Earnings Call: Q4 2019

Feb 26, 2020

Ladies and gentlemen, thank you for standing by. I am Haley your Chorus Call operator. Welcome and thank you for joining the VinaBayer Conference Call on the Results on the Full Year of 2019. Today's recorded presentation, all participants will be in a listen only mode. I would now like to turn the conference over to Ms. Anna Maria Groscooper, Head of Investor Relations. Please go ahead. Thank you. Ladies and gentlemen, a warm welcome to the Vina burger earnings call on full year 29 team results. Our representatives today are our CEO and interim CFO, Jaime Choi, and our CPO, Solvek, Menard Gallian. I'm also happy to give you an executive summary on the highlights of 2019. As well as an outlook for 2020 and after these statements, we will be ready to take your questions. I will now hand over to our CEO, Thank you, Anna, and a warm welcome from all of us from Vienna to you on the phone. Obviously, we are very glad to report to you a record set of results for 2019, 2019, 18 are sort of milestone in the history of our company being the 200 year anniversary of our company. So we obviously are very pleased with this strong set of results. In light of the economical and the general sort of situation that we were operating in last year, and I will elaborate this on this shortly. It's a strong set of results because sales were up with about 4% on a like for like basis. To reach nearly 3,500,000,000 turnover, a record high in the history of the company. And also from an EBITDA perspective, like for like, a strong increase was about 24 percent to nearly 1,000,000. The strong cash flow again showed that we are optimizing our structures. We are focusing on cash flow and having a cash flow plus free cash flow level of +5 percent reaching 1,000,000 is a strong message from the operation that we operate on a high degree of efficiency. Obviously, it's important to note that from an EBITDA margin perspective, we were able to increase it from about 14% to about 17% our like for like margin. So again, it shows that from a perspective of cost control and the portfolio and product mix we optimized our structure again in an important way. Showing the strong set of results, let me make 2 further comments. First of all, I think it's important to note that during 2019, we were focusing again not only on an organic growth where we have achieved great results and where I will elaborate a little bit more in detail. But also on the operational front where we with our fast forward project have achieved or overachieved our own targets by reaching EUR 50,000,000 contribution to our results already in 2019. So again, I think a strong sign of our company, of our structures and organization to focus on the efficient sees within the company. On an M and A front, we have dedicated about 50,000,000 to small, midsized companies that we integrated in our portfolio to deepen our product range to add to our existing ones in order to enhance value for our customers, very good steps forward, especially when it comes to accessories in roof in the UK. And that we will roll out over the whole of Europe during the next years when it comes to a whole set of products that sell with respect to our roofing business. And also when we talk about pipes, we have made great inroads in different aspects of the business and obviously have achieved here a strong performance. In the light of an overall development, I think it's important to note that, obviously, when you look the reported EBITDA figure, we have reached 610,000,000 in 20 19. Please remember that when we go back the history of our company. In the year of 2015, when we talked about the midterm target, we said it should be around 6 1,000,000 dollars, $600,000,000 incorporating M and A activity, a strong one, which actually we didn't sort of have a integrated as a result in 2019 and obviously very strong performance on the market as well. So we are still, as far as markets are concerned, under the level that we originally projected for the $600,000,000 target. And obviously, we had much M and A into this target. So I think it's important to note that Winneberger 1 year early has achieved this result of CHF 600,000,000 is now progressed seem nicely in the futures. And we are set obviously to grow further as we speak. Just one more sentence on the achievement of 2019. I think important to note that from a dividend perspective and the return to shareholders, we again make an important improvement about 1,000,000 return to our shareholders by dividend and share buyback and we'll throughout our planned strategy of returning 20 percent to 40 percent of our free cash flow to the shareholders by share buybacks dividend. That's why we'll propose to our general assembly, May of this year, an increase of 20% when it comes dividend to a share, for 2019. When we talk about value management, I think it's important to note that our midterm target of 10% ROCE we were able to achieve in 2019 as well coming in at about 10 0.6%. So again, a significant improvement as far as the value management within the company is concerned. And all this When you look at the balance sheet, we have kept our strict discipline on financial targets. We remain at 1.4% for 1.4 times EBITDA to net debt in 20 and 2019, despite, obviously, that we took on a more than CHF 200,000,000 due to the fact that, obviously, from an accounting standard perspective, we had to change the leasing, leasing obligations. So we put them additionally into our debt level. So again, I think a strong performance when we talk about our strict discipline on the working capital, the perspective also consider that we have been on a very extremely low level in 2018. We slightly increased it a little bit, but still at about 16.9% of sales So clearly under our internal target of 20 percent of sales. So again, a strong performance even under the consideration that we obviously increased our activity, have added some activities towards the year end. And I think it shows that we are strongly committed to manage our working capital well. Let me just go a little bit to the market development. Market development in 2019 was somehow mixed. We saw a strong start into the year. You'll remember, a strong first