Good morning. I am the Agodin operator for this conference. Welcome to the Geberit conference call on the first quarter results 2019. Please note that for the duration of the presentation, all participants will be in a listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing Star and Zero on your telephone. This call must not be recorded for publication or broadcast. At this time, I would like to turn the conference over to Mr. Christian Buhl, CEO, accompanied by Mr. Roland Iff, CFO, and Mr. Roman Sidler, Head of Corporate Communication and Investor Relations. Please go ahead, sir.
Thank you for the introduction. Good morning, ladies and gentlemen, welcome to our conference call. Geberit had a successful start into the year 2019 with a good sales growth and a strong improvement of the profitability in the first quarter 2019. We generated a sales growth of 0.9% to CHF 830 million. Sales in local currencies grew by 3.6%. The operating cash flow grew by 6.8% to CHF 262 million, corresponding to an EBITDA margin of 31.6% and an increase of 180 basis points. Net income increased, adjusted by 4.9% to CHF 192 million, corresponding to net income margin of 23.1%, which is 90 basis points higher than in the previous year. Earnings per share increased, adjusted by 6.6% and reached CHF 5.33.
Let me now first comment on the sales development, remind you that it is not our policy to communicate with Q1 results our sales figures by individual markets. I will comment on the sales growth rate in local currency. Group sales increased by 3.6% in the first quarter of 2019, despite a strong previous year quarter. Sales in Europe increased by 3.5%, with growth in all countries and subregions except for Italy and France. In Far East Pacific, sales were up by 8.6%, with a strong double-digit growth rate in China. The Middle East and Africa region sales grew by 4.8% with a mixed picture in the region. In North America, sales grew by 2.8%. I will now comment on the sales development per product area, again in local currency.
The product area of Installation and Flushing Systems grew by 5%, with strong growth in installation systems and concealed systems. Piping Systems grew by 7.5%, with strong growth in both product lines, Supply piping systems and Drainage piping systems. Bathroom Systems sales declined by 1.6%, driven by a weak market environment in Nordic, a strong comparison from strong sales for Shower Toilets in the previous year quarter, and weak sales from Keramag, due to the brand phase-out in the second quarter this year. Let me now update you on the operating and financial results. Geberit EBITDA increased by 6.8% and reached CHF 262 million. The EBITDA margin reached 31.6%, an increase of 180 basis points versus the first quarter of the previous year. 50 basis points of this improvement were driven by the new accounting standard, IFRS 16.
The remaining operational margin improvement of 130 basis points were driven by three factors. Firstly, lower raw material prices and increased sales prices. Secondly, operational leverage from volume growth and a positive product mix driven by upselling of our product portfolio. Thirdly, efficiency improvements and strong cost control and cost discipline. Tariff-related increases in personnel expenses had a negative impact, while currency fluctuations did not have any impact on the operating margin due to our nearly perfect natural currency hedge. The operating profit amounted to CHF 227 million, which is an increase of 5.8% compared to the adjusted previous year level. The EBIT margin reached 27.4%, 130 basis points above adjusted Q1 2018. Net income increased by 4.9% to CHF 192 million, and earnings per share grew slightly disproportionally by 6.6% to CHF 5.33 versus the adjusted previous year numbers.
Free cash flow increased significantly by 130% due to strong operating performance and a positive net working capital development. We further continued our share buyback program started in 2017, and we purchased around 50,000 shares in the first quarter. In total, we have repurchased as part of the running share buyback program around 697,000 shares through end of Q1 2019. In order to refinance the CHF 150 million bond, which became due in April this year, and due to the partially EUR bonds tender executed in Q4 last year, we recently issued two CHF bonds of CHF 125 million each, with maturities in 2024 and 2028. Let me now comment on the market outlook. The various market outlooks for the construction sector in 2019 have been presented and commented on with the release of our full year results 2018 in March. Since then, our view has not changed.
In Europe, we expect overall a favorable but mixed construction market environment. Meanwhile, individual markets will continue to develop differently. We remain confident about the construction demands in Germany, although the limited qualified installation capacity might remain a bottleneck. In Switzerland, we expect a slightly declining market driven by a softer residential segment. In the Nordic region, we expect at best a stagnating market driven by a positive outlook for Denmark, a stagnating environment in Norway and Finland, and a decline in Sweden. In Italy, we are more cautious due to the political and economic uncertainty. We foresee a stagnating market in France as the indicators for the construction sector have weakened. We expect overall a declining market environment in the U.K., driven by the non-residential sector due to the Brexit uncertainties. In Austria, we expect a positive construction market with a slight growth.
