Earnings Call: Q1 2018

May 3, 2018

Good morning. I am the operating operator for this conference. Welcome to the Conference Call on the First Quarter Results 2018. Please note that for the duration of the presentation, all participants will be in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. This call must not be recorded for publication of 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 Seidler, Head of Corporate Communications and Investor Relations. Please go ahead, sir. Thank you for the introduction. Good morning, ladies and gentlemen, and welcome to our conference call. Geberit had a successful start into the year 2018 with strong sales and earnings growth in the Q1. We generated a sales growth of 11.7 percent to CHF 823,000,000 in the 1st quarter. In local currencies, sales grew by 4.7%. The adjusted operating cash flow grew by 12.1% to CHF 245,000,000 corresponding to an EBITDA margin of 29.8%. Net income adjusted for one off costs related to the Sanddepre acquisition increased by 12.9% to CHF183,000,000 corresponding to an adjusted net income margin of 22.2%, which is 20 basis points higher than in the previous year. Adjusted earnings per share increased by 13.4% and reached CHF5. Let me now first comment on the sales development and also remind you that it is not our policy to communicate with Q1 results our sales figures by individual markets. The group's 1st quarter sales amounted to CHF 823,000,000, an increase of 11.7% in Swiss francs. A favorable currency development led to a sales increase of CHF 51,000,000 or 7.0 percent versus previous year's quarter. The sales growth rate in local currencies reached 4.7%. Sales in Europe increased by 4.2% with positive growth rates in all countries and subregions with the exception of the UK and the Nordics. In Far East Pacific, sales were up by 30.1% with strong double digit growth rates in all key regions. The Middle East Africa region, sales grew by 2.8% with positive growth rates in the Gulf region and South Africa. In North America, sales grew by 3.1%. I will now comment on the sales development per product area, again, in local currency. Please keep in mind that we have adjusted the reported structure as of this year due to the completed integration of the Santek organization. The product area of installation and flushing system with a share of 39% of Geberit sales grew by 6.5%. Bathroom Systems, reflecting 32% of group sales, grew by 3.4% in the Q1. And Piping Systems, contributing 29% to total sales, grew by 4.0%. And now let me update you on the operating and financial results. Due to the completion of the major half of the Sanofi acquisition, we will not report any longer onetime costs and corresponding adjustments on EBITDA level. We will only report adjusted figures on EBIT and net income level and for earnings per share due to the last year of amortization costs for intangible. Now to the results. Geberit's EBITDA reached CHF 245,000,000 corresponding to an increase of 12.1% versus the adjusted EBITDA of the Q1 2017. The EBITDA margin as a percentage of sales reached 29.8%, which is 10 basis points above the adjusted margin of the Q1 of last year. The EBITDA margin was negatively affected mainly by 2 factors: substantially higher raw material prices and secondly, higher personnel tariff costs. These negative effects on the EBITDA margin have been fully compensated mainly by the following 3 levers: 1st, higher sales prices fully compensating the higher raw material prices, leading to a 0 net price effect second, the operating leverage from volume growth and thirdly, efficiency improvement, especially the full benefit from the site closures in France. The substantial currency fluctuations did not have any impact on the operating margin due to our nearly perfect natural currency hedge. The adjusted operating profit increased by 12.7 percent to CHF 215,000,000 corresponding to an adjusted EBIT margin of 26.1%, twenty basis points above Q1 2017. Adjusted net income increased by 12.9 percent to CHF183 1,000,000 and adjusted earnings per share grew slightly disproportionately by 13.4% to CHF 5 0. 1 off costs related to the amortization of intangibles in relation to the Tanatec acquisition amounted to CHF9 1,000,000 on EBIT level and CHF 7,000,000 on net income level. Driven by the strong results, the group balance sheet has further strengthened. The equity ratio grew again above 50% and reached 51.8% versus 49.1% at the end of last year. We further continued our share buyback program started in Q2 last year and repurchased another 31,000 shares in the Q1. In total, we have now repurchased around 236,000 shares per end of Q1 2018. Let me now comment on our market outlook for 2018. The various market outlooks for the construction sector have been presented and commented on with the release of our full year results 2017 in March. Since then, our view has not changed significantly. 