Ladies and gentlemen, welcome to the Sika Third Quarter Report 2018 Conference Call. I am Gay, the Chorus 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 and A session. The conference must not be recorded for publication or broadcast.
At this time, it's my pleasure to hand over to Mr. Dominic Slapning, Head, Communication and Investor Relations of Sika. Please go ahead, sir.
Thank you. Good morning, good afternoon, and welcome to the Sika 9 months results conference call. We published our figures at 5 o'clock this morning. And now our CEO, Paul Schuler and our CFO, Adrian Wittner, will provide further details on the results. Afterwards, they will be ready to take your questions.
I will now hand over to Paul Schuler, who will start with the highlights of the 1st 9 months.
Okay. Good afternoon, and thank you for joining the call. I'm happy to inform you about a very motivating search for the closing. In the 1st 9 months, we had an excellent sales growth of 14.1 percent in local currency and 15% in Swiss francs, with a new record to 5 $1,323,000,000 All our regions were able to grow. EMEA, I mean, Europe, Middle East and Africa increased by 14.4% in local currency.
We recorded double digit growth in many countries and areas as Eastern Europe, Africa, the Middle East and a strong solid growth in Spain, U. K. And other companies. The newly established region Americas has an excellent run with also 30%, double digit growth in U. S, Mexico, Argentina and Ecuador.
Brazil posted a sales growth of 8.8% after some difficult years. And Colombia, with 5.4%, we are also happy. In Asia Pacific, we grew by 4.8%, double digit growth in India and Indonesia. China's construction market picked up further, enable us to grow with a strong 9.5 percent, solid growth 4.8% in Japan. In some markets, we have some difficulties like Malaysia, Thailand and the Philippines, but overall, we're happy with the grow rate.
The segment global business includes our automotive business with the new acquisition PHY and the Sika Action Technology, our market leader in tooling and the wind industry, with 29.9% an excellent run, mainly driven by the acquisition effect. Thanks to greater market penetration and structural growth, our automotive business grew clearly faster than the market. The pressure from higher input costs like raw material were well managed to many price adjustments. However, we're still locking a bit behind. Volume growth, together with this proportional low cost development, resulted in a strong EBIT improvement.
The one off cost effect in connection with the resolution of the dispute at Zangoban of $23,000,000 negatively impacted the EBIT. However, Nonet plus improved by 9% to $728,000,000 dollars Net profit rose by 10.5 percent to 527,000,000 dollars In the 1st 9 months, we continued to invest in future growth in the market by opening 6 new factories and found a new subsidiary in Honduras. With the acquisition of Index in Italy, we secured a market lead in the roofing, waterproofing business, and the closing of Pfizer in February extended our access to the automotive industry. With PolyPark, we acquired the market leading bulletproof and foam systems. The integration runs excellent, and the synergies are even higher than expected.
So overall, we had a great run, and I would like to hand over now to our CEO, Adrian Wittmann. He will guide you through the financial information. Adrian?
Thank you, Paul, and good afternoon, everybody. Following our CEO's business summary and the presentation of the highlights, I will now give you some further insights into the financial results of the 1st 9 months of 2018. Q3 saw a continuation of the dynamic sales growth of the first half year with 9 month sales 2018, increasing by 14.1% in local currency. Organic growth in the 3rd quarter even picked up slightly from the 6.8% increase in the first half year to 7.4% in Q3, resulting in a strong organic growth year to date of 7.0%. Acquisition contributed another 7.1 percent year to date.
Translation impact was negative in the 3rd quarter, negating part of the positive foreign exchange impact in the first half year, resulting in a modest year to date positive impact of plus 0.9%. Total sales in the 1st 9 months were €5,323,000,000 which represents a growth of 15% in Swiss francs. As we have heard, all regions as well as mature and emerging markets contributed to our growth in the 1st 9 months. In the region EMEA, sales grew at a rate of 14.4% in local currencies with Q3 growth accelerating to 16%. Organic growth of 7.2% was driven by solid volume growth in core markets, such as the U.
K, Spain and double digit growth in Eastern Europe, Africa and the Middle East. Organic growth was matched by acquisition growth of 7.2 percentage points, mainly coming from this year's acquisition of Index in Italy as well as KBK in the Czech Republic and ABC of Turkey, which both closed last year. Foreign exchange impact in EMEA in the 1st 9 months was a positive 3.6%, while in Q3, we saw a slight negative impact of minus 0.9%. 4 new plants and production lines in Senegal, Saudi Arabia, Dubai as well as the acquisition of Polypac closed at the end of September will support continued growth in EMEA. Region Americas continued its double digit growth with year to date increases of 13% in local currencies.
