Ladies and gentlemen, welcome to the CRH Plc 2018 November trading update conference call. For the duration of the call, you will be on listen only. Available on the CRH website or at any point during the call. The next for she will hear will be Albert Munifold.
Good morning, Edward. Albert Munifold, CRH Group Chief Executive here. And you're very welcome to our conference call and webcast presentation, which accompanies the release, our trading update this morning. I'm joined on the call by our Group Finance Director, Sam and Murphy, are ahead of Investor Relations, Frank Hyrester Company. Over the course of the next 30 minutes or so, Sarah and I will take you through some of the key points of this morning's announcement, setting up key drivers of our trading performance for the 1st 9 months of the year, as well as providing you with an indication of our EBITDA expectations for the year as a whole.
As you look ahead to 2019 and beyond, we'll also take some time to remind you of how we think about value creation at CRH. The steps we've taken in recent years, and indeed, the steps we are taking today to deliver value and returns for our shareholders, both in the near term and in the long term. Afterwards, we'll be available to take any questions you may have, but I was told we should be done in about an hour. So turning to Slide 2, before I take you through our regional trading performance for the 1st 9 months of the year, I'd like to take a moment to highlight a few of the key messages and highlights from this morning's statements. From a trading perspective, our sales and EBITDA for the 1st 9 months of the year increased by 6% and 8% respectively compared to the same period in 2017.
On a like for like basis, our sales were 3% ahead, and EBITDA was 2% ahead for the 1st 9 months of 2018. Reflecting a small improvement compared to the first half trends despite some significant weather disruption in certain key markets in North America. I'm also pleased to report that the integration of Ash Grove Cement, which we acquired in June of this year, is progressing well, and trading in that business is very much in line with our expectations. Based on the momentum we've seen in our business, and then as we look ahead to the end of the year, we expect a full year EBITDA to be approximately 1,000,000,000 ahead of 2017 and reflecting another year of progress for CRH. Our 1,000,000,000 share buyback program is progressing well, having returned approximately 1,000,000 to shareholders already this year.
As announced separately this morning, we are now commencing the next phase of our IVAC program and expect to return a further EUR 100,000,000 to shareholders by the end of the year. As a result of our continued focus on strong financial discipline and despite significant net acquisition spend and buyback activity in the year to date, our year end net debt is expected to be approximately 1,000,000,000 or 2.1 times EBITDA. So turning to Slide 3, and before I take you to our regional trading performance, I'd like to give you some color on the market backdrop we've seen in our core regions over the course of the year so far. Starting with the Americas, where economic activity remains robust US GDP growth is above 3%. Job Creation remains strong with over 2,000,000 jobs added in the year to date and looking at our backlogs and talking to our customers, our overall sense is that fundamentally U.
S. Construction markets are in a good place. Our end markets continue to experience solid underlying demand with infrastructure activities supported by both federal and state level funding initiatives. The non level residential construction sector continues to advance with year to date spending, plus 5% compared to the same period last year. We are also encouraged by leading indicators, such as the ABI, which have been in positive territory for 13 consecutive months now.
On the residential side, activity levels remain well below long termities and housing starts are 6% centered ahead in the year to September, reflecting strong underlying demand. As I mentioned earlier, our businesses experienced significant weather disruption during the third quarter of the year. Particularly impacting our operations in the Northeast from parts of the United States and in Texas, 2 large and important markets for CRH In September alone, we lost almost 23 working days in Texas due to weather, and that's up from 6 days in the same period last year. Of course, the strength of the U. S.
Economy also brought some challenges. Interest rates are rising, and we've experienced both cost inflation in our businesses and labor constraints within the markets that we serve. Challenges confounded by significant weather disruption, making it difficult to fully offset higher costs through increased pricing. Turning to Slide 4. At Europe, where we continue to see an improved backup in both economic and construction activity, despite ongoing physical uncertainty in the United Kingdom.
Western European Construction Markets are performing well, but Eastern European Markets continued asset from strong growth in new build residential and infrastructure activity. The recovery in the European construction market remains several years behind the United States. It has been primarily volume led to date and often historically low base. Our pricing is structured to follow as markets continue to normalize and utilization rates approved. As it is encouraging to see that the pricing momentum is continuing to build with cement prices ahead in 12 or 15% producing markets by the third quarter of the year.
We have a strong footprint of business across the region, leading us well placed to benefit from this continued recovery as it unfolds. So moving on and against that backdrop, I'd like to take you through the financial performance of our business for the 1st 9 months of the year. So if I can actually do my slide 6, and as you can see, the table on the right provides an overview of the trends we have seen in our businesses for the 1st 9 months of 2018. Overall, for the group as a whole, you can see our 9 month sales and EBITDA are ahead of our first half delivery, a satisfactory performance given some of the significant weather challenges we faced during the third quarter of the year. Turning to our Americas trading performance of Slide 7, And as you can see, despite the significant weather disruption in quarter 3, our like for like sales and EBITDA were 4% and 3% ahead at the end of 3rd quarter.
Reflects of the solid underlying demand environment across our markets. In our Materials division, our 9 month aggregate volumes were 8% ahead, or slightly ahead on a like for like basis, which of course reflects the adverse weather conditions during the period. Pricing, however, was strong. With good price decreases across all product categories, resulting in overall like for like sales being 5% ahead for the 1st 9 months of the year. These price increases only partly compensated for the impacts of cost inflation and weather to bear disruption.
And as a result, our like for like EBITDA was 2% ahead. And when we'll facilitate the impact that weather has had in our business in the third quarter, we believe this was a good downturn. We estimate the weather disruption will now have a negative EBITDA impact of at least $100,000,000 for this year, who mitigates this impact by actively managing our cost base. In our products business, favorable pricing and strong performance in our engineered building products business translates into a 9 month EBITDA which was 6 months ahead of the prior year period. As I mentioned earlier, the integration of Ashco Cement is progressing as planned as a business performing very much in line with expectations.
Turning now to our exciting performance in Europe. And on Slide 8, you will see that despite some continued input cost pressures, the crossover momentum we've seen in our businesses has continued into the third quarter. Resulting in like for like EBITDA 2 percent ahead for the 1st 9 months of the year, a small improvement on our first half performance. Our Cement clients were 4% ahead in the 3rd quarter, driven by good growth in markets such as Ireland, France, Switzerland and Poland. UK remains somewhat mixed impacted by the ongoing political uncertainty in that particular market.
