Ladies and gentlemen, thank you all for standing by, and welcome to today's interim financial report from January to September 2018. At this time, all participants are in a listen-only mode. There will be a presentation followed by question and answer session. At which time, if you wish to ask a question, you will need to press star and the number one on your telephone keypad and wait for your name to be announced. In order to give the other participants to ask their question, we are not going to allow more than two questions to each and every participant. I must advise you all that this conference is being recorded today, Thursday, the 8th of November, 2018. Now I'd like to hand the conference over to our first speaker for today, Mr. Bernd Scheifele. Please go ahead, sir.
Hello. Good afternoon to everybody. We are calling here from London. Thanks a lot for your great interest in our Q3 earnings call. I sit together as usual with Dr. Näger, CFO of the group, and our investor relation team with Andreas Schaller and Rosane Casal. I think before I talk about the Q3 developments in our markets, I think I should shortly address the event, which was a really negative event in Q3, which was our profit warning mid-October, which came obviously as a surprise and which was obviously for myself and also for the company a clear or a big disappointment because normally it's part of our corporate culture that we try very hard to deliver what we promise. Let me address a couple of points.
The first question, there were questions in the market why Heidelberg did a profit warning compared to other companies in the sector. Quite a few reduced their guidance even in a more significant way than we did. That has only to do with German law. German law is very strict on that, and if we have a significant deviation compared to our guidance, then we have to act immediately. The German financial authorities are now very sensitive on this issue because, as you know, after the Volkswagen scandal, there was a big discussion in Germany whether the Volkswagen top management informed the market in due time. We are under very close scrutiny, and that's why we had, from our perspective, no choice then, and could not wait until the Q3 earnings call and just reduce the guidance.
By law, we were kept to go that way. If you look to the reasons why we did the profit warning, there are three big issues. The first impact is the weather in the U.S., and we come to that later. You saw, and other companies also reported, I think September was a historically very bad month in the U.S. cement industry and especially in our core markets in Texas and in the region Northeast. We had very significant rainfall. When I was on my trip around the world in October, I met our guys, I think on the 10th of October, on the region Northeast in Chicago, and I had a video conference with the South, and they came down with their forecast for the full year by about EUR 50 million. That's the first big point. The second point is in Europe.
You see that especially strong in the region, Western Southern Europe. In Q3, which is the summer period, July, August, September, in the last four years, electricity prices in Europe typically dropped significantly because we have a lot of renewable energy available. This year, this was not the case. Even the opposite. Electricity prices stayed high or even went up. That's for this reason in Europe, overall, electricity cost versus our July forecast internal estimate went up for the full year by another EUR 20 million-EUR 25 million. The last point is that on the quarry sales, you know that according to our accounting rules, we report the sale of depleted quarries as part of the EBITDA because it's part, and it's a significant part of the value chain of aggregates business. How do you commercialize exhausted quarries?
Last year, as you know, we had a big quarry sale in Q4, which was in San Diego, Carroll Canyon, which had an impact of about EUR 80 million and which brought the EBITDA from quarry sales up for the full year to around EUR 190 million. We think this year we're going to end up at around EUR 100 million. You might ask your question, say, "Hey, Scheifele, why didn't you tell us end of July?" Very simple answer. We had a major quarry transaction, an LOI sign in the greater Seattle area, close to the Boeing Works in Everett. Here the land developer from Vancouver walked away end of September when the stock market got very nervous about the cycle in the U.S. We have now restarted the process for this big piece of property, and probably we will finalize that transaction in 2019.
That's it on the quarry. If you look to our Q3 results, I think you see that there are some clear positive news. We have a strong organic growth with about close to 10%. That shows you that our markets are solid and growing. You see also that free cash flow generation is very good. The financial KPIs are moving in the right direction. Finance costs are down. Cash assets are down, net debt is reduced, and we earned, again, a premium on our cost of capital of about 10%. Message is clear. We're going to earn more money in 2018 than we did in 2017, and we're going to continue to increase our dividend in 2019 in the ninth year in a row. Another KPI, which is for me always very important, is the productivity or the efficiency in the company.
If you look to our detailed quarterly report, you will see that our manpower is down compared to last year by about 1,600 full-time employees. If you take acquisition and disposals out, we have organically reduced manpower by 600 FTE. The workforce is around 60,000, so we have a reduction of about minus 1% on workforce. Whereas volume average are up in the first nine months 3.5%. Also productivity in the company clearly went up by about 4.5% or even to 5%. Core message, results are negative impact by weather and some of the markets. We had a clear spike in energy costs, and the runoff on the quarry sale. The underlying business is okay.
We as a board, obviously, we were sitting together after the profit warning and said, "Okay, what can we do?" That's why we have initiated an action plan which focuses on three areas. The overall message is here. It is a clear signal that obviously the top management listens carefully to the capital market. We understand the concerns of the shareholders. It's also clear that we act accordingly. It's also for us obvious that at the current share price level, to buy our own shares, there is more value in that than doing acquisitions which are above that hurdle rate and which have higher risks to buy your stock, which you own and control yourselves. The three points are mentioned. We want to accelerate our portfolio optimization. We have further divestment potentials now under review.
We will have an opportunistic approach, we will not detail the countries or what we think we plan to do because we also need the good buyers world. We have initiated, we have started new actions and are confident that we can accelerate that. On operational excellence, we have started already to implement a new efficiency program in a first step to focus on SG&A. We commit to cut SG&A costs in the group over the next two years by about EUR 100 million. We will check then in a second step whether we have other areas where we still have room for improvement. We will update you in March when we publish our final results, where we are in that area.
The other one is we want to cut back our gross CapEx to EUR 350 million by average for 2019 and 2020. The hurdle rate is share buyback valuation. We will reconsider mid-2019 when we see how our measures are implemented and going, whether we have cash available to do a share buyback. Message is also clear. We try to pull all levels in order to improve margin and cash flow and also support a good investment grade rating. We also believe and are committed that our net debt target of our 2020 vision of EUR 7 billion is now more ambitious, it's still feasible. With the three levels which I just mentioned, I think we will try very hard to reach that target. If you go to the next chart, you see the overview of the financial figures.
I think you see on the right side the revenues for 9%. That's a pretty steep number. Then you see also the EBITDA margin. The problem on the EBITDA is not in aggregates. I think at the end of the year in aggregates, we're going to be fine. The problem is the cement division, and in the cement division, it's the energy piece of the business, which is the major problem. If you look to our energy cost for the full year, they're going to be up only on pricing, not on volume, about EUR 100 million compared to last year. That's what's hitting our cement EBITDA margin. Then you see earnings per share down in the quarter, down on the page 12% year to date, 19%.