Targeted investments into the supply chain and sales organizations, primarily in the fast growing metropolitan areas. Solid demand as well as acquisitions in the U. S. Contributed significantly to this continued strong business performance. Sales growth in Mexico, Argentina and Brazil was also strong.
Total organic growth in the Americas came in at 8%, while acquisitions added another 5 percentage points. Foreign exchange impact, however, was strongly negative at minus 3.4%, driven by weak currencies in a number of markets. Growth in Asia Pacific increased by 4.8%, in line with previous year growth. Growth was all organic, and foreign exchange impact was neutral. Highest growth was achieved in India and China, while growth in Pacific and in Southeast Asia slowed.
In Vietnam, a new state of the art mortar plant was commissioned next to an existing production for admixtures, which will further enhance the supply chain and market access in Vietnam. The newly formed segment global business achieved a strong growth of 29.9% in local currencies compared to 9.2% in the previous year period. Organic growth in this segment was 7.2%, which is only slightly lower than in the first half year. While the acquisition of 5, Chemtech contributed almost 23 percentage points of growth. Positive foreign exchange effects contributed another 2%, leading to an overall growth of 32.1 percent in Swiss francs.
Moving down to P and L. Gross result as a percentage of net sales decreased by 140 basis points from 54.7% to 53.3%, a slight improvement versus half year impact of a minus 150 basis points. Ongoing price increases as well as various initiatives on the procurement and R and D side limited the impact of significantly higher raw material costs. Dilution effects from acquisitions accounted for about 30 basis points of this material margin contraction. On the other hand and driven by solid volume growth as well as further efficiency improvements, we showed a strong operating leverage with both personnel costs as well as other operating expenses growing significantly below sales growth in spite of a certain dilution effect from acquisitions.
Organically, cost growth continues to be around 50% of organic sales growth only. The successful resolution of the long standing dispute with Saint Gobain led to a onetime cost of CHF 23,300,000 year to date, which are included in other operating expenses. A positive impact in Q3 of the previous year of $8,000,000 related to the reduction of the pension conversion rate in Switzerland impacted cost growth in Q3 2018 negatively. EBITDA increased double digit by 10.3 percent to $880,000,000 compared to 7 $97,900,000 in the same period of last year. If onetime costs related to the dispute resolution were excluded, EBITDA growth would have been 13.2%.
Driven by increased intangible amortization coming from acquisitions, depreciation and amortization expenses increased by 17% versus the previous year period. This resulted in an EBIT increase of 9% year on year. Excluding onetime costs, EBIT growth would have been 12.4%. In absolute terms, EBIT is up $59,900,000 to $728,900,000 on a reported basis. Net interest costs were higher by roughly $5,000,000 in the 1st 9 months, largely related to higher debt in connection with the purchase of the 6.97 percent of outstanding Zika shares from Zagreb.
Net other financial expenses also increased due to higher hedging costs, primarily related to higher level of intercompany financing and increasing interest differentials, particularly to the U. S. Dollar. Group tax rate, however, reduced markedly from 25.8% in the previous year to 23.9% in the 1st 9 months, primarily related to the lower tax rates in the U. S.
As a result, net profit after tax increased double digit by 10.5 percent from €477,400,000 to €527,700,000 With this, I conclude my remarks and hand back over to Paul for the outlook.
Okay. Thank you, Adrian. Our outlook for 2018, based on the results for the 9 months, we confirm our full year targets. We have an outstanding pipeline of big, newly won construction projects, many new products and initiatives as well as several acquisition candidates throughout the world. We are well on track to increase sales by more than 10% to reach sales of above $7,000,000,000 for the first time.
The volatile raw material price continues to present the challenge in the next month. However, with efficiency improvement and continued price adoption, we expect a double digit growth for EBIT and net profit. Thanks to the commitment of our employees and the strength of sicko grow model, we can look forward with high confidence to the last quarter of 2018. Okay. Thank you for your time.
Any questions?
The first question is from the line of Rosenberg Fim with Bernstein. Please go ahead.