Although the pricing recovery remains modest to date, it is encouraging to see the broad based nature of that recovery continuing with pricing ahead, as I mentioned earlier, in 12 at 15 markets by the end of quarter 3. While our distribution business was impacted by some challenging market conditions in Switzerland, Our light side businesses performed well against a backdrop of good demand in key markets such as in Netherlands and Poland. And finally to our Asia division on Slide 9, and specifically the Philippines where trading conditions remain challenging. Despite the market improvement in our cement volumes and prices in the third quarter, higher fuel and energy costs continue to impact our profitability in that business. There are, however, signs that the market is beginning to stabilize and we expect to see an improvement in our business for 2019 offers.
We also expect to start seeing the benefits of our ongoing debottlenecking programs, which will significantly reduce our dependence on expensive air force drinker. Moving on to outlook on Slide 10 and our full year EBITDA expectations. In the Americas, assuming normal weather conditions for the remainder of the year, and with the good momentum we are now seeing in our markets in quarter 4, we expect the 9 month trend to continue with EBITDA for the year as a whole expected to be approximately 3% ahead of 2017 on a like for like basis. In Europe, we expect the positive momentum we've seen in the 1st 9 months of the year to continue, with overall full year EBITDA expected to be 2% ahead on a like for like basis. The outlook for the age division and specifically our business in the Philippines is beginning to show signs of stabilization.
We are reiterating our guide that we have to EBITDA is expected to be similar to what was reported in half 1 resulting in full year EBITDA of approximately 1,000,000. As so for the group as a whole, we expect the overall EBITDA outturn for the year of approximately 1,000,000,000. Representing another year of progress Thank you, Robert. Good morning, everyone. So on Slide 11, you can see the key components underpinning our expectations for our year end net debt position.
And I'm pleased to say that as a result of our continued focus on strong financial discipline and despite some significant cash outflows over the course of the year, we expect investment activity in the 1st 9 months of the year, primarily as a result of the divestment of our American distribution business in January, and the acquisition of Ash Grove cement in June. We expect 2018 to be another year of strong cash generation for the group, enabling us to return significant cash to our shareholders through dividends and share buybacks. And as a result, we expect our year end net debt be approximately 1,000,000,000 or 2 point loan times EBITDA. Of course, I should mention that this reflects a partial year ownership of Ash Grove. And adjusting this for a full year ownership would bring our pro form a net debt to EBITDA position to below two times.
And I'm going to hand you back to Albert to talk to you now about value creation. Thank you, Sarah. So that gives you an indication of our expectation the remainder of 2018. But as we look ahead to 2019 and beyond, I think it's important to take a step back for a moment and remind you of the steps we have taken and indeed the steps we continue to take to deliver value for our shareholders both in the near term and in the longer term. Looking at Slide 13.
At Sirius, we've always thought to align ourselves with the needs of our shareholders. And in this respect, creating value over the long term continues to be a core focus for us as a management team. The return that we generate and the cash that we deliver for shareholders are the 2 key metrics we focus on. That's what our shareholders want and indeed expect from CRH. But while the long term value creation has always been a core focus we are keenly aware of the importance of near term delivery.
And of course, near term and long term value creation are not mutually exclusive. It can be if managed, if managed, and we have seen examples of this in our industry over the years, but it managed closely and carefully, our focus on near term value creation, supposed to do every of significant benefits over the longer term. We are facing a cyclical industry, you can't escape the cycle, but you can manage it. We have long been strong advocates of managing our business in a way that is appropriate to the point of the cycle that we are in as any given time. In the past 10 years, you can observe how we have managed serials completely differently in the upcycle compared to how we manage this in the downcycle.
And how we are positioning and repositioning our balanced portfolio of businesses across geographies, products, sectors, and end users appropriate to the coming cycles and the changing needs of construction markets. All of this enables us to smooth out toxic technology delivering superior returns and cash for our shareholders through the cycle. Now let me remind you of the changes we've made in our businesses in recent years how we've reshaped and repositioned our business as we strive to maximize value for our shareholders. Turning to Slide 14. In 2014, we carried as a detailed bottom up review of our entire portfolio of businesses.
It was a thoughtful assessment of our businesses and a crucial part of our strategy development that facilitated the repositioning of our businesses to become more aligned to the changing needs of construction markets. Through the portfolio review process, we identify parts of our business for which the original investment thesis simply no longer applied. As a result, we decided to divest of these businesses. And over the last 4 years or so, we have received investment proceeds of over 1,000,000,000. Business has sold as an average multiple of 12 times EBITDA.
However, what is much more interesting is how that process identified businesses that had better and more resilient returns and cash profiles through the cycles. And helped shape our thinking, but helped position our group going forward. Now let me expand the button. Firstly, we focus on our core capabilities and operating heavy materials businesses and how we appear to deliver superior returns and cash our base materials businesses will operate as a part of the chain of vertically integrated materials businesses located in markets where we are leading market positions. It became clear that whilst our individual operations benchmark well against our competition, we were able to consistently generate superior growth returns and cash, where we operated these individual operations as part of the fully integrated chain businesses directly serving end use markets.
In addition, where we focused on the more stable heavy materials markets in Europe and North America, and in particular, where we focused on markets with attractive long term fundamentals, markets with good economic activity, growing populations and significant construction needs. For example, the smile states in the Southern Western United States or indeed Eastern Europe, which is the highest construction needs of all of Europe. And also, we expanded ourselves further by operating in markets that best offered stability with regard to returns and cash to align well with our existing market footprint. Of course, markets for the industry remain fragmented provided with hospital inorganic growth opportunities, which have been fundamentally to the successful growth of Series through the years. We also identified a number of key trends in the building product space, an area where we had a core capability in operating our existing products businesses.
We saw we had a strong capability in the successful bundling and rolling up of Relates and integrated products and services, which enabled us to better serve our customers' needs. Aligning ourselves more closely with the changing phase of construction and in doing so, delivering higher growth, higher returns and improved cash flow. During the downturn, we also have these product businesses through a lesser reliance on new build construction and more on OMI and with lower asset intensity helped us manage better our crucial cash and returns metrics in the down cycle and helped us position ourselves better for the upcycle. All of this gives a unique sense of how we should develop our business going forward, maximizing value for our shareholders by focusing on our core capabilities in Americas Materials, Europe Materials And Building Products and capitalizing of the opportunities we saw across our existing footprint in Europe And North America. And so on Slide 15, you can see that over the course of the next 4 years, we spent 1,000,000,000 at an average multiple of 8 times doing that, exactly that.
