Thank you, operator. Ladies and gentlemen, welcome also from our side to the conference call on our 2018 results. Wienerberger representatives on today's call are Heimo Scheuch, CEO, and Willy Van Riet, CFO. We will open the call with an executive summary by Mr. Scheuch, focusing on the key developments of 2018, as well as our strategic priorities and the outlook for 2019. Following the opening statement, we will take questions. I now hand over to Mr. Scheuch for the executive summary.
Thank you, Klaus. A wonderful afternoon from Vienna from the whole Wienerberger team. Ladies and gentlemen, let me walk rather quickly through the highlights of 2018. I think we can look back to a very strong year for Wienerberger, with a robust top-line growth about 6% to a record revenue high of €3.3 billion that we have achieved. On the EBITDA, like-for-like performance, again, 15%+ to nearly €470 million. We come in at the top end of our guidance. Again, when we look at the different divisions, we have seen strong progression and also EBITDA improvements in all of our divisions. Are obviously happy with the performance in these different business areas of our group. This strong performance leads us, obviously, to propose to the next general assembly a strong increase in dividend by about 70% to EUR 0.50 a share.
If you look to the whole return to shareholders last year, with the two successfully performed share buybacks that we have achieved, it's about EUR 80 million that we have returned successfully to shareholders. All of this comes in on the back of a very strong free cash flow generation, increasing by 55% up to about nearly €240 million. This is, I think, important to note when we look at Wienerberger. Wienerberger is active not only on the organic growth side, where we have achieved due to the fact that we are strongly focusing on innovation, and have made here good progressions on not only pricing with respect to products, but because obviously we do a lot of innovation with products and solutions and services to better price our products. You see that there has been a strong track record in 2018.
And utmost also because we have been focusing very strongly on our Fast Forward project, a project that leads to sustainable savings and sustainable efficiency improvements within the company, and where we focus not only on one area of the business, but on the overall business model as such. Here we are glad to announce that we fully achieved this EUR 20 million of earnings, that are included in our results and constitute a major improvement in our business performance. Looking forward also here, we see big improvements coming our way because we have already implemented these measures, and they will come in on the positive side 2019. We have also stepped up our activity on the M&A front. Again, very disciplined.
Allocating the right resources in the areas where we want to be stronger with respect to products or markets, and I will elaborate on this a little bit. It's a consistent delivery on our strategic goals, where we can say we have ticked off the boxes in 2018. Let me just say a couple of words on the different divisions. In the Clay Building Materials Europe, we have seen a strong EBITDA improvement, about 2% when you look on a like-for-like EBITDA. We are getting close to our targeted EBITDA margin range here in this division. It's a mixture of new products, innovation, price increases for the services and solutions that we offer, and working hard on our self-help program with respect to the business and improving the different aspects of these businesses.
When we look at the Pipes & Pavers Europe division, also here, a good and robust growth. We pursued also the announced optimization of the portfolio with the necessary restructuring measures that we have successfully implemented and where we already see the benefits coming through in 2018 and more so in 2019. Here also a slight but important margin improvement, and I think it will be also continuing this year and significantly increasing so. In North America, we have seen on a rather stable development on the external revenue side, a strong, nearly more than 2% increase on the margin side. Here also strong performance in the different businesses. On a side note, obviously, we have seen a slightly weaker trend in the Canadian residential housing market.
You see there how disciplined we have been here also on the Fast Forward side in order to improve the performance of the business. All in all, Wienerberger continues and will continue to focus on the three pillars of growth, the organic one, where we show strong improvement and strong growth here in all of our divisions. The operational excellence part, where we focus on a sustainable improvement criteria with the Fast Forward project. Obviously, the selective growth projects when it comes to M&A. All in all, you see that we consistently focus on innovation, maybe it in the smart infrastructure business when it comes to our pipes, maybe it on a sort of more solution-driven business when it comes to our clay materials.
We strongly have worked and elaborated our presence and continue to develop on the digital front, where we are already realizing much more of our activities through digital sales, where obviously it helps us to get closer to our end clients and decision-makers, we strongly beef this part of the business up as we speak. Obviously, where we use new tools in order to facilitate for people to install and use our products throughout the markets that we are operating in. Let me just say a couple of words with respect to our Fast Forward program that we have introduced last year, where we have given a sort of broad and more detailed view in our Capital Markets Day last year in London.