Hi, good afternoon, gentlemen. Thanks for taking my questions. Just a couple, please. The first one is, how should I how should we or can you help us understand the sort of the big drop in operating leverage in the Q3? I believe EBIT grew at only about 6.5% on revenues of about 13.5% compared to the sort of the 10% growth that you got in the first half or even 16% in EBIT that you got if you compare if you take out the €23,000,000 related to Saint Gobain.
So my understanding was that the raw materials the worst of the raw materials inflation was felt in H1, not in Q3. So perhaps you could sort of break down the elements behind why Q3 was substantially less? My second question then related to that is, can you also get help us to sort of get comfortable given that Q3 number that you can get to your full year guidance, which I think requires, at least in my calculation, you to get to about 13% growth in EBIT in Q4. So coming from 6.5% to 13%. It would just be nice to know how we should think about that.
That's thank you, Phil. I will be taking this. I think there is, well, 2 elements I'd like to point out on Q3. On the one hand, the material cost impact or increase was actually quite significant in Q3, even with increasing prices. So basically, the impact here was very similar to the first half year in terms of material margin reduction.
The second one on the cost side, I mentioned one factor. This onetime gain we had in the last year in the Q3 related to a pension effect. Roughly €8,000,000 if you deduct this, we're basically at a like for like EBIT growth in the 3rd quarter of around 10%. Now looking forward into the 4th quarter, over time, the price component will overcompensate what is a more flattening raw material cost input curve. So this effect should be bigger in Q4.
And also, we will not have this negative effect in the previous year as we had in Q3.
Sorry, can I just one clarification there? Because from my understanding, if you take out the €8,000,000 you get to 10%, if you like, like for like growth. But if you take out the Saint Gobain 23,000,000 euros in H1, you get to around 16% underlying. If the material cost impact is similar, what makes that difference?
I mean, the impact has been increasing actually throughout the year. So the Q3 was quite significant in terms of input cost.
And what are the key materials that are really moving the needle on this? We're trying to track this and predict things, but it's very, very difficult for us to really understand what has really changed in the Q3. Can you give us any more detail?
Of course,
there was a further push
on the epoxy side. Silicones have continued to go up. We have also seen a further impact on the plasticizer side. The situation has been quite volatile, also not uniformly across the regions with foreign exchange moving having some impact. So there is a number of factors which have influenced this.
On the positive side, we already increased our prices throughout the region where most affected relief in the October, November numbers.
Great. Thanks very much.
The next question is from Oskar Martin with ZKB. Please go ahead.
Yes, good afternoon. Thank you for taking my two questions. I'm looking a bit ahead into 2019 and trying to understand what's going to happen there on the margin price increases and cost between price increases and cost increase. And I was just wondering basically if you assume for next year that the gross margin could be on a level of 2018 because you were mentioning those price increases and kind of a flattening of the cost increases. So basically, my first question is what about gross profit margin for 2019, your best estimate?
And the second question is turning to your acquisitions that added about 7% to overall sales. You're mentioning a 30 basis point impact on gross profit margin. Can you elaborate a bit on the impact on the EBIT margin or maybe the contribution of this 7% sales to EBIT? Was there any contribution at all? Or was it all maybe did they show up because of integration costs and the amortizations?
That's basically my second question.
Okay. Martin, I'll take the first question. Where is our target for raw material margins? As we said, we expect now rather flattening out. It was at the 4th or 5th price increase in the last 3 months.
We see clearly signs that in certain areas, the prices will stay or come down. So with our price increase, as we said, we're lagging behind. However, we feel strong for 54% to 55% according to our guidance.
On the acquisition side or the dilution, it is correct that particularly the initial month, there is typically only a notional contribution. We're seeing a gradual actually a significant increase in relative contribution throughout the year and continuing as these synergies and also growth leverage
is in this target. Well, for 2019, we have a strong pipeline. We have a strong a lot of new projects. So we feel good in keeping the results and increasing our guidance.
Okay. Thank you. Maybe just to add on to Adrian's answer. Is it just as a rule of thumb, if you say contribution of acquisition 7% to sales, maybe contribution to EBIT, about half of this, 3% to 4%. Is this a fair assumption?
I mean, particularly in the 1st
couple or 1st few months, the EBIT contribution is typically, if you factor in all the sort of integration and transaction costs, below 5% of sales and then but quite strongly increasing thereafter.
