Ladies and gentlemen, welcome to the LafargeHolcim Q1 2019 Trading Update conference call. I am Sandra, the conference call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A 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 is my pleasure to hand over to Mr. Jan Jenisch, CEO, and Ms. Géraldine Picaud, CFO. Please go ahead.
Good morning, everyone, and thank you very much for joining our conference call this morning on the Q1 results 2019. I am here with Géraldine, our CFO, and we will try to give you maybe a 10-minute summary on the results, the key takeaways, and some regional information, in order to have enough time for your questions. Let me start with, I would say that we had a very good start to the year 2019. You have seen the numbers. We have a growth of over 6%. EBITDA is +20%. I think I couldn't have wished for a better start of the year. It goes very well with the second half of 2018, where we started to show a similar performance.
I think we have now already three consecutive quarters where we grow on the upper level of our guidance, and we are able to increase EBITDA, but also later net profit on an overproportional level. Very pleased with this. You also see that these results are broadly based. They come from Europe, they come from North America, they come from Asia, they come from our cost-saving program, and also they come from all four business segments, from cement, from ready-mix concrete, aggregates, and from solutions and products. This, I think, makes me very confident also going now in the remaining months of the year that we will achieve our targets as we have communicated them.
I think with this, I will hand over to Géraldine, who gives us a little bit more details on the regions, but also on our divestments at the new level of financial strength which we have achieved.
Thank you, Jan. Good morning, everyone. If we go to the slide two of the presentation where we expose our divestments, you can see that after the completion of the sale of Indonesia announced in February, we have signed two agreements, one for Malaysia and Singapore and one for the Philippines. On leverage, we are very proud to have achieved a strong valuation of 21 times the 2018 recurring EBITDA with a global enterprise value close to $5 billion. This multiple implies a significant premium to the local stock prices and obviously to our group trading multiple. We expect a normative impact of all transactions of 0.6 time on the leverage.
This is before IFRS 16, we assess that we should close 2019 with a debt in the range of CHF 10 billion, excluding the IFRS 16 liability, which could be overachieved depending on the outcome of the scrip dividend. This means that in any case, we have delivered on our leverage objective. If we now go on to the regions—first to the key numbers on slide three. Slide four, excuse me. That's our key numbers, and you can see, as Jan mentioned, that sales and recurring EBITDA for this quarter are very strong. In Q1, our net sales were up 6.4% on a like-for-like basis, supported by a good increase in both volumes and prices. Recurring EBITDA was up 20.6% at CHF 809 million.
For the third consecutive quarter, our recurring EBITDA growth is exceeding our sales growth, reaching the excellent number of 20.6% on a like-for-like basis. Please note that these numbers do not account for the positive effect of IFRS 16, which is applicable since January 1st, 2019. This with the consequence that the large part of the leases are not booked as an EBITDA expense anymore. If we turn on to the volume growth, the volumes have increased in all segments. Volumes in cement were up 2.6% on a like-for-like basis. This has been driven by an excellent growth in Europe on the foundation of a solid demand in construction. The favorable weather has driven higher sales volume in most European countries and segments, especially in Eastern Europe and France. Germany and Spain also brought a solid contribution.
North America recorded a contrasted progression with good cement growth in the U.S. and a slow start in ready-mix in Canada. LATAM had a weak trend, especially due to reduced infrastructure spending in Mexico and a slower market in Argentina. Middle East cement volumes have a bit decline, mainly due to Egypt, which suffers from overcapacity, and Asia has recorded contrasted results with good volumes growth in India, partly offset by a complicated market in the Philippines. If we now turn on to our net sales and the bridge, the Q1 sales bridge, sales have increased by 2.2% in total, while organic growth amounted to 6.4%. The sales have been negatively impacted by a negative scope effect of -1.8%, following the closing of Indonesia and a Forex effect of -2.2%. This high like-for-like growth results mainly from the volume increase, also from a strong contribution of prices.