Where we can see after these last six months that not only we have successfully implemented this project within Wienerberger, but we see obviously the results and the positive results coming through. It's a completely self-help program. It's a program that is independent from the market as such, where we have been successfully looking at all parts of the business, from purchasing, manufacturing, to commercial, to the whole supply chain on the administration and management side. It's a comprehensive package of a multitude of different measures that we implement, hundreds of measures that we implement throughout the business. We consistently look at the business models and drive them to change. It's more a mentality change within the business, I would say, which contributes largely to a higher profitability.
EUR 20 million achieved in 2018, EUR 40 million to be achieved this year, we are very confident to reach those 40 because we see obviously that the measures that we have been implemented already last year bring the positive contribution to our results. These are sustainable enhancements to our performance. I understand that a lot of people want to know what we are doing, but it's a multitude, as I said, of measures. I just give a couple of examples. We look today to the data that we have available, how we look at factories and manufacturing activities in our group. We gather this data, we use it in a way how to run more efficiently our plants to get energy consumption down, and we do, significantly so. This obviously contributes to this self-help extremely in the future and substantially.
Using data, working on different automization degrees in our manufacturing base. Using the procurement and purchasing power that we have throughout the group by improving to do this purchasing together, optimizing further our supply chain and getting here strongly new IT-based tools into place. All this helps us to grab this sort of additional performance enhancements. The EUR 40 million we feel comfortable for this year. Also when we look in the future, because we got the message from some of you that said that obviously it's very back-loaded. Obviously, when you do such measures, these take time to implement. Therefore, we can tell you from this stage that the EUR 60 million next year will be also achievable because we do already the things that are necessary in order to achieve them.
We feel comfortable in the near future to grab these EUR 40 million and then EUR 60 million with respect to Fast Forward. By the way, Fast Forward will not be a project that ends in 2020. It's, as I said, a continuous project, and it's the DNA of the company to always look into optimization in the future, and therefore you will see gradually improving our performance in this respect. This is, I think, a very important part of Wienerberger's future in order to increase performance of the operations. Let's have a different look also in addition to that on the M&A front and what we have been achieving so far and where we want to be in the future.
Last year, we have spent about EUR 160 million on M&A and on organic growth projects where we obviously introduced and built new automization, additional capacity in certain markets, et cetera. Successfully implementing this EUR 160 million. We see on top of that also a nice and promising pipeline ahead of us when we look in 2019 and 2020, because such projects tend to take time. If you look to last year, where we acquired in the U.S. a facing brick producer in Pennsylvania, which opens us the markets on the East Coast to New York, for example, where we are then more in the architectural line and can bundle these products together with our existing ones. A very successful step forward. When you look at the piping operations in Norway, where we add these pre-insulated pipes that then help us to grow our business in Sweden, Norway, and Finland.
All these are interesting opportunities for us where we use our existing platforms and add on these new products, higher margin products, in order to improve our profitability. Or as another example, the facing operations out of the Netherlands, where we immediately can use the capacity for a growing market, not only in the Netherlands, but in Germany and Belgium and the U.K. Here, quick, fast integration, no risk, and where we obviously can ensure that we allocate resources very well, not overpaying and having high returns on such smaller and mid-sized acquisitions and M&A activity. If you look at the post synergy perspective, and that's what I think is important to look at, we can achieve multiples around 5 to maximum 6 in this range in order to improve our operations.
A very promising value creation out of these opportunities of growth, where we see obviously numerous opportunities as we speak. On the other hand, we look very carefully in our portfolio and have shown in 2018 that we are ready to dispose of certain assets that are not producing the returns that we wish from such operations. Therefore, you will see us also in the future moving on such operations and assets that we will dispose, and we have done so successfully in 2018, reaching to nearly EUR 75 million in 2018. We'll continue to do so. All in all, you see that we have been returning to the shareholders over the years through an increase in dividend. The dividend, by the way, since 2012 increased by more than 300%.
As I said, also, we will propose to the general assembly an increased one to EUR 0.50 a share this year for 2018. That's more or less a 70% increase. We have carried out successfully two share buybacks in 2018. All in all, we returned an impressive number of a little bit above EUR 80 million to the shareholders. All in all, I think a good, a very promising year, and I think we have here a very solid, strong basis for the future within our Wienerberger operations. Let me just say a word on how we see the future. Wienerberger has now decided to base its growth on three major divisions. We call them the Wienerberger Building Solutions, a business that focuses on Europe.
