Earnings Call: Q1 2021

May 12, 2021

Ladies and gentlemen, thank you for standing by. I am Suggi, your Chorus Call operator. Welcome and thank you for joining the conference call on Wienerberger's results on Q1 of 2021. Throughout today's recorded presentation, all participants will be in a listen only mode. The presentation will be followed by a question and the I would now like to turn the conference over to Elizabeth Faulkner, Head of Investor Relations. Please go ahead. Ladies and gentlemen, a warm welcome to the Wienerberger earnings call on the Q1 of 2021. Our Board representatives today are our CEO, Mr. Heimer Scheife and our CFO, Mr. Gerhard Hanke. The call. After the presentation, we are ready to take your questions. I will now hand over to Mr. Heimer Schuyck for the presentation. Thank you and a warm welcome from our side here in Vienna to all of you on the call. I will lead you through a little bit the general sort of background of quarter 1 and our strategy. My colleague Gerhard will sort of speak a little bit about the results and the numbers, and then I will summarize from strategy perspective and outlook. If you look at the quarter 1, we have had a strong start into the year with revenues more or less on the level of last year and EBITDA Slide also on the same level as last year and a strong obviously net result due to the fact that we had no write offs the In this sense compared to last year. So from a perspective of performance, strong operational performance. Please keep in mind Obviously, last year 2020, before the pandemic hit us, we had a strong start as well into the year and especially a very mild winter in big parts of Europe. I say this not as an excuse, but you need to understand when we talk about Building Solutions, and that's mostly our Brick business, the The new build and especially when you talk about 12 family houses, they can only be started and the groundwork can be done if it's mild, the Not freezing and not snow. If it's wet and it's freezing, they can't sort of start the project. And this is what we had this year. We had a normal winter the In January February in big parts of Europe, and that's a lot of projects didn't start at this stage compared to last year. However, and this I think this is important for all of you that we saw this strong rebound end of February and into March, obviously, a very strong Activity and this is continuing into April and onwards. So I think from our perspective, we are starting here off For a good year, obviously, in the new build and in the building materials segment, we had obviously a slower start due to the weather effect in the month of January February. So nothing to worry about. And obviously, this is when it's cold, production is also a little bit more difficult because the The clay is thicker and it's a bit more difficult to sort of prepare it and burn it at the end of the day. So these are things that normally happen in a strong winter, but nothing exceptional from our perspective. So if you look at the the different performances of our businesses. Let's go into this for a minute. As I said, from Wienerberger Building Solutions side, 4% only From a turnover perspective under last year. And considering this weather effect, I think a very strong Q1. And the Margins effect, it is also slightly under last year. But as I said, it's a volume driven thing. It's nothing to do with prices or costs. The So I would say this is a very normal start into the year with a strong winter. And as I think say that the sort of company takes momentum right now in March April. The cost structure is also going in the right direction. And obviously, from a cost the inflation increase. We see the positive effects of our price increases in the market. Gerhard will talk a little bit about it, but we have been able successfully to offset these cost inflations with our price increases. On the Piping Solutions side, again, a very strong start. You see that infrastructure spending is on the rise, Especially here in Europe. And obviously, we took advantage of this slightly improving margins. And I think, yes, we'll talk in a minute about the strategy and the way forward. We are moving in the right direction with this Piping segment. North America, record results. Again, I would say, in the Q1, the Very strong start into the year with EBITDA up and the margins up considerably. Please keep in mind also there, we had a difficult start from a weather perspective, but the recovery, especially in the South of the United States, went Obviously, quicker due to better weather than in February March. We think and we see it in the market that obviously the following months and this year will be a strong year when we talk about new residential housing. And the performance in Canada is also very satisfactory With respect to our operations there. I will talk after the numbers of Gerhard a little bit more in detail about MRIdian and the status of the takeover and give you more update on this important project for us in a minute. So from a number perspective, a very good start, as I said, but also strategically. We have now moved, when you look at the piping segment, very strongly into the the Water Management and Water Solutions business in Nordic of Europe with a strong investment in Sweden in the sort of the best and high performing plant that the Nordic region has in Europe. And obviously, we want to be the leading player in energy and water management in the Nordic market. With a strong focus on ESG, with a strong focus on digitalization and obviously gaining in the momentum in the modern solution business for water and for energy. And therefore, obviously, the investments that we take there, the aspects of products and solutions Very important are the major drivers of future growth in this business. The new plant that we are building the And the additions to the existing ones is obviously state of the art plant with all the modern features that you have the in such a plant and where we will gain from the experience that we have in the group and gain obviously momentum on the cost side as well. The The digitalization will help us in offering more solutions to our clients. For us, it's important, and this is not only for the water business, but that's also for the business of roofs and facades and walls the To increase the convenience for our clients, this is, I think, the major issue that we focus on as a company. We want to make the life of our