Earnings Call: Q1 2020

May 14, 2020

Ladies and gentlemen, also warm welcome from our site from Vienna to the conference call with regards to Q1 2020 earnings. The Winnebago Representatives today are our CEO, Jaime Oshoi and our new CFO, Carlos Koceto. Hi, Moshe. If we'll lead you through our presentation today, it is provided on the website. If you don't have it in front of you, You can see it and download there. And after the presentation, we will be ready for any remaining questions. And I'll hand over to our CEO for the presentation. Thank you, Ana, ladies and gentlemen, a warm welcome from Vienna. To this conference call. I will obviously due to the, sort of happenings of the last couple of weeks months walk you through the presentation. I've given you an update obviously during our, numerous calls with respect to COVID-nineteen. But let me just say before we start that, considering rather particular sort of situation and special situation that we are currently in. Our first quarter has been a very strong start into 2020, we have achieved a slightly better revenues than last year by plus 2% to EUR 793,000,000 and the EBITDA like for like 105 less in line with last year. That was $109,000,000. So I think altogether, if you look at a little bit more into detail, to the first quarter. You've seen a very strong start with January February above last year. March was obviously affected already by COVID-nineteen. You can more or less say that we had a drop in revenue here about 30% in certain up to certain percent in certain markets. This is something that you will see also during April, May, and probably into June. When you talk about the development for Vienna, for the Vienna burger group, keep in mind that obviously, the Western European economies have been severely hit by this. We have alluded to this several times due to the fact of the shutdowns, especially in France, in the UK, Thailand, Italy, and obviously affected by these shutdowns is also the Belgium operations because they strongly import into these other economies. So I think this is from, in a nutshell, what I can say when we start, obviously important also, and I think this is a couple of good news, the pricing that we have put into the market is covering cost inflation and is holding up as planned. So this is, I think, again, a strong statement from our side that our strategy with respect to value creation with innovative products and solutions is working and we make here good progress. We have obviously reshaped the portfolio of Vina Bera during the last decade. So Vina Bera is more resilient in such crisis because we have a much more diversified portfolio of products and also touch upon different end markets like the infrastructure the renovation market. So here, obviously, we have a stronger portfolio than we used to have 10 years ago. And I think what we see also in this market environment that the focus on customer proximity, the innovation that I talked about and of the strong focus on digital solutions that we have put into the marketplaces have helped us tremendously in these difficult times stay in contact with our clients to work closely with them and to ensure the availability of our product. So I think here a strong message that we can give from operations to you. As I said, I think from let us move a little bit into the different divisions. Building Solutions has seen, obviously, also due to the fact that we had a rather mild wind in Europe, a strong start, plus 5% in turnover to more or less a 500,000,000 turnover in the first quarter. So a very strong start. We see the effects of COVID in certain countries of more than in others. I talked about this in much more detail during our update calls that the Eastern European economies were not so hard hit in certain of the Western European ones due to the lockdowns due to obviously the state intervention. And therefore, obviously, we see here in March already declines in turnover. And also a good set of news is that the acquired Brick assets in Denmark have been integrated rather quickly and create already here additional value contribute to earnings due to the consolidation effects that we have. So again, from my side, it's a good sort of feedback from the performance of this business unit in Europe. The Piping Solutions also a strong sign of value creation here. We have improved in this difficult market environment. The EBITDA by plus 10% was a rather flattish market environment and this is again, also due to the fact that we have focused very strongly on the added value product And therefore, obviously, the value addition was a higher one and we were able to improve margins throughout this business unit. And I think here also, From a strategic point of view, we are focusing on the right set of issues in order to improve the performance Obviously, the Northern And Eastern European economies were working without most without interruption. Obviously, you have lower demand levels also in these markets, but from a shutdown perspective, they were not affected as for some Western New in economies. When we look to North America, here we have 2 sets of issues that we have to keep in mind. We had rather bad start weather wise into the year, very wet weather in certain states and