Okay. Thank you.
Thank you, Martin.
The next question is from the line of Karlsson Erik with Industrial Equity Partners. Please go ahead.
Yes, thanks for taking my questions. I was just wondering on the price to raw materials spread that has been negative throughout the year. Could you just confirm if you think that spread could now be neutral in Q4 or whether it's still a negative but smaller than prior quarters?
Just on the material input side, yes, the curve should be flattening. There given the increasing effect of given the increasing effect of price increases.
So negative, but smaller negative. That's perfect. And I had one question on EMEA Construction. You probably haven't seen this, but Kona, which is a large elevator manufacturer, they lowered their construction outlook for EMEA going forward. Have you seen any change in demand trends in EMEA?
I think we have a very nice position here where we work on refurbishment and new builds and on the project. So we don't see that this will suffer it in region. There in certain countries, yes, there will be a change. Therefore, other countries will go strong. So we cannot we don't see that in the moment in our business.
Super. And if I can ask just the third question, please. Auto production has been weak specifically for China and Europe. And I appreciate it's very much a penetration game for you, and you helped OE manufacturers lower the weight of their cars and strengthen them and lower emissions. But do you think that would have any impact on your auto business?
Or it's so much penetration, it won't really be meaningful for you?
I mean, to be clear, if they produce less car, which we have existing, of course, they will slow down now. However, on the other side, the penetration rate, new project we have and the build rate, I think we are still feeling confident we had a 6% increase even the market went down by 1%. So we are confident that also in a slower auto market, we will continue to grow. And looking to Europe, mainly, I think if the Germans get hold on their issues, I think they continue them back on the growth path. So I'm not so pessimistic for 2019.
The next question is from the line of Lukakir Martin with Kepler Cheuvreux. Please go ahead.
Yes. Thanks for taking my questions. Good afternoon, gentlemen. Actually 3, if I may. Coming back to the old macro story regarding the U.
S. And Chinese trade tensions, I was just wondering whether you have any updates with regards to potential signs of a market slowdown in the relevant markets for Zika in that market? That would be my first question. My second question is with regards to coming back to the outlook for EMEA and particularly Europe. I understand your answer that you've just given a couple of minutes ago.
But looking at building permits, particularly on the residential side, but also on the non residential side, they started to slow. And I think on the resi side, they're even flat now year on year. If any, when would you expect slowing building permits to have an impact on your business in Europe? That would be my second question. And then just clarifying the squeeze from FX on the margin.
Could you quantify the total currency impact that you've seen on your Q3 EBIT? And assuming constant FX rates, what do you think it could be the estimated impact on the full year EBIT? Thank you very much.
Okay. Martin, I'll take the first question with trade war, China, U. S. I mean, the whole world is nervous. The whole world looks what's going on.
From our side, we are in a lot of new projects. I don't expect that they stop building. I mean, they will be very critical. But I I we believe they will continue. So over the next 6 to 7 months, we are on the strong side to continue this project.
Then we have a strong side on refurbishment. We're still strong there. So has not really an impact regarding to the building permits. However, we prefer high rate on building permits. That's clear.
It's easier for us to go double digit with a lot of building permits out there. But for the next 6 to 12 months, confident we continue on our guidance of 6% to 8% grow rate.
Maybe on the EBIT squeeze, Martin. I mean, the translation impact basically is very, very similar as to the top line. In the first half year, we had a more 2 percentage point positive effect, which has now squeezed. So I would assume the actually, the foreign exchange impact for the full year is pretty much going to be flat.
Okay. That's just to clarify, sorry, is that on top line growth? Or is that on EBIT growth? Because I'm just asking because other And I was just And I was just wondering whether there's also a transaction impact for you guys, even though I realize that overall, you're well naturally hedged.
Yes. No, the transaction impact is very insignificant. So it's really translation very similar on top as well as on EBIT.
Okay. Thank you very much.
Thank you.
The next question is from the line of Fraser Andrew with HSBC. Please go ahead.
Thank you. Good afternoon, gents. 4 for me, please. The first one, Adrian, you mentioned operating leverage of 50% of organic sales growth on the other expenses, personnel and other expenses. Should we think about that kind of level going forward into 2019 2020?
That's the first question. The second is in the global business, which slowed down a bit. You mentioned the auto in auto plus 6 in Q3. But it seems that, that was higher actually than the other parts of industry. So was there a sort of wider slowdown, not just in auto?
