Ladies and gentlemen, welcome to the Heidelberg Materials Half Year 2026 Results Conference Call. I'm Moritz, your call's call operator. I would like to remind you that all participants will be in a listen-only mode, and the conference is being recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christoph Beumelburg. Please go ahead.
Thank you, operator. Good morning, good afternoon everyone listening into our Q2 call, H1 call. We're here in a room with Dominik von Achten, our CEO, René Aldach, CFO, and the IR team. Looking forward to your questions later on. Before we have some prepared remarks, without losing time, over to you, Dominik.
Thanks, Chris. Welcome everybody from my side, including René Aldach, our CFO. Let me just go through the presentation that I think many of you have in front of you. In general, a strong quarter for us. We are accelerating the growth. A couple of good news to share. First of all, operational performance, 6% up on revenues and 4% up on RCO. I think that moves in the right direction. What is very important for us is to see that for more than four years, since Q1 2022, this is the first quarter with a positive volume impact. Okay. I think that's one quarter. I think that's very important to note from our side, that this is since more than four years, the first quarter with positive volume impact.
We are accelerating also the inorganic growth, with a couple of M&A transactions that either closed or have been done in the second quarter. MAAS Australia will try to close during this year. AmeriTex in the U.S. has been signed and closed, a very important strategic acquisition in the fastest-growing concrete pipe provider in Texas. Akçansa Turkey transaction has been closed end of June. Very good, strong platform for the Mediterranean, both for the Turkish local market, but also export hubs to Africa, U.S., and other parts of the world. BURNCO, the transaction finally closed at the beginning of Q2. That's a strong market position in the Prairie market in Western Canada. Very important also is what we would call the self-help.
We really continue to work on all cylinders when it comes to pricing and surcharges, mitigating the effects that are absolutely there from the Iran situation, that we have increasing energy prices along the full supply chain. That's why we are working diligently on pricing and surcharges, and that work continues. As much as the work on our own cost position, especially the fixed cost side, continues with the TAI program, Transformation Accelerator Initiative, where we are now at EUR 440 million. We're moving in the right direction. Third tranche of the share buyback, EUR 1.2 billion, has been started and is running well, up to EUR 450 million. We've specified our outlook to the range of EUR 3.4 billion-EUR 3.65 billion. The ROIC will be slightly above 10%, and the CO2 emissions will be around the previous year level.
That's mainly due to the Akçansa acquisitions in Turkey. With that, I turn to page three. You see the numbers, plus 7% like-for-like, plus 6% revenue. That's very good. Strong growth on the top line. Operating EBITDA also moving in the right direction, like-for-like 4%, reported 3%. Operating margin, more or less flat, slightly down. Operating EBIT also up like-for-like 5% and reported 4%. I think that's a good set of numbers for Q2. That also gets us well into the water for H1, with basically a flat performance year-over-year on the profit numbers and a slight growth on the top line. In that respect, moving in the right direction. If you go to the Q2 profits, you see that things are shifting a little bit, which is important to see. One is the net volume effect increases, that's good news.
As I said, the volumes are coming back. Price over cost is around the zero mark, slightly negative. We'll get into the details, I'm pretty sure, in your questions. We also see a scope effect coming from the acquisitions down the road. You will see more coming. I think that moves in the right direction. H1, you see when you flip the page six and five back and forth, you see the difference there. Net volume impact in H1 was noticeably smaller. Price over cost was again around the zero line. I think you see the shift, especially on the net volume side, that is important to note. Important for us to work on those two legs. As I said earlier, pricing. Significant pushes around the globe. We've just finished our quarterly management meetings.
Significant push around the globe, with a big focus continues to be Europe and North America, when it both comes to top line price increases but also surcharges. That work continues as we speak. We'll go into the details when we go through the regions. On the right side, the Transformation Accelerator Initiative, the EUR 440 million, and we are very confident here that we will surpass the EUR 500 million saving target that we originally set. On page eight, we go to Europe. You see here, I would say a very good performance in Europe. Revenues up, EBITDA up, RCO up, and margins up on cement, slightly around the zero line on aggregates, in terms of changes, and slightly up in the total region if you combine everything. Resilient performance in Europe, based on good pricing.
