Yes. Good morning, everyone, and thank you very much for joining our call. I'm excited to share more details on our excellent quarter three results. I think we are well above expectations, and very happy to see that our strategy is not only starting to delivering the growth, but also to deliver over proportional operating profit growth. Despite a very steep cost inflation, we were able to more than offset that in quarter three. I give you a few more details maybe from my perspective, and then I'd like to ask Géraldine to go into some of the details on the regions and other areas. Very excited. We have a growth of over 6% in the quarter three. Very positive, it comes from all four business segments.
As you know, we are, of course, continuing our focus on cement, but we are asking our other three segments, aggregates, ready-mix concrete, and the new one, solutions and products, to contribute much more to the top line and the bottom line results. The quarter three was the first quarter where we see this. With the empowered leadership we have now in the countries, I think we will see much more of that going forward in the future. From the region, I wait for Géraldine for more details, but fair to say that the Middle East has stabilized in the quarter three. We had basically a flat result there in July and August. I'm very happy to see that. We have a new leadership installed in the region, and I think we will see more good news from that lately troubled region.
We are on the SG&A cost-saving program. We are delivering ahead of target. Very good to see. With our new operating model, where we basically took out one management level, countries reporting directly. Also, we had a huge simplification of all the corporate support functions. As one consequence, we closed down the corporate sites. We closed down already Singapore, Miami, and maybe surprising to many, we have now already the detailed plan to close down Paris and Zurich, beginning of the new year. This all goes well. We have already, in quarter three, a significant contribution of this corporate cost saving to our bottom line.
We have on the divestment, I'm a bit sorry I cannot share more details, but we are well on track here, and hopefully we have some announcements to make in the near future here, what and for how much we're going to execute the divestment promise. On the financials, we have been successfully refinancing CHF 1.3 billion in CHF, EUR, and USD, leading to, of course, a better maturity profile, and to also quite some saving on the finance cost. I think with this, I hand over to Géraldine, and later I will share with you some more feedback on the outlook for the company.
Thank you, Jan. Starting on slide four. I'm very pleased to drive you through a third quarter of very strong growth. After a hard Q1 impacted by bad weather, a Q2 where we have come back to growth, Q3 has been a quarter of high performance. Our net sales have increased by 5.1% over the nine months, and 5.8% over the third quarter on a like-for-like basis. In terms of EBITDA, we are proud to report a Q3 like-for-like growth of 8.1%, higher than the sales, leading us to a nine months recurring EBITDA of CHF 4,351 million, an increase of 2.5% compared to last year at the same period. These solid numbers reflect good market trends and progresses done on the cost side. Turning to slide five. Our Q3 net sales stood at CHF 7.4 billion, up 2.6% compared to Q3 2017.
The organic growth of 5.8% has been partly offset by a small scope effect of minus 0.8%, and a stronger conversion effect of minus 2.4%. It comes mainly from the Argentinian peso, the Indian rupee, and the Nigerian naira, which have depreciated against CHF during the Q3. The like-for-like growth has been driven by both volumes and price, and all business lines have contributed to growth in almost all the regions excluding MEA. Let's go to slide six. As you can see, strong organic growth in all four segments. Cement, aggregates, and ready-mix concrete benefited from volumes growth. Cement recorded a 6.5% like-for-like rise in net sales, reflecting strong volume growth of 5.1% like-for-like. All regions except Latam recorded volume growth.
For aggregates, our volumes grew by 3% like-for-like, with a strong contribution of Europe and North America, despite bad weather in September in the U.S. Volume growth has been up 1.1% like-for-like for ready-mix for the group, resulting from very high momentum in Europe, partly offset by Hurricane Florence in the U.S. For aggregates and ready-mix, you may remember that it was one of our strategic pillar to increase profitability to, as we said, close the performance gap to the best-in-class performers, and in this spirit, we have managed to grow the sales significantly more than the volumes on these two segments. Let's now look at recurring EBITDA. It amounted to CHF 1,867 million in Q3, a growth of 5.2% as a result of a strong like-for-like growth of 8.1% over last year, partly offset by a significant negative Forex, as we already saw on the sales.
The volumes growth have generated the larger part of the growth. In Q3, however, and contrary to the previous quarters, the cost inflation has been more than covered by the cumulative impacts of price increases and cost savings. These cost savings benefited from our CHF 400 million cost saving plan we had announced early this year, and as Jan mentioned, which started to deliver in Q3. We now look at the nine months, Q3 positive contribution has allowed to offset part of the price of a cost negative effect that we had recorded in H1. On the first part of the year, effectively, we had incurred strong inflation and strong hike in the energy cost, which had not been covered immediately with price increase. We also had negative impact from difficult market trends in MEA.