Clients and Customers easier. You remember we talked a lot about the lack of skilled labor. We talked a lot about the caustic the increases that are out there in different products, in different sort of aspects of building and infrastructure and renovation by the Investing and by improving our solution business also by features of new features of digitalization, we improve the This sort of performance for our customers and increased the value for them. So I think we are perfectly in line with the development and the key drivers of the market. Not to be forgotten that ESG is a major part of our business in the sense of Driving the future of the business. I just want to alert again all of you to the fact that Wienerberger is fully now committed to the circular economy by saying all our products that we launch these days are fully recyclable or to be reduced. We also have a clear commitment to biodiversity on any site that, industrially speaking, we use and we develop. The And utmost importance, obviously, our contribution of positive one to climate change by reducing our CO2 emissions additionally the by 15% in the next 3 years. I'm convinced and all the sort of steps that we're undertaking today, Not only on the investment side, but also in the optimization of the business lead in this direction and that we will reach those targets, very important. The And I will say also a couple of words on the CO2 emissions after Gerhard has spoken in order to give you here a little bit more flavor to this issue. So Gerd, if I may ask you kindly to go through the numbers, please. Thank you, Heimel. Ladies and gentlemen, We are happy that we can present a successful Q1 performance. Our revenues are slightly above prior year, as Heimer mentioned, mainly driven by the Strong demand, which we have seen in our infrastructure and renovation markets. Our EBITDA like for like the Margin is with 13.2%, slightly below prior year. As also already mentioned, the very harsh winter in the beginning of the year, Especially in February, led also to a lower efficiency in the production process, especially in the business unit, building materials. As mentioned, If it is freezing and cold, production is more difficult in the clay process. And our net debt EBITDA margin was 1.9 percent is, I think, stable and is considering the normal working capital upswing, the Presenting you the income statement, I would like the To highlight basically the development of our EBIT, which is 20% above prior year, We have this year EBIT is equal to the operating EBIT. As you remember, we had last year this impairment charges on the goodwill and on different tangible assets of more than €100,000,000 The the financial result is slightly declining compared to prior year. And finally, we closed the Q1 2021 with a profit after tax of €27,000,000 compared to a minus 106 the In the reconciliation from EBITDA from EBITDA as reported to EBITDA like for like, Let me explain you the 2 most important adjustments which we did. On the one hand, it was about the FX adjustments, so the currency devaluations of the U. S. Dollar, the The bonus slot in the Hungarian Forint. As well, we had some one offs out of the sale of non operating assets, Mainly in Austria and Germany, which we finally deducted again from the EBITDA as reported to end up with an EBITDA like for like. Basically, you see that the difference between EBITDA as reported and EBITDA in life for life is rather immaterial. The The strong balance sheet ratios, which I would like to highlight, I think, is showing also the resilience of our business model. You see that the net debt development is only driven from the beginning of the year to the closing of the Q1 by the working capital upswing, which is round about SEK 200,000,000 on a yearly basis. The working capital itself It's still on a rather lower level compared to last year, but still fine. But we will basically further keep going and optimizing the working capital level. And for the rest, I think the balance sheet itself shows a very strong structure compared also to prior year. Let me continue the financing structure, respectively, the maturity profile in what we have. We have, for the next years, a very the balanced maturity profile. You see that we have no major redemptions till 2023. We have the first bigger redemptions in 2024 and in 2025, which is basically the settlement Of the bonds, the first one was out of 2018, which had a volume of around about €250,000,000 And I think In 2025, we will settle the bond which we issued in 2020, which had a volume of €400,000,000 Next to that, we have, by the end of the Q1, a liquidity reserve of around €750,000,000 EBITDA. The Let me explain you or let me say some words about the self help program. Our newly the Set up, self help program is embedded in our strategic focus areas of our business units. One key aspect of operational excellence is the continuous upgrade of our industrial setup, Meaning also the optimization of our plant network. When we look to innovation and digitalization, we the Focus further on on the transformation to a full system provider, expanding the portfolio with the new products, digital services, increasing the share of recyclable and reusable products the key aspects in the field of innovation and digitalization. And the last pillar of our self help program is sustainability. And here, the focus area is the further rollout of the existing technologies, but also new technologies the to reduce the energy consumption and the CO2 emissions in the future. We also have a Clear financial ambition set for the self help program. Our total financial target the €135,000,000 on EBITDA enhancement till 2023 versus the baseline of 2020. Supported is this financial target by yearly growth investments in the amount of €140,000,000 whereby €60,000,000 are allocated on ESG CapEx, meaning investments in circular economy, the in biodiversity and the reduction of CO2 emissions and roundabout SEK 80,000,000 per year the Allocated for special CapEx, meaning broadening the range of the portfolio in the sense of system solutions, But also new product designs and recyclable and reusable products. And with this program, the Basically, where we already started in the beginning of the year, we already achieved a contribution in the Q1 of 8,000,000 the EUR 1,000,000 on EBITDA enhancement. For the whole year, we expect an EBITDA contribution of EUR 40,000,000 the SEK135 1,000,000. Let me, as a last