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 demand in Germany, although the limited qualified installation capacity might remain a bottleneck for growth. In Switzerland, we expect a stable market running on a high level. In the Nordic region, we expect to mix the picture. While we are positive for the building and construction industry in Denmark and Finland, we expect a further cool down of the markets in Sweden and Norway. In Italy, we foresee an improving market environment. Favorable building statistics indicate to a growing construction market in France. Despite a robust residential market in the UK, we expect overall a declining market environment in the UK due to a weak nonresidential sector. In Austria, we expect again a growing construction market but at a slower pace compared to last year. We are positive for Benelux, although the recovery in the Netherlands leads to shortages of qualified installation capacity. The outlook for the Eastern European markets remains mixed with a positive outlook for markets like Poland and the stabilization of the market in Russia. And finally, in Spain, we expect an ongoing recovery of the build construction sector. In North America, we foresee a moderate improvement of the institutional construction market, while both relevant segments for Geberit, the health care and the educational sector should contribute to growth. The residential construction sector should also do well and further grow in 2018. In Far East Pacific, we see a mixed picture across the region. We expect a moderate increase of the residential construction market in China. In India, we are more cautious for the residential construction sector due to new regulations and policies introduced last year. And in Australia, we expect overall a significant build in the stock market. Let me finalize our market outlook 2018 with the Middle East and Africa region. We expect an improving construction market in the Gulf and a stagnating building construction environment in South Africa. We remain cautious for the Northern Africa and the Near East region with a mixed picture. And now a few words about the raw material price environment. Average raw material prices in the second quarter will be above the level of the Q2 last year, driven by the already increased price level and a further price increase in the second quarter compared to the Q1 this year. And finally, let me briefly update you on the Geberit outlook 2018. We expect for the full year total CapEx of CHF 170,000,000. Important investment projects this year will be the complete renewal of our metal piping systems manufacturing site in Germany and the capacity expansion for the manufacturing of our installation of flushing systems in various sites in Germany and Switzerland. Another important topic this year will be the preparation of the phase out of 4 ceramics brands and the replacement by the Geberit brand as already announced with our full year results in March. As a consequence of this phase out, we will amortize the book value of these brands, leading to additional yearly amortization costs of approximately CHF 8,000,000. This amortization starts this year and will run up to 12 years. As usual, we will provide a quantitative sales and EBITDA margin guidance for 2018 with our half year results in August. But keep in mind that we will face in the remaining year a stronger tariff increase than in previous years and additional personnel costs for the buildup of production capacity for installation systems due to the strong growth of this product line. 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. We've received the first question. It comes from Andre Kuehnsen of Credit Suisse. On It seems that it doesn't work. This is Christian Bult speaking. Mr. Flutiger, you can ask your question now. Your line is now open. Okay. Thanks so much. Good morning, gentlemen. Martin Fluteger from Kepler Cheuvreux. Three areas for questions, please. Now I appreciate you don't want to talk about country specific growth rates, but you've indicated at the Q4 reporting stage that there was prebuying effect in Switzerland, most likely also for Q1. Was that the case? And could you talk about the magnitude that you think is appropriate for that? That's my first question on Switzerland. Then the second one is on the order book level at sanitary and storage in Germany in Q1. Do you have any updated figures for that? I seem to remember that it was 10.3 weeks last time you spoke about it. And then my third question would be on the net price effect in Q1, which was flat. Could you give a little bit of insight on what the individual components, I. E. Selling price increases, but also raw material price increases were in Q1 and how these were offsetting one another? And also talk a little bit about the raw material price increase in Q1 and the quantitative indication and also provide some quantitative guidance for Q2? That would be my third question. I'll go back in