especially in the state where we are operating in and the south. And then obviously a rather important impact by COVID-nineteen, especially when comes to Canada, you know, that Canada is a very profitable business for us in the facade business. And the shutdown there obviously has taken us to shut down the plant. And obviously, there were no construction sites. And, we look forward to Canadian government will take also less restrictive measures, hopefully, in the next couple of weeks easing up and and we can go back into production and also into the sales. So this weather and COVID nineteen has to be seen we look at the U. S. Business. And again, I think it was minus 6% in turnover and a slight decrease in EBITDA. I think here, we have shown that the American business is also more resilient and stronger than it used to be. Again, in a nutshell, from an EBITDA development, you see here, I think when you take it from a reported into the like for like. There were not no major. I wouldn't say adjustment necessary, just the consolidation effect that we have seen. Obviously from the Northern European Rig Business. When we look to this crisis in particular ladies and gentlemen, obviously, we had a triggering effect when we talk about asset valuation. As you know, we were or we all are forced to do so when it comes to such triggering events and COVID-nineteen was clearly one. So we as management took every necessary step in order to look at our assets in a very detailed way and also on the numerous scenarios and took obviously also very serious scenarios because we're operating in very dynamic market conditions. And therefore, we came to the conclusion that from our perspective, we had to write off the integrity of our goodwill in the North America. This is about 1,000,000 of euros. It's a goodwill that means it's it's not cash effective. It's not the sort of anything that influences the results, the operational ones. It's on top of it an issue that we carry on the balance sheet, I think, from the late '90s. So it's, I would say also some cleaning up that we had to make here. But at the end of the day, it clearly indicates that we have a strong U. S. Business because we had not to touch under any circumstances in these scenarios, the assets. So actually, it shows that clearly the cash generation of these assets in the U. S. And the Canada is a good one. But obviously in this very circumstances, we took the decision to write off the whole of goodwill in the U. S. On the other side, we looked at certain assets also around Europe and the CHF 22,000,000 for a group like ours is not allowed. And therefore, I think one shouldn't take too much time to talk about it. And it's mostly attributed to Russia. Here, we had to take some sort of precautions due to the impact of COVID in the Russian market. So all in all, when you look at the operational, perspective, as I explained, a very good set of results with this COVID-nineteen impairment. This is one of the obviously effecting our profitability in the first quarter. When we move, I think to interesting issues like the working capital. I think it's important to note here when we compared to last year. And this year, we have managed it very well in the circumstances. When you look at the inventory, we brought it even down in this, rather, sort of difficult market environment. It shows how proactively we are managing such crisis on the cash side, on the cost side and also on the working capital side. So again, very quick intervention in the business, as we speak, Obviously, we took, as I alluded to in a couple of times during our calls, to liquidity, we have good, strong, sort of additional available liquidity in place, roughly 500,000,000 in order to be well equipped for this crisis. Let me just, before we go into Q And A mode, go a little bit through the market so that we have a clear understanding, what has changed in recent days we see on the European map, sort of easing situation because obviously in France, the lockdown is partly now relieved and we are going back into production in the French operations. So this will take some time a couple of weeks to be back in production. But the good thing is obviously that we're moving in this direction. We've moved out of this in Austria. We are also now in the process of getting back slightly step by step into production in the UK. It's not going to be a quick return to do because it's obviously a phase 1 and it's also wished like this in the industry in the market. Also from a governmental perspective in the UK. So we will it will take some weeks that we are back into production there. But all in all, I think when you look at the European map, only Ireland, Switzerland and Italy are down for the moment. And, our indications are also that in Italy, we will see a restart pretty soon. The focus obviously was and this is also, I think, very important to mention at this stage the health and the safety of our employees. We have been clearly and I'm proud to say that everything has been put in place very rapidly, very quickly. And we had no direct incident in our factories. Indirectly due to family members. We had to put some people into quarantine, but nothing serious occurred. So I think here, again, a very good management operationally