topic which I would like to highlight, Also say some words about the cost management. As we have seen during the last months and still see a general upward trend of input prices. Based on our local supply chain structures, meaning that we have local sourcing supported by a central contracting team, This helps us protecting us from the rising input prices. We have for most of our raw material prices, raw materials contracts in place, which are based on a local supply chain and which are negotiated and supported by the central procurement department. We announced in the beginning and basically implemented in the beginning of the year our price increases. And these price increases, Which we have announced and implemented are already covering the input price increases, which are roundabout2% to3% in average the in most of our markets in the Q1 of 2021. One second topic which is important to mention is active margin management, which we are doing in relation to the the which we are doing in relation to the price increase of the plastic granulates in the piping business. We see a continuous upward price trend for plastic granulates, which is pushed by the shortage of availability from new producers, mainly due to maintenance work and forcefully relevant in production. And thanks to our proactive margin management, the We were largely successful in mitigating the effect of rising input costs. The last point which I would like to highlight is the topic of energy hedging. As it is also for us, as Wienerberger, the A huge cost position, which is important to hedge or respectively to actively manage. We're having our hedging strategy, our hedging policy in place, meaning also that big part of the volumes and big part of the price is basically what we need for 2021, meaning more than 90% is already hedged and fixed. And that Basically helped us benefiting from the attractive price levels of the prior year where we locked in. The So basically, with our successful inventory management, our long term supplier relations and also long term contracts which we have in place, our local supply chains and our proactive cost management, we were able in the Q1 to meet our customers' demands at any time during the Q1. With these final words, I would like us to hand over again call. Thank you, Gerhard. And ladies and gentlemen, I think from what you heard, we are perfectly on track with our self help program. Just to alert you to the fact, obviously, beginning of this year, politically speaking, we couldn't move our people around Europe still. So this was Obviously, a major setback for us because the engineers were not able to travel yet due to this turmoil with vaccines and other things. But As we speak, quarter 2 will help us in sort of putting a lot more emphasis on the manufacturing side and the projects will run Quikka and therefore, obviously, the improvement of the contribution from this self help program will improve dramatically in quarter 2 and quarter 3. The So this is some additional information on the front of the self help. If we look at the markets as such in Europe and in North America. Let's look at it from the perspective of new build, renovation and infrastructure. I think when we look at renovation, it goes without saying that in the All of our markets, regionally speaking, we see a positive trend. So all the aspects of renovation are on the rise. I just redraw your attention to the fact that the turnover in this part of the business is about 20% of The whole turnover of Wienerberger and increasing. When we talk about infrastructure, more or less 25% of our turnover goes into this sort of end market. We see stable, slightly growing market when it comes to infrastructure in Western Europe, Central, Eastern Europe, Nordics and a growing definitely a growing one in North the So here again, a very good market environment. On the newbuild side, obviously growing in North America and especially in the U. S. We have a slight decrease in the Nordics. Our exposure is minor to these markets in the Nordics. And our major exposures in Western Europe and Central Eastern Europe, you Probably noted that we are more optimistic and positive about Western Europe that has to do with the markets as they have performed the In recent weeks months, we talk about big markets, the Benelux for us, France, also the U. K. And also in Central Europe. Poland is picking up the Czech Republic, Austria and Hungary and Romania. So here, good underlying trends. We see also the trend that obviously after COVID, people are investing in the rural parts of these markets, the More in one family houses, our key markets, obviously, because they want to invest in the future and they have their own sort of gardens. The So from a health perspective, they feel here a better sort of situation than being in an apartment. So here again, we see some positive trends for our business, not just for the coming months, but for the following years. I have promised that I'd say a couple of words on the following items. MRIdian. MRIdian acquisition, everything is going well. We had our discussions with the Department of Justice in the U. S. As foreseen by the procedure. It took probably a little longer due to the COVID effect and the change of administration in the U. S. But nevertheless, we are moving in the right direction. We foresee sort of closing of this transaction in the quarter now, that means in the Q2, so that we can then consolidate the business probably, as I say, half year onwards. So nothing to sort of worry about. The businesses are performing well. So there's no cash drain in the The business of MRIdian, and it's going in the right direction. I'm not allowed to say anything more because obviously bound by the the sort of regulations in the U. S. And especially Department of Justice. You will understand if I can't sort of the answer very particular questions as to the performance of the businesses. To ours, yes, but not to their colleagues. But as I said, I'm very optimistic that we closed this transaction in quarter 2. Then I said also, I would say a couple of the words on CO2 emissions, that's an important subject. From our perspective, as you are all well aware, we are part of the trading scheme of the European Commission. We We are now in the 3rd phase that goes up to 29. We are obviously part of the carbon leakage status as an industry and get allocated free the CO2 side. These allowances we use, we have obviously enough of