line for the rest. Thanks. Thank you for your questions. Pre buying effect in Switzerland in the Q1, yes, we had prebuying effect in Switzerland in the Q1, although we had first prebuying effect at the end of last year. These pre buying effects in Switzerland this year were higher than in previous years due to the higher price increase, which we have implemented as of beginning of the first April this year. 2nd question, Germany, the order book of sanitary dollars. The latest statistics indicate that the order book of sanitary installers in Germany has further increased. Currently, we stand at 12.9 weeks, that is from the spring survey, which is an increase of 13% compared to last spring. So the bottleneck remains in Germany. The order book level of installers remains to be on a high level. Number 3, the net price impact of the Q1. We have seen raw material price increases of 2 point 5% in the Q1 versus the Q1 last year. And we have compensated this 2.5% raw material price increase by a sales increase sales price increase of around 1% in the first quarter. And let me briefly come back to the first question of the pre buying effect in Switzerland. This higher pre buying effect in Switzerland compared to previous year led also to a relatively weak sales in April, because of course, the prebuying fills the eventual levels of wholesalers and led to relatively weak sales in April. Thank you very much. You're welcome. Thank you. The next question is from Rubel of Reuters. Please go ahead. Your line is now open. Yes. Good morning. I'm quite interested can you hear me? Yes, we can. Yes, super. Yes. Okay. Good morning, gentlemen. Yes, I was just interested in your outlook on raw material price rises moving forward. What you're saying about metals or materials, you expect those to rise. Which metals are we talking about here in the first one, steel or aluminum? And what sort of price rises do you expect moving forward into Q2 and beyond that? And then secondly, how much of this is down to kind of U. S. Sanctions do you think on Rusal or just the general U. S. Metal sanctions that are coming out there? Thank you very much. Thank you for the question. We expect further increase of raw material appliances for plastic raw materials and metals, both of them in the Q2 compared to the Q1 of this year. We talk about metals, it's mainly metals which are linked to aluminum, copper, nickel and zinc. Right. Okay. The main metals where we are exposed to. Why? To your third question, we have not seen any impact so far from the U. S. Sanctions or from RUSAL on our prices and raw material price, particulate prices in the Q1. So we haven't seen any impact so far. On the U. S. Sanctions on RUSAL, there's been no impact. Right. Okay. And is there a figure for how much you expect metal prices to go up in the second quarter, we can say? I would say compared to last year in the first half of the year, we expect an increase which is lower compared to the first half of the year last year. If you look, for example, the spot prices of aluminum, copper, nickel, zinc, they are year to date up in the single digit. Last year, aluminum, copper, nickel, etcetera, they went up between 25% 30%. So we expect a further increase, but at a lower extent compared to last year in the first half of the year. So it's sort of single digit range into the Q2 as well then year on year? Yes. Thank you. Thank you. We now have Andre Kukhnin back on the line. Please go ahead. Your line is now open. Good morning. Can you hear me? Yes. Great. Apologies about earlier. Can I just start with the labor cost that you saw in Q1 2018? That was unexpectedly higher and quite a step up from the run rate of quarters of 2017. Is this just the inflation as we're seeing elsewhere? Or was there anything else in that €195,000,000 figure? No. In Q1, we also recorded cost for our employee participation programs. That's why Q1 is always a little bit higher than Q4. In addition, the last quarter of the year is also an important holiday month. So that's why the labor cost in Q4 is always a little bit lower than the run rate. Right. But it was also, I think, good sort of 7.5%, 7.6% up year on year. And I don't think that was a trend in the previous year. So No. I mean, you have also an important FX impact in there. And then yes, the FX is driving the position of it, obviously, also quite important. We expect higher labor increases or tariff increases throughout the year in the area of 2.5 percent and for the whole 2018, which is a little bit more than what we had last year. Right. Okay. So we should take $195,000,000 and think about that as more of a run rate through quarters for 2018 and maybe a little bit less in Q4? We'll give the guidance then with the midyear numbers. Okay. And on net price and on the Swiss price increase, is that still planned as before at 3%? Correct. No changes there. We implemented a disproportionate price increase of 2% as of April 1 