Overall, with the FX and scope out, the EBITDA is almost flat in value compared to nine months 2017. Let's now turn to our performance per region. You have this quantitative slide here, and we will go through in details in the coming minutes. Let's now turn to North America. That is slide 10. The region delivered here another robust quarter. Net sales up 4.7% like-for-like in Q3, 4% like-for-like growth in cement volumes in Q3, aggregate +6.9% like-for-like, ready-mix -5% like-for-like, and a recurring EBITDA up 2.9% in Q3. This performance was supported by solid underlying trends in the U.S. and Canada West. The recurring EBITDA progression was, however, hampered by the impact of Hurricane Florence, as well as some flooding in Texas. In addition, notable inflation on transportation and energy costs remains a constraint. Latin America recorded another quarter with strong net sales growth.
The performance of the region has been impacted by weakening volumes and cost inflation in Latam. Net sales were up 7.8% like-for-like in Q3. Cement volumes declined by 3.6%, and recurring EBITDA was down 5.5%. In Q3, the performance was impacted by weaker volumes and softening of the cement demand in Mexico post-election as anticipated, Argentina, and Ecuador. Cost inflation and currency devaluation continued to constrain the profitability of that region. In this context, we continue to work on our cost and reduce the dollar currency exposure and on managing our flows to reduce purchases of cement. I am now turning to Europe, the region continued to deliver a strong growth in Q3. Volumes, top line, and recurring EBITDA were up in all main business lines, supported by a positive underlying market across the region.
The net sales increased 6.9% like-for-like, with cement volumes up 3.8% like-for-like, aggregates 1.1% up, and ready-mix +8.8% like-for-like. Strong momentum, in particular in Eastern Europe, Romania, Poland, Hungary, and Serbia, continued in Q3, notably supported by infrastructure projects. Recurring EBITDA was up 4.4% on the back of good volume growth. The favorable pricing dynamics allowed us to offset higher production and distribution costs. In Middle East Africa, we saw signs of stabilization in some of the difficult markets where we operate. Net sales were down 1.3% like-for-like in Q3. Recurring EBITDA declined by 9.8% after a drop of over 30% in H1. The turnaround initiatives implemented under the new regional management have started to deliver first results. In Algeria, market conditions remained challenging and prices were materially below last year. However, we observed a clear improvement of the situation in Q3.
Positive contributors to the recurring EBITDA were Nigeria and South Africa. In Nigeria, the top-line growth has been supported by higher market demand and commercial initiatives. After a good performance in Egypt for the first six months, Q3 was a bit more difficult with a shift in supply-demand balance. Now I turn on to Asia PAC in Q3, that is slide 14, we experienced another strong quarter with net sales up 7% like-for-like in the quarter. Recurring EBITDA recorded a significant growth of +35% like-for-like. That strong contribution was supported by China, top-line growth in India despite the monsoon, and improvements in Indonesia and in the Philippines. We saw good cement volumes trend in most of the countries in the region. Our cement volumes grew by 5.7% in the last quarter versus last year.
China, again, strongly contributed to a recurring EBITDA as a result of favorable pricing dynamics on the back of supply side reforms, pushed by the government to improve environmental footprint in the country. India had another quarter of very good net sales growth, mainly driven by increased volumes, strong underlying cement demand growth, affordable and rural housing segment, as well as infrastructure projects, supported all volume growth for both companies. Cement prices were both previous year. Cost inflation have remained high in the country, especially on energy. We also observed a noticeable improvement in Indonesia and in the Philippines. An increased contribution came on the back of improved cement demand, and therefore higher cement volumes in Indonesia, and a lot of good work done on cost. Philippines also benefited from a stronger cement demand and somewhat suffered pressure from import. Situation in Malaysia still remains a bit challenging.
With this, I hand over to Jan.
Thank you, Géraldine. I think we expect a good momentum to continue into the fourth quarter and also into 2019. What we see at this point of time, we have good order books and we have, I would say, good underlying market trends, so we will see in North America, which had a little bit of bad weather constellation, but nothing to complain. We see ongoing good demand. The same in Europe, markets are strong. Of course, in Asia, we have a very good demand situation from India to China, from Southeast Asia to Australia. In Latin America, we saw the softening in the demand in the third quarter. I don't think it gets any worse from here. We have to see how the markets develop in more detail.
In the Middle East, Africa, we see a stabilization of the markets, and I think the meltdown, what we have seen in a half year, this is now over. Now for the results, we see some more sales growth coming in the fourth quarter, and also we are guiding that we will have another positive growth in EBITDA. We believe our measures we have in place now to the cost inflation challenges, they are working, and they also will work in quarter four. We believe that we will have another positive EBITDA for the fourth quarter. I think with this outlook, I would like to open the Q&A session, and happy to answer any question you might have.
The first question from the phone comes from Elodie Rall, JPMorgan. Please go ahead.