Energy surcharges are in place. We are very focused on price over cost, which is positive in the region. That is very important to note. The volume development on the total group development is supported by also Europe. There are recovery signs in our sluggish markets around Germany, Benelux, France, U.K., but only very limited. The bigger increases now come from Scandinavia. I think the markets in Sweden and Norway have really rebounded quite a bit. Italy and most parts of Eastern Europe stay strong. Obviously for us also, importantly, the situation in Hungary has turned around. We continue to climb back up in Hungary, which is an important joint venture, that contributes also to the European results. The team is also doing an excellent job on fixed cost savings.
You know that we have worked on our plant network in Europe. We're going to continue to see the lower cost base coming into the results as we speak. North America, I think a strong performance on the top line and also the bottom line. Top line up like for like seven and reported five. Operating EBITDA almost double digits like for like plus 9%, 4% on reported. RCO like for like double digit plus 11 and reported 5%. EBITDA margins come and go in the quarters. We've seen this in the past. Cement down, aggregates up, total region basically flat. That's the picture in North America. It's clear that there is good volume developments driven mainly also by a couple of very big projects.
Not so much a rebound in housing at this point, but it's also fair to say that there is inflationary cost pressure in the U.S. That weighs on the margin developments. We are continuing to work on pricing. We have announced July, August, September price increases. I think we are continuing to move on the top line in North America to mitigate the underlying inflation. If we go to Asia Pacific, page 10, I would say a very mixed picture. Very strong rebounding in Australia. The market is very resilient. The team does an excellent job there. Good volume development. Pricing is moving in the right direction. Cost management is moving in the right direction. Overall, I'm very positive that we will see a good performance out of Australia also for the full year.
Asia, I think is probably one of the weakest link at this point, when it comes to profit development. I think the volumes are actually moving in the right direction, but there is clear underlying inflation and cost pressure. Pricing clearly has upside potential in our key markets, Indonesia and also in India, I would say across the board in Asia, that's something that needs to rebound. If you go to page 11, AMWA, I think again, a very strong performance from AMWA. Top line growth, bottom line growth. Look at the margin development. Margin now in AMWA Cement more than 30%, another 300 basis points. I think, guys, this really moves in the right direction.
The region is now almost at 28%, very strong performance on the top line and also on the bottom line coming out of AMWA, that moves really in the right direction. Good on AMWA. When we come to inorganic growth, I think the pipeline is absolutely intact and we are executing the deals. The MAAS transaction I mentioned in Australia, we expect news in the coming weeks here, how this will close. Let's wait and see on this one. Would be an important contribution, potentially also to this year's result or at the latest, to next year's results. We have already the contribution from AmeriTex. That deal is closed. The same is true for Akçansa as of July. There is no impact in Q2, but there will be from Q3 going forward. BURNCO did close the beginning of Q2.
Things come and go. You know that we are actively not only acquiring but also disposing the most underperforming assets. This is the reason why we have sold the position in Eastern Kazakhstan, Bukhtarma. Very old plant, wet kiln, very difficult in profitability and also in terms of CO2 footprint. In that combination, we decided to exit during the quarter. The deal is signed and closed. In that respect, that's it. Sustainability, there was a lot of discussion around the EU ETS. I think the water has been cleared to a large extent. The EU Commission has made their proposal on how to proceed. We broadly support that proposal, and I think it sends a clear signal that the EU ETS is here to stay. Yes, there are some minor adjustments around the linear reduction factor or the benchmark, more or less expected.
From our perspective, we can live with it. We may adjust here and there the one or the other investment, but overall, I think that moves in the right direction. We have set a completely different tone in terms of CO2 footprint in France with the opening of the new kiln in Airvault, reducing the CO2 footprint by nearly 30%, 30%. That's a significant progress in the right direction, let alone that this is also financially a very attractive investment. Advancing the technology on carbon capture at smaller scale in this point, but it's a completely new technology, Pure Oxyfuel plants, together with three competitors in a plant in southern Germany. The plant is now up and running, capturing the first CO2. We are moving also to advance the technology on carbon capture.