this year in Switzerland. Great. Yes, indeed. And can I just double check on the German installers? I heard what you said about the spring survey and the lead times, but your language changed from kind of severe constraints to might constrain. Was there any is there anything to read into this? Are there any signs of this easing? Or kind of why did you change that language? It is indeed that we think at a certain point in time, it should change a bit and it should help that installers add capacity. We haven't seen it, but at a certain point in time, it should come, and that is the reason why we've changed the language slightly. But we haven't seen it so far. Right. And if I may, are we of the same view? And I've asked that question pretty much every quarter, if not in every other quarter, that it should change and economic forces should prevail. And your answer was always, we're seeing none of that on the horizon. It sounds like you are seeing something on the horizon. I don't want to push too far on this, but just generally interested because you clearly monitor a lot more things and you see more things than we can see from the end. It's not on the horizon, but it's the horizon itself. That is the reason. But it's nothing no figures on the horizon. But there should be a horizon. Right. Great. Thanks very much. Just the last one. You obviously made a big announcement at the end of last year on the brand structure intentions in Europe and in particular, the big one in Germany with Caramag. Could you share any kind of initial reactions you had from customers or other stakeholders from installers and wholesalers, if you can? In general, we have positive reactions from the wholesalers, maybe even less surprises than what we would have expected. We had even some customers who expected the decision because they understand the logic. While we do that, they understand the simplification of only for Geberit, but also the simplification for the market, for our customers, for our partners. So all in all, a positive reaction. Very clear. Thank you very much. Welcome. Thank you. The next question is from Martin Huser of Zurich and go ahead. Your line is now open. Yes. Thank you. I have two questions. First of all, the amortization of the book value for this brand phase out. Can you repeat again? So €8,000,000 per year, we should add to amortization for 12 years. And then my question is why don't you impair this in one step? And the second question related to this, is there already a EUR 2,000,000 impact in the Q1 on amortization? So this is the first topic I'd like to speak. And then the other one is relating to working days. According to my calculations, you had about a negative impact of 2%, 1 or 2 working day less in the Q1 compared to last year. Is this correct? And for the Q2, I would assume a positive impact by 2 working days, I. E, about 2 percentage sales impact on positive territory. Is this a fair assumption? I'll start with question number 2, and Ronen Dick will answer question number 1. You're right, we had a positive effect sorry, a missing working day less in Q1 this year. There was one working day. In the Q2, some of the countries will have an additional working day, not all of them, for example, Switzerland. So in the Q2, you can assume a positive effect maybe of half working day, not more than that. Is that answering your question? Okay. Yes. Thank you. Related to this brand amortization, the reason why we don't impair it in one step is that we will still use the brand or need the brand for spare parts, for example, which are in the market. And we also have an interest in protecting those brands for a certain number of years. That's why we are not impairing it. That's why we are amortizing it. And yes, we have already charged CHF 2,000,000 now in the Q1. Okay. And would you consider this as adjusting or will you present adjusted EBIT figure for that? Or is this for you ordinary impact on EBIT? No, this is an ordinary cost. The only thing we adjusted was the amortization of the ceramic production know how as we have done in that line already in the past years. So no adjustment for that going forward and also not in 2018. Okay. Thank you. Thank you. The next question is from Charlie Ferenberg of BMW P Finance Nachtrichten AG. Please go ahead. Your line is now open. Do you expect any possible negative implications through the trade dispute between U. S. And Europe and or maybe possible costs from Europe to Switzerland? Thank you. Not sure if I fully understood your question. I think it was around if we expect any negative impact from the trade disputes between the U. S. And Europe. If that is the question, no, we don't think that we are affected by the trade dispute, definitely not on the short term. Our operations that we have in the U. S. And our sales organization in the U. S. Is basically manufacturing or selling products, which are manufactured also in the U. S. They have