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. However, you may submit your questions via the webcast portal available on the CRH website or at any point during the call. Press star one to queue for a question after the presentation. The next voice you will hear will be Albert Manifold.
Good morning, everyone. Albert Manifold, CRH Group Chief Executive here. You are very welcome to our conference call and webcast presentation, which accompanies the release of our trading update this morning. I am joined on the call by Group Finance Director, Senan Murphy, and our Head of Investor Relations, Frank Heisterkamp. Over the course of the next 30 minutes or so, Senan and I will take you through some of the key points of this morning's announcement, setting out the key drivers of our trading performance for the first nine months of the year, as well as providing you with an indication of our EBITDA expectations for the year as a whole.
As we look ahead to 2019 and beyond, we will also take some time to remind you of how we think about value creation at CRH, the steps we have 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 will be available to take any questions you may have. When all told, we should be done in about an hour. Turning to slide two, before I take you through our regional trading performance for the first nine months of the year, I would like to take a moment to highlight a few of the key messages and highlights from this morning's statement.
From a trading perspective, our sales and EBITDA for the first nine 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 first nine 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 am 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 have