If we now turn to our recurring EBITDA, slide seven, you can see here that recurring EBITDA increased overall by 15.5% in total, of which 20.6% on a like-for-like basis. The like-for-like growth is driven by both volume growth, but also a positive price over cost of CHF 99 million. Actually, on our fully consolidated companies, inflation has been 3.5%, excluding energy, and energy price have increased by 5.8%. These increases have been more than offset by our price increases and wash-in progress of CHF 27 million. Our cost-saving program also delivered CHF 95 million before inflation in Q1 in total, and well on track to reach our ambition. Finally, IFRS 16 was adopted January 1, 2019. The EBITDA impacts, meaning the removal of the eligible lease expense from EBITDA, amounts to CHF 111 million for Q1.
With this, I'm going to hand over to you for questions and for Jan for the outlook before.
The outlook, again, the quarter first is not the biggest quarter of the year. However, when we look at the volumes and the broad base of the results are driven by, we are very confident. We have strong order books, especially in Europe, in North America, and in Asia, and we expect our momentum to continue for the months to come. We can confirm our targets, which are 3%-5% sales growth and an over proportional EBITDA growth of at least 5%. The deleveraging, I think, was done very well. We have achieved fantastic valuation, so we have quite a huge financial firepower now. Our original target of at least 2 times net debt to EBITDA will be now most likely be much overachieved for the full year. Cash conversion, we will improve as promised. Overall, we will invest.
We have some key investments in India coming up, some smaller ones in Europe and the U.S. We will have at least 10 bolt-on acquisitions for the year. However, total CapEx and bolt-on acquisitions will be less than CHF 2 billion. With this outlook, I like to turn over to you. I'm happy to answer your questions. Maybe we can limit to one question a person to really go around. Please go ahead.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. You will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets only while asking a question. Anyone with a question may press star and one at this time. The first question comes from Elodie Rall, J.P. Morgan. Please go ahead.
Hi. Good morning, Jan and Géraldine. My first. Well, I'll try two if I can. The first question on disposals. First of all, is there any antitrust concerns to have on the Philippines? Is there any conflicts for the buyer, you think? Just a follow on, do you think you can give us some guidance on the impact on EBITDA from the scope of those disposals in Asia? We're talking about CHF 230 million, if I'm correct. What's the split between 2019 and 2020? If I can sneak in a second question on Middle East, Africa, performance is still down double-digit in Q1. We're looking at, well, you're talking about some stabilization, and I think you said at full year results that you were hoping not to see any further declines in profits this year versus last year on a full year basis.
Do you think it's still possible to make up for the shortfall in Q1 during the rest of the year? Thanks a lot.
Thanks, Elodie, for the questions. On the Middle East, Africa, we still stick with our guidance. We believe we're going to have around flat results for the full year. We are a little bit delayed with the recovery. We had some strikes and some special political situations, we don't take it as an excuse. We see the trend basically from the second half into the quarter improving month by month. We have strong signs that our forecast will be correct for the full year on Middle East, Africa. Maybe quickly on the antitrust in the Philippines. We have signed these four divestment agreements. Indonesia was already closed in February.
We expect rather fast closing in Malaysia and Singapore within the next, let's say two months. The Philippines, the procedure is a little bit more deep, so maybe here we expect a couple months to go forward, and I expect closing this year, and I don't see antitrust issues.
On your question, Elodie, on the EBITDA, yes, you're right. The scope is about CHF 230 million.
Can we have the split between 2019 and 2020?
Well.
Going forward, how-
Yeah.
EBITDA would be this year? Is that the question?
Yeah.
Yeah. What would be the scope impact for 2019 and 2020, that split between-
I give you my personal view. Which is to have that, okay.
Yeah.
Depends on the closing.
Yeah, it depends. It depends on the closing, already.
All right. Okay.
Let me answer the question maybe in a different way.
Yeah.
