Earnings Call: H1 2020

Aug 12, 2020

Ladies and gentlemen, and warm welcome to the Biena Burger earnings call on Q2 and half year twenty twenty results. Our board representative today are our CEO, Jaime Shai and our CFO, Carlos Crosetter. Both will lead you through the presentation today discussing our results in the COVID environment, but also giving an outlook for further opportunities for growth Veno Therapy in the future. After that presentation, we are ready to take your questions. I will now hand over to Haimo Shai for the presentation. Thank you, Anna. The warm welcome for Marc here in Vienna. Obviously, as an opening statement, I do believe that, from a Buenavirus perspective, we have been very transparent and straightforward when comes to the communications throughout the COVID crisis in the last couple of months. So I don't have to go in every detail, but I think it's important to note that due to our decentralized, organizational structure and our local supply chains and especially the experienced management team, we were able to cope with this crisis in more than 30 countries very well. Have been very quick in implementing our measures, obviously, above all cost control and cash preservation were driving the performance in these very important periods of time when it came to lockdowns and severe impacts on our business in different market environments. So I think all of this shows and this is, I think, the major message that I wanted to relay to all of you that the Vina burger business is today a much more resilient business, a stronger business, and resist crisis like this 1. And, if you go to the slides 4, 5, and 6, you see obviously how strong the impact was with all the lockdowns and obviously the month of April most effective was minus more than minus 20% of sales, nearly 20% minus in May and then obviously a strong recovery in June when we compared to last year last year being record levels for VINA Burger plus 4%. So you see that obviously this pent up demand that has built into these months of lockdowns, we were able to recover it quickly. We have been very quick in starting up our operations again you will understand that this is always an issue to bring down plants and then start them up again. All in all, I think a great performance, great performance also when you look at the health and safety of our employees, which was the utmost attention for us in this period of time. And closing the 1st 6 months of this year was a performance only the turnover side, 5% down to the record levels of 2019 coming in at about 1,600,000,000 turnover is a strong aspect. Let me just put in this perspective also that we have been very strict when it comes to pricing with been able to offset all the inflationary cost increases with the additional price increases that we put into the marketplaces So this obviously was a successful operation of all our local management teams that are operating in different countries. The EBITDA level, was a like for like EBITDA of $255,000,000 compared to $90,000,000 last year, only 12% down again shows that we have been able to manage costs very proactively and fast and also obviously our fast forward program contributing even in these difficult times when we were not able to bring people across borders and not pursuing as planned our projects that we will have, we'll have $15,000,000 coming in from Fast Forward in the first half is a strong indication that we are working on always improving our performance. As you can see on slide 8, we have been very strict when it comes to cash preservation compared to last year by holding back on about 50,000,000 in the CapEx area. Strong liquidity team of Carlo has been very proactively managing our liquidity by increasing it to up approximately 800,000,000, we have successfully placed a bond that was oversubscribed nearly three times. So it's 1,000,000 and the 5 year duration with the coupon of 2 0.75%, so good financing structure here in place. Again, important to note that even in this crisis scenario, we were able to bring down the net debt to EBITDA ratio to 1.6 compared to last year. So strong balance sheet, strict control here on the financing side and obviously from a rating perspective also stable. When we look at the ongoing business, we didn't only manage crisis. And this is, as important for all of you to know that we can focus on cost. We can manage the business very in strict and closed terms, but, and this is the important part we focus also on the future. And discuss without saying that the ESG issues are one of the most important elements from our perspective. Strategically speaking, So not only we have updated on the recent events and on our roadmap that we have put in place for 2020, he has successful implementation of all the measures and issues that we had to put in place We obviously take it very serious when we when it comes to the, measurement and the KPIs. So you see it our rating has been confirmed in this respect that we are moving now on new targets that we will communicate a little later this year. Successfully also launching the 1st climate neutral break in Austria and Germany and 2nd, very important pillar innovation. Remember that we always focus on this new products, new solutions. And again, I'm happy to report that here again, we have made big steps when it comes to innovation launching the world's first certified pipe for 2 transport green hydrogen in the Netherlands. So very important to enter this market, a future market and a very interesting one. Then again, in our traditional portfolio of facing bricks, for example, to launch new products that are highly energy efficient when it comes to Ecoprick where we further decarbonize our products range, very important solution here again The digital enforcement of our presence here when it comes to customer solutions has proven the right track in this crisis times because it allowed us to ensure distribution and ensure the logistical part of our business. And therefore, we engage even more in this aspect providing additional solutions for all of our customers in the different markets. And again, on the waterfront, smart asset management when it comes to water networks, here again, improving our product range significantly. And obviously, when we look at the overall performance here, I think, Werner