Hi. Good morning. Thanks for taking my questions. My first question is on guidance, if I may. We are already in October, and you've provided a rather broad range of, I think, new guidance for the full year of 3%-5%. I think that gives a swing of 8% in Q4. At this stage of the year, what would you see as the key swing factor between now and year-end that could move Q4 EBITDA by 8%? That's my first question. My second question is on the like-for-like EBITDA growth that you have delivered year to date. You've generated CHF 109 million, I think. I was trying to dissociate the contribution of Huaxin versus the rest of the group. I estimated that the contribution from Huaxin was CHF 156 million versus the CHF 109 million so far delivered.
That would mean that the growth in China has more than offset the decline in the group excluding China. Can you confirm that this computation is correct? If so, should we expect China to continue to drive the like-for-like performance in Q4 and next year? Thank you.
Okay. Regarding the guidance, I think we are guiding positively on the EBITDA in the fourth quarter. I think we take a cautious stand, this is why we have a range. The quarter four is not only the smallest quarter, it's also a volatile quarter depending on effects like the weather in North America and in Europe, especially. Please allow us to have a range. At the moment, we are in good spirit. We have a great momentum in the business, as you see with Q3, and I have no doubt that this will continue into Q4. Just the landing point, we have to see later this year. On the little details with, what you say, with Huaxin, in principle, we have a good situation in Asia, not only in China.
We have a good contribution in India, in Southeast Asia, and a strong one in Australia. Of course, in China, we still have our own operations plus the Huaxin joint venture. We have a very strong contribution there. Our guys are running a fantastic business there. Géraldine, would you like to comment a bit on the I don't think we have these numbers in such a detail, but you like to comment?
Well, we have on the contribution of the net income or share net income of Huaxin that is put on the EBITDA, you have on slide eight or slide seven, the base effect for 2017. If you look at the nine months, actually the Huaxin contribution to EBITDA growth in value was CHF 160 million.
The next question from the phone comes from Gregor Kuglitsch from UBS. Please go ahead, sir.
Hi. Good morning. I've got two questions. The first one is on your cost-saving initiatives, which I think are quite visible in the quarter, I think particularly in Africa and Middle East. If I look at the corporate elimination line, that was also down CHF 40 million. I want to explore a little bit of the CHF 400 savings, if you can give us perhaps a little bit more flavor what the phasing now is. You obviously commented that it's a little bit earlier. You can maybe give us a broad kind of split, what you think kind of falls into this year, next year, and then I guess there'll be a little bit of a tail in year three, in 2020. That would be really helpful for us to get a bit of a better sense.
The second question is, I know this is just a trading update, if you can help us out, obviously, I appreciate there's still a quarter to go, where you see net debt landing in rough terms by the end of the year. Thank you.
Let me take the first question. Thank you for noticing that our cost saving is starting at corporate. I'm very happy we show these results. You mentioned the CHF 40 million in elimination, which, to be honest, is a cost elimination. It's not some different accounting or something. We have done big steps. You see now the announcement. When I started a year ago, people thought this will be very difficult to do, we have a great team here in place, and we were very decisive. Even closing down Paris, people thought this is a very difficult challenge. We have now all the approvals to close it down beginning of the year. We go, we have a very big step. I cannot give you an exact split. I mean, of course, we have the numbers, and what we see now is just the starting.
At this point, we don't want to give now any big plans, for now, it's, I think, worth noticing that while there are a lot of cost programs in this world, our cost programs will hit the bottom line.
On the debt, maybe Gregor, just to answer your point, it's a bit too early, and there's always Forex that can play in the debt, we forecast to be at the same level as last year.
Okay. Thank you.
The next question from the phone comes from the line of Phil Roseberg with Bernstein. Please go ahead.
Yeah, good morning, Jan. Good morning, Géraldine, and congratulations on all the hard work done and the good results. Just a couple of questions. I just wanted to dig a little bit more, perhaps into the contributions to your Q3 results, and notably the big drivers for me, China and the corporate cost reduction. In terms of China, just wanted to understand how we should think about China going forward. You talk about this being a sort of a supply-side reforms. How sensitive is China to the underlying market, and how sensitive is its profit outlook to other things, other factors in terms of the reform, for instance? On the corporate eliminations, we noted CHF 40 million benefit or gain in Q3. Can we attribute this already to cost-cutting, or is there some other reason for that may be more one-off in nature? Those are my questions.
Thank you, Phil. On China, we have a great business in China. We see now a big bounce back in results this year or the past 12 months, driven by strong pricing, but also driven by some other effects people don't see at this point. In our business, we drive now very hard for waste co-processing, something new to the cement industry in China, and we are going very fast. We have plans to go up to 50% of alternative fuel in our plants, which is fantastic and very appreciated by the local communities. There's a lot of growth in there, a lot of value. Secondly, we are starting now to go in the aggregates business in China, where we make some big inroads. I get a lot of questions on the sustainability of the China results.
