Ladies and gentlemen, thank you for standing by. My name is Emma, your Chorus Call operator. Welcome, and thank you for joining the Wienerberger conference call on the results for the first quarter of 2018. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question and answer session. If you'd like to ask a question, you may press star, followed by one on your touchtone telephone. If any participant has difficulty hearing the conference, please press the star key followed by zero on your telephone for operator assistance. I would now like to turn the conference over to Mr. Klaus Ofner, Head of Investor Relations. Please go ahead, sir.
Thank you, operator. Ladies and gentlemen, welcome to the Wienerberger earnings call on Q1 2018 results. Thank you for dialing in today. Wienerberger representatives on the call are Heimo Scheuch, CEO, and Willy Van Riet , CFO. Heimo Scheuch will open the call with a summary of the key developments of the first quarter. After that, he will speak about the outlook as well as our strategic priorities. Following the opening statement, we will take your questions. I now hand over to Mr. Scheuch for the executive call.
Thank you, Klaus. A warm welcome to our call. Good afternoon from Vienna to everybody. Q1 was for us a good start in 2018. We had a strong beginning of this year with a good market and a solid market demand in all of our regions where we are active. Please consider also that during the month of March, we had very harsh weather conditions throughout the whole of Europe, from the U.K. into Russia and also North America. Considering the fact that the business was heavily impacted by this cold, and also to some extent, wet weather with snow all over Europe, it is a very good start into the year with +2% on the turnover side. When we look on the EBITDA expansion side, a very strong performance with +30% like-for-like EBITDA, coming in at about EUR 60 million in the first quarter of 2018.
Just obviously also to address your attention to the fact that from an EBITDA perspective, like for like, as we do always adjust for negative FX effects that were in the range of EUR 2.1 million in Q1 of this year, for restructuring charges, which were in the first quarter of this year, EUR 18.9 million coming especially from the restructuring of our ceramic pipe business in Germany and our Austrian and German brick businesses, which we restructured during the first quarter of this year. Obviously, earnings contribution from sales of non-operating real estate. Here we have had an incoming cash from EUR 5.2 million, for which we adjusted the like-for-like EBITDA. Finally, the consolidation effect coming from the takeover of the Austrian brick factory, Brenner, in the first quarter, which is EUR 0.1 million that was adjusted for. Like for like, a strong performance in EBITDA for the Group.
Obviously, based on this strong start and the timely performance of our restructuring measures and optimization measures, we feel strongly about our guidance for the year 2018 and reaffirm our target range for like-for-like EBITDA of EUR 450 million to EUR 470 million this year. I can also obviously say at this stage, after the month of April, that the trading in the month of April is fully in line with our expectations and meets obviously the targets that we have established ourselves. On the CapEx front, we have obviously guided for EUR 160 million of CapEx for our ongoing business, maintenance CapEx, improvement CapEx, also new products, and slight expansion CapEx. EUR 160 million will be spent throughout our operations this year.
As far as the gross CapEx is concerned, that means on one hand, M&A activity, and on the other hand, also increasing of capacity in certain regions where we are active or increasing our product range with new products and therefore also the necessary production lines. We are on track for this EUR 200 million of expansion CapEx, gross CapEx for this year. EUR 160 for the ongoing and EUR 200 million for the growth.
We look a little bit more into the different segments and the performance of the markets, as we speak, we see, if I may start in the eastern part of Europe, a strong increase of activity here in the eastern part of Europe, where we have seen also in the first quarter of this year, a significant margin improvement in our Eastern European brick segment, which obviously highlights the strong operating leverage that we have there. Even considering, as I said earlier, the cold weather, it has been a very good start into this year, and we foresee, as you have seen in the attached presentation of our group, that we see here a good development for the rest of the year as we speak for residential housing construction and also for infrastructure spending in this region of Europe.
We move to the Western part, here we obviously had the impact of the weather as well. However, we have seen good trends coming out of the Netherlands and Belgium, also France, and the U.K. performed accordingly. We feel strongly about the progression of these markets for the rest of the year. The optimization measures in Germany and Austria are under full implementation and will obviously lead to the cost improvements that we have guided for. When we look at the pipe business, as I said, also already in Eastern Europe, we have seen underlying market improvement with stronger demand levels coming from the infrastructure business side. Obviously, again, the cold weather at the beginning of this year impacted the growth, but we see it also already coming through also in April and the months further. The performance operationally is satisfactory.
