Earnings Call: Q3 2017

Nov 8, 2017

Ladies and gentlemen, thank you for standing by. I am Jota, your Chorus Call operator. Welcome and thank you for joining the Winnebago Conference Call on the Results for the 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. I would now like to turn the conference over to Mr. Claus Offner, Head of Investor Relations. Please go ahead. Thank you, operator. Ladies and gentlemen, as always, also welcome from our side to the Winebarger earnings call on the results of the 2017. Thank you for dialing in today. Winebarger representatives on today's call are Jaime Schoich, CEO Willi van Reit, CFO and Stefan Huber, Head of Corporate Reporting and Treasury. As always, Jaime Schoich 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. Schoich for the executive summary. Ladies and gentlemen, good afternoon and a warm welcome to our conference call on the third quarter results. If I may sort of summarize at the beginning the first nine months of this year, have seen a very satisfactory development for the Wineberger 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. And thirdly, we have realized our savings goal from operational excellence in the first three quarters of this year, which come in at about CHF 7,000,000. So we are perfectly on track on this target of CHF 10,000,000 for the whole of the year. Finally, we have seen a significant increase in net result of 38% compared to last year. If I resume in numbers, we are a little short of CHF2.4 billion in revenues, plus 4% to last year, CHF315 million in EBITDA, also 4% plus to last year and CHF174 million in EBIT, that means 13% plus and roughly €95,000,000 in net results, which is a plus of 38% to last year. So in general, the number is very satisfactory for the first 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 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. So 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 Brenna. We also concluded the Secretary, the anti trust filing and got the approval from the Austrian anti trust authorities a couple of weeks ago. So 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 Brixton Brick Plant. That's a block plant in the Northeastern part of Romania and the Iasi area where we have not been present yet. And so this fills also nicely our gap in this part of and 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 and which has operations also in France and which is a leader in the pre wired cable business, which adds on very nicely to our Elekto exposure of PipeLabs 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 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. And obviously, we have started this integration as we speak. If we look at those growth projects, which will generate roughly about CHF 90,000,000 of turnover on a full year's perspective and about CHF 16,000,000 of EBITDA, this leaves us with a multiple of about 6.5 times that we paid for these businesses. So as you see, falls perfectly in the strategy of Wineberger of profitable growth and reaching our target of this 11.5% CFROI after the third year and their takeover and integration. So 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 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 UK. Obviously, The UK 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. So we have seen a strong imports also from the continent. So the Dutch and Belgium operations have taken advantage of this strong demand in The UK as well. So pricing and volume very strong in The UK market. If we move now to Continental Europe, what did we see in the third quarter and especially in September? Some areas had rather a white 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. However, 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 it that at the September, it would ease up. But however, the international suppliers, especially from the insulation front, kept the 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 So this means that the market is a little weaker compared to last year. And this is in both fields, roofing and pacing brick part. So I would say solid market in the Belgium marketplace, good demand level, however, this temporary issue with respect to the insulation front. If we move then on to the other parts of Europe, especially Germany, what did we see in Germany? Obviously, 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 slight 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 then move easternwards, strong and good market development through the whole region from Poland to Romania, Slovakia and Czechia doing strong as well as Hungary. And also on the Balkan front, we have seen good demand levels both in the roofing business and in the block business. So here, really a good and strong demand level in this area of the business. In the Pipes and Paver division, again, different development between East and West. In the Eastern part, we have seen increasing demand. So 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. So 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 Papers business. We have seen here increases as far as volumes is concerned in the Semierok part of activity in the same area from Poland to Romania. So good demand levels in the pavour business as well. If we now move westwards, and here, again, a different picture, different in the sense that we have seen good demand levels in the underlying ongoing local businesses like Finland, Sweden, also Norway and The Netherlands. However, the international projects business that we serve out of The Netherlands and Norway especially have suffered tremendously compared to last year because obviously there were less projects in the oil and gas industry for our solar force 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. So this year is certainly for this part of the year, a difficult year. And obviously, this part of the business is a profitable one, has higher margins than the local business of PipeLabs. 