Ladies and gentlemen, welcome to the CRH April 2019 trading update. For the duration of the call, you will be on listen only. However, you may submit your questions at the end of the call by pressing star one on your telephone keypad. I will now hand you over to your host, Albert Manifold, to begin.
Good morning, everyone. Albert Manifold, CRH Group Chief Executive here, and you're very welcome to our conference call this morning, which accompanies our trading update issued in advance of our AGM tomorrow. Joining me on the call is Senan Murphy, our Group Finance Director, and Frank Heisterkamp, 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 nine o'clock or so. Our announcement this morning provides details of our trading performance for the first three months 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 first six months of the year and indeed our outlook for the year as a whole.
After returning EUR 1 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 EUR 350 million to be completed before our interim results in August. We'll go into that in a bit more detail a little bit later on. Beginning with our first quarter trading performance, overall it's been a positive start of the year for CRH. 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 periods, progress on pricing across our businesses. In May of 2018, we announced a new organizational structure for the group effective January 1st of this year.
This included the establishment of our new Building Products division, combining Americas Products, Europe Lightside, and Europe Distribution businesses into one integrated global platform. With our Europe Heavyside and Asia businesses incorporated into our new Europe Materials division, we now operate under three core businesses, Americas Materials, Europe Materials, and Building Products. Three integrated platforms that will support our future growth plans and deliver further value for all our shareholders. Let me now briefly take us through the trading results and trading trends for the first quarter of 2019. I'm starting with the Americas Materials division. First quarter like-for-like sales were 4% ahead compared to 2018, benefiting from continued positive momentum across infrastructure, residential, and non-residential markets.
Our aggregates and asphalt volumes benefited from improved weather conditions in the Northeast and southern regions of the U.S., though this was partially offset by less favorable conditions in 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 Americas Materials business in particular, is extremely seasonal, with 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 of the 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 15 of our cement producing countries during the period. The political situation in the U.K. continues to weigh on our markets, although milder weather conditions in the first quarter of 2019 contributed to cement, asphalt, and ready-mix 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. While in Switzerland, despite a competitive market backdrop, we experienced good growth in our cement volumes and a modest improvement in pricing. In Eastern Europe, more favorable weather conditions compared to the extremely cold temperatures of 2018, combined with good underlying construction activity, 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.
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. Finally, to 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, reflecting 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 C.R. Laurence and improvements in pricing.
Our Oldcastle 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 products 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 U.K. In distribution, like-for-like sales were ahead of 2018, primarily led by strong performance in our merchanting businesses in Germany and the Netherlands, which benefited from good growth in new residential construction. 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 demand momentum in our businesses to continue, resulting in another year of progress for the group.
Before I go into our outlook in further detail, let me touch briefly on a few other items from this morning's announcement. First, our development activities. In the year to date, we've completed 16 bolt-on acquisitions for a total consideration of EUR 200 million, the majority of which were in our Americas Materials businesses. One of the largest deals completed in the Americas Materials involved a strategic expansion of our aggregates and ready-mix 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, active portfolio management is an embedded practice at CRH. We continue to assess our portfolio to identify 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 shutters and awnings business for a total consideration in excess of EUR 300 million, representing good value for our shareholders and further progress in our EUR 1.5 billion-EUR 2 billion 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 and are considering all options to maximize value for our shareholders. We expect to complete our review in the next two to three months. Ultimately, this is a capital allocation decision. 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 EUR 2 billion 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 EUR 200 million to shareholders during the first three months of the year, bringing total cash under our share buyback program to EUR 1 billion over the last 12 months. In the light of our strong balance sheet and cash generation, having assessed the cash requirement of the business for the months ahead, the board is proposing to continue our share buyback program with a further tranche of up to EUR 350 million to be completed before our interim results in August.
Subsequent tranches will remain under active consideration, any decision in relation to future buybacks will be based on an ongoing assessment of the capital needs of the business and general market conditions. Finally, in keeping with our strong focus on continuous business improvement, the implementation of our profit improvement program is advancing well, and we continue to make good progress across all business areas. Turning now to outlook. Following the good start to the year, we expect to report first half EBITDA in excess of EUR 1.5 billion, over EUR 400 million 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.