quarter from a demand perspective in our markets, mild weathers, obviously helped this development. And then we saw, obviously, in the 3rd fourth quarter, a sort of softening of markets. And here again, I think it's important to note that even in such a flattish market environment, we were able to grow our performance. And this shows that Vena burger consistently moves away from a traditional company in the sense of product driven to a more solution driven 1, a more resilient one in the sense of economical cycles. And I think it's important to note that because we made this strong performance on the back of such market in Europe, in infrastructure innovation in new build and as well as in the U. S. When we talk about new build renovation and infrastructure. So again, I think it shows that Vina Burger focusing on innovation And here, it's important to note that 30 percent of our turnover of 3,500,000 is coming from innovative products especially when we look at the Vina Vega Building Solutions site where we were able to improve our sales by 6% and then the life for like EBITDA by 23%. It shows obviously the strong growth potential that we have when we sell higher value solution. So again, I think here, a clear signal that we want to grow in this aspect and grow our share in the envelope of the house, being growth being walled, being facade. So we see attractive growth potential for being a better industry. On the Piping Solutions side, I think it important to note that we are now nearly reaching about 1,000,000,000 turnover in this segment, significantly improving our like for like EBITDA, which reached in $100,000,000 were up 43% compared to last year. So a strong improvement. You see also the margin is coming up nicely. We have still some spots that we will focus on in 2020 to improve our margin, but we are getting closer to our target margin of 12%. Again, by focusing in house solutions, we talk here about hot and cold water, about the Electro accessories and electro installations. And obviously, when we talk about the agricultural business and the energy sector business, which has proved very nicely. Finally, in the North American market, we had to digest a little sort of softening in the Canadian market due to regulation that were put in place by the Canadian government, but also a sort of, market that I would consider as very competitive to the pricing side, but also on the volume side in the U. S. But here, again, we improved our performance. And considering these aspects some weather related aspects, we have a strong set of results coming out of the U. S. As well. And we consider our business as a one that we can improve a, that we see as a potential in these markets. So when I, resume the strategy of being a better focusing organic growth, focusing on operational excellence and focusing on growth projects and turning around our portfolio is going to continue also in 'twenty and the years ahead. So you will see us obviously focusing dramatically on new products speed in digitalization, innovative solutions, value adding applications and especially market proximity It's without saying that I'm very glad that we have launched the first COT 2 free and neutral Greek in Germany and Austria. And we see a good inroads when we talk to our wall in the system to file forward segment is contributing nicely, and we'll add another 1,000,000 of additional improvements by 2020. And obviously, the M and A activity that we performed in 2019 will continue also in 20 in order to improve our portfolio and deepen our value creation When we come to the financials very briefly, I think you see the strong development and the EBITDA front, the EBIT front, obviously, where we are we see a plus of 50 percent again, again, compared to last year up to about 1,000,000 this year. And obviously also on the net results, being nearly reaching about GBP 250,000,000 compared to $3,000,000 last year, so up 87% compared to last year. From a cash flow perspective, strong gross cash flow, free cash flow also slightly above last year, about 5%. We invest in the business was about CHF 100,000,000 in improvements related into fast forward relating to other optimizations of the product portfolio, about 1,000,000 in M and A. And obviously share buybacks and dividends and we bought some hybrid back, which brings us more or less to a 0 result when we come to net cash flow. So again, here, a very disciplined approach when it comes to investments and the balance sheet management. From the net debt development, I think it's important to note that obviously from a business perspective, we digested the investments of around SEK 300,000,000. The hybrid buyback and the coupon and the dividend very well and added obviously, from an accounting perspective $250,000,000 of IFRS 16 lease liabilities in order to achieve a level of about $870,000,000 of net debt. That reflects on a balance sheet about 1.4 times EBITDA to net debt. So on the level of last year, so you see how drink to manage our balance sheet. On the financing structure, I think not much to talk about only one I think, which is important, the corporate bond coming to an end in 2020, we refinance it by cash that we have on our balance sheet and 70,000,000 loan, a green loan, the first one, in this area for our industry here in Austria and which saves us about 10 1,000,000 on the financing costs. It's a loan around sort of 1% interest rate and is linked to our performance in the of sustainability. Let me come now to the outlook of 2020. I think If we look on the back of 2019 very successfully and we want to grow on this basis, it's a basis where I see it from a market in perspective. And let me be clear on this. I don't see major changes to 2019, but I would say the following, in the new build and renovation, markets in Europe, we will see a flattish to slightly softening activity, slightly softening in certain countries due to intervention in the sense of tax regime changes and some sort of interventions that you see from a general perspective as economical ones, but no substantial ones that could frighten us at this stage, yes? We will see some sort of lower demand, but no dramatically and on the renovation side, a more stable business. In infrastructure, slightly