We stay committed that for the full year, we're going to keep our guidance that we will have a double-digit increase in group share profit and earnings per share. Chart five gives you a little bit an overview on the Q3 EBITDA. What you see is pricing is okay, not bad, but not enough to compensate energy in a way if you want. We have net volume is up EUR 78. You see costs are up by about EUR 165, out of which about EUR 65 or EUR 70 are energy. Next chart three, shows you a little bit the history of this year. Here again, what I told you, we had the three drivers for the profit warnings, the increase in electricity and variable costs in Europe.
Harsh weather in coal and U.S. markets, the lower gain from the asset sales from depleted quarries, that's the core message. We had growth like for like in Q3. It was obviously not enough to compensate the very slow start in the year of Q1. Chart seven shows you the weather impact in the U.S. This is not a chart made up by Heidelberg. That comes from the Portland Cement Association, the American Cement Association. I think the right one is very important. It shows you that, West South Central, that's mainly Texas, 20% down in the months of September. You see the region Northeast, Mid-Atlantic, Virginia, Maryland, were down 21%. That's for us, a core area. That's where we have our biggest cement plant in the U.S. in the Lehigh Valley. That's Union Bridge. That's in Maryland. Mid-Atlantic, -19.6%. New England, -26%.
Midwest, down 8%-9.6%. Our North American business, in this region, Texas and the region Northeast, we do about 60% of our cement business and about 50% of our aggregate sales. As you know, that September is probably the most important month in our industry for not only volume-wise, but profit-wise. It was clear that with that miss, due to weather in September, it will be very difficult or impossible to hit the numbers. What you see now on the next slide is the energy or the power side, what I told you in Europe, the EUR 20 million-EUR 25 million. You see now in Q3, electricity cost inflation for Heidelberg. That's not the index. The index looks even worse for Heidelberg in Q3. If we start with Spain, you ask yourself, 53%, what's the problem?
Belgium is a country running 100% on nuclear power. They have seven power plants out of which six are down for the moment. Their power in Spain is short. The situation also in October has not improved. You see France, Germany is up only 17% for us because we changed a little bit the hedging strategy during Q3. Just to give an example. You can check that via internet. If you go to the Leipzig Electricity Stock Exchange in Germany and you check what was the spot price for electricity last summer in July, August, September per megawatt hour, you will see the price was around EUR 32, EUR 34 per megawatt hour. This year, we had prices between EUR 54, EUR 56 or EUR 57 per megawatt hour. That's mainly driven by the significant increase in CO2 pricing.
You see the same for Norway and Sweden, and that has obviously created additional headwind for us, and we had not foreseen that end of July because our July forecast we do based on the two numbers, and then the three months period comes this July, August, September. Finally, when we came to the end of Q3, was clear that we had a significant negative development on electricity pricing. Chart nine talks a little bit about more in detail about our portfolio optimization and the acceleration. I think we will do this with a lot of attention. As you know, this year, we have already disposed income of about EUR 350 million. We have sold the German sand line business. We have sold white cement in the U.S. We have sold white cement in Egypt. We have sold participation stakes in the Arabic peninsula.
We are about to sell Sri Lanka and whatever. We are on our way. We think this year we will have disposal proceeds of about EUR 400 million. Operating excellence, we talked about that SG&A with EUR 100 million saving target. This number is not coming out of my guts. It is based on a detailed study, which Dr. Näger had done already during the summer break on my behalf over the SG&A development in Heidelberg after the Italcementi acquisition over the last four years. He came to the conclusion that we can cut EUR 100 million, and the split up is we want to cut EUR 65 million on country level. We have about 60 or 57 countries in our portfolio, and EUR 35 million will come on group overhead. That is mainly Heidelberg and area overhead, including area overhead in Dallas and Singapore. We have already started to implement that.
We are taking out, in total, three group functions, and merge them together in order to streamline the organization and to delever. We are also taking out three area functions. That is what we already have executed, and we are confident that we are going to hit this number. We see this as a first step. We will check in more detail where we have further efficiency improvements potentials. In my opinion, the one area is digitalization. I think we can work smarter and efficient if we use really digitalization, not only in the cement plant, but maybe also in the shared service center, et cetera. I think we have also upside in real estate management. We are very good in the technical part of real estate management, whatever, whether we are in the commercialization process already world-class, I would make a question mark. We are going to study that.
We have a very significant real estate portfolio. The third point is also on purchasing. We have to make sure that with digitalization, we pull all levels on purchasing. This organization goes back to the years 2005 when I joined Heidelberg. I think we have to review that critically, whether that is still best of class and what can be done. On the CapEx, we discussed. Message is clear, share buyback is the hurdle rate. We cut it to EUR 350 for the next two years. It is clear that we might exceed it a little bit in 2019, because we have still some projects where some we are committed, some we are halfway committed, but we will compensate that by a reduction beyond EUR 350 in the year 2020. Good news is Indonesia. You see here our result development for July, August, September.
I think Indocement and Semen Gresik published their Q3 results yesterday, the message is clear. We see in the numbers a clear turnaround in profitability in the month of September. September was after 41 months, the first month where the result was above last year and above our internal budget. That's mainly driven by price increases, which we successfully executed starting end of June. If you, in June, the price level in Indonesia arrived at the historically lowest level for the last, what about six, seven, eight years. From there, we have increased prices in bag cement by about $6 or 13%, that's clearly visible now in the September figures.
If you look to the Q3 result of Indocement, you check that by internet, you will see that the Q3 result on EBITDA level more than doubled compared to Q2, the EBITDA margin went up in Q3 by about 4.4% compared to Q2. It's also worthwhile noting that in the first nine months, we gained market share by 0.3%. For us, it was clear that we want to defend our core market position in Western Java and Jakarta. We did not want to give up market share or to sell market share. I think this is good, we expect a solid Q4 in Indonesia, finally. If you look to the group areas, chart, what is it, chart what? Chart 12. You see on the right side, Q3 sees a clear improvement in profitability compared to the nine months, it's clearly not enough to catch up.
