Ladies and gentlemen, welcome to the CRH April 2019 Trade update. I will now hand you over to your host, Albert Mannifold, to begin.
Good morning, everyone. Albert Maliford, CRH Group Chief Executive here, and you're very welcome to our conference call this morning, which our trading update issued in advance of our AGM tomorrow. Joining me on the call is Sennan Murphy, our Group Finance Director and Frank Heistekan, Head of Investor Relations. Following some short introductory remarks, we'll be available to take any questions you may have regarding this morning's announcement. We have approximately 30 minutes scheduled for our call and aim to finish up at around 9 o'clock or so.
Our announcement this morning provides details of our of 2019, as well as an update of our recent development activity. We'll also provide you with an indication of our EBITDA expectations for the 1st 6 months of the year and indeed, our outlook for the year as a whole. After returning billion to shareholders under our share buyback program in the last 12 months, I'm pleased to announce that the board is proposing to continue our program with a further tranche of up to 1,000,000 to be completed before our interim results in August we'll look into that in a little bit more detail a little bit later on. Beginning with our first quarter trading performance and overall, it's been a positive start up year presage. Group sales for the first quarter were 7% ahead on a like for like basis, a reflection of the good underlying demand environment across core markets, more favorable weather patterns in some areas compared to the prior year period and progress on pricing across our businesses.
On May of 2018, we announced a new organizational structure for the group effective January 1st this year. This included the establishment of our new Building Products division, combining Americas products, build Lysight and Europe distribution businesses into 1 integrated global platform. And with our Europe heavyside and Asia businesses incorporated into our new Europe Materials division, we now operate under 3 core businesses America's materials, Europe Materials And Building Products, 3 integrated platforms that will support our future growth plans and deliver further value for all our shareholders. So let me now briefly take you through the trading results and trading trends for the first quarter of 2019 and starting with the Americas Materials division. 1st quarter like for like sales were 4% ahead compared to 20 benefiting from continued positive momentum across infrastructure, residential and nonresidential markets.
Our aggregates and asphalt volumes benefited from improved weather conditions in the Northeast and Southern regions of the United States. So this was partially offset by less favorable conditions some of our Western markets. Pricing, however, continued to make good progress with improvements across all product lines. Ash Grove Cement acquired in June of 2018 continues to perform in line with our expectations and the integration of that business is progressing well with synergy delivery very much on track. Finally, in Canada, cement volumes were negatively impacted by adverse weather conditions during the period.
Although this was partly offset by improvements in pricing. Of course, it's worth remembering that our Merrick's Materials business in particular is extremely seasonal. Less than 20% of annual aggregate volumes and indeed less than 10% of asphalt volumes being sold in the first quarter of the year. Turning now to Europe Materials where our like for like sales increased by 12% year over year. Cement volumes were well ahead for prior year period.
With particularly strong growth in such countries as France, Ireland, Poland, Ukraine and Romania. Across our European markets, volume growth and cost recovery continues to support further improvements in our pricing and it's encouraging to see cement prices ahead in all fifteen of our cement producing countries during the period. The political situation in the United Kingdom continues to weigh in our markets. Although milder weather conditions, in the first quarter of 2019 contributed to cement, asphalt and ready mixed concrete volumes being ahead of the prior year. Whilst the pricing environment remains competitive, selling prices increased in cement, asphalt and aggregates in the first quarter.
In France, good market demand and favorable weather led to higher volumes and higher pricing across all product lines during the period. Finance Switzerland, despite a competitive market backdrop, we experienced good growth in our cement volumes and the modest improvement in pricing. In Eastern Europe, more favorable weather conditions compared to the extremely cold temperatures of 2018 combined with good underlying construction activities led to volumes in Poland, Romania and Ukraine being well ahead of prior year. Cement volumes in the Philippines were also well ahead of the first quarter benefiting from increased levels of infrastructure activity. Pricing also continued to improve during the period with good traction on recently announced price increases in our major markets.