As we look to the second half of the year, we expect group EBITDA to be also ahead of the second half of 2018 on a like-for-like basis. Sitting here on the 24th of April with 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. With that, I will now hand over to Q&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 are going to be more directional than quantitative at this stage of the year. May I ask you please to state your name and the institution that you represent when posing your questions.
Now I'll hand you back to the moderator to continue and coordinate the Q&A session of our call.
Ladies and gentlemen, the question and answer session will now begin. As a reminder, if you would like to submit a question, please press star one on your telephone keypad. Our first question comes in from the line of Paul Roger, calling from Exane BNP Paribas. Please go ahead.
Good morning, everybody. Thanks for taking my questions. I'm conscious of what you said about it being early in the trading year, going to ask you to be a little bit more specific on guidance, if possible. This as a 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, you had an easy base at the second half of 2018. 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? My second question is on the Europe Heavyside. Obviously, very encouraging to see more price increases coming through.
Actually looking at it also in places like France and Switzerland, I think that's the first time. I just wonder if overall, you're basically guiding and expecting margin expansion in Europe Heavyside this year, and whether that's likely to be the sort of 10, 20 basis points that we saw last year or whether it could be something more material, as we saw in the Americas Materials business when that started to recover pricing.
Thanks, Paul. Some interesting questions there, I'll try and be a little bit more detailed. As I say, it's hard to be very specific at the early part of the year. The reason why we're talking about 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 the extended winter and some very challenging days regarding construction. Had a more normalized winter here in Europe, and hence, we had a very strong first quarter compared to last year. Markets are ahead, growth is ahead, volumes are ahead, it just won't continue on at 12%. It will decelerate. The extent to which it will decelerate, of course, is that we'll reveal as we go forward.
We look at moderation of growth as I think as we go forward into quarter two, the extent that we will see. I should also say that the price increases, which is encouraging to see all 15 of our markets are ahead. Those price increases didn't kick in on the first of January, they kicked in during the course of the first quarter. We haven't really got the full benefit of those yet as well. There's a little bit of upside there as we move forward, but it's encouraging to see good pricing. With regard to a specific question, should we see the reverse happen? Should we see an acceleration in growth in the second half of the year in the U.S.?
I think that the pace of growth during the course of the 12 months, the whole period in the U.S., and recall, we're seeing it, of course, it's a very quiet period of time of year for construction in North America in the first quarter. I think it's probably moving in between 3% and 5% volume growth rate, depending on where you are. Obviously, the smaller states, you're seeing higher growth and out west it's higher growth, but it's between 3% and 5%. I think that's the pace 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. Let's see how that plays out during the remainder of the year. I think that's what we will see during the full year.
If that means over, there's 4% like-for-like for the first quarter in regards to materials. If you see a mixture of volume and pricing coming through the second half of the year, it should be slightly ahead of that if we get the full benefit of the work and we get good weather to do some work. We had some difficult weather last year, as you would recall, in quarter three in the U.S. With regards to your Heavyside on pricing, 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 little or no pricing power coming through the European businesses.
I think the main issue for us is the fact that now there is a clear momentum and a desire across the major players in Europe, that we've got to start to see recover the very significant cost increases that we've taken over the last three or four years, and we've got to recover pricing, that back to pricing. There's a real strength and commitment to do that because European pricing has significantly lagged pricing in North America. You can see that the separation pricing that I referred to before. What that will mean with regard to margins we will see, my own assessment is that in continental Europe and in Ireland, that should lead to a net margin expansion because our costs are broadly under control in continental Europe. I think that our pricing should see an expansion on margin over last year.
The one call out I would make is the U.K. We've had a soft first quarter in the U.K. I think it's been well flagged that the non-residential sector of the U.K. market has been challenged, particularly since the Brexit vote in 2016, where we've seen a slowdown, particularly in the southeast with regard to office space, and that continues on. That was expected. Likewise, we were anticipating a slowing and a flattening out of the residential construction output. Again, that was expected, and that was seen to us. The problem that's taken us a bit by surprise in the first quarter 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 more almost now completely reliant on smaller county infrastructure work at this moment in time.
