Ladies and gentlemen, thank you for standing by. I am Yote, your Chorus Call operator. Welcome, and thank you for joining the Wienerberger conference call on the results for the third quarter of 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. If you would like to ask a question, you may press star followed by one on your touch-tone 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 Aufner, Head of Investor Relations. Please go ahead.
Thank you, operator. Ladies and gentlemen, as always, also welcome from our side to the Wienerberger earnings call on the results of the first three quarters of 2017. Thank you for dialing in today. Wienerberger representatives on today's call are Heimo Scheuch, CEO, Willy Van Riet , CFO, and Stefan Huber, Head of Corporate Reporting and Treasury. As always, Heimo Scheuch will open the call with a summary of the key developments of the first three quarters and speak about the outlook for the remaining months of the ongoing business year. Following the opening statement, we will take questions. I now hand over to Mr. Scheuch for the executive summary.
Ladies and gentlemen, good afternoon, and a warm welcome to our conference calls on the third quarter results. If I may summarize at the beginning, the first nine months of this year, we have seen a very satisfactory development for the Wienerberger Group as far as revenues and EBITDA is concerned. Both have increased by 4% compared to last year. Secondly, we have successfully implemented our growth projects in all the different areas of business, and I will try to elaborate a little bit more in a minute on those. Thirdly, we have realized our savings goal from operational excellence, in the first three quarters of this year, which come in at about EUR 7 million. We are perfectly on track on this target of EUR 10 million for the whole of the year. Finally, we've seen a significant increase in net result of 38% compared to last year.
If I resume in numbers, we're a little short of EUR 2.4 billion in revenues, plus 4% to last year, EUR 315 million in EBITDA, also 4% plus to last year, EUR 174 million in EBIT. That means 13% plus and roughly EUR 95 million in net results, which is a plus of 38% to last year. In general, the numbers are very satisfactory for these three quarters. If I may, to start with, resume a little bit our growth strategy. As we pointed out already, we are pursuing a clear growth strategy in all the different business areas of Wienerberger and also the different markets. We have been successfully acquiring a very important block plant in the eastern part of Germany, which is already integrated and which serves the local market in the area of Berlin and the western part of Poland.
A very good add-on to our geographic presence in the eastern part and western part of Germany and the western part of Poland. Then we have also acquired a brick plant in the south of Austria with the name of Brenner. We also concluded successfully the antitrust filing and got the approval from the Austrian antitrust authorities a couple of weeks ago. We are also starting to integrate this plant, which also adds very nicely to our current footprint in Austria and fills, if I may say so, a gap that we had for a number of years in the Austrian market. Finally, we move to Romania, where we have completed also a very important takeover of Brikston brick plant. That's a block plant in the northeastern part of Romania, in the Iasi area, where we have not been present yet.
This fills also nicely our gap in this growing part of Romania. If we move now to the pipe business, a little earlier this year, we were successfully acquiring a company called Preflex in Belgium, which has operations also in France and which is a leader in the pre-wired cable business, which adds on very nicely to our electro exposure of Pipelife in Europe and where we see a strong growth potential for this part of the business in the years to come. Finally, moving to the U.S., we have been successfully taking over a family business called Columbus Brick Company in Mississippi, which also adds nicely to our local footprint in the southern parts of the U.S. and where brick has a very high market share in Mississippi, Alabama, and Louisiana, and which we can add on very nicely.
Obviously, we have started with the integration as we speak. If we look at those growth projects, which will generate roughly about EUR 90 million of turnover on a full year's perspective and about EUR 16 million of EBITDA, this leaves us with a multiple of about 6.5 times that we paid for these businesses. As you see, falls perfectly in the strategy of Wienerberger of profitable growth and reaching our target of this 11.5% CFRI after the third year and after the takeover and integration. Here, again, a very good example of our very disciplined and very focused growth strategy, in the different areas of our business. If I may now come back to the third quarter of this year. We have seen in the third quarter of 2017, some diverging developments in our markets, and I will elaborate.