growing in Eastern Europe and flattish in on European market. So on an overall perspective, from today's perspective and knowing what we are seeing now in the market, I would say a fair assumption is that we sort of position ourselves in a situation where we'll see a 2% decline in volumes for the whole group 2020. So this is our sort of estimate in February of this year. In North America, it's more flattish environment where I don't see major changes slightly improving in Canada. All in all, when we see this development from a market perspective and volume perspective, I need to draw your attention to the fact that obviously we have some in some parts of our business, significant inflationary cost increases, which we will be able to offset with price increases. So again, it shows our strength in Vienna Vargas in such a market environment to clearly, pass on the inflation cost increases to our customers. So again, I think on this aspect, nothing to worry about. When we look at the general strategy, I think Mina Bagger will, as I said earlier, focus on it, clearly determined 3 pillars. And we will enlarge our sort of activity in this field by focusing also strongly on a midterm perspective on sustainability targets. And these are actually when I say that obviously the base Venabaga, being a very solid one based on strong ethical values, strong entrepreneurial values, where we had no incidence of corruption in the last 10 years, no incident of antitrust issues and a very strong, corporate culture that we focus on and that we have established over the last 10 years that we will sort of position ourselves as the leading company when it comes to decarbonization of our product range to the absolute enforcement of a circular economy so that every product of Vina Bear can be recycled and that we preserve and encouraged biodiversity on all on our two hundred sites. So these are clear signs of Inaburger in a strong year and looking forward that financial excellence and best financial performance can be combined with world class performance when it comes to sustainability. And that's what Winneberger is about when it comes to the building material arena and so and actually delivering solutions into the building market. When you look out 3 segments. Building Solutions Europe will obviously deepen its product range to become a major supplier when it comes to the envelope of the house. Increasing its value there and obviously improving its product range. So you will see us exceedingly active here in developing new solutions and obviously doing M and A activity. The midterm EBITDA target remains above 20%. So we'll certainly focus on optimizing it and certainly in in growing this segment with this strong EBITDA margin. On the piping side, clear focus on in house solutions, water and energy management and the agricultural industry for drainage and irrigation and focusing on an EBITDA improvement up to more than 12%. So we are in good ways. And as I said earlier, we will sort of straighten and address the issues that we see still in the business in 2020 to get above this margin of 12%. North America, again, focusing on our end markets, better penetration, stronger solution business and obviously improving here. The margin is also above 12%. And when we talk about decarbonizing our portfolio, what I mean with this is all of our during the life cycle will positively contribute to the decarbonization and therefore, have a positive impact when it comes to climate change. And you see here some examples I gave you one where we have really breakthrough innovations when it comes to technology. Remember that we have 160 brickworks in our business. So here again, if we reduce consistently on a way forward, our energy we will make here a very positive contribution. On the Circular Economy, you will see us move extremely aggressive on recycling already material and putting it back to our production process and on the biodiversity, as I said, for two hundred sites having a clear set of targets in place, how to improve it and how to maintain biodiversity in our neighborhood is of major importance. And Winnebago is already a leading company in this field, especially when it comes to Western European Operation the Benelux. Here, we see obviously good and then there's promising progress in order to improve our performance in these fields. When I come to a final outlook for 2020, we see on the back of such market developments that we see at this stage, and we are not by knowing negative for our optimistic or conservative. I think Winaburger is well geared for further growth. So in a market where obviously we have certain geopolitical and other issues coming our way and uncertainties. I think from our perspective, a guidance between 625 45 is the best we can give you right now, but we obviously, determined order to adjust if there is a better market environment and certain risks go away. We have a fast forward project that contributes about 15,000,000 in 20.20. The ROCE target will remain in place above 20. Now our net debt EBITDA ratio remains place, and the working capital will be below 20% as well. On a maintenance CapEx, we'll invest $140,000,000 and and on a special and CapEx and M and A, we will discretionary from a management perspective, devote these funds 2 different projects. If we see that they are creating immediately value and if we see that there is obviously the right moment to do such investments. So again, I think from our perspective, we are looking to 2020 with excitement for further growth, bringing Wiena Barger to a higher level of profitability and to stronger performance even considering that we have reached already a very high level in 2019. So I think from my side, we are ready to take your questions. Session. And the first question comes from the line of Matteis Vaffenberger of DB. Please go ahead. Yes, good afternoon, ladies and gentlemen. Congrats to the results. I'm really very well done. Couple of questions from my side. I would like to know how the minus 3% volume prospect interacts with the guidance. So On the one hand, you said the tax is up to 3%. Now right now in the presentation, it was more like that's what you're already seeing. Like, maybe you can shed some light of