We are nine months like for like still down -1.6%. I explained to you the various factors. North America, chart 14. Our result in Q3, if you look to the weather, I think was okay, it was clearly not enough to catch up. That's why region North and region South reduced their October forecast compared to July by about close to EUR 50 million, driven by weather. Our result in Q3 is very strongly impacted by Canada, where we had strong markets in Vancouver, Seattle, and Portland, which are really booming, which are growing double-digit. Pricing overall is okay. We have clear price pressure in the region North and New England due to McInnis. Their pricing is down by about $4 per ton. We think we have a good outlook for the remainder of the year. October was a good month in the U.S. for us.
The order book is in good quality, in good shape, the outlook for U.S. is okay, we are running now against the clock. You know what I mean? Thanksgiving is coming, the big question mark in U.S. in our business is always whether after Thanksgiving, whether you restart the quarry on operation or you just keep it closed and you save on costs. That's why the year comes very fast now to an end. On the margin side, you see we have done well. I think cement is okay. Aggregates, the margin is up. The margin is up compared to last year. The reason there is a one-off of a quarry sale of about $20 million, which is included in the Q3 result, which is also visible on the margin. Western Southern Europe.
You see also here that the trend, result trend is clearly improving. EBITDA was still down 3.5%. We are improving against the weak first half. We expect an acceleration of this trend in Q4, especially in U.K., but also in France. Western Southern Europe suffers the most from increased variable costs. We talked about electricity in Western and Southern Europe due to our business mix in Spain and U.K. We have a very low clinker incorporation, meaning we use a lot of slag. Slag prices have increased due to the increased CO2 prices. That increases the input cost for us for the cement production in a significant way. Also in the U.K., in the asphalt business, we were hit very much by the increase of bitumen costs, which were for the full year, about GBP 10 million, which is weighing on our result.
That's what you see then also in the margins. What we see, if you come to Northern and Eastern Europe, I think here everything looks okay. Results are up in the quarter 12.7% from the nine months, 9.1%. We have a very strong performance in Poland and Czech Republic, where volumes and prices is clearly up. We had a little bit of weaker quarter in Sweden, but that's just the timing of our maintenance repair stop in our largest plant in Slite. We had weak results, continued market pressure, and weak results, especially in the Ukraine. You see the margins, I think, are okay, and the volumes are significantly up in Poland and Czech Republic, significantly double digits. We talk about numbers around 20% or more. Markets are very strong in Q3.
Asia Pacific, if you look to the right side, you see on EBITDA, we are only down 0.9%. That comes only from Indonesia. Indonesia in the quarter, all-in including ForEx, was down again by about EUR 14 million. That shows you the other countries in Asia were up. Especially China was good, Thailand was good, Australia was okay overall. That's what you see also in the margin. The newly acquired Alex Fraser business, this asphalt business in Melbourne and recycling business is doing very well, and we expect a solid Q4 due to the better pricing in Indonesia. Africa, Eastern Mediterranean. The figures, which you look, you see EBITDA down -10.4%. You say, "Hey, this is what's happening there." You have to see the numbers are relatively small. We talk about EUR 11 million.
If you look to year to date for the first nine months, you're still up 6%. The markets are okay. The Tanzania and Ghana markets are strong. Egypt until September was okay. October was more difficult because the army started to supply more to the market, that led to pricing pressure. The main deviation in the quarter comes that last year we sold our fancy headquarter in downtown Cairo. That was a book gain of whatever, EUR 2 million or EUR 2.5 million. That makes the numbers move because the numbers are small. Then we had a license expiry in Israel for our important quarry, Hanaton, in the north. The last one is obviously the market in Turkey is under pressure. Volumes in the quarter in cement were strong, especially in Egypt with about 9%, Ghana 9%. In aggregates, you see volumes down 27.9%.
That's the quarry in the northern part of Israel. From trading, I think the results are okay. They are not so meaningful. I think there are always two key issues. One is about the clinker export prices. That shows you a little bit about the world demand and supply situation. It is so that in Asia, clinker prices are clearly up by $4-$6 . If you want to buy clinker now in Shanghai, it's up to $40 per ton. That shows you the underlying strong demand in Asia. The second point is in Mediterranean, due to the overcapacity and the fall in the Turkish market, prices are coming down to $30 or even below $30. Yeah. We have a quite divergent development. The second point, and that's a little bit a choke. China becomes now one of the largest cement importing countries in the world.
We expect China to import next year about 11 or 12 million tons because the Chinese government managed the market in a way that the prices are very high, and especially the Vietnamese players are importing now significantly to China. Okay. That's it from my side, and I hand over to Dr. Näger for the financial report.
Okay. Thank you, Dr. Scheifele. Good afternoon, everybody. Also, from my side, I would like to lead you through the financial report. We start on page 20. There you can see the group share of profit is up. Earnings per share increased from 2.42 - 2.72. The trend of improvement in the group net share of profit continues to improve. This is as mainly financial result and lower taxes overcompensate weaker than expected RCOBD. You can see that the financial result in Q3 improves by roughly EUR 12 million. On a yearly basis, our finance cost goes down by EUR 50 million, roughly as guided. The trend will continue. On the tax side, we see an improvement by more than EUR 100 million. This mainly comes from one-off previous year where we did a provision for a pending tax audit. Cash flow is encouraging.
We have a high cash conversion rate. We have kept the free cash flow stable at EUR 1.2 billion, despite the comparable EBITDA going down. We have created more free cash flow out of the EBITDA compared to previous year, which shows that the quality of result, the quality of earnings are pretty good this year. We see a significant increase in working capital still at end of September, which reflects the high business activity in September, but also in October. We expect a normalization of the working capital towards the year-end. We have earned a premium on cost of capital. Return on invested capital is 7.1% last 12 months trailing at the end of Q3, and that exceeds our cost of capital, which is 6.3%. I will come back on that in detail on a later slide. Slide 21, you can see the profit and loss statement.
We have a little additional ordinary result, minus EUR 34, which comes from antitrust provision in Italy and some smaller restructuring. We see financial result improving. As discussed, we see income tax improving, and we see pretty stable discontinued operations and minorities. Per balance, good share of profit at EUR 539 million and 12% up compared to last year. On the cash flow statement, as I mentioned earlier, we see a high change in working capital, a high increase in investment in working capital. As I said, I would expect this to come down towards year end. If we look to the CapEx, we see that the sustaining CapEx is about EUR 370 and same level as previous year, whereas the growth CapEx is EUR 844. You know we have invested EUR 360 million earlier this year in January in Italy.