We have seen, if we look at our clay business in Europe, a very strong and very satisfactory demand level and market level in the U.K. Obviously, the U.K. has been a great performer throughout the whole of this year and also in the third quarter, and continues, by the way, to do so as we speak. We have seen strong imports also from the continent. The Dutch and Belgian operations have taken advantage of this strong demand in the U.K. as well. Pricing and volume, very strong in the U.K. market. If we move now to Continental Europe, what did we see in the third quarter, and especially in September? Some areas had rather wet weather, and so it doesn't serve as an excuse, but however, some projects got delayed throughout the European business when we talk about the brick operations.
More particularly, we have seen a solid and good development in France and the Netherlands, so within our expectations. We have seen a weaker sort of development in the Belgian market. It's a temporary issue because obviously you remember we talked about the insulation shortage in this market, and unfortunately this was prolonged. It looked like at the beginning of September it would ease up. The international suppliers, especially from the insulation front, kept supply short to this country, and therefore we had significant delays in construction projects, which we, at this stage, don't see that we will recuperate in the last two months of this year. This means that the market is a little weaker compared to last year, and this is in both fields, roofing and the facing brick part. I would say solid market in the Belgian marketplace. A good demand level.
This temporary issue with respect to the insulation front. If we move on to the other parts of Europe, especially Germany, what did we see in Germany? The market showed a weaker permit level as far as one and two family housing demands and permits are concerned. We have seen also a sort of slighter weaker demand throughout the year, and obviously, we will see such a level throughout the rest of the year as well, as far as Germany is concerned. If we move easternwards, strong and good market development through the whole region, from Poland to Romania, Slovakia, and Czechia doing strong, as well as Hungary. Also on the Balkan front, we have seen good demand levels both in the roofing business and in the block business. Here, really a good and strong demand level in this area of the business.
In the pipes and paver division, again, a different development between east and west. In the eastern part, we have seen increasing demands. You remember we have spoken about the increasing interest of people investing again due to the availability of the structural funds out of the EU. This is confirmed. We see this also in the third quarter of this year, that the demand level in the Eastern European hemisphere is increasing as far as infrastructure spending is concerned. This is also true for our pavers business. We have seen here also slight increases as far as volumes is concerned in the Semmelrock part of the activity in the same area from Poland to Romania. Good demand levels in the paver business as well. If we now move westwards, here again, a different picture.
Different in the sense that we have seen good end demand levels in the underlying ongoing local businesses like Finland, Sweden, also Norway and The Netherlands. The international projects business that we serve out of The Netherlands and Norway especially, have suffered tremendously compared to last year. There were less projects in the oil and gas industry for our Soluforce business coming from The Netherlands, and also from the big diameter pipes coming out of the Norwegian production facility, a significant less demand and also delivery to projects. This year is certainly for this part of the year, a difficult year. This part of the business is a profitable one, has higher margins than the local business of Pipelife, and therefore obviously you see the strong impact on the EBITDA front as the business pipes and pavers Western Europe is concerned.
On top of it, we have seen a very, very tough market environment in the French market where we have operations with Pipelife. A lot of overcapacity there, especially because foreign importers from Italy, Spain, and other countries delivering to the French market, and therefore provoke a very fierce price competition. That's why obviously these operations have been suffering considerably. All in all, if I resume pipes and especially Western Europe now, good underlying business in the local parts of the market, including also the Steinzeug-Keramo business doing well. On the other hand, difficult market in France and a weak demand in the international project business, which obviously harmed our profitability in this segment. Moving on to the north of America, we have seen a very strong and good development in the Canadian business, and this continues to go forward for the rest of the year.
The American one has somehow suffered in the third quarter, especially obviously, as all of you are aware, through the hurricane season in September and the very wet weather, especially in our parts of the activity, the Georgias and Carolinas, where we have seen a weaker demand during this, because obviously there was less construction. However, we see the growth is continuing already as we speak in October, November. It was also, again, a temporary issue due to the rainy part of this area of the business. If we look to summarize in a nutshell, we have seen the good Eastern European trends. This will continue for the rest of the year. We have seen, obviously, the good also underlying trends out of the U.S. and Canada. We see a good business in pipes in the Western Hemisphere and the local parts of the business.