Developing these businesses further by acquiring platforms for growth and integrating them into our existing networks to drive further value creation. In 2015, we acquired Telefonica assets for 1,000,000,000, a transformational deal across 4 regional platforms, quality assets in good markets, a strong strategic fit with our existing businesses. And as we reported earlier this year, this has been a very good acquisition for CRH, generating a 10% return on our investment after just 2 full years of ownership. In that same year, we spent $1,300,000,000 acquiring 0 loans and add on to our existing old Casa billing envelope platform. This acquisition increased our exposure to the higher growth non residential repair and maintenance sectors in the United States, we are now North America's largest provider of our potential glazing products.
Another successful and value accretive acquisitions for the group generating 13% returns after 2 years. In 2017, we acquired sales, building out our existing line platform in Europe to 1,000,000. And of course, the acquisition of Ashbourg and Swinee cement in the part 12 months for a combined $4,300,000,000 further develops our positions in the higher growth Southern And Western regions of the United States and integrates well with our existing footprint. Through these acquisitions, we were able to align our core capabilities and competence in markets with attractive fundamentals, repositioning our businesses into higher growth regions and product areas and adjacencies where we are best positioned to deliver superior returns and cash for our shareholders. Turning to slide 16, our portfolio review also harves us that where we list simpler and leaner structure in place, were able to drive more value creation from the center of our organization in a more efficient and effective way.
Through the coordination of strategy across our businesses, driving business improvement initiatives from the center, delivering acquisition and integration synergies or leveraging group tax, treasury and insurance capabilities we were able to deliver more efficiencies, higher returns and improved cash generation. As a result, we decided to move from a broad spread of 7 to a leaner structure of 3, thereby enabling the center of CRH to become more involved in driving returns and delivering the scale benefits of an integrated group. Moving on to the next slide. And so all these initiatives, the portfolio review, the building out of our strategic business plan going forward reorganization of our business, the increased role of the center, enables us now to execute our aggressive gold plan announced earlier this year to drive further value for our shareholders. This growth plan, which is aligned with our strategy, our organization and our structure, focused on the crucial areas of improving efficiency and productivity in our businesses.
As announced earlier this year, we are targeting 300 basis points of EBITDA margin improvement by 2021. In addition, with continued strong cash conversion and subject to a net debt to EBITDA comfort level of approximately 2 times, we estimate we would have 1,000,000,000 capacity by 2021, providing significant optionality for further value creation for our from a combination of incremental business improvement initiatives, previously announced acquisition synergies, further growth across our main markets and improved operating leverage. It's important to point out that twothree of this plant or approximately 200 of the 300 basis points relates to internal self help measures or acquisition synergies initiatives that are within our control. And let me expand a little to give you some examples of the kind of initiatives we're implementing across this group. I'll start with the structural segments we've identified.
As outlined on Slide 18, we've identified approximately 1,000,000 structural segments over the next 3 years. These segments have primarily been made possible by the reorganization of our business from 7 divisions to 3 and moving to more central management of key areas. Some of the initiatives that we already have underway include the delayering of management structures, the rationalization of administration, reducing overheads and the consolidation of regional support functions into central and more coordinators hubs. One example of this is the group procurement function where a number of regional teams have been consolidated into a more coordinated central platform consisting of cross functional and cross regional and cash routines. And there are many more examples like this across professional services, operational and commercial excellence teams.
Our new organizational structure also allows to review and optimize our network of sub regional off focus around the group. I will keep you updated on our progress as it unfolds. Turning to the next slide, Slide 19 and our procurement initiatives. Which are expected to deliver approximately 50 basis points of our 300 basis points margin improvement target. Global Procurement is a key driver of value in our business.
Allowing us to leverage our scale and expertise across the group, cutting out purchasing programs in a more efficient and effective way. In fact, in areas where purchases are managed and coordinated centrally, we can typically expect it to save anywhere between 2% 4% compared to locally managed purchases. That's a significant saving when you consider Series procures EUR 18,000,000,000 of materials, equipment, consumables and services on an annual basis. And crucially, only half of that 18,000,000,000 is currently managed under our central procurement function. Under a simpler of our focus structure of just three divisions, it will now be much easier to coordinate our efforts in that regard.
This new organizational structure will help to facilitate the expansion of our procurement programs throughout the group, enabling us to better leverage our scale in a more focused and coordinated way. We've already identified errors for potential increases in scope and also expect to improve our savings years by increasing the depth of our existing purchasing categories. Take North America, for example, where we spent approximately $500,000,000 each year on cement purchases. Apart from previously, we had to look to learn no leverage on how we procured cement in North America. And we were primarily a price taker in the cement market there.
But following up on our acquisitions of Ash Grove and Swannie Cement, we now have 15,000,000 tons of cement capacity in the region. This gives us the capability to self supply our downstream business in areas where we're not getting sufficient leverage on our existing purchases. For example, in 2018, we will self supply over 700,000 tons of cement from Canada into our U. S. Operations.
That's from 0 in 2015, providing our U. S. Businesses with access to internal cement supplies in Canada and putting greater volumes to our Canadian operations. The decision on purchasing 500,000,000 Dollars of cement annually in North America can now, for the first time, be taken against the option of self supply. And that obviously increases Syreage's purchasing power and will deliver sustainable benefits to our bottom line going forward.
We're also bringing global cement purchasing under the remission of our central procurement function, which we expect to deliver significant benefits going forward. Other opportunities already identified at this early stage from our costs group through 1,000,000 of savings in the area of maintenance and production services, 1,000,000 in logistics, 20,000,000 in chemical purchasing, terminal and packaging to name a few. Next to our process improvements initiatives on slide 20, representing another 60 basis points of our margin improvement target. Broadly speaking, these initiatives are set to fund leveraging our global expertise and best practice programs to deliver operational and commercial savings across the group. One such example comes in the variable terms of fuel usage.
Following the Ashford and Swannie Cement acquisitions, we are now a significant producer of cement in the United States for the first time. And once our European cement operations are already well advanced in this area, but our average alternative fuel usage in excess 45 percent, combined alternative fuel usage in our cement plant is still below 10%. This provides us with a significant opportunity to leverage our European cement best practice programs across a full range of cement operations These in the areas of alternative fuels management, improved throughput, debottlenecking, materials handling, improved kilo economies and kilo efficiency, all predictive maintenance to name some of the few key areas, all of which will generate further savings going forward. And similar to what we're doing in procurement, we're also centralizing the coordination and control of pricing for all major product categories. We expect to deliver further benefits as we continue to grow the sales across the group.