those. And the As it is the policy of such a trading scheme, we are obliged to reduce our emissions year by year by pre agreed the And this is what we are doing. On top of it, we clearly said, and that's what Gerhard was alluding to with the program of ESG investment, the In decreasing or reducing our CO2 emissions by another 15%. So again, yes, strong effort of Wienerberger to do So what does it mean? From our perspective, we will optimize our structures as much as we can, reduce the Our emissions step by step. And obviously, from an optimization standpoint, don't shy away from any effort to reduce it further and make a positive contribution to climate change. On the front of different resources of energy, we have tried those, have the experienced with those electrification of kilns, for example, that's what we are currently doing in one of our projects in Belgium. It's running very well. And we obviously use such sort of different resources of energy like hydrogen as well in order to test it. Also positive outcome from those tests. And I think we are ready also to use biogas when we get it like in the In Denmark, for example, we had already biogas very successfully to our production. So it's an approach step by step and national the A sort of market by national market. Why? Dear ladies and gentlemen, because Europe has no common policy. You will see also emerge from a national perspective the very different approaches from Denmark to the Netherlands, from the Netherlands to Germany and Austria. So people will sort of the proposed different solutions and we as an industry will take advantage of those. So our General sort of policy is to be open, open minded as far as energy resources are concerned, alternative ones, use them, implement them. And as I said, We've already prepared ourselves to these different resources of energy and are able to use them. So this will continue as we speak. Then a last word also before I go to the outlook on the M and A side. We have a completely full pipeline of M and A projects in all the different areas of our businesses, meaning piping, meaning the The Billing Solutions side throughout Europe especially. So we will pursue those growth projects in the not too distant future Because they fit nicely into our businesses, enhance the performance of those businesses and create stronger and faster growing businesses as we speak. So This is something where we do our work thoroughly and with a lot of diligence. And therefore, it's not to be timed that some transaction will be the sort of completed in quarter 2 or quarter 3. But as I said, we have a full pipeline of those projects the Q4 this year. This leads me to my final comment, that's the guidance for this year. From all the things that have been said by Gerhard and myself, I can confirm again that all the cost inflation has been covered by price increases and successfully so in the markets as we speak. I will dedicate a couple of words to the specific item of plastic granular prices, because I think this is an important item that you We had obviously a force majeure call by the major producers worldwide at the beginning of This year, so they were all down for maintenance and created a shortage of supply prices went up by 50% to 60%. So this was a really tough situation for all the producers in the plastic industry and therefore also for us We managed it very well, by the way, as Gerhard pointed out, in quarter 1, but it will hit us eventually also now the in quarter 2 and 3. Why? Because we have long term contracts with our clients on infrastructure projects and where we obviously can't pass them through immediately. So this will stay with us. So it's a max amount of €20,000,000 that we see as of today. It's the same amount as of the beginning of the year. We see it to be material to materialize in quarter 2 and quarter 3, but it's a onetime effect, by the way. So again, I think when we take our guidance and if we position ourselves on the I would say, On the upper side of our guidance, meaning the EUR 620,000,000 then obviously when you add the EUR 20,000,000 of this plastic granular price impact on us, then you have obviously the A serious number that is a real indicator where Wienerberger's performance is going to this year. So this means I'm rather optimistic for the rest of the year. I'm not sort of saying I'm disappointed by the 1st 3 months because For me, there was only 1 month in one of the business areas that was strong. It was March, but I see with optimism the numbers coming in April May. So as I say, the performance is moving in the right direction. As Gerhard pointed out, the self help program is picking up momentum. On the CapEx spending side, we are again very disciplined. So all in all, and as I said from a perspective also on the M and A front, we have good sort of projects ahead of us. It gives me the optimism that we will sort of move in the right direction with respect the So ladies and gentlemen, I hope we covered some ground and answered probably one or other questions that you had already burning and Probably could contribute it. And if there are more questions to come, my team is and myself are obviously ready to take those. Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. The the Form Making Your Selection. The The first question is from the line of Tobias Bernhard, Stifel Europe. Your question please. The Yes. Good afternoon, gentlemen. Thanks for taking my questions. The first question is you in a way alluded to already and seems to be supported by data. The We look at, I. E, that you've been selling from inventories in the Q1. You also mentioned the difficulties producing or getting clay out of the ground, so to speak. Should we see this as the main impact on margins for you in the Q1. Your working capital was obviously significantly lower. If we look at the Piping Solutions side of the equation, is it basically there where your inventories the Higher building up for the typical seasonal selling. So that's the first question. The second question, you mentioned price increases the And the ability of you for you to pass on further price increases as the year goes on. And then just lastly, permits the In the U. S, housing permits in the U. S. And Poland are extremely strong as of March. Are you seeing similar pictures in other markets? Thank you. Thank you, Tobias, for your three questions. Let me just sort of talk about the housing permits. Obviously, we see those numbers as