The third question is on FX. And I hear what you say just now, Adrian, but your dollar must have increased and was because of the FX depreciation against the U. S. Dollar. Was that part of the gross margin squeeze that we saw?
And is it just chemicals that you pay for in dollars? And my 4th and final question is, can you give an update on October trading if you're able to do that?
Okay. I'll take the first question on operating costs. I guess we have a high leverage in the last years on improving our efficiency. We have several projects running also to offset the cost. So I guess guidelines are 50% in this magnitude.
Could be fair to say it's 'nineteen, probably also 2020. We have to see we have enough capacity to invest in future without over averaging this 50 percent. So yes, you could assume we're going this direction. Maybe on the foreign exchange
impact on particularly the U. S. Dollar and then in relation to the material margin. The foreign exchange impact per se is not material where we, of course, have a bit more of an issue with this rather short term is in markets where, for example, in Latin America, where a lot of the raw material costs are actually U. S.
Dollar based, which means we have to even more strongly increase prices. But in these markets, they're basically used to doing this. There is some slight impact, but this is not material. Okay.
And to the question of the global business, yes, we had over years double digit growth with automotive. Now the build rate comes back. So we are single digit high single digit. Yes, this hurts. And with the new models, we can increase, as I said before.
Besides auto, you are surely aware that the wind energy here in Europe dropped quite significantly. So we had a big share there. So for the next 3, 4 months, we think it's lower down, but it will come back. As in China, we already started to rebuild the wind parks. So from that side, it's a combination between wind and auto.
And on the other side, we have good run rate in the bus manufacturing, rail manufacturing. We're also strong in appliances. So it will settle up a little bit in all the different issues. But overall, we still feel strong with 6% to 8% growth rate also in the next months.
Thank you. And just the last one on October trading.
Here some of your peers also made some rather cautious remarks. And then the second question, how satisfied are you really with the capability of your sales force and also your industry to increase prices? You announced price increases in both Europe and North America already in May, but I'm actually not really sure whether we already have seen any impact of these price increases in the Q3 results. So do you agree that probably your whole industry should be a little bit more active or proactive in increasing prices going forward? Thank you.
Thanks for reminding me that we have other cost increases. It's nice to have that. I thought I have a nice afternoon. But yes, I mean, we have this situation in Germany where we have 3% more cost on personnel costs. We know that one of the biggest challenge is transportation cost to get it.
On the transportation cost, I think we it's easier to hand it over to the customer because they are clearly cost allocated. So here, we are strong and fighting. On the personal cost, we have to find efficiencies. Therefore, we go down with efficiency. We push efficiencies, so to set off our additional costs.
And I guess that's the measurement we have to do. Regarding the nice crash with the price increase, if I visit customers, they say don't come and show up again. Usually, we had the 3rd price increase. Sometimes, we have to see we really can leverage our prices. We can demand bigger prices.
But as I said before, it's the 3rd price increase or the 4th price increase in certain material, and the chest can continue to do that. And usually, you have 3, 4 months period where not just can go back. But I feel one of the strong suits we have in it's decreased to market leader throughout the world. The market leader has to increase the prices. But I fully agree, our competitors should do more, so it would be easy also for us.
Okay. Very clear. Thank you, Paul.
Okay. Thank you, Bernd.
The next question is from the line of Jelukhan Daniel from Mirabel. Please go ahead.
Yes. Good afternoon. Hello as well. Just one question, a tiny one left. On Argentina, you mentioned quite a strong business there to I mean, just today, one bigger company, not in your sector, had a substantial profit warning because of IFRS.
They had to restate all sales and EBIT because of the hyperinflation, actually quite a complex topic. Can you maybe Adrian guide me or teach me on is that something which affects you as well? Thank you very much.
I mean, there is well, the rule is if
there is 3 years in a row of more than, I think, 30% or 40 percent inflation you do apply as hyperinflation, it should actually not have material negative effect on the P and L. It means basically inflation adjusting parts of your balance sheet. And we are applying this as well, but it will not have a material effect on the P and L performance of the Argentinian business nor the group, of course.
We have a follow-up question from the line of Karlsson Erick with Industrial Equity Partners. Please go ahead.
Thanks for being patient with me and answering all my questions. Very impressive cost containment as the SG and A line where you have grown at only 50% organic sales growth. Do you think that's sustainable also going forward?