our local operations in the different countries. The same is true for North America. Here, obviously our operations in the southern states have not been, affected so much actually by this lockdown in certain states of the U. S. We see good running rates even today out of our operations here in the southern part of the U. S. Canada, as I said, is partly now going out of this lock down situation. And we have started our plant in Ontario obviously working together with the local authorities who will ramp it up step by step also in the next a couple of weeks. When we look at this situation, we have obviously prepared ourselves numerous scenarios. We have managed it actively at the situation. We got also, I mean, it's for us also was a 1st in the history to have such a situation to be confronted with it. And we have seen that when we move out of a lock, downward shutdown, we have a rather quick return to a certain melody. I referred to a country like Austria where we were pretty quickly back to about 80% of sales rather quickly. So It is of utmost importance to ensure the supply management. And this is our major focus at the moment. We are actually putting back our operations into full mode because the demand levels are good. We are working on project and there's a good demand level in the market. So again, I think major focus is now to satisfy the demand in the market at we speak. We have obviously a very strict cash management in place and cash preservation policy. When it comes to CapEx, to cost spending, etcetera. So this will put we will remain in place. I referred also to the very strict working capital management that you have seen in the first quarter. So this will remain in place as well. And the team around my new colleague Carlo has ensured the necessary liquidity in order to be ready for any sort of scenario in such a situation that might occur. Obviously, and I think we want to be here also very transparent with all of you. We have worked on numerous scenarios in order to estimate what the year might bring. And the experience that we have now after nearly 4.5 months in this sort of a year and 2.5 months in such a a very, sort of extraordinary scenario that we are currently living in, we come to the conclusion that if in the event, there are no further lockdowns in our markets that we're operating in. If the market demand level goes back to normality as we see in countries like Austria and Germany. Then obviously, we would see that the whole of our markets will decline probably throughout the year by 15 to up to 20% across the group. And we're confident and we obviously put in such scenario so that the price increases are holding as planned for the rest of the year. In such a case, we would estimated our EBITDA like for like. So comparable to last year's EBITDA, which was around 5 87,000,000, we should be in the range of about 440,000,000 to 480,000,000 So this would be the COVID effect that we would see this year on our results. On the maintenance CapEx, you can obviously predict that we will be in the range of $120,000,000 to max $140,000,000 that we will spend. I think this is the scenario that we give you at this stage and provide you to work with and to analyze. It's a one that obviously is produced by us in a very dynamic market environment that we are currently living in where there's a lot of things that are moving and the moving parts that are to be considered, but we feel at this stage come able to give it to you. So in order that we have a clear understanding where the year might be going. I think from my side, this was a short introduction to the current situation. I think that Vina Barger, at this stage, would say is a very different company that it used to be. We have worked, as I said, very, very, thoroughly on the product portfolio. I completely different set of products. We have also worked on our cost side, especially due to the optimizations that we have put in place during the last two and a half years. So obviously, when you talk about the efficiencies that we have and how we cope with this situation, it's a much different one as a model, it's a more resilient one and takes us through this crisis with a lot of more confidence than in the past. So I think from a strategy point of view, we will obviously be focusing also this year on innovation will reinforce our efforts in the digital arena in order to bring Vina Bagger even even closer to our end clients and end users and installers in order to make sure that they can use our products quicker, faster, easier on the construction side and that we can interact with them in a very digital way. We will also reinforce our efforts in the sustainability area, as I said. And I think Winnebago is not shy even in this situation in order to invest and prepare the company for the future. I think it's an important message that we are fully committed the Circular Economy, as we said, we are fully committed to the decarbonization of our product portfolio. It's even in these market circumstances that we launched a new product in Austria and Germany. It's a completely carbon free new brick for the wall segment. Then it shows the clear commitment from our company to this innovation process and to a new set of products that corresponds to the needs of our clients and gives us obviously a major step in the right direction of a carbon free economy. I think, ladies and gentlemen, that was my sort of summary of the first quarter with a sort of outlook, if I may say so for the whole year. And we as a team are ready to take questions. Ladies and gentlemen, at this time, we will begin the question and answer First question comes from the line of Matias Pfeisenberg with Deutsche Bank. Please go ahead. Yes. Good afternoon, ladies and gentlemen. Thanks for taking my question. I asked them 1 by 1. So, the first one, Mr. Shojson, on the 80%. So that's basically going back to the creep to the pre crisis of volumes. 