well in Poland and in especially in the U. S. From my perspective, I don't see this sort of steep increases in other markets yet, to be honest with you. The But I see strong numbers coming through from other markets. And I mean, obviously, the Netherlands or Belgium are more stable, so You don't see these heights up and down. So even there, if we see a couple of percentage points plus, I'm delighted See those, to be honest, and also the English market is moving in the right direction. So again, not those sort of increases, but That we see in Poland and in the U. S. With respect to comments, but still very good ones. On the price side, The price side is something, as we said, Gerd and myself, we were very disciplined to get the price increase quickly. And I mean, it's positive to say that beginning of May, we have everything sort of aligned. Yes, there might be additional price increases throughout the year. We have certain markets where we are active in that are the I'm open to such sort of things. I'm saying this with respect to Eastern Europe. Northern Europe is a little bit more disciplined when it comes to pricing. They usually 1 price increase a year, exceptionally 2, if we're in a situation like this one where steep increases are like I alluded to in the piping one with the plastic granular. The And when we took when we take other markets in Western Europe, usually, we are here also in the situation for 1 MAX 2 price increases. But As I say, from this perspective, we are already moving in the right direction. If there's additional possibilities and needs, Wienerberger will certainly move on that. And by the way, in the U. S, it's much higher, the price increases on our sites, about 5%. So Just to give you a little feedback on this thing. Do you want to say something on the inventory side, Gerhard? Or shall I continue? Basically, I think the inventory is right. There are 2 aspects. I think the one what you already mentioned that we had the inefficiencies in the production, which was due to the cold weather. But this is not leading to a big the limitation in the output of clay products because it is basically an issue what you have with clay production. We had a very strong start in the renovation part. We are basically volumes started picking up already in the beginning of the year. So it's I would say we are right on track with the development on working capital. And already the Now in May, we simply see that working capital is on the level where it should be for the season of this year. The Thank you very much. Maybe one add on question, if I may. In the UK and also in Poland, volumes deliveries seem to be up according to the data we follow about 12% 11%, respectively. Is there something you're seeing as well? We see this, I mean, from a perspective of general remarks, yes, the UK market is strong, Definitely. The Polish market, as I said, was when we talk essentially about our brick business, and that's the walling segment, Tobias, that's the clay blocks. And as I said, from a starting perspective, the winter was especially also harsh in Poland. So the January February, we are slower. But in March April, we see the pickup again. So this obviously is increasing the Strongly and the numbers you're hinting towards are right, but this is also some sort of effect because the January February numbers were lower. This has to be seen a little bit on the long run if this continues this trend, especially when we talk about Poland. Thank you very much. Very helpful. Thank you. The The next question is from the line of Yves Bromhead, Exane BNP Paribas. Your question please. Good afternoon, gentlemen. I hope you're well. I will have just a few questions on my side. I'll take them 1 by 1, if that's okay. My first question is on the like for like. I'm struggling to reconcile the Q1 like for like in the Clear Building solution. You mentioned you had a negative FX of around 2%. But I remember that you also divested some assets last year, including in Switzerland. So could you maybe help us to understand what's the actual organic revenue development in Q1 and split this between the volumes and prices. I guess we could assume 2%, 3% price and the rest is volume, but if you could help us on this. And I guess related to that, You mentioned March in April is strong. We're already halfway through May. Can you maybe help us understand the exit rates In March, what's happening in April May in terms of volume developments? Well, if I may take the first the second one. As I said, I mean volumes are up and strongly in March April and also into May. So As I said, I'm positive and go with optimism in the Q2. If you pretty well understand that the Q2 will be a very strong one compared to last the Because obviously, the comparable numbers last year were affected by lockdowns, etcetera. So we will see Again, a very strong performance in the Q2, but not only due to this effect, but to the effect that numbers are improving in April May. Yes. Okay. Yes. Go ahead, sorry. So now we need to move to your first question, the like for like, yes? And maybe I think what we have to consider also because you mentioned the the VBS, so the claim business unit. There is also this year, when we look to the currency development or is any impact in it on the zloty and on the Hungarian foreign, which is hitting basically the business unit This year rather strong. And looking to the development for like for like, yes, I think what is important, the What we already mentioned that we had this year a totally different 1st 2 months development like we had the In 2020. And out of that, I would say that the month is January February are the most basically influencing the factors which are basically showing or explaining the different development of the CBME business unit compared to prior year. The Sorry, are you just able to quantify the like for like in percentage development in Q1? Is that something you could give the In the clay building solution. Basically, we cannot quantify it or we would not like to quantify it really the In detail, as we said, we basically adjust the EBITDAs by 1 offs, Which you have seen, like the sale of non core assets and the currency devaluations. You mentioned also the Swiss topic, which basically was sold last year in, I think, in November in September, the the So out of that, basically, the reconciliation, the like for like reconciliation should be possible to make up for you. The Yes. I guess I was