We see, obviously, a weaker delivery level, not demand level, in Belgium due to the insulation problem and somehow a weaker demand level in the German market. All in all, if we look at the year target that we have been putting out, we see that we will be roughly short of about EUR 10 million in EBITDA. Our original guidance of EUR 415 million we brought down to EUR 405 million, which still obviously is an ambitious target for the year, considering that obviously we have here a significant growth realized compared to 2016. Obviously, this implies that from a weather perspective, we have a good remaining part of the year. Good means that we don't have, especially in continental Europe, a lot of snow and ice and harsh winter conditions, so more or less the same weather conditions as we had last year.
I think from our perspective, we are perfectly on track as far as the organic growth is concerned in the market. We have these temporary issues in certain markets which have somehow harmed us in September of this year. However, we have enough confidence out of the strong activity coming out of October that we can see that this will continue on our growth path for the rest of the year. On the other hand, I think it's important to note that on the growth front, we have taken the necessary steps on the M&A front on a very attractive multiple level in order to grow the business also into next year. We have also a pipeline of potential growth projects for next year, which we will target and which should bring us obviously forward as far as our activity in the different markets are concerned.
I think in a nutshell, I've covered all the major issues, and Willy and myself, as always, are ready to take any questions. Thank you very much for your attention.
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 comes from the line of Yves Bremond with Exane.
Can't hear him. Yves, are you there?
Excuse me, Mr. Bremond. We cannot hear you. Give me a second, please. Excuse me, I am back. Can you hear me?
Yes.
Great. Let's try again with Mr. Bremond. Mr. Bremond, can you please talk to us? I think we can hear you.
Great, thanks. Good afternoon. Sorry about that. Maybe a technical issue from our side, I don't know. Thanks for taking my questions. I have three. The first one is on your like-for-like EBITDA guidance of 4%-5%. When we look at the underlying like-for-like EBITDA growth in the last quarters, if we exclude the benefit from operational excellence, it looks like the last two quarters were actually negative. It implies that to reach the 4%-5% targets, you would need more than a double-digit Q4 like-for-like EBITDA growth. Could you maybe run us through the key drivers there that you think will allow you to reach these targets? Does it mean a bit less pressure in Belgium and an acceleration in Germany? That's my first question. The second one is on your Western European tiles business.
It seems that when we look at the volume implications, they were actually down by 9% year-on-year. Most of your exposure is in France, U.K., and the Benelux. Could you give us a bit more color as to why Q3 volumes were down versus a growth in H1? Does that explain part of the margin pressure that you've seen in Western Europe? Finally, my last question is on M&A, the 6.5 EBITDA target that you said. Does that include synergy? If it does, could you maybe quantify the synergy that you expect to generate from this acquisition? Thank you.
Okay. Let me start with the last one. Yes, it includes synergies, but I would say it's difficult to quantify them over the whole period. They're EUR 1 million-EUR 2 million, I would guess, basically, in the whole thing. In the case of the U.S., they are a complement. Even in Romania, it's a complement because it's a different part of the country. It's a smaller part, basically there.
Okay.
Western European tiles business, I'm a bit puzzled to be honest, Yves. I have to look it up. There is pressure, of course. We have the German pressure, yeah? When you mean roof tiles, Germany is down, and we of course have the impact in Belgium because, as you know, this PUR and PIR kind of insulation in Belgium, that's about 90% of the insulation used in Belgium. 90%. If there is a lack, it's clear that you can't build in the roof tile in the roof, and you also can't use it in the wall. That is clear there.
Just to precise, I think from what you've asked, Yves, if we look at the sales volumes of tiles in Western Europe, actually, we've been only down in Belgium, and this is due to the insulation. The rest has been either flat or slightly increased. There's nothing, I think, to worry about on the rooftop front in the Western Hemisphere. Yeah?
Okay, thanks.