Burger has made a great step forward in providing new solutions in practically every product range that we serve. And with this, I would like to hand over to Carlo who walks you a little bit through the numbers. I mean, we can do the business units. You have the numbers in front of you, we can comment on this probably a little later. Yes, sure. We can do that. Thank you, Jaime, and also good morning, from my side. We're very pleased, considering the situation that we've been facing in the second quarter with the overall results that we were able achieve. IMO has shown in the slides, previously, we started April with a significant drop in revenues in 3% in the June, at a high level of 4% to 5% above previous year. So Clearly, we are showing a significant recovery from the beginning of the COVID crisis. And thanks to the great effort of our team in the different organization, we were able to deliver a result that maybe just 3, 4 months ago was probably difficult even to, to assume. A drop in revenues of 5% in such a difficult phase is something that, we are we were able to, to accept in the sense that it did affect also our our fixed cost coverage, especially on the factory side, on our Building Solutions side, but nevertheless, thanks to pretty, cautious cost cutting and, to a certain extent, also subsidies receive from some of the markets where the Subsea were available plus a very stringent working capital management, we were able to obtain our free cash flow levels and our working capital levels to a very satisfactory level and actually lower than they were a year before. So, very conscious management of our expenses and very conscious management of our working capital and especially inventories. Our fast forward, delivered, results of $50,000,000 in the first half of the year and, given our decision to be careful in the second quarter with regards to special CapEx spending and also to hold back on some of the projects, which we're supposed to deliver better volume opportunities in the future given the uncertainty that we were facing in the second quarter. We have reduced the expectation of savings and efficiency improvements coming out of Fast Forward for the rest of the year to CHF 30,000,000. And the remaining CHF 20,000,000 will be, of course, delivering in the year 2021. It's important to mention that this is mainly driven by our conscious decision as I said, to be careful on the additional investment as liquidity management was for a short period of time, at least very critical probably even more priority than, you know, delivering results, especially in the middle of the crisis. Today, we have a much better feeling And we have a significant higher cash position. Jaime mentioned that we have over $800,000,000 worth of liquidity or disposal And we do expect the 2nd year to deliver decent results as we go forward. So we are much stronger position also to put money again back into fast forward activities. Our like for like comparison you see on page 18 was obviously influenced by lower sales, mainly volume driven. We were for the great effort of our sales organization to maintain our pricing and cover the inflation re increases. So it was really purely volume driven. And shutdown driven. The other effects that you see in the walk from reported to like for like, mainly driven by same of noncore assets in Germany, a few consolidation effects due to the acquisition in Denmark of our building solution last year. The FX impact was pretty minimal with $3,600,000. The revenue or the income statement excuse me, was, influenced heavily obviously by the impairment decision that was taken in the end of Q1. As you know, in Q1, we had the significant triggering event, which was the COVID-nineteen. And at the time, given the limited visibility, or how we're expecting our business to develop in the coming years, given that we had to make this decision in a very at certain time, we felt that it would be prudent to write off mainly our U. S. Goodwill which, probably in today's hindsight given the stronger performance in, especially June of our U. S. Operation. We could argue that it may be in a bit too aggressive, but at the time, we felt that given the different scenarios that we calculated, that was probably prudent approach to take. Other effects on the income state that were related to less, administrative and selling expense is due to our cost saving measures and, that we were implementing and also expecting given the shutdowns or managed cost reduction, but also a cost reduction driven by the temporary government imposed shutdowns. We also had an improvement on the financial results, mainly driven by the fact that we were able to optimize our funding structures to replace facilities and bonds at a higher interest rate with lower ones Jaime mentioned the successful placement of the $400,000,000 bond at 2.75 coupon. So we also had additional facilities that we were able to secure with banks and also with other institutions so that we were able to significantly reduce the cost of funds while securing additional liquidity for the group. Taxes are, basically, including also deferred tax expense as the pure current tax expenditure is actually lower given the slightly lower results for the first half of the year. We're very pleased with our cash flow development that we were able to achieve in the first half of the year. The change in working capital was significantly better than it was for the same period last year, basically improvement of nearly 60,000,000 So, thanks also to the organization for managing this very difficult phase of shutting down and restarting operations. And obviously, that's not so easy to manage working capital in such a phase. And also the conscious decision of the board and the management to be a bit more stricter on this special CapEx at least in this critical phase that we hope have behind us, M and A activities as Haimo mentioned in previous call was put on hold, but it does not mean that Vina Berger will not consider the right acquisition going forward. Inventory level in absolute term were down $28,000,000 indicating also a strict cash control and working capital management and our debt or net debt is, as of June 2020, with $928,000,000, $60,000,000 lower than it was at the same time in 2019. Here, I would like to highlight, however, that