the regions. How much is Eastern Europe still moving ahead? How much how weak is Western Europe? And what's the Q4 blip in the pipes business on the revenues? So is it like if we get to minus 3, it's going to be 625 because of operating leverage, you lose some of the fast forward gains on the operating leverage side? Or is this basically now at minus 3% and the range depends on what's to come in terms of your political, and answer basically the question the way I would advance it. And just to put some light in this on top of what you already said and concluded. The month of January was a very the factory months to start the year with good weather around Europe, good demand levels, nothing to worry about. February is obviously from a weather perspective, a little different. And I think what we see only when we talk about the 3% that there are some things around Europe that obviously can materialize. And they must not materialize. I'm very clear on that, but they can. And obviously, it is an sort of prediction from us for management looking at countries. I'll give a couple of examples like Hungary where the VIT changes and put up again from a very low level of 4% to up to 19% when it comes to billing etcetera. So here, obviously, you will see a different development in demand levels. Obviously, the Netherlands were affected by decisions of court decisions last year. So it will take time that this comes back, for example, France is still at a very low level. So there are things happening in the market. Nothing, as I said, nothing to worry. I do fully understand that all of you are looking for indicators, but there's nothing to worry about, but we see a little trend that we sort of predict throughout a year. It might change, obviously, it might get a little sort of not worse, but it may confirm it. We things like the virus out there for the moment. And there's a lot of, sort of, nervousness out there. But I would say, generally speaking, we remain very positive about our end markets. Interests are low. There's a demand level that is strong. There's a positive sentiment out there. Especially when it comes to Europe and North America. So again, I think we just wanted to alert it to you that there is could be a sort of slight negative volume trend. It's a little softening of end markets, but not symptomatic. Okay. Just quickly do you want comment on the pipe split in the 4th quarter, like minus 4%. It was also the weakest quarter of the year. Is this I don't know, oil prices have an impact on polymers or it's just a high base? And then the second set of questions is on M and A. You said earlier this morning that, obviously, the pipeline is very attractive. Last time, we also spoke about moving potentially towards larger targets like $300,000,000 plus EV. I'm just looking at Bloomberg right now. There's a statement where you say acquisitions take time and they are tough to predict. So are you close to closing on a larger one, or is it like depends. Thanks. No, thank you for the two questions. They're very important. And thank you for them. I think when we talk about the piping segment, you need to be aware or even negative margins. And that's why you see this volume drop in the fourth quarter. On the other hand, you see dramatic improvement on the a profitability side there, you see obviously that we have left those segments and what impact they have, yes? So I think, again, nothing to worry about It's a deliberate, decision that we as management take to move away from this very, very commodity and low end areas and move a company in a much more high value oriented company. It comes to products and solutions. So I think this is hopefully addressing your concern On the other hand, when we talk about M And A, it is true. And, I can only restate what I said, when you talk with families and when you talk, I take, for example, the acquisition that we did successfully in Denmark. I remember very well more than 10 years ago talking to these people about an acquisition and about what financial transaction. It takes time. And it has to come at the right moment when succession comes in when the family feels it's right moment. And on top of it, I think it's important that we, as Winneberger, are not overpaying these transactions. And we very disciplined. So again, we are not today signing a transaction or tomorrow. Otherwise, I would tell you that, but we are working on a number of very interesting ones for us to bring us forward. So that's what I'm trying to say, to you. And we have obviously also the financial abilities of doing that and be assured if we do those, they have significant potential of synergies and cost efficiencies that we can then put in to place as soon as we take them over. The next question comes from the line of Edith Broomhead of Exane BNP Paribas. Please go ahead. Good afternoon gentlemen. Thank you for taking my questions. 3 if I may. My first one is on the U. S. And your comments that you made on competition pressures that you're seeing. Could you maybe expand on that? And is this related to kind of the 2 Australian players with one being in a more difficult position than the other? Especially in Australia. And also just curious, why don't you expect any strong volume growth when single family permits in the U S is booming right now? My second question is on your EBITDA outlook. So at the low end of guidance, should strip out the 1,000,000 of cost savings it implies a decline in EBITDA. I think we can all understand that you probably have that minus 3% volume decline. But still, when I think about energy costs with gas coming down significantly in Europe since the last 6 months, just wanted to know what kind of assumptions you built on the cost side here. And my last one is on the strategy. I just want to get your vision in terms of where you want to bring Vineaburger in the next 5 years. With the end of the fast forward program end markets being readily dull, what's kind of the next leg of the story here and what do you see as opportunities? Thank you. Thank you very much for these 3 important questions. Let me start with the U. S. I think here, your take is right. We have a competitive in a joint venture together with a private equity company in the U. S. And they