I think China will have good years to come from now. We have a lot of plans for growth and for value in China. Also outside of China. You will see that our Huaxin partner has already three plants outside of China, and you will see that we will add more capacity, and we have some very exciting projects I like to share with you at a different location. On the corporate cost, I make the answer very simple. The CHF 40 million you see, that's all costs and all costs which are taken out of the system long-term.
Okay. That's very clear. Thank you.
The next question from the phone comes from Jean-Christophe Lefèvre-Moulenq, CIC Market Solutions. Please go ahead, sir.
Yes, good morning. Guten Morgen. I have a question regarding the price hikes you recently announced across Europe. It is quite impressive, between 6% and 10% according to different countries, France, Germany, Belgium, et cetera. Are those price hikes sustainable given, let's say, some reticence from the downstream, from ready-mix concrete producers? I have also a question regarding Middle East, Africa EBITDA. We lost more than 300 with the decline of EBITDA, -10% over the Q3. Is Algeria still profitable despite huge overcapacity and a strong decline in volumes? Many thanks for your answers.
Yeah, thank you. The pricing, very exciting. Very exciting. I'm glad you noticed our ongoing activities for the pricing. You will see when you have a closer look at our numbers, we had already excellent pricing effects into Q3. While cement, we are, I think, well above 1% full pricing effect. For ready-mix and aggregates, we are around 3% just by pricing. That was key for us for this year. We have already informed that the cost inflation will be a very steep one for the year. Our people have worked beginning of the year to make sure we do all the necessary adjustments in pricing, in transportation cost, and so on, and we have been very successful. When you look at the pricing and then you look at the volume growth, you see we're not losing market because of that.
We're just doing the right thing. As you described, we do that market by market, always depending on volume, demand, and supply situation. I think that's very well done, and we continue to focus on this very much going forward. The question regarding-
I think Algeria.
MEA. Algeria.
MEA. Middle East, Africa, Ms. Géraldine takes that one.
No, I think we've made a lot of progress in MEA, as I said actually, Jean-Christophe. In Algeria, yes, the prices are significantly lower than last year. Actually, we have a lot of turnaround measures that are undertaken. As you've seen, we are also having restructuring that is paying off in terms of cost savings. We are pushing for exports, and we have a lot of initiatives to offset what is going on in Algeria.
Does it means that Algeria is still profitable below last year numbers, but still positive in terms of EBITDA?
Yes, of course, Jean-Christophe. Yes.
Okay.
The next question comes from Bernd Pomrehn, Berenberg Bank. Please go ahead.
Yes, good morning. Good to see the first benefit of your new strategy that goes both for investors and also obviously encouraging for your employees. Two questions. Firstly, on Algeria, you mentioned signs of stabilization in Algeria. Does that mean a stabilization in demand, or what are you really seeing here? Then a second question. You mentioned that you're ahead of your plan for cost savings. What does that mean for restructuring costs? One-off cost this year, could you also provide an update for the current year here, please? Thank you.
Thank you, Bernd. I think Middle East, Africa, that's a big focus on Algeria, and I think also LafargeHolcim has maybe a bit over-communicated on Algeria. We have 23 markets in Middle East, Africa, and the poor results in the first half, that was Algeria, but also many other markets. We have a very, very aggressive turnaround plan. We have a new regional head who is full of energy and ideas, and we will turn this around. You see this already in Q3. By saying Q3, we were flat in the result already in August and September in the whole Middle East, Africa. We have quite a good confidence going forward from here.
Even in Algeria, I would love to share more details with you, which Géraldine Picaud doesn't permit me to do so, because we have a great plan even in Algeria, how we not only stabilize, but how we have a very attractive value generation there. Géraldine Picaud, you want to comment on the cost or the one-off cost for the plans?
Sure. I want to just reiterate what we said during the call for H1. Basically, we'll be at about the same level as last year on a full year basis for what we call the restructuring, the ERP implementation, and the litigations. On the restructuring part, we expect them to remain below CHF 350 million for the full year.
Okay, excellent. Thank you so much, Geraldine and Jan.
The next question from the phone comes from the line of Robert Gardiner with Davy. Please go ahead.
Good morning. Just two from me, please. One, would you mind just talking about the trajectory of the cost inflation that you're facing, where it's maybe most acute, for what input costs, and maybe remind us in terms of what you have in place in hedging. Also just wanted to go back on Europe. You mentioned the markets are strong. You're pushing hard on price. Your margins are still contracting, but I'm just wondering the extent to which you're really getting on top of that cost inflation and would expect them to grow again in 2019. Thank you.