the dividend payment, which was approved, will be paid in October which obviously in the figures of 2019, it already included a payment of the dividend. So if you add that up, that payment, which is planned for October, would probably bring the net debt level to a similar level that it was in 2019. But again, given the difficulties of COVID, it is, I believe, a strong result of the group. And the net debt to EBITDA level of 1.6, indicates this strict cash discipline. In the following slide, we see a walk off the net debt development and you see that the main expenditure or or cash outflows were for investments, share buyback, dividend, hybrid coupon and lease repayment So even in this period of difficulty, of uncertainty, I would say, although this obviously includes also the cash flow development of the half, second half of last year. We have kept delivering also to meet the expectations of our shareholder by buying shares back and by trying to the approval, also, the contribution to our shareholders. The last slide that I would like to briefly touch upon is the 5 intake structure, which basically is much more balanced throughout the year. Obviously, the bond is a lump sum payment in 2025, but I would say that we have a much more structured or a better maturity profile than we had just a quarter ago as we were talking last time and indication that the 2021 hybrid call date is also going to be due with the decision if we're going to call the hybrid will be made in December. So we decide and inform you accordingly what our position is. I can say that as from today's perspective, we have enough liquidity to cover a potential a potential favorable decision to call this, if we decide to do so. Right. Thank you very much, Ricardo. And let's back to operations, we into our 3 segments or 3 units, building solutions to Europe, heavily impacted in quarters too, obviously, by the lockdowns, especially in Western Europe, big markets like the UK, France, Italy, and parts of the rest of Western Europe. So again, if you look at the performance on page 12 of this division, considerable and remarkable comeback in June in order to offset these lockdowns and well managed in the sense of costs to keep the margins on such a high level. We have seen good trading also in July and I will come back to this in a minute. Piping solutions, even I think, very important to manage that here, we have been able increase the EBITDA margins and have moved up in performance due to the fact that here obviously we pursue our value added solution strategy. And you see here also on the impact side from the COVID nineteen situation that obviously by 5% sales were down, but strong performance as far as products and pricing is concerned. North America, two words on this, the longest shutdown in our operations Canada, very profitable business, 3 months down, but you see obviously here also a very good performance and strong management team in North America was able to offset it by good cost discipline, forward looking working capital management and a very good trading in 2 months of June July already again. So here we offset this lockdown situation due to better performance in the recent months. All in all, and obviously based on this good trading results in June July, we looked into the business analyzed the situation and obviously analyzed it also in the rest respect that we obviously due to these lockdowns, we have pent up demand that we currently see. We from a management perspective see also that this will flatten out in the next couple of weeks months. So all in all, we foresee in our end markets, the 30 markets that we operate in, about an average of 10% down on the end market. That does mean that Binaberg is down 10%, but obviously we want to outperform in certain markets. But as I said, administrations were not working and the Okay, ladies and gentlemen, very sorry. If you had a technical issue here, now you're back. And again, over time, side. Okay. Thank you very much. We apologize for the technical breakdown. And I will continue obviously with the segment, been a piping solutions where I said that obviously due to the strong efforts that we put in place to upgrade our product portfolio, we have been successfully, increasing our margins and in North America due to the fact that we had strict cost control and also good performance in the local markets with pricing. We were able to recover very quickly in the in Canada and the US. So all in all, this leads us to, a situation where we as management consider that our end markets will be down for the rest of this year or for the year as a whole about 10% That doesn't mean that we are down 10%, but we want to be better than that. However, as I said, there are certain issues when we look at planning permissions, when we look at the work on administration side to issue such share permissions, and that this will affect obviously the rest of the year. Setting this aside, we assume that obviously there's no further 2nd or 3rd week of COVID and that obviously our prices we have seen this throughout the 6 months are stable at this level and that we have a contribution from Fast Forward as Carlo has explained it from approximately $30,000,000 to our business. All in all, then we are, we foresee that we will have an EBITDA like for like in the range of 480 to 500, which is significantly up from our, first scenario that we have put in place in the early weeks of May. So here you see that we have worked a lot on our performance and we are confident that we will reach this throughout the year. From a CapEx perspective, we have about 120 to 140 on the maintenance CapEx side that we'll put in place. I think when you look even considering that the visibility right now is still short and it's difficult to predict the developments in the next month or so in Europe in North America and the UK right now. But the general macro trends that we see out there are good, are very encouraging because all the state aid programs that are put in place in the U. S. In Canada, in the UK and in the EU indicating that investments will be dedicated for infrastructure for renovation and for social housing. And I think here, Binnerberg is well positioned to take advantage of that. I draw you to your attention that the current turnover of our group is in the range of about 