more talking about revenues to be fair in the Clear Building Solutions. So if you can provide that, that would be great. If you want to follow-up after the call, that's fine. Maybe just a second question then on the outlook. I understand you're keeping the EBITDA guidance. Just to be completely clear, Given the comments you just made on pricing and the fact that you could potentially come back to the pricing and increase it further sequentially given the strong increase in volumes, Is it fair to assume that your current EBITDA guidance of $600,000,000 to $620,000,000 does not include any further price hikes sequentially speaking? The Well, if I may take this one off. I said in my sort of statement that we see ourselves on the upper range already of the guidance of EUR 620,000,000. So I think we have made here a considerable step already, yes? And I also said that the EUR 20,000,000 of the additional price increases that we have to absorb. So basically, from a perspective of Wienerberger, We are far ahead of this already guidance that we gave at the year end at the beginning of the year, sorry. And yes, the answer is also a yes. We have not built into this additional price increases. So we have assumed that we can offset the The inflationary cost increases with price increases. So if other price increases were to follow, they will add on As I said, I mean, it's very important to note from all of you listening into the call that we actually improved already our guidance upwards. The Okay. Thank you very much, Emmanuel. Thank you. The next question is from the line of Priya Sia, call. I have two questions, if I may. The first one is on the exit rate. You hopefully talked about kind of sorry, helpfully talked about the improvement. If you could put some number around it, how the Klavik business kind of performed in March April? And if you could contextualize with 2019 numbers, so that we at least we see that the comparison is not being mixed with the COVID-nineteen impact. Well, I think what we are not going to do in the time we're speaking, we are not now breaking down quarter results Monthly results or numbers because that would then only create more confusion, etcetera. When I say that the trading numbers of March and the April are strongly up and substantially up. I think this gives you a good indication already, yes, compared to last year, yes? So Yes, we I think give you already a substantial information in this respect. Okay, understood. And if we look at the Exhibit Slide 25, you kind of raised the numbers for New build and infrastructure is kind of down to flattish. Could you please tell us what are the kind of countries where you have seen those positive strength the from what you communicated in February. Well, as I said, when I talked about the Western European markets, We have seen obviously and confirmed that the UK market is doing better than originally expected. Then also the Benelux markets, Belgium and Netherlands are Becoming better right now and that's why we obviously realigned it from a red to a more stable one. So I think these were the major drivers for this change. And these are the most important markets, if I may say so, in this region for Wienerberger. Okay. And probably a last one on the plastic granulate, that number being confirmed at €20,000,000 For this year again. But if we just follow through your comment and you talk about there is a delay in pass through, Does that mean we are going to get a benefit in Q4, hence the impact of $20,000,000 may not be fully seen for this year. It could be €15,000,000 or €10,000,000 depending upon where the plastic granular pricing will be in Q2 or Q3. The Well, I think what we need to see, 1st of all, and I think that's too early to make here a judgment. I understand fully and appreciate your comment. But 1st of all, we need to see a stabilization on the plastic granular prices and then the full supply coming in. And what we assume as of Today, we have not more information than that, that the production capacities of the producers of plastic bannered are now up and running, 1st of all, so the supply issue shouldn't, as I said earlier, move away in quarter 2 and into quarter the And therefore, then the pricing should come down as well and stabilize. So I think these are things If we then see these positive trends, then we can probably talk about a little bit of positive impact on this EUR 20,000,000. But for the moment, I think from a risk perspective, it's the most the best information that we can give you at this stage, yes? The Okay, fair enough. Thank you very much. The next question is from the line of Matthias Preisenberg of Deutsche the Bank B. Your question please. Hi, good afternoon, ladies and gentlemen. I had only one question from my side. Could you elaborate a the On funds in Germany under which new business that we saw over the last couple of months and how that has developed? Was it just a freeze? Is that something that's going to the Maybe later in the year, how are the dynamics there? On France, to start with Strong dynamics on the renovation market. That's important for us because we have a roofing business there. And we see also on the newbuild Side here also an improving market environment, yes? Started a little slow, but permits and other activities picking up in France. So this is the positive trend that we see there. On the German side, renovation, again, also strong and forward looking also positive. On the newbuild side, I would call it a more stablish environment, yes? So nothing to worry about the Immediately and nothing in the not too distant future, but it's more a stable environment. Okay, great. Thanks. The next question comes from the line of Markus Ramirez, RBI. Your question please. The Yes, good afternoon. Actually, I've withdrawn from the line. All my questions have been answered. Thank you. Thank you. Thank you. The. The next question comes from the line of Jason Tuhari, Onefield Investment Research. Your question please. The Yes. Good afternoon. So couple of questions. First, you mentioned that you've got 2% to 3% the price increase covering the cost. You mentioned 5% for North America. Could you give a bit of color for your piping solution And your clay building solution in Europe, is it lower than 2%, 3% in those 2 divisions. Then I've got a second question, which is on gas prices. So I understand that you're fully hedged the This year, that's your largely edge for 2022, at least for