Earnings Call: H2 2017

Feb 28, 2018

Ladies and gentlemen, thank you for standing by. I am Jyote, your Chorus Call operator. Welcome and thank you for joining the Winnebago Conference Call on the Results for 2017. 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. Session. I would now like to turn the conference over to Mr. Claus Afner, Head of Investor Relations. Please go ahead. Thank you, operator. Ladies and gentlemen, welcome to the Winebarger earnings call on our 2017 results. Thank you for dialing in today. Winebarger representatives on today's call are Jaime Schoich, CEO Willy van Rijd, CFO and Stefan Huber, Head of Corporate Reporting and Treasury. Jaime Schoich will open the call with a summary of the key developments of 2017. After that, he will speak about our outlook as well as our strategic priorities. Following the opening statement, we will take questions. I now hand over to Mr. Schoich for the presentation. Ladies and gentlemen, good afternoon, a warm welcome from Vienna. Thank you very much for joining the call. I will try to focus on the first part of my little opening speech on 2017, then move on to the strategic issues and the strategic development of Wienerberger and then finalize with the outlook 2018. If you look to 2017, we have achieved a number of very notable milestones in 2017, at mostly, obviously, that we have got in the turnover to more than EUR 3,000,000,000, that's the highest sales number that the company has achieved in its history. So a plus 5% coming in at EUR 3,100,000,000.0, a very good achievement in 2017. On the EBITDA front, we have achieved a 3% increase to €415,000,000 and again, the fifth consecutive year that we have been able to increase our EBITDA. On the net profit, an impressive 50% increase to EUR123 million. So the net profit is on a ten year high level if you see in the history compared to the history of the company. All in all, if you look to the performance in particular of revenues, EBITDA and net profit, we have achieved over the period of five years, the last five years, average growth of about 6% in revenue and a margin expansion of 400 basis points and a very strong earnings growth up to, as I said, in 2017, million. All in all, very successful year 2017. If we look more in detail, which is also important for 2017, we have been able to realize a number of very successful and value creating acquisitions in the Brick business, but also in the Pipe business. Here again, very important to note that all of these acquisitions will contribute more than 11.5% CFRI to the group. So when we look at those acquisitions, some of them are already closed, some of them are still pending because we are in front of antitrust authorities like in Romania with the acquisition Brickstone. All in all, all of them will contribute EUR 90,000,000 revenues to Winnebago's revenues and an EBITDA of EUR 16,000,000 to Wiener Berger's group results. So again, a very strong signal from our company that we are also growing by means of acquisition. If you look more in detail to our balance sheet, you see that even after such acquisitions, we have been able to reduce net debt again by 10% in 2017. So a strong signal that we focus on our financial discipline and that we create with a 1.4x EBITDA to net debt, a very strong balance sheet, which gives us the opportunity to realize further growth and strong growth throughout the next years. Also on the working capital front, you remember that last year in 2016, we were able to come down to 17% of sales. We have again, after acquisitions and also by expanding our business remained at 17% of sales working capital. So again, a very disciplined and strongly managed working capital within the group, Wienerberger. On the capital expenditure front, again, when you look at the normal CapEx, we have remained more or less stable. So we invest in our industrial platforms, the necessary amounts in order to make them competitive, improve their performance and ensure that we have the innovative products that we need to be successful on the market. So a very strong signal also that we act disciplined as far as capital allocation to our businesses is concerned. Again, when we look at the operational excellence, we have been able to keep our promises. We guided for EUR 10,000,000 cost savings throughout 2017. We delivered slightly more EUR 11,000,000. And this is a number of smaller and midsized initiatives that we take through our plant network, our overhead structures and our sales structures in order to optimize the business. And it shows clearly that this cost efficiencies and the work in this respect is part of our corporate culture and our DNA within Wienerberg. And we want to continue on such base and create further efficiencies in the years to come. If we look on the share performance and the return to the shareholders, we will propose in June at our next general assembly a rise in an increase of 11% to our dividend, so to come to a dividend of €0.30 per share. We'll also introduce a special dividend this year coming from the foundation that was founded early two thousand to have non operating assets in Austria in it. And the beneficiaries of this foundation are the shareholders of Wineberg. So due to the fact that we have been able to sell some of this real estate, the shareholders will get €0.10 per share as a special dividend in 2017. Obviously, as you are well aware, have introduced a share buyback program coming up to 1% of the shares issued to 1,200,000.0 shares that has been started in December and that we will continue to realize. When you look at the shareholder return in 2000 and the total shareholder return in 2017 was 24%. And for this five year period, you have over 200% shareholder return that we have been able to realize. Summary, in 2017, we have been actively and significantly delivering on our growth plan. We have obviously continuously enhanced the sustainable operations, made them better focusing on the efficiencies. And by the end of the year, we have delivered an outstanding financial performance. So 2017 gives us the opportunity to further look into our strategy and the development of Wienerberger with optimism. We have over the last years, ladies and gentlemen, created very strong platforms in Europe and The United States and in our industrial activities, focusing on infrastructure, renovation and new build. Such platforms gives us obviously a leading edge in the industry, and we see here the opportunities by having very strong and capable local management to add on such platforms and to create here additional