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 pipeline, a lot of overcapacity there, especially because foreign importers from Italy, Spain and other countries deliver into the French market and therefore provoke a very fierce price competition. And that's why, obviously, these operations have been suffering considerably. So all in all, if I resume pipes in especially Western Europe now, good underlying business in the local parts of the market, including also the Steinzekeramo 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 wet 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 this is the growth is continuing already as we speak in October, November. So it was also again a temporary issue due to the rainy part of area of the business. If we look then to summarize in a nutshell, we have seen the good Eastern European trends will 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. So 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 €10,000,000 in EBITDA. So our original guidance of €450,000,000 we brought around to $4.00 €5,000,000 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. So I think from our perspective, we are perfectly on track as far as the organic growth is concerned in the markets. We have these temporary issues in certain markets, which have somehow harmed us in September. However, we have enough confidence out of the sort of 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 and 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. So I think in a nutshell, I've covered all the major issues. And Willy and myself, as always, are ready to take questions. Thank you very much for your attention. Session. The first question comes from the line of Yves Bromhead with Exane. Excuse me, Mr. Bromhead, we cannot hear you. Give me a second, please. Excuse me, I am back. Can you hear me? Great. Let's start again with Mr. Bromhead. Mr. Bromhead, can you please talk to us? I think we can hear you. Great. Thanks. So yes, good afternoon. Sorry about that. Maybe a technical issue from our side, I don't know. Thanks for taking my questions. I'll have three. The first one is on your like for like EBITDA guidance of four zero five. And when we look at the underlying like for like EBITDA growth in the last quarters and if we exclude the benefit from operational excellence, it looks like the two the last two quarters were actually negative. And it implies that to reach the four zero five targets, you would need a more than 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? And does it mean a bit less pressure in Belgium and an acceleration in Germany? So 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 exposures in France, UK and The Benelux. Could you give us a bit more color as to why Q3 volumes were down versus a growth in H1? And does that explain part of the margin pressure that you've seen in Western Europe? And then finally, my last question is on M and A. The 6,500,000,000.0 EBITDA target that you said, does that include synergy? And if it does, could you maybe quantify the synergies that you expect to generate from those acquisitions? Okay. Let me start with the last one. Yes, it includes synergies, but they are not, I would say, it's difficult to quantify them over the whole period. The 1,000,000 or €2,000,000 I would guess basically in the whole thing, because they are in the case of The U. S, they are complements. Even in Romania, it's a complement because it's a different part of the country. It's a smaller part basically there. Western European tiles business, I'm a bit puzzled, to be honest, Steve. I have to look it up, but I don't there is pressure, of course, we have the German pressure, yes, in the when you mean roof tiles. Germany is down. And we, of course, have the impact in Belgium because, as you know, this poor kind of insulation in Belgium, that's about 90% of the insulation used in Belgium, 90%. So if there is a lag, 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. So that is clear there. Just to precise, I think, from what you have asked, Yves. If we look at the volume sales volumes of tiles in Western Europe, actually, we have been only down in Belgium, and this is due to the insulation. The rest has been either flat or slightly increased. So there's nothing, I think, to worry about on the rooftop front in the Western Hemisphere, yes? Okay. Thanks. And for the like for like four zero five key drivers, we see a good performance in operating performance now coming in most of the markets where we active. And we see a number of things that we hoped for already a little bit coming through in the third quarter coming through now. So basically, it's a movement out. We know this is a lot on operating and a lot on, I would say, ongoing organic growth. But we see clearly at the moment that is happening in our Eastern European businesses from both sides, both on the infrastructure and on the house building. We see Western Europe further on good demand. Also The UK continues to be very strong. And we believe also we see some of the pricing in The Nordics on the pipes coming through now rather than which was much too late to get any effect of it in the third quarter. So we see those things now really coming through. So do you actually expect UK to be up year on year in Q4 given the strong base effect? Compared to last year, yes. Yes. Don't forget, last year, we have closed some of our production lines in the second half of the year. And maybe that's one of the questions for later on. That is also an effect you see in the inventory buildup, completely different. Yes, definitely. We are very well in The UK, and we are as Jaime already said as well, this has, of course, a positive knock on effect on our Bot Benelux business. 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. Thanks for taking my questions. Firstly, coming back to Germany. The election is now over. So what's developments there? Why is it so weak? Is it the new government or the building of the new government, which spooks people a bit? Then secondly, on the full year guidance, one of your last sentences in the call was that you expect a similar 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. So why really base it on a very mild winter when this is the case? And then 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? 