Good afternoon, ladies and gentlemen, and thank you all for standing by. Welcome to today's preliminary overview Q4 and full year 2018. At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answer session. You.
I must advise also that this call is being recorded today, Tuesday, 19th February 2019. And without any further delay, I would now like to hand over the call to your first speaker today, Doctor. Bern Schiefler. Thank you. Please go ahead.
Hello. Good afternoon to everybody. Yeah. From Heidelberg, welcome to our trading state for the full year numbers in Q4. I think if you look at the results of the magazine, both the company and the investor relation team with Mr.
Shalo and Usan Casa. Now 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 1,000,000,000, which shows that, we are growing with our business model. And 2018 was a difficult year, a high increase in energy costs in absolute terms about 1,000,000 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. And then we had lower asset gains than last year in the range of about 1,000,000 which brought our operating EBITDA down.
You see in Q4 on the right side, we are down versus last year. About 1,000,000. If you take out the Carroll Canyon gain, then we are up. Carroll Canyon was last year with an exceptional gain of about 79,000,001,000,000. Q4 overall, volume growth in cement was 2.4%.
We had a good run mainly in Europe, Western Europe, Germany, UK, Italy, also been here, but also Eastern Europe, Czech Republic, Poland was strong. And, yeah, there are, Africa was also good in towards Tanzania Ghana. We had a mixed picture in North America where the reach west was very weak. California had fire. So in Q4, volumes went down by about 12% whereas Canada, including Washington.
So that means for us, Seattle, Vancouver, Portland, Portland was up double digit, yeah, that was a little bit the situation. On the next page, chart 4, we show you the bridge and, what it shows you is, we are stable. If you exclude the lower asset gains, disposals, which are in total about 1,000,000 less than the year before. Our normal run rate on a yearly basis is about 1000000 to 1000000. And these are typically exhausted quarries we have about, I think, 600 or 6 50 quarries globally.
Typically, lifetime is about 30, 35 years. So we have a run rate of about 15 to 20 quarries which go out on a yearly basis. And where then 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 1000000.
This is the 3rd 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 'sixteen, 'seventeen and 'eighteen on EBITDA, we lost in total around 2.95 1,000,000. And last year, it was about 1,000,000 and it is interesting to see that it quiet evenly split. So we lost about $14,000,000 against the U. S.
Dollar, $15,000,000 against the Aussie dollar, and then we lost about 21 in Indonesia and 9 in India. So it's not all emerging markets. We lost also significantly against mature markets. Also, for example, in Canada, we also lost on LCOBD on Forex about 1,000,000. And
we hope
as a management team that maybe to 2019, we are a little bit lucky over the ForEx. And normally, if these things come back, then we have maybe a positive swing on the ForEx side. Chart 5 gives you a little bit of an illustration of what happened during the year. You saw a very slow start in Q1. And then you see Q4 we had, volume and price did overcompensate the cost increase, yeah, and that's what we see.
The yield 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 disappointing year. Various reason we come to that later. 1st of all, as a comparison base like 2017, we had very good figures.
We had record figures in North America. We had outperformed the market. So it was difficult As a starting point, then we have the bad weather, in Q1, and also then 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 in UK, but also Germany had a good run-in France, had a good run. Yeah.
And overall, EBITDA in Western, Southern Europe is up against last year, 1.1%. And the main problem in Western Southern Europe was the slowdown in the UK where we lost on LCOBD level about 1,000,000 compared to last year, which was then compensated by positive result development, namely in Italy, France and Germany. NAICA 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% but a very different development we had in the first half year, still a very challenging and difficult year this Indocement, which turned clearly positive in Q3 or in September, the month of September, then also in Q4. We had a clear positive swing, but At the end of the day, on LCOBD in Indonesia, we were still down about 1,000,000 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, Ghana, good result in Morocco, but also in Egypt. Chart 7 shows you our main management targets, cost management. We have our SG and A saving program, aggressive commercial excellence and disposal policy and that we limit the gross CapEx to total 700,000,000 over the next 2 years. Chart 8 shows you the SG and A initiative target is to get 1,000,000 We are well on track. We have included in our operating plan 2019 a saving of 1,000,000 which we will get.