We are positive for Benelux, although the strong construction growth in the Netherlands since 2015 led to shortages of qualified installer capacity. The outlook for the Eastern European markets remains mixed, with a positive outlook for a market like Poland. Finally, in Spain, we expect an ongoing recovery of the building construction sector. In North America, we foresee a moderate improvement of the institutional construction market, while both most relevant segments for Geberit, the healthcare and the education sector, should contribute to growth. In Asia Pacific, we see a mixed picture across the region. We expect a moderate increase of the residential construction market in China. We are positive for India and expect a declining building construction market in Australia. Let me finalize our market outlook 2019 with the Middle East and Africa region.
We are cautious for the Gulf due to liquidity issues and expect a stagnating building construction environment in South Africa. We remain cautious and see a mixed picture for the Northern Africa and the Near East region. Now a few words about the raw material price environment. We expect average raw material prices in Q2 2019 to be above Q1 2019 due to increased prices for commodity plastics and spot prices for several industrial metals since the beginning of the year. Finally, let me briefly update you on the Geberit outlook. We expect for the full year total CapEx of 180 million CHF. An important topic this year is the phase-out of the Keramag brand and the replacement by the Geberit brand in the second quarter.
As already announced, this will lead to additional marketing costs of 10 million CHF, which will be entirely spent during the remaining three quarters of the year. Furthermore, the negative impact from wage inflation will increase as of the second quarter, since several tariff increases will be effective only as of Q2 this year. As usual, we will provide a quantitative sales and EBITDA margin guidance for 2019 with our half year results in August. This is the end of our introduction. We are now ready to answer your questions.
Thank you. We will now begin our question and answer session. If you have a question for our speakers, please dial zero one on your telephone keypad now to enter the queue. Once your name has been announced, you can ask a question. If you find your question is answered before it's your turn to speak, you can dial zero two to cancel your question. If you are using speaker equipment today, please lift the handset before making your selection. One moment please for the first question. The first question received is from Andre Kukhnin. Your line is now open, sir.
Good morning. Thanks so much for taking my questions. I'll just go one at a time. On raw materials first, please. The guidance for Q2. In Q1 you had a 90 basis point improvement in raw materials to sales year-over-year. Should we think about Q2 as kind of reversing that and therefore, that 130 basis point component on the bridge becoming kind of smaller or more towards neutral? I'm just trying to get some kind of quantification of this. Wanted to check what we discussed at the full year results a couple of months ago about H1 being overall small headwind, and H2 being overall potentially small tailwind on raw materials for the year still holds or has that changed for you?
As I said in our introduction, we expect raw material prices to go up in Q2 versus Q1 2019. Of course, we do not know how much that increase will be, therefore, it's difficult to answer your question. Most probably, the raw material price level in Q2 this year will still be below Q2 last year. Overall, most probably, we expect raw material prices the first half of the year this year below the first half of last year. Regarding the second half of the year, I don't want to speculate because the volatility and uncertainty around raw material prices is high, as we have already seen in the first quarter. I don't want to speculate about the second half of the year.
Okay. That's helpful. Thank you. Can I just check on this extra cost for Keramag rebranding? You said the whole of CHF 10 million will be spent in the rest of the year. In Q1, we had a couple of trade fairs and one particularly sizable one. I just wanted to get an idea of this kind of extra costs. Would there be still a step up in Q2 because of the, say, whatever it will be, CHF 3 million, CHF 4 million, maybe even up to CHF 5 million spend in Q2 on Keramag rebranding? Or this is kind of the run rate you're already running at given BAU Munich and ISH costs in Q1?
We have slightly higher marketing cost in the first quarter driven by ISH, that's true. The CHF 10 million, which we plan to spend for the brand switch, will only be spent as of the second quarter. The entire CHF 10 million will be spent in the next three quarters. There was no expenses so far in the first quarter for the switch of the brand.
Okay. ISH cost is kind of not comparable to the quarterly run rate of Keramag rebrand, it's much lower. Is that right?
Yeah, lower.