Market consolidation mainly was the acquisition of Cementir and the buildup of asphalt business on the East Coast in Australia. After that two acquisitions, together roughly EUR 500 million growth CapEx has very much normalized. As Dr. Scheifele has said, we have now increased the hurdle rate to the level of the expected return from a share buyback, and this will bring down growth CapEx even further from now on. If you look to the proceeds from fixed asset disposal, EUR 369 until end of September. Also here we are well on track to reach our three-year target of EUR 1 billion- EUR 1.5 billion, and we will see further disposals toward the end of the year and also early 2019. Basically, on the cash flow side, we are well underway, and we will continue to generate cash flow from that.
If you look to the functional chart, slide 23, you can see again what I mentioned earlier. The company is able to finance its growth CapEx and its dividends from the free cash flow. On top of that, pay down debt now down to EUR 9.5 billion at the end of September. Slide 24 shows the balance sheet. You see very little movement there. What you can see is a significant increase in the accounts receivable, as I have said, buildup of working capital due to strong business activity by end of Q3. On slide 25, I put the return on invested capital, and I have given to you on the right-hand side quite a number of detail on our WACC, because there have been some questions from the capital market how our WACC is calculated.
The WACC calculation is unchanged for more than 10 years now, you can see the improvement in the WACC mainly comes from external factors like the risk-free interest rate, which went down from 1.3% down to 1.1%. Mainly the beta factor. This has probably the highest influence on that, which is a 0.83 coming from 0.94. Apparently the volatility of the HeidelbergCement share over the last time was lower than the volatility of our benchmark. That leads to a visible reduction in the WACC, and that allows us to earn even bigger margin on the WACC. Also, tax rate down. That has a little bit smaller impact and comes, as I said, that overall our tax rate goes down in the group.
What brings the WACC also to a lower level is that roughly 80% of our assets are in mature countries with a WACC below 5%. Only 20% of our capital employed is in emerging markets with significantly higher WACC rates. I mean, that's it from the finance side, and I would like to give back to Dr. Scheifele.
Okay.
For the other part.
I keep that short. Revised outlook, you have seen that. Dr. Näger explained that the expansion CapEx this year is higher due to the two acquisitions at the beginning of the year. Energy costs, we are now guiding higher, more to the low double digits, so it's going to be close to 10%. We have a last chart on CO2. You have seen that CO2 prices went up significantly. That drives power prices. That drives slag prices. We see that finally as an opportunity for Heidelberg for various reasons. First of all, we are the ones who are long on CO2 rights. They are not all players in Europe long, to our understanding. We are long, and we are covered until beginning of 2023. It's not an imminent problem for us.
Secondly, we believe that the high CO2 price and the new trading period will drive consolidation in the markets because there are quite a few markets where the government granted excessive CO2 rights to the cement players. This is now over in the new trading period, and that meaning living from selling CO2 rights from a cash perspective will no longer be a business model, and you will see capacity closure, and by then also increased utilization rate. Finally, I think such a tight environmental regulation as in a lot of industries is not good for the small players. The big ones are going to make it, and it will drive consolidation, and by consolidation, finally, pricing power. Okay. That's it from our side, and we're happy now to answer any questions you might have. I hand over to Mr. Salomon. We are ready for the Q&A session, please.
Thank you, ladies and gentlemen. To all the participants joined over phone line, should you wish to ask a question, please press star and the number one on the telephone keypad and wait for your name to be announced. Should you wish to cancel the request, you may press the pound or hash key. Once again, it's star and the number one should you wish to ask a question. Our first question is from the line of Paul Roger. Line is now open. Please ask your question.
Good afternoon, everyone. Just two questions then. Firstly, maybe going on to the margins in Europe. Could you help us understand why the margin pressure was bigger in Southwest Europe than Northeast? I really ask that because it looks like both of them have very good growth and face similar sort of cost inflation. Just wondered if there's a particular market reason. Maybe the pricing was weak in U.K. or Germany or something like that. Then the second one is on Indonesia. I think you mentioned on the second quarter call that you might be interested in buying some assets in the country. Clearly, now you're talking about buybacks versus M&A. Should we interpret that to mean you're less interested in buying assets in Indonesia at this stage? Thank you.
Mr. Roger, hello . Second question first. The answer is yes. You are spot on. The second point is on Southern Europe and Northern Europe. You're right. There's one thing, and we mentioned that, because we try to be transparent. We said that last season, we lost market share. We are underperforming the market in U.K. We rearranged the management. We are back in the markets. We are growing volumes in our business lines, our volumes are back in U.K., but we had to buy back a little bit in the market. Our pricing, especially in U.K., was relatively weak, and that coupled with high input costs, obviously led to a pressure on margin. The top focus in the U.K. is obviously now to get pricing up.
If you take a look for 2019, I talked to our guys in London yesterday evening to prepare for the call and with the investors meetings, that we plan double-digit price increases in the U.K. across all business lines. We plan to increase in ready-mix by about GBP 7 per cubic meter, in asphalt GBP 8, aggregates 2.5, and in cement GBP 4. Cement is only 5%, but this means significant price increase in order to regain margin. That is now high on the agenda. On the other side, in MECA, you know what I mean, with all respect, competition in Norway and Sweden is a little bit different than in U.K. or in PC because we are the only producer in these countries. Secondly, in MECA, we include very strong performing countries like Poland and Czech Republic, where I mentioned that volumes are up significantly, double digits.
We have very good cost control. Here also the results came up very nicely, and that obviously helps to drive the results to MECA. Also to make one comment, I saw that obviously we follow our competitors. Competition is always good. Some competitors report on Europe only in one bucket. We have separated in East, West or in West, South and in North. If you put that as a Europe all together, then you compare it with other large European player, then you will see that our EBITDA development is just spot on where they are. We have separated it. We had a weaker part in U.K. and also partially in India, and also now in France, but we have good in open parts. If you put that together, overall Europe is, I think up to like 4% or whatever. 4.4%.
4.4% on EBITDA, if you look it at a combined level. No, 4.6%. Competitors are 4.4%. Then the competitors from the South of Germany are 4.4%. We watch the numbers. We are very self-critical. But if you look it together, I think we are overall it is okay. Okay, thanks a lot.
Perfect. Thank you.
Thank you. Your next question comes from the line of Mike Betts. The line is now open. Please ask your question.