Obviously, the EBIT in this segment is heavily burdened by the restructuring measures that I outlined at the beginning, meaning the restructuring of the ceramic pipe business in Germany with the EUR 16.1 million. I can also report that on the pipe side, we are in an implementation phase of the French pipe restructuring. We have fully accounted for this restructuring, and we see already the benefits coming through in the sense of new repositioning of our French pipe business by exiting the commodity side of the business, the infrastructure one, and positioning ourselves more in the niche parts like the agricultural irrigation business and some of these very niche products that we will sell in the future in the French market.
On the integration side, we are successfully integrating our newly pre-wired electro pipe business that we acquired in Belgium and in France, and it's already positively contributing to our Western European region. On the international project business, I'm happy to report that on the long length and big diameter pipes, we see here a slightly increasing demand and order intake on the international one, especially coming from South America, and some projects in this hemisphere. On the Soluforce, which is the pipe for the oil and gas application, we still see here a weak demand level. In one part of the business, a slight pickup, and the other is still on a slow pace activity. If we move to North America, we have seen here in the first three months, a good organic growth level in all areas of the business with a significant earnings improvement.
We see a positive trend in the U.S. residential market, which should continue for the rest of the year. Also here, the integration of our acquired business in Mississippi, Columbus Brick is taking pace, and we are obviously successfully integrating the business and then adding to our operations. We have restructured our activity in pipes in the U.S. last year and are happy to report the satisfactory demand levels and increasing demand levels and the good profitability coming in. Also in Canada, our business volume-wise and price-wise developed satisfactory. Again, if I summarize in a nutshell, rather favorable market conditions throughout Europe and the U.S. We have adjusted our prices up as we have guided for. The costs are under control, and obviously, we have addressed issues like the German and Austrian performance in the brick business and the ceramic pipe business in Germany.
We are on track on the optimization projects, which will obviously also contribute this year in the amount of around EUR 10 million of cost savings in 2018. Furthermore, if I move on to the strategic projects, we have successfully disposed of the Austrian concrete paver business. You recall that we have put in place an ambitious project of selling underperforming and not strategically for us important businesses within the Wienerberger Group in the amount of about EUR 100 million in the next 16 to 18 months. We have already moved on the first business, that's this Austrian concrete paver business, which made obviously a slight EBIT loss last year in the range of about EUR 3.6 million, and we sold the business for an enterprise value of around EUR 30 million.
Again, here, the first step in reshuffling and repositioning our portfolio, moving out of assets that are underperforming, where we don't see the necessary growth and the sufficient profitability coming through, and to move these funds into higher margin and higher growth businesses in the future. Furthermore, let me point out that we have successfully bought also the minority stake from the shareholders that still had shares in our Tondach operations for EUR 30 million. This was the call that we used in order to buy out the two banks that have reconverted their debt into equity when we did the restructuring of Tondach. We are now a full 100% owner of Tondach in Eastern Europe as well, and the full integration can take place of this business as well in Eastern Europe.
Again, I just want to put also forward that on the restructuring side and on the cost saving and optimization side, we are fully on track with all of our projects. Obviously, we will benefit from the positive effects during the rest of the year. I recall that we will have the targeted EUR 15 million of cost savings by the end of 2019 from all these restructuring measures, which will cost us EUR 30 million as restructuring costs this year. We are fully on track on the cost side and also on the savings side. We also are working, obviously currently, on a pipeline of further bolt-on M&A deals. These smaller deals that created immediately value and are value accretive for our company.
We are certainly in a position this year to fully take advantage of this pipeline in order to reach our targeted EUR 200 million gross M&A CapEx. Just let me also draw your attention that we successfully placed a EUR 250 million bond, 7-year bond with 2% in coupon earlier, a couple of weeks ago actually. The demand level was high, showed the strong confidence of the investment community into our business. Again, in a summary, a strong start into the year. We feel confident with respect to our guidance, and we'll focus obviously very strongly in the upcoming months on our organic growth potential and fully optimize it. We will enhance our operational performance by all the measures that are put in place, and we're certainly and are determined to even increase those efforts.
We will use our current and existing platforms for further growth, we will further continue to dispose of these non-strategic assets and underperforming assets, where we have already a couple of things on our way and we'll be in a position to announce something probably a little later this year. All in all, Wienerberger on track to reach its guided targets for 2018. I think I've tried to give a short and brief overview and would then be ready to take your questions as they come. Thank you very much.