All right. Great. Thank you. Then just one more interesting stuff. We saw some products at ISH that I think some of your customers were very excited about. Just wanted to get an update on how that one month has gone since you launched them and whether the customer take-up is in line or ahead of your expectations, and whether we can expect an impact from that already in Q2 and onwards, or is it still kind of more of a gradual ramp up?
We had a positive feedback on the new products which we introduced as of April 1st, especially on our main fair at the ISH. The feedback of customers was very positive. Of course, we do not see yet any impact in the figures. As you know, that takes time. There's no quantitative impact so far.
Thank you. Last one. On IFRS 16 impact, could you give us an idea of it for full year? Is that going to run about sort of 50 basis points as in Q1 or it will change?
We expect that it will remain at that run rate. We charge CHF 4.5 million or CHF 4.5 million for switch from above to below the EBITDA line. On the balance sheet, it was CHF 71 million each on the investments and on the liabilities which we added.
Great. Thank you very much.
You're welcome.
The next question received is from Martin Suter from Exane BNP Paribas. Your line is now open, sir.
morning. It's Martin Suter from Exane BNP Paribas. Can I ask about the personnel expenses and tariffs? Your comment in the presentation in the bridge points to tariffs as a headwind year-over-year. I don't square that with the key figures release, where it looks like personnel expenses are basically flat despite higher sales. Can you just run us through that? What am I missing, please?
There is a currency effect on the personnel cost as well, which you have to take into account. That is the main reason.
Okay. on the mix, volume and mix, which you put together. What was the main mix effect? Was that due to upselling or can you quantify the mix on the margin from? Obviously, the different segments have had quite a divergence. You've got Piping with sort of your middle margin business growing the most, then Installation and then Bathroom Systems declining. Can you say what the segmental mix did to the margin?
No. The positive effect from product mix is mainly coming from upselling and not the different growth rates of the segment. It's upselling within the segments.
All right. Last one was on the marketing cost. Excluding the Geberit ONE and the ISH, your marketing costs were down year-on-year. Can you just give us a bit of color around why that was? Thanks.
Sorry, can you repeat the question?
You talked about marketing costs, there's a couple of sort of one-off-ish things, aren't there? ISH, which comes every two years, you didn't have any Geberit ONE launch costs this quarter, even though perhaps we thought you would. Underlying marketing spend, I think you said it was down year-on-year, or at least in terms of percentage of sales. Can you just give us some more color around why your marketing spend was perhaps reduced?
No, marketing spend was not reduced in Q1. We had some additional costs for these fairs. Even if we exclude that, there was no significant change compared to the previous year. In the next three quarters, marketing costs will be higher due to these costs we need for the switch, so brand switch project and the missing trade show costs from Q1 will not compensate for that.
All right. Thanks.
You're welcome.
Next question we received is from Daniela Costa, Goldman Sachs. Your line is now open, madam.
Oh, hi. Good morning. Thanks for taking my question. Just two quick things. Can you comment about in terms of pricing actions, going forward, I guess if you did your normal April one, and if there's anything else sort of planned? And then just a little bit more color, if you can, regarding the shortages in terms of plumber labor, if you have seen any signs of easing there, and particularly Germany, but I guess geographically across Europe, how is that situation developing? Thank you very much.
Question number one about pricing this year. We did a small price increase around 1% as of the second quarter, and we do not foresee any specific extraordinary pricing actions. Question number two about shortages of plumbers, mainly in Germany. Nothing has changed since our full year publication 6 weeks ago. It's still the same situation. Also, the latest statistics is still an order backlog at installers of 12.0 weeks. No structural fundamental changes since the full year presentation mid-March.
Thank you.
You're welcome.
Next question received is from Martin Flueckiger, Kepler Cheuvreux. Your line is now open, sir.
Good morning, gentlemen. Thanks for taking my question. I'll go one at a time as well. I've heard your elaborations on the organic decline for Bathroom Systems. Could you just remind us what the comps look like for the Shower Toilets going forward, i.e. Q2 up to Q4? That would be helpful.
We had a strong first half of the year last year for Shower Toilets because we had dedicated marketing initiatives. We had strong growth in the first half of the year 2018 for Shower Toilets and a lower growth rate in the second half of the year last year.
Okay, thanks. That's helpful. On the EBITDA margin bridge, could you talk a little bit or quantify preferably the impact from the efficiency gains that you had cited in your press release?