Yes. Thank you very much. My two questions. The first one, maybe I just need a bit more explanation, if you wouldn't mind. On this expansion CapEx, on the slide this time it shows EUR 700 million in 2018. The slide back in July, it showed EUR 400 million. The EUR 300 million doesn't seem to be to do with the acquisitions, but correct me if I'm wrong, and maybe just explain, if you could, a little bit more on that. Then the second question, maybe it's too early to ask in detail, but it's great announcing these big price increases, but how do you make sure that they get delivered? On one of the slides, it talks to about an aggressive commercial excellence initiative. Could you give us some clues as to what that entails?
I think, Mr. Betts, hello. The first one is a technicality that we could enable. On the pricing side, Mr. Betts, you followed the industry for a long time, it is always difficult for this industry if you have a significant short-term price increase in energy prices to translate that immediately, transfer that to our customers. In an industry which, for example, in Europe and also in emerging markets, has a low capacity utilization, this is difficult, we have typically a time effect where we then get a wake-up call, get pressure from the capital market, and then we push very hard. That's what we see now.
How I read the market is, for example, in the U.K., what I see in Germany, what I see in the U.S., there is a real push in the market to recover lost margins due to the significant inflationary cost rental. We train our sales force globally now very much on price increases, and we have very clear targets to do better. Due to the CO2 issue in Europe, which is a bigger problem for some players than for us, because some players are not long. I think the need and the must to increase prices. If you look to these electricity prices, others have also similar issues. Depending a little bit whether they are short or long in Euro, there is a real pressure to move on prices, because otherwise, you will never get the margin back. That's why I think we will see movements.
For example, in Germany, we are out now with EUR 8 plus freight cost increase. I think in Germany, we should get at least EUR 5.50 or whatever, because even the private smaller players are out with price increases of EUR 6 or more because they have the same issue with the electricity like we had in Heidelberg, and a similar issue I see also in the U.S.
Okay.
Yeah.
Okay.
Your technical question, you refer to slide 23, as I see. On the right top here, you have the EUR 544 net growth CapEx. That is in that figure, including these disposals. You have to note this is the last 12 months figure. It includes the Q4 2017 to make it comparable quarter-over-quarter. In Q4 2017, as you know, we had extraordinarily high figure on disposals, which is roughly EUR 130 million-EUR 140 million. Now if we go forward in Q4 2018, you will not see this EUR 130 million. If you add up the EUR 130 million-EUR 140 million to the EUR 544, you end up EUR 680 roughly, and that's the guidance, EUR 700 rounded.
Okay. Thank you.
Yeah, okay. Thanks a lot. Thank you.
Thank you. The next question comes from the line of Phil Roseberg. The line is now open. Please ask your question, sir.
Yeah. Good afternoon, gentlemen. Thanks for taking my questions. The first one is on the action plans, the accelerated portfolio optimization. Can you give us a little bit more detail of what has changed since you announced this at the capital markets day? What are the criteria for these divestments? The second question is just on the price cost. I see in Q3, the price cost is still not in balance. How are the trends in costs going forward at the moment in your view, and when can we expect that price cost will become in balance overall for the group?
Yeah. Okay. Mr. Roseberg, hello. On the portfolio. As I said, the profit warning was a disappointment and was alarm call also within the company, and I took that very positively. Out of a problem, you have to make an opportunity. You have to turn it into opportunity. That's why I said now we take clear actions. The acceptance in the company to take also tough actions, for example, on SG&A is clearly now there. That's why we said also we have to expand our view on the portfolio, whether we can do more in order to streamline the portfolio more aggressively what we originally thought. Secondly, we want to accelerate. We talk about countries, and it's also clear there are some countries in the world which we believe are very important, are very attractive, which are absolutely core.
Then there are countries, if you look from a German point of view, which are a little bit far eastern from Germany, moving closer to Russia and then going even beyond Russia to Central Asia, where we think maybe whether we are there or not is not a must. Also in Africa, there are sub-countries where you can make a question mark. Thirdly, it's also clear we have quite a few public listed companies in our portfolio where we have majority holdings and where we do not want to give up the majority, but whether you need to own 75% or 80% or only 51%, that's something, for example, which you can debate. As I told you, we are opportunistic, we're not going to sell below value.
We look to areas where we have a good buyer's world, where prices and profitability is at the moment on a higher level, and where we can do a good deal for the company. We will upgrade you or update you regularly on that. What was the second on the price-cost balance? On the price-cost balance, you are totally right. That's the problem, the 165. I'm on chart five now. What I told you at the beginning with the productivity is the clear message. If you look to the price-cost balance to Heidelberg and to another big European player, you see they are better positioned. You ask yourself, "Will we hire 1,000 people more? Will that drive the cost up?" The answer is not. We are still very efficient. The productivity, in my calculation, is up 4.5%, which is a good number.
The problem is the variable cost, meaning especially the energy. That's why I mentioned the price inflation in energy, the EUR 100 million in energy. That here, we are at the moment, how we read the numbers, we are, due to our hedging policy, we are worse off than companies who took a lot more longer position into 2018 on energy. I told you at the beginning, our energy price inflation compared to last year and plan is up in the forecast EUR 100 million. If we had, by forward contracts, covered all potential energy costs which we can cover in the company, our energy bill and forecast for this year would be more than EUR 100 million. You know what I mean? The price-cost inflation in this year plays very much on your hedging strategy.
When you were more longer hedged, obviously you had lower prices, where if you were more shorter hedged, then you have higher prices. Our action on energy is always based on the forward prices for next year, because I'm not a coal or electricity expert. Our budget in November is always what is the forward price for next year. We have a hedging policy which goes quarter by quarter, which tends to be a little bit short, which is bad if prices go up, but which is good if prices go down. You know what I mean? That's what you see on the energy cost inflation. My answer is, I think we're going to review our hedging strategy for next year, obviously. We will see, and we should see a clearly better point next year.
Okay. Is that from the beginning of next year? I mean, is that just a factor of-
Beginning next year. We see also, Mr. Roseberg, coal price, for example, or the Newcastle index for Asia, which is a big issue for us, has stayed around spot about $108, $110. When we made the budget last year, second half of November in Asia and Singapore, you can check that again what I tell you. The Newcastle forward contract for coal in Asia was about $85, $86 per ton. That was our budget assumption. That was the budget assumption for Indonesia, for Thailand, and for the coal in Italy, which we buy externally. It is also, by the way, the index for China, because in China, we buy also partially externally. The year-to-date spot price for Newcastle, if you go now, is about $108, $110 per ton. It stayed there, but it went up during the first six or eight months.