Last but not least, but importantly, when we talk about Dow Jones and FTSE, we are moving further ahead in the indices to underline our sustainability leadership. If you talk about that, you look at the performance of the KPIs, they broadly move in the right direction. Alternative fuel rate up, clinker incorporation down, sustainability up, and on the specific net CO2 emissions, it's flat. Mainly also driven by whether we are exporting or importing clinker, whether we are growing in one area more than in the other. Let's wait for the full year. We are still confident that we will come in with a good performance also on the specific net CO2 emissions. That's it for me. René, maybe you take the financial side.
Yes. Thanks, Dominik. Hello, everyone from my side. We are on Slide 15. Quickly, the highlights from the financials of the first six months of the year. Our adjusted earnings per share, which means excluding AOR, are up 2%, which also already highlights you that below RCO, the P&L is also in very good shape. Even on a reported basis, our earnings per share is up seven and a half, or our net income of the group is up 7.5%. If we go to the cash flow, you see here last 12 months rolling is EUR 1.9 billion. It is down, driven by working capital and CapEx. I think we will go through the cash flow in a few minutes also year to date. I explain you the details. The leverage is around 1.6, 1.7 for H1, similar to prior years. No big movements over here.
As part of our strategy, what we have always announced, we increase our M&A, let's say, ambitions, which we have seen in the first six months. Dominik has explained what we have done. We hope to close, let's say, the MAAS acquisition also this year. What we also promised is we increase the share return. You see it also here, +13%, which is driven by higher share buyback plus higher dividend. Let's go on Slide 16. What I said, you see our AOR is EUR 50 million better than last year, which has also to do with revaluating our current Akçansa sh are because we have now changed from at equity account to consolidation. We need to revalue based on the purchase price we have done. Here, there is an accounting effect in there.
What you have read, Dominik has also alluded to, the Burglengenfeld cement plant, as we have mentioned in our report, there will be an impairment coming of a material amount, but it is not cash relevant, it is a cleanup of the past. There is a EUR 100 million impairment will be in the full year books, but again, non-cash item. Financial result, I think very good. Flat in increasing interest in environment, I think good result here also. From the income tax perspectives, you see here EUR 40 million improvement, which is based on a, let's say, provision release of a tax case we have won, which is a good thing. It is here also contributing to our increased net profit. Let's go to Slide 17, the free cash flow. I think there are only two items I want to mention.
Number one, the working capital you see here was -EUR 99 million. There are two things. There is EUR 60 million of this is timing, with our trading business increased, let's say, the revenue. That money will come back. We have discussed it with them two days ago. There is no problem about the 60 of the 100. The rest is inventory build-up. We had to have taken opportunistic approaches when coal was cheap during the quarter. We have probably bought more than we really need, but that will benefit us, obviously, from a cost perspective in H2 than compared to spot. Plus, with all the price increases and surcharges, obviously, the receivables are going up. The promise is, it is clear target for us. There will be no cash outflow from working capital by end of the year.
The EUR 99 million should go away, in terms of free cash flow input from working capital. Again, net interest, I say that's flat. Tax is flat. Then you have one negative with CapEx net, -EUR 115. It's also mentioned here in the comments, two items contribute to this. First of all, this is a net number. We had EUR 44 million lower divestments and you will see here EUR 30 million higher CapEx spend for the CCUS project in Padeswood. Here, I guess it's very important to note that it's the CapEx we spend to build that plant is shared with the U.K. government and the part we have, let's say, financed over this, we will get this back during the first five years of operation of the plant, which is a very good thing because we do it now the pre-financing, that is a fact.
When the plant is operating, we will get all the money back, which is, I guess, only a timing effect, and therefore I am very confident with our CapEx number. Our core business CapEx stays in the disciplined manner we have always said. The net debt bridge, just to say here, the net debt went up EUR 500 million, driven by EUR 760 million gross CapEx and 13% increase of our shareholder return, which is a good thing. If you look at year-end, that depends on the Maas acquisition, if that comes or not. Let's assume we do not do any acquisition in H2, which will not happen.