So overhead costs are clearly coming down. And if you look to our SG and A in percentage of revenues, if you compare that now in 2019 for the plan, the plan is around 8.3%. So clearly, we know below 9%, which we think is a very competitive figure. On the disposals, we are on track to deliver the billion, which we are targeting for 3 years. We have reached already 1,000,000 in 20 18, we are well on track and the impact on EBITDA is very limited because we typically want to get rid of underperforming assets, and we have a clear action plan on that.
Chart 11 gives you an overview on the regions. I think we go immediately then to the areas here. And you see in Q4, North America was down, okay, if you take a canyon out, you are still down, driven mainly by weak volumes in the region west, yes? And you see Western Southern Europe clearly up compared to last year, driven by good result developments in Germany and UK, yeah, and north of Eastern Europe, as I mentioned, goods result development in Czech And Poland, Sweden Norway and 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 4 operating income, you see we are well down by about 34.5 Okay, you have to take out the on a onetime effect of Carroll Canyon, but 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 reported by our competitors. We had early winter in the north.
And then that has hit us. We had a very weak Q4 in Western, in the region West in California, where we had the problems with the bush fire and whatever. So volumes in the Californian cement market were in Q4, down about 15%, very significantly down, which has, which has hit us and which was compensated in Q4 by a strong reach in Canada and Washington, which was up by about 12 or 13%. If you look to the margins, you see an aggregates margin is down, okay, you have to neutralize a little bit the Carroll Canyon effect, but Obviously, the margin in aggregate this year was clearly under pressure by the increased fuel costs. Fuel costs, by average went up by about 25%, 26%.
Which has clearly impacted the margin. And in Cement, you see the margin in Q4 is down, There's a destocking effect, lower volumes in the region West. And, 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 a like for like up 76%.
There are no asset disposal gains or whatever. It's all operational. We have rebuilds stock, partially in France and also in UK, yes? And we have good operational performance in Germany, France, Italy, UK, as I mentioned, is for the full year down by about 1,000,000 driven by high energy price inflation, partially Forex driven, and also by due to weaker markets, volume wise and competitive pricing, namely in ready mix yes? And if we move to Northern And Eastern Europe, that's the next job.
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 covery driven also by residential, yeah, because the buying power of the population is going up because all governments push very much for for wage increases, minimum wages are up. The salaries of the public sector are increased significantly, and 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. When Asia Pacific, Chart 15, you see Q4 was up versus last year. That's driven by Indonesia.
We see clear the recovery. For the full year, we are still down 5%. That's without ForEx. Obviously, that's about 1,000,000
and where
we are down. And if you go to Indocement, I'm not sure they have published the final still not yet. You will see there LCOBD in euro terms is about down versus last year, 1000000, 1000000, 1000000 euro and that was compensated by a clearly better result in China with about 1,000,000. Australia was up and Thailand was so significantly better by 1,000,000, so that has compensated to more by 50% the still the downfall from Indonesia, which was coming from the 1st half year. Okay.
That's Asia Pacific. And then if we 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 to reduce the personnel In Egypt, we have reduced the personnel by 2500. We have really, a random major fitness program for our operations that's why we're recited in a very difficult market in Egypt went up quite significantly. Okay. And on trading, you see our result is to be paid up slightly 1.9%.
That's Chart 17. We reached a record volume of about 1,000,000. The trend is unchanged. China becomes an interesting spot for importing Klingo. Yeah.
That is interesting in polylinda and cement. That's why clinker prices in Asia are high. Worse in the Mediterranean and due to the question, 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 China to grow between 2.4percent2.5percent, yes, we expect China to be more or less flattish we see a clearly downturn in Turkey. Obviously, we see a clear downturn in Saudi Arabia. Iran is also clearly negative Russia. Flat, yes?