As you see from the name solution, we want to offer more solutions to our clients and customers with respect to wall, facade, roof, and paving. Here, obviously, to look at the client as such that he wants the complete wall with all the accessories that he needs and offer also this in the different market that we are active. That means for this very business unit, that we will further integrate the businesses that we have in the markets that are relevant for us, that we will focus on targeted acquisitions to complete our geographic footprint and the product offering in the relevant markets to penetrate them deeper, to be closer to our customers, and to leverage strongly the product innovation and the operational excellence across these European platforms.
You have to understand that if we are in the number 1 or number 2 position in such markets, it's easier to drive this change with respect to innovation, to new solutions to our clients, and that's what we want to do. We will exit markets that are not in the situation that we think are favorable for such change, and therefore focus only on markets where we have strong market share and where we see a promising environment. Innovation will be a key driver for success of this unit in the future. If we look at the piping solution business that essentially focus on the European piping operations of Wienerberger.
We see here, obviously, a strong potential for further M&A opportunities, not only to consolidate the markets that we are in and that we want to build a stronger presence in, but also to add new and innovative applications. Our move now about a year and a half ago in the pre-wired cable business in the Benelux was a very successful one, and we want to build on such steps in the future to have a complete range of offerings when it comes to in-house solutions. Here we see a potential for Wienerberger to grow its business and therefore also to take advantage of the strong presence of the Wienerberger Building Solutions in this market. To use the synergies on the commercial front and on the projects front of the presence of Wienerberger's businesses in these local markets.
Additionally to this, we will also focus and build a stronger smart infrastructure business where we show our competence, for example, in water management when it comes to drinking water and wastewater, and not only offer pipes, but complete solutions to our clients. Again, here in the markets where we're active, we'll increase our presence, deepen our presence in order to grab more of this market in the future and increase our margins consequently. North America will continue its drive for consolidation in the U.S. brick business throughout this mid and small-sized M&A activity. We'll cover and expand our geographic footprint and develop the portfolio further when it comes to solution provider for such businesses.
Again here, to pursue this strong track record of growth and successful margin improvement in the U.S. All in all, this leaves us with a company that offers these solutions as a leading company in the fields that we are active. Together with strong brands and a very strong digital presence in such markets, we believe in increasing our efforts in the digital part of the business strongly. We see here strong inroads for us in the local markets that we are active. Therefore can also use the local platforms that Wienerberger has created, where we share centralized procurement, where we share an efficient general administration, where we share commercial excellence and the digital platforms. Therefore can create more innovation and a high degree of central engineering in order to improve our manufacturing base. Here we see basically the major drivers for growth in the future.
If we look then to 2019, the ongoing year, we find ourselves, when we look throughout our markets, in slightly growing or stable markets when it comes to new residential housing, when it comes to renovation, and also when it comes to infrastructure. In some markets, a slightly better environment in the sense of growing when it comes to Eastern Europe, and a more stable environment when it comes to Western Europe. This is the current market environment, and this we operate in. We want obviously to leverage this through the fact that we do new solutions and improve our offering of products on the one hand, and obviously on the other, continue our efforts on the Fast Forward project in order to improve profitability and enhance operational excellence. These two aspects will contribute again to further growth within Wienerberger.
Obviously, as pointed out earlier, we will be disciplined on the M&A front and strengthen our local platforms through acquisitions in the different regions that we are active in. If we look then to the guidance for the ongoing year, you have to keep in mind that for the first time, we have legally to integrate the IFRS 16, which then contributes around EUR 41 million of EBITDA. It comes our way, the 41, we have to insert and include this into our guidance. Please be aware from a cash flow perspective, this has no importance and no relevance for our group. For the guidance, you have to include it. Then if we add obviously the performance enhancement, the organic growth, we'll get to a range of EUR 560 million to EUR 580 million for the ongoing year.
Again, an ambitious target when you look at the different macroeconomic outlooks, et cetera. We believe from Wienerberger side, that we are well positioned in order to deliver again such growth rates and come to this range of EBITDA from EUR 560 million to EUR 580 million, which demonstrates again that we are well on the way to reach all of our targets also on the midterm front. On the CapEx front, as we said already at the beginning of the year at the last Capital Markets Day, we will situate ourselves at around EUR 200 million with respect to investments, which are obviously dedicated also and especially to our Fast Forward project when it comes to automation improvements in manufacturing, et cetera. Again, a strong guidance for this year.