80% of that. Is that also a level that you foresee let's say that that they will accommodate any knock on effects in terms of any negative blows to how's the confidence and are you adjusting your capacities to that level? I mean, we haven't been at full, capacity utilization before. So I guess there there will always be some leeway, but are you basically preparing for those levels to to remain in place for the time being? Let me just refer to this question, Matias. I think we, as you correctly pointed out, the capacity utilization and this is only for our breakout operations was obviously at such levels before the COVID scenario and the COVID crisis. And I think what we are adjusting, we are not adjusting to, we are satisfying demand levels, and we will see how demand level are working out. I mean, you might have areas that are doing better than others. That's a common thing in Europe. After the summer, we will have a better indication where demand levels are sustainably going to. I at this very moment, you have demand levels coming through rather quickly because, projects have been stopped. So we are working on existing ones. We'll see how the new ones are coming through. It is not that we have to adjust today certain demand levels yet. I think we need to follow this very closely. As I said, there's a very dynamic market. Situation to be in, but we shouldn't worry too much. We should now concentrate on having the products for the market ready and get it out. Stock yet. That's what we are focusing on right now. And you will be basically happy to kind of keep the plants in place not sacrifice them because you are still a big believer in terms of the long term pent up housing demand. Right? Well, I think we have a very, a highly efficient plant network throughout Europe. We talked about that in the past, we need to be in places to be ready to deliver to the market. I mean, that's also a distance issue. We that's why I'm saying we cover Europe, I see right now. I'm not excluding over the next years that from an efficiency standpoint of view, and especially also when we look at the mid to long term, it goes into the discussion of CO2 emissions. It goes into the sustainability discussions, efficiency. As I said, year, we might sort of put some more efficiency in place by putting some plants together in the future, but that's not something we are currently working on. My next question would be on the pipes business now actually showing the resilience from basically the the hiccups we had over the last couple of years. The margin is up year on year. Can we expect it for the fiscal and would you also say it's it could be up in terms of absolute earnings? Well, I think from a margin perspective, you should keep in mind that we are working on that and this is a continuous work and will continue. For the rest, I think I would be cautious right now because obviously we are, we're just at made levels. So we will see what the rest of the year brings and especially when we look at demand levels from the infrastructure part. So I think here, good, the management does a terrific job in this business unit in upgrading the product portfolio here, and I have no reason not to believe that we will have the positive margin effect. And the last one would be on working capital net debt can we expect the working capital release over the next several quarters or do you have to keep inventories to satisfy demand And maybe let's say at the midpoint of the scenario, what is the limited level that you have? Oh, you well appreciate. I think we always have this working capital swing that we have, which is about $200,000,000 to $250,000,000 depends on the turnover. But I think this will what we have every year in as will always be the case this year as well. So I think you will see this normal swing level throughout the year. Okay. And and for the swing to reverse, basically, in the second half as usual. Okay. Thank you. Your next question comes from the line of Eve Broomhead, Exane BNP Paribas. Please go ahead. Good afternoon, gentlemen. Just a few questions on my side. I guess, the first one is, I'm trying to your sensitivity and your scenario that you built on your guidance for 2020. And I believe that the run rates would be at around 20% for the remainder of the year. However, I think in the last few weeks, we've now seen construction sites reopening and the percentage of them being open now in the UK is even higher than France actually from what I'm getting. So I'm just wondering whether or not you're being overly cautious on the pace of the recovery that you