growth. The focus has been in the last years, and we have shifted the company from clearly a production oriented company to a customer oriented and innovative product company, so a strong local active company that really is in touch with the final decision makers. Based on such principles, we will further develop our potential growth by focusing on organic growth, operational excellence and growth projects. So such three pillars will obviously contribute as they did already in the past, positively to the development of Wineberger Group and over the upcoming years. If we look at the organic growth in more detail, as we did already successfully in the past, we will clearly focus on our innovative products, the services and the solutions that we provide with it. We will further increase the market proximity in the respective market that we are operating in. And we are excited as a company that we are a front runner in digitalization when it comes to the building material industry and will further to develop this competitive edge that we have developed over the last couple of years. If you look at the Wienerberger business model, we have very strong, as I already said, platforms industrially speaking, but also distribution wise because we have strong sales forces in the respective companies in the countries that we operate in. And we will take advantage of those in order to put through new and innovative products as we did, for example, with the infill clay block successfully in the southern parts of Germany, now in Austria, in The Czech Republic, in Poland and also in France. So here you see a clear example of a successful platform that we use in order to further strengthen our local market shares and our local performance. The next growth pillar, Operational Accidents. It's a continuous process of cost efficiencies and process optimizations. We focus on our approach of a sustainable management orientation in order to create value by developing our employees, by environmental protection and production and by sustainable products. It is our clear focus to reduce further our energy consumptions by 20% up till 2020. We are on good road, as you see in the presentation. We made big efforts. We make already the necessary investments in this respect in research and development with people, but also focusing on our industrial base. So again, here maintaining lean organizations, being best in class as far as energy consumption is concerned, we contribute here, as I said earlier, successfully to this annual savings that we target within the Wineberger Group. On top of it, we don't stand still as Wineberger. We want to improve further our operations and we have identified in 2017 operations that are not at the level we want them to be. We talked throughout the year 2017 about a certain weakness in the French piping operations. We talked about a certain sort of weakness in the German operations. And we addressed those very quickly, very fast. And again, when we took a look at 2018, we will intensify those steps and measures that we implement there in these operations. It will cost us an overall onetime cost of EUR 30,000,000 that we will have to invest in order to streamline these operations and make them stronger and more efficient. Such costs will contribute positively, obviously, to the savings at the end of the day. So we will have, in 2018, total savings of EUR 15,000,000, EUR 10,000,000 coming from the ongoing cost savings projects that we have been establishing over the last years and EUR 5,000,000 from this new efficiency improvements that we currently are about to implement. Such measures that we are currently implement will then contribute in 2019 another EUR 10,000,000 of savings that you can add to the calculation. So we will have EUR 20,000,000 of total savings in 2019. So again, a strong signal of Wineberga to commit itself to further performance increase in the operations. Obviously, we also look carefully at non operating assets. You remember that we successfully concluded a first project that we had of sales in the range of EUR 93,000,000 of non operating assets in 2017. We stepped up efforts in 2017, again focusing on non operating real estate throughout the group and realized out of this originally planned €70,000,000 up till 2020, already 40,000,000 in 2017, due obviously also to the positive overall business environment in Europe where the most of these real estates are located. So again, a strong commitment to Wienerberga to realize value out of non operating assets. And we'll continue this process in the next coming years, depending on the availability of planning commissions and obviously also interest in these real estate that are mostly located these days Eastern Europe and coming from closed down sites in the past. So operational excellence and organic growth are top of the agenda. But on top of it, we will focus on growth projects. We want to enrich our existing platforms by acquisitions that create more value and that improve our margins. You remember that we did, for example, pre wired pipe business acquisition in Belgium last year, Braeflex. This is a perfect example how we want to go further in the development of our portfolio. Why, ladies and gentlemen? Because we see the need in the market to have technical simplicity when it comes to the products that we propose and the solutions that we propose to the clients and customers, they need products and solutions that are easy to implement, to lay on the construction site to install. And this is the major driving force for Wienerberger to improve its product range over the years. We, as Wienerberger, are local company. We operate locally in Finland. We operate locally in Italy, in Ireland or even in Russia. So that's very important. We have very strong local management, strong local brands and a strong customer orientation, where we, through by means of digitalization, by means of services, but also being the trusted partner of the decision makers in the local market can improve our performance and outgrow continuously our markets where we operate in. And this is obviously the basis for our future growth when we look at acquisitions. We have, as of today, that platforms industrially where we can add on and therefore have a good and very interesting and attractive pipeline of opportunities ahead of us that we, especially within family businesses in Europe and The U. S, can then add on our existing platforms. Obviously, and this goes without saying, we, as management, are strongly committed to our financial discipline that we have