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. But I'm just saying because in the most important parts of Austria, Switzerland and Germany, there's no frost and there's even if it's a little wet, we will continue to sell and build. So this is not affecting us yet. And 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. So this on your second question. On the first one, Germany, what we realized also is that in the German market, not only the government or in 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. And therefore, I think here, we will see some sort of changing environment in Germany, yes? And so 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 apartments. So that's my observation there. And the third one for Willy? I put something down like update, but then I will start listening. What was your question? So just maybe some color, some numbers on what do you expect on those On the FX continuation, I think, from what we've seen at this moment. That's our best guess, and that's what we have assumed for time being. We still hope for some of the real estate projects to come through. But I'm not as always, the closer we get to the year end, it can either be the December or the January, and that makes a difference. But 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. And that's actually what the aim is of those things to free cash flow for the business. So that is what is happening. On the M and A and the contribution, I think it's fair to say that the costs are outweighing at this moment the contributions. Certainly for the ones that we have to go and don't forget, we still have not closed on the Brixton one. So that is not in the books at all. We are in the process of closing the Austrian one. Actually, up to now, we have and we are only getting now into a closure for The U. S. One. So it's limited, yes? It is limited. Okay. Very helpful. Thanks. The next question comes from the line of Lash Mahendra Raja 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's not going to sort of even out in this year. But in terms of when it does, whether that's Q1 or Q3 next year, do you think you'll 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 sort of continue at the underlying rate? Secondly, on The UK, obviously, there's been a big pickup in imports. And so the data we can see, it's probably up sort of 30% plus year to date. Obviously, you're benefiting on the volume side. But in terms of the margins there, is UK margin lower than it was last year? Then thirdly, on the piping side, can you just confirm if you're now sort of zero net price cost in terms of plastic granules? I get you your pricing recovered in Q3, but has it fully recovered the cost inflation? 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're absolutely right, it won't come in one go. It will go over the year because capacity, meaning in the industry to lay the roofs and to build the walls is also limited. So we will see it throughout the year and not in one go, one quarter, the second the first or the second quarter. So you're absolutely right. We should see it more over the stretched over the year. On the pipeline front with the granular 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. So here is the effect is now kicking in. And then 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. So we have been good in managing costs and prices. Okay. Thank you very much. The next question comes from the line of Amy Gala with Citi. Please go ahead. Thank you. Just two from me, please. My first one is on the clear Building Materials Western Europe business. If I look at your Q3 performance, your revenue growth was about 2% in the business, but EBITDA was down 12%. I'm just trying to understand if 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 price increasing in the Pipe and Pavers business that you just commented. Can you give us some color as to how much did prices how much price increases were implemented in the quarter and how much has been factored in your Q3 numbers? Well, Western Europe, there's not really there's no extra costs coming in. It's a question of the utilization and what we've been able to sell throughout the business. It's there's no to my inclination, there's no rising cost. We've not seen anything nonrecurring happening in that period. It's just the performance of not selling and not being able to sell in Belgium and in Germany. And on the pricing of the plastic pipes, we've seen maybe this can help you. We've seen throughout the year an average price increase of about 10%. And that's what we are now trying to reflect in the pricing as well, and that's 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 to in the third quarter. So it's now in the fourth quarter where it's going to be effective. Sure. Thanks a lot. And 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 business I mean, in terms of the segment split on that of those amounts so far? So far, I would say out of 50% on CBME East and 50% CBME West, probably. That's the major part. There's not that much in The U. S, whereas last year, we had quite a substantial part in the North American business. And it's probably about sixty-forty, I think, 60% on the West and 40% on the East. If I look at the figures now, it's okay. Yes. That's it. Thank you. And the second part of the follow-up was the real estate? No, it was Yes. Real Okay. Sorry, yes, that was the real estate as well. Yes. The next question comes from the line of Stefan Trubig with Kepler Cheuvreux. Please go ahead. Yes. Good afternoon, Thanks for taking my questions. I have also three, if I may. First, I would be interested in strong profitability level you show in your clay building materials Eastern Europe. Here, I mean, the margin in the third quarter has reached, I think, a multiyear 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? Then the second question would be related to your recent acquisitions. You showed that they have million EBITDA potential. Can we assume this already for next year? Or will it take some time until the EUR16 million can be realized? And 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, euros 85,000,000 for next year? And then 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? Yes. On the EBITDA margin in Eastern Europe, obviously, you point to the satisfactory sort of increase in 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 operational margin, yes? So this was your first question. The second one was 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 16,000,000 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 2016. And 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. So we have a good pipeline in place. But we'll give