We will be probably EUR 150 million-EUR 200 million higher than it was last year, which tells you that the leverage should be around 1.5, excluding Maas acquisition because our LCBD grows, our net debt grows slightly. No problem on the leverage also. That's it from my side. Dominik, I hand over to you.
Yeah. Thanks a lot. Final page then from me, before we get into your questions and our answers. We have specified our guidance, going down the road, during a year, we try to narrow the range that we give you at the beginning. We are now at 3.4-3.65. The return on invested capital will slightly be above the 10%. CO2 emission, as I mentioned earlier, will be around previous level, mainly driven by the fact that Akçansa comes with a higher CO2 footprint for now. That's the one driver. Then CapEx net EUR 1.2 billion-EUR 1.3 billion. This includes the Padeswood topic that René was just alluding to. Overall, I think if you put that also with cash conversion into the right dynamics and look at it over many years, I think we are moving in the right direction.
Leverage, as René alluded to, will be in line with the midterm target around 1.5 times. It's clear we continue to increase our shareholder return with dividends and share buybacks. I think you see here in the Q2, plus 13%. I think that's a very fair return to shareholders. That's it from our side. We move to Q&A. Thanks.
Thanks, Dominik. Operator, you want to start the Q&A, please?
Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. In the interest of time, please limit yourself to two questions. Anyone who has a question may press star and one at this time. One moment for the first question, please.
Right. The first question comes from Ben Rada Martin from Goldman Sachs.
Ben.
Hi, Ben.
Excellent. Good afternoon, Dominik, René, and Chris. Thanks for the questions today. My two questions. My first today was on price cost. It's worth noting, price cost turned negative for the first time in a few years. We've obviously got a backdrop of transport and energy pressure, do you expect this to turn positive as we go into the second half? I guess, which regions in particular do you expect to see sequential improvements in, if any? The second question would just be on carbon and I guess your comments around the ETS. We've seen more clarity around the structure of the system. Could you provide an update on when you expect some of the carbon costs to come through your European cement business when it comes to which years you expect to start incurring those costs? Thanks very much.
Thanks, Ben. Maybe let me do the second one and then René does the price over cost one. On the carbon costs, I think you saw the revision of the scheme. We are long until 2028 minimum. I think that's the answer to that question. Overall comfortable for the next couple of years. Obviously, we need to cover the increasing carbon costs.
Okay. Ben, let's talk about price over cost. Yes, you are right. The price over cost in the quarter was negative of minus EUR 90 million. Half of it comes from our, let's say, joint ventures, especially China. You know that the China economy is pretty weak, half of it comes from a joint venture. There's a remaining 10. To tell you, it's clearly not Europe. Europe is very positive for Q2 plus also for H1, this is very good news. As Dominik alluded to it also, I think APAC, the pricing was not covering the higher variable costs. That's probably the answer to that one. To your further question, how do we see this going forward? It's clear that the Iran war has a certain impact on a lot of companies, including us.
This we see in higher distribution costs, which we get, let's say, surcharged from our suppliers. That is if you look at the margins and our price over cost, this is the only one where I have margin dilution. That means that our own efforts to increase price to cover variable fixed costs are very well intact because that covers our own cost, additional cost, especially from energy and inflation, we will cover by ourselves. Just the ones from suppliers, we need to push further. We will still be very confident with further price increases to come, that we try to be positive in price. Of course, you see it for H1. Even with H1, we are already plus EUR 2 million, and again, joint ventures is minus EUR 20 million.
Take the joint ventures out, we are plus EUR 22 million for H1, and we are confident that we will be positive for the full year.
Excellent. Thanks very much.
Thanks, Ben.
Thanks, Ben.
Next one comes from Citigroup, Ephrem Ravi.
Hey, Ephrem.
Ephrem, hello.