are currently running the biggest Greek operations in North America They are under significant pressure. It goes without saying that from a profitability basis, we are, large ahead of them and doing obviously a much better performance than them and they're falling behind. And obviously, there's struggling and fighting cash in certain areas. So we have in certain areas, not everywhere, certainly a little bit of competitive pressure, not on prices, but they are there. They because we, as Winneberger, run a completely different model. On the other hand, we are glad to have another Australian company, Brickworks, that is buying into the market and solidating it and behaving as a good competitor. So I think here, we will see some sort of competitive landscape change pretty quickly in the U. S. In order to sort of then come to a different setting in the and which is obviously then much more and profitable and promising in the future. To your second point, we talk about cost, obviously, this year, we have a certain cost inflation. Those who are saying that wages are up other sort of input costs up. And therefore, I said clearly, we will be able again to cover those cost increases to some extent, substantially, especially when it comes to Eastern Europe. And here, we will be able to offset them by price increases, again, due to our efforts that we all make in excellence projects when it comes to sales or in product mixes or a better performance. So again, strong signal on the back of flattish markets caused increases, we can put this through to our customers. And when we look forward, you're absolutely right. Energy is coming down. We are more or less hedged for 2020, so we won't see this positive impact in 2020. But going forward, we certainly will sort of take into consideration to buy certain amounts of energy in advance and therefore, bring our cost level down. And we were clearly, as always, in the past, report this accurately and transparently to you. And the third very important question on strategy. I think what we always said and I go back a little bit, you know, I may make a very note here. When I took over in 2009, the company was around 1,600,000,000 turnover. We are now closing 10 years later, 3.5 We have, from a perspective EBITDA improved it from 150 to above 600. So I think here, we are set for growth. Think Keith, you will appreciate if I say, we will definitely in light of our balance sheet to power and in light of growth power that we have today grow the company and certainly have very positive developments in the to come in the next perspective, VinaBera is very different today than it was 10 years ago. So I see it as a company will show strong growth return, as I said, cash to the shareholders. When you look at our dividend policy and our sort of share buy policy look at the last couple of years, we have returned more than 400% to the shareholders. So a very strong performance here. And I think it's this long term vision that important that Vina Becker is a company that focuses on long term growth and has system and is put in place consistently over the years. If I just may, on the energy side, I mean, if you're not going to sit in 2020, Does that mean that actually you're hedging way ahead of the kind of 12 month curve? And when should we expect you to kind of city energy and the gas falling down? 21, yes, from 10, yes, but solid, please. Yes, no, just to that, obviously, our hedging policy goes over several years with a different percentage level that we cover. But of course, we try also to be flexible in a way that we can reopen positions, without taking too much risk because that's the point of the whole hedging point. So you don't want to be completely exposed to a market that is swinging up and down So we need to secure supply that's on one side, but also at manageable costs in that sense. So that's just you're doing. And therefore, we are, of course, looking forward to 2021, which helps to follow ahead, you're going to see. So now this year, we are close to 80% hedged for 2020. The next question is from the line of Marcus Remus of RCB. Please go ahead. Good afternoon. Two questions if I may, firstly, on coming back to 2019 revenues, you usually gave some breakdown in terms of volume, pricemix Development and M and A contribution, which I did not find in the financials at this time. So if you could break that down please? And also coming back to the cost question, how much of pricemix inflation, top line inflation you would need from your point of view to keep the equilibrium in 2020. That would be the first question. And then coming back to the Fast Forward program, Apparently, you made a big jump in the 4th quarter, which I personally found a bit surprising and given that it's rather a small quarter. So it must have been like 1,000,000 of incremental savings. So I'd be interested to hear what kind of measures were particularly kicking in here. And if you could, with regards to 2020, give us some breakdown where you see the biggest potential, if it's, of course, given the size it must be in building solutions, but some granularity on the kind of segmental impact, please? Well, let me take the Fast Forward question first. Just as a reminder, we set this program up in 2018 based on 2 17 results and analyzed our whole structure in the different areas and said, where do we have the potential to sustainably improve our results. And that goes across different areas from, of course, production manufacturing works, but cost structures to commercial excellence where it's about product portfolio and the way we address the market as well. To procurement, obviously, but we also did a significant step change in how we set up our procurement from quite local teams to much more central commodity management, from a central perspective, and therefore, also bundling and strengthening our purchasing power. Next to supply chain optimization and administrative optimization. So what it is and what we did is setting up a comprehensive program, and we, we were running a huge number of initiatives in parallel in the different streams. And you need to consider that this is always 1st in analysis what we want to do, how we want to improve. And normally, you do have a pre investment