And following dis synergies on Slide 21, we I'm pleased to reiterate our synergy targets for the Ash Grove, Swani, and Feld acquisitions. On a combined basis, they are expected to deliver approximately 1,000,000 of run rates and just by year 3, a reflection of the significant integration opportunities between our respective businesses, the operational benefits and efficiency we have identified. At these synergies have been identified by our own team of experts, the outcome of the detailed bottom up exercise results resulting in a long list of tangible initiatives. Uponacy, Synges will be delivered locally. They are driven from the center by the integrated nature of our group.
$100,000,000 of Ash Grove synergies, for example, would simply not be possible without the knowledge, the experience and the expertise of our European cement businesses. And will be delivered over the next 3 years by over 118 years from within our European operations. Moving to Slide 22. And so as a result of all this, as we continue to manage our business and as we deliver on the initiatives we've implemented, we will to further strengthen our cash generation capabilities. We have we are already an extremely cash terms of business, converting approximately 80% of our EBITDA to cash and generating on average over 1,000,000,000 free cash flow each year.
Furthermore, we estimate we would have 1,000,000,000 of financial capacity by 2021. That's 1,000,000,000 of optionality after CapEx, after dividends, and after our ongoing share buyback program, which can be used for further value driven M and A or cash returns to shareholders and that's before any further divestments. Strong cash generation and financial discipline remain at the core of our investment thesis and we remain committed to maintaining our investment grade rating and normalized debt metrics going forward. Our long term average net debt to EBITDA is approximately 2 times and despite 1,000,000,000 of acquisitions in the past 4 years, Our average net debt to EBITDA over that period was approximately also 2 times. The cash regeneration is not used to service an overleveraged balance sheet Instead, we protect our balance sheet and we use this significant amount of cash regeneration to create value for our service.
And so given the quality of our assets, the attractiveness around markets, our relentless focus on continuous business improvement, our financial strength and flexibility, and the level of cash generation in the business we believe we are uniquely positioned to deliver superior long term value for our shareholders. So before I turn it over to Q And A, on Slide 23, I would like to leave you with a few key takeaways for this morning's presentation. Taking into account our financial performance and year to date, and based on the current momentum in our business, we expect full year EBITDA of approximately 1,000,000,000. With our continued focus on strong financial discipline, despite significant cash outflows as a result of net acquisitions and our ongoing share buyback program, we expect our year end net debt to EBITDA ratio to be approximately 2.1 times. We also spoke about our aggressive long term growth plan to drive further value for our shareholders focused on improving the efficiency and productivity of our businesses with a target to deliver 300 basis points of EBITDA margin improvement and 1,000,000,000 capacity by 2021.
We talked about the cycle and the importance of managing your business in such a way that's appropriate to the point of the cycle, we talked about the importance of delivering in the near term in order to create the maximum amount of value in the long term. Although it's still too early to say when any great tragedy, as we look into 2019, we expect the positive underlying momentum in our business to continue. We look forward to another year of progress for the group. So that concludes the presentation part of this morning's call, and now happy to take your questions. May I ask you please state your name and the institution you represent forwarding your questions.
And now I'll hand you back to the moderator to coordinate the Q And A session of our call.
The question Okay. Our first question comes in from the line of Robert Gardiner calling from Davy. Please go ahead.
If you could talk a little bit about capital allocation, looking into 2019, how you're thinking about, further acquisitions, CapEx, maybe further buybacks and the dividends. And just follow that then with, It's just interesting, I thought to slide in terms of the opportunity on your products platform. Does that mean replicating the best parts of the U. S. And Europe or further increasing vertical integration into the heavy side businesses, or how should we think about the opportunity in products?
Thank you. Thanks, Bob. A number of questions there. Principally around capital allocation, but also questions about global products, Just let me take you through the whole area of how we think about capital allocation within CRH going forward. We spoke about financial discipline during the the presentation earlier.
And I think that's really been a core part of CRH over the past 2030 years. And the efficient use of that capital. And at this moment in time, of course, we see that there's an increasing focus on income. With regard to investors. We recognize that with our share buyback program.
And that we said, at signals that when we had what we considered to be surplus cash or cashless that we had on our balance sheet. We did not to leave it there. We chose to go down the route of returning it to shareholders through the return share buyback program. And we're currently well progressed through that and we'll continue that at the end of May. And with regard to acquisitions, of course, we recognize that acquisitions are very important in terms of building our foot in our platform going forward.
And we have a number of deals, that we're looking at at this moment in time, but we always do. The pipeline is quite good. For me, it's all been about valuations and making sure it fits with the strategic shape of our business going forward. But we have the optionality there. We've got the cash capacity to do so.
But we'd only move forward when the value equation works for us. But of course, we do recognize you mentioned dividends there. We have long been proponents of the fact that we like to keep a certain level of dividend cover. And of course, we think now having built that back up after the global financial crisis We recognize that by showing progressive increase in dividends going forward. And again, talking to our investors over the last 12 months or so, we do recognize the importance of income at this took her time.
And I think we've more or less arrived at our comfortable level of dividend cover now. And whilst I don't want to prejudge any confusion that we may take in February or March, I think we do recognize the importance that dividends are placed in an investor's mind at this moment in time. I'd like to think we'll be able to reflect and that's when we come to our dividend decision. We sit down as board in February on March. And just trying to global products, I think it's probably just to maybe just to classics of lower products than you asked about, is it just about the Americas and Europe come together?
Can I just set that against the backdrop of what we talked about changing phase in construction markets over the past 20 years or so? And there's been a few important key developments in those markets over the past number of years. And 1st and foremost, we've seen a big move to improve the quality of the building environments, not just the building themselves, but also what surrounds those building and what's those buildings. There's also been a significant push to compress construction times for contractors. And not only from a cost perspective, but it's local side constraints, the environmental needs that are there, we see the ever increasing shortage of labor coming, which is looking at de skilling and taking the wet trades out of construction.
Increasing site safety, increasing regulations and billing codes, pushing people more towards greater energy efficiency, the need for improved ventilation, noise and light and manner and indeed at the bill billings and also flexible billing interiors. And contractors and engineers and distributors are turning to manufacturers to address those challenges. Now how that rubber meets the relevant in specific markets is obvious when you go to look at the individual markets, take residential markets. Of course, all the points are made above our impact in residential markets. On top of that, there are changes to societal needs, family formations are changing affordability is becoming a big issue.