Hi. Hello. Thank you for the time. Two questions from me as well. Firstly, on North America, you called out inflationary pressures. If I look at the margin, aggregates margins are up about 2 percentage points. Cement margins are down about 3 percentage points. Can you pinpoint which are the cost inflationary pressures, especially in cement, that is causing that big divergence in margins? Secondly, on Asia Pacific, very strong performance there. Any countries, sorry, AMWA. Any countries in AMWA you would call out, is it Egypt? Is it Turkey? Is it Morocco? Is it Sub-Saharan Africa, which is contributing to the strong growth over there? Thank you.
Let me do those two. René, if you want to jump in, I think, that's fine. North America, it's clear, as I said earlier, Ephrem, margins come and go. What is the reason for the good margin development in aggregate, it's mainly large projects. That's what I indicated. There is a lot of large project work in the U.S., it depends a little bit, quarter-over-quarter, how this balances out. On cement, René has indicated that pricing, underlying inflation is significant. It's a very energy intensive business, cement much more than aggregate. If pricing doesn't kick in as much as it probably should, you see the margins squeeze. We are on it.
We are fighting in both dimensions. We are very confident that we fix this in the second half. AMWA, to be honest, as I said, it's a portfolio approach, Ephrem. Things come and go in AMWA. There are countries in there that are really strong. There are countries that are a little bit more weak in this quarter. Overall, again, quarter-over-quarter, year-over-year, AMWA is going in the right direction. Sub-Sahara is going well, especially if you go to the east side of Sub-Sahara. The north side of Sahara is also going strong. We'll get Turkey coming into this picture also as we go into H2. Overall, we are confident for AMWA for a good performance for H2.
Thank you.
Thanks, Ephrem. Next question comes from Julian Radlinger from UBS.
Hey, Julian.
Julian?
Hey, guys. Thanks very much. I've got two questions. I'll start with the one first. North America was really quite strong in Q2, and especially in aggregates where your margins went up quite substantially. I just wanted to check, there's nothing in there that was kind of specific, that's just price and cost and operating, sorry, price, cost, volume and operating leverage?
Nothing out of the ordinary that we need to note. Things come and go in aggregates. I think that's it. Nothing super material that needs to be noted.
My second question is a bit of a bigger picture one. If we take a step back, you originally gave a full year guide of organic EBIT growth of something around, I think it was 7% or so. You're now down slightly in H1. Obviously, we know the story, Q1, weather, et cetera. Q2 was better, but you're basically down slightly in H1. There are some international heavy side companies with similar regional exposures that have done a little bit better. I think what investors would really love to understand here is, what exactly drove this H1 underperformance versus your own expectations? Really big picture, when and how will this turn around? Is that something we should already see in the second half of the year? Or is it something that'll take a little bit longer? Thank you.
Yeah. Julian, do you want to take the North America? The North America, I've already answered. That's fine. The EBIT minus seven, I'll go first and then René can jump in. I don't want to correct you, but I would say, when is this going to turn around? I would say we are actually well on track. I think don't underestimate, Julian, we said that the first quarter was below our expectations. That's fine. Nobody has doubted that it was a weather-related impact to a large extent, and we've always said there's nothing structurally going in the wrong direction. We are very confident that we will deliver the guidance that we are giving today. From our perspective, it can always be better, but there is nothing structurally that holds us back from operating on a very high level.
Just Julian to add. Yes, Q1 was below expectation. We all know this and admit this, that was mainly driven by North America, and we said we will come back with North America, and you see, I guess we don't need to hide with our Q2 numbers for North America. Top line good, margins good, aggregates result good. I think that was a very convincing result for Q2 for North America. What Dominik and I said in Q1, that North America was mainly weather related and it's coming back and it came back in Q2. That's probably, we are on track to deliver, and we will hit our guidance, what we have provided to you, and I guess it's we deliver what we promise.
Thanks, Julian.
Okay.
Thank you, Julian.
Thank you.
Next question comes from Cedar Ekblom from Morgan Stanley.
Hey, Cedar.
Cedar, hi.