For the like-for-like four or five key drivers, we see a good performance in operating performance now coming in most of the markets where we're active. We see a number of things that we hoped for already a little bit coming through in the third quarter coming through now. Basically, it's a movement out. We know this is a lot on operating and a lot on, I would say, ongoing organic growth. We see clearly at the moment that is happening in our Eastern European businesses on both sides, both on the infrastructure and on the house building. We see Western Europe further on good demand. The U.K. continues to be very strong.
We believe also we see some of the pricing in the Nordics on the pipes coming through now, which was much too late to get any effect of it in the third quarter. We see those things now really coming through.
Do you actually expect U.K. to be up year-over-year in Q4 given the strong base effect?
Compared to last year, yes.
Okay.
Don't forget, last year we have closed some of our production lines in the second half of the year, maybe that's one of the questions for later on. That is also an effect you see in the inventory buildup. Completely different. Yeah, definitely. We are very well in the U.K., as Heimo already said as well, this has, of course, a positive knock-on effect on our Benelux business.
Okay. Thank you very much.
Thank you very much.
The next question comes from the line of Matthias Pfeifenberger with Deutsche Bank. Please go ahead.
Yes, good afternoon, gents. Thanks for taking my questions. Firstly, coming back to Germany. The election is now over. What's the developments there? Why is it so weak? Is it the new government or the building of the new government which spooks people a bit? Secondly, on the full year guidance, one of your last sentences in the call was that you continue to expect a similar winter than last year was exceptionally mild. Now we have selectively snow already in parts of the DACH region. Why really base it on a very mild winter when this is the case? Lastly, maybe can you update us, it's only a couple of months left, on the residual effects like FX disposal gains and also the contributions from the acquisitions in the fiscal? Thanks.
Matthias, thank you very much for your questions. I think on the winter, you will appreciate if I say the mountain valleys are not the ones where we sell most of our products. We are grateful that the winter slopes are being prepared for the skiing season. I'm just saying because in the most important parts of Austria, Switzerland and Germany, there's no frost and if it's a little wet, we will continue to sell and build. This is not affecting us yet. When we talk about mild, this means really sort of severe conditions, and we don't hope for that, and we don't see them right now. This on your second question. On the first one, Germany.
What we realize also is that in the German market, not only the government or somehow a little bit of political instability affects the market, but also quite a sort of trend in the sense of not enough labor, not enough skilled labor on construction sites, which affects us especially also in bigger projects, therefore, I think here we will see some sort of changing environment in Germany. I would say from my perspective, there isn't going to be a sort of difficult market environment. It's just something where Germany needs to sort out its way forward in the sense of having enough capacity also to build the necessary houses and apartments. That's my observation there. The third one for Willy.
I put something down like update, I will start listening. What was your question?
Just maybe some color or some numbers on what you expect on those three items.
On the FX continuation, I think from what we are seeing at this moment, that is our best guess and that is what we have assumed for the time being. We still hope for some of the real estate projects to come through. As always, the closer we get to the year-end, it can either be the last weeks of December or the first weeks of January, and that makes
Yeah
A ton of difference. We still see some coming through. Although not always with, I would say, large EBITDA contributions, but we are certainly expecting a few coming through with a large cash contribution. That is actually what the aim is of those things, to free cash flow for the business. That is what is happening. On the M&A and the contribution, I think it is fair to say that the costs are outweighing, at this moment, the contributions. Certainly for the ones that we have to go. Do not forget, we still have not closed on the Brikston one.
Yeah.
That is not in the books at all. We are in the process of closing the Austrian one. Actually, up to now, we are only getting now into a closure for the U.S. one.
Yeah.
It is limited. Yeah. It is limited.
Okay. Very helpful. Thanks.
The next question comes from the line of Lasko Mahendran with Berenberg. Please go ahead.
Hi there. Thank you for taking my questions. I have three, if I may. Firstly, on Belgium and the shortages there. Obviously, you said it is not going to even out this year. But in terms of when it does, whether that is Q1 or Q3 next year, do you think you will see an extraordinary pickup? And is there enough capacity to sort of make up for the shortfall this year, or do you think it will continue at the underlying rate? Secondly, on the U.K., obviously, there has been a big pickup in imports. From the data we can see, probably up sort of 30%+ year-to-date. Obviously, you are benefiting on the volume side, but in terms of the margins there, is your U.K. margin lower than it was last year?