The willingness and ability to commute particularly against the aging infrastructure, it means that people are moving more towards urban living than they had here to form in the past. That's leading to the cost of a building up rather than building out. And you're seeing that with the increase of multi family homes over single family homes. And specifically, in moving towards more modular off-site manufacturing of construction components that are being assembled on-site. On non residential, we're seeing it again impacted by all of it changes that we're seeing in the construction markets, but also have that impact become urban and rural non residential construction in urban areas.
Clearly, it's office space and buildings now are built with a core structure and a shell. The interiors have no fixed interior walls. People want to flex but interiors, but they can move over time. And they outside the facade of the business are largely using glass, which are encompassing the aesthetics and energy efficiency and light and ventilation bead that I spoke about earlier on. And within rural and suburban areas, obviously, with the increase of warehousing and data centers, we're seeing large scale modular construction begin happening is that that manufactured all site modular construction that being assembled on-site.
And lastly, the big infrastructure markets are changing. We're seeing an increasing need to protect and secure and indeed transport vital utilities such as water, water management, waste, water waste, drainage, power, telecommunications, information technology, sometimes it becomes 1,000,000 of dollars worth of equipment needs to be protected from the ground or overground. And indeed finding an increasingly modular construction with regards to infrastructure. It's those that surround road and rail networks using offset modular production of bridges, clobberts, curbs and indeed traffic management. Over the past 20 years, we have worked hard across North America and Europe to develop divisions to satisfy and deal with these changing market needs and trends.
Those in all our business, we have 4 big product businesses, that operate across Europe and North America. Our Architectural Product Group, which is focused very much on serving the outdoor living space, So the products, which is initially just in products, you have to pay this, but now includes just the box, walling, hardscapes, decking, patio and garden accessories, the whole outdoor space, all tapping into that improved that need to improve quality to build environment that surrounds residential and non residential businesses. And that is a whole roll up in a range of products and services that we serve both in North American and now increasingly more so in European markets. And our OPE, our OPE plus business, again, that's an end to end supplier of full range of blazing products. And it provides the interior walls and and indeed the exterior facade, which encompass the aesthetic needs, the energy for, for, for, non residential plumbing indeed increasingly for residential buildings as well.
And again, architects and engineers are turning to us to address those challenges that they've been developing in place with regards to them. Our Old Custom Infrastructure business across North America and indeed our European Infrastructure And Network Access Business. Now these are businesses that provide large scale, conquest and composite material products used again to protect and secure and transport the budget utilities I spoke about early on. Last, with us, at least, a very important construction accessories business here in mid March and Europe, both developed and closed in the United States, again, you pretty much provided serious for anchoring and fixing connecting and lifting the heavy and modular components that have been used in both infrastructure, non residential and also increasingly in residential construction. All of these markets and all of these divisions are high growth businesses serving high growth markets.
They generated higher margin they are more resilient to view the cycle because they have a higher online content. They have a higher cash conversion and provides superior growth in developed construction markets where we can leverage them off our base of Heavy Materials Network. It should be noted that 70% of our products business is effectively products that are manufactured from concrete and we have a very significant level of self supplied across our businesses. In the United States, for instance, at the moment, it's only 25%. But 25% of all the materials purchased by our products businesses across our U.
S. Business comes from our own business. However, where we have the capability to do so, we're able to complement focus It's between 75 90%. And of course, it shouldn't go unnoticed that the acquisition of Swannie Cement and Ash Grove costs significantly improves our footprint across the United States and I would expect that figure to increase. So all of those needs in the industry, all of those divisions we have are coming together with regard to global products and interesting the change that are there.
In performing developer products, we're looking to bring together the knowledge base of both our businesses in Europe and the United States together. We're seeking to remove any kind of duplication that we can see that there, but principally to get the scale benefits of operating 1 integrated products group, going narrower and deeper as we say, and leveraging the internal knowledge and scale across operations, commercial, R and D for new products and indeed product owners and crucially leveraging the multi market knowledge we have and using our first mover advantage to build out the existing successful platforms we have in both markets, into new markets and regions. Our sense is that global products will very much be at the forefront of demand construction markets going forward. We just think it's no longer enough just to be a business that takes materials out of the ground and sells it by the top. Markets and customers need more than that.
They demand more of that, and they're changing, and we need to adapt to those changes. And our global products, we believe it does just that. Okay. Yeah. Thank you.
Thank you very much.
The next question comes in from the line of Alodi Roy calling from JP Morgan. Please ahead.
Oh, hi. Thank you for taking my questions. The first one, if MA is on the input cost, We've seen a big rise in this year. And now we've seen some decrease recently. So I was wondering what your forecast is for 'nineteen.
And if you could remind us of your hedging strategy in particular for asphalt cost, Would you be looking to locking the usual requirement, which is about, I think, 40% for the full year, at the current pricing? So that's my first question. The second question is on the guidance for net debt of 1,000,000,000 for this year. I was trying to reconcile if with regard to divestments and buybacks. So just to confirm, that doesn't include the additional buyback that you have announced this morning.
But also in terms of divestment, I think you've said that, you've divested about 1,000,000,000 year to date, but in the bridge, you're showing 1,500,000,000. We're just trying to understand because the CHF 7,000,000,000 is the above consensus on what we had. Thank you.
Okay. Thank you, Ed. Good morning. I'll just give an overall count in terms of the directions we see where input costs, being Fisher and where they're going next year, I'll let them set out some of the numbers around that mill. So we will give you the detail with regards to the next And look, this year has been a very challenging year for us with regard to input costs, particularly on energy.
We've said it here many times before, and we are used to managing decades rising input costs that have been increasing for many, many years. The challenge we have in our industry or any industry, such as ours is when you get short term spikes and it was registered according to those costs. In 2018, we had 2 very significant spikes. 1 came through in the period late April to early June. And in fact, during that period of time, we could not price back up our products quick enough to recover those costs.
Just as an example that you would have seen this from our first half results, our pitchfork cost is of course half of our total energy cost build, which is a very significant overall, almost $1,000,000,000. Years, excuse me. In the first half of the year, our asphalt pricing, we tried to recover those big price increases, but we our asphalt pricing was up 7%. Now during quarter 3, actually, our asphalt pricing rose, and we actually were up by 12% by the end of quarter 3. So we'll start to recover further those spikes, those high spikes.