Hi, guys. So, just can we go back to the North American market? Pricing in that region, I think, has been one of the negatives that we've heard from companies in the last two or three weeks. Most businesses are reporting that pricing is sort of flat in the quarter. Can you talk to us about the landscape in the U.S.? It is your single largest region, how we should think about the momentum on pricing as we move into the second half, because I think that that's important in terms of reaching the guide.
And then the second question relates to your Asia Pac business. Another quarter, I would say, of subpar performance. Not much organic growth there at EBITDA. It is a business where you double down on with your exposure in Indonesia. It is a business where you remain in your Indian assets. Can you talk to us about the pathway to that business actually delivering meaningful EBITDA growth and your view on its relevance in the portfolio? Thank you.
Yeah. Thanks, Cedar. Let me maybe do the first half of the first answer and then René chips in on the pricing, and then I'll give you the APAC answer. On the pricing in North America, you're right, Cedar. It was below our expectation. Mainly in cement, not so much in aggregates. The reason I think is there is import going into the U.S. I think that is slowing down now. There is import pressure in the U.S., and the market structure has also changed a little bit. Overall, as I said, we are going to continue to be pushing prices in the U.S., and we are positive for the pricing development going into H2 because as I mentioned on the page earlier, Cedar, we are implementing price increases as we speak. The management was very confident that this will also work.
In that respect, okay. Anything to add from your side there? On APAC. Careful with APAC, I would really split into two parts. APAC for us includes Australia. I think let's take Australia out because this is a very meaningful business, especially with the Maas acquisition that we now get very significant in Australia. In that respect, Australia is actually on a very good track, and that will drive the APAC performance forward. You have the remaining parts of APAC, which is basically Asia, and that also splits in a couple of maybe more sluggish markets. That includes especially China, which is super sluggish. Maybe also Hong Kong, as René was mentioned earlier. I think what has changed to the positive, Cedar, to your point, India and Indonesia, at least on volumes, are coming back now quite significantly.
We all know there is a lot of capacity in those markets. If there is no volume, then it's also difficult to move pricing. My expectation is that that part of Asia will come back, but it needs the volume to come up to then also move on pricing eventually. From a portfolio perspective, there is no change to what we said. Indonesia is an important part of the group. India, we continue to develop, but it's going to be opportunistic, if at some point there is an exit trigger, we may think about this, but for the time being, we develop India and just to be clear, we earn money in India.
Yeah. Can I just follow up? I get your point, but I mean, we had 11% organic in Asia Pac in Q2. We had no organic at EBITDA. How much growth do we actually need at the top line before we're going to start seeing some positive contribution? I understand the points around cost inflation and Asia Pac is probably more exposed to that energy risk. Like we've been hearing this story on Asia Pac for a number of quarters, and fine, maybe Australia is a different part of the portfolio, but the rest of it's just a constant drag on the group, right? How much growth do we need at the top line before we can see positive organic at EBITDA? Do we need 20% growth at the top line? Like, what's the number?
No, I don't think you need much more growth than the current run rate. Cedar, you gave the answer yourself. It's probably the region in the world that is mostly exposed to what happens in Iran, and that's why quarter-over-quarter, you will see that there is not much EBITDA contribution, but I don't think you can read too much out of this in terms of general trend. I think, Cedar, if I may say, you've been long enough around the block to know that things come and go. You have also enjoyed days with the group where we were making super profits in Asia. Let's see how we navigate through this. I fully agree, and I don't want to play it down. The current performance is clearly below our expectations.
Okay. Thanks, Cedar. Kepler Cheuvreux, Luis Prieto is next in line. Hi, Luis.
Hey, Luis.
Thank you, Dominik, René, and rest of the team for taking my questions. I had two, and sorry for the change in subject. With regards to the EU ETS overhaul, and in the context of the proposed delay in the phase out of free allowances that we know of and the MSR changes, could the Industrial Decarbonisation Bank subsidies for decarb projects in the tune of, I think it was EUR 100 billion, save the day regarding the incentive to invest in a low carbon price environment if these measures go through? My second question is more detailed than anything else, but along the same lines. What is the current Brevik situation in terms of production of evoZero and its profitability? Thank you.