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 touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selection. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. First question comes from the line of Yves Bromehead with Exane BNP Paribas. Please go ahead.
Good afternoon. I'll have three questions, if I may. The first one is on your full year 2018 EBITDA guidance that you stick with the EUR 450 million-EUR 470 million. If my calculations are correct, it implies a low teens run rate for the next three quarters, which seems quite undemanding given that the base effect is getting easier. I think that in the Q1 report you are also referring to the fact that you are absolutely confident on the target set out for this year. I was just wondering what are the key drivers and what you need to see before looking at upgrading your guidance for the full year 2018 number.
Shall we take your second and third question, or are they related?
Yeah. I'll go ahead with the next ones. My second question is, could you give us a rough number in terms of the full year 2017 EBITDA contribution from the French pipe business? If I remember, I think it was loss-making. I just wanted to understand whether you would expect that to break even this year and if that's included in your EUR 5 million cost saving for full year 2018. My last question is on the international pipe business. You mentioned today in the last conference call that the underlying trends were improving. Have you continued to see further improvements? Do you have enough visibility at this stage of the year for the remainder of full year 2018? Thank you.
I might sort of go in the other direction and take your last question first, if I may. The international pipe business, as I tried to mention, we see a sort of slight uptick in demand levels on the long diameter and long lengths and big diameter pipes coming out of our Norwegian operations. Especially when I look at the order intake level, it's more coming from the southern parts of South America these days. Here, yes, a little uptick. On the other one, the Soluforce, it's still on a very low level. Compared to what I told you at the beginning of this year, it's not a significant change right now. We are more or less in the same direction as far as the demand level is concerned. Willy, may I ask you to?
On the French bit, yes, we were EBITDA negative last year. We have seen a good improvement in the first quarter, but the first quarter, of course, is a smaller quarter on the whole thing. Yes, it's included in the EUR 5 million that we put because it's part of the whole improvement process. That gives us the confidence what we have seen now. We will complete the restructuration and everything by the midst of the year as things progress now, and they're progressing well as planned. That's the update on the French business.
The overall guidance, I think we went into this year with confidence in establishing a guidance of EUR 450 million and EUR 470 million, like for like, obviously, we remain confident that we achieved that. I understand that when you make certain calculations, you come to certain results. Let us, first of all, I think after a first quarter, which is I would say in the whole range and not so significant one, let us wait for the second one in order to have a better view on the year as we progress. I would say with a certain respect for the world and for the economical situation, let us be positive for this year, but let us give us the opportunity to realize what we want. These are ambitious targets, and we want to deliver, obviously, and we'll certainly not shy away from better results if they come.
I think it's already a strong statement from our side that we are confident with respect to our guidance at this stage.
Thank you. Sorry, if I could come back to the pipe division. Just want also to know the sale of the Austrian business in the ceramic pipe, is that also included in the EUR 5 million fixed cost savings?
This is the German one.
No. The Austrian concrete paving is not included.
Okay. Thank you very much.
The next question comes from the line of Matthias Pfeifenberger with Deutsche Bank. Please go ahead.
Yes, good afternoon, gents. Couple of questions. Firstly, on the U.S. pickup and the EBITDA is quite sizable. Can you maybe run through? You mentioned a couple of points. It's the integration of Columbus, but also pipes in Canada. What's the driving factor there? On the U.K., you mentioned in the release it's high demand. You expect high demand to stay. Does that go for the entire year? Because previously you've basically said we're quite confident for the first half. Is that more optimism there? Germany, did you mention you restructured the ceramic pipes business in Germany or in Eastern Europe?
In Germany.
Okay. It's basically most of the restructuring in the Q1 was in bricks and ceramic pipes in Germany. Is that like saying you lost the hopes on this market for the medium term? A last one, only if you want, maybe you can comment on the selective shareholder criticism. Thanks.
I just want to take up your question, Matthias, if I may, on Germany. I think we have not lost confidence, nor in the German market, nor in the usage of our products, ceramic pipes and bricks. We have always said that on the ceramic pipe business with three production sites, two in Germany and one in Belgium, there's one too many, and we want to regroup in order to use our efficiencies and to have a better utilization rate. That's why we moved and restructured the business and reduced the sites to two, and that's in order to utilize these sites better. Keep in mind that in the past, a substantial amount of pipes was basically exported at not real margins, but at the cost level to international markets like the Middle East, et cetera.