20% in renovation, 25% in infrastructure. So a strong exposure to the 2 fields of activity. This also proves that Glynneberg is more resilient than in the past when it comes to the overall business model. In recent days, we have also together with the supervisory board worked on our executive board structure. And I'm happy to announce that 2 colleagues, Solvayek, my Natalia, who has been the performance manager and responsible for 1st forward moves into an operational role being the COO on the board for the billing solutions side and Harald Schwadsmaier, a longstanding manager that has been successfully putting our UK business up in the last 10 years is now headed. The Piping division is CEO and both of them will be responsible for further developing our 2 major business divisions in Europe. Again, I think here we have a clear strategy in place to develop those 2 units and to develop North American business in the way that we obviously improve our product range when it comes to higher value added products and solutions that we want to sell. And I will show you in a on Slide 31, for example, the strategy for North America where we see a potential for growth further consolidation and where we are ready to consolidate the market even further because we consider Linaberger is the natural consolidator for the industries that we are operating in in North America and in Europe and the UK. So positive housing sentiment in the years to come, as I said earlier, we see that our strong and strict cost management, very efficient and experienced management structure allows us to add on businesses. We have done so successfully in recent years. And therefore, I think a further consolidation in the U. S. Will bring the positive effect. On the Wiena Burger Piping side, we want obviously also to grow our business, especially when we look to our exposure in for Eastern Europe, we see here some important and substantial potential for further improving our market will move on that. We will also move on a very specific application when it comes to energy management, water management, especially and renovation solutions. So this is an attention point for the management in this division. We have a piping solution building solutions again, here again to further improve our range when it comes to, highly energy efficient solutions for renovation, for roofs, for facades, and also for the new build when it comes to Gricks in Central And Eastern Europe. It goes without saying that Vienna Berger today is a company that has a strong attention and focus point on ESG. We had this in the past will continue and certainly reinforce our performance in this field. It is a clear target of us to decarbonize our product range to hear make sure that all of our solutions and all of our products positively contribute to climate change and have a life duration that is extremely long and add obviously to the performance of buildings and renovation solutions and infrastructure solutions. Furthermore, and I think this is also very important and not to neglect that any solution and product of peanut butter is 100% to be recycled. And can be added into the circular economy. So we see here a big advantage of our products compared to the, to the competition and running more than 200 production sites worldwide, we feel responsible that we do a positive contribution to the biodiversity locally, be it in the local communities or regions, be it in all sorts of respect of, the surroundings of our sites or within our sites. And we'll have here clear plans and report on all of these aspects transparently as we did in the past. Obviously, and finally, when we to Slide 35, you see that we have a clear vision when it comes to capital allocation. We have clearly said to the shareholders that we want to return 20% to 40% of free cash flow by dividends and potential share buybacks. So that's what we have done in the past. We'll continue to do so in the future. Secondly, we have a strict balance sheet management when it comes to financing and especially when you look at our ratio today, we have been very disciplined net debt to EBITDA and we want to keep it below the 2 point 5 that we impose on ourselves. And this leaves us with obviously the opportunity to grow. We have our maintenance CapEx where we always said clearly that $120,000,000 $140,000,000 in this range we need for maintaining and improving our business. We've also a clear vision then in the future to put CapEx into targets. And this will also drive our sustainability performance in the future. So we'll have a clear measurement with respect to these targets and the KPIs that we will put forward when it comes to investments in this direction. And finally, the discretionary investments that we will put in place by special CapEx, as you have seen in the past, especially performance enhancement and then finally M and A, where we see ourselves as the natural consolidator in the industry, and in industries next to us in order to strengthen our portfolio. So here again, I think we want to move forward to create a Vina burger that is more system and solution supplier than a product supplier and continue the successful cost in the coming upcoming years. So I think that is a gentleman we have given you together with Carlo an update on the current situation. Financially, performance wise and also with respect to strategy and are ready to take your questions. Ladies and gentlemen, at this time we will begin the question session. The first question comes from the line of Eve Broomhead from Exane BNP Paribas. Please go ahead. Good afternoon, gentlemen. I'll have three questions, if I may. My first one is on your comments for the month of June. I'm sorry, but I didn't hear that correctly, was this 4% to 5% below or above 2019 levels? And given that comment does that imply that July was running at higher level than June? That's my first question. My second question is just want to better understand your guidance. Is your EBITDA guidance of 4.80 to 5 based on market expectations of minus 10% versus what Vinerberg could actually achieve And then lastly, on the M and A side, especially in the USA, you've done a specific slide. There is a real need for a larger consolidation in the U. S. Versus Europe. Just trying to understand, does this mean that you're feeling a bit more