The Newcastle went up like that. That's the problem. That is shown on the cost-price relationship, which you rightfully mentioned. It's not a fixed cost problem. It's an energy problem. The key question is, how long and how short have you been in your energy hedging strategy? That plays this year around a triple-digit million euro amount. That's it.
Thank you.
Okay. Thanks a lot.
Thank you. The next question comes from the line of Arnaud Pinatel. The line is now open. Please ask your question.
Yes. Good afternoon, gentlemen. Arnaud Pinatel on the phone. Just to follow up on pricing in Europe for next year. Obviously what you are telling us is very ambitious in terms of price increase, and we understand it looking at the cost inflation you are flagging to. I understand that the CO2 issue is impacting Northern Europe, the Nordics, Germany, Poland, and a lot of countries. Could you also give us a little bit more visibility on what you are going to do in Italy, and if you are facing the same type of situation on the Italian market, and perhaps for France too? My second question, as we are limited to two, if I'm right, would be on CapEx. During your capital market day, I think you mentioned that you could rebuild your plant in Mitchell, to fix the wet processes to rebuild dry processes.
I just wanted to understand if in your new CapEx envelope, you are willing to achieve this project.
Yeah. Mr. Pinatel, to your last question, what did you mention upgrade cement plant from wet to dry?
In Mitchell, in the U.S.
Yeah.
in the capital market there, you said you want to modernize your plant because you still have wet processes.
Yeah.
I just wanted to know if in the new CapEx envelope, if it's still possible.
Mr. Pinatel, we have not checked that in detail, but anyway, the cost for McInnis would be, there will be nothing in 2019. There will only be $10 million for permitting or whatever, because we are applying for the air permit at the moment. There will be some cost in 2020 if we would start immediately, and then it would become more on 2021. I think principally we would stick to that, but we have to do that again. On pricing in Europe. On Italy, just to update you on where we are. In Italy at the moment, we are in September at a price of about EUR 65, EUR 66 per ton, which is about EUR 5 per ton up compared to last year. The target is now to keep that price at that level, because normally it will go forward, it drop. At the moment, it looks okay.
If we keep the September price until December, we would be in December about EUR 10 better than last year as a starting point for the new year. The price increase announcement for Italy is about EUR 7 per ton. I think, with our competitors in Italy and overall, we are relatively confident that we will get five.
For France, please?
Sorry.
For France.
France, we plan for a price increase net about EUR 2 - EUR 3. That would be the first significant in France. What I see from the market, and what you saw on our numbers on electricity, EDF is also charging the other guys. Electricity in France is up, and that is a major issue. We think price increases in France, EUR 2 - EUR 3. It depends a little bit how much reaction is needed in order to stop the new grinders. Our friend, Finiper, the other one, Vicat, will not come in next year. In principle, it will come only in 2021. That's it.
Thank you very much.
Thanks a lot.
Thank you. Our next question comes from the line of Robert Gardiner. The line is now open. Please ask your question, sir.
Good morning. It is from me as well. Good afternoon too from me, please. Can I ask maybe just on the buyback, what kind of criteria do you need to see in mid-2019 to engage the buyback? Do you think, you would be back close to your leverage targets by then, allows the buyback kick in? I am just wondering what sort of kicks out that buyback there? More confident to get into that kind of 2.5x or EUR 7 billion that you talked about before. Secondly, if I could just ask on the property numbers. You mentioned a $20 million gain in Q3 in the United States. Could you give me maybe two numbers? One, the total property sales for 2017, your total property sales in the nine months 2018, and when you are engaging in that. Please. Thank you.
Okay. Last one for me. Last year, property exhausted worries was about 190, maybe 195 or 198. Check the numbers. It was like that. Year-to-date for September, the number is 72. We think we're going to do about 100. That's for the most of the nine months. That's where we are at the moment. That's always pending. It could be more. That must be clear. It could be also a little bit less, but I think the 100 is a very good leverage. We will see. On the buyback, Mr. Gardiner, there are two issues. It's not that much about deleverage. It's clear that deleveraging the company back to about EUR 7 billion remains a target, a management target for 2020.
I agree it's get more difficult, with our action plan, I think if we do that successfully, stay very disciplined on gross CapEx, be successful on additional disposals, we can still hit the numbers. That's the first one. You have to see that also, if you look to 2019, I think, if you look below EBITDA, you will see that our finance costs will trend further down. We have a bond of about EUR 500 million running out, expiring in December. He has an interest coupon of about 9.5%. You see only from that measure, it's again EUR 40 million or even more saving. Cash flow generation in the company should remain very solid. For us, it's the cash situation. Do we have excess cash available? The second point then is what's the share price? You know what I mean?
This is the most important question. Share buyback makes sense from a company point of view, if you believe that the intrinsic value of your share, according to Warren Buffett, is clearly higher than your actual share price. It's a very different story when we had the capital market day in Berlin. Our share price was around EUR 80, EUR 81. Now we talk about EUR 60, EUR 61, and even went up to EUR 55. You know what I mean? That's a total different story, and it is very clear that at a price of EUR 60, we regard HeidelbergCement shares as a very low risk, attractive investment opportunity. We also want to send a clear signal to the market that we understand their reasoning, and we are not principally opposed to it. We will follow the commercial logic, we listen what the capital market is telling us. Okay?
Great. Yeah. Thank you.
Thanks.
Thank you. The next question comes from the line of [audio distortion]. The line is now open. Please ask your question.
Yes. Good afternoon, gentlemen. Two questions from my side. First on the disposal program and your progress. I hear that many of your peers have also assets for sale, and one thing that we learned is that getting the right price will take time. How much confidence or what gives you confidence that you'll be able to bring that process forward? That's one. Two, on your EUR 100 million at SG&A, can you confirm if this is net of inflation, and over what time period? Thank you.
On SG&A, it's net of inflation. What do you mean by that? It's going to be over two years. We start with EUR 50 million, 2019, then another EUR 50 million in 2020, we will update you in our result presentation of the full year in March. As I said to you, it's only a first step. We will check, and we need more time for that, where are other areas where we still see efficiency gains for the company. I mentioned real estate management, I mentioned purchasing, but I mentioned also digitalization. I think in the digitalization in our industry, there is a significant upside on the cost and on the production reliability and also on maintenance repair. Disposals, you are right. There are assets for sale, but they are more in areas where we are not in a seller position. That's why we said we are opportunistic.