implemented within Wienerberger. The 11.5% CFRI is to be applied to all such acquisitions, smaller, medium sized or bigger sized acquisitions. They must produce this return in order to be on the list for such investments. Why the CFRI for Wienerberger? Because it's a very, very transparent and clear metric in order to value such steps of growth, but also look carefully in the past because it's the historical capital employed that we take into consideration with respect obviously to the performance of EBITDA in order to determine the value creation. And I think it's the best one for you as shareholders, you as experts of the financial market, but also to measure management. And therefore, it's a key management instrument that we have implemented throughout the group, so the people understand clearly that they are responsible for such historically capital employed in order to improve performance. We also are very strict on our current portfolio. We look carefully into the strategic fit, into performance of it, and then argue and discuss if we have the necessary platforms for the further growth. If we find out that such platforms locally in the regions, etcetera, are not of strategic interest, we will certainly move on the disposal of such ones. So we have set ourselves a clear target that we will, due to this investigation, come up with about €100,000,000 of disposals in the next eighteen to twenty four months and realize such disposals and we'll reinvest the proceeds of these disposals in higher margin business that better fit with our future growth. So all in all, we are excited about this new future of Wienerberger, building the future on this very strong industrial platforms in our core markets in Europe and The U. S. Infrastructure, new residential and renovation. We have a very build a very strong team of management locally, regionally in order to realize such acquisitions, integrate them and improve the performance of such acquisitions. And we have geared the company to a very strong customer oriented and innovative product oriented company. So an exciting growth story for the years to come. And if we look finally more in detail to 2018, we find a sort of organic growth despite mixed market sentiment throughout Europe and The United States. Wienerberger sees itself obviously always exposed to a little different developments throughout the world. But generally speaking, we see ourselves well positioned to grow our business as we did in 2017 in this environment, which I would qualify at this stage as volatile. There's good sentiment in certain areas, stable sentiment in others. But generally speaking, I think we are set here for a good trend as far as organic growth is concerned. We'll, as I said earlier, enhance and intensify our operational performance by putting operational excellence top of the agenda. We'll further put emphasis on acquisitions to add to our core platforms, and we will dispose of non core assets throughout the year 2018. So all in all, when you look at our guidance, we see ourselves in a situation where we can give you at this year's beginning a guidance in EBITDA like for like between CHF $450,000,000, CHF $470,000,000. Why a range? Because obviously, as I said, there is volatility out there in the marketplace. We are set for certain timing issues as far as acquisitions are concerned, but also on the front of optimization projects because obviously, it depends on labor law and the respective timing here. And therefore, you have here a range of EUR $450,000,000 to $4.70 On the CapEx front, keep in mind that we have expanded our asset base already and therefore the 160,000,000 guidance for the current asset base that we have available and the gross CapEx of EUR 200,000,000 that we will devote to projects that are already signed and are executed in 2018, but also projects that come our way, as I said, in this very interesting pipeline of projects that we have. So all in all, I think we are set for growth and geared for growth on the Wienerberger front. We are excited to have this strong company that is now obviously set in a sense of innovation, digitalization, but also on the M and A front for a very successful 2018. So thank you very much for your attention. And obviously, we are ready to talk with you and take all your questions that you might have. 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 the touch tone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. Session. The first question comes from the line of Sofia So to Mayor with Exane. Please go ahead. Good afternoon. Thank you for taking my questions. I have three questions. The first one is on Great Britain. Last year, your outlook on The UK was relatively pessimistic even when domestic volumes were much stronger than anticipated. How should we think about volumes and prices in 2018 since capacity additions are taking place and whether or not this will affect margins? The second question is whether or not margins in Eastern Europe will be able to get get get back to precrisis levels around 28%. This considering that the group took out a lot of costs and multiple capacity in the region And whether or not there are any reasons why it couldn't go to these 28%? And lastly, how should we think about tax rate going forward in The UK, Belgium and France in particular? Thank you. Thank you for your questions. If I may, my colleague, Willy van Riede, will start with the tax rates going forward. You. Well, we see we have, of course, already incorporated in our results the lower tax rate in the Belgium market, which we already put in there. France as such, not really and UK, also not that of a big effect. You know that we are high tax payers traditionally in Western Europe. So I think it should have a lowering effect on our average tax rate, which we always guide around to 25%, excluding any one offs like deferred taxes like we had this year. So it would temper, I think, the tax rate a little bit downwards, but I would not put too much of a too big emphasis on the whole thing. Because usually, when governments announce lower nominal tax rates, they start deleting some of the tax adaptabilities of other items. So it's always it's a bit of a rush. I understand. Thank you. Your first question was about The UK. And let me just slightly correct what you said. Wienerberger has not been pessimistic about The UK in twenty seventeen, seventeen, not at all by the way. And we just said obviously in the overall Brexit discussions, things can develop either way. However, if I look at what we have achieved at Wienerberg, we have seen