So overall, a positive start to the year for Europe Materials, reflective of improved weather conditions compared to the prior year, but also a continuation of that solid underlying demand environment we experienced across our markets in 2018. And finally, through our Building Products division, where like for like sales for the first quarter were 5% ahead of 2018, benefiting from a positive demand backdrop in both Europe and North America. In North America, volumes and prices for our architectural products businesses were ahead, affecting good underlying demand and early purchasing from home centers in advance of the key spring trading period. Like for like sales in our building envelope business were also ahead of the prior year, led by increased product demand at Sierra Lawrence and improvements in pricing. Our world class and infrastructure business continued to benefit from good levels of activity, particularly in the non residential sector and like for like sales were ahead of 2018 with improvements in both volumes and prices.
In Europe, our products business delivered good growth across all product lines, particularly in our architectural product and construction accessories businesses, which benefited from milder weather conditions and good underlying demand across our main markets of Germany, the Netherlands, Poland and the UK. In distribution, like for like sales were ahead of 2018, primarily led by a strong performance in our merchant new businesses in Germany and Netherlands, which benefited from good growth in new residential construction. So for the group as a whole, it's been a good start to the year. Looking ahead to the rest of 2019, we expect the positive underlying momentum in our businesses to continue, resulting in another year of progress for the group. Before I go into our outlook and further details, let me touch briefly on a few other items from this morning's announcement.
1st, for development activities, we in the year to date, we've completed 16 bolt on acquisitions for a total consideration of 1,000,000, the majority of which were in our Americas Materials businesses. Of the largest deals completed in Americas Materials involves a strategic expansion of our aggregates and ready mixed concrete operations in Oregon, a prime example of our unique capability to leverage the platform we acquired through the Ash Grove acquisition to develop future bolt on activity and value creation for our shareholders. As you know, ACTR Portfolio Management is an embedded practice at CRH and we continue to assess our portfolio of Twist against buy and focus on businesses, which offer the most attractive returns for our shareholders. This morning, we announced that we have reached an agreement to divest of our European business for a total consideration in excess of 1,000,000, representing good value for our shareholders and further progress in our 1,000,000,000 to 1,000,000,000 divestment program which we announced in April of last year. A strategic review of our European distribution business is also ongoing.
We're continuing our thorough review of the entire business are considering all options to maximize value for our shareholders. We expect to complete our review in the next 2 to 3 months. Ultimately, this is a capital allocation that and it's important to ensure that any final decision is the right one for our shareholders. Efficient use of capital is a core philosophy at CRH. We are an extremely cash generative business generating over 1,000,000,000 free cash every year.
Every capital allocation decision we make is analyzed and assessed through the lens of creating maximum value for all of our shareholders. Earlier this month, we announced the completion of the most recent phase of our ongoing share buyback program, returning a further million to shareholders during the 3 months of the year and bringing total cash under our share buyback program to 1,000,000,000 over the last 12 months. In the light of our strong balance sheet and cash generation and having assessed the cash requirements of the business for the months ahead, the board is proposing to continue our share buyback program with a further tranche of up to 1,000,000 to be completed before our interim results in August. Subsequent tranches will remain under consideration and any decision in relation to future buybacks will be based on a non billing assessment of the capital needs of the business and general market conditions. And finally in keeping with our strong focus on continuous business improvement, the implementation of our profit improvement program is advancing well and will continue to make good progress across to report first half EBITDA in excess of 1,000,000,000, over 1,000,000 ahead of last year.
This reflects mid single digit like for like growth and a good contribution from acquisitions. Of course, that also includes the benefit of currency tailwinds and the impact of the transition to IFRS 16, the new lease accounting standards. And as we look to the second half of the year, we expect group EBITDA to be also ahead of the second half of twenty eighteen on a like for like basis. Sitting here on the 24th April was our most important trading period ahead of us It's very difficult to be more specific at this stage of the year, but we will of course update you on our expectations as the year unfolds. So with that, I will now hand over to Q And A.
