control the downstream and obviously unlock as much profit across the value chain. That 5% to 1.7 and also the other key market with vertical integration, Western and Southern Europe, where obviously it's still losing money in ready-mix, not quite as much as last year. What are the ingredients? What is going to help you move those higher? In that you've often highlighted, the ready-mix price is a critical point in terms of the health of these markets.
Is it your own cost structures that are too costed to compare with some of the players? What needs to change to sort that out? In that it's quite a glaring gap in terms of just your performance and where I guess you'd like to be. The second question was just obviously Israel, the removal of that mining license, is that something that's gone for good or is there something that you're looking to renegotiate to bring more reserves on board? With that one in mind, are there other small operations where you have short life assets still remaining? Or is that a very unique situation? Thank you.
Yeah, Mr. Messenger. Hello. I think Israel, that's very unique because in Israel, I don't know whether you know, all land is more or less owned by the government. You cannot own a property in Israel, and they give you the license typically only for two or three years. Their license are always then renewed. That's the same practice, by the way, in Malaysia. It's very strange. Whereas in countries like U.K. or Australia, North America, we typically very often own the quarry, and then we have very long-term license as a permit. Whereas in Israel and also Malaysia, it's very short-term. What they did, they went out for public auction and a guy won the license at a crazy price where he has to pay a royalty like hell. The profitability went down significantly.
What we did now in order to compensate that shortfall, I don't know whether you saw that, we have started now a cement business in Israel. We have started to import to Israel. We will import cement via our own terminal by about 1 million tons. Our overcapacity from Turkey, which we have, we will import to Israel. Overcapacity from Turkey and also Greece. We want to compensate the lower aggregates business by the new business line, cement, because we have about captive supplies. In Israel, we are a large reading of about 1.3 million tons of cement we consume. That's the business which we will start, which we will see, which will gain. We started importing. We opened our terminal, I think, last week, Friday.
Great.
That's the situation in Israel.
Great.
The second one is on vertical integration. Vertical integration, obviously in our industry is something you cannot get around. I understand that the capital market does not like ready-mix because they say the return on capital is very low. That is part of the business model. Never forget a saying from me that also emerging markets become mature markets. In mature markets, you need ready-mix. If you are in aggregates and cement and ready-mix, you have typically a very good market position. If you look now to ready-mix and asphalt, the asphalt profitability is very much driven by the bitumen price. That goes up and down. In last year, we were short. We had not covered our bitumen volumes, especially in the U.K., and that is why we had to pay significantly more for bitumen.
On ready-mix, obviously, it is about logistic efficiency, truck utilization, and the other one is then obviously pricing and volume. If you look to our both markets, North America, I have not checked it, but by heart, I tell you the results went down since we had in our Alberta operations in Edmonton and Calgary, the market was weak. There is overcapacity, and we had significant price pressure. Also in Houston, we had clearly price pressure. We are the market leader in ready-mix in Houston with our Campbell operation, and both ready-mix operations faced significant price pressure, and that is why the result went down.
In Western Southern Europe, it is mainly U.K., where there was significant price pressure in ready-mix to a certain extent, or to a significant extent, also to the default of Heidelberg, because you know the story that we had lost market share in the U.K., especially in London. I am not paid for giving up market share in core markets like London. That is why we had to solve the market share problem, and that typically goes a little bit on the price side. That is what you see in the numbers. That is why the numbers in Western Southern Europe is heavily impacted by the U.K., because in the U.K., our operation is about close to 4 million cubic meters, so it is a significant operation.
Thank you. Can I just check in the U.K., are you today broadly because obviously you lost EUR 50 million in EBITDA last year or EUR 52, EUR 53 because of the problems in the U.K. I think you mentioned EUR 40 earlier. Was that a pure U.K. drop this year?
Yes.
Two years, EUR 90 million down. It's not a very profitable operation right now, is that fair? There's not a lot of EBITDA left.
Yeah. It has a lot of upside. You're right.
Absolutely.
Yeah.
Brilliant. Thank you.
Yep. Okay.
Our next question is from the line of Arnaud Lehmann. Thank you. Please ask your question.
Thank you. Good afternoon, gentlemen. Two questions from me, please. Just to follow up on the cost outlook for 2019. In your comments, you said on electricity, you were more hedged than last year. Can you explain a little bit what do you mean by being more hedged? Have you changed the way you contract with your utilities company, or how do you get a better visibility? Maybe on that, if we were to see, let's say CO2 prices continue to increase, driving higher electricity costs, how are you better prepared today to deal with that compared to maybe a year ago when it was maybe more of a surprise? My second question is more generally, you give a very positive picture for 2019. What are for you the key risk for this year? Thank you.