I think on the cost inflation, we have seen a very steep one this year, but it was anticipated by us, and I think we can prove in the Q3 that we were able to balance this more than off. This is well done. I think going forward, we don't now expect that this cost inflation will worsen or the challenge will worsen. We are very confident for Q4 that the measures in place are sufficient. Next year, we have to see if there's another hike in energy or not. We are well prepared for this. We run the company. One thing of our operating model, we are now much closer to the markets, and we react much faster, and you can see this now in our results. We don't need a big corporate program to do cost inflation.
We do this very fast on a country basis and obviously with a good result. The cost inflation doesn't worry us so much going forward. We think we have it under control, and we have many good levers with the pricing, with the volume growth here to create value on top. For Europe, we had a tough start of the year, if you remember, with the weather in Q1. In Q2, the demand came, and we had a couple of factory topics, and that was a bit frustrating for us, to be honest. The good thing is we have everything addressed. We improved the factory efficiency a lot, and we will deliver very beautiful results in Europe in the future and in cement, but also in aggregates and ready-mix, where we have a huge catch-up to do in the margins. We address this now.
You see already overall that aggregates and ready-mix is improving, top and bottom line, and this will be extremely supportive for the Europe numbers.
Great. Sorry, just one follow-up, if I may. On the U.K., just wondering how that market's performing recently. It seems from some of the peer results, it's a market that's slowed.
Yes. You know all the discussion. U.K. has softened a bit, maybe 2%, 3% in volumes or something. Unfortunately, also softened 2% or 3% in pricing, which gives you a very bad multiple, right? I think no one is too happy with the result in the U.K., but that's one market out of 10, 20 in Europe. You always have that. We are prepared, and we got some new projects for road building and so on. Doesn't worry us. It's in our figures, but that's the only market which you would say is a bit soft, or the only major market in Europe which is a bit soft. Yes, that's correct.
Okay. Thank you very much.
The next question from the phone comes from Josep Pujal, Kepler Cheuvreux. Please go ahead, sir.
Yes, hello. Two from me, please. The first one is on Mexico and Argentina. I think that there are two markets which have started to soften. Could you give us a little bit more of color there? The weakness is only linked to public sector, or is it also linked to residential? My second one is a follow-up. I did not catch very well the answer on the SG&A cost reductions. What has already been done or reflected in your figures year to date in the first nine months? Thank you.
Okay. I think on the SG&A cost reduction, you have seen we have CHF 40 million reduction on corporate costs only. We are very well ahead of target and very happy to have this number already hitting the bottom line, and we will continue with that speed. Again, that's just the beginning. We announced CHF 400 million, and we will be very well within the target and showing it in the P&L for next year as we have targeted in March. For Mexico and Argentina, you are right. We had a good first half in Latin America, and we have a softening in the third quarter. Cement volumes are down 5% in tonnage, so that's not good. But of course, it's Latin America. You have always a bit of volatility with political, economic, and currency cycles. On the other hand, you have higher than normal operating margins.
To be fair with your question, we are now believing that Latin America has a rather weak demand for the months to come. We don't see it worsening, but we have a weaker demand than in the first half of the year.
Thank you.
The next question comes from Nabil Ahmed with Barclays. Please go ahead, sir.
Yes, good morning. Congratulations for the good numbers. I had two questions as well. First one, considering the momentum in Q3, I am actually a bit surprised with the full year guidance downgrade. I guess that would be useful if you can point to specific items or regions where you would expect the Q4 to be below your earlier expectations. Also what strikes me is that doing the math, and maybe correct me if I am wrong, but that implies virtually no growth excluding Huaxin in the fourth quarter, which is again, a slowdown versus the momentum you have enjoyed in Q3. If you could clarify that. The second question is on slide seven, where you do allocate the like-for-like growth in the third quarter between volume and price costs. I was wondering how you allocate the share of net income of JV between those two items.
Specifically, I would be interested to see what would have been the price cost in the third quarter, excluding Huaxin contribution. Thank you.
All right. I happily pass the second question to Geraldine. The first one on the guidance. If you do the math, we like to be cautious, realistic on the guidance. What we guide now for EBITDA in the quarter four, I think comes down to about 4%-12% EBITDA growth. I think first of all, we are positive. We see the momentum continuing. We are guiding for the 12% quarterly growth. I think for my style, we look at the order books, we look at the weather impact. We had a bit of a discussion here and we said, "Hey, we can do the 5%, but let's guide in the proper range, not to make any mistake there." I think you should take, it is a positive guidance, 4%-12% quarterly EBITDA growth. We see our model works and continues into the end.
Let's see where we finally land.
Sorry, to follow up on that. There's no specific market development that made you become more cautious on Q4?
No, that's fair. We guided a bit on the region, so you see I'm quite confident that the momentum should continue overall.
Okay.