I think that's it. Africa, Globally, Europe, we see overall a flattish or slow growth, Germany flat on a high level UK, we would expect flat, then Eastern Europe up 5%, 6% Spain, you 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 Northern Texas, where we are a little bit mixed is more on the East Coast, yes? And if you look to the result, we would expect that we we will see a result improvement in margin improvement in 2019, obviously, what do we expect? We would expect that I, what I understand is that the consensus is on EBITDA about 5%, 5 point 5. That's something that's the 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 comparative phase 2017, which was very high. We had a very negative weather impact and then we had rising energy costs. And for us, what you see, we see Indonesia clearly turning positive. Also generally result was clearly better than last year. We see the market at the moment in Indonesia in the 1st 2 months as expected slow or flattish we see a very weak infrastructure bike cement market due to the elections pending elections.
So infrastructure programs are not really moving ahead. Back cement residential is okay. Pricing in bag compared to last year is up 10% or 11%. Bulk is more or less flat. We see, the one competitor who sold his business, still very aggressive searching for volumes.
But that's going to go over now. And on the cost side, we see coal clearly down. In January, Newcastle was down about $8 against last year. Last year, we had about $1.06 per ton. And, in January, we had about 98 the other point, which is very important, the ForEx, the Indonesian UPI has gained during the year even in January, February, against the U.
S. Dollar. That's very important because you have to bear in mind that twothree of the costs in Indonesia are in dollars. So, the exchange rate plays a a good role. So, I think, we are at the moment doing okay.
In U. S, we think, volume code 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.
So that's been a good timing price increases. So the sales force is still positive. What you will see, if the trend continues, is a clear tailwind from energy costs, yes? I've been traveling a lot in the 6 or 7 weeks of the year and 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 1,000,000,000 for hydroborged if I look now forward to 2019, if the trend, the actual trend continues, I would see an upside on energy maybe against last year of about 1,000,000.
And 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. And since coal and pet coke is transported a long way, freight rates are very important cost factor. And at the same time, we see pet coke coal and also bitumen come down. And also the fuel price is clearly lower than last year.
We don't see that increase yet, an increase in U. S. About 27%. We're not going to see that this year. So 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 Europe is still in increasing. But compared to last year, we are much, much more hedged for the full year than we did last year. So the risk of 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, in a UK. So overall price sentiment, especially also in Europe, is pretty good.
So that's it from my side. Doctor. Megoff, I knew nothing to add. That's it. Okay.
Then I would say, we go for
You can start with the Q And A session, please.
As a reminder, And if you wish to cancel the request, you may press the hash key. Edelsbanken. Please go ahead.
Yes. Hello. Good afternoon. I had a question from my side I understood you recently met with Henry Conch. So I'd like to understand whether you would like to share with us the kind of corporation you are looking for?
Is it disposal? Is it a JV or is it a technology? And then I would like, I would have another question on the beauty Iranian basin, the Olympias Store Plus. Is that a threat or an opportunity for you given your trading position in Africa? On also regarding Italy maybe?
Okay. Thanks a lot.
So I think it's part of my top description to meet the key global players and conch is undisputedly a key player. That's why I regularly meet with the Konch guys in order to have a cup of Chinese tea, yeah, or happening in the world and what we could do together or not. And, that's it. And, that's always interesting. You always learn And, that's it.
But I think, there's nothing more I can say on that. The second point is you are 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 Postgres, we try to help to manage the overall capacity in Turkey, and for our African units, that's an opportunity because clinker prices go down, yes? On the other side, it's also clear that the export threat to Europe is also increased.
That's, that's correct. Okay. Thank you. Thank you.
Okay. Our next question is from the line of Phil Roseberg.
Yeah. Good afternoon. Good afternoon, gentlemen. Just a couple from me. The strong operating leverage that you saw in Q4 in West South Europe and in Northeast and, North And Eastern Europe.