No, I can't quantify the total effect of efficiency gains. As you know, we haven't run a top-down program that is a bottom-up driven approach. I can't quantify it, but it had a substantial impact, of course, on our cost structure. Besides the efficiency improvement program and projects which are running in many plants, it's also very much driven by our cost control and cost discipline, which is also having a positive impact on the margin and the bridge you're referring to.
Okay, thanks. Just a clarification question on the installer order books that you just mentioned, the number of 12.0 weeks in Germany. Is that the spring survey or is that still the winter survey?
Still the winter survey. We do not have the actual figures.
Okay, thanks. My final question. Given the high EBITDA margin level in Q1 and also the IFRS 16 impact of 50 basis points, is Geberit thinking of adjusting its target EBITDA margin range? 31.6 is quite a different league compared to 28%, 29%.
First of all, keep in mind that is the seasonal effect as well. Q4 EBITDA margin is always lower, so it is also a seasonal effect for the full year. We are not considering to adjust our EBITDA margin guided 28%-30% due to the first quarter results. The answer is no.
Okay, thanks.
You're welcome.
Next question received is from Martin Hüsler, Zürcher Kantonalbank. Your line is now open, sir.
Yes, good morning. I have two questions. First of all, several construction companies are pointing to a positive weather effect in the first quarter. I was just thinking, what's your thoughts on that? Did Geberit also profit from positive weather?
That is always very difficult to judge, to be honest. We haven't seen, I talked to the market, to customer, a fundamental, systematic, positive effect of the weather, to be honest. Difficult.
Working days is also more or less no impact, right?
No, there was no working day impact in the first quarter. In the second quarter, we expect one working day less in the second quarter, but no working day effect in the first quarter.
Okay. Then just maybe one question to U.K., where you said because of Brexit, you expect a slight decline in the first quarter. It seems like there was still some growth there. Do you think Brexit even had a positive impact because of inventory buildup?
Yes. We have seen strong sales in February, especially March in the U.K. Brexit orders, because wholesalers wanted to build up their inventory. On the other side, we have now seen a very weak trade in April in the U.K., that is kind of compensating now in April. We have seen a positive effect in the first quarter.
Okay, thank you very much.
You're welcome.
The next question is from Charlie Fehrenbach, AWP Finanznachrichten. Line is now open, sir.
Good morning, gentlemen. We've seen this negative growth in Bathroom Systems. If I remember correctly, also last year, this division was a bit under proportional. The development, you see that it can come out of this trend soon? Thanks.
As I said, the development in the first quarter this year was relatively specific and not comparable to the second half of last year. The first quarter was driven in the U.S., first by the market in mining in Nordics, which was difficult, especially in Sweden, where we have seen a decline in market. Secondly, we have tough comps due to the Shower Toilets business. As I mentioned before, we had a strong growth of Shower Toilets in the first half of last year due to dedicated marketing activities. Thirdly, the phase out of the Keramag brand in the second quarter had an impact on the sales, especially March, which were weak because wholesalers didn't order any more Keramag branded products because the switch was ahead.
Okay, thank you very much.
You're welcome.
The next question received is from Bernd Pomrehn from Bank Vontobel. Your line is now open, sir.
Yes. Good morning, gentlemen. Two questions left, please. You mentioned some phaseout effects for Keramag, some pre-buying effects in the U.K. Were there any further pre-buying or phasing effects?
No. These were the main, the two most important phasing effects in the first quarter.
Okay. Excellent. Then one question regarding your tax rate, please. As you know, the vote on the corporate tax reform in Switzerland will be held this month. Currently, support is rising. I would like to know whether you ran a simulation on the impact on your Swiss tax reform should the vote be positive, and if so, what would be the impact on your corporate tax rate in the mid and long term versus an unchanged tax regime. Thank you.
Yes. What we are voting on now on the 19th of May is only the first step of this implementation of the new tax level for us. There will be a second step on the canton level, later in the year. If the law, as it is proposed now by the canton of St. Gallen, where we are paying the taxes, which is the implementation of what we will vote for now on the 19th of May. If this is accepted, if this is adopted, our tax rates probably will go up to around 16%. That's not sure yet because there could also be a popular vote then on this implementation strategy of the canton we are paying taxes in later in the year. Really what's coming out, we only will know by the end of the year.
What is sure, we will pay more taxes, in either scenario.