comfortable around potential larger deals, especially with the U. S. Thank you very much. Thank you, Nima. I just want to clarify this again on chart on Slide 6. We have clearly said that our trading or revenue performance in the months of June is 4% above record levels of last year. So you clearly see there was this pent up demand in June after the lockdowns. Your second question related to the performance in July. Obviously, we've seen a good month of July, not at this record levels, but more in line with our expectations. Our guidance implies that obviously our end markets are down by 10% and that doesn't imply that Vinaberg is down by 10 percent, but it implies that we are operating in a market that is declining by 10% overall for the year, 2020. So this is on the front of guidance. When you come to M And A, I think you mentioned the U. S. I'm obviously, I will comment this in a minute, but I'm just saying Biena Burger is ready obviously to move as a consolidator in industry is being piping or being building solutions, as well as in the U. S. Or North America in Europe and also in the UK, if the right opportunities arise. We are not forcing anything. We are not under pressure to do anything, but we are saying that from a balance sheet perspective, operational perspective and management perspective, we are ready to do such deals. Yes, they can be a little bigger. They can be obviously not only bolt ons like we have seen it in recent years and we'll continue by the way to do those bolt but if the right opportunity arises, we'll also do a bigger one. Thank you. Just sorry on the guidance side. I'm sorry, but still struggle to understand if you are able to achieve better than the 10% essentially In other words, this is incremental to your 500, upper range. Is that correct? You've advanced or no? Sorry. Are you still there? Yes. I said no. The next question is from the line of Matthias Pfeifenberger, Deutsche Bank. Please go ahead. Yes, good afternoon, ladies and gentlemen. Thanks taking my questions and congrats to the very resilient results. I ask CapEx question first. Can you maybe share with us with us what the total CapEx budget would be, let's say, no further lockdowns, you're resuming some of the special CapEx and you're always engaging in in this new line item is G CapEx. What could be be we'll be looking at in total XM and a? For this year, I don't, I can't give you a solid guidance when it comes to this. But just in general, yeah, when we are back to normal, what could we in terms of a total run rate? Well, I think the total run rate, as I said, from $120,000,000 to $140,000,000 in the maintenance CapEx, I think, is that one we confirm, on the discretionary side, as I said, we will decide then how much we want to allocate in to the businesses. Carlo explained, when we feel more confident, we will allocate a little more than 2 special CapEx, for example, towards the second half of this year, but it will be well below last year's level, by the way, and M and As, as I said, driven by opportunities And by when you refer to the ESG part, then I think you will get an update in the clear vision when we do our Capital Markets Day later. I think it's plan for the beginning of October where we'll give you a more than 1 year outlook because I think this is projects where we really want to make a difference when it comes to the incremental and sustainable performance of Fenaburger. Okay. Any sneak peaks there in terms of the ESG program that you envisage for the next 5 years? I mean, will this go as far as working on the Cunes structure, the energy structure of the Cunes, or is this just on a product basis No, it's definitely a yes to what you have seen with, you have said Matias, it's a work on the technology side. It's on the industrial footprint. So it's a major project that will keep us busy not only for 2 or 3 years. I think their division considering the lifetime and the lifespan of our plants more than a 10 year project. And therefore, it needs to be embedded in a long vision and then we must step do it step by step implementation. We can't rush into one mark in all the markets at the same time. We need to implement this. But what we have seen throughout the last years where we can consistently worked on technology and improvements and fast forward is a good example where we see efficiency gains, tremendous ones. Here we want to implement them now in a very structured way forward. And so we will give you a clear guidance and also the necessary case guides to it. Thank you. And the last one is, okay, great. Looking forward, last one is really on the guidance and I really don't want to nag you on this because obviously it's, has been too good to be truce anyways with with regards to you raising the targets for the 3rd time and, for the for the second time. This is just about when we're thinking about, let's say you do, you do minus 7a half for the fiscal, like you always did better than the market. The run rate on a year on year basis is still close to minus 10% for this quarter. So it's not really such a slowdown in terms of the Q2. So my question is, do you see a big shortfall from, let's say, July June, July to August, September, is that already visible in terms of the conversations you have with the customers? Or and that's the other scenario, I guess you're you're maybe, still preparing for a for a weaker Q4. Is this Is this really Q3 where you see it already or is this just precaution for the fourth quarter? And then also on the margin, it's obviously a weaker margin in the second half, but it's a lot of seasonality and low visibility. I get that. But especially also the pipes business was a big surprise in terms of absolute EBITDA up and also margins up. So probably this is gonna be up on the on the fiscal basis. So my my over question is how bulletproof is this second half guidance really? Thanks a lot. Well, I think bulletproof when you refer to if we can achieve it, I think it it needs hard work. Obviously, it will not come by its own as didn't the results of the first half, by the way. And I think Carlo alluded to it, it has been difficult market environment out there. And especially when you consider our pricing, it is holding and we are working on that every day. Also the new products that we have introduced in the market. But here, it's I think