How much of that do you suggest sort of attribute to the pricecost dynamic, already? And can we sort of expect that trend price cost in those regions to to carry through into, into Q1 and the rest of the year. And my second question is just on your portfolio optimization from what I understand, you know, your divesting assets on the basis of their individual attractiveness, it seems. But what is your vision for the overall portfolio as a whole and for instance, what do you think that should look like, in terms of split EMDM, regions, activities over the next few years? What are you going to achieve with this big program?
On the operating leverage is a little bit, I would say you would you can expect the trend in Northern Europe to continue. I think that was a very solid trend, but we have reached now obviously a very high level. So I would say the side potential into 'nineteen in Northern Europe, it's still there, but not to the extent what we have realized into 'eighteen, 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 project also there, but this infrastructure, you would never know what's happening. In Western Southern Europe, I will tell you that we had a good move forward. That's a little bit what we told you during the year.
That we had some problems on production, which were solved, yes? And we had now a solid performance. We had also better pricing So it is clear message for 2019. We expect a further quite significant result improvement in Western Southern Europe by ever pricing and lower costs, yes, that is for sure. But because you have to understand if you have in a plant, the production problem, which happens in cement plants, like in steel plants, whatever, if you have more than 100 plants in the world, but if you have a production problem, you are not losing volumes, but you have to ship the stuff from far distance to plants, and that brings your distribution costs, right, significantly up And that's what has hit the results in Western Southern Europe in the 1st 6 9 months, mainly in the UK, but also in France, yes?
And that's what we did not see that in Q4. So you're right, we would expect that recovery to continue unless the British go for a full half exit with the recessions scenario okay, but you are probably closer to me to charge 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 buyer that our portfolio should be 70% mature market, 30% emerging markets, yes, what we do at the moment, we could we just try to clean the portfolio from unattractive market positions or structurally underperforming assets, yes?
What we have not in mind, that's different from peers that we would sell a fully fledged position, like, for example, Indonesia or whatever, that's not our strategy. But we try to sell a Sri Lanka, for example, yes? And we have sold Ukraine and there is maybe the other or a Central Asia country, whether you have it or not, that's not really metal, yes? That's a little bit the point on the portfolio strategy because overall, we believe maybe the market sees it differently. We believe that for Portio of Heidelberg is a very nice mix on geographies with North America about 12% than about 40%, 45% in Europe and the rest is then Asia and Africa.
So we think we have a nice mix of stable, cash flow stable markets and also exposure to emerging markets, which bids you close. So we do not see a need for a radical portfolio restructuring.
Our next question is from
adoption in government 2, from my side as well, please. And thanks for the numbers around the energy bill, the 2,100,000,000 Can you give us some indication of the split there between coal, pet coke power and how much you hedge or have hedged for 2019? I know you mentioned, you've hedged a lot of electricity in Europe. And you mentioned also in the in the presentation, I think
you mentioned a number of net debt or an
8 point 4,000,000,000. I'm just wondering, is that your year end position, or does that include the 600,000,000 disposals that you announced? I'm just wondering what the where where that number comes from.
Sorry. Could you repeat the second question? Was that concerning to net debt? Or what was the question?
Yes, you have a net debt number in the presentation of $8,400,000,000. I just want to know, is that the year end position, or are you factoring in disposals agreed, but not, not received?
No, that is the year end position for this year. That's the December 31st December 2018, number, yes, and the target for next year is that we reduced by another 1,000,000 and to get the net debt down to 7.77.6. And we think this is clearly feasible by accelerated disposals. And secondly, tight discipline on gross CapEx as we announced only 1,000,000 over the next 2 years and a cash situation in the company is very good. That's why we think we're going to hit these target.
These are MBO targets for Doctor. Nager and myself. And normally, we are the guy to try to hit our numbers on the IFRS, sorry. It's before leasing. Okay.