Okay, Arnaud. The risk is surely, I would say, is the Brexit scenario in U.K. That's the point. Another risk I would see is also how this U.S.-China trade war works out. We believe that they will settle this case. We have obviously, in Indonesia, the question is election, Jokowi in June, how does the market then develop? We also believe that Jokowi will win and it will work out well. I think the risks are typically in the industry now today are more political risks than pure market risks. That's at the moment a little bit a problem because the public tensions are very high, and that has obviously an impact on our industry. On the energy, Mr. Lehmann, it's very simple. We have increased the forward buying, you know what I mean?
Maybe just as an example, maybe last year that time, we were covered in Europe for electricity for Q2. That's as of April to June, maybe we had covered only 20% of our, and now we are covered 50%-60%, and we are also covered to 40%, 50% in Q3. We increased the forward buy perspective because we believe that the CO2 price in Europe has rather a tendency to go up than to go down, and that's why against increasing electricity price, we are better hedged than last year. Okay. Thank you.
Thank you very much.
Our next question is from the line of Gregor Kuglitsch. Thank you. Please ask your question.
Hi, good afternoon. Thanks for taking my question. My question is on cash flow. I know that obviously you only give us the debt number. Can you just give us a broad sense from memory at your capital markets day, you were looking at achieving perhaps a run rate of EUR 2 billion of free cash flow. I want to understand, I suppose two things. One, broadly where you think you are in 2018. I appreciate that you're not producing these numbers today, but a ballpark figure, and how you see that trending in 2019. And perhaps if you can, anything you care to elaborate on that side? Then I think last year in this call, Dr. Scheifele, I think you did comment on a broad EBITDA expectation. I think at the time it was mid-single digits. Is that something you're prepared to communicate on today?
Are we going to have to wait till March? Thank you.
Mr. Kuglitsch, I already said that on the outlook on my chart, what is it, Chart 20, I said the consensus at the moment is, I think 5.5. That is what I am told. That is not something which keeps me awake at night. So I think that is a number we can hit. That supported what I said on our Chart 20, that we see Indonesia positive. We expect U.S. to be solid. We see good pricing in Europe overall. We see a tailwind from energy. That should overall, if you take this all into account, that should work.
Okay, excellent.
On cash flow, that is a number I have difficulties always to understand. I hand that over to Dr. Gieré.
Dr. Scheifele is kidding again. I cannot tell you the free cash flow today because that is just not ready for communication. What I can tell you is that we have a good. As you always also can see from the net debt figure that we had a good free cash flow, but also cash flow in general this year, which was based on better lower interest payments, lower tax payments, good proceeds from disposal. Okay, on the other hand, we had a high growth CapEx. But this year again, we were able to deleverage. Also, we paid the full dividend, and we had a full growth CapEx program. So our cash conversion is excellent, and towards the end of the year, we had a very good run in that respect. Looking forward, I would expect that this trend goes on.
We, as Dr. Scheifele has said, had a headwind also on that level from Forex. That may change this year, we do not know. We expect better EBITDA, we expect lower interest payments, we expect lower taxes. We expect a continuation of our disposal program on plan or as 2018, even a little bit ahead of plan. That will give us again, a cash flow, free cash flow, which allows us to pay full dividend to make the growth CapEx we need to make in the framework we have announced and still to deleverage and to accelerate deleveraging in 2019. That's what I can say. I would say we are well on track.
Thank you.
Okay.
Thanks a lot. Last two questions.
We take two more questions.
Okay, our next question is from the line of Alain Gabriel. Thank you. Please ask your question.
Yes, good afternoon, gentlemen. Two questions from my side. Firstly, on the U.S., are you able to quantify the impact of the infrequent events such as the fire and the floods and the gas explosion in 2018? Just to help us with the profit bridge for North America into 2019. The second question is on Egypt. Are you able to elaborate a bit more on your comments on the market dynamics there with the ramp-up of the Army plans? How do you think of the high-level thoughts on your capital deployed in Egypt? Are you happy with it? Do you want to do something about it, and can you do something about it? Thank you.