As I said, we are working on our self-help program on organic growth in order to realize it and are very confident in order to achieve further growth for Wienerberger. I think that's in a nutshell 2018 and the outlook in 2019. Obviously, the whole team and myself are ready to take your questions now. Thank you.
Thank you. Ladies and gentlemen, at this time we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you are using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. The first question is from the line of Yves Bromehead of Exane. Please go ahead.
Good afternoon, gentlemen. I will have three questions if I can. The first one is on the restructuring cost, which came in higher than we expected for the full year and in Q4. Could you maybe help us in giving us more granularity in terms of what they consist of, and if they are part of the Fast Forward 2020 program? How should we expect restructuring costs in full 2019 as well, would be helpful. My second question is on the outlook. Could you confirm that the EUR 560 million-EUR 580 million excludes EBITDA contribution from M&A and growth CapEx? Given your comments that you just made on the volume outlook, if you exclude for the cost savings, it implies a lot of the EBITDA growth will come from pricing.
I wanted to get a sense of what gives you confidence in your ability to again increase prices over costs. Finally, in terms of the changes in reporting, there is no indication of either clay or bricks in your Wienerberger Building Solutions division. Could you maybe give us a view on whether or not you would be willing to enlarge your portfolio with new products and materials that are non-brick or clay products? Thank you very much.
I think Willy might take the first one on the restructuring costs, then I will take the rest.
Well, Yves, thank you for the question. You're right, in Q4, we have actually decided to do an additional restructuration step in our German business, where we have closed a roof plant, which was actually operating a lot for, I would say, adjacent markets to Germany. What we looked at is how can we integrate this business into those plants, thus improving the profitability for 2019. Since we announced, however, this closure in December, we still accounted for the closure, and that actually was a charge of EUR 8 million. We decided really to go on and press on with it and do it as quickly as possible so we can get the full benefits in the year 2019 and the following years. That's the clear answer to that. Restructurings 2019, no major plant.
If you remember, we guided clearly that our turnaround cases would be in Germany and in Austria. We believe we have completed there our homework. We've done what we believe we have to do and actually stepped up our efforts as I just explained. Obviously, and I think that you would expect from us as well, if we see the need somewhere to improve our profitability by further restructurings, we will not hesitate. I would not anticipate at this moment in the current situation that we are, that we would have a similar figure for 2019.
Yves, coming to your second set of questions regarding the outlook, I can confirm and do this now again, that EUR 560 and EUR 580 does not include any M&A. It does not include any M&A. When you were saying and referring to the new segments, yes, you are absolutely right. Wienerberger will look at the new sets of products in complementing our offering in the sense of accessories and products that help to improve our performance in the local market. It's a very local sort of business that we look at because it's going to be different in Romania than it's going to be to U.K. and Belgium, for example. We will sort of deepen, as I said, our penetration of these local markets because we want to sell solutions and a whole package to our client.
I think on volume and prices, I would like to hand over to Willy again.
Okay. Yes, we are confident that we will be able to increase prices. If you see 2018, we delivered, I think, a very strong performance on pricing. With a 5% of the group overall, which was spread over the two major divisions, CBME and Pipes & Pavers. We are looking at very similar, at least as a minimum price increases for 2019, because you're right, the volume will not grow that much, but we still expect some volume growth as well. If I look at our coverage there, what gives us the confidence when I look at the markets at this moment and where we are active and where I see how our prices are put into the market, gives us certainly sufficient confidence to say that under the present circumstances where we are now, we believe we can do this again.
We will see as usual how prices stick at the beginning of the second quarter, at this moment, there's nothing that lets us to believe that we cannot repeat it.
Okay, thank you very much.
The next question is the line of Miguel Borrega of UBS. Please go ahead.
Hi, good afternoon, everyone. Two questions, please. The first one is on your guidance for 2019. You expect EUR 57 million-EUR 77 million EBITDA improvement, I see that you exclude the scope effect from your base of EUR 462. Does the EUR 57 million-EUR 77 million include the EUR 13 million consolidation adjustment from M&A during 2018? Does that mean that the like-for-like improvements would actually be EUR 44 million-EUR 64 million? My second question is on your return capital employed. This year you had 7.5% return and improvement of 20 basis points year-on-year when your like-for-like was up 15%. Can you give us a sense of what you expect for return capital employed in 2019, please? Thank you.