Okay. Thank you, Roland.
The next question we received is from Manish Daniya from Zürcher Kantonalbank. Your line is now open.
Good morning. I have three question. The first is on the growth rate. Geberit has been doing something like 3%-4% organic revenue growth for last many years. I wanted to know, is there anything that we can do to significantly take the growth trajectory to the higher level? Will it need a favorable market environment or your recent innovation probably will provide the necessary base, or should we focus on more under-penetrated market like emerging market to drive the growth? Or should we look at maybe the inorganic growth route to take to the higher level of revenues? This is the first question. The second one is, I mean the raw material cost inflation, you are already talking about the first half 2019 to be lower than the first half 2018.
If I look at the full year 2018, raw material price increase was something like 2.7%. Should we think, I mean, in the full year 2019, probably the raw material inflation would be lower than last year? At least the inflation rate will be lower than the last year. The third one is on, you are already disclosing that the base of Shower Toilet is impacting the performance of Bathroom Systems. Can you tell us what is the Shower Toilet contribution to these divisions?
The first question about the overall growth aspiration. The growth aspiration, as you know, is between 4%-6%, is our midterm growth target. That is basically driven by organic growth, of course, based on a normal market environment with solid growth of the market. Secondly, with our two main levers. One, penetrate further technologies in the market, also in European expansion markets. Secondly, penetrate all the markets with new innovative solutions. We do not consider any substantial part from an organic growth in that midterm growth target. Question number two about raw material environment for the full year. As I said before, I don't want to speculate about the raw material prices in the second half of the year. There is a high uncertainty and volatility in the raw material market.
The only thing I can say is that we expect high raw material prices in the second quarter this year, but still below the second quarter of last year. We will see what the second half of the year will bring. Question number three, I'm sorry, I can't disclose the share of Shower Toilet business within Bathroom Systems because we are not disclosing these figures.
Okay. Yeah. Thanks.
You're welcome.
The next question we received is from Christian Arnold from MainFirst. Your line is now open, sir.
Yes. Good morning, gentlemen. Two questions from my side. On the one side, a large real estate consultant recently stated that building applications for rental flats in the Swiss urban centers increased by 59% beginning of the year. You, on the other hand, are still quite cautious on Switzerland. Maybe you could elaborate a little bit on that. The second question would be on the strong development in piping. Assuming that piping is more exposed to new construction, where we see a kind of a normalization. This came quite as a surprise. Could you give us here a little bit more color and any particular strong performance in markets or products? Thank you.
Question number one about the residential market in Switzerland. We are a little cautious for the residential market, mainly driven by the fundamental sectors, which is immigration, which was driving the market heavily over the last couple of years, which came more or less to a halt on a still high level, but it is not growing anymore. Secondly, the vacancy rate of empty apartments in Switzerland has constantly increased and it is on a historically high level. That is the reason why we are a little bit more cautious for the residential sector in Switzerland. About the strong performance in piping, that is very much driven by new product introductions, especially drainage pipes. We introduced a new noise-insulating drainage piping system three, four years ago in Europe, and that is doing very well across the markets.
It is more a product-related growth and not that much a geographical related growth. We also introduced new products in the Drainage piping systems, which are doing also very well.
Thank you.
You're welcome.
The next question we received is from Fabian Deriaz from UBS. Your line is now open, sir.
Yes. Thank you for taking my questions. Still got a question on the raw material price impact. Could you share a bit with us what was the biggest positive factor in the raw materials, metals or other plastics? When I look at the polyethylene price index, actually, that was down in September, but has not really recovered recently. Can you share a bit your view on metals and plastics and the lot?
The lower raw material price environment in the first quarter was driven by both plastics and also metals. We have seen both price areas coming down. Regarding the plastics, we expect mainly the commodity prices to rise again in the second quarter also, for example, for polyethylene. For the more technical plastics, we do not expect the same effect. Mainly the commodity plastics, which are going up currently.
Just to clarify, when you say you expect these raw material prices to increase, is this the impact you feel on your P&L, or is there also a delay then, when you expect them to increase?
That is what I expect and what we are paying on our invoices for raw materials. That's what I'm talking about. Our side is paying.
Okay. That's clear. Then just a question on wage inflation. Is there any remaining kind of upwards risk to tariffs or negotiations on the wages, or is this kind of done now with the level we speak Q1?