solid strong growth as far as volumes are concerned. We have certainly had a very satisfactory year in The UK market. Price wise, volume wise, we have seen also a strong increase in our imports into The UK. So a very satisfactory 2017 for Winaberger. If we look into 2018 again, think the is true as in 2017. I think it's too early to say and to give you a trend there. We think at Veenenberger, we can obviously take advantage of our strong position, perform accordingly to the market demand and also on the price side, I think we will see a satisfactory year 2018 in The UK. So that's the most I can tell you at this stage from a UK perspective. Coming to Eastern Europe, your second question, I think what you have seen also in our Eastern European division, when you look at the margin expansion in 2017, it was a strong one where you see that the operational leverage has come completely through that we have promised. We are at slightly above twenty four percent of EBITDA margin. You refer to pre crisis as peak levels of 28%. So I think if you look at the capacity utilization rates and the market and the roofing business, here again, I think the 28%, obviously, if everything then goes right is achievable. So there's no reason why not. Thank you. Which would be a very strong performance because if you look back to the translation rates in 02/2007, we had stronger Eastern European currencies than we have now. So a part of the margin, the high margin came out of the currency. So the like for like, if you want to, is stronger and then it's inherently stronger. Makes sense. Thank you. The next question comes from the line of Matthias Feifenberger with Deutsche Bank. Please go ahead. Yes. Good afternoon, gents. I've got three questions to start with. Firstly, on the like for like EBITDA growth, it was 7% this year, and you're implicitly guiding for 13% to 15 So what explains this acceleration in the like for like EBITDA growth? Is it really the measures, the closures, the disposals? Is it better top line momentum or just even stronger operating leverage in Eastern Europe? And secondly, maybe you can help us bridge the delta between like for like and reported EBITDA bit in 2018. So it's the $460,000,000 midpoint minus the 30,000,000 I think the €15,000,000 is included in the like for like. And then I guess you can compensate the 30,000,000 maybe by maturity with M and A and closure. So I don't know, is it is $450,000,000 a good level before FX changes? And then also on the M and A, I mean, it's a EUR 200,000,000 budget. The simple question is, is it really a good point in time in the cycle to accelerate the M and A when multiples are that high? Matthias, thank you very much for your questions. I will take your third question immediately. You have seen our disciplined approach in 2017. I refer to the multiples that is about 6.5 that we have realized the acquisitions. So there's no whatsoever reason to go away from such principles that we have implemented. I've clearly stated also that the 11.5% is our clearly measurement target within the company, but also for acquisitions. So you won't see management of Wienerberger moving away from these principles and start buying companies for crazy multiples. I think I clearly addressed this issue. And when you look at your first question where you referred to 7% EBITDA growth like for like in 2017 and 2014, I think for 2018, I tried to put forward the measures that we put in place, and I think they are important. They are certainly contributing to this improvement. We will see also organic growth, and we have seen improvements as far as products and innovation rates are concerned. So it's a mixture of a lot of incentives measures that we put in place in order to get us to this growth of 14% in organic EBITDA. And the last one is for Willy, that's on the guidance. On the bridge, I will not bridge Matthias because when you look at the figures as they come, we've given a clear guidance where we see the EBITDA going to. We have hinted on what the cost savings are going to be. We have hinted also where we can see the M and A and by M and A contribution because we said for a full year, it's going to be EUR 16,000,000 EBITDA contribution. If all acquisitions that we put there on the map are going to be realized. And to add to Jaime's point on the M and A budget, take into account as well, we have not spent the full EUR 85,000,000 that we guided for in 2017 on M and A. So some of the projects like the Brixton one in Romania, we still have to close. We closed the Brenner one in 2018. So part of the EUR 200,000,000, a fair chunk of that is further closure of those acquisitions that we have already announced. We will also buy out the minorities in Tondag, which will take fair amount of money. So it is not all new and it will be smaller M and A acquisitions. But coming back to the bridge, I think that we have guided for the two major parts. I think the rest, must leave up to your appreciation on how markets will develop and how they will go. But we are clearly hinting where we see markets are going to. And just to clarify, the 16,000,000 annualized, how much is that in 2018 terms? Or maybe can you give us a number in terms of if you spend the whole EUR 200,000,000, there will be an incremental M and A accrual for earnings? What could it be in total, like EUR 25,000,000 in total? It's a nice try, but try the EUR 16,000,000 try the EUR 11.5% CFROI on the 200,000,000 excluding the Tondag, which is a buyout of a minority. Okay. Maybe a last one. I mean, in the fourth quarter, the Pipes business was really looking quite bad. I mean, it was, I think, negative in Western Europe. Maybe some more light on that, what's happening? What measures have you taken? What are you going to take? Yes. As I mentioned, we closed the one factory in France basically, and that has provoked I think, the booking of an additional provision of what we already had as exceptionals throughout the year of roughly EUR 11,000,000 in the last quarter. So and that hits our results pretty hard. For the rest of the thing, the underlying business was moving positively. And we also took in some of course, you had to write down on this factory also to a certain extent. So that was provoking there the results in the pipes. Okay. Thanks a lot. You're welcome. The next question comes from the line of Miguel Borrego with UBS. Please go ahead. Hi, good afternoon everyone. I've got two questions both on your guidance. The first one is on the EUR $450,000,000 to EUR $470,000,000. I understand that EUR 16 sorry, 12,000,000 of scope is