ROCE guidance, I think that's not where we want to go into that territory at this moment. You're right, we've improved our ROCE, and what I can repeat is what we said on the Capital Markets Day, that we see our ROCE further increasing and growing over the next couple of years. I think we can reiterate that point. On your question on the growth, we have not the EUR 13 million that is included, it's only a fraction of it because this is only the part that we have completed as 100% acquisition. I think it's a technical calculation, but it's certainly not a EUR 13 million you allude to.
Is the EUR 13 million scope from 2018 included or not included in the EUR 57 million-EUR 77 million EBITDA for 2019?
No. No. Only for those acquisitions which have been completed in 2017 and which are now completely into the running business. That's only a fraction of the total. Thank you.
The next question comes from the line of Matthias Pfeifenberger of Deutsche Bank. Please go ahead.
Yes, good afternoon, gents. Thanks for taking my questions. Firstly, can you maybe update us what the net debt impact will be from IFRS 16, then also on the EUR 27 million one-offs between like-for-like and reported, maybe you can just basically explain those in more detail. Just give us the numbers. Then also, I was wondering if you could share your EBITDA portion from U.K. plus imports. I think in the past you were mentioning something like 13%-18%. Then also lastly, on the guidance, do you already have a delta between like-for-like and reported in mind like last year, or is that just a couple of EUR million restructuring for now and too early to give us another number? Thanks.
The debt effect of the IFRS is EUR 200 million. I think there we are in line with what you already earlier guided for, I think we've-
Yeah
Put it somewhere in the presentation as well, Matthias. The EUR 200 million is clearly there. For your information, we will book this as of the first quarter. It will include the figures. On the guidance for the like-for-like and the-- No. I cannot do it at this moment. At the moment, nothing. We always see. That's also why we refrained from guiding for real estate purchases. We know we have a number of real estate deals potentially outside there. The question is when do we realize or don't realize? I think it's too early. We will further guide on that as we go throughout the year.
Are you taking a directional view on FX or is this just basically the rebase you're doing here on slide 41 in terms of the EUR 462? You're basically including the
That's the rebase, yeah. That's the rebase of the FX.
There's no FX bet or
There's no FX included in the guidance.
Yeah. Okay.
That's why it's a like-for-like.
Yeah. Maybe on the U.K. imports and on the EUR 27 million, maybe you can deconstruct those a bit.
Matthias, the EUR 27 million, the adjustment we did between reported EBITDA and like-for-like in 2018 are on slide 22 of the investor presentation. There you have the four elements and the amounts we're adjusting for FX consolidation assets here, structural adjustments. Basically there, I just said to the earlier speaker, I think to the very first question, why we are there roughly higher than what we initially gave as a bracket of EUR 20 million is because of this closure of this one plant in Germany.
Yeah. Okay. U.K., are you willing to give us a number there in terms of EBITDA from U.K. domestic and imports from Benelux?
No, not really, because I think that depends on how we look at our business. As you said, a part of our sales in the U.K. come from the continent. We do not see, because your question is how much is at risk. That's your underlying question. We don't see it at risk because we believe it's an integral part of our offering. I think we've been there before, and we see that as actually a part of our business that we consider as U.K. business.
Okay. Thank you.
The next question is from the line of Ami of Citi. Please go ahead.
Thank you. Just a couple of questions from me. My first question is on cost inflation. If you could give us some color on the moving parts and the cost inflationary trends across your businesses. Connected to that, if you can give us more color around the price cost gap in the Pipes & Pavers division, and have you seen that improve over this fourth quarter and any outlook that you can give us on that? My second question is just a follow-up on the structural adjustment figure that you booked of EUR 56 million. If you can split it across the divisions, that would be very helpful. Also, can I clarify that you're not guiding for any specific structural adjustment into the 2019 number? The last one is on disposals and any potential disposals that you are considering in your existing portfolio.
Can you give us a sort of a mix in terms of what % of your current portfolio is one that is under the scanner and can potentially be disposed of? Thank you.