Unfortunately, what happened at the back end of quarter 3, oil went up spiked up again. So the back end of September, October, all went back up again. So again, we got behind that equation. When we go up to next year, it seems to be that perhaps energy costs are going to be flat to slightly declining. We do have a hedging, approach in place to various different ways.
We tend to hedge forward, flatten our coal and pet coke. We tend to fold hedge forward a little bit on our bitching up with regard to our winter for the program. But again, that's a key part of how we manage it. And we, of course, we focus very much on the management of that. With regard to just canceling your own thoughts in terms of the numbers behind some of the energy costs this year and maybe a year on 12th next year on that.
And also maybe just talk on the debt number.
I think you've covered most of the energy situation. I mean, we talked about double digit energy price increases across all of our main categories since you mentioned bitumen, gas, tackle, diesel costs, etcetera. In terms of putting a scale out of this year, it's about 1,000,000 worth of energy cost headwinds that we've absorbed. Remember, we talked about energy costs as being about 10% of our sales or revenue numbers for the year. And I agree with your guidance in terms of next year, in terms of we expect to see that stabilize.
And, most importantly, we manage margin, and therefore most importantly, it's about making sure there'll be our pricing to catch up that input cost increases and be able to expand our margin On your net debt question, Elity, on Slide 11, we've laid out our expectation or our guidance in terms of where we expect to see net debt at the end of the year. As you pointed out, approximately $7,000,000,000 is where we anticipate that being. In terms of the major components of that, you were asking about acquisitions divestments. The divestment number that's on there is net of capital gains tax paid on those divestments, and also has some outstanding receivables on some of those divestments. But the gross headline number, as you see in the announcement, it's $3,000,000,000 of proceeds and divestments, and then 2.5 is an we receive in on that.
Acquisitions is a big feature of that as well. And then I guess the big positive is that we have very strong cash flows coming from our operations. And those cash flows are affected in allowing us to, you know, give back significant quantifying my shareholders in the current year through the buyback program. Which will now be forecasted to be $800,000,000 by the end of the year. If you recall, we announced a program of $1,000,000,000 back in May that we would do over a 12 month period.
By the end of the year, we should be substantially through that with the remaining portion completing after the year end. And then another feature that's there is obviously a currency given that we have a large portion of our debt in U. S. Dollars, representing the large asset base we have in the U. S.
There's a natural hedge there. And as you know, the exchange rate has strengthened in terms of dollar recently. So that obviously means the euro value of that dollar debt. Is higher than would have been earlier in the year. So those are the major items that are set out there for you.
The next question comes in from the line of David O'Brien calling from Goodbody. Please go ahead.
Good morning guys. Thanks for taking my questions. A couple of short term first and then a couple of long term, please. Firstly, just given the backdrop we're seeing in the UK, it seems like top line in Europe overall has been quite resilient and momentum maybe on continental Europe is growing. Can you give us a quantify performance into October to give us a sense of what momentum is like or a flavor on the ground of how things feel?
Secondly, you've been good enough to give us a view on order books in North America over time. Can you give us a sense or quantify where they are at the moment? And more longer term, like one of the things about the core strategies you've talked about is vertical integration and maybe from the external observer standpoint, you could give us some color on the benefits of such a model And finally, you've just said, you can essentially procure kind of $9,000,000,000 of the $18,000,000,000 goods and services that you buy what is the optimal level that you could kind of get that over the medium term?
Okay. Thanks David. A number of questions there. Let me just go through the middle of the order you're giving to me there. And with regard to the UK, the European market, actually I have to say I think the trading has improved through the core of quarter 3 and indeed into quarter 4.
And in the month of October alone, I mean, Europe and finance volumes are 13% ahead of last year, which is very encouraging to see there's good momentum and good demand across all major content. You're very pleased with those market momentum dynamics are going. I think that will carry forward into next year. Well, we can see our order books and our products look good. And I'm particularly pleased to see the pricing continuing to gain momentum across our European markets at recruitment in years ahead as we seek to recover price increases, which have been pretty much non existent for the last 6 or 7 years.
And so we feel quite good about the momentum that we're exiting this year as and really towards next year looking across all of our major content the properties in one one area I'd be concerned about throughout the UK. And with regard to the United States, again, I have to say that I'm quite pleased with the level of backlogs seeing in our businesses. Just looking at the backlogs, as of last Friday, overall backlogs in the business are up about 7% on last year, Now you need to just take a little bit of caution with that because where we've had to weather disruption during the course of quarter 3, that would of course lead to increased unfrasil work that's done. So I would take about 1.5% off that 7.5%. So, Brian and large, I think that the underlying backlog increase over Ash is probably between 5% 5 5%.
I mean, it shouldn't go on this, I've talked about in the presentation there, whether it would have been awful during this year, particularly for us in quarter 3, in our, in our biggest state in the, in the, for CRH, in the biggest month of September, we lost 23 out of 35 working days. Completely. We would normally do this between 56. At our biggest stage, in our most important profit month in all of CRH, we lost 23 out of 35 days when we normally lose 6. Against that, we managed to pull back our costs, we managed to make all the changes across the business and protects our bottom line investment code.
But I think that the underlying momentum in the business is strong across the U. S. I think pricing momentum is good across the U. S. I feel quite good as we actively share, but the management costs are made for transport and integration of Europe and the United States.
And you talked about virtual integration. And I'm going to just explain a lot about this. I mean, the important level within CRX because we do produce superior returns, across the cycle. And let me just explain to you a little bit about why it's important to us. We are unique amongst all our global heavyside peers, COH started downstream and actually worked upstream.
And from that point of view, we are different because everybody else started upstream and Samantha tries to go down from downstream. And from our point of view, there are tangible benefits on being a Portuguese player. There are 3 or 4 ones which are interns first of all, there's increased poultry demand. We target on supplying 35% of our base materials supplied to our own internal source business sectors and tremendous security supply and sales. And of course, it is not a profit pickup at each step of the chain.
With regards to being a player down that chain, that helps us control and influence the market with regards to the competitive dynamics influencing quality control, logistics, specification, and of course, how we shape pricing in those particular markets. It helps us push the market more towards larger, operations and focus on quality higher volume suppliers through rebate securities clients. So it allows us to become an important part of how the customer thinks and embeds us as part of our customer's supply chain to our ability to supply a full range of products and services. Operationally, the fact that we can supply a broader range of products to hydrojet just cement our agonist plots to concrete concrete products and indeed our contracting business, that means we actually have structurally much lower waste in our upstream businesses as a percentage of as a percentage of materials used compared to a single, a focus of operators. So again, lower waste, lower cost, And lastly, if not least is the lower asset intensity of those downstream businesses as compared to the upstream business gives a tremendous advantage as we smooth our returns to have lower CapEx needs and helps with the cash generation of businesses.