I believe we have some questions on the line. In framing your questions, please be aware that it's still very early in the season. So many of our responses will be more directional than quantitative at this stage of the year. May I ask you please state your name and the institution that and now I'll hand you back to the moderator to continue and coordinate the Q And A session of our call.
Ladies and gentlemen, Our first question comes in from the line of Paul Roger calling from Exane BNP Paribas.
I'm conscious of what you said about it being early in the trading year, but I'm going to ask you to be a little bit more specific on guidance if possible. And basically the question is you've explicitly said that European profit growth will decelerate as you go through the year after the strong start. Could the reverse happen in the Americas? Obviously had an easy base in the second half of twenty eighteen. And when you think about the overall group, you've sort of said mid single digit, profit growth in H1, Is there any reason why it can't do better than that in the second half?
And then my second question is on the European heavy side, obviously very encouraging to see more price increase coming through. I should look at it also in place like France and Switzerland. I think that's the first time. And I just wonder if overall, you're basically guidance and expecting margin expansion in European Heavy side this year, and whether that's likely to be the sort of 10, 20 base points that we saw last year or whether it could be something more material, as we saw on the American materials business, when that starts to recover pricing? Thanks,
Paul. It's some interesting questions there. But I'm trying a little bit more detail, but as I said, it's hard to be very specific at the end of part of the year. And the reason why we're talking deceleration in growth from the first quarter because it's been so strong in the first quarter and it is of course to do with the comparatives. As you will recall, the first quarter of 2018, we had a ended winter and some very challenging year with regards to construction.
Had a more normalized winter here in, in Europe and hence we had a very strong first quarter compared to last year. Markets are ahead, growth is ahead, volumes are ahead, but it just won't continue on at 12%. It will decelerate the extent to which it will decelerate, of course, is that, and, you know, we'll tell it as it goes forward. So we look at a moderation of growth as safety as we go forward into quarter 2, but to the extent that we will see should all say that the price increases, which is encouraging to see all fifteen of our markets are ahead. And those price increases didn't kick in on the 1st January 18th, during the course of the first quarter.
So we haven't really got the full benefit of those yet as well. So there's a little bit of upside there as we move forward, but it's encouraging to see good pricing. With regard specific question, should we see the reverse happen? Should we see an acceleration in growth today in the second half of the year in the U. S?
And think that the pace of growth during the course of the 12 months for the whole period in the U. S. On the call, we're seeing, of course, it's a very quiet period of time of the year for construction in North America. The first quarter I think it's probably moving in between 3% 5% volume growth rate up depending on where you are. Obviously, the smile of Stacy is seeing higher growth and out west higher growth, but it's between 3% 5%.
And I think that's the face of volume growth during
the course of the year.
You will see some prices on top of that and it's encouraging to see prices ahead in all our products in North America as well. So let's see how that plays out during the remainder of the year. But I think that's what we will see during the full year. And if that means over this 4% like for like for the first quarter in direct materials, if you see a mixture of volume and pricing coming through the second half of the year, it should be out of that if we get that the full benefit of the work and we get good weather to do some work. We have some difficult weather last year as you'll recall in quarter 3 S.
And with regards to your timing side and pricing here, I mean, I've just spoken about how it is encouraging to see. I think your comments are correct. The reason why we're seeing such good pricing is because for years, we have seen middle or no pricing at power coming through the European business And I think the main issue for us is the fact that now there is a clear momentum and a desire of course, the major players in Europe and we've got to start to see recover the very significant cost increases that we've taken over the last 3 or 4 years. And we've got pricing, is that back to pricing? And there's a really strength and commitment to do that because European pricing has significantly lagged pricing in North America.
And you can see that the separation pricing that I've referred to before. What that would mean with regard to margins, we would see my own own assessment is that in Continental Europe and in Ireland, that should lead to a net margin expansion because our cost are broadly under control in Continental Europe. And I think that our pricing should see an expansion on margin over last one call out I would make is the UK. We've had a soft first quarter in the UK. I think it's been well flagged that the nonresidential sector of the UK market hasn't been challenged particularly since the Brexit vote in 2016, but we've seen a slowdown particularly in the Southeast with regard to office space.