That's not to say it's not going to kick on. I think there are challenges there on the volume. Also with regard to the U.K. and costs in particular, we don't have the benefit of winter fill in the United Kingdom as we have in North America. Therefore, with higher bitumen costs rolling forward from last year, they will take a while to work through the system. We have a higher cost that is coming through, and that, with the fact that the infrastructure work is not coming through as we have seen yet, has led to perhaps a more competitive pricing dynamic in the U.K. That may impact upon the net margin. Well, it will impact upon the net margin of the U.K. business and what the impact will be on the overall Europe Heavyside business we will see.
Absent U.K., I have to say, I think we should see net margin expansion across all of continental Europe and in the island of Ireland as well.
That's great. Thank you very much.
The next question comes in from the line of Gregor Kuglitsch, calling from UBS. Please go ahead.
Hi. Couple of questions, I think two are kind of interrelated. On energy costs, it'd be helpful if you can kind of update us where you see things trending in terms of either kind of % inflation or deflation into 2019. I think last year your bill, including bitumen, was kind of EUR 2.4 billion. I think you should have a pretty good view now with the winter fill tank, particularly in the U.S. Related to that, can you remind us where you are on carbon and CO2 rights in Europe? I presume, I think you're a net buyer, perhaps that's an element of cost erosion that shows up in a different line, I guess. Related to that, do you as CRH have any plans to adjust capacity in light of the next phase?
One technical question, if you could just remind us your expectations for H1 and perhaps also full year 2019 of the net M&A contribution as we sit here today based on all the different transactions that have happened. Thank you.
Okay. Thank you, Gregor. Three questions there. Just to repeat them. First question with regard to energy cost, overall energy cost and cost movement through this year. I'll pass that to Senan in a moment. Your third question was on net M&A contribution this year, first half, second half. Again, I'll pass that to Senan. Maybe I'll just talk briefly about the carbon cost this year as to last year, this year, and also what plans we have in place to adjust capacity with regard to that. Just to remind people on the line, last year, our overall CO2 costs, the net cost was about EUR 15 million. You're right, Gregor, we were a buyer of CO2 gas 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 at around +10 to that in 2019. It's kind of manageable. I think it's clear to us something in and around that. I wouldn't take any more than that. With regard to what we're working on and trying to reduce that, of course, we're signed up to the Paris Agreement. We have specific requirements to meet, which we will meet with regards to reduction of CO2 usage across our businesses, which we're on line to, and track to meet by 2020. We're doing all that we could be doing in terms of lowering our clinker content, increased alternative fuel usage across Europe, all of which reduces CO2 emissions quite significantly. I would hope that we'd be able to maybe reduce and mitigate somewhat any of that anticipated increase we spoke about there.
That's principally what we're doing within our cement plants. Would you overall more general comment on energy costs, Senan.
I think in terms of energy costs, just looking at the components, Gregor, as you mentioned, about EUR 2.5 billion 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, in the U.K., particularly in Ireland. On that side, obviously the winter fuel program we've talked about, we bought through the winter. Pleased with that level of activity, and that will continue on through the end of this month. Given where our prices are today, I think we feel good about the winter fuel activity that we have conducted over the year, and we'll 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. Winter fuel looks good. Let's see where prices play out now in the bidding season over the next couple of weeks and months as we get into that. Albert did mention bitumen, particularly in the U.K., in terms of that's an area where we don't have winter fuel. As you know, we hedge forward, about 80% of our activity is hedged going into 2019. They're sitting at 2018 prices, and that's part of the conversation Albert mentioned earlier about bitumen.