Thirdly, on the piping side, can you just confirm if you are now sort of zero net price cost in terms of plastic granules? Because I get your pricing recovered in Q3, but has it fully recovered the cost inflation? Thank you.
Thank you very much for your questions. I think if I may, on the Belgium front, obviously you will see into next year when we have the necessary supply of insulation material, certainly a pickup of activity. However, obviously, again, you are absolutely right. It won't come in one go. It will go over the year because the capacity, meaning in the industry to lay the roofs and to build the walls is also limited. We will see it throughout the year and not in one go, one quarter, the first or the second quarter. You're absolutely right. We should see it more stretched over the year. On the pipeline front with the granule prices, you're absolutely right.
They were up significantly this year, and I think we can say now at this stage that obviously we have been able to get the price increases through with this delay that is normal in the industry. Here the effect is now kicking in. On the imports, yes, we have seen good imports, and I think the margin has more or less stayed the same, so there's nothing to say there. We have been good in managing costs and prices.
Okay. Thank you very much.
The next question comes from the line of Arpine Galyan with Stifel. Please go ahead.
Thank you. Just two from me, please. My first one is on the Clay Building Materials Europe West business. If I look at your Q3 performance, your revenue growth was about 2% in the business, but EBITDA was down 12%. I am just trying to understand were there any incremental costs in there or one-off costs last year, which could have impacted leverage in that business? My second question was really a follow-up on the pricing fees in the pipe and pavers business that you just commented. Can you give us some color as to how much price increases were implemented in the quarter and how much has been factored in your Q3 numbers?
Well, Western Europe, there is no extra costs coming in. It is a question of the utilization and what we have been able to sell throughout the business. To my inclination, there is no rising cost. We have not seen anything non-recurring happening in that period. It is just the performance of not selling or not being able to sell in Belgium and in Germany. On the pricing of the plastic pipes, maybe this can help you. We have seen throughout the year an average price increase of about 10%, and that is what we are now trying to reflect in the pricing as well, and that is what we are getting into. That is, we hoped to get that already started and to a large extent in the third quarter, but actually did not manage to get everything through in the third quarter. It is now in the fourth quarter where it is going to be effective.
Sure. Thanks a lot. Can I have one more follow-up, please? One on the real estate asset sales and the optimization gains. Can you give us some color in terms of the segment split of those amounts so far?
So far, I would say out of 50% on CBME East and 50% CBME West, probably.
Okay.
That's the major part.
Okay.
There's not that much in the U.S., whereas last year we had quite a substantial part in the North American business. That's probably about 60-40, I think. 60% on the West and 40 on the East. If I look at the figures now. It's okay.
That's helpful. Thank you.
The second part of the follow-up was the real estate?
Yes.
No, it was the real estate. Okay.
Sorry. Yes, that was the real estate as well.
Yeah. It's possible. Yes. Yep.
The next question comes from the line of Stephan Trubisch with Credit Suisse. Please go ahead.
Good afternoon, gentlemen. Thanks for taking my questions. I have also three if I may. First, I would be interested in the strong profitability level you show in your Clay Building Materials Europe East. Here, the margin in the third quarter has reached, I think, a multi-year high with 28%, and after nine months, you're at 23%. Can you give us some color here? What are the drivers, or is it also a bit supported by, let's say, property disposals? The second question would be related to your recent acquisitions. You showed that they have a EUR 16 million EBITDA potential. Can we assume this already for next year, or will it take some time until the EUR 16 million can be realized? Also in that context, you said that you have a filled pipeline or, let's say, a promising pipeline for 2018.
Can we, as a result, also incorporate growth CapEx of the same amount, let's say EUR 85 million, for next year? The third question would be related to the working capital, where the cash inflow has been less pronounced this year in the third quarter compared to previous years. I understand that this is partly related to the situation in Belgium. What's your view on Q4 and what kind of free cash conversion can we expect compared to the last years? Thank you.
Okay. Shall I?
Yeah.