And that continues on, but that was expected. Likewise, we were anticipating a slowing and a flattening out of the residential construction of that. Again, that was expected and that was seen to us. The problem was taken a bit by surprise in the first quarter of this year is how soft the heavy infrastructure work has been some of the larger projects, which we anticipated were going to slow, have really stopped completely and we're really almost now completely reliant on small county infrastructure work at this moment in time. That's not to say it's not going to kick on but I think there are challenges there in the volume.
And also with regards to the UK and coast in particular, we don't have the benefit of winter in the United Kingdom as we have in the in North America. And therefore, with higher bitumen costs rolling for from last year, they will take a while to work through the system. We have a higher cost that's coming through. And that's with the fact that the infrastructure work is not coming through as we have yet has led to perhaps more competitive pricing dynamics in the UK. So that may impact upon the net margin this impact upon the net margin of UK business and what the impact would be of the overall European hemp side business we will see.
But absent UK, I have to say I think we should nicely expansion across all of the continent, Europe, and in the Ireland environment as well.
The next question comes in from the line of Gregor Kulich calling from UBS. Please go ahead.
Hi.
Couple of questions, I think 2 are kind of interrelated. So on energy costs, be helpful if you can kind of update us where you see things trending in terms of either percentage inflation or deflation into 2019. I think last year, your bill, including bitumen, was kind of 1,000,000,000 you should have a pretty good view now with the winter fill tank, particularly in the States. And then related to that, on, can you remind us where you are on carbon and CO2 rights in the in Europe. I presume, I think you're a net buyer.
So perhaps that's an element cost erosion that shows up in a different line, I guess. And then related to that, do you, as CRH, have any plans to adjust capacity in light of the next phase? And then one technical question, if you could just remind us your expectations for H1 and perhaps also full year 'nineteen of the net M and A contribution as we sit here today on all the different transactions that have happened? Thank you.
Okay. Thank you, Gregor. Three questions there. Just to repeat the first question with regard to energy costs or overall energy costs cost movements of this year, I'll pass that to Sen in a moment. Also your third question was on net M and A contribution this year, first half, second half again, I'll pass that to Sena.
Maybe I'll just talk briefly about the carbon loss this year as last year this year and also what plans we have in place with just capacity with regard to that. And just to remind people on the line, last year, our overall CO2 cost this year, it was net cost, but CHF15 1,000,000,000, you're right, Gregor. We were a buyer of CO2 credits last year. With the increased volume coming through this year in Europe, that figure will increase, I suspect, if I were you guys, I'd factor in something in around plus 10s of that fish. So in 2019, it's kind of manageable.
I think it's clear to us something in around that. I wouldn't be much wouldn't take any more than that. With regard to what we're working on and trying to reduce that, of course, when we're signed up to the Palace Accord. We have specific requirements to meet them, which we will meet with regards to reduction of CO 2 usage across our businesses, which were on line on track to meet by 2020. We're doing all that we could be doing in terms of lowering our turnaround content, increased alternative fuel use across Europe, all of which reduces CO2 emissions quite significantly.
And I would hope that we'd be able to maybe reduce and mitigate somewhat any of that anticipated increase we spoke about there. But that's principally what we're doing within term trends. The overall more and more general comments on energy costs, Sanin, in terms of Yes,
I think in terms of
energy costs, looking at the
components, Gregor, as you mentioned, about $2,500,000 spent on energy last year, which is about 9% of sales. Within that number, about half of that is bitumen, which is obviously large in North America and to a lesser extent, it's in Europe and the UK, particularly in Ireland. On that, on that side, obviously, the winter fill program we've talked about We bought through the winter. I'm pleased with that level of activity. And that will continue on through the end of this month.