Yes. We will work on it. I think we are competent. We have lot of leverage in our factories. And yes, we will go there as said before.
Very clear. And one more, if I may. You commented on that the price to raw material spread, if we look at those 2 together, will be negative in Q4, but less negative than before. Do you think they can be positive already in Q1 next year if you just freeze raw materials where they are? Or should it take a little bit longer during next year?
I think this is possible, yes.
And it's our clear target to turn it around as fast as possible. And yes, this is clearly the target, and it's possible.
Fantastic. Thank you.
Okay. Thank you, Erik.
We now have a question from the line of Rafais Patrick with UBS. Please go ahead.
Thank you and good afternoon everyone. Looking into 2019 and you have mentioned also at the Capital Markets Day that you will provide new midterm targets. Does the fact that we will probably end this year with a lower margin unlike the initial expectation for this year. Does that affect in any way your thinking or planning around the new targets? Or do you think this is such a short term issue?
And as you just answered in the question before, it could be recovered by Q1 already that it won't affect your midterm planning at all?
Thanks for the question, Patrick. I think, therefore, we have long term planning, and we are in the process now to discuss it, to define it. There are certain elements in there, how our acquisition strategy, what plays in the game. So we'll come out with our target in a moment. We confirm 2020 targets, and we continue with that.
And then we'll enter as soon as we know more, but we are positive to go in the right direction.
Okay. Thank you. And just one more. If I think about the bridge for 2019, and I mean, it seems that the M and A dilution has become smaller from maybe 70, 80 bps in H1 to maybe 40, 50 bps now in Q3. Should we assume that the dilution gets smaller and smaller in the next one, 2, 3 quarters as well, assuming no major deal?
And would you then say that you have kind of 0.5 percentage point of margin improvement in the bag anyway just from the space?
As you know, that is one of our strong suits we have. Each acquisition usually have to work for a year or 2 to bring the margin up to our level. I think the past showed it very good. We have now 2 acquisitions this year where the dilution, as I explained, is already there. But yes, we will continue to bring them up to our level as we did in the many, many acquisitions.
Looking forward to 2019, the question is what kind of acquisition we have, So we cannot answer. The question is, can we really go up if we have another acquisition. But yes, we are able to increase the margins of the candidate we acquired.
We have a follow-up question from Lukiker Martin with Kepler Cheuvreux. Please go ahead.
Yes, thanks for taking my follow-up question. Just going back to your performance in Canada, if I remember correctly, I think in Q2 or Q1, Canada was a bit of a problem child in the North American market. Now I realize U. S. Is much bigger and it's thriving, but how's Canada been doing in Q3?
And what is the outlook there? And talking about Canada, could we also could you also elaborate a little bit on your outlook for Brazil? Because looking at the economic situation there, it doesn't look like you're going to get much tailwind at least. Let's put it that way.
Starting with Canada, yes, we have a tough year like many. I think the build rate, everything is very constrained in Canada. We manage a small grow rate, not on the level we would like to be. We have certain measurements in. We have certain new projects in.
Yes, tougher market, I agree. And for the next 2019, we are rather positive that this turns. Now it's the 3rd year. Canada is more or less a little bit in a recession as a country. So confident we can continue.
But yes, one of them. Looking at Brazil, we have in the moment an excellent ground. Nothing shows with 8% growth rate. We are very confident after the deals they have. So far, we see no sign that we slow down.
But as you know exactly, in this context, we never really predict the next 24
months.
We have another follow-up question from the line of Hostler Martin with ZKB. Please go ahead.
Yes. Just a minor financial question. What about cash flow in after the 1st 9 months? Didn't show any number. What's the trend according to your expectation and according to EBITDA?
And maybe for the full year, what do you expect at the end of this year the level of net debt to be?
On the cash flow, cash flow development is positive. We're not reporting these numbers in detail. But the gap in the first half year to the first to the last year has basically vanished in spite of the €70,000,000 lease buyback we did in the first quarter. In terms of the reported net debt, I'm expecting this to be a little bit shy of 2x EBITDA.
Okay. Thank you.
Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to management for any closing remarks.
Thank you very much. And thank you, I think, from our side, everything is said. We thank you very much for your interest and like to say goodbye to you. Bye bye.
Ladies and gentlemen, the conference is now over.