Remaining other energy costs, electricity is a big part of the equation as well for us around. I think the increase in electricity prices are probably at normal levels, not expecting anything unusual there, something we'll work through in terms of looking at the price conversations, as Albert mentioned earlier, to make sure we get margin expansion in the year ahead. To your M&A conversations and contributions, the way I'd look at that is in the 2019 year, first half of the year, should see an increase in earnings net from M&A. I'm expecting a number of about EUR 125 million-EUR 130 million net in the first half. That's part of the improvement over last year. That is primarily as a result of the contribution from Ash Grove, including the synergies that go with that.
I would think then that the DIY sale that we concluded last year will net off against our bolt-ons that we did last year. That should be a net wash. If I look at the first quarter activity this year, again, we announced EUR 200 million of bolt-on deals in the first quarter this year. We're also announcing the disposal of shutters and awnings. Again, as you look at that over a 12-month period, they're pretty close to a break even or wash between the two of those. The shutters and awnings business will take about EUR 30 million of EBITDA out of our business, and then the bolt-ons should contribute the majority of that back in its place.
I'd say the net movement over the first half of the year and off the full year will be about EUR 125, EUR 130, which is largely coming from the contribution of Ash Grove.
One point I'd add, Gregor, you didn't ask the question, but just to add it to it, from a point of view in terms of where we are at this point of the year, we're just at the start of the bidding season for big asphalt work. As you know, we work on sort of a 45 to 90-day bidding cycle. We're 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, which doesn't normally happen, we do like to see higher oil and higher bitumen prices at this point of the year. Remember, our bitumen in our tanks will be at lower prices than, because oil, as you know, is not perfectly correlated. Oil has gone from about EUR 55 to about EUR 75 over the last three months.
We would have an advantage in that, coming forward. We would like to see higher prices at this point in the cycle because that's when people are tendering for the work. That's what we're seeing. It means that we start the season well in terms of our price establishment 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 from me, please. One maybe just on capital allocation. You've announced an extension of your buyback, EUR 350 million to get you to August. 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? 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. The issue with regards to the roll forward again, or the proposed roll forward again, excuse me, of the buyback program, it's really to do with the fact, if you can recall, in the end of February, we said that certainly for the first six to nine months of this year, we'll be very much focused on the success of integration of Ash Grove and Suwannee, some very big deals we did last year, settling them down into the group, number one. Number two, we had a very ambitious program to improve the profitability, the efficiency, and the effectiveness of our businesses with a plan and a 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. We have said that we will allocate capital in the best way we can for our shareholders. Our focus is on integration and internally within our business in driving performance and not on acquisitions, which it probably isn't at this moment in time and going forward for the remainder of, until we get through the summer period of time, the cash has been allocated back to shareholders through buyback. That's what's behind this decision now. It is a decision that we will, again, revisit in August, because at that stage then we'll have clear visibility with regards to where quarter 2 and quarter 3 are, and we'll know exactly, we'll have a good sense of what the year is going to come out. That's the purpose of that decision.
It's for now, it's here, and we'll see where we stand at the end of August with regards to the integration and the achievement of those plans. To reference those plans, which you talk about, again, if you recall in February, what we did say was that some of these plans are more longer term in nature. We expected to see most of the benefits start to kick in in 2020 and 2021. We do think we will start to see some of the delivery 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've got to move things around the place, factories, machines, people to do that.
In terms of how we procure products for our businesses, we've got to unwind existing procurement programs and embrace and bring more products into those procurement groups. That takes time and effort and teams to do that. Of course, structural changes take place. There are back offices, there are systems and support and factories that need to be closed and changed and amalgamated and integrated together, and all of that takes time and cost. We're working through that process, as we said in our statement this morning, that we're very pleased with the work that we've done. We're in line with our plans. As I said to you, I should expect to see some of it coming through the back end of this year, but most will start to be delivered in 2020 and indeed 2021.
Okay, very clear. Thank you very much.
The next question comes in from the line of Rajesh Patki calling from JP Morgan. Please go ahead.