Luis, I just want to make sure I've understood your first question right. Can you just repeat the essence of that question? Because I'm not 100% sure whether I got the key point of your first question.
Basically, we've seen measures within the ETS overhaul proposal that I would assume tend to or would like to see the price of CO2 being relatively low or moderation in order not to bankrupt anybody in other industries. At the same time, the measure also implements the Industrial Decarbonisation Bank, which proposes subsidies that are huge, EUR 100 billion, whatever, for decarbonization projects. I just want to know if you have a feeling that those subsidies fix the low potential carbon price environment, if you see what I mean, in terms of how incentivized you are to do CCUS projects going forward. In other words, I just want to know, does the subsidy save the day?
Now I understood, Luis. Yeah, fair enough. First of all, the price of CO2, let's not play it down too much because the price of CO2 sits around EUR 80, EUR 82, so that's not such a bad price level of the CO2. That was the original idea. This would go down to EUR 40, EUR 50, has not happened. I think it's been fairly resilient around the EUR 75, EUR 80, EUR 85 mark. I think we are fine with that price level. Now, on the marginal fall in terms of specific investments, does that need us to revisit them? Absolutely. That's what we will do. On the subsidy scheme that you are talking about, early days, I think this is not yet specified. It's not in a legal framework yet. I ask for your understanding that we don't want to speculate on this.
Honestly, I've also not understood the full details of it at this point. Let us go work through it. You know that it will take probably until the beginning of next year before all of this discussion becomes the legal framework. Yeah. Brevik production, on the capturing of CO2, we are absolutely on track. We are exactly in line with what we planned for 2026. All our eyes on green. With evoZero sales, you know that we are very selective in terms of creating the right returns. The discussions keep going very well, and we are taking that opportunity by opportunity. Importantly, the CO2 capturing works technically, and it works also in the volumes we have assumed.
That's great. Very clear. Thank you.
Thank you, Luis.
Next one is from Pujarini Ghosh from Bernstein.
All right. Pujarini.
Hi. Thanks for taking my questions. My first question is on Germany, your home market, where you highlighted that because of the war, the recovery signs seem to have stalled somewhat. From what we are hearing from some of your peers, they seem to highlight that trends are improving. Could you provide some color on what you are seeing exactly on the ground in Germany, both in terms of volumes as well as pricing, and how do you expect the rest of the year to progress? Any signs of the funds from the infrastructure budget coming through, what is the expectation for that? When can we expect to see some movement? My second question is on the exit rates going into Q3, both in terms of volumes, pricing, and price cost across the different regions.
My expectation had been that with costs kind of coming down at the end of June, early July, you having already passed through some pricing, the price-cost spread or the pressure on the price-cost spread would ease into Q3. What are your expectations on that now that the war seem to have been rekindled? Yeah.
Okay. Thanks a lot. Let me take the first one, then René will take the second one. On the German recovery, yes, it's not gone as fast as we thought. Let's go through the segments. I think housing continues to be sluggish, there are first signs that the permits have gone up now for a couple of quarters. There are first projects coming out of the ground. I think we've seen the bottom there. Obviously, this is also interest rate sensitive. You saw what the ECB has decided. Let's wait and see, I think we've hopefully seen the bottom there. I think the commercial segment continuously sluggish, the infrastructure, it needs the pipeline. The money is there, as I said before. The pipeline now needs to come. You see that the government themselves seems to have realized that something needs to accelerate.
They've made a change in their government setup that's also very much centered around the infrastructure question. We are hopeful for H2 and especially also 2027, that the infrastructure money that is there in EUR billions will actually hit the ground anytime soon. That's why I would support your point that Germany has seen the worst, and we are seeing first sign of recovery.