part of the year. But when I look at the gas prices Right now in Europe, they are very, very high. So is it a concern for you for next year and for 2023? The What was your strategy there? And then a third question, which is probably much more long term is that Have you think of a strategy for carbon neutral Wienerberger by 2,050? The Just before Gerhard comes in, yes, we have thought about the carbon strategy of Wienerberger. I try to be very brief in my sort of statements, but obviously we have a tremendous plan behind it when we talk about the Different resources of energy, what we can use, how we can access them. So it's a state, I would call it a national approach, because As I said at the beginning, it's going to be very different from country to country in Europe especially, and therefore, we need to adjust to this. The One very important subject for you at this stage. We successfully moved away already from natural gas only in Denmark to biogas, the Yes. So you see how quickly we can do it if the availability is there, if we have insurance, if Enough of this energy is there. And if the supply can be sort of sent through a network of pipelines. So this is very important. So we can talk a lot about, for example, hydrogen or others. If it's not available for us at this stage, it's an interesting subject, the But we can't sort of work on it. The only thing we can do, and that's what I tried to explain earlier, that in case we have the to such sort of alternative resources of energy. We can use them. Now kilns, we need to adapt certain things, but we can use them. The And the same goes for electrification. You can do certain sort of aspects of production and especially burning with electrification, but then you need enormous amounts Electricity that can be, 1st of all, need to be available, available long term, 3 65 the So one is the The reduction of our CO2 emissions by cutting our input of energy. 2nd is efficiency improvements Throughout our production process and thirdly is our alternative resources. So this is our clear strategy ahead. And If we come to your second question, it's about gas hedging or whatever you want to take first. Yes, exactly. Didier, let me start with your first questions where you were asking about the Pricing development. You mentioned basically the 2% to 3% price increase, what we communicated In the Q1 and also basically the 5% on the piping side. Yes, we have on the piping side, we have the Even higher price increases, but also not forget that we also have higher input prices. So we see basically a stable the margin development. And we can we are able to manage the margins, especially on the pipings are very good. But that leads also to even higher price increases on the piping segment or in the piping business unit, especially here the In the U. S, where we have a rather flexible pricing mechanism. And basically, when we look to the building solutions, As Heimer mentioned, we see this 2% to 3% price increase in average, which is covering the input cost the Inflation or income cost increase what we see across the business unit of Business Billing Solutions. The second question, if I may add, is the topic of hedges. As I mentioned before, the big part of our the prices for 2021 is already fixed. And maybe to add some figures to that, The gas is already for 90% fixed for 2021. And for 2022, we even have 70% fixed on the price level. So we are benefiting at the moment on a favorable cost structure as we locked in already these volumes or these prices basically last year. On the electricity side, which is Not that material for us, but still also a big cost position. It is comparable. We had on the electricity side, on the Our side roundabout 90% fixed for 2021. And for 2022, we also have roundabout 70% already fixed for 2022. And this hopefully answers your questions about the volumes the The prices basically which are hedged for the future. Is it fair to assume that the hedging price for 2022 is higher the price, the average price for 2021. The hedging price of 2022 the It's slightly higher than the hedging price which we have in place today for 2021, yes, right. But the risk is mostly for 2023, which is a long time down the road. We have 2023, and we only have small volumes basically hedged so It is simply going too far. Okay. That's very clear and very helpful. Thank you very much for all those key answers. Thank you. Thank you. The The next question is from the line of Seda Ekblom, Morgan Stanley. Your question please. Thanks very much. Hi, gentlemen. I had a question on your M and A strategy going forward. I wanted to ask how you see the M and A landscape and if you could Compare and contrast maybe what you're seeing on the piping side versus the brick side in Europe and maybe give us a bit of color in terms of how you see capital allocation going forward, where you see the growth opportunities and maybe also talk about multiples in the different markets. I would assume that multiples of pools of piping businesses are probably a bit higher than on the brick side of things. Maybe just give us an understanding of the next leg of the M and A strategy, please. Thank you. Thank you, Ed. And obviously, appreciate your question on this. And from our side, when we talk about the pipeline, it's Again, a mixed one. It's smaller deals in the building solution side add ons that we require on accessories and others. So As I say, it's a mixture of midsized and smaller these, couple of €1,000,000 etcetera. So the multiples are not that high the And not that different from before or didn't develop that much. So this is, I think, very digestible the And from a perspective of further growth makes a lot of sense. You are absolutely right. If I look around And look at different multiples that are currently paid in the billings and billing material side. In Europe, we are approaching quite high multiples. And From our perspective, we will be very careful because it's a matter of creating value that is obviously the In the center of our attention and not just buying companies. On the piping front, we see a multitude of the Midsize and smaller deals that we can absorb and do in different geographies around Europe, Eastern and Northern and Western part of Europe, And that we will move on. We see them as perfect add ons to our current structure and exposure. So as we said, water management and energy management, the 2 major focus points and also on the in house business when