But given where our prices are today, I think we feel good about the winter fill activity that we have conducted over the year. I will see that coming through. I think we're more focused on making sure that we get margin expansion as you pointed out rather than
the absolute amount in terms of how that comes through.
So winter fill looks good. Let's see where prices play out now in the bidding season over the next couple of weeks months as we get into that. Albert did mention bitumen, particularly in the UK, terms of that scenario where we don't have winter bill. And as you know, we hedge forward about 80% of our activity is hedged going into 2019. So sitting at 2018 prices.
And that's part of the conversation Albert mentioned earlier about bitumen. And other remaining other energy costs, I mean electricity is part of the equation as well first around, around, and I think the increase in electricity prices is probably at normal levels. So it's not anything unusual there and something we'll work through in terms of looking at the price conversations that Robert mentioned earlier to make sure we get margin expansion in the year ahead. To your M and A conversations and contributions,
the way I look at that is
in the 2019 year first half of the year should see an increase in earnings net from M And A. I'm expecting a number of the $125,000,000 to $130,000,000 net in the first half. So that's part of the improvement over last year. And that is primarily as a result of the contribution from Ash growth, including the synergies that go with that. I would think then that the DIY sale that we concluded last year will net off against the bolt ons our bolt ons that we did last year.
That should be a net wash. And then if I look at the first quarter activity this year, again, we announced $200,000,000 of bolt on deals in the first quarter this year, we're also announcing disposal of, shutters and armies. And again, as
you look at that
over a 12 month period, they're pretty close to a breakeven or wash between the two of those. So the shutters and earnings business will take about $30,000,000 of EBITDA out
of our business and then the bolt ons should contribute the majority of that back in
and in place. So I'd say the net movement over the first half of the year and after the full year will be about $125,000,000 dollars, $130,000,000, which is largely coming from the contribution of Ashville.
One point at that, Gregory, you didn't ask the question, but just to add it to it from a point of view in terms of where we are point of the year, we're just at the start of the bidding season for a big, big asphalt work. I mean, as you know, we work on sort of a forty 90 day bidding cycle. So now bidding work now, which will come through in our busy season. What we do like to see of course is we do like to see doesn't normally happen. We do have to see higher oil and higher bitumen prices at this point of the year.
Remember, our oil, our bitumen in our tanks will be at lower prices because oil, as you know, not perfectly correlated, but it's gone from about $55 to that $75 Brent in the for the last 3 months. So we would have an advantage in that, going forward. We would like to see higher we'd like to see higher prices at side book, because that's when people are tendering for the work. And that's what we're seeing. So it means that we start the season well in terms of where prices finished that way.
Great. Thank you.
The next question comes in from the line of Robert Gardiner calling from Davy. Please go ahead.
Good morning. Two questions for me, please. So one maybe just on capital you've announced an extension of your buyback $350,000,000 to get you to August. So just wondering how we should think about the potential for a rolling buyback or the decision that comes in August, what are you weighing up there maybe in terms of acquisition versus a further buyback? And until then, You referenced a lot of, the long term targets in terms of cost takeout and the procurement the process and the structural savings.
Just if you wouldn't mind giving us a short update in terms of what's going on there and what we can expect in 2019 or possibly later in 2020? Thank you. Thanks, Bob. And the issue with regards to the rule forward again of the proposed rule forward again, excuse me, of the buyback program. It's really to do with the fact that you can recall, in the end of February, we said that certainly for the 1st 6 to 9 months of this year, we'll be very much focused on the success of integration of NASH Global and Swan.
So very big deals we did last year, settling then down into the group. Number 1, and number 2, we had a very ambitious program to improve the profitability of the efficiency and the effectiveness of our businesses but the plan and the program to increase our profitability. That was where our focus was going to be this year and it is going to be where it is going to be this year. With that in mind, of course, we are a significant cash generator. And we have said that we will allocate capital the best way we can for our shareholders if our focus is on integration and internally within our business in driving performance and not on acquisitions, which it probably isn't for this moment in time and going forward for the remainder of that we're not going to get to the summer period of time, the cash has been allocated back to shareholders through buyback.