expect in those markets especially as these are very profitable markets for you in the UK and in France and in Belgium. So just a bit of color on that would be really helpful. I'll take that first question and then I'll jump to the next one if that's okay. It's not. I mean, obviously as always transparent and frank with you, I mean, we take a point of view, you might call it conservative, optimistic, realistic, pragmatic. It is one that we have to take in a very difficult market. The situation that we are operating in was a lot of things that move every day and develop every day. I think if something is doing better, we will obviously inform you, keep you posted, but I think we have still and a year in front of us that we'll see certain development ups and downs with as we have seen in the last couple of months, as you well appreciate. I hope that we come back to normality, but nothing is excluded at this stage. So I would say from our perspective, I didn't use the word guidance. I said it's a scenario that we are working with because that's what we can tell you at this stage. I mean, there's no such things as certainty in such situations that we are currently in. So I think If you appreciate, I would answer your question with everything is possible at this stage, but that's the best guess that we take. Okay, cool. Thanks. So just on the second question, in terms of the discussion that you've had with your clients and especially the house builders, How are they feeling about kind of presales activity and the lang auction in the permitting stage And then thinking about that, how should we think about demand going forward into Q4 2021? Do you think there's a risk that there is a strong lapse of time when there was absolutely no activity, which could start to fall in to the residential sector and or even the renovation sector? I think the risk, there's no activity. I don't see that to be very frank with you. But I think that we need to follow very closely, a couple of things. And I'm not referring to one country only because that would be too short sighted. If we take the whole of Europe, we have major issues like availability of workers for construction sites. So this is one thing that we need to keep an eye on. Because still a lot of people have not yet been able to move and come back to countries from outside the EU. So this is, I think, some effect that will keep us busy for a while because the construction sites cannot go back to full activity. So this is certainly something we need to keep an eye on. Secondly, I think from a perspective of permit issuing and also granting permits it's something where you need to understand that certain administrations around Europe did not work. So they were down as well. I think here also in certain areas, we will have to speed up processes, get it much quick and faster in place. Otherwise, will see some declines in certain markets in the later part of the year and into next year. So I think I've addressed this with certain people in administration in Europe, they're aware of it, but I think it's an important factor that we need to understand. And obviously, it's the overall sentiment that you are referring to, which is also one thing that we have to keep in mind. And we don't yet see this because obviously we are just moving out of this current situation. And our clients and customers I would say, as everybody in this world enthusiastic to be able to work again and put themselves back on the sites and do the work and we'll see, as I said, a little later in the year, what really happens. And that's why I might be, you might consider me cautious, but I think we need to it's the first time in our lives that we face such situations. So we need to understand better what will it be happening in a couple of months. Okay. And just a last question. At the start of the year, you mentioned that you didn't expect a decline in energy prices. But now gas prices are down very significantly. So I just wondered if your views have changed on that side. No, I've not because we have obviously, you know, that we buy forward. We have done so also for 2020. So we are basically well covered. Please keep in mind that due to the shutdowns in certain countries we were and to have successfully negotiated with the providers in order to push it back into the future, so there's no penalties. But I wouldn't sort of expect major gains from this this year. Thank you so much. Next question comes from the line of Michael Skamus with RCB. Please go ahead. Yes, good afternoon. First question relates to the top line that's built into the earnings outlook. Is it fair to assume that the 50% to 20% market share decline is also kind of a good proxy for the top line? Or do you think that your top line drain could be a little less even market share gains, for instance. Listen, I think this is something not to be answered today because I think we need some more experience in that. We have we just monitor very closely our markets. We, as you have seen in the first quarter as well, we're confident that our products our solutions are performing well in such market. We'll see how we can sort of get along with it, but at the end of the day, we need to operate in a market environment that is under pressure. And