to be done. So with extra teams, with extra project costs before you really can realize the benefit So there's this is not a, a year, quarter over quarter, same amount that comes in, we do have quarters with higher cost impact because we invest in certain areas. And then only a later, we get the benefit. And this is what you see. If you followed, us over the quarters in 2019, there was not always the same impact per quarter depending on exactly these different, spreads of the costs that we have related to this program. So what we do report is always the net effect the net impact that we create, and that this sustainable impact that we can hold also over the coming years. So, now looking forward to what are the biggest opportunities also in 2020, we continue course, focusing on manufacturing. Here, we did a lot of pilot projects of in 2019 were in different areas, especially automation, but also energy saving, optimization of scrap rates and so on. So it's really process should see. We, we did several pilot projects where we said in one plant, we test it, we see how much it gets out of it. And if it works well, we roll it out in as you know, our plant network is quite big and there you get a quick spread over several plants then and you can repeat the benefits. So this is one of the drivers for 2020. We still continue, of course, with our procurement initiatives to bundle and change resourcing and sourcing and strategic supplier relationship but also in commercial excellence, we run through, our portfolios. We continue to, evaluate let's say, low margin products and product ranges, which we might take out again. And therefore, might also offer in a structural way. So bringing up average gross margins, step by step. So these will definitely be also the focus areas for 2020. And from your first question's perspective, from when you say volumes, as indicated, flattish end markets and to a certain extent slightly below, last year. So the volumes were around 1, 2. 2% minus. And the revenue growth came obviously from the price side and the mix side. So this obviously you can determine easily from the turnover perspective and the consolidation effect, I think, about 2%. The next question comes from the line of Tobius Foner of MainFirst. Please go ahead. Yes. Congratulations. Great way to, celebrate your big birthday. Two questions from me, if I may Number 1, when you look at your portfolio of products today, compared to about 5 years ago, what is the percentage of value add products in there, let's say accessories compared to the state by the bill? Number 2, when you look at your 160 plants and break plants, around the world, what is the capacity utilization at this point in time. And number 3, you know, Eastern European Outlook. Looking actually at the permits and you start at the end of last year. It seems to be relatively well set. So your 3% volume decline seems, fantastic. Maybe the message will be conservative. Thank you. Okay. I think you have 3 questions. 1, on capacity utilization throughout the group, obviously, the one that we focus on is the clay business, basically U. S. And Europe. And here, we have around 80% capacity utilization. When you talk about Eastern Europe, we have seen obviously growth in Eastern Europe there. You are right, but we have seen also flat markets in Poland and also in Romania and Hungary. So I think it is I would say it's a mix picture also going into 2020, political instability in certain regions might add to the And that's why probably we see we not only look to permits, but we look to sort of the market sentiment in these markets. And I'm not saying when I say on the group level, we see minus 3% that it is necessary in Eastern Europe, 3%. So it's on the group level. And therefore, I think we want to clearly indicate to you that the growth region still remains in Eastern Europe. When you talk about value added products, I mean, if you take a comparison very roughly 5 years ago and today, when we talk about 30% of our takeover being in innovative products, I think there you have a good indicator already where we are. And obviously, you add this a little bit, then we are above 30% compared to 5 years ago when it comes to value added products and better solutions So we are clearly above a 30% of turnover. For our year expectations for the UK. And when I look at the profit of my business, which is public, I think it's about 15% of school EBITDA or EBIT, where do you see the market going this year? When I look at 2019, it's about the Vienna bagger business, in the UK, turnover wise, is about 10% of the business of the overall business. So It's a strong business where we have a very good track record. We have again gained momentum in the UK, even if the market was to some extent, also flattish in certain areas, not as well as you are well aware of from our colleagues what they have published in the documents. But I think from Vina Wager's perspective, a very good run-in 2019. I have no reason to believe that this is in 2020. So demand levels are still strong. Pricing is very, very good. And here also from an operational perspective, our plants are running well, so cost structure is very much under control. So there's nothing specific to report as far as the UK business is concerned. Thank you very much. The next question comes from the line of Shintang O'yang of On Field Investment Research. Please go ahead. Good afternoon, ladies and gentlemen. So three questions on my side, if I may. The first one is on your margin improvement of the piping business. So this year, we're around 10% and you're aimed at 12%. So I'm just wondering how, especially given that you've already exited some of the low margin commodity markets. So in the midterm, how do you intend to improve the margin? Is it by product mix or by pricecost? And probably by other kind of measures? No, I can answer this very straightforward. We will definitely act it further low end products. Or as I said, due to the fact that we turn around our position in certain markets like where we have a big commodity of low margin business in order to get synergies by combining businesses and then obviously finally moving up the value added products when we come to the electoral part of the business