That's what's behind this decision now, but it is a decision that we would again revisit in August because at that stage then we'll have clear visibility with regards to where quarter 2 quarter 3 are and we'll know exactly we'll have a good sense of what the year is going to come out. So that's the purpose of that decisions for now, it's here. And we'll see where we stand at the end of August with regards to integration and the achievement of those plans. And to reference those plans, what you talk about, And again, if you recall in February, what we did say was that some of these plants are more longer term in nature. We expect see most of the benefits start to kick in in 2020 2021.
We do think we will start to see some of the deliveries at the back end of 2019 because they take time to put in place. Changing the way we process materials and changing the way and the location of where we produce materials in terms of looking for more efficient and effective production means we got to move things around the price factories, machines, people to do that in terms of how we procure business that procure products for our businesses, we've got to unwind existing procurement programs embrace and bring more products into those procurement, that takes time and different teams to do that. Of course, structural changes take place. There are back offices, there are systems and support factors need to be closed and changed on a management system integrated together and all of that takes time and costs. So we're working through that process.
As we said in our statement this morning, that very pleased with the work that we've done. We're in line with our plans and I, as I said, I should expect to see some of it coming through the magnet this year most will start to be delivered in 2020 only 2021.
The next question comes from the line of Rajesh Patki calling from JP Morgan. Please go ahead.
Hi, good morning, everyone. It's actually Elodie Rolls from JPMorgan. I have a couple of questions if I may. So it's a lot of U. S.
Housing markets, we've seen a mixed, we've seen some mixed data points recently and not necessarily with regard to mortgage rates or home sales or permits, ABI and HP. So I just wanted to have a bit of color of what you're seeing and expecting there 2nd, on U. S. Infrastructure. Can you give us a bit of color about where your order book is and how it has evolved with some And are you still hopeful to see a new highway deal to be announced in May?
And lastly, on your strategy for you in general, given that you don't have any Asia division anymore. I was wondering if you could give us a bit of consideration about what you're thinking of doing in emerging markets, would you actually contemplate some potential divestments, maybe in the Philippines Thanks.
Thank you, Adi. Three questions there. And just a first question was on U. S. Housing, our sense of using housing.
Well, we've seen dialing stuff. We've seen some of the external staff that you've talked about as well. And, but our own sense is as we talk to our customers, we talked about a lot of contractors and we look at our flow going out. Actually, we think it's fairly solid and the same pace of growth as last year, probably around the rate of 2% to 3%. And a little bit, a little bit, as I said to you, a little bit stronger S.
And down south. And we do think what backs that Ocozee is more trades are down again. There's basically good sentiment across the homebuilders good demand there. Still below long term need. Inventories are pretty much at record low levels now at this stage.
We're seeing interest down sort of at 30 year lows in terms of 3 months rather than 6 month stock. And again, I think our footprint is quite favorable in terms of that. And, you know, state states that are important to us Texas of Florida, where the housing, residential housing division is significantly ahead of what it is for the rest of North America. So I have to say, I think that we're fairly okay with regard to U. S.
Res, even though there has been some of the assays, some other commentary with regard to that. And with regards to a U. S. Infrastructure, we have no expectation any new word of infrastructure bill going forward. We hear a lot of talk about that.
What we have at the moment is we've got the current bill, which runs through the end of 2020. The next 3 years, we'll see an overall about a 7% increase in overall spending over the last 3 years. And our focus is very much in delivering against that. And it is, it's clear to us probably the one point we've got the greatest powers with regards to our backlogs because it's more long term work that we do. And our view is that We're focused on that.
If anything else comes beyond that, it'll be a surprise to us all, I mean, we will revisit our forecast and our predictions with regard based on that. But basically current program running at the end of 2020, we can see where the funding is coming from. It's a continuation of the trend, which is more and more falling on the states through initial initiatives and the state taxes to support that. The figures are now used to be 15 years, 5, 6 years ago. We now find the states are providing almost sort of 65%, 70% if they're providing 64,000,000,000 and the federal are providing 49,000,000,000 this current year.