On the EBITDA margin in Eastern Europe, obviously, you point to the satisfactory sort of increase and the performance of the business, which obviously shows on the one hand, strong market demand. Obviously, the capacity utilization is much better in this region compared to the year before, and there are no real estate sales in this. This is an operational margin. Yeah? This was your first question. The second one with respect to the gross CapEx and the EBITDA. I think you should see this sort of, depending when we get the final approval of the antitrust in Romania, but the EUR 16 million or more or less EBITDA is on a full year perspective. As Willy has pointed out, synergies are very minor in this respect, so you will see it rather quickly coming through the EUR 16 million.
On the gross CapEx, please be aware, obviously, when we talk about such acquisitions, they take between one and three years when you talk with smaller entrepreneurs that sell you the business, it's not timed in one year. We have a good pipeline in place, but we will give you, and please, you can count on us, a much more detailed guidance at the beginning of next year. Today, it's a little early to give you here some sort of numbers. We will still and will have some gross CapEx next year. That's for sure. The last question was the working capital.
On the working capital, you remember we already hinted and actually said very clearly at the end of last year that the 17% of working capital to sales was really a very positive result. Also out of the fact that we in the U.K. had been building up very strongly our inventories in that period, and we actually have been doing the same thing also in the North American market. If you look at this year, part of the working capital buildup is again this normalization towards the 20% where we will be around the year-end. The second thing that you have to take into account, we have, of course, a roughly on average a 10% increase in the value of our raw materials and products in pipes.
That's simply the price increase of the resin, which is reflected in that. We see that period that is going to be normalized again towards the year-end. As far as I can look in our figures, we will be around a normalized working capital position again at the year-end, around 20%. The cash, and maybe there the differentiation between 2016 and 2017. If you look in 2015 and 2014, you see that we always have released a lot of cash in the fourth quarter, and that's the biggest. It's been the continuation of that, you will see this year. It's rather a normalization than a continuation of 2016 as a position.
Okay, thank you. Just one follow-up, if I may, coming to the EUR 405 million guidance. If I recall correctly, you mentioned at the Capital Markets Day that the negative FX effects that you impact are most likely compensated by disposal gains from real estate sales. Can you still confirm that?
Yes.
All right. Okay, good. Thank you very much.
Thank you.
The next question comes from the line of Miguel Borrega with UBS. Please go ahead. Mr. Borrega, can you hear us?
Hello, everyone. Can you hear me? All right.
Yes.
I have got a couple of questions. The first one is on your long-term targets. Can you just confirm that you are still on track to achieve EUR 120 million-EUR 160 million EBITDA organic growth until 2020, which obviously implies an acceleration from this year. Could you give us a little bit more color on what is behind the initial plan, what is running ahead of the plan? I am just thinking about, for example, the Pipelife Western Europe, where you are obviously generating margins below the normalized levels. The second question is on the acquisition of the Columbus Brick plant in the U.S. Could you just give us a little bit more color on the rationale for the acquisition? Is it because you want to increase the geographical penetration, or was it because it was an opportunistic transaction?
Following up on that, could you guys give us more details on the seller as well? Lastly, how are you seeing right now the competitive environment on pricing in the U.S.? Thank you.
Before Willy takes your first question, I will answer you quickly on the U.S. front. The seller of Columbus Brick is a family, and it has been always a family business for the last 80 or so years. It is in a very good shape, not only industrially speaking, but also management speaking. It is going to be a quick and very strong integration because the two mentalities and cultural fits are there. It is both. It is a regional fit because we are obviously active in Tennessee and the north of Mississippi, and this in Alabama as well already. This adds on to our existing presence there, makes it stronger. As I said earlier, these markets, especially Mississippi, Louisiana, and Alabama, are strong brick markets when it comes to market share of bricks in wall construction.
This is perfectly in line of our future and ongoing strategy, which was also bolt-on strategy in the U.S., where we want to grow regionally in these markets where there is strong market share of bricks. Again, if you look at the multiples that we pay for such transactions, a very attractive one in the current market circumstances, and that is what we want to aim for in the future as well.