I all perfectly understand you and your colleagues want to understand better what the visibility is, but I must say also our visibility today is not very long. And I see only that in markets also in Eastern Europe demand levels are or have been under last year's levels will continue to be under last year's level. So there's no major change because obviously there is shortage of labor. There have been some fiscal policy changes by local governments, other political issues, etcetera, that are important to note. So all in all, I think when you look at our guidance with the 500, it is already a lot of optimism in it, and especially I just want to recall where we are coming from because I think 3 months ago, nobody really believed that there is an EBITDA at the end of the day. So, let's see. Let's move through this year. I think we give you confidence. We you a sort of good outlook at this stage. If something major changes, we'll update you regularly, but for this moment, I think this is our best estimate that we have. The next question comes from the line of SingTong Uyong with On Field Investment Research. Please go ahead. Hello. Hi. Good afternoon. Thank you very much for the presentation. It's the underlying market. So you've been mentioning that there is a lot of uncertainty concerning and I will also see a lot of healthy measures for example from the UK where they're trying to change their planning to So I'm just wondering, do you see other similar measures in other European countries which are going to help the new bill from the permit site. And then my second question is on yes. Sorry. Your connection is very bad. I couldn't get your question. Sorry. Can you hear me now? Better. Okay. Sorry about the connection. So, my first question is on the underlying market. So you've been saying that the lag cost, say, building permits or the planning system is going to affect the new build market at least for the, for the rest of the year. But then we also see, for example, the UK government is trying to ease up their planning system. To make new bills market a lot easier. So I'm just wondering, do you see any other similar measures in other European countries which are going to make the new build market say less pessimistic on the, administrative side. And then my second question. Can I ask you, can I just sort of answer your first question? Not at this level. I don't see any sort matches by any other government to ease up this sort of permit process for the moment. And I would sort of say also if And in the event that the UK government says things will need still to see the results of it. So I think you will not see immediate effect here. It's a good intention. We all applaud, but we need to see it then materialize Okay. Okay. All right. Great. That's clear. And then my second question is on your renovation split. So you've said that 20% of group revenues, from renovation activities. But then I'm just wondering how much of this 20% actually is targeting energy efficiency, like as in the sense that keep renovation instead of light renovation where you only save around, say, 30, I don't know, a very small portion of the energy consumed. All of it is in high energy efficiency. I mean, all of our renovation solutions because they are linked to fissade and roof, especially. And when you renovate the house, the most energy that you that you lose in a not renovated house is through the roof, by the way. It's an old saying, but it is the right thing. So if you start insulating the roof, you will save more than 40% of your energy. Then the facade, then the doors and windows. So these are the most important things that you need to do. So clearly, when we talk about energy efficiency and energy savings by renovation, the roof and the state are the clear winners. Yes. Okay. But then in that case, do you have any plans, for example, in M and A or whatsoever to expand your solutions for the renovation solutions in the building solutions division, like do you consider acquiring other products like insulation or waterproofing products? Well, we do and we did already. I think we bought small bits businesses in the Benelux. We just bought a business in the first half of this year, which we signed recently in Germany in order provide these solutions. It's a multitude of businesses that we currently are integrating in our existing and therefore, get a stronger performance here. So it is yes, the answer to your question that we will certainly look carefully in opportunities when it comes to renovation. Great. Thank you. And then the last question I have is on the ESG side. So, based on your based on your updated 2019 sustainability report, it seems like you have achieved most of the targets you set for 2020. But then as for the, CRT emission from primary energy source, in the bricks and tiles segment. You targeted say 20% decrease versus 2010, but you've only achieved 6% decrease in 2019. So I'm just wondering what caused this, this gap and is it still achievable because we're in the middle of 2020? Thank you for this question. And I think this is very important that you mentioned it. We are obviously on a journey. And, as I said, when we put these targets together, it was in 12 or 13. So it was a long time ago, and we were very ambitious already. But I think what we have done, we have learned and we have we have put new technology in place. And today, we are much more confident that we will reach targets that we will then communicate to all of you. I think when you take this specific one, I will say probably not everything will be achieved in 2020 because it's a really tough goal hit, but we see in certain product extensions and then on certain sites already the significant improvement. So what I try to explain to your colleague Matias is that with this experience, we will put now in place a major ESG effort for the next 10 years where we will substantially reduce energy consumption and therefore CO2 emission. Okay. All right, great. Thank you. Thank you very much. Thank you. The next question comes from the line of Ami Galla with Citi. Please go ahead. Hi, thank you. A couple of questions from me. First on the July demand trends that you've seen, can you talk a bit about the product mix which products have actually experienced a much stronger demand as the market picked up. And