it comes to piping. So these are the major focus points. Multiples have not sort of increased dramatically. They are not higher than in the Building Solutions sites, by the way. So pretty much in line. And I don't foresee in recent months that they shoot up or go through the roof as we speak. But as I said, We are known for a disciplined team of people when we talk about the M and A side of the business. So again, yes, there are good opportunities out there. We pursue them. We're eager to take these opportunities if we can get them at the right price. The And we will sort of make sure that our teams are ready to integrate it. And finally, Yes, they are more in Europe at this stage because on the U. S. Side, we will have our hands full of integrating MRIdian the Then from the next quarter onwards. Great. Thank you very much. Thank you. The next question is from the line of Miro Zusak, JMS in Rostanket. Your question please. Yes. Hello, gentlemen. Thank you I have 4. The first one would be regarding the gross margin. Now in the current quarter, you are you seem to be very, let's say, bullish on the price increases the And that you can offset the raw material prices. Is it fair to assume that your gross margin, which has been a little bit on the pressure now. Q1 will normalize in Q2 already. And by normalizing, I the mean not going back to the previous year level, but to the 2019 levels of 36%, 37%. The Yes, I think obviously we always They have the same development. I think gross margin, you need to see over the year, by the way, and not over quarters because obviously you get, first of all, the shutdowns for maintenance and then start up of plants that are in these in certain quarters. But you're absolutely right. In quarter 2, due to the full utilization of plants, they're running smoothly and the output is increasing. Obviously, margin goes up. And I would say it's fair to assume that we go to the 2019 level. Okay. I think on the piping side, as Time already mentioned there, we foresee that there is some pressure on the margins, which we quantified by a maximum risk, Which partly will affect quarter 2 and finally also quarter 3. Okay. The Thank you. Then regarding the carbon leakage status, which now Please guarantee it until 2029. What happens thereafter? That's a good question Obviously, we have different sort of schools of thinking and I think we need to be very the Agile and very sort of flexible because certain that there are some people and you See the tendencies already in Europe that this gets replaced by national policies. So that governments put national policies in place the Like carbon taxes, like sort of references with respect to carbon prices And etcetera, etcetera. So I'm not sure that we will have from 'twenty nine onwards a common European approach, By the way, we might have a common European approach on the borders of Europe. But as far as the national ones are concerned, There could be eventually a move towards a more, call it, nationalistic approach by all due respect, but That's something where we see already certain tendencies when we look through our landscape of activities that we have. The But that's a best guess. We can also have a broader reflection because the U. S. Is currently talking to Europe again about the whole sort of climate change procedure. We might sort of see a bigger discussion on those items. It's like looking into a glass ball, to be honest. I can't give you here more of this information. The only thing is that I can tell you, we prepare ourselves the For all sorts of different scenarios, it's not only one scenario that we are basically looking at, meaning that this Sort of trading scheme continues. No, we think also of more national approaches as well. Okay. And then the third question would be regarding the selling cost, which has been down year over year. Is this are you there are you more efficient there? So can we expect to have a lower level in terms of percentage of sales going forward the Compared to the 2019 levels, are you more effective there? Or was there a temporary effect in Q1? No, I think we obviously are more effective because we do a lot in digitalization. We put a lot of emphasis, as Gerhard puts it, on the Fast Forward or now the sort of the self help program. So here we have made considerable improvement, But it would be also too ambitious to see that we do it every year and in the same amount. I think it gradually goes lower. And obviously, the The last part is the more difficult region. I think if we are very efficient already to squeeze out another percentage point, it's much quicker than at the beginning of such a journey. So yes, we will continue to positively develop, but not at the same pace as we did in the past. Okay, cool. And administrative cost was up. It's quite a contrary contrarian development. Was there any one offs or is this the new flight level, the 64? The No, I think some again, quarter by quarter, it's difficult to adjust because obviously, here again in the Q1, you might have some bonuses in it and some Sort of from the past some issues. So please don't look don't overreact on those things in the Q1. And Gerhard, you can confirm that. I think there's nothing special what you see. I think especially on the administration costs, it is really only a timing impact what you see. On the selling costs, I only can underline what Heimer said. We did our efforts. And also what we should not forget, There was in the last also last year, this year, no fares, basically, which also were the part of the selling costs in the past. So we constantly are coming down. But as we said, I think the efforts what we are showing the Coming also to a level where we percentage want to go further down is difficult and challenging. Okay, cool. Thank you, gentlemen. All the best for Q2 and the rest of the year. The Operator, I think we need to look at also our timing and think if there are 1 or 2 more questions, we might take them. But if not, then we will sort of close the call. There are no further questions at this time. Call. Thank you very much, operator. Ladies and gentlemen, thanks very much for dialing in today. The next conference call will be on August 11 for our half year results. Call. Today, I can only wish you a nice remaining afternoon. Thank you very much for dialing in again and goodbye. Ladies and gentlemen, this concludes the Wienerberger conference call. Thank you for joining and have a pleasant day. Goodbye.