All of this helps in terms of how we look at building higher returns and superior cash to our businesses. And all of this helps the whole vertical into chain without, through that. With regards to procurements, your last question, you're right. We have $18,000,000,000 of procurements, goods and services across our businesses. Now I was all over this in the global financial crisis when I was the chief operating officer of our businesses, and we looked at us and centralizing across certain key areas there was a limit step of what we could do with that because we had 7 divisions there.
In moving to 3 divisions, we've been able to bring more and more of that into the central procurement function we would estimate probably getting somewhere between 75% 80% coverage of the $18,000,000,000 will be the optimal level where we should try to get, and we should be able to get there What I can tell you is, where we pull procurement into centralized control service, we save between 2 4%. So there's significant advantages for to do this. I have to say the early signs of what we've achieved, some of which I mentioned this morning had a major start in recent times, had been very encouraging, but this is work that's going to carry on for the next couple of That's really helpful. Thanks very much. The next question comes in from the line of
Paul Roger calling from Exane BNP. Please go ahead.
Hi, good morning everyone. So I'll just have three quick questions, please. Just going back on to the the outlook in Europe. I mean, you made some comments about the UK. It's quite interesting.
If you look at what your peers are saying, there's some mixed messages in terms of both volumes and price. So I wonder if you can be a bit more specific and see what you expect, in terms of the outlook for 2019. The second one is actually on front. Looking at the pricing dynamic, it looks like you're doing a bit better, particularly on the cement side where some of your peers have reported further declines. Is that just because you've got a slightly better regional mix?
And also maybe if you could comment on the impacts, you think some of the new grinding capacity that's come in the next few years could have on on pricing in that country. And then finally, just a very quick one. Is CRH long or short CO2 credits?
Paul, three questions there. And just, I'll pick up the last question. It's just a straight answer, the CO2 press. This year, which costs us probably about $11,000,000 or $12,000,000. Again, next year, it costs probably maybe $15,000,000 to $19,000,000 something like that.
So it's not a significant headwind for us. A concern for
the whole industry post-twenty 20, but that situation
is very unclear, Yasmin, it's an industry question rather than a serious question, but that's the visibility we have for those particular years. And with regard to the UK, I thought you're going to ask me to comment on 2018, what's going to happen in 2019? Yes. Yes, you're all right. No, but I think look at the I'll try this 2019 by 2018.
And 2018, you're right, your Amex messages and the Amex messages in our own business The big picture, of course, is the southeast of U. K, particularly in the London market, particularly on the black of slowing non residential and residential has meant that volumes are down. But overall, across the UK volumes have held up reasonably well, but the change in mix of businesses has meant it. It's, if I call it lower quality business, it's lower priced and therefore lower profitability. So the issue has been that there's more competition for the lower quality businesses, and therefore, price being impacted, and that's impacted upon margin in UK issues.
So the volumes that has a broadly across the United Kingdom, London has been hit, but the quality to this and the pricing of products has hurt us during the course of 2018 I don't see any change that in 2019, but I can't interpret what's going to happen. We'll see what happens after the 29th March in terms of confidence levels, etcetera, etcetera. And with regard to France, yeah, I think we have felt it quite well. I think it's down to a couple of things. First of all, I think you're right.
I hope it helps us with a big exposure and a good position regard to some very significant infrastructure projects in around the Paris area, particularly Grand Prairie, and that helps us. I shouldn't always turn it off, whether it's our level of virtual integration France, again, supports our business and supports our cement price. That's the whole point of vertical integration made us support the profitability of those business. And we're not just 61 we're not a price table in the marketplace where in France, we say there's a lot of power in the downstream businesses, more so than you would expect in other markets. So that's been holding on quite well for us as well.
So on the glass, so that's your grinding capacity coming out stream. It's the grinding capacity coming out in 2019, both in Belgium and in the Northeast of Waterfront, that's focused, I think, probably, I'd say, 60% to 70% more on Belgian Netherlands and these are France for the and let me say the dynamics downstream perhaps more favorable for an independent player to come in, there is a history of there is a history of independent players supplying, or having grinding capacity on the Belgian coastline, as you know, and that this is a replication of that. Again, in fact, one of the individuals involved is years ago and then, and then exit the restrictions back again. So it tends to be, I think it's more focused on Belgium and the Netherlands than it is in France. So I don't think it's going to have huge influence on our, on our French business and on our Belgian business.
Of course, you know, we're actually a consumer of cement and from that point of view, I expect it to be overall and it's manageable. It's actually it's more a problem for the integrated cement players of cement producers and cement suppliers to those markets. Thank you.
The next question comes into the line of John Messenger calling from Redburn. Please go ahead.
Hi, morning gents. If
there's one, just can I
clarify just on energy so we all have the right kind of perspective? Can I just check, obviously, the accounts talk about 1,000,000,000 or just over of energy conversion costs? But is the correct kind of all in thing is about 2.7, and it's gonna go to about 3,000,000,000 this year. Is that the right reading? This then the first proper question was just on European Heavy side, But when we think about the first half, you had 2% sales, 2% EBITDA, clearly at the 9 months, 4 on sales, still 2 on EBITDA.
Clearly well flagged. These are a big step up in energy costs that is hitting across Europe. But given, yeah, the history of expectations around getting prices up and getting that price cost to go positive. Are you as comfortable looking at next year? Because I'm just conscious that yeah, the industry has had something of an easier time since 2011 when energy has been on a downward trend.
Actually, do you think the mindset of the various players is sufficiently strong that you can get that kind of price cost moving in the right direction 2019, or is there a risk that we just go sideways again? And the second one was just on USA, you talked on the call about more centralized pricing Can I just understand how much latitude that will allow people on the ground or is it a major change or just to understand a little bit more around what has been the situation to now and what it's going to be going forward?
Just I'll take
the first one there and, Albert, you can take the rest of that of the energy question that you asked, just on terms of numbers, John, right? Total energy bill for the group in 2018 will be just north $2,000,000,000. And as Albert mentioned earlier on, bitumen makes up about half of that, which is about $1,000,000,000. And the remaining half then is made up from energy, diesel, natural gas coal, etcetera, around
the group.