We said it's better to concentrate on the European markets with margins, obviously with higher ones, and to better utilization of the production capacity. On the brick site, again, remember last year we took over a very modern and very productive site near Berlin, and it was integrated in our network, and that's why we moved out of two old sites in order to better utilize it again. From a utilization rate perspective, this helps us improving it, and the cost structure is obviously better in this site. We are not saying that we quit markets or exit markets. It's better utilization, better cost structures. Two other questions that you had were the U.K. The U.K. is, as we speak, I think the demand level is healthy, I would call it at this stage, and stable as far as the months to come.
We remain optimistic for the rest of the year in the sense that we are progressing at this level of activity. I think this is what we can tell you about the U.K.
In the U.S., the improvement is basically in the three fields that we have. We have seen in bricks a lower volume activity, but compensated with a better pricing. The Canadian market is still good, although there's a bit of an expectation if you look at the measures that have been announced by the Canadian government that might cool down in the second half of the year. Plastic pipes, as Heimo mentioned, we have reorganized that business over the last couple of years, and there we see a good performance both on pricing and on volume.
Yep. Thanks.
Matthias, the last question that you had was on shareholdership, and let me put it this way. Myself and the whole team see every year hundreds or even thousands of shareholders and investors of Wienerberger. We take comments, and if they are critical ones, positive ones, encouraging ones, obviously very serious, and try to learn from every input that we can get.
If there are interesting ones and constructive ones, and especially inputs that bring us further, we are very appreciative. We view any comment as valuable, and we don't see it negative or something like this. We see it as a constructive approach, and we only feel positive in order to encourage ourselves and the whole team to perform even better and to deliver the results. That's what we are doing and what we are currently also doing, what we are showing in the first quarter, obviously, and we'll continue to show this year.
Okay, thanks a lot.
Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star followed by one. Next question comes from the line of Miguel Borrega of UBS. Please go ahead.
Hi. Good afternoon, everyone. I've got two questions, please. The first one is on clay Eastern Europe. Can you give us a flavor of the strong performance in this division? Could you give us some sense of how much is pricing gains and where you are actually seeing strong volumes coming through, in which particular markets where you're seeing strong growth? My second question is a follow-up to the recent corporate development. Could you give us some comments on the recent board proposals from one of your investors? Are you proposing different board members to the AGM? Have you spoken to other shareholders with regards to these candidates? Any feedback that you can give us? Thank you.
If I take the question on clay Eastern Europe, it's on all the markets. We see it's a lower quarter, of course, on volume, because in Eastern Europe you have a winter. We also see a healthy uptick in pricing. As always, we will comment later on in the second quarter on whether we see pricing sticking, yes or no. It's encouraging on everything. Of course, what we then see, if we would extrapolate that, we see, of course, a better utilization of our capacity in that area. You know that we have our operating leverage that really comes through. All of that, with the exception of Russia. In Russia, we're not losing money. We have trimmed down our operations, and we are still in good, positive territory.
Your second question was related to corporate governance. I can only say from a management perspective of Wienerberger, that Wienerberger is among those companies that has and meets the highest international corporate governance standards, and it has an outstanding performance as far as the board work on the supervisory board level is concerned and on the management board level. We will certainly keep this in this direction because this is I think the utmost importance for a public company. We respect all shareholders in the same way and will do so in the future. Therefore, I think it's also under Austrian law. You need to understand that this is purely a supervisory board issue and has nothing to do with us on the management board side. We are running the company.
The supervisory board is responsible for looking for the right candidates, qualified, independent, and experienced candidates for the board. You have to understand, it's not our business to do that. That's the supervisory board that deals with these issues.
Fair enough. Thank you.
Are there any further questions? Please press star followed by one at this time. Gentlemen, there are no further questions registered at this time.
Okay. Ladies and gentlemen, thank you for your questions, for dialing in today. We hope that you will join us again on the 16th of August when we release our H1 results for 2018. All that's left for today is to thank you for your attention. Have a nice day, and goodbye.
Ladies and gentlemen, this concludes the Wienerberger conference call on the results for 2018. Thank you for joining, and have a pleasant day. Goodbye.