If I may come back to the 2020 target, I still am convinced that we are full on track to reach that, because if you look to your issue about the pipes margin, the pipes margin is negatively affected by three, I would say, individual one-off events. There's the international project business, which is lacking completely this year, hence no contribution there to the EBITDA margin, and the EBITDA margin in those projects is above the typical average margin. Secondly, we have this price lack, which we have seen pretty pronounced now in the second half of the year, which is happening in, I would say, some of our most profitable markets, which is the Nordics. Also there, once we are back on track there, we see that continuing. The third thing is the French market, where we will address the situation.
I'm very convinced that we will be back on track next year. If you look at margins and figures, then you will see it more clearly. The events of this year are circumstances where a lot of things happened in the same year.
Thank you very much.
The next question comes from the line of Bruno Ceron with Bedford Advisors. Please go ahead.
Good afternoon. Just a follow-up question on slide 28, the pipes and pavers business and the lower EBITDA margin year-over-year. Can you elaborate a bit on what's the breakdown of the three effects underlying the decline in EBITDA margin, i.e., the price increase, the 10% that you mentioned before, the volume difficulties in the infrastructure or international project business and the competitive pressures in France. Can you just give us some color on how much each of these three factors count?
The only thing I can do is I can refer back to the comment we've given on the half-year figures where we said that the French issue was a mid to double-digit effect. Also the fact that we hinted to the price effect was also around EUR 5 million. That were the figures that we gave at that moment. That is confirmed because that's what it is.
Back to the price increases in raw materials. Obviously, you alluded to the eventual ability to pass through the increased cost over time. Obviously, there's a time lag. Can you give us some color on how long should it take eventually to you to pass through these increased costs to the customers?
The same thing there again. It differs from end market to end market, where if you have a lot of infrastructure projects, you re-quote and you quote your new price as you go, and you work throughout the whole business. If you're dealing with markets where you sell through wholesalers, there you have to take into account that they have a number of projects in the pipeline on which they've quoted, there it takes you longer. There, the average period is 3-6 months.
Okay. Finally, are you taking any measure in the pipes and pavers business to eventually, again, reduce your cost base and further counter the negative or the headwinds that you're having at the moment in the business?
It has nothing to do with the cost base, it's more to do with the revenue base. It is on the fact that you build through price increases, it has to do with the fact that you have to be on the market and be close to the market.
Nothing really on the cost base, with the exception maybe of one activity which we have in Western Europe, where we have to see how we can address that. That's much too early to give any comments and any color on.
Okay. Thank you.
Okay.
Ladies and gentlemen, if you would like to ask a question, please press the star followed by one on your telephone. Excuse me, Mr. Aufner, there are no further questions at this time.
Thank you, operator.
Sorry to interrupt. We have a follow-up question, if I may, from the line of Mr. Yves Bremond.
The follow-up. I heard that you were about to close the call. Sorry about that. The follow-up is on the action on the international projects. When we look at the oil price environment, which is up quite significantly now, do you happen to see any improvement in terms of the talks that you have with your key customers? Are there any increase in tendering project that you foresee probably for the end of 2018? Thanks.
Yves, as always, very good timing coming in at the last minute. I have to sort of disappoint you. No, we haven't seen yet something coming through. Obviously, we monitor the oil price again, I would say it's not so much linked to the oil price because we are more in the maintenance part of the business. It actually comes with the sort of activity that is there going on in the maintenance part. We remain, and I can only confirm the positive, and we see opportunities, good opportunities for these products that we have available in this market, and we will continue to penetrate, especially the markets in the Gulf region in order to be more active next year. This year, I don't see any sort of pickup as we speak.
Okay. Thank you very much.
Thank you.
Mr. Offner, there are no further questions.
Okay. Ladies and gentlemen, thank you again for your questions today and for dialing in. We hope you will join us again for the release of our full-year results on the 28th of February in 2018. All that's left for today is to thank you for your attention. Goodbye.
Ladies and gentlemen, this concludes the Wienerberger conference call on the results for the third quarter 2017. Thank you for joining and have a pleasant day. Goodbye.