Hi. Good morning, everyone. It's actually Elodie Rall from JP Morgan. I have a couple questions, if I may. First of all, on the U.S. housing markets, we've seen some mixed data points recently, not necessarily consistent with regard to mortgage rates or home sales or permits, AHI and NAHB. Just wanted to have a bit of color of what you're seeing and expecting there specifically. Second, on U.S. infrastructure, can you give us a bit of color about where your order book is and how it has evolved recently? Are you still hopeful to see a new highway bill to be announced in May? Lastly, on your strategic review 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, Elodie. Three questions there. Just our first question was on U.S. housing, our sense of U.S. housing. Well, we've seen the housing stuff. We've seen some of the external stats that you've talked about as well. Our own sense is, as we've talked to our customers, we've talked to a lot of contractors, and we look at our workflow going out, actually, we think it's fairly solid at the same pace it goes at last year, probably around the rate of two to three%. A little bit stronger out west than down south. We do think what backs that up is these mortgage rates are down again. There's basically good sentiment across the home builders. There's good demand there, still below long-term need. Inventories are pretty much at record low levels now at this stage.
We're seeing inventories down sort of at 30-year lows in terms of three months rather than six months stock. Again, I think our footprint is quite favorable in terms of that. Big states that are important to us is Texas and Florida, where the residential housing build is significantly ahead of what it is for the rest of North America. 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, I'd say, some other commentary with regard to that. With regards to U.S. infrastructure, we have no expectations of any new word on infrastructure build going forward. We hear a lot of talk about that. What we have at the moment is we've got the current build, which runs to the end of 2020.
The next three years, we'll see overall about a 7% increase in overall spending over the last three years. Our focus is very much in delivering against that. It's clear to us, it's probably the one point that's got the greatest priority with regards to our backlogs because it's more long-term work that we do. Our view is that we're focused on that. If anything else comes beyond that, it'll be a surprise to us all, then we will revisit our forecast and our predictions with regard based on that. Basically, the current program runs to 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 is falling on the states through initiatives and the state taxes to support that.
The figures are now, it used to be 50/50 five, six years ago. We now find the states are providing almost sort of 65%, 70%, but they're providing EUR 64 billion. The federal are providing EUR 49 billion this current year. Significantly more money coming from the U.S. With regard to emerging markets, look, we've been fairly consistent over emerging markets. We were very cautious in our expansion into emerging markets over the last sort of five, six years. I think that caution has been merited, and we've seen the fact that it is very challenging for all companies, and I think very challenging for ourselves, to make long-term sustainable returns in emerging markets, and I don't think that's going to change anytime soon.
We have a lot on our plate dealing with the developed first world markets that we're in, with three very focused divisions. We're focused on driving value and profitability through those divisions, with lots of opportunity to grow organically and indeed inorganically. With regards to looking at our portfolio of emerging markets or indeed any other business, every business in CRH has to satisfy the same requirements as any other business. It is the same EUR invest, whether it invests in emerging markets or developed markets, it must be able and capable of generating returns and cash for our shareholders. Those who underperform, be they in emerging markets or in developed markets, are under the same critical eye wherever they may be. I'm not going to comment any one, two, or three individual markets.
Just to say that our focus is not on emerging markets, but going forward and with existing assets, it's the same capital allocation criteria are applied wherever those businesses are.
Thank you. We have time maybe for about two more questions. We're over our time, but it's quite short this morning, so we'll keep going.
Okay, the next question comes in from the line of Arnaud Lehmann calling from Bank of America. Please go ahead.
Thank you. Good morning, gentlemen. Just maybe one follow-up on your capital allocation thoughts. You're announcing a share buyback for the next three, four months. You said you would take a decision on the strategy for European distribution within two to three 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? These are completely unrelated, and it's more about how you see trading developing through the year or maybe your acquisition pipeline, I guess is my first question. Just on European distribution, I believe you also have an option in Saint-Amand in 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 Saint-Amand. 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, it 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. It is not dependent on Europe Distribution.
Okay.
Arnaud, with regard to Saint-Amand, obviously, we have an agreement between ourselves and other shareholders. All I can confirm is that you're absolutely right. As we've announced, we have an option to step up within Saint-Amand. 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. As we go forward, we will factor that into our considerations when we're assessing how we wish to allocate capital excuse me, going forward with regard to remaining with Distribution or looking at other options, yeah.