also in in the markets where you sell to intermediaries, Have you seen any bigger restocking effect in the sort of demand that over June July? My second question is on the Piping Solutions margin again. Sorry for the follow-up, but the improvement, as you mentioned, the improvement has been driven by the your value added strategy. I was wondering if you could quantify what portion of the improvements was really driven by the benefit of lower input costs. And should we still expect, is it reasonable for us to expect that the year on year margin improvement can be held into the second half in this business? My third question is on working capital management. I mean, has there been any signs of increases in bad debts or signs of customers requiring extension of credits in your business? If I take you three questions, I'll start with the last one on the working capital side. We did see any sort of major changes when it comes to customers or payment terms, etcetera. So this is very well managed. You've seen from Carlos presentation also that inventory levels have been managed very well. So all in all, nothing nothing to report on this issue. When your first question was relating to products and we see obviously an increasing trend and better trading in the roofing products and the facade product. So this is the clearly the pent up demand that you see there in this area. And from my perspective, when you talk this, your other question about the piping segment, here again, obviously, as I said, we have here a better margin because deliberately, I told you about also when we talked about 'nineteen, we left certain markets, certain commodity markets, So, we exited certain product types and therefore have more focus on this higher value added ones. So that's a natural effect that we have here. And secondly, I think when you talk about solutions like the, on the electro part when it, despite a solution that I described, I think the last time when it comes to a plug, system as well as a pre installed system for electrical installation. So these are taking momentum as we speak. And the input costs, yes, they have been a little lower in the first half. You can't sort of foresee that will continue in the second one because we have already here seen that the raw material prices are trading up. So don't foresee this for the second one. And I think from a general perspective, we always said that we are working on the level of profitability of the segment and And obviously, we are in good way forward and the target levels that we have said ourselves have been 12%. And then I've indicated to all of you colleagues twelve is not the one that I'm satisfied for the long term. We will certainly work on that over the years, but I think what you should what you see here that this segment due to a very experienced management team is now moving in the right direction. Thank you. Thank you. The next question comes from the line of Rajil Pava with MainFirst Bank. Please go ahead. Good afternoon, and thank you for taking my questions. Just a couple from me, if I may. Just starting with the impact of COVID upon the business, just in terms of a twofold, I should say. In terms of can you quantify the benefits that the company received from government employment schemes and the like? But also can you estimate the cost of shutdowns and site closures and how that impacted the business? Well, the first question is, I mean, this is a minor effect. I think from an overall perspective to be neglected to state 8 things it's really minor. And we, from a reporting perspective, we can ignore this basically on the overall performance obviously, you see the results in quarter 2, the shutdowns all the impact that we had here. I mean, quantifying it, it's certainly a substantial amount because obviously it impacted us in the certain in the second quarter. And I think you can easily deduct it from our results, if I may say so. Okay, great. Thank you for that. Moving on to the Fast Forward program as well. If possible, be good to know the savings by divisions that were achieved in the first half of twenty nineteen, the first half of twenty twenty? And also just how that remaining million will be by division, if possible, just to give us a good idea of the underlying earnings and how they could move? Well, I think it's not so much by division. It's, when you look at the year 2020, we have promised to deliver pre COVID 1950,000,000 for the whole of Biena burger. And when you look at the impact, the severe impact that we have seen in the first half with 15,000,000. It's a strong performance. We also indicate to you that 15 world come. So we have an overall performance of $30,000,000 and I am, I'm very confident in Carlos as well. That the remaining 20 will be then achieved next year. But I think from our perspective, it's a strong performance in, especially when it comes to manufacturing because these are the major ones that Carla was indicating earlier where we do our project and where we'll dedicate also the special CapEx too. So you will see it mostly coming from manufacturing. And this is certainly mostly also on the Building Solutions side where we do this project. Okay, fantastic. Thank you very much. And just the last question, just on trading in July, and July August, sorry to go back to this because I know you did a respond to questions earlier, but if you're able to provide a bit more color on the split between volume and pricing and how that's trended? Because the data that we follow shows that pricing, for example, in North American BRICS has tended to accelerate in July. So I'm just interested to see you're seeing in the market? And if you're able to provide any more color on that basis? Well, I think it's pretty much in line, as I said, with expectations to trading in July, August is too short now to give you an indication. But from a volume perspective and price perspective, we are pretty much in line with the overall performance that Winnebago has shown so far. The next question comes from the line of Anastasia Solidszina with UBS. Please go ahead. Hello. Thank you for taking my questions. I've got 2 please. First one, on pricing. Do you see any room for the positive spread on prices versus cost inflation in the rest of the year? And how do you see potential benefit from energy cost decline? Is