relatively limited product flow between the U. S. And Europe. So we do not expect any negative impact. Okay. Thank you. The next question is from Fabienne Hacqui of UBS. Please go ahead. Your line is now open. Yes. Good morning. My first question, when you take the bathroom systems growth of 3.4% and now with the new business unit structure. I mean, when we look at last year, the ceramics business was slightly down now. The new structure has gained some traction. Is this mainly due to the shower toilet? Or can you give some indication how the ceramics ex shower toilets and ex the fittings business, how that performed? Both businesses performed well. We are in line with our expectations in terms of the development of the ceramics business. And also shower toilets had a very good Q1. We were in line with our expectations of a double digit growth, and both of them contributed to the growth of bathroom systems. Okay. Okay. And then a second question on your kind of combined product you're planning with the ceramic stores in front of the wall and the behind of the wall systems. Can you elaborate on this how you want to combine kind of the know how or kind of the technicalities on how that should work and what should be the benefit for the installers and the consumers? So there are many areas I could talk about in that context. But basically, what we do, we want to combine the technical know how, the engineering know how with the ceramics design know how to improve or to bring benefits to both professional customers, for example, an easier installation of bathroom ceramics, but also the same way more benefits from end users for end users not only design, for example, some functionalities, which are then driven by technical features behind or at the wall. I can't go into more details because that is an area of high concern and confidentiality for us. We are working on these topics, and we expect that we will bring as of next year first products to the market, which are based on this combination of know how and design of ceramics in front of the wall. Okay. And are the wholesalers and plumbers already informed kind of about the steps and how do they react about potentially increasing market power of Geberit? Are they concerned about that strategic direction? If we refer to new product innovations, they are not yet informed. We do that in the regular course of the year. They will be informed at the end of this year or beginning next year about the new product introduction. So therefore, they are not yet informed about the concrete innovation ideas we are working on. Okay. Thank you. Thank you. The next question is from Bernd Pomrehn of Bernstein Total AG. Please go ahead. Your line is now open. Yes. Thank you and good morning, gentlemen. Three questions, if I may, please. Firstly, is it correct that you saw a significant significant pre buying effect only in Switzerland and no other countries? Or what should we have in mind when we do our estimates for the next 1 to 2 quarters? Secondly, is it true that your expectations for Italy have slightly improved? I realize that you changed your wording slightly. So, so far, you guided for slightly improving environment in Italy. Now you're speaking about an improving environment in Italy. And finally, how do you see the market acceptance for your new Aqualene Clean Tumor Classic series? Would this further help you to improve penetration rates for shower toilets? Or how do you see the risk of cannibalization of your higher price? Coming to the first question, the pre buying effects were mainly in Switzerland due to the disproportionate price increase in Switzerland. But that is not the only impact which we have now seen on the Q2. What we have seen at the beginning of the second quarter or in April, relatively weak sales because we have seen that the weather impact in Europe of the cold weather end of February, beginning of March led to low order income and sales in April. So that was a clear impact now on the second quarter. Question number 2, you're right, we are a little bit more positive for Italy. We expect now an improving market environment and we have been a little bit more pessimistic at the beginning of the year. Question number 3, the acceptance of our new shower toilet AquaClean Tuma Classic. That is too early to be honest because we introduced the product at 1st April. That's just too early to talk about the success. The first acceptance by our professional customers, wholesale showrooms is very positive, but it's not yet the time to talk about the acceptance at the end consumer level. Okay. Thank you, Christian. You're welcome. Thank you. The next question is from Marc Martin Frutiger of Kepler Cheuvreux. Please go ahead. Your line is now open. Yes, thanks gentlemen for taking my follow-up question. Just going back to this issue of selling and raw material price increases. Now looks like selling price increases, the ordinary ones plus