I'll take the last question first. I think here we have given a strong guidance as well that till 2020, we want to realize about EUR 150 million out of these disposals. Yeah. As we have communicated, we have achieved nearly EUR 75 or so last year. Here we are on good progress. The businesses and the assets that we want to sell, we want to do it obviously at the maximum value, and therefore, you will see us gradually moving on them in the next 24 months. This is, I think, to try to answer your third question. I will hand over to Piet. If you look at the EUR 26.7 million, which we put on our presentation, which you find on the website on I think it's slide 22. Yeah?
Yeah.
The EUR 7.3 comes to half out of Pipes & Pavers, which is mainly the part of our business which is most exposed to Nordic currencies and some Turkish lira and other more fluctuating currencies. Consolidation effect is, I would say, most of it out of CBME and the North American business, where we have added a very profitable business already last year, and we have some of the consolidation effects. The structural adjustments, the majority there is also in clay building materials, because there we have our German and our Austrian restructuring. We also have then at the holding, as we also put out in our report that we've issued, we say there we have a one-off payment for our workers participation program, and we have some first costs on the Fast Foward program. That's all in our report.
Sorry, are you guiding for any structural adjustment figure for 2019?
As I said to an earlier question, we are not at this moment looking at any major restructurations.
Okay.
We will never exclude them, because if we see the need to do some, we will do.
Okay.
That's also, I think, also in the nature of the way we manage our business and we handle our business. We do the restructurations at the time we see that they're necessary. At this moment, we're not in a position to guide to anything.
Okay. My last one was really on cost inflation.
Generally, you see an increase, of course, in wages and a little bit on the energy side. All in all, I think the overall message we want to reiterate, we are confident that again, we will be in a position to offset cost inflation by price increases. That's the way we approach it at this moment. That is actually the case in all the business units we look at this moment.
Okay.
The next question is from the line of Trubrich of Kepler. Please go ahead.
Yeah, good afternoon, gentlemen. Thanks for taking my questions. First, I would be interested on the EUR 40 million that you target in the Fast Forward program in 2019. Can you give us here maybe a split where in which of your portfolio, in which areas these might be allocated? Secondly, looking at the margin development in your Eastern European clay operations, obviously here operating leverage is strongly coming through, and you show a very strong EBITDA margin. What do you think, where can you still go from here? Is the further improvement possible? On the markets, looking at the outlook on the residential markets, obviously the green spots for Belgium, Slovenia, and Croatia have been removed. Can you give us maybe some more color on what has changed here compared to 2018 in your expectations?
My last question would be on your growth CapEx, where you at this point refrain from providing details. Comparing to 2018 and looking at the pipeline you have, is it more likely at the same level? Is it significantly lower? Let's say that M&A projects that you have in the pipeline, is there something that could be, let's say, how big is mid-sized? Could it be two or EUR 300 million as well? Thank you very much.
Thank you for your question. I think I will take the last one first on the growth side. Yes, we are not giving here guidance because I think it's not reasonable to do so. As you all know, M&A activity is based on sort of opportunities that are out there and when they materialize. I think here we have seen that some projects get delayed by the sellers, by discussions that we have. I can only confirm, yes, we have really a multitude of opportunities out there. Mid-sized means obviously from EUR 50 million-EUR 200 million. We have opportunities, we have small ones, we have mid-sized ones. As you know, I think I want to make this clear also, in the building material arena, there's a lot on the plate these days and a lot of transaction take place.
I want to confirm very clearly here the message that Wienerberger is not a company that buys businesses at any price. We look very carefully if we can generate value, if there's value in for us, and if such an acquisition target meets our criteria on the financial side, on the operational and the strategic side. I think this is our sort of clear confirmation, M&A, yes, if it creates value. I think for the next one, I hand over to Willy.
The Fast Forward EUR 14 million, where we had this, there's certainly going to be a contribution there again of whatever projects we are putting forward at this moment. Of course, we are now embarking on all the productions related, and that's going to contribute. We have the pricing excellence, again, will be a major role in there. We will have some procurement contributions. I'm not going to put down some hard figures to the whole thing. I think that's difficult.
As I tried in my initial statements, I think we break it down to a multitude of projects. I talked about manufacturing, I talked about purchasing, I talked about sales excellence and packaging sort of product offerings.
You see it anyway in the operations coming through. By the way, your question relating to Eastern Europe, where you saw and see the improvement of margin. It's also due to the Fast Forward project. It's also due to these optimizations. If you look to the fact that we are guiding another EUR 40 million this year, this will be also in parts of the business where we already have a strong margin. That means it comes through in all the segments, because we focus on the operations and roll out all of these best practice models throughout the operation. It might be then in East, in West, in North Europe, in the United States. Step by step, this is coming through.