or the agricultural 1. So it's a mixture depending on the geographic portfolio because we run already within our five segments, very high margin businesses, especially when it comes to the Nordic part of the business And as I said earlier, in Eastern Europe, we have still some progression to make, for example, and in Western Europe in certain areas in order to improve our margins. So clearly, the targets I said, the areas identified and we are moving on this in 2020. All right. I see. Thank you. So then the second question is on your return on capital employed. So basically in 2019, you've already achieved the 10% midterm target. So I'm just wondering, looking forward, do you intend to raise the target or you're willing to stay at, say, 10%, 11%? Well, I think, again, yes, I think the mid term targets are clearly there to show that we as management have a clear vision what we should deliver to you as investors or to the financial community. So we are not going to change our mid term targets every 6 months. I think it shows that we are working in the right direction. Obviously, as we report currently, you will see it on a regular basis. And if we do acquisitions, obviously, this is also a very strong indicator that we were clearly focused on value creation. So also, I think it's important to know that Winneberg is not we are not managing business in a sense that we just want to be spot on with 10%. It's, I think, should give comfort and reassurance that we obviously focusing on the right targets, on the right developments and allocating the cash to the right parts of the business. That's what the midterm target is about. I see. I understand. Well then in this case, say if you do some kind of acquisition, how do you intend to bring up the margins of the acquired target onto your level to, retain this 10% return on capital employed? For example, if this target is running on a low capacity utilization, right, and we can incorporate businesses and restructure them, then obviously you bring up the whole EBITDA margin considerably and therefore have a better performance when it comes to ROCE, for example, or you combine product and sell a more solution driven business, again, if you improve your margin and performance dramatically. So there's a lot of things And when you look at our businesses that we run very efficiently and I'm talking now about the clay operations, for example, we tend to see when we take over businesses that we have about a 10% to 15% cost benefit when we go in and do the economies of scale, but all the cost to do the projects and sort of do better purchasing around us more efficiently. So here is a lot of things that we experts in the industry can improve when we take over especially family business. I see. Thank you. And then the last question is a follow-up question on your M and A. So as for say 2020 or beyond 2020, do you have a more specific guideline on the pipeline, say around $300,000,000 or a little bit more than that. Is there a specific number or range? Oh, I, you see, I must say that from our perspective, it's not very useful to give numbers because as I said, projects come and owe and are available because in the marketplace, when you're dealing, especially with smaller midsized projects, then you can't predict this is coming exactly in 2020. It might also be then in 2021. So we will, according to the availability that we have on the funding side and without joke with a nice in our strong balance sheet move on those targets when they are clearly available. And this is, I think, what I want make clear, but you will see us doing acquisitions, certainly that I can confirm in 2020. I see. Well, then the acquisitions, just last follow-up question, the acquisitions will it focus more on consolidating your existing markets or do you intend to move into, say, other construction, other building materials, say, insulation or whatsoever? I can clearly confirm to you that our priority is giving in deepening our value range in the existing products that we have in the existing solution and not going into other ones at this very moment. The next question is from Gregor Kuglitsch of UBS. Please go ahead. A quick question, just perhaps with technical. So in terms of the deals you've done and looking slide 21 here in terms of the sort of bridge. What's the carryover effect of, of acquisitions in terms of EBITDA contribution And a little bit unclear, maybe it's a detailed point where that $3,800,000 of one offs, is it a positive or negative one off or which way just so we can kind of tie up your like for like guidance with, I guess, what will actually happen considering the deals you've done And then I think there's a further point on the guidance on CapEx. So you've given maintenance CapEx. I think you called it now a normal CapEx. Maintenance CapEx. Apologies. And then the special CapEx, which I think last year was SEK 150,000,000, and I appreciate you're not giving a specific number, but if you could help us out in the sort of direction of travel, in that regard that would be, that would be helpful as well. Krigger, thank you very much for your two questions. I think when I look at what you call carry over to next year, it's about 6,000,000 that you have to put in. And on the CapEx front, when you look at, our CapEx structure, you're absolutely accurate we guide and we'll stay within the reach of SEK 150,000,000, SEK 140,000,000, SEK 140,000,000 for maintenance for the whole group. And on the special CapEx, we didn't give any guidance. And when you talk about the direction of travel, I think I would like to give you our sentiment, how we see things. And if we see that there's a short payback and there's a strong value enhancement mesh to be made that my colleague, Solog and myself, will move on this sort of CapEx projects within our group. If we see that there's a longer one and a more risky one, then we will certainly delay it for the moment. So when I say this, I mean, honestly not to give you too much of a flavor here, but thinks that this 2 year or 3 year payback will move very quickly in order to improve our business and sort of invest there if it's capacity in hand and business. Is it going to be $50,000,000? Is it going to be $100,000,000? Gregory, this