So you know, there's significantly more money coming from the U. S. With regard to emerging markets, look, we've been fairly consistent with emerging markets. We were very cautious in our expansion to emerging markets over the last 5, 6 years I think that caution has been merited and we've seen the fact that it is very challenging for all companies and it has been very challenging for ourselves. Make long term sustainable returns in emerging markets.
And I don't think that's going to change anytime soon. We have a lot in our place dealing with the developed first world markets that we're in. We still very focused divisions and we're focused on driving value and profitability through those divisions and with lots of opportunities to grow organically and indeed and organically. With regards to looking at our portfolio of emerging markets or in the annual business, every business in CFH has to satisfy the same requirements as any other business. It is the same dollar to invest whether to invest in emerging markets or developed markets.
It must be able to cater to generation returns and cash for our shareholders. And we those who underperformed be they in emerging markets or in developed markets are under the same critical eye wherever they may be I'm not going to come to any 1, 2 or 3 individual markets just to say that our focus is not on emerging markets going forward with the existing assets. It's the same capital allocation criteria or applied wherever those businesses are. If we have time for maybe about 2 more questions, we'll go over time, but we'll finish it. It's quite short this morning, so we'll keep on
Okay. So the next question comes in from the line of Arnold Langan calling from Bank of America. Please go ahead.
Thank you. Good morning gentlemen. Just maybe one follow-up on your capital allocation thoughts. So you're announcing a share buyback for the next 3, 4 months. You said you would take a decision on the strategy for European distribution within 2 to 3 months.
I'm just trying to understand if these two decisions are related to each other. Would you expect to have to sell more assets in distribution before you commit to more share buybacks? Or these are completely unrelated and it's more about how you see trading developing through the year or maybe your acquisitions pipeline, I guess is my first question. And just on European distribution, I believe you also have an option in something France to increase your stake? Have you taken any decision on this?
Thank you.
I'll take the
first one in terms of the capital allocation conversation, maybe Albert, you can talk about Sam's just in terms of the capital allocation and share buyback considerations, Arnaud, I think it's safe to say that it is not dependent on what happens with Europe distribution. In terms of looking at the capital allocation, as Albert has said, is looking really at our trading performance, looking at the cash we're generating from our operations and considering our balance sheet position as well at that point in time. So it is not dependent on Europe distribution.
Okay. Arnold, with regard to SAMHSA, obviously, we have an agreement between our sales and other shareholders. All I can confirm is that you're absolutely right. We've announced we have an option to step up within Sunset. It's a very fine business.
We would see that as being a plus to our overall business plans going forward and there's good optionality with that particular option going forward. And as we go forward, we will factor that into our considerations when we're assessing how it was to allocate capital, excuse me, going forward with regard to remaining with distribution or looking at other options here. I think you may have time for one more question, please.
The final question comes in from the line of Will Jones calling from Redburn. Please go ahead.
Hi, good morning. Thank you. 3, if I could please. First, is it possible to just be a little bit more precise around the price change year over year? I guess firstly across that basket of 15 countries that are all in positive territory.
Is there a percentage number you put against that? And I guess a similar question, if possible, for your I guess, 3 key materials in North America, cement ags and asphalt. Appreciating that asphalt clearly is not in the season right now. The second was just coming back to the guidance for the first half of mid single digit like for like EBITDA growth. Could you help us with what first half like for like sales you're assuming, behind that profit growth, please?
And just to double check if Q2 any materially different from Q1 in value terms? Obviously, we don't get the hard figures within the first half. And then the final question was just around, you can just wind back to the 1,000,000,000 of surplus capital. That you flagged as being possible for your business by 2021 about a year ago. Does that number still apply in your mind?
Do we need to knock off billion from it you spent over the last year on the buyback? Just I guess the latest thoughts on medium term capacity on that point.