Absolutely.
It is in all divisions, in Pipes, in the piping solutions, in the Building Solutions, and in North America. It's a very consistently and very thoroughly managed process that we implement here. You will see that as a self-help program, and I want to state it once again, you see that the benefits will come through penny for penny, and that we will sort of implement it very thoroughly.
Okay. This implies basically that in CE, there's still further upside to profitability, as basically this Fast Forward is going to benefit across all divisions.
Yep. Correct. Clearly.
Okay. Just, I don't know if you provided a breakdown, and if you did, I apologize for asking it, on the growth CapEx, can you split it up how much has been allocated to M&A and how much to organic growth in 2018?
I think it's about EUR 73 in M&A. Yeah. The minorities that we bought out in Tondach, it's about EUR 30 million or so, the rest is then organic.
Okay. Thank you very much, gentlemen.
Thank you.
The next question is to the line of Flor O'Donoghue of Davy. Please go ahead.
Thank you. I've just a couple. Just one on the margins in the CBM business. I'm sure you've talked about this before, but you might just explain to us again what drives the gap between Western and Eastern Europe in terms of the differential in the EBITDA margin. Second question I have, and again, apologies if you've touched on this before. I'm just going to slide 15 of your presentation, in terms of the M&A from 2018. Just wondering how much of that EUR 11 million-EUR 12 million of EBITDA that was acquired effectively, how much of that actually is in for 2019 in terms of the phasing of it being in for a full year? Thank you.
The gap on the margins between East and West, I think that's your first question on CBME, has to do with the nature of the markets themselves. The cost structure, of course, which is still different to an extent on the labor cost, also the fact that we have better and more modern equipment still around in Eastern Europe. That's the basic underlying driver for the difference in the margins, where we also now see that we can get better, higher product quality into the market. It's clearly also the fact that we do Eastern Europe, all the markets are on a good level. Whereas we see in Western Europe, we have a-- Well, Germany is of a weaker nature, that's it.
Out of the EUR 11 million, I don't have the absolute breakdown with me, but it's roughly EUR 7 million, something like that, because this U.S. business we have only acquired at the end of the year, it's going to be more or less it.
Brilliant. Listen. Thanks, Willy. Thanks for that. Very clear. Thank you.
Okay.
Again, if you have a question, please press star, followed by one on your telephone. The next question is to the line of Christene Gusch of Numis. Please go ahead.
Hello. Hi. Afternoon. Just a couple of questions from me. First of all, I know you point to the Benelux market improving both in terms of brick volumes and price. Could you please talk through the trade-off between local sales in Benelux and then exporting the bricks to the U.K.? Following on from that, could you sort of touch on capacity utilization in the U.K. and whether you have any plans for capacity increases over the medium term? Thank you.
Yep. Thank you for your question. From the capacity side, we are running, as we speak, full speed, flat out, as I said, in the Fast Forward project, parts of it is also to improve capacity utilization and capacity as such when we debottleneck, and that's what we are doing in the U.K. as well. In all of our operations, we focus on that. We'll gradually improve here also on the capacity side as such. We have, at this stage, no intention to build a new plant in the U.K. I can relate this to you. As I said, however, we improve our capacity continuously, and we use obviously our capacity on the continent in order to satisfy the very demand in these specific product ranges.
It needs to be clarified also from our side that this is a special and very special market that cannot be satisfied with products from the U.K. because there is not such a product, even if others think that there is. Obviously, you need to understand from a client perspective and customer perspective, these customers want a special product, and these products come only from the continent. This is a business that we have developed over the last 20 years and is running very well. We are very satisfied, and it will continue to do so.
Brilliant. Thank you very much.
We have a follow-up question from the line of Yves Bromehead of Exane. Please go ahead.
Yes. Hi. Just a follow-up, actually, on the U.K. We've been seeing quite a lot of consolidation happening in the coastline of Benelux. Do you expect this to make the import market a bit more competitive or not? Thank you.
No, not at all. I think we've seen here ups and downs, as I said, over the 20 last years. I don't see here major changes because it has been sort of a very, on both sides, a rather consolidated market. Therefore, the market as such won't change dramatically.