will be sort of developing throughout the year. We need some sort of investments the fast forward. This is certainly the case. It's going to be a double digit number. It's not the highest one, which sort of mid- to mid sort of digital 2 digit number so that you have at least a sort of direction of travel, if I may give you this stage. But this is sort of to send demand that you have here within the management right now. Okay. Thank you. And then on fast forward, I think the previous CMD slides kind of pointed a little bit towards kind of some remainder post 2020. Is that the case still or not really just want to get a sense because obviously this is the year where you still get benefit from it. There's volume pressures and net you're up. What's kind of what lies beyond, I guess, is the question? Obviously, we focus now on closing this program. We had, we set ourselves clear target and we identify the opportunities and focus this year is completed. Nevertheless, we will not stop obviously with further improvement. I mean, as I said, also, it's part of our strategic pillars, operational excellence will continue. And we what we achieved with Fast Forward is a new way of doing a disimulatory methodology and a very and approach that is very much appreciated also within the organization with our people. So really this learning and forward look analysis where is the potential? How do I address my resources correctly? To really reach, this will continue. And obviously there's there's initiatives that we still start this year that we'll have in a rollover effect also to next year. That is clear, which we course, monitored during the year and clearly also would estimate between 10,000,001,000,000 positive impact in 20 Q1 still continuing. The final question comes from the line of James Crombie of Petress Advisors. Please go ahead. I've got four questions from my end, and I'll go one at a time just so we don't get lost. The Fast Forward program is obviously progressing reasonably well. I was just wondering is your run rate EBITDA as of Q4? In Q4, the net effect of the program was 1,000,000 impacting really quarter over quarter. But as you know, this is always difficult to compare because there's cost evolved and also in the quarter 4 in 2018, there were certain cost evolved. So this is not a like for like comparison that you can make here. Okay. That's understood. Just a quick one on the adjustments you've made on like for like what you've been speaking about today, it sounds like there's been some structural adjustments, particularly in pipes. I was just wondering why there's no structural adjustments in 2019? There were no releases in 2019. Are you referring to the adjustments on the like for like EBITDA, right? Slide 21. That's the 1. Yes. Can you repeat the questions just to be answered? Yes, sure. So just from what you've been saying, today, it sounds like there have been structural adjustments to your business, in pipes, for instance. I was just wondering, when you look at the like for like adjustments on Slide 21, there are no structural adjustments in 2019. So I was just wondering, why that's the case that we're sort of talking about structural adjustments within the business, not making any adjustments to EBITDA based on that. What you see here is obviously a net effect. We did have structure adjustments also out of fast forward initiatives. We're improving our turnaround cases. But obviously, although in the year 2018, we booked, provisions, which we did not fully have to use. So released. Oh, I see. And this kind of netted nets it out. Just what are your thoughts on a share buyback at these levels? You are referring to today's levels. Yes, at that level. Yes. Honestly, I think you, both of us will appreciate that obviously the market under sort of a little impression on some sort of virus impact or potential impact. Again, I think from a Vena burger's perspective, we need look beyond that. I think you've seen other levels a couple of days ago also on share price. But as I said also in my introductory speech that from our management perspective, dividend share buyback is to be seen as a package when we return cash to the shareholder. So by proposing a 20% increase, in the dividend for last year, we believe ourselves already some room also for this ongoing year. So think I'm pretty clear when I give this answer to your question. That's understood. And the last one from me was to see just your 2020 EBITDA guidance seems quite low. And I was just wondering what the difference is between, I think it was 1,000,000, previously and now it's 1,000,000 to 1,000,000. Is that all related to volume or is that something else that's in there as well? I'm just to clarify, this is without any motions. I think there was no guidance out there of 680 from but it's perspective. The midterm target was always above 600 for Vierenberg in 2020. When it this number, I understand that this number was floating around. And my colleague, the former CFO, Willifen Reid has used it, but it was to be used in a different context basing ourselves, 1st of all, on a rather aggressive M and A activity adding about 40, I think about 40 or something 1,000,000 of EBITDA the business, which we have clearly not done. And secondly, basing the assumption on a much better market environment in the sense of that market came up to the situation of, 90% above the level that we have today. So I think these 2 assumptions, and if you look at our current performance, I mean, if I give you the a guidance up to 6.45, and you add for your benefit this impact from M and A and a little bit on the market side, then you get probably to the number that you were throwing to me. Thank you very much. That's all from me. Thank you. And there are no more questions at this time. I hand back to Anna Maria Growsgouber for closing comments. Okay. Ladies and gentlemen, thank you very much. That's it for today. I would like to invite you also for the next call for Q1 with us. If is on May 14. And for today, there is only left to pay. Thank you very much for dialing in and participating, and I wish you all a good Goodbye. Ladies and gentlemen, this concludes the Vinerberga Conference Call. Thank you for joining and have a pleasant day. Goodbye.