that's why we give you this indication of 20 up to 20% market declines around our businesses. And it will vary, obviously, very, very from market to market. We will have different product segments. I think it's very complex at this stage to give you here a much more detailed indication. It's very early in the year for us as well and early in this crisis. Just keep in mind that 2 months ago, we were just moving in to this and now we are moving out of it and we are we try to give you some indications. But I think half year, more or less, then we will have a better view and we'll give you some better indications there. Just a clarification on the goodwill Did you test other Goodwill also, or was it just the North American one? Oh, as I indicated earlier, we may the very thorough analysis of all assets, all goodwill of Winnebarger. And I think this is an important message that we can color on myself can provide to you that obviously I'm also under this stress test and analysis that we made. There was nothing to be done. And we have enough and significant headroom when it comes to address. Okay. Very clear. Does the government impairment play considerable role in the, in your decision to call the hybrid because essentially it's non cash, but it reduces the equity. Not at all. We have not put this into any equation when we talk about this. It's a purely related issue to this testing and triggering effect and the scenarios that we calculated. And if I may add, the hybrid is actually due in 2021, so we will make an internal decision towards the end of the year, how we want to deal with it. But clearly, we do have enough liquidity, to potentially address this, but the decision not been taken. And as our CEO already mentioned, the goodwill impairment is basically no impact on the cash situation. So it's, there's no consideration whatsoever in our discussions in terms of how to secure the liquidity. And what to pay or not to pay? Yes, not coming from the liquidity side. I'm coming from the equity ratio side. If you want because it's that's the angle I was taking. Okay. Can I finally ask if you have already an idea about, the kind of, size of special CapEx, No, no, not yet? I think what we are doing and we are contemplating a certain project you know that we will move on on our efficiency programs on also our expansion when it comes to new products. And step by step as we move out of this situation that we are currently in, we'll put this in place. Keep in mind that we are not even allowed to move our technicians around Europe at this stage because otherwise they would spend the whole of their working time in quarantine somewhere. But, I hope that in the later part of the year, July, August, we'll be able to do this and then we'll pick it up. And Again, at half year, we will be in a much better position to give you an update, yes. But it is going to be certainly and this I can indicate to you, certainly less than 'nineteen. Obviously, that's for sure. Your next question comes from the line of Bintang Liang with On Field Investment Research. Please go ahead. Hello. Good afternoon. Thank you for taking my questions. So I've got 3, actually, 4, if I may, I'll go one by one. The first one is on the, I'm just wondering, can you provide a little bit color on the April and May trading? So is the 30% decline in at the end of March applicable for April May? Yes, I can confirm this to you. Okay. So then if that is the case and based on the volume guidance that you volume scenario that you provided for the end of the year. It is suggesting around a 15% to 20% decline of volume, the top line in H2 as well for this year? Is that what you have in mind? No, no, no. I think we need to keep in mind the following. When we talk about the scenario for for the whole of the year 2020. We talk about our assumption that the market might decline by 20% the market. That's a market decline that we see and in such markets we operate in. So that's the indication that we give to you at this stage. When you ask me about the performance in April, and then obviously, more likely also in May and probably into June, probably into June, I say, then you can sort of say that our turnover is down by about 30 percent as a group, yes, as a group. And keep in mind also for to be clear here that these decline are sharper and obviously more important in certain Western European markets where we have a strong exposure that they are very profitable and I talk about the English 1, especially where we have seen obviously this low level of activity in April, especially. And in May, we'll see it also even if we now start slightly to produce there. So this is, I think, the important aspect that you need to keep in mind when you analyze Alright. Great. Thank you. That's very clear. Thanks. And then the second one is on the, cost saving side. So before I think in previous calls, you said that there will be some kind of delay of the fast forward program and you achieved 9,000,000 in Q1. So I'm just wondering, looking at full year with all these, say, restrictions being gradually lifted, what kind of amount are you trying to achieve for 2020 and how much would that actually run into 2021? Let us sort of, as I say, let us please do our homework at this stage. We have