So that's just the magnitude of that. And as we guided, in terms of looking at that picture overall, in terms of its increase, from 'seventeen to 'eighteen, as I said earlier, double digit increase. We talked about $300,000,000 of increase. Last year's number was just over $2,000,000,000. This year's number will be point 3 approximately that kind of range, okay?
So that's the 90s from that.
Okay. Excuse me, just on your question in terms of energy costs and energy costs recovery, Look, our 2 main markets are Europe and North America. I would be very confident that the
pricing dynamic will
continue North America given the strength of our order book and what we have, we feel that the markets will perform next year that we will be in a positive pricing charge bus. I think we just got behind you, behind the curve ball and the ball, the airport, I should say, this year because it had to move, it spiked quickly, it spiked over a short period of time. I'd be very positive about about North America. Actually, I would be also positive about Europe as well. I think Europe is earlier in the cycle of recovery.
But I think that you can be here when you talk to all the other main players in the business. There is people that fit between the teeth with regard to pricing at this stage 12 of the 15 markets that we operate in are pricing positively. That's up from last year and it's up from previous year. So that dynamic is there. And of course, I think the fact that volumes are recovering as we've always said, volumes have to come back to pulp price.
So I will be confident that we will be able to push on pricing yet. I know the way discussions are going with our customers already at the end of this year with regard to discussions by next year. Actually, both of those questions feed into the last question you asked, which is about sort of a central pricing. You referred to the question with regard to the United States. That's actually something we have for the close the last 2 to 3 years when we moved to Central Portfolio Pricing, this effectively is where we got a pricing committee for major product categories.
Pricing is strategically too important for the group just to leave with my hand local, local individuals. We have got to set our targets and our objectives. And from that point of view, there is there are price bands assessed by our central committee and then they're implemented at a local level. We find working in the building materials area, our guys are federal focusing on the operations of focusing and managing that markets. Most of the senior executives with 0H Now, all of them have come up through the operations and have a full understanding how markets operate, but they also fully understand the importance of returns and cash.
So rolling to Sally Falls the United States really give us a for the opportunity, the fact that we now are a $15,000,000 on the producer of Symmetric Policy United States that requires coordination and discipline with regard to ensuring we maximize returns in our businesses and our cash flow. And we've seen the advantage of doing that murables in the last 2 or 3 years. That's what's behind the coordinated range of price increases across all of our major markets. I think it will continue to develop and evolve, and I think it continues to develop and evolve across the United States, not only across the cement markets, but the other product categories, major product categories as well.
Perfect. So it's more cement though, Albert, rather than obviously when you get down to ready mix and aggregates, it's so much more market dependent. So this is more a cement issue or is it everywhere?
No, let me indicate the downstream markets are largely dictated by the upstream product pricing in the downstream markets is largely dictated by the base material of the aggregates and cement that are price enhancement. That's what I was talking about further integration earlier I talked about you are in the downstream market, the ability to have shaped that market, if you're an upstream player, it's very important in terms of shaping pricing, pricing strategy. I would say that they're very connected. But of course, there are times where we have to take local initiatives to ensure we protect market share And we do that, but but we have negatives and to be aware of that, but largely speaking, all the price direction, strategy, and returns criteria our direct from the centric was the main base of materials and the downstream business tend to follow that direction.
The final question comes in from the line of Kristin Toth calling from Numis. Please go ahead.
Hi, good morning, Jess. Just a couple of questions for me really. I mean, first of all, you've pointed to managing the business and the group for the cycle. And I just wonder where where you feel the U. S.
Is in terms of its business cycle at the moment. And the second one, maybe just a bit more color on U. S. Volumes, where you think they would stand this year across your key product categories and in heavy side assuming that, that weather weather was good. So what you think you're up in regards to that?
Thank you.
Okay. Well, and kind of 2 connected questions, but I'll try and answer together actually in terms of managing the cycle and the volumes. But I think the cycle rate is a result of where the volumes are. If I look across the three main markets that we service for most North American, biggest market construction, which is the infrastructure spend. A lot of that is underpinned by a very firm commitment with regard to federal spend, on AFS closure.
And that's clearly indicating going forward, combined with the state spending, which is increasing, indicates that that over the next 3 years, there will be about a 5th percent increase in overall infrastructure spend in the next 3 years. So that's what gives us, we say, good run rate for those business and those major states there. For that particular category. With regards to nonresidential, nonresidential, we see that the ABI has been up for 13 consecutive months. And of course, it seems to particularly changing that where we're getting focused very much on warehousing, factories, and office space, hardly surprising when you consider that there are over 2,000,000 new jobs created in the United States this year.
And that strong employment level, that low level of unemployment is driving not only job creation, but also these need to have upspaces and factories to go to work in. And that growth continuing forward because, again, that by ABI, and we're seeing it in our business up to good, on good funds that are so again in 2018 and nonresidential. Not residential, of course, the levels of residential construction are long, along with the low long term need for 1,200,000,000 homes per annum. If most people were telling us between 1.4,1.5, we would agree with that figure. And housing stocks are getting very tight.
It's about 4 months supply against an average of 6 months supply, And of course, again, the statistics tell you that for each new job created in the United States, you should have 0.9 of the home. So you should have too many new jobs, you should have just over 1.7,1.8000000 new homes, I mean only at 1.2. So I think there are constraints on the residential side. I think it's down to affordability. I think it's supply.
I think it's down to contractors' ability to put shortages of labor and logistics that's causing difficulty in doing this. But underlying demand is up about 6% from residential this year, and we expect continue. So with those volume levels that we're seeing this year, we're going forward, you'll see infrastructure head could start at 3% profitably more with state funding increasing. Non residential running at running at a rate of about 5%, non res at about 6%. That level of activity in the U.
S. Is not going to drop off the age per cliff.
As you look into 2019, be
quite comfortable that we're going to see sustained levels at both the course of the year. And in addition to that, I think this pricing will be coming back in a more positive way as a result of the cost headwinds in this year. So I've been quite good about where the U. S. And the cycle is due in 2019.
That's all I have. The crystal ball, we've only seen that far,
who talk about 2020 when we 2019.
Thank you very much. Okay. Well, look, I think that our time for today, I'm afraid about, I'm sorry we couldn't give it more time for this. I want to thank you for your attention this morning. I hope that we've managed to answer some of your questions.
But for those of you who have further questions, Frank Heistekampers team are available to answer any of your follow-up calls that you may have throughout the day. I will look forward to talking to you again on the 20th February next when we report our preliminary results for 2018. Thank you, and have a good day.
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