the extraordinary one in well, mind you, the extraordinary one in Switzerland is only as of Q2. So the ordinary selling price increase is obviously no longer sufficient to cover cost inflation. Looking at other cost effects was minus 60 basis points. Then we also had this raw material price impact. So when are you guys considering introducing extraordinary selling price increases to cover the impact of rising raw material prices? Because looking at your guidance, it looks like raw material price inflation will continue. What is your question, Ekaterik? Can you repeat your question? Yes. So when are you thinking of increasing selling prices at an extraordinary level due to the higher raw material prices? Because now cost inflation is not covered by selling price increases. No. We do not plan any extraordinary price increases because in the last quarter, but also already in the Q4 2017, we compensated the higher raw material prices with our regularly safe price increases. Okay, thanks. You're welcome. Thank you. We have a next question. It's a follow-up question of John Rivell of Reuters. Please go ahead. Your line is now open. Yes. Hi. Yes. Thanks for taking my follow-up. It was just a question. Obviously, you said that you see no price increases from Rusal the sanctions on Rusal in the Q1. But then I realized, obviously, the sanctions have only kind of come in, in the Q2. So just looking ahead, do you see any kind of what sort of effect do you see on do you see any effect on Rusal for aluminum prices in the 2nd quarter as there's also sanctions? And then secondly, on the U. S. Tariffs overall, just clarification, moving forward, the tariffs in the second quarter, does that is that going to have any effect at all? Or wait, did this general metals tariffs that they brought in over there? Just a bit of clarification, that would be nice. Thank you. Well, it's important to know that our exposure to aluminum is relatively limited. First of all, we are not buying aluminum at all. We are buying parts made out of aluminum. So there's a value add in between. Therefore, even if there is a price an impact on the spot price of aluminum, the effect would be much lower on Geberit. And if you look at the aluminum spot price, it's more or less on the level where it has been at the beginning of the year. So you don't even an impact currently on the spot price of aluminum. So you don't see an impact on the roof sales moving forward then you don't see in the future then particularly? Sorry, say it again? You don't see an impact on the aluminum prices because of the RUSAL sanctions then particularly then? I just look at the aluminum spot prices and they came down again and they're at the level of the beginning of the year. Okay. Good stuff. And the general U. S. Metal tariffs, have they kind of had any effect on sort of prices at all? Are you expecting them to move forward? No. The reason is the following. Because in the U. S, we are manufacturing faucets and the raw materials we are requiring there are neither aluminum nor steel. Therefore, they are not connected with our U. S. Operations by any tariffs, which are then implemented or not, which we don't know. Right. Okay. Good stuff. Okay. And then moving forward, just to clarify copper bottom, as it were, the Woodside thing you see no particular impact on aluminum prices moving forward then? That's correct? As I said before. Yes, good. Excellent. Thank you. You're welcome. Thank you. The next question is from Monish Bouvier. Please go line is now open. Yes, good morning. I have two questions. The firstly is on your gross margin. So if I calculate your gross margin and I see that in this quarter, it has contracted by 120 basis points. But in your presentation, you say that the net price effect is 0. So my question is like, how do you reconcile these two numbers? I mean, so this is my first question. The second one is that we were of the impression that the CHF depreciation actually brings in some margin accretion and there are more cost in CHF rather than the revenue versus the group. But now you are saying that there will be no margin application from here on. So my question is, is something fundamentally changed on the ForEx equation? So that's all my 2 questions. Question number 1, the 120 basis points higher cost of materials and potential sales in Q1 2018 versus Q1 2017 was driven 1 by the raw material price increase, but also by a product mix effect. So these two growth factors are explained the 120 additional basis points. And also the currency effect because we are buying a higher share of our raw materials in euros versus our sales. So three effects: increasing raw material prices, the product mix effect and the ForEx effect. And can you repeat question number 2, please? So we were at the impression that the CHF depreciation actually brings in some margin accretion for the group because there are simply higher more cost in Switzerland