First of all, with Egypt, I would say interesting country. The first problem is that the market last year was overall down 5%. The Army started with their operation mainly in the second half. Especially Q4 was very difficult because they were trying to dump volumes on the market. At the moment, the capacity utilization of the Beni Suef plant or that south of Cairo is maybe 20%. The Army has to pay back on a yearly basis to Sinoma EUR 90 million cash. That is interest on the investment and also principal. We will have to see how that will impact the pricing behavior of the Army now in 2019. We would expect the market to be flat in 2019. Infrastructure is okay. The New Cairo city is being built, but the private sector is down because inflation is still very high.
Interest rates are high, that's not good for the private sector. Our three plants, Suez, Katameya, and Helwan, are very well-positioned. Logistically to the greater Cairo area, I think we have the best positions in the market. We have trimmed costs significantly from Italcementi. As I said earlier, we have sent home 2,500 people. We have switched now all plants from gas to coal, we run a relatively good business over there. The outlook for Egypt overall remains challenging. If you look to our balance sheet, you have to see that I think, Dr. Näger, what's the capital investment in Egypt is for us, very low.
Very low. In the PPA, we were properly considering the difficult market situation in Egypt. Our capital employed in Egypt is a low triple-digit million EUR figure. It's a very reasonable valuation. From there, from that perspective, we have no risk of an impairment or something like that. The question is not so much on the financial figures. The question is whether we want to keep 11 million tons of capacity in Egypt forever. That's under discussion.
Yep. We own in the Egyptian business only 53% or 56%, it's not 100%.
What hampers the restructuring on a total Egypt level is that the corporate structure inherited from Italcementi is very complex with three stockholder companies. We still have to do some work in that respect.
Okay. U.S. impact, I would say, if you look to our U.S. business like-for-like last year, it's down against last year. If you take Forex out, maybe about EUR 60 million, that's more or less Region North. I would see the impact of the weather in Texas and Region North, at least in the area of this number. Probably the number's higher. We have not run a calculation on that, it's clear we had a major hit in the Region North, also in the South, where we had in September the very bad weather, and in December again. I would expect the whole hit from this is probably EUR 60 million to EUR 80 million.
Thank you.
Okay, last question. Roshano, let's go.
Okay. Last question is from the line of Rajesh Patki. Thank you. Please.
Yes. Hi, good afternoon, everyone. Two questions from me. First one is in Australia. We're hearing about some delays in road construction projects. Just wanted to get your thoughts on how you're seeing the trends for each end market in Australia. Second one is, now that the Holcim Indonesia transaction has closed, are you seeing any changes in the pricing environment, and how do you see pricing in Indonesia evolve through this year? Thank you.
Okay. Indonesia, I just told you that one competitor was still very much looking for volumes in January and February. That should ease now. We kept our market share. Our budgeting is that we keep the pricing in the first half year flat on the current level, which is an increase against last year because last year, first half year price was still dropping of about 10%-11%. That's what we mentioned in the bagged cement. We will see after the election of Jokowi in June, whether we can do some price increases in the second half. That's a little bit our game plan for the moment. Overall, we expect the Indonesian market this year to grow about 4%. We expect the slow growth in the first half year due to election. What's happening, we would expect a recovery in the second half.
We think that's fine. Australia. In Australia, the situation is so that we see a slowdown in residential, especially in the multi-residential sector, clearly in Brisbane and also in Sydney and also in Melbourne. In Sydney and Melbourne, that's compensated, especially in Sydney, by large infrastructure road projects. I don't know whether you know Sydney that well. They put up a second airport in Sydney where we have significant work. We have significant work on these new westbound highway around Sydney and also on the northbound. I was there about 4 weeks ago. I visited the site. These are huge construction sites with lots of tunnels and whatever. In Sydney, we expect the infrastructure work, on which we are working to compensate the slowdown in residential. In Melbourne, we have a good commercial market that should work.
Perth, Western Australia, what we see is the mining industry, the mining business is coming back step by step. We just won a big lithium project in south of Perth. We see also more activity in the mining sector north, whereas Perth itself still remains relatively slow. We got 2 big shopping centers in Perth. We expect our Western Australian business to be clearly up versus last year. The critical market, the most difficult one is Brisbane. Brisbane residential is down. We have new competition from ready-mix. We have independents setting up a new business. The ex-boss Wagner, the guy who was running a cement terminal, re-entered now ready-mix. We see also a new cement terminal being built, which comes in the market in the second half. Brisbane will be challenging.
For the rest of the country, we think we are in good shape.
Okay. Thank you.
Okay. That's it from our side. Thanks a lot for your interest. Hope to see some of you either in March on our trip or then in May. Thanks a lot. Have a good afternoon. Okay. Thank you.
That does conclude our conference for today. Thank you all for participating. You may all disconnect.