Okay. And well, I'll take the first question with regard to the pricing change. I'll ask you to send us a comment on behalf 1two EBITDA in terms of capacity and we'll also only cash to the world cash number there. Look, the cement pricing as I said to you, it's somewhat has kicked in. Some of it is kicking in as we speak as such.
And pricing, as you well know, will has been so much slow over the last 4 or 5 years. It's been coming through piece by piece by country. Broadly speaking, it goes from a low of about won 2% to a high of 6%, 7% and those countries that were slowest to come through with the ones that are getting a higher percentage Obviously, the ones that have been coming through the last couple of years are, I think, sort of the 1%, 2%. It is, again, as I start to the very first question, it is role in response to the fact that we have taken very significant cost increases across all energy and input the last number of years and they have not been passed on to the customer even it will take a couple of years to do that. But that's what's behind it's not just ourselves.
You can talk to all of the other cementers across Europe, they're feeling exactly the same. With regards to the overall pricing across our businesses, in North America, our main products area. And with regard to Aggregates, cement and concrete, absolute price increase is important. Again, but very significant energy increases last year, we'd expect to see something in the region of sort of 3% to 5% range coming across that. As far as a little bit different because as as well, it's very much about managing the margin while managing the price increase.
And it's very early days only with 10% of asphalt volumes are gone in yet. So we'll see how that goes. But as I said to you, the reason why I made that comment after Senate spoke about the asphalt at the Bisma cost was because, as I said, you're looking at our experience as we started most important bidding season now at this stage, the next month, 1.5 months, we did all the work for would say the highest of the summer, starting on bidding that work, we're the only ones who do winter fill. So most people are bidding that work against high bitumen on high oil prices, and that's probably good position to be in with regard to overall positive territory, with regard to margin expansion, but we won't actually know the margin will be able until we get to that bidding season. I'll get through that digital care work, which will be due to IO
Just in terms of half one guidance, well then in terms of your questions, I mean, there's 4 key elements to our half one performance versus last year. Organic growth or like for like growth is the first one which we guided at mid single digits and I'll come back to that in a second. Also what's in there obviously is the contribution from acquisitions. I think question that was asked earlier about net acquisition contribution, we anticipate $125,000,000 to $130,000,000 extra from acquisitions in the first half compared to last year. The other two features to bear in mind are obviously currency, which is we move into this year a positive position on currency, which is we anticipate a tailwind for the half year as opposed to last we had a headwind.
And that tailwind at the moment, we would size that it's been worth about $50,000,000 to us for half 1. And then finally is the obviously lease accounting changes which take effect in 2019. And the full year impact of that, we have estimated to be $380,000,000, which we guided earlier in the year. And that should come in evenly throughout the year, half 1 half 2. I think to your organic growth question, like for like growth question, yes, we're guiding like for like mid single digit earnings growth for the half year.
Top line, not that much out of line, probably a similar range. So probably slight margin expansion in the first half of the year, but we're looking at margin expansion 12 month rather than over a 6 month period. And then I think in terms of your question around Q1, Q2, when you look at the revenue in the first quarter. Obviously, it's a smaller quarter as we've talked about. What we are saying is the Europe Materials 1 in particular, you should expect to see that sales number moderate in the 2nd quarter and end up with what I would regard as a more normal half one when you put it together.
To your surplus cash question, of course, we're still focused on the $7,000,000 of surplus capital we can generate from our cash from operations as we look out over the next 3 years. And when we were arriving at that number, we had already a debt $5,000,000,000 buyback that was in the pipeline. So that was taken into account when we were arriving at that number. Obviously, further buybacks now as we continue going forward. Will be a part use of that $7,000,000,000 as you look forward.
Thank you, Will. And well, look, that's all we have time for this morning. I want to thank you all for your attention. And as always, if you have any follow-up questions, feel please, and feel free to get in touch with our Investor Relations team. We look forward to talking to you again on the 22nd August when we report our interim results for the 1st 6 months of 2019.
Thank you.
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