you 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. But we will still and we'll have some growth CapEx next year. That's good. The last question On was on working the working capital, you remember we already hinted and actually cleared that 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 UK 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. And the second thing that you have to take into account, we have, of course, roughly on average a 10% increase in the value of our raw materials and products in pipes because that's simply the price increase of the resin, which is inflicted in that. We see that it's going to be normalized again towards the year end. And 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%. So 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 that'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. And just one follow-up, if I may, coming to the 400,000,000 $405,100,000,000 euros 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 Borrego with UBS. Please go ahead. Mr. Borrego, can you please can you hear us? Hello, everyone. Can you hear me? Yes. I've got a couple of questions. The first one is on your long term targets. Can you just confirm that you're still on track to achieve €120,000,000 to €160,000,000 EBITDA organic growth until 2020, which obviously implies an acceleration from this year. So could you give us a little bit more color on what is behind the initial plan? What is running ahead of the plan? I'm just thinking about, for example, the pipes, Western Europe, where you're 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? It because you want to increase the geographical penetration? Or is it or was it because it was an opportunistic transaction? And following up on that, could you guys give us more details on the seller as well? And lastly, how are you seeing right now the competitive environment on pricing in The U. S? Thank you. Before Willi takes your first question, I will answer you quickly on The U. S. Front. The sale of Columbus Brick is a family, and it has been always a family business for the last eighty or so years. So it's in a very good shape, not only industrially speaking, but also management speaking. It is going to be a quick and very sort of strong integration because the two mentalities and cultural fits are there. It is both. It's a regional fit because we are obviously active in Tennessee and the North Of Mississippi and this in Alabama as well already. So this adds on to our existing presence there, makes it stronger. And 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. So this is perfectly in line of our future and ongoing strategy, which was also a bolt on strategy in The U. S. Where we want to grow regionally in these markets where there's strong market share of bricks. So again, if you look at the multiples that we pay for such transactions, a very attractive one in the current market circumstances, and that's what we want to aim for in the future as well. If I may come back to the 2020 target, I still I still are 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, yes? 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 lag, 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. So also there, once we are back on track there, we see that continuing. And the third thing is the French market where we will address the situation. So 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. But the events of this year are circumstances where a lot of things happen in the same year. Thank you very much. The next question comes from the line of Bruno Carraro with Petros Advisors. Please go ahead. Good afternoon. Just a follow-up question on Slide number 28, so 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, say, competitive pressures in France. Can you just give us some color on how much each of these three factors No. 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 double digit effect. And also the fact that we hinted to the price effect was also around €5,000,000 That were the figures that we gave in at that moment. That's the only part that is confirmed because that's what it is. Okay. And back to the, say, price increases in raw materials. So obviously, you alluded to the eventually ability to pass through the increased costs over time. Although 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, then you requote and you quote your new price as you go and you work throughout the whole business. If you are 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 and there it takes you longer. And there, the average period is three to six months. Okay. Okay. And 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 has more to do with the revenue base. It is on the fact that you build through price increases, and 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 some of one activity, which we have in Western Europe, where we have to see how we can address that. But there, it's much too early to give any comments on any color. Okay. Thank you. Excuse me, Mr. Afner, there are no further questions at this time. Thank you, Afner. Sorry to interrupt. We have a follow-up question, if I may, from the line of Mr. Yves Bromhead. The follow-up I heard that you were about to close the call. Sorry about that. The follow-up is on the actually 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 projects that you foresee for the probably for the 2018? Thanks. Steve, as always, very good timing coming in at the last minute. But I have to sort of disappoint you. No, we haven't seen yet something coming through. Obviously, we monitor the oil price again. But I would say it's not so much linked to the oil price because we are more in the maintenance part of the business. So it is actually comes with the sort of activity that is there going on in the maintenance part. And we remain, and I can only confirm that 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. But 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 then. 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 twenty eighth February in twenty eighteen. All is left for today is to thank you for your attention. Goodbye. Ladies and gentlemen, this concludes the Wiener Berger conference call and the results for the third quarter twenty seventeen. Thank you for joining, and have a pleasant day. Goodbye.