With regard to your question, of course, the share of net income of Huaxin is put into the EBITDA and contributes to the growth that you're seeing. Mainly this increase of Huaxin contribution to our EBITDA is linked to pricing, actually. This is where we would put it rightfully into. Yes, it helps the price over costs.
Okay. That's clear. Thank you.
The next question comes from Arnaud Lehmann from Bank of America Merrill Lynch. Your line is now open. Please go ahead, sir.
Thank you very much. Good morning, Jan and Geraldine. I guess three hopefully brief questions for me. Firstly, if we could come back on the U.S. I guess there's some moving parts. It looks like the volumes are decent, some weather effects, some positive pricing, some cost inflation. I guess more specifically, did you fully cover cost inflation, energy, maybe transportation, with pricing through both cement and aggregates? Where would you expect both pricing and cost to evolve going forward for the U.S.? I'm guessing there are some regional differences. Secondly, can you give us a feel, you've done a few bolt-on acquisitions. Did you disclose how much money you've spent for this acquisition? I appreciate you don't want to give the detail for each of them, but maybe if you combine your spending, how much you spent on bolt-ons.
Lastly, if you're ready to give an update on the Syria investigation, please.
Thank you for the questions. Yes, the U.S. If you look a bit in the details, I think the volume in cement is up 4%. The EBITDA is not up 4%, so you can imagine we are not happy with the situation. We want, of course, to see a much stronger EBITDA growth. We have a couple reasons for this. It is addressed. We will see hopefully stronger results from the U.S. going forward. We have the bolt-ons, Geraldine will take. Just a quick comment from us. We made very attractive bolt-ons. I think we can share more details at a different occasion with you, but the ones we made, if you look at the Denver acquisition, Dallas in the two hottest markets in the U.S., very beneficial ones with very attractive financial parameters. I'll let Geraldine comment in a bit.
On the Syria investigation, there is no real update. We have this investigation going on by the court in Paris. I think it's all properly done. My position is clear. I am very keen to have the most deep and thorough investigation of this. We are sorry about what happened, that there were obviously payments to people you shouldn't make payments to, and we want everything to come out, and we are prepared to take any ruling on this, which will come in the future. There is no news as of today. I think the facts are pretty out in the media and everything, there's nothing to report. It's handled by the court. They are reviewing thousands of documents. They are interviewing hundreds of people. It's a very deep investigation and we are happy to see the outcome.
Just on the bolt-ons, if you take the four bolt-ons we've done this year, the one in the U.K., one in France, and two in the U.S., we're below CHF 200 million of spending on that. Highly synergistic bolt-ons.
Thank you very much.
The next question comes from Paul Roger, Exane BNP Paribas. Please go ahead, sir.
Good morning, everyone, and congratulations on the results. Just a couple of questions. Firstly, on India. We obviously saw in Ambuja quite a good top-line performance in the third quarter, but the margin continued to go down. Presumably, that's cost inflation. I wonder if you see any sort of imminent change in that situation, and whether we're at a stage now where the margins in India could be close to the trough. That's the first question. The second question is again, just to follow up on the U.S. We've heard from a number of your competitors that maybe LafargeHolcim's been a bit aggressive on the pricing side this year. That's been mentioned, for example, in the Mississippi and the Northeast. I wonder if you can comment at all. Is that the case? What will your price versus market share strategy be for the U.S. into 2019?
Thank you.
Maybe I start on the U.S. Honestly, I'm very disturbed that maybe people who have less performance are commenting on other companies. I never do this, and I will never do this in the future. If any company comments on pricing in the Mississippi, that's very interesting, and maybe we go there together and have a beer in the future. Besides this, I think it's very incorrect, and we shouldn't do that, and people should focus on their own performance. If you look into our numbers for North America, you will see that the sales are growing ahead of volumes. We have pricing, and I'm not sure if everyone has that kind of a pricing effect. We focus very much on doing the pricing, which is important in the market. As I mentioned before, we are not happy with the performance in the U.S. margin-wise.
The reason is not the weak pricing. The reason is we had maybe one or two hiccups in our supply chain, which was unfortunate. On the pricing, we are positive and also in the Mississippi or any area anyone wants to talk about. Your India question is, I think, well observed. We have a fantastic market demand in India. As you know, we are in position 2 in India. A great market also going forward. We have for next year a great demand forecast for India. Of course, with the margins, we are not happy. India is a bit a special case because they rely on imported energy. Here we have maybe the steepest cost inflation of all our countries. The industry is just not able to convert that into the pricing into a time period which would be more comfortable for us.
I have a good confidence that we will see a strong 2019, where the pricing will follow the costs.
Perfect. Thank you very much.
The next question from the phone comes from Yassine Touahri with On Field Investment Research. Please go ahead.