Thank you very much.
Thanks, Arnaud. I think we 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. Three, if I could, please. First, is it possible just to be a little bit more precise around the pricing 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? I guess a similar question, if possible, for your, I guess, three key materials in North America, cement, aggs, 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 the 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? Just to double-check, is Q2 any materially different from Q1 in value terms? Obviously, we don't get the hard figures within the first half.
The final question was just around, if we can just wind back to the EUR 7 billion 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 EUR 1 billion from it for what you spent over the last year on the buyback? Just, I guess, the latest thoughts on medium-term capacity on that point. Thanks.
Okay. Well, I'll take the first question with regards to the pricing change and ask Senan to comment on the half one, half two, EBITDA in terms of price, and we also want to cash the overall cash number there. Look, the cement pricing, as I said to you, some of it has kicked in, some of it is kicking in as we speak, as such. Pricing, as you well know, Will, has been somewhat slow over the last four or five years. It's been coming through piece by piece by country. Broadly speaking, it goes from a low of about one, 2% to a high of six, 7%. Those countries that were slowest to come through were 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 one, 2%.
It is, again, as I started the very first question, it is broadly in response to the fact that we have taken very significant cost increases across all energy inputs in the last number of years, and they have not been passed on to the customer. Even it'll take a couple of years to do that. That's what's behind this, and it's not just ourselves. You could talk to all the other cement players across Europe, they feel exactly the same. With regard to excuse me, with regards to the overall pricing across our businesses in North America, our main products area. With regard to aggregates, cement, and concrete, absolute price increase is important. Again, with very significant energy increases last year, we'd expected to see something in the region of sort of 3%-5% range coming across that.
Asphalt is a bit different because, as you know, asphalt is very much about managing the margin rather than managing the price increase. It's very early days. Only about 4% of our asphalt volumes are gone in yet. We'll see how that goes. As I said to you, the reason why I made that comment after Senan spoke about the asphalt, the bitumen cost, was because, as I said to you, in looking at our experience, as we start the most important bidding season now at this stage, the next month and a half, we bid all the work for, we'll say, the height of the summer. Starting on the bidding of that work, we're the only ones who do winter fill.
Most people are bidding that work against high bitumen and high oil prices, and that's probably a good position to be in with regard to overall positive territory with regard to margin expansion. We won't actually know what the margin will be until we get to that bidding season and get through the delivery of work, which will be June, July, August.
Just in terms of half one guidance, Will, in terms of your questions, there's four 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. What's in there, obviously, is the contribution from acquisitions. I think the question that was asked earlier about net acquisition contribution.
We anticipate EUR 125 million-EUR 130 million extra from acquisitions in the first half compared to last year. The other two features to bear in mind are obviously currency, which as we move into this year, a positive position on currency, which as we anticipate a tailwind for the half year as opposed to last year, we had a headwind. That tailwind at the moment, we would size it at being worth about EUR 50 million to us for half one. Finally is the obviously lease accounting changes, which take effect in 2019. The full year impact of that we've estimated to be EUR 380 million, which we guided earlier in the year, and that should come in evenly throughout the year, half one, half two. I think to your organic growth question or like-for-like growth question, yes, we're guiding like-for-like mid-single digits earnings growth for the half year.
Top line, not that much out of line, probably similar range, probably slight margin expansion in the first half of the year, but we're looking at margin expansion over a 12-month rather than over a six-month period. 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 is one in particular, you should expect to see that sales number moderate in the second 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 EUR 7 billion of surplus capital that we can generate from operations as we look out over the next three years.
When we were arriving at that number, we had already identified the EUR 1 billion buyback that was in the pipeline. 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 EUR 7 billion as you look forward.
Great. Very clear. Thank you.
Thank you, Will. Well, look, that's all we have time for this morning. I want to thank you all for your attention. As always, if you have any follow-up questions, feel free to get in touch with our investor relations team. We look forward to talking to you again on the 22nd of August when we report our interim results for the first six months of 2019. Thank you.
Thank you for joining.