than the revenue versus the group. So but these are changed. I mean, you are now saying that there will be no margin increment because of the CHF depreciation from now on. So just want to understand, I mean, has something fundamentally changed on this ForEx equation? We have even improved our natural hedge with the acquisition of Suntec. And that is now visible in the group. In the Q1 this year, we had a zero impact on the margin from all these currency fluctuations. So we have even proved that better natural currency effect, it's a nearly perfect natural currency effect. Okay. Yes. So, can I just ask one more question basically, like the first question related to the first question? So how do you calculate this net price effect? So if I take your last year revenue of $7.37 maybe the cost of material of $203,000,000 and just multiply by 2.5 percent, that is the raw material price increase. And then maybe take 1% sales increase and multiply with the €800,000,000 or something like that. So that's the way you calculate the net price impact? There are a lot of elements there like currency Basically, what we do is we test the raw materials. We take the raw materials price effect, which was 2.5% in the Q1, up. And then we add the price effect from face price increases, which was 1% in the Q1, and this equation leads to the net the 0 net price effect in the Q1. So I understand that. Yes, thanks a lot for your answer. You're welcome. Thank you. We have a next follow-up question of Martin Hoesler of Zurcher Kantonal. Please go ahead. Your line is open. Yes. Thank you. It's just an additional question for me because I struggle a bit to see the tariff increases in your personnel costs. If I take the change in cost of this 7.6% in the Q1, and I think you added about 1.4% in number of personnel. So this then gives a difference of, let's say, 6%. And I assume that you have a ForEx impact in the personnel cost in about of about the range of 6% to 7%. And I was just wondering how I can see or calculate the tariffs or the increase in personnel costs then? So we have tariff increases if we compare to the previous year of around 2%. That will increase then towards year end a little more because, for example, in Switzerland, we increased the tariffs in Q2 or as of 1st April. Then we have the FX impact, as you mentioned. And on the other side, we have the savings from the closure of the French plant. So those are plus we invest obviously in capacity. So out of those four effects, you have the plus 7.6% versus prior year Q1. And if you compare towards the Q4 last year, you don't have a currency impact that's roughly neutral. But then Q4 is always a little bit lower due to holiday, etcetera. And in Q1, we booked our costs for the employee participation programs, which were a little bit lower this year than they were last year. Okay. That helps. Thank you. Thank you. There's the next question from Andre Kukhnin of Credit Suisse. Please go ahead. Your line is now open. Yes. Thanks very much for taking follow ups. The first one was actually on the exactly we just discussed. So you had the full benefit from the French side closures in Q1 already. And given it's all now done, maybe you could help quantify that? We kind of have it at about €3,000,000 to €4,000,000 Would that be a right ballpark? As usual, you're not quantifying that impact, but we have the full impact in Q1 and already in Q4 last year. So for your full year consideration 2018, keep in mind that we have only for 3 quarters now the full impact of the site closure in France because Q4 already last year, we had a full impact. Got it. And second follow-up is on the answer you gave about the new products you're planning to introduce, where you said you will combine the technical engineering know how behind the wall systems with ceramic design know how? And could you just repeat what you said in terms of kind of the benefits what that product would be geared to do? There will be several benefits. For the professional, it will be faster and easier, safer installation. And for the end users in front of the wall, it will not be on the design. It will be a lot around functionalities for end users. But I don't want to go into more details here. I understand. I just wanted to double to confirm the faster and easy install as well as user benefits. Thanks very much. Welcome. Thank you. The next question is from Bernd Pomrehn of Bank 1st. Please go ahead. Your line is now open. Yes. Just another housekeeping question, please. Tax rate was again quite low in the first quarter. Do you provide any updated guidance for the full year tax rate? Thank you. Yes. We take it down to 14% for the full year. Okay, excellent. Thank you, Roland. Thank you. As there are no further questions, I would hand back to you, gentlemen. So thank you very much for the participation. We wish you all a great day. Thank you. Goodbye. Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.