No, it's not a risk in the sense that there's uncertainty, it's just the fact that some of the countries, the tariffs are increased, not at the beginning of the year, but as the second quarter of the year. For example, in Switzerland, we increased salaries as of April 1st. It's clear that it will go up the tariffs a little bit more. Overall, we still expect for the entire year around 3% wage inflation.
Okay. Thank you. Then maybe just also on the Swiss market. Did you feel any negative base effect from the pre-buying impact you had last year? Can you elaborate a bit on the market, how it did in Q1?
That is true. We had a little lower growth rate in Switzerland in the first quarter. Still positive, but lower growth rate compared to the first quarter last year because we had a strong base effect from the pre-buying in Switzerland. You are right.
Still growth, sir? Okay.
Yes, still growth.
Okay. Thank you.
You're welcome.
The next question we received is from Andre Kukhnin. Your line is now open, sir.
Thanks very much for taking follow-ups. I just wanted to check on the Keramag impact in Germany in Q1. Can you give us an idea of kind of significance of that in size and whether you see that now coming back now that you've launched it under the new brand?
I can't quantify the impact, but we have seen now the beginning of the April some signs that it's going up again. We have seen the signs, but it's a little bit too early to quantify the impact because that brand phase out is not a phase out or a switch at one day. It will be during the entire second quarter. It will last a couple of weeks or more or less another two months until the complete switch is implemented. Therefore, I can't yet quantify the full impact.
Okay. Would you say it's bigger than the U.K. pre-Brexit pre-buy?
Things I can't exactly quantify directly are very difficult to compare two figures which I can't quantify. The answer is no, I can't.
Okay, got it. Thank you for trying. Just on labor increases, I think you've given the full year number already in the previous question, the timing of tariff going up on 1st of April, I presume is annual. In terms of step-up in Q1 versus Q2 as a percentage of sales, should it be material? Is there actually an increase in the tariff step-up this year compared to how much they were going up last year, or not?
Yes, in Switzerland we have a stronger wage inflation this year compared to last year.
Right. Got it. Any more of a magnitude?
We increased salaries in Switzerland 1.5%, or we have increased as of the 1st this year, around 1.5%.
Great. Thank you. Last one, just a much broader question. Just thinking back on the visits to those two trade fairs and seeing a lot of traditional ceramics players launching or having launched, or now launching second derivatives of some kind of installation systems offerings, and often in response to you buying Sanitec a few years back. Does that concern you? Or maybe asking it another way, in terms of list of concerns or worries that you have on your strategic list, where is that development in terms of order priority?
I would not agree that we have seen a structural change in competition in the sense that ceramic players have started to launch products behind the walls. That has happened already a couple of years ago. From my point of view, it's not a structural new observation. It hasn't changed.
Yeah, I agree. That was two years ago when some of them came out, but I guess they're now launching reiterations of it or becoming a bit more mature in it. I guess, am I right to read your answers that this is something that started happening already two years ago, and at the moment you're not seeing any intensification of that suppression?
You're right. It's even more than two years that we have seen certain players providing also complete system. I think it's even more than two years, even before we acquired Sanitec, we have seen first players. That has not a new quality, also not a new quantitative dimension or new quality of competition. We don't see that structural change.
Got it. Thank you, Christian.
You're welcome.
We received a follow-up question from Christian Arnold. Your line is now open, sir.
Yes, a follow-up on wage inflation. You were saying that in Switzerland, wage inflation only took place in Q2. What about Germany? Have you already increased here the salaries at the beginning of the year? As a whole, how much has already been done in Q1? How much will follow in Q2? Thank you.
I can't give you an exact answer. The reason is we are not in one tariff association in Germany. We are in several different tariff organizations or associations. Most of them have been increased as of January 1st, but not all of them. Therefore, I also can't quantify exactly how much we have already seen in Germany in the first quarter, but I would assume it's the majority.
Okay. On group level? Maybe for all countries then, having the largest headcount in Germany, that means that more than half has already been done in Q1, right?
The tariff increase, which explains the wage inflation overall 3% in the entire year, has been below 3% in the first quarter on a group level.
Okay. Thank you.
You're welcome.
As a reminder, if you would like to ask a question, please press one on your telephone keypad now.
Okay. It seems there are no further questions. Thank you for your interest and participation. We wish you all a great day. Goodbye.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.