I think it depends a bit on the closings, Indonesia is, we had the one extra month this year. Malaysia, Singapore will be most likely be closed in June. We have maybe half a year or less, and the Philippines will be closed maybe in quarter four, so we have three quarters of that. Maybe on the outlook, that's a question I have been asked before, because we said that we took a strategic decision first to divest Southeast Asia, because we don't see that region recovering in EBITDA margins. We can have a very positive debate on the growing cement demand in most of these markets, that's all true. We can discuss infrastructure needs, we can have a positive view on the cement demand.
When you start to simply look at the EBITDA margins, you realize that no global player can be happy with the returns. You need to have at least 30% EBITDA margins in these markets in order to make up for the local currency, to make up for the high WACC. I don't see that Indonesia, for example, will recover anywhere close to 30% EBITDA margins. This is why we have a lot of overcapacity in some of the markets, we have a lot of new capacity coming to the market. We have the Chinese entering Indonesia and the Philippines. Our true assessment was, this is a market we don't see how we can go back to 30%-plus EBITDA margins, that's the conclusion.
That also now going forward, if you want to calculate the EBITDA, you can assume there is no big EBITDA increase against the 2018 numbers Géraldine has given to you.
Thanks. Thanks very much.
The next question comes from Alain Gabriel, Morgan Stanley. Please go ahead.
Yes, good morning. My question is on the Middle East, Africa region, which appears to be fundamentally as challenged, if not more, than Southeast Asia. What are the strategic challenges that you are facing in accelerating any disposal program in that region, and how should we think about the future of that region within the group? Within that question as well, given that you have met or exceeded the disposal program, is that the end or should we be expecting more meaningful disposals throughout 2019? Thank you.
We are very happy to have achieved or over-achieved our targets on the disposals, especially for these high valuations, which are key to really deleverage the company. We obviously feel very comfortable now. If you take the numbers we have provided, 0.7x deleveraging, after we closed 2.2 times already in 2018. We are maybe at 1.6 towards the end of the year or maybe even, I'm even a little bit more optimistic, as Géraldine wants to keep this more conservative, we are in a very good level. Going forward, we feel comfortable to run this company below two times multiple on the net debt to EBITDA. We believe a healthy global blue chips should not be two times. We try to keep to that principle. However, now we are comfortable.
We have a strong balance sheet, we will first of all focus now to grow the company. We want to accelerate the bolt-on acquisitions, especially in the very attractive markets in the U.S., in Europe, in Australia. We did already four deals this year compared to four deals in the entire 2018. This will be our focus. Now on the disposal, we have a fantastic portfolio of positions in Middle East, Africa. We have some of the best quarries, some of the best factory positions, your question is, nevertheless, is fair. We have to do some selections where we want to invest for the future and what markets maybe we are not able to invest simultaneously.
Middle East, Africa, we will take some decisions in this year, throughout the year, but no time pressure, and at the moment, we have no big divestment in the pipeline.
Thank you.
The next question comes from Phil Roseberg, Bernstein. Please go ahead.
Good morning, Géraldine. Good morning, Jan. Nice results. Nice to see. I was going to try and sneak in two if they can be quick. My first one is just to understand a little bit the price cost effect. I know it's always confused a little bit with Huaxin, but it'd be interesting to understand ex Huaxin is price offsetting cost, and how will that evolve going forwards, the cost outlook? I guess you are hedged, should be fixed, and so how will that play out in the next couple of quarters? The second one is just, Huaxin seems to continue to contribute significantly. What is behind that continued growth? Is it price? Is it volume? What exactly, and what's the expectation for that outlook at Huaxin?
Yes, Phil. Good morning. About the CHF 99 million in Q1 of price over cost. We have a very good price effect to start with. Albert said that has almost offset the inflation that we have endured during the quarter that I explained as being 3.5%. This was excluding energy. Energy, we were around 5% increase. You're right that on power, we are hedged. Power represent about 40% of the total energy cost, and we are partially hedged where it depends on the market, whether they're regulated or not, obviously. This is fairly under control. We're seeing that we should have a slight increase overall in the year, if any, for energy. On the JV, the JV contributed to CHF 33 million in the 99 that you're seeing. That comes mainly from Huaxin, as I mentioned, for CHF 27 million.