given you a sort of indication of EBITDA for the whole year under certain circumstances, obviously, as it's a scenario, 440 to 480, which includes any effect from operational performance enhancement. So, that has sort of worked our way through in the next couple of weeks months that we are in a position to give you a clear update. As I said, keep in mind, we are not able to move conditions around, we are not able to sort of to perform certain projects due to the fact that our factories are down right now. So I think we need to have a little bit better visibility ourselves and then we can provide you with an update. But it's going to be, again, a very transparent one assistant in the past. There will be some sort of projects that are running then over the year end into 2021 for sure, because obviously the delivery of chinery or other suppliers are not able to do this right now. So again, I think nothing to worry about because the performance will be there. But give us some time to clearly give you a detailed update. I see. Thank you. That's very clear. And the third one is, more like running into 2021. So as you've mentioned, there are a lot of uncertainties on the underlying market. Especially for, the new build projects. So I'm just wondering if that is the case, do you have any contingency plan to say, for example, if the underlying market is quite sluggish, whenever they will be able to actually outperform the market and achieve a better result. So what is your plan to actually probably do that? Thank you. Yes. I fully appreciate your question. I think it's the right question to ask at this stage. We have shown in the past and also in the recent months that we are very quick and fast in implementing all sorts of plans if required. On the cost side, on the capacity side. I think keep in mind that today, we are living a very special situation. We all don't know how this is going to sort of turn out. There might be and also I just throw these arguments to for your consideration. On the table. There might be big programs coming from the EU when it comes to the green plan for renovation for newbuild for infrastructure. There might be national plans in order to reinforce infrastructure or spending in housing, especially social housing in order to create jobs. So I think At this stage, it's too early to make speculations on this. I think we keep ourselves in a position to be ready for anything that comes our way We have plans in place. Don't worry about that, and we are very quick in implementing them. But on the other hand, we need to be ready also to the satisfy demand levels that might be also higher in the future because some sort of plans are coming from EU institutions or national governments. I see. Okay. Thank you. And the last one is actually very quick. It's just a very technical one. So the tax rate in Q1 seems a little bit higher than the previous level. So I'm just wondering, what will be the tax rate the run rate, in 2020? Carlos, I mean, the reason for the slight higher tax amount in the first quarter was due to the fact that we had to reevaluate the so called deferred taxes related to the to the updated business case with regards to the, to the North American cash generating units, which then resulted to this impairment. So that's basically the escalation. Otherwise, from a purely rate, but we don't see any significant difference. And for the whole year, I think it's too early to give any indications. We will at the end of the day, I think, see what happens in this market. So I think it depends very much where the cash generation takes place. But At this stage, it's too early to give here a final indication where the tax rate is for the year. All right, great. Thank you. That's very clear. That's all from my part. Next question comes from the line of Rishi Piva with MainFirst. Please go ahead. Hi, thank you for taking my questions. I'd just like to follow-up on two points that were raised, if I may. The first one is regarding the COVID-nineteen scenario and the assumptions that are in built. Looking at the EBITDA like for like range, using the midpoint there would imply a year on year decline of around about 21% putting that in context of the expected or the market declines of 15% to 20% that you've assumed in that scenario, the EBITDA decline does seem quite quite low in that sense. Could you just talk me through any other assumptions that are built in that may be offsetting the earnings decline or essentially softening that blow from an earning perspective? Well, I think as I said, it's a mixture of things that are here to be a counted for. As I tried to explain, it's a product mix issue that we need to take care of when we talk about this scenario. And all the new solutions and products that we'll put in the marketplace. The second one is obviously linked also to the fact that we will do some performance enhancement measures that are kicking in. So and also at the end of today, the geographic mix that plays an important role here, especially when you talk about markets that are now under pressure, because there's no literally no sales and that are predominantly high producers of profitability or contribute of the profitability. So it's, it's, I hope you appreciate that this is a very early