Yes, sir. Good morning, gentlemen. Two question. First on the Huaxin. Huaxin results implies that its cash generation is quite high, and China is willing to help investments in the One Belt One Road countries. Could it make sense to partner with Huaxin to develop your position in energy markets through CapEx? The second question is on your development strategy. Could you give an update on your development in your new solution and products division? You've done some acquisition in . Would you consider larger investment in precast, mortar, or concrete products?
Thank you. I think Huaxin again is a fantastic company. We have 42% of this stock listed unit. This is a great expansion platform for us. We expect to do much more with them in the future, and also they have a growth plan going forward with more plants to be built outside of China. They already have three plants outside of China, and you will see more activity from that side, and we will closely cooperate with them, I think much more than you have seen in the past. On solutions and products, I'm happy we have a positive momentum also in this segment. For the time being, we have so much potential to grab in our traditional three segments that we don't have the number one priority now to make big acquisitions for solutions and products.
We will grow the business organically, and we have a good plan there, but we will not make huge acquisitions at this point in time.
Thank you very much.
The next question comes from John Messenger from Redburn Europe Limited. Please go ahead.
Hi. Good morning. Two please, if I could, Jan. The first one was just coming back on MEA. In the early part of the call, you talked, I think, around how the months of July and August had been flat. Later on the Q&A, you mentioned it was August and September. With the flat months, obviously, against the 9.8 EBITDA like-for-like, can we just understand the shape? Was it September that was the weaker one because of things like Egypt, or were you actually down in July and then obviously flat thereafter? Just to understand the momentum there. Is there a concern about probably Egypt in particular in terms of where that evolves for the rest of the year? The second question, more to Géraldine, I guess, was just on the issue of price, cost, and performance.
Can I just understand whether you're looking at total cash costs here or a different definition of costs in that? Obviously, when we look at the group numbers, all the divisions except Asia-Pacific had a bigger delta in terms of there's more cost inflation than certainly when we look at sales versus EBITDA movements. At the group level, if we take out Huaxin, again, there is less EBITDA movement than the growth in sales, which would imply, everything else equal, that there is still more cost pressure than you're getting through on selling price. Am I missing something there, or is it very much that at the back end of the quarter, you've got to the point where you've got a positive price spread with the exception of India, I guess?
Yep. Thank you. On Middle East, Africa, I think I might have misspoken. We have August, September, we're flat. Basically you saw the meltdown in the first half where we lost one-third of the EBITDA compared to last year. July was maybe in a similar range. We have a new leadership and some strong action plan. Already in August and September, we were at both months, we had a very acceptable result.
On your point on Huaxin once more, I think it's wrong to see it separate. Huaxin's performance and contribution to the EBITDA growth is effectively remarkable for the quarter. It's also very positive for the first nine months. As it mainly stems from the pricing in Huaxin, it is, for us, part of the pricing effects. Plus you add the cost savings program that are delivering in Q3, as we mentioned, you've got strong progress as we explained during the presentation. Yeah, we're very happy about it.
Sorry. Just come back, because obviously it's not in the revenue line for the group, but if we just look at all the divisions, with the exception of Asia-Pac, where clearly there are positive things coming through, in the quarter and every other, there is more cost growth than there has been revenue growth on the basis that we're looking at total costs. Am I missing something? Because obviously India, we know, is a tough place to get sufficient price improvement. Everywhere else, it would imply from the financials that the costs have still been going up faster than sales prices.
No, it depends. It depends on each market. You can't make a general rule like that. Most of the time we've mitigated all the inflation costs and the energy rise by cost saving programs.
Great. Thank you very much.
The next question comes from John Fraser-Andrews with HSBC. Please go ahead.
Thank you. Yes, good morning. My two questions are firstly on the price cost side. Just continuing the answer to the last question. Can you give us an underlying cost inflation number? It sounds like there's been a number of cost savings over and above the SG&A, which are mitigated. Just a feel on what's happening on energy costs and other underlying costs would be helpful. Within that, could you say what your U.S. dollar cost proportion is? You mentioned earlier on the call that in LatAm that's an issue, what is that in the wider EM? What are U.S. dollar costs? Just so we can understand that FX depreciation issue. Secondly, on the U.S., it looks like you've had some price growth, more price growth in Q3 than half one.
Could you share with us, are you planning as you are in Europe, a significant price rise? Are you sending letters to customers that there will be a price rise in the States? Thank you.
You will take the first two one. A quick one on the U.S. pricing, thank you for noticing. We do price increases in the U.S. We have more than half of our business in North America is in concrete and aggregates where pricing is of same importance and maybe with even a bigger potential. This one we continuously follow up, we do this on a micro market perspective and not just one size fits all.