We see Huaxin developing fairly well during the year. We have a very good trend in terms of pricing. We're well-positioned. We believe that this will carry on throughout the year.
If you look on Huaxin, we are very proud to be the fifth largest Chinese cement manufacturer. Besides the cement, where we now have a very good pricing in China, we do significant investments into aggregates in China, you will see some new greenfield plants basically down the Silk Road with Huaxin. We have very attractive projects with very short payback terms and very exciting. We see that Huaxin, not a short-term increase, but this will be a very strong part of our business.
Okay. Thank you.
The next question comes from Lars Kjellberg, Credit Suisse. Please go ahead.
Thank you. I just want to come back to your achievements thus far. Clearly, you've delivered on the cost out, divestitures done, leverage is well below your targets. You mentioned you're comfortable below two times and financial power. I guess the question really is, what do we do going forward to continue this positive trend, in terms of incremental margin expansion? If you can share your thoughts on how you can continue to drive aggregates and ready-mix concrete higher. Also, when you talk about the bolt-on valuations up to potentially more than 10 this year, you made it very clear in terms of valuation on disposals. How should we think about valuations on bolt-ons, and will this potentially be a meaningful contributor to earnings and growth as we progress through the year and into 2022?
Yes, I think going forward, I think we entered now the stage of our Strategy 2022, where we will deliver profitable growth on all levels. That means volume growth, the sales growth will drive overproportional increase in operating profit. You can imagine with less financial burden, but also Géraldine and her team has done very smart refinancing choices throughout the year. Our finance costs are coming down significantly. At the same time, I don't know how much we talk about it on the tax side. We also have very smart programs to lower the tax rate. Based on overproportional operating margin, we enter now a phase where we will also see on top of that, overproportional net profit. On top of that, the cash conversion has been announced by us as it must increase. You will see improved cash conversion on top of that.
This is the model we will lead now going forward and coming to a very healthy, how to say it, self-helping operating model.
In terms of valuation on acquisitions, also when you say self-help, where can you redeploy free cash? You obviously used it now to pay down debt, but what's next, so to speak? Your plans in terms of CapEx plus bolt-ons is less than CHF 2 billion, so it's not a meaningful deployment of cash.
Oh, yes. We put that also in as a limit for the year to make everyone, the investors, comfortable that we want to create value and that we're not going to overspend. Nevertheless, we will go for attractive options. The valuation on the add-on side is, I think, in very healthy levels. Normally, it's around our own multiple before any synergies. We have very value accredited add-on acquisitions, what we have done last year, this year. We try to accelerate that, and I'm happy to spend significantly more on add-ons compared to 2018.
Okay, thank you.
The next question comes from the line of Arnaud Pinatel, LafargeHolcim. Please go ahead.
Yes. Good morning. It's Arnaud Pinatel from On Field Investment Research. I will have a first question just to follow up on the acquisition side. If we consider that you are going to focus on add-on, it doesn't look like you are going to have a transforming deal. One of your pillar strategies to develop the building products division, what you call, I think, products and solution. Could you share with us if you need or not to do a bigger deal to acquire a critical size in this division? Or could you please share with us what could be the percentage of sales or EBITDA you could generate from this division by 2025, for example?
Yeah. Thank you for the question. I think the strategy is there. We want to develop the fourth segment, solutions and products. This is clear. Here we will not make any move which doesn't create value. Here we have to wait for the right opportunities. We are not overpaying just to fulfill some line in the strategy paper. We will only buy something if we are convinced we have a good cash flow going forward. I cannot give you more color today. We're trying, also solutions and products to expand. Also, we will expand through acquisitions, but we will be very value-disciplined. In a nutshell, we sell high, we buy low. That's our principle.
What you have seen from Géraldine in the past, from me in the past, this is what you have start to see now at LafargeHolcim, this is how we play this. I have no big news for you, but just can explain the principles. We will be totally value-disciplined, and we hope we get a lot of opportunities to grow through acquisitions in the future, also in solutions and products.