That's why we started various projects. Opportunistic means we go then for the projects which offer us the best returns, we're not going to sell below value. That's also clear. We will be opportunistic, but we have really started new processes and are pushing and taking a broad view on our portfolio.
Okay. Thank you.
Thanks. Okay.
Thank you. Our next question comes from the line of Arnaud Lehmann . The line is now open. Please ask the question.
Thank you. Good afternoon, gentlemen. I have two questions, if I may. I mean, firstly, when you speak about reducing your gross CapEx relative to the other rate of share buyback version, sorry, maybe it's stupid, but could you please explain what you mean by that? Does that mean you need a return higher than your WACC or something clear? My second question is related to the U.S. I think it's probably about the third year in a row that you've had some sort of weather disruption on your volumes. I mean, it's you, and it's obviously all of your competitors depending on the regions. I appreciate it doesn't always happen in the same states and the same parts of the U.S.
If we end up every year having a long, tough winter and then ongoing structural weather disruption in the summer from the hurricanes in the southern part of the U.S., is there anything you can do to somehow adjust your business model in the U.S. or your logistics to try to take into account maybe securing weather events?
Mr. Lehmann, I'm responsible for a lot of things, but for me to manage the weather is a problem. I agree, to change my business model, I haven't thought about that. I fully agree with you that the weather was, this year, extremely not our friend. It was a lousy Q1, especially in the regional east. We had no wind, some type of travel struggle to U.S. We had still snowing in the Northeast in the second half of April. When I made my Q1 result performance meeting with the U.S. management second half of April, I talked to our Dennis Dolan, he's the Vice President for region Northeast, a very experienced guy. He said, "Dr. Scheifele, what do you want? It's still snowing." You know what I mean?
I tell you, this is a quote, and we had a very bad weather, and then we had this shitty rain in September. Just to make a long story short, I was on the 10th of October, I think it was, I was in Chicago. I was visiting our largest quarry in Thornton. We could not leave the bloody quarry because it was raining like in the monsoon in Indonesia and Italy. We had extreme bad weather, and that's a problem, and we were not alone. We put it in the profit warning. We are the first to tell you, but all our guys which came out told you, "Oh, the weather was a problem." Whether we change the business model, I have to think it over. I'm concerned we cannot.
Okay.
On the gross CapEx, and we have to see. Let's be fair on that. Two issues. This industry is weather sensitive, and due to the climate change, weather gets more extreme, which reduces the predictability for us. That must be very clear, because normally winter get warmer and longer and whatever, that changes the shipping patterns, whether we like it or not. If we are lucky in the U.S., we had last year a very early winter in December. I don't know, maybe it's sunny and warm until Christmas, and then we have other numbers again to tell you in February. You know what I mean? I don't know. The weather gets more extreme, and that reduces the predictability for us.
Sure. I don't think that will be our.
That must be very clear. The second point is due to the whole CO2 and climate discussion, the peaks on the energy prices are also much more than they used to be. As I explained Mr. Phil Roseberg, the energy pricing is always difficult to predict, and it's the question whether you go long or short, and you might be right or wrong, whatever way you go. That's a problem, and that has changed a little bit maybe to the old times. On the gross CapEx, I'm not an accountant. For me, the message is very simple. Heidelberg is valued at the stock exchange at the moment with 7.1 or 7.5 or 7 point whatever EBITDA multiple.
The capital market tells me, "Scheifele, if your company is 7.5, you should not make an acquisition in a crazy country with high risks for 9 x EBITDA." You know what I mean? That's the message, very simple for me, and I have understood that message, and I accept the argument. That's the role.
Okay. Makes sense. Thank you.
Thank you. The next question comes from the line of John Messenger. The line is open. Please ask your question.
Hi, good afternoon. Could I just come back to Mike Betts earlier asked about CapEx, and I'm not sure, maybe he was thinking of the same one. On slide 27, can we just understand there, obviously, you've reduced EUR 100 million of your maintenance number for the year, but the expansion CapEx, which I think is all about physical CapEx rather than acquisitions, has gone up by EUR 300 million. Behind that, I'm thinking here maybe in France, where you obviously talked about a master plan and you've had production difficulties. Have you accelerated some spend in some part of the portfolio? Because I'm just looking at that EUR 300 million extra, arguably it's EUR 150 million less in the next two years. I'm just wondering whether you should be more aggressive on reducing your expansionary CapEx than you've highlighted.
The second question was just on hedging again, and apologies to come back to it, but when we look at what has happened over the last 12 months, are hedging decisions, Dr. Scheifele, taken in each individual company, or is the group having a stated strategy and you've adjusted that in any way? Where does responsibility lie? Is it a global level where you set these decisions, or is it down at the local level? Are there reasons why that might change looking at 2019 or how you may approach that hedging kind of decision-making?
Okay. Messenger, hi. On CapEx, Dr. Näger will come back. There is no acceleration on investments in France or whatever. No, I think we have some confusion maybe on the numbers. On hedging, Mr. Messenger, that's a very fair and valid question. The principle in Heidelberg is very simple. I have asked a couple of years ago to Dr. Näger to come up with a hedging policy for the group, and I told him, look to the airline industry, because this is a business, if you are wrong on kerosene management, you get out of business. Yeah?
Yeah.
What we do is very similar what airlines do. We have a clear hedging policy, which is a group guideline, and the decision is with the country managing director, but he has a guideline he has to stick. For the next quarter, maybe as an example, he can cover by forward even 100%. Yeah? He can.
Yeah.
For the next quarter, the second quarter, he can cover by forward maybe 50%, for the third quarter, 25%, and for quarter number four, 0%. Just as an example, might differ a little bit, but that's the principle, Yeah?
Right.
If he wants to exceed the hedging, he talks to his area Vorstand, they go to Dr. Näger, because he's the guy. If they agree, then they can go forward 100% for the full year. Maybe they got a crazy electricity contract in Canada, in Edmonton. We did that two years ago, where we had a very cheap exceptional offer, and then with EPCOR Utilities, we did a forward for the full year, and Dr. Näger agreed, and the Vorstand member agreed. If these two guys do not agree, this comes on my table, and then I have to decide. Yeah? That's how it works. Our hedging policy, which I described to you very shortly, is obviously relatively short.
We believe our energy pricing in the group should be not too far away from the real market price in energy, because if you get it wrong, and this is an energy-intensive business, you can be out of business. You are no longer competitive. Whereas if your first target is to give security to your guidance, to your board, and to your stock exchange, then you have a tendency to hedge much longer, because then you have a basis for calculation. You understand what I mean?