Putting it to your second question, also regarding volumes, I think the July will be an okay month. Our end of June, end of the quarter was very good, and July we see is going from a volume perspective okay. From a price over cost perspective, your working assumption that the cost pressure eases, is probably with the current, let's say, restart of the conflict, probably not correct. We assume in our guidance also that the cost will stay where for energy, and probably also surcharges we get. What Dominik also explained, we will push further price increases to the market. As I said, already our own cost, we are very well managing. Our pricing is covering our own costs without any problem. Now we just need a little bit more to cover as well, the overhang of distribution costs we get charged by our suppliers.
As I said before, we are positive to reach also price over cost positive for the full year.
Just to add, we have baked in this increase in energy cost that René has mentioned between H1 and H2 into the forecast.
Yeah
Then also into this guidance. This is assumed. If it comes better, that would be an upside, but let's not hope on this for the given the volatility, it's based into the guidance.
Yeah
around the current levels.
Yeah.
Okay. Next question comes from. Thanks, Pujarini. Next question comes from CIC, Ebrahim Homani.
Hey, Ebrahim.
Hi, Ebrahim.
Hi, guys. Thank you for taking my questions. I have two if I may. The first one is about the AMWA. Is there room for future development in terms of margin, which is quite high? My second question is about the working capital. Do you expect an improvement on the working capital in H2?
Okay. Let me do the first and then René does the second. AMWA margin. In AMWA, the sky's always the limit. As I said, for many years now, they have moved in the right direction. We continue to develop the region. Absolutely, I think there is room for further improvement, even if we are already on a very good level. The team is doing an excellent job. We are positive for AMWA.
For working capital, as I said it at the beginning, currently year to date June, we have minus EUR 99 million outflow due to change in working capital. We will get this back. The target is to be very close to zero in cash movement from working capital by year-end.
Thank you very much.
Very clear.
Thank you.
The last question comes from Bank of America, Arnaud Lehmann.
Arnaud.
Hello.
Hello. Thank you for taking my questions. A couple if I may. Firstly, coming back on Europe, you mentioned a positive price cost. However, the margin is a little bit down. The results are broadly stable. Clearly there are some pressure there. Is it all UK related? Looking forward, you talk about incremental price increase, but there's probably also incremental cost inflation. Do you expect the margin to potentially start expanding in Europe for the second half? My second question probably maybe a bit more for René. There was EUR 33 million scope impact in the first half from acquisitions, I think. There's a lot of deals coming through and close at different dates. Could you help us a little bit understand the potential scope effect on EBITDA for the full year or for the second half? Thank you.
Let me take the first one, Arnaud, and then René does the scope one. On the margins in Europe, the first message is, price over cost is positive, and we continue to be positive that that price over cost will continue to be positive in Europe. That's very important. Also margin expansion in Europe. That's also good news, and we continue to believe that that margin expansion will continue. That's it. As I said, the costs are coming up, but prices continue to be moving in the right direction. That's it on Europe. We'll get it done.
Arnaud, let's talk about scope. I give you the year to date, RCO scope H1 is plus EUR 17 million, when I have it right here on the chart, plus EUR 17 million. Our guidance obviously includes now also Akçansa because the deal is closed. Here we think we have EUR 65 million scope in the guidance, and that does not include MAAS, for example, and any further acquisition, but includes what we have on the chart. We have Akçansa, we have the AmeriTex, we have the BURNCO. These three are all included. MAAS not yet, but I can't tell you because I don't know if it closes or not. The full year number in the guidance is EUR 65 million RCO.
Perfect. Thank you.
Okay. Arnaud, thanks a lot. That concludes I think the call. Let me just quickly summarize. Good quarter. Growth is moving in the right direction with the first quarter since four years of organic volume growth. The pipeline is executing well on the M&A, and you should expect more deals in the coming months out of that pipeline. Self-help is going on all over the place with pricing surcharges and diligent cost management. The third tranche of the share buyback continues to run, and we've specified our guidance to EUR 3.4 billion-EUR 3.65 billion and are very confident to reach this. Thanks, guys.
Thanks, everyone. Thanks for listening. Enjoy the summer break. We will see each other in the September conferences in N.Y., London, Toronto, and Munich. Thanks so much. Bye-bye.
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