Okay. Thank you. Perhaps just a second question, which is more short-term. When you look at April and May, what have you seen in terms of volume and demand? Because obviously your Q1 is very good and it's partly driven by base of comp and mild weather. Just to try to understand your confidence about the rest of the year, if you could share with us if there is any geographies in April and May where you've seen a significant positive or negative inflection in trends.
Yes. I think you see me quite confident that even Q1 is a small quarter, but when I look at the order books we have, and the broadly very based success factors for this growth in North America, in Europe, in Asia, I'm very confident that this will continue into the quarter two. We also have to realize last year we had a few hiccups in the factory performance in the second quarter. If you recall, that was one of my very frustrating quarters in my career, where the demand picked up in quarter two, 2018, and we had some hiccups in the supply chain. We took extra care of the supply chain in all the key markets in the first quarter.
Again, I don't want to be overly optimistic, but when I look at the demand, the order book and our preparation for the supply chain, I think we are in a very good position for quarter two.
Okay. If I may just to follow on that, we have seen Boral Brighton, for example, in Australia, warning on the Australian market. I think you are still expecting growth in Asia Pacific, so I guess you are very confident on India. On Australia, you have no specific worry for the coming quarters?
I was a bit surprised about this profit warning. You have seen in our quarter report, we even have a line that we had increasing profits in Australia and New Zealand for the first quarter. I cannot confirm this trend. I think Australia will contribute to the good results in 2019.
That's very clear. Thank you very much.
The next question comes from the line of Arnaud Lehmann, Bank of America. Please go ahead.
Thank you. Good morning, Jan and Géraldine. I guess my main question is around Europe and especially European pricing. We've seen your competitors reporting positive pricing trends and also highlighting that this year the prices in Europe have gone up since January rather than having to wait for April. Can you confirm this positive trend and maybe a little bit of color for your main countries? Maybe just also follow up on your capital allocation. Now that you've done all these disposals and clearly your balance sheet is in much better shape. You mentioned 1.6 times net debt to EBITDA, potentially, at the end of the year. Do you regret to go for a scrip dividend, or are you happy with that? Was it a one-off, or shall we expect, potentially more scrip dividends going forward? Thank you.
I think on the pricing, what we see this year, I think we see a better pricing environment than last year, also driven by the solid demand. In Europe, I think we have a good pricing going forward in most of our markets. Exception, the U.K., where it's probably maybe the only key market in Europe where we see a little bit soft in both on volumes and pricing. Not a disaster at this point, but that's the only market. Besides that, we have very positive volume and price developments in Eastern Europe, in Germany, in France, Spain, Italy. We are very happy with the situation and all the actions taken by the teams in Europe. For the U.S., we have a similar situation where I think the teams has worked better to prepare for the year on the pricing side, also on the supply chain side.
We are very positive for the U.S., especially when you compare to last year. I think Latin America will be an area where the volumes will be maybe lower for the full year, slightly lower, but the people have a huge resilience to keep the margins and keep the pricing up to that sometimes inflationary environment. I think India, this is our second biggest market, and here we want to see better pricing than last year. I think here we see also the positive trend going forward.
On the capital allocation question you had. Yes, 1.6x is our estimate in terms of leverage for the year-end. It's subject to completion of all deals before the year-end and also before IFRS 16. The scrip dividend, as we said, it's here to allow us to accelerate our growth strategy. From that standpoint, of course, there's no regret, on the opposite. About what we will do next year, we will see next year.
Makes sense. Thank you very much.
The next question comes from the line of Paul Roger, Exane BNP Paribas. Please go ahead.
Yeah. Good morning, everyone, and congratulations on the strong start. Just a couple of quick questions. Firstly, just expanding on your commentary about India. I think in the Q4 stage, you were expecting margins to stabilize in 2019. Obviously, if we look at ACC and Ambuja, I think you saw a 200 basis point squeeze in Q1. I wonder if you can just talk a bit more generally about whether you're still expecting margins to stabilize for India in 2019 and maybe the outlook more generally. Secondly, following up also on Asia. If we strip out India and JVs from the overall division, it looks like the margins in the other countries jumped from around 11% to 35%. Firstly, is that math correct? Secondly, what's driving that?