Absolutely.
You say, in asphalt, for example, I have a price increase of 4%. I have a hedge on bitumen price for the full year of 3%. I will do my budget. If the bitumen price goes up 10%, well done. If the bitumen price goes down by 10%, not well done, but you still do your budget. You know what I mean? That's more-
Sure.
What we talk about. Since we are relatively short, like along this year, we are obviously more exposed to strong energy price increases than peers, which are maybe longer and who have hedged maybe bitumen in U.K. for the full year. Just to be very pragmatic, you know U.K., and Mr. Roseberg knows U.K. If we had hedged our full bitumen volumes in U.K. this year for 2018, our asphalt division would have produced a GBP 10 million better result. Then we talk about results in less than certain EUR. You understand what I mean?
Understood. Yes. Thank you.
Fine.
Sure. A comment on CapEx here.
Maybe, I want to comment on this energy. We have a bracket for each country and for each type of energy. The country can decide inside this bracket, inside the upper and lower limits, what they do. I have checked it. They are pretty much on the upper side currently, so they have done that right. We had roughly 25 exemption requests this year, and except one or two, we have for longer hedging. We have approved all of them, almost all of them, except one or two. I mean, that's the right thing. We have benefited in 2015 and 2016 from this. I do not intend or do not believe that we should change this policy now, because gradually, what we see is a plateau on energy price or even gradually a decrease.
I think the underlying strategy is okay, I do not think that we should change the strategy. We may give guidance during the budget meeting whether they should go more on the upper limit or the lower limit of the range. But that's their discretion then. That's how we operate that. On the CapEx, I will come back on you. That seems to be a misunderstanding or an error in the Q2 figures. Because it was clear, the spending the EUR 500 million there in January for Italy and France and Australia, and the figure should have been EUR 700 the whole year. That seems to be an error here, but I have to check it, and I will come back on you. Great. Thank you very much.
Thank you. The next question comes from the line of Gregor Kuglitsch. The line is now open. Please ask your question.
Thank you very much for taking my question. My question is on the net debt. I think you said you're going to be above 2.5 x. If you could just give us maybe a bit of a range where you think you end up for the year. Is it EUR 8.6 billion, EUR 8.7 billion, something in that region? That's question number one. Question number two, just to come back on the situation in Indonesia. I'm sure you've benchmarked your EBITDA margins with your peers. I think historically you used to be 10 percentage points higher than your two other peers, at least the ones that we can see. If I look at the last two quarters, it appears you're 10 percentage points lower. I want to understand what's going on and whether you agree with that analysis, and whether you think there's anything specific that explains that gap.
Perhaps it is also to do with hedging and coal pricing and things like that, any views you have and whether that should converge back to normality. Thanks.
Mr. Kuglitsch, on the Indonesian results, obviously I know the Q2. I saw Q3 yesterday only shortly when I was preparing in the afternoon for our call today and meeting the investors. I had a short chat with Christian Kartawijaya. I think he had his phone conference on his results today, this morning. I know, obviously, since we are very competitive company, obviously I know the numbers from Semen Gresik. First point is that's why I make the point in the call. Heidelberg is not for the short term. You know what I mean? We want to keep our market position, and in this industry, especially if there is price pressure, if you sell market share, then to get better results short term is a possibility.
Just to make it short, if you look to the core competitors, Semen Gresik, they lost market share in the first nine months, 1.5%. We increased by 0.3%. There's obviously a reflection on the price point on that. Yeah? We stopped. That was a conscious decision from us that we said, our management, no further erosion of the market position because we want to keep our core market position in Western Java and Jakarta, and especially in Western Java and Jakarta, we even increased our market share. If you go back to the Indonesian guys, they will tell you. We kept about 40% in Jakarta because that's the value for the company, and if we give that up, you know what I mean, then in five years, we have no longer a defendable position in Indonesia, and that's what my time paid for.
The second point is obviously Semen Gresik, they have lower transport costs than us because they are more spread over the country. Transport costs in Indonesia played always a big role and played even a bigger role now because the Indonesian rupiah weakened significantly against the dollar. That's why transport costs, oil and gas went up significantly, and that has over proportionally hit us. If you look to what is important for us, if you look to cash cost per ton produced, we are clearly the lowest cash cost producer in the country, and we have an advantage against Semen Gresik of about 10%. There is an analyst report on this out this afternoon. If you don't have it, I'm happy to send you that. Okay?
Thanks.
Thanks a lot. Yeah. Okay. A question on net debt. I think you are pretty close to our expectation, provided normal FX development, normal winter, and therefore normal winter, that means normal working capital. If that comes back, we are very much in line on cash flow generation with each single item, except of course, EBITDA. Year to date, EBITDA is EUR 180 million below report as absolute values, and that's what's missing in the cash flow as well. Yeah? You are right. EUR 8.6 appears to be a realistic target in this very moment.
Thank you.
Okay. Last question. Who is the final one?
Last question for this call will be Rajesh Patki. The line is now open. Please ask the question.
Yes. Thank you very much. Good afternoon, everyone. My two questions are, first one is, given the trends this year and revision to profit expectations, do you feel any of the medium-term targets that you set at the Capital Markets Day also need to be reset? The second one is on quarry sales, given that you could not complete the planned quarry sales this year, do you expect quarry sales to accelerate in the next year compared to 2018? Thank you.
Okay. As I said, we're going to do an update on the mid-term targets mid of the year. Yeah. We want to wait now for our final results in order to have a clear basis also on net debt and cash flow, and we will update them on the targets in mid-2019. The message is clear. We have to reduce or adjust our EBITDA target. We have now a lower starting point. On the other targets, especially what we see on the net debt target, we stay committed, but we will update that in mid-2019. On the quarry sales, we have to do the budget round, which starts now next week. We have an overview over the group. Yeah. Obviously, we have a significant real estate portfolio, and that will continue to be a continuous stream of income.
You have to see that 2017, the 180 million or 190 million was an exceptional year, which was driven by the Carroll Canyon. This year's number is around 100 million. The year 2016, I think it was 75. You know what I mean? That's why we would expect for next year a level around EUR 90 million ± EUR 15 million. That would be, as we speak, our normal level. Yeah. Okay?
Great. Thank you.
Okay. Thanks a lot for your interest. Thanks a lot.
Have a nice day. Bye-bye.
Bye-bye.