On the other first two questions, the inflation for Q3 has been a bit above what we've seen for H1. We estimate it around 4%. The energy was also higher, as you know. There was a 15% increase in Q3. When you take that, when you look at the chart for Q3, I'm talking, you get to something around CHF 289 million. What you can see is that we have obviously more than offset that thanks to pricing for about more than CHF 250 and the cost savings that leads you to the CHF 340 rough numbers that allowed us to offset the energy and inflation. With your questions about U.S. dollar rise and cost U.S. dollar rise, we can't make any general statement. It's of course depending on each market. It does matter for Argentina considering the situation of hyperinflation in the country.
That's it. I mean, there's no general rule or anything to conclude on that.
Okay. Thank you. That's helpful setting that out. Just back on the U.S., are there plans, are there letters out to customers for price rises for next year on cement?
I don't want to comment now on such a detailed pricing question, but you can imagine that pricing is our top priority, our top KPI in all markets.
Thank you.
The next question comes from Sven Edelfelt from Oddo. Please go ahead.
Yes, good morning. Can we have an update on the supply and demand in the Chinese market, on possibly the impact on the region? Second question, it might be a subject for the capital market day. Given the cash trap in emerging country on currency depreciation, what level of confidence can we have on the Swiss francs dividend?
Okay. Yeah, thank you. China, I don't know exactly. China, maybe we have a very good situation. Many people were worried two years or one year ago about the little bit of downturn in construction activity and volume. There were some fears that the Chinese market is not doing well, the opposite has happened. I think the base for that is the strong policy from the government to reduce emissions and CO2 in China. They have closed down a lot of production lines which were not state-of-the-art. Our lines are all running, we are largely benefiting from this, how do we say, consolidation of industry and improvement in emission standards. We can see that from our results that we're doing very well, that cement price has increased. We are in a very good situation, I would say, in China.
More exciting is it will continue. We have now also more regulations on the aggregates business. We are now having the opportunity to enter into aggregates because it's becoming more regulated regarding the product quality and specifications. Very exciting opportunities. The same for the whole supply chain. They want to see that we do co-processing of waste, of alternative fuel. We have very exciting projects in China going forward. This all without any needed growth in cement. We are happy where the volume is now in cement, or even if it goes down another few %, that doesn't matter to us. We have a very strong value proposition for the years to come.
Yes. I'm sorry, just a follow-up. Do you believe it will have an impact on pricing in the overall region?
It will have an impact.
Less export and therefore better pricing on Philippines, Indonesia, I don't know.
Yeah, I think where your question is targeting is there are no significant exports out of China, and it's also not supported, I think, by China to have exports. They have very strong efforts in improving the air quality and the emissions and everything. Exporting cement is not on the agenda, and we will not see anything significant. For this reason, we have maybe a good situation also in other markets. That's correct, yes.
On the cash, your question about the cash, we have done an enormous effort, an amazing effort to repatriate cash. We have a dedicated project task on that. The gross debt has decreased. You will see that with our year-end results. We are, of course, very confident.
Thank you very much.
The last question comes from Remo Rosenau now with Helvetische Bank. Please go ahead, sir.
Great. Thank you. Prices of CO2 certificates have increased a great deal over the last 12 months. At the same time, the allocation process of these certificates is also going to change in the future, if I'm not mistaken. Could you elaborate on how these price increases, combined with the foreseen changes in the allocation process of CO2 certificates, might financially affect you over the next few years?
Yeah. That's a great question. Thank you. A lot of people always worry about CO2 certificates and cost increase. I think it's a great opportunity for our company. You will see we have an innovation pipeline to be at the forefront of this needed reduction in CO2 in construction in general, and maybe in cementing concrete specifically. I'm very excited, and we have a very good action plan to follow the needed reduction targets, and I'm very confident that we can be better than others in playing now a significant role in the CO2 reduction. Maybe a bit of a specific comment. As you mentioned, the CO2 certificate price has tripled in the past six to eight months. I think that's a good thing, because now it really starts to play.
Before, when you have a certificate price of EUR 6, EUR 7, EUR 8 per ton of CO2, it doesn't trigger actually any change or any innovation. Now we come in an area of EUR 20 and above, where it will be very interesting, and we have a strong plan how we're going to play this out, and I'm very confident that we will even be increasing our profit and not having an extra cost burden. You can see that in China, actually, what we just discussed before, when the Chinese government decided to improve CO2 emissions and so on, had a great positive effect on the leading cement companies who have the best process and are the best contributors to the new targets.
Am I right to assume that you didn't sell any certificates over the last few years?
Géraldine, we're not commenting on this really.
No, we're not commenting. We have not, no.
Yeah. We have a bit of reserves in CO2 certificates. That's fair to say, right? Can I say that, Geraldine?
Yeah.
Well, he said it already. Okay, great. Thank you.
Ladies and gentlemen, there are no more questions at this time.
From my side, LafargeHolcim, thank you so much for attending. Enjoyed very much our discussion, and I wish you a good Friday and look forward to a strong closing of 2018. Thank you very much.