And then on energy, just to give you an idea, so our energy bill is about 1,000,000,000 for 2018. Out of which more than 900 is electricity and, code is about 404 40 and pet coke is about 1,000,000. And then we have about 1000000, 1000000 natural gas and about to 80 or 300 fuel as oil and diesel. And what we see is electricity is still going up, whereas coal, pet coke and diesel are clearly coming down, yes? And that together with lower freight rates, we think 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 1,000,000 that the energy bill overall should be in absolute terms, lower than in 2018. The ones who followed the company for a long time, they know in 2017, the energy bill was about 1,000,000,000. Is the number we published and it went up this year to 21. And we would expect if the trend continues after Chinese New Year, it could go down to 250,000,000, which would be compared to 2017 to 2018, a positive swing of 150,000,000 year, energy increased by 1,000,000,000. This year, we would expect 1,000,000 down, and that's why I would expect to have tailwind, from energy.
Okay. Thank you.
Thank you.
Our next question is from the line of John Messenger. Thank you. Please ask your question.
Hi. Good afternoon. Just, I think, actually, 2 from me as well, if I could. Just on when we look group numbers, particularly the 2 Developed divisions North America And Western And Southern Europe, Doctor. Schiefler.
1 of the big advantage is obviously the group would put forward is vertical integration. Just to control the downstream and obviously unlock as much profit across the value chain. When you look at North America ready mix and asphalt margins, clearly, there's been an asphalt issue in there. But 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 and 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 kind of a critical point in terms of the health of these markets. Is it your your own cost structures that are too costly to compare with some of the players, what needs to change to sort that out and that it's quite a glaring gap in terms of just your performance and where I guess you'd like to be. And the second question was just obviously Israel has the 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?
And and 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.
Yes, Mr. Reyes, as in Israel, that's very unique because in Israel, I don't know, we know all core land is more or less owned by the government, you cannot own a proper feeder in Israel. And they give you the license typically only for 2 or 3 years. So their license are always then renewed. That's the same practice by the way in Malaysia, right?
It's very strange. However, us in countries like UK or Australia or North America, we typically very often own the quarry and then we have very long term license as a permit, whereas in Israel, for example, Malaysia, it's very short term. And what they did, they went out for public ops and a guy win the license at a crazy price where he has to pay a royalty like health. So the profitability went down
significantly. And
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 1,000,000 tonnage. So our overcapacity from Turkey, which we have, we will import to Israel overcapacity from Turkey and also Greece.
And we bought a compensate the lower aggregates business by the new business line cement because we have about captive suppliers in Israel. We are the last reading of about 1,300,000 tons of cement. We consume, so, that business, which we will start, which we will see, which we've gained. And we started importing now. We opened our terminal, I think, last week, Friday.
That situation as well. And the second one is on vertical integration. I also adversely integration, obviously, in our industry is something you cannot get around. Yeah, I understand that the capital market does not like ready mix because they say the return on capital is very low, but that's part of the business model. And never forget a saying from me that also much, emerging markets become mature markets.
Yeah. In mature markets, you need ready mix And if you are in aggregates and cement and ready mix, you would have typically a very good market position And if you look now to ready mix and asphalt, the asphalt profitability is very much driven by the bitumen price, right? That goes up and down. So in last year, we were short. We had not covered our bitumen volumes, especially in the UK.
And that's why we had to pay significantly more for bitumen. And on ready mix, obviously, it's about logistic efficiency, truck utilization, and the other one is then obviously pricing and volume. And if you look to our both markets, North America, I have not checked it, but by half, I tell you the result 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. And also in Houston, we had clearly price pressure.
We are the market leader in ready mix in with our Campbell operation. And those ready mix operations faced significant price pressure, and that's why the result went down. And in Western Southern Europe, it's 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 mark share in the UK, especially in London.
And I'm not paid for giving up market share in core markets like London. That's why we had to solve the market share problem. And that does, that typically goes a little bit on the price side, right? And that's what you see in the numbers. That's why the numbers and estimates on Europe is heavily impacted by the U.