stage into the year and in the middle of this crisis, but We tried to give you an indication, but this is, as I said, it's a mixture of a lot of things. At the end of the day, as I hopefully try to make clear, it shows clearly that Wienaberg is a more resilient company and has a stronger, script on its cost structure than it used to have. Awesome. Thank you for that. And just the second question was just a follow-up regarding the current liquidity situation and the hybrid bond that has its first call date next year. I know it was mentioned earlier that the company will be making a decision regarding the hybrid bonds later in the year. If you're worth you redeeming either all or part of that hybrid, are you able to talk us through how you would consider your current liquidity situation? We know that as part of the last COVID-nineteen update, there was a bridge loan that was in place. So can you maybe just talk us through what your future liquidity plans are and how they may be impacted if you choose to redeem the hybrid? Carlo will handle it and I hand over to Carlos Yes, thank you for the question. Obviously, when this COVID-nineteen pandemic came into play, we started calculating different scenarios, even more extreme scenarios than we are actually expecting today and obviously based on these scenarios, we have decided to, secure additional liquidity beyond what we have already secured today. Obviously, we have additional liquidity opportunities lined up, which we are, let's say, going a bit slower on just for the purpose that, we also should not have the risk of ending up with too much liquidity in our balance sheet. As the COVID increases, crisis hit us, we were on the process of, considering the opportunity of placing a bond. And given the volatility and the market situation and the opportunity to make a sensible place and we felt it would more appropriate to wait for, let's say, the waters to come down a bit and have Instead decided to sign or put in place also called the Bridge 2 bond loan. This Bridge 2 bond facility is duration is about is 18 months. So we have theoretically enough time to replace this with the bond later throughout the year, but the intention so far as to potentially not to wait so long to issue the bond, which could even be higher. Than the British facility. And so we have basically enough time to to, to replace this bridge to bond facility with, let's say, a proper, a more, a long term financial solution. That is on the liquidity side. We are obviously monitoring the market and the intention was really to to just have enough security in terms of liquidity for all possible worst case scenario. Right now, the focus is more about not securing liquidity, but securing, then we have the right structure of our funding going forward. And necessary flexibility, which is obviously given the lessons learned going to be probably a little bit higher than it was in the past, just to be on the safe side. Okay, Sean. Just with the bridge loan, can you, are you able to tell us what the interest rate or the cost of that loan is? No, we don't disclose interests paid for each single facilities. That we have with the different banks. And we are currently on the negotiations anyway. No problem. Thank you. That's all for me. Thank you. We have a follow-up question from Ed Broomhead, Exane PNP Paribas. Please go ahead. Yes. One quick follow-up. You've been hearing a lot more about potential and for either secondary homes or even people trying to away from the urban life towards rural life, if that's possible. And I was just wondering how would you think about that phenomenon for Greek demand in and also in terms of potential extensions to build office spaces in Are you already seeing some level of interest on that on the web traffic and on the feedback that you get from yourself, Tim? I think when you talk about the movement into investments in 1 and 2 family houses, we see clearly in certain areas of Europe, a certain demand level that is on is good and sustained where people are obviously ensuring the building of a house and move on on this project. We have also from demand level. And when we check our the hits on our websites and after that, the leads that we have, I think it's it's quite a strong demand and interest level that we see there from people to be checked and analyzed in the next month's if it materializes or not. And I think obviously any such movement, when people have to stay months in their homes and are confined in apartments. They are dreaming of moving out rather quickly in getting a home in the countryside, but how this turns out. The only thing that I can tell you for sure in all the markets that we are strong in when we come to break share This is obviously very favorable because this is the classical bread and butter business of Vinaberg, if I may say so because people tend to use 10 bricks for such small houses and single houses, especially. I think we don't have any further questions. No, I don't see anyone in the line. Ladies and gentlemen, thanks very much. That was it then for today. We get back with the next update in August on August 12th, with Q2 and half year results for 2020. Thank you very much for dialing in today. I wish you a nice afternoon and good night.