First, I think on India, we will see increasing margins in 2019. I think Q1, the teams were preparing for pricing and their regional strategies. Here we are confident that we will see increasing margins, and we have to see that for India. On your question for Asia, Géraldine, do you want to comment?
Well, the rest performs quite well, Paul. I think Australia did very well in Q1, as we've already precised. Basically, all the countries had a strong growth in their recurring EBITDA in Asia.
Okay, there was nothing sort of exceptional or specific in there.
No. Really not.
Okay. Thank you so much.
The next question comes from Bernd Pomrehn from [ODDO BHF]. Please go ahead.
Yes, good morning. Jan, you mentioned quite a financial firepower you have regained, and you mentioned also at least 10 bolt-on acquisitions this year. Where do you see actually most opportunities? Is it in ready-mix, where especially the U.S. market is still highly fragmented, or also in aggregates and solution and products?
Yes. The acquisitions we have done so far this year are focused on our vertically integrated markets of Europe, U.S., and Australia. We have a couple more projects in the pipeline, and I think we are excited to do all of the three segments, so ready-mix, aggregates, and solutions and products, depending on the right opportunities. Maybe to give a bit more color, I would like to go in the double-digit deal numbers already this year. Generate at least 1% of sales growth through bolt-ons, and this is a mechanics I would like to see going forward.
Okay. Excellent. Thank you, Jan.
The next question comes from Nabil Ahmed, Barclays. Please go ahead.
Yeah, thank you. Good morning. I have two quick ones, if I may. The first one, there's been a lot of press reports on the environmental issues with the Bataan power plant in the Philippines. My question is to understand whether there are any potential environmental or social liability that could potentially affect the closing or the price of the transaction in the Philippines. The second question coming back on your comments on Middle East and Africa and the stabilizing trends. Just to understand, are you expecting the pressure in Egypt and Algeria to ease towards the end of the year? Or do you expect other markets in Middle East, Africa, to make up for the weak performance in those two countries? Thank you.
I think on Middle East, Africa, you are right. I think we took a big hit in Algeria from a demand supply curve, from the pricing, as you are well aware. I think this has bottomed out now. We have going forward now in Algeria, we have, I think, a good situation. We have also, we expect in the other big market of Nigeria, we expect positive contributions this year and also from all the small to medium positions we have. Again, I would like to repeat, we are really confident Middle East, Africa, you will see stabilizing results for the coming months, and you will see a stable result for the full year.
On your questions on the Philippines, really, I would like to emphasize again that Holcim Philippines has just an excellent relationship with its communities in all the areas where it's operating. There's no issue to be noted with regards to the deal.
There's no conditions in the transaction related to any potential outcome on the plant dimension or any of the social disputes that have been reported in the local press?
No. Frankly, again, we have very strong CSR environment program that can demonstrate that we're a good partner to all the communities there. No, of course not, there's no CPS in the deal.
All right. Thanks a lot.
The next question comes from the line of [Brijesh Siya], Societe Generale. Please go ahead.
Yes. Good morning. I have two questions. The first is, if I look at your operating lease outstanding for 2017 and 2018, it has been rising. It seems like the CapEx was brought down in 2017 and 2018 by using more operating leases. Can you please tell us the real maintenance CapEx required as a percentage of depreciation if you exclude the lease impacts for both 2017 and 2018? The second one is, I want to know what will be the impact of IFRS 16 accounting on EBITDA and net debt in FY 2019, and is there any change from what you have disclosed in the annual report of 2018?