K. Because in the U. K, our operation is about close to 4,000,000 cubic meters it's a significant operation.
If I just check-in the UK, are you today, broadly, because obviously you lost 50,000,000 of EBITDA last year or 5253 because of the problems in the UK. Think you mentioned 40 earlier. Was that was that a pure UK drop this year? So in other words, 2 years, 90,000,000 down. So So it's not 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. It has a
lot of upside. You're right? Absolutely.
Our next question is from the line of Arnold Lemmon.
Thank you. Good afternoon, gentlemen. Two questions for 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 change the way you contract with your utilities company? Or how do you get to better visibility? And maybe on that, if we were to see, let SEO2 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.
And my second question is more generally, you give a fairly, fairly positive picture for 2019. What are for you the key risk for this year? Thank you.
Okay, Arthur. The risk is surely, I would say, is the, Brexit scenario in UK. That's the point, then another risk I would see. So how this U. S.
China trade war works out, we go through or we believe that this will which will, they will settle this case, yeah? And then we have obviously in Indonesia. The question is election, Jacoby in June, how does the market then develop? And we also believe that Kobi 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 risk.
That's at the moment a little bit of problem because the public tensions are very high, yeah, and that has obviously an impact on our on our industry. And on the energy, Mr. Lehman, it's very simple. We have increased the form of buying. I mean, So, maybe just as an example, maybe last year that time, we were covered in Europe for electricity for Q2.
That's the May to June or April to June, maybe we had covered only 20% of our, and now we are covered 50% to 60% And we are also covered to 40%, 50% in Q3. So we increased the forward buy perspective because we believe that the CO2 price in Europe as well, our tendency to go up and to go down. And that's why against increasing electricity price, we are better hedged than last year. Okay. Thank you, Amos.
Okay. Our next question is from the line of Gregor Kuglitsch. Thank you. Please ask your question. Hi, good afternoon.
Thanks for taking my question. So my question is on cash flow. I know that obviously only give us the debt number. Can you just give us a broad sense for memory of your Capital Markets Day? You were looking at sort of achieving, perhaps, a run rate of SEK 2,000,000,000 of free cash flow.
I want to understand, I suppose, two things. 1, broadly where you think you were in 'eighteen, I appreciate that you're not producing these numbers today, but kind of a ballpark figure. And how you see that trending in 'nineteen, and perhaps if you can, any, anything you care to elaborate on that side, And then I think last year in this call, Doctor. Scheifele, I think you did comment on kind of a broad, EBITDA expectation think at the time it was mid single digit. Is that something you're prepared to communicate on today or should we are we going to have to wait till March?
Mr. Bruce, I already said that on the outlook, though, in my chart, what is it chart 20? I said the consensus at the moment is I think 5.5. That's what I told, and that is not something which keeps me awake at night, yes? So I think that's the number we can hit, yes, and then supported what I said on our chart, Wendy, that we see, Indonesia positive, we expect U.
S. To be solid we see good pricing in Europe overall. And then we see a tailwind from energy and that should overall, if you take this all into account, that should
work.
Okay. Excellent.
And then on cash flow, that's the number. I have difficulties always understand. I hand that over to Doctor. Nagam.
Doctor. Scheck, he's kidding again.
So, you
know, but I cannot tell you the free cash flow today because, let's 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 upper hand, we had a high growth CapEx. But this year, again, we were able to de leverage. Also, we paid the full dividend and we had a full growth CapEx program. So I mean, 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, we, as of table is a headwind also on that level from ForEx, yes, that may change this year. We do not know but we expect better EBITDA and we expect lower interest, primarily expect lower taxes. We expect a continuation of our disposal program, on plan or 2018, even a little bit ahead of plan.
So, 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 so to de leverage and to accelerate de lever in 2019. That's what I can say. So I would say we are the on track.
Thank you.
Okay. Thanks a lot. Last two questions. I mean, if I follow-up,
you take 2 more questions.
Okay. Our next question is from the line of Alain Gabriel 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 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. And 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 plants And 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?
Yeah. So, 1st of all, if you talk 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, yes? And especially Q4 was very difficult because they were trying to dump volumes on the market.