there any benefits already realizing in second half and how big the input can be into the next year? And my second question is a follow-up on M and A. What criteria do you, use to determine attractive M and A targets for you? And, what levels of returns you are looking at potential targets? And also on related to this question on SG CapEx, are you looking to put in place? What levels of returns we can expect on it as well and the over what period? Thank you. Thank you for your questions. I think from, from what I tried to explain on the pricing side, we we are very happy that we can cover cost inflation this year. And we do so for the remaining years. So there's nothing to be expect on top. So that's it. From the input cost side, when you talk about energy in particular, you remember that we buy forward. So we have, call it, hedged or bought forward the energy already. So we don't see here a favorable environment for the rest of a year either on the cost side. So this is basically all built into our guidance, if I may say. So if you Bear with me one second. I think we will give you then the update at the Capital Markets Day for 2021. So not yet because we are in the middle of this forward buying process and getting this organized. So in October, we'll give you here a stronger sort of guidance when it comes to the input cost side for next year. Then you had a question on the, yeah, the potential targets on M And A and the ESG CapEx levels. So, from a return perspective, you know, we will certainly, as I said, to your colleague, Matthias, give you a better than more detailed plan on this overall policy and strategy that we'll put in place and therefore, then also return targets that we'll have with respect to this CapEx. So if I say this, there will be a return. So that's the positive news to it. And it's not only an obligation to do so. So that's one part. And the second one M and A targets, yes, we are looking at numerous targets and we have been doing so in the past. We have seen how disciplined we have been in the past and will remain very disciplined As I said, if the right opportunity comes in these markets, we will certainly move of them. You know our track records when it comes to M and A, so they have been well and transparently communicated as far as multiples and return KPIs are concerned. So we'll certainly remain in this range when we talk about potential targets in the future. The next question comes from the line of Losh Mahindra Raja with Berenberg. Please go ahead. The first one on Austria, I think I saw in the report that the lockdown was shorter there and you sort of saw the initial recovery and then it slowed since then sort of given some of the permit issues you've already discussed. I just wanted to, wonder if you could give us some color on where for Austria has settled versus maybe 2019, and given, like, I get a sense that they're maybe slightly ahead of other market. And the second question is on, on energy. I know one of your competitors, obviously, had a big loss on sort of disposing hedged energy, in in a full current spot market. I just wondered if that would material you guys at all in H1. And then the third question is on Fast Forward. I know sort of when you launch the program of of a 120,000,000 it was based on on flat volume, given you sort of expected to get it complete by 20 21, you know, do you think volumes can get back to 'eighteen, 'nineteen level by then or is there just sort of more you found on the cost side? Thank you. I think I will hand over for the fast forward question to Carlo. Yes. I mean, we, I mean, I think the key message on the, on the fast forward expectation with regards to $20,000,000 is that, you know, part of the reason for this delay is the conservative approach in dealing with special CapEx. And we don't do special CapEx for fun. We do it obviously to improve the operational excellence of our operation and to grow the business. And we felt that would better to focus on liquidity in the short term. But, we remain committed to the fast forward initiative beyond 2020 and this $20,000,000 and probably more will come in the following years. So it's just a mindset change and it's the attitude that the business have in making sure that we come efficient at these tools and mindset is embedded in the organization. So we're pretty confident that there will be additional savings in these savings will increase as revenues and market sentiments improve obviously. So it's not going to be finished. It's going to be a continuous process. And I think if I may add to this color, if you see the performance in the first half that it was declining markets and we were able to achieve this positive result it proves that, obviously, if markets are coming back into our manufacturing, especially when they come more from the manufacturing side, we have hit in the additional leverage Yes, correct. Yes. Your second question was on Austria, and I think we have seen here permits down about 8%, if I'm not mistaken, something like this in Austria. And I think it will level out at this stage here. It's also regionally very different and obviously, it's not always in the markets that we are active in when we talk at multi residential housing and and multi store housing. So it's something we monitor very closely, but does not always affect our markets as such. Yes. So that's my response to this. On the energy side, you know that our policy is very different from competitors. We buy forward that means volumes and we don't hedge, basically. So we buy volumes, we insure them. And obviously, we have been in contact with our suppliers very early this year and try to push back this for obviously volumes order not to have penalties. And I think so far we're in good shape with these negotiations and we'll not see major issues coming from this cost wise. Okay. Thank you. Thank you. At this time, there are no further questions. I hand back to Mr. Krausz group for any closing comments. Okay. Thanks very much, operator. Ladies and gentlemen, thank you very much for dialing in today. We will come back with a date for our Capital Markets Day later on in autumn. Next conference call will be on November 5th for the Q3 results. And for today, I can only wish you a nice remaining afternoon. Thank you very much for dialing in again and goodbye.