included in that figure. So that is broadly 10% like for like, an acceleration from the 7%. I just wanted to get some color around where do you expect an acceleration of trends versus 2017? Is it specifically in clay Eastern Europe that is exceeding your expectations? My second question is about the margin in the Pipes business. Can you just comment on your expectations for EBITDA margin in 2018 and over the long term? I just wanted to understand if the margin performance in 2017 was more of a one off, as you said, on the provisions? Or is it structurally difficult to turn around back to 11%? Thank you. No, the pipes margin should return back to the 11% we had earlier. There's two main reasons for this. One, you hinted very clearly to is the restructuring costs we've seen in France and the underperformance in the French market as a result of that in 2017. We by the end of the last of the fourth quarter, we have also managed to get our prices up and to reflect price increases, especially in our Nordic markets where we were lagging a little behind as we hinted throughout the year. And as you know, we have a high margin business in long length diameter and in solid force pipes, which virtually had no activity in 2017. And that's a high margin business, well above the average pipe margins. And there we see, I would say, at least in the beginning of the year, we have already booked a number of real orders in that. So we will come back to a more, I would say, normalized level there in 2018. And then on your first question about where do you see the growth, I think we clearly hinted Eastern Europe is of course the sweetest spot, if I may say so from a market perspective. But we are, of course, working on also our own projects and getting also the cost savings in. We hinted to the EUR 15,000,000 that we want to see come in. And we, of course, are also not what we should not underestimate is also some of the Western European markets are developing positively. And that together with an improvement in our Pipe business should give us the comfort to get where we got in our guidance. And just a follow-up on that. Are your expectations for The UK for further growth into 2018 versus 2017? And is it mostly on volumes or prices? Thank you. We've seen the map where we described what we believe about The UK. I think that's what it is. We will see where the market takes us. We had a good run, as Jaime explained, in 2017. We believe it's going to be at stabilization 2018, and that's where we see it at this moment. We are not we are not depending but upon The UK as well. Yes, I think that's the point I want to make clearly as well. We see in our Western European businesses, a good performing France, a good performing Benelux market as well. Very clear. Thank you. You. The next question comes from the line of Stefan Troubrik with Kepler Cheuvreux. Please go ahead. Yes, good afternoon, Thanks for taking my questions. I would like to follow-up on the EUR 200,000,000 growth CapEx guidance. Could you be maybe a little bit more specific? Because I think in the morning press conference, you provided a breakup here that some of that, as you said, is going to the buyout of Tonda. Can you maybe share with us how much that will be? And I think you also said that you are not looking at large scale acquisitions. It will be several smaller bolt ons. Is that correct? Okay. One thing to be perfectly clear, I think we said clearly that in this CHF 200,000,000, certain acquisitions are also taking into consideration that we have already signed or are in process of executing. Because like the Romanian BRIC one, we are depending in front of the antitrust authorities. So this obviously is already committed. Also committed is the more or less EUR 30,000,000 to the buyout of the minorities of Donda. So there you have already elements to work with. And we said clearly, all these smaller midsized acquisitions that we can influence control or are able to sort of handle, we take them into consideration. So we have obviously in this CHF 200,000,000 no big acquisition because bigger acquisitions are when companies decide to sell their divisions or put them on the market. So obviously, this is not part of this because this is driven by other parties and not us. So here we are talking about this clearly is bolt on activities as you have seen them in 2017. And also what we have included, like we did I think also like we also did in 2017, are some larger industrial projects where we increase our capacity, and that's roughly, I think, about EUR 20,000,000 at this stage. Okay. Because I think you mentioned also in the press conference that you had some asset write downs at some mothballed or of mothballed facilities where you decided that it doesn't make sense to bring them back and rather invest into existing sites. So of this EUR 200,000,000 growth CapEx, you allocated EUR 20,000,000 to 30,000,000 basically to expand existing capacity at already running facilities? Yes. Okay. And when you talk about the divestments of EUR 100,000,000 in, let's say, noncore assets, Can you give us some more color in which direction is this going? Might this be in pavers? Or is this single sites, maybe also in clay blocks? Or is this also related to the, let's say, asset write down you did that you consider this as potential selling candidates? Thank you. No, we have first of all, it's not about noncore assets, it's about underperforming assets. Assets where we believe that the performance does not fit. We will not say at this moment where we see the potential because it's a study that is still on its way. It is not it is clearly not those that we are written down because they will come at a certain stage when we see time fit. And when also when we see that the value is there to be realized, they will come in our non operating assets sale program. So they will be part of what we had in the past, our 90,000,000 or EUR 70,000,000 programs in future. Now that's not being said that that's going to be this year, next year or whatever. Because one of the good things we've done also in the past is we waited until the value was there before we realized our sales. And we cannot disclose at this moment where we're going to sell non underperforming assets, but they can be everywhere in the group and they will be everywhere. But they are not necessary me just let me this very clearly We as I said earlier, strategically, we are looking at all our portfolio and where we see that in the future, the growth rates are not at the level we want them to be. And if we see here that such