Yes. Good morning. No, there's no material change to note with regards to shift of the operating lease that you're mentioning. Actually, between 2017 and 2018, and even 2019, we really look at it on a case-by-case basis and make sure we create as much as possible value. Meaning, net income for the group. On your question about IFRS 16, you're right. Since January 1st, 2019, we now apply IFRS 16 with no restatement of the past periods. The standard requires to integrate the lease commitments on the balance sheet, including the operating leases, which were previously recognized off balance sheet. While as you know, the rents paid each year was included as an expense in the EBITDA. Consequently, we book an additional debt as of January 1st, 2019 that amount to CHF 1,460 million.
That corresponds to the net present value of the future lease payments not previously recognized. We've indicated on our Q1 results that the IFRS 16 impact on the recurring EBITDA was CHF 111 million. That, of course, is following the calculation of the corresponding rent expense. This is, of course, excluded from the like-for-like computation. We're still assessing the impact for the full year, but our current estimate is consistent with this Q1 number, as I guided already in March, it will be between CHF 400 million-CHF 500 million for the year.
Okay. Thank you.
Yeah. That's fine? Okay. Thank you.
The next question comes from Gregor Kuglitsch, UBS. Please go ahead, sir.
Hi. Good morning. Thanks for taking my question. My question is on the net debt. I think last year you closed the year at CHF 13.9 to sort of include the Indonesian debt. I think you communicated that the net proceeds of the disposals is CHF 3.9, if I'm not mistaken, which already gets you to CHF 10. Obviously the CHF 10 implies that everything else neutralizes, which is a bit surprising considering you issue the hybrid and obviously you generate cash flow. I want to understand whether the CHF 10 is just kind of
A number that you're very comfortable hitting and probably will exceed, or whether there's anything else that I forgot in my bridge, I guess, to get to the debt number. Thank you.
Yes. Good morning, Gregor. Yeah, we say around CHF 10, but we effectively expect to be below CHF 10. Yeah.
Okay. Thank you.
The last question is from Josep Pujal, Kepler Cheuvreux. Please go ahead.
Yes, hello. Good morning. Could you comment on potential further disposals, let's say material ones, not small things, but do you envisage still things that cumulatively, let's say they would do above CHF 1 billion, let's say in the coming 12, 18 months? You consider that the material disposals are over? Also related to that, how low are you able to bring the net debt to EBITDA ratio? If we saw that there was no big opportunities, and that you only could do bolt-ons, would you feel comfortable with just one-time net debt to EBITDA, or you consider that, okay, this is non-optimum and that you should do something about that? Thank you.
I know on the disposals, I'm very happy that we have done this big step now, and it's the same with buying assets or doing M&A on the other side. You have to have the right window and also the fortune, in our case, to get the multiple, which is like three times our group multiple. I'm extremely positive, and I think we had a first mover or preempt advantage doing this thing in Southeast Asia. This gives us now an immense level of freedom, as you can imagine. There's no pressure on our side, we overfulfilled our promise to strengthen the balance sheet, and we will focus now more on the growth side.
We want to do 10 plus bolt-on acquisitions this year, we want to grow in the very solid markets we see globally, and we have no plans at this point to have any major disposal.
If I can just jump on that. You talk a lot about growth, for the time being, you are only talking about bolt-ons and bolt-ons saying that, okay, around 1% extra growth per year. I would say this is not enough. What you have disposed equates to 3%-4%. I would say, are you saying that you will go for something more than bolt-ons, more material deals? Because if not, I struggle to square everything.
No, I think to develop a successful global company and transform our company into a blue chip, we needed several steps. If you look now our results since middle of last year, we are growing above 5% constantly. We are improving the margins proportionately. We are in the growth mode. The divestments we made now is basically three cement markets, we're not talking about something really major affecting the group. I think very smartly done, now we have to wait for the next steps, as I said, we will focus on the growth and you will see very good moves from us going forward also on the growth side. However, nothing I can share today, but there are many opportunities in the market.
Okay. Thank you very much.
Okay. I was just told we ran out of time. From my side, thank you so much for joining today, and I very much look forward to meet you in person very soon. Please have a good week. Thank you. Bye-bye.
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