At the moment, the capacity utilization of the Bennett Superplant or that south of Cairo is maybe 20%. Yeah? And the army has to pay back on a yearly basis to see Noma, 1,000,000 cash, yes, that is interest on the investment and also principal. And we will have to see, how that will impact the pricing behavior of the Army now in 20 in 2019, yeah, we would expect the market to be flat in 2019. Infrastructure is okay.
So the new Cairo City is being built, but the private sector is down because inflation is still very high. Interest rates are high, so that's not good for the private sector. Our 3 plants, U. S. Kadamaya and Helvaan are very well positioned.
So logistically to the Greater Cairo area, I think we have the best positions in the market. We have print costs significantly from Italian Cementi. As I said earlier, we have sent home 2500 people. We have switched now all plants from gas to coal. So we run a relatively, a good business over there, yeah, and but the outlook for Egypt overall remains challenging.
If you look to our balance sheet, you have to see that I think, but what's the what's the capital investment in each of these for us? Very low.
Very low. From the PP in the PPA, we were properly considering the market situation in Egypt. So our capital employed in Egypt is a low triple digit million figures. So it's a very reasonable valuation. And from there, from that perspective, we have no risk of of an impairment or something like that, but the question is not so much on the financial figures.
The question is whether you want to keep 11,000,000 tons of capacity in Egypt, forever. That's not a discussion.
Yes. And we own in the Egyptian business only 53 or 56 percent. So it's not 100%.
What's the restructuring on a, on a, on a, totally achieved level is that the corporate structure inherited from inherited from, it has remained very complex with for the companies, we still have some work in that respect.
Okay. And then U. S. Impact, we have not, I would say If you look to our U. S.
Business like for like last year, it's down by against last year. To take Forex out maybe about 1,000,000, and that comes all from, let's, more or less reach north And I would see the impact of the weather and in Texas and reach north at least in the area of this number, probably the numbers higher. We have not run a calculation on that, but it's clear. We had a major hit in the region, but also in the south, yes, where we had in September though, the very bad weather and then also in December again. So I would expect the whole hit off from this is probably 1,000,000 to 1,000,000
Thank you. Okay.
Last question is from the line of Rajesh Patki. Thank you. Yes.
Hi. Good afternoon, everyone. Two questions from me. First one is in Australia. We're hearing some about some delays in road construction projects.
So just wanted to get your thoughts on how you're seeing the trends for each end market in Australia. And 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 when competitor was still very much looking for volumes in general and February, but that should ease now. We kept our market share. Our expect 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 still dropping off about 10 11%. That's what we mentioned in the bag.
Cement, and then you will see after the election of Jacoby 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 next year or this year to grow slow goes in the first half of your Q2 election, what's happening, we would expect then a recovery in the second half. We think that's fine. Australia, in Australia, the situation is so that we see slowdown in residential, especially in the multi residential sector, clearly in Brisbane and also in Sydney and also in Melbourne, in Sydney and mobile, that's compensated, especially in Sydney by last. Infrastructure road check.
So, we, 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 west bound, highway around Sydney and also on the northbound. I was there about 4 ago. Why? We said that besides these are huge construction sites with lots of tunnels and whatever.
So in Sydney, we expect the infrastructure work, which we already 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, and we see also more activity in the mining sector, north, whereas Perth itself still remains relatively slow, but we got 2 big shopping centers in Perth. So we expect our Western Australian business to be clearly up versus last year.
The critical market, the most difficult one is Brisbane. Briston Residential is down, and we have new competition from ready mix. We have independent setting up a new business, the experts Wagner, the guy who was running a cement terminal, reentered now ready mix. And we see also new cement terminal being up, built which comes in the market in the second half. So Brisbane will be challenging for the rest of the country.
We think we are in good shape. Okay. That's it from our side. Thanks a lot for your interest. Hope to see some of you either in March from our trip or then in May.
Thanks a lot. Have a good afternoon. Okay. Thank you.
So that does conclude our conference for today. Thank you all for participating. You may all disconnect.