assets are better off with other owners, we will move on those assets. So this is going to be criterias that we will impose and implement here. So it's a process that you will see us put in place within the next twenty four months. And we've clearly said, we right now think that there are assets out there in the range of about CHF 100,000,000. Okay. And what kind of EBITDA contribution do they currently have? Well, you won't have we are not in a sales process today. Okay, fair enough. And when you said that in the real estate disposal program, you delivered already EUR 40,000,000 of the targeted EUR 70,000,000. This means there are EUR 30,000,000 left, but it could be theoretically upped given that you just basically did some write downs on some assets. Is that correct? Not necessarily on those assets because we will also see what we can do with the existing asset base that we still have on the balance sheet, which are up. As I had mentioned earlier, some of the projects have taken us a longer time because we have to change the final destination. So we have been managing assets from, I would say, agricultural culture to construction sites and then being able to sell them off. So this goes all over the assets that we have. And it's not just because we have written down some assets. Okay. And maybe some housekeeping questions. As you usually with the guidance provided also some or hinted towards the absolute amount of depreciation or the net interest result. Is there a specific reason why you didn't do it this year? Or can you help us out a bit here? Thank you. It's going to be if you look at the financing, it's going to be in line with what we've seen this year in 2017 because we the debt will more or less with all the acquisitions that we will pay out will remain a little bit will remain stable. And what you will have as well is the depreciation, I think, will hover around CHF 190,000,000. But again, depending upon which businesses we take on board or not, also that is not effectively. And the very last question, I was just wondering when browsing through the slide deck, is there a reason why you don't show this slide with the plus €600,000,000 EBITDA by the 2020? Have you, let's say, revised or put this target on hold for the time being? Or is this still up? No, not at all. First of all, I think when you look at Wienerbeg, the world doesn't end in 2020. That's the one reason and the most important reason because we see the company obviously there for a much longer period of time. And as I said, for us, we want to move clearly fast, quick and grow the company also in 2018, 2019, 2020, 2021 and 2022. So I think here we are not focusing on only one year, but on the growth in the on the midterm and in the next years to come. All right, good. Thank you very much. The next question comes from the line of Markus Remis with RCB. Please go ahead. Yes, good afternoon, gents. Just two smaller ones left from my side. Regarding the Pipelines business, you indicated a pickup of the international business. Do you see that rather as a kind of spot business? Or could you imagine that we're going to see a more broad based improvement as we go forward? And also, if you could provide some details on the geographies where business is picking up? And then on Belgium, the growth you're flagging in the on the map, is that a base effect because 2017 was held back by this insulating material issue? Or is this to be understood as a kind of an underlying growth? On the Belgium front, very quickly, I think we have all talked about this last year with the lack of insulation material and the problem it has on the construction market. We have I mean indications that this has eased somehow and somewhat so that the normal trends are coming back. Obviously, we see that there have been some backlog there and therefore, will see some growth. And I think that's more or less explains the development on the Belgian market. On the international business and the projects business, it's a spot business because it depends on projects. And if we get projects in South America or in Asia, that's then coming through and contributing positively. So it is a business that you would qualify as a spot business. Basically, what we said earlier, the long length diameters that the whole world is our market. And on the solid force, which is the oil and gas industry, it's mainly The Middle East. So where we see business picking up. All right. Thank you. The next question comes from the line of Floris O'Donoghue with Davy. Please go ahead. Thank you very much. I have just two questions. First one is quite general, really, just, an update on your thoughts on various input costs, be it plastic, granules, energy, people? And then the second one, just, looking at roof tile volumes in Western Europe. It looks like they were down in the second half of the year. I think you might have referred to renovation markets being sluggish or weakish. You might just give us a little bit more detail around that, if you could, please. Thank you. On the energy front, I think the question is flat on the gas side of the clay business. And the granular as of this moment, I think we've seen some developments that we've covered. However, I would sort of remain also cautious throughout the year because there's some volatility in these products. And as you have seen last year, when it comes to such volatilities, there are regions where we can ease it with prices rather quicker and others that are more difficult and have a sort of timing lag when we can put prices through. So these to your first question. And I think on the roof tiles, yes, you have seen in certain markets, I think we referred to these issues, especially on the markets and the bigger markets in Western Europe that renovation is somehow sluggish or down. And this is obviously because there's a lack of initiatives coming from the government. The only government, by the way, that moved on this is the Belgium one where they have decided to give incentives on renovation, especially on the roof one. We have not seen something coming through by the French one nor by the German one. And therefore, obviously, these markets remain somehow sluggish. So that's why you have obviously a certain decline in volume in Western Europe. Great. Thank you very much. The next question comes from the line of Bruno Carraro with Petros Advisors. Please go ahead. Yes. Good afternoon. Can you shed light on the areas and sanctions where you found room for further cost savings? So I'm referring also to Slide number 29. And maybe give us also some color on the costs related to the restructuring initiatives or additional cost savings initiatives that you're working on. Right. When you talk about the cost, it's a onetime cost that we calculated EUR 30,000,000, yes? These are basically redundancy costs, closure costs that you have here when we are talking about the individual restructuring efforts. And if you look at those efforts, they concentrate, firstly, on the pipe operations in France, where we as my colleague Willie has explained, cut capacity, cut obviously staffing in the factories and concentrate ourselves now on a very small sized operation that doesn't focus on commodity products, but more upscale products. So this is the first major attention point, which was an underperforming operation in 2017. We have focused also on our clay pipe business in Germany and Belgium, where we closed one site in Germany. That's the biggest site and to take out here capacity and lay off the people and overheads also in Trameleon, also in this respect. So here is a major part of the CHF 30,000,000 coming from this restructuring. And then obviously, we focus on the German and Austrian clay block activities or clay activities where we see also potential for further improvements. By the way, we have closed two smaller sites in Austria and then have announced that already, as you have seen. And that will move also in overheads and structures in these two countries to improve the performance. So these are the attention points that we have under construction at this point. Okay. Thank you. One follow-up question or actually two. On French pipes, given that, obviously, there's a lot going on there. So you spent 12,000,000, if I'm not mistaken, in 2017. And if I understand correctly, 11,000,000 of which was in q four. Correct? Yep. Okay. And in q four so if I just add back this €11,000,000, q four EBITDA for Western European pipes and Pavers business had a margin which was about 90 to 100 basis points lower compared to last year. So I was wondering whether you could give us a sense of, again, what's going on there? Due to lack of interest of closure. Okay. But if you look at this exactly what you are doing, you are adding this French sort of restructuring back. And then you see the lack of international project activity that we have seen in 2017 and that obviously negatively influenced our business in Western Europe. So if you see the operations that are focusing on the local business in The Nordics and in The Netherlands, they were slightly up actually and trading better than in 2017. The only negative effect was this international project business that has obviously a better margin, a higher margin than the operations and therefore negatively impact the overall margin in Western Europe. I see. The other question is, again, another area that is, I think, impacted by the restructuring costs or restructuring initiatives that are in place is the clay business in in Germany. So, actually, also in the in the report, you hinted at a few difficulties that you're having. Is it something that is idiosyncratic, I. E, relates to Winnebago only? Or you think the market is, by and far, slowing down? What's your sense there? Can you give us some color on what you're seeing in the market? No. The market, I think the market for BRICS is a very local one in Germany. It's not an overall German market. So you have actually Southern Germany that is more brick minded and some parts of the mid German markets that are brick minded. You don't find hollow blocks in the North Of Germany. That's the first thing. And the second one is obviously due to competitive issues as well because in certain areas, have stronger competition, local one, regional one, that influences not only prices but also the supply in this area. And as you have seen in Germany, the bricks go into one and two family houses mainly, so nearly 80% or more go into this segment of the market and are not going into multi housing units. There are other products going into these units. And therefore, obviously, when the German market is shrinking in this one and two family houses, the brick market is going down as well. So this is are the elements that influence the German market. So it's not a discussion about Wienerberg and the rest. It's about the brick utilization in certain parts of the market. What we are doing obviously, we are changing our footprint there in order to optimize it, cutting back on overheads, cutting back also on the production units in order to improve our capacity utilization and therefore the cost structure. That's the clear target and therefore bringing up margins considerably. Okay, okay. And quickly back to the Pipes business. Can you give us an update on the eventual eligibility that you had and whether you are able or not to pass through the increased cost of raw materials to customers or broadly speaking, to eventually price up your products? Well, I think we as we explained throughout the year 2017, we were able, especially in the Nordic region, where this was the major impact, bring up the prices and obviously cover this price increases of granulate and therefore restored the margin in this area of Europe. So this is the positive news of 2017. Keep in mind that obviously the Nordic market is a market that operates with a high degree of concentration. You have big dealers there and therefore price increases are only coming through with a certain delay. And we talked there about three months plus, nearly up to six months in certain So I think the positive news that we can give you that here we have been able to increase the prices and restore the margin. And what about our other regions, again, obviously France and other regions? France is obviously of less importance because it's more driven by this restructuring. Netherlands has been well sort of structured also on the price side. And Eastern Europe is more a business that is project oriented, and therefore, the prices can be here adjusted easier. Okay. And North America, so satisfied with the return on capital there because it's obviously lagging behind your internal target of 11.5%, it stands at below 4%. So I was wondering whether you have some plans to eventually increase the return on capital there? Well, I think if you look at the North American business, you have seen a strong increase in the return here because you see the EBITDA is strongly coming up. We see that the measures that we have taken there and the measures of cost cutting, efficiency improvements, capacity utilization is going up, and therefore, the performances come up impressively. And if you compare us to our colleagues and competitors, our increase is far above those. If you look at Meridian, for example, the strongest competitor out there, but also Glengarry that you can measure when you take their numbers. So we have clearly outbeat them. And I do think that the potential is there to improve our North American operations even further. And obviously, if you look at the historical invested capital, we are suffering here from a lot of cash that has been invested there, but the returns are getting better, the potential is there to further improve them. Okay. But it's still a long way, I mean, 4% to 11.5%, sorry, plus percent. So probably it will take a few more years. Yes. Well, I think you need to give us also the opportunity to do so. And therefore, we can show that we are on the right track. And obviously, I think if you improve this, you have seen it also in other parts of the group in the years 10/12/1113, where we have been at very low CFRI numbers and have improved gradually. I think this is the story of operational leverage. That's the story of the cost improvements that we make. And I remain confident that we have here the right assets in The U. S. To improve our performance. Yes. And just one last question. Can you give us some color on the process that led eventually to your contract extension for a few more years? So eventually, you're a long standing CEO and CFO of this company. So I was wondering whether you could give us a sense of where the Board stood when it came to renewing your contract. And again, obviously, in light of the increased cost savings initiatives, I was wondering whether you're confident to reach or beat the €600,000,000 EBITDA target you have set for 02/2020. And if that is the case, whether you would consider potentially coming up with a more challenging target given that you have a rather long time horizon in which you will still be in the driver seat? Sure. But I think if you look at our performance over the last five years, and I clearly pointed in my presentation to this, what we have done and how we improved the performance of the company, we're strongly and really strongly committed, both of us, to continue to do so. And I think also the Board was very supportive in giving us the strong signal of confidence and trust that we continue our growth plan. As I said earlier, it's not only one target that matters in one year. It's obviously to take Winnebago completely to a new value level by improving the performance of the company. We have done so in the past. We have shown the track record. We are confident that we can go further. Obviously, we will put all the necessary efforts in place over the years to come to even beat a target that we put out there. You see also the ambitious $450,000,004 70,000,000 target that we have out there for 2018, the current year. And I think both of us, as I said, are confident and strongly committed to realize and take the company completely different level as far as profitability is concerned. And are you committed to putting also your money where your mouth is, I. E, would you consider eventually investing more in Bineberg stock? Definitely. Obviously, even I don't only put the money where my mouth is, but I'm convinced and I'm already strongly invested in Wienerberg. And I'm strongly committed and clearly will also invest in the future in this company because I'm a strong believer that there is value to be created in the years to come. Okay. Thank you so much. Okay. Thank you. The next question comes from the line of Amy Gala with Citi. Please go ahead. Thank you. Just two from me, please. My first question is on Pipe and Pavers. In the results comment, you mentioned that you will be taking measures to optimize capacity and reduce admin costs. Is the charge on these measures included within the overall EUR 30,000,000 number that you have flagged? And also, just a clarification, the range of your guidance for 2018, the EBITDA guidance, is there any markets where the outlook is I mean, the numbers are more dependent on those on outlook of those markets? In addition to the overall pace of your optimization gains, is it incrementally dependent on markets in Western Europe? Sorry, another follow-up last one, please, here is just on your 2020 EBITDA guidance of $600,000,000 As far as I recall, it was based on 2015 FX rates. Can you give us what the revised number looks like at current FX rates, please? Thank you. Pipes and pavers, where we talk about the restructuring, there is clearly, it is the French restructuring because that's in pipes and it's in France. That's included. Okay. The range if you look at our markets, one of our the strengths of our company is that we are active in a lot of different markets. So we are not depending on one or the other market. I think I said earlier as well, we are not depending upon The UK or anything else. We are we have a broad portfolio of markets, which are at the moment performing and are getting better. So it's not like it depends on the turnaround of one another market to realize where we are in the range. I'm sorry, I do not constantly recalculate the 2020 target that we put out. I that's that's sort of figure I don't do. Because in the meantime, the world changes, the composition of the group has changed as well. So that's But can you give us some guide as to how how far the number has moved based on the FX moves across your market? Because I would think that mix also does change based on the acquisitions that you have made. We have a $5,000,000 EBITDA translation loss this year. I think we had a similar figure last year, and that's more or less where it is. Okay. That's helpful. And just one to add to my existing set of questions. Can you talk a bit about the margin differential between the infill clay blocks and the standard blocks? How does that margin look versus the overall average margin within the wall division that you report separately? I think we have on average, we have about a 15% better margin. Okay. Okay. That's that's helpful. Thank you. Excuse me, Mr. Offner. There are no further questions at this time. Okay. Thank you. Ladies and gentlemen, thanks again for dialing in today and for all your questions. We hope that you will join us again on the May 9. That's the day we release our Q1 results for 2018. All that is left for today. Thank you for your attention. Have a nice day and goodbye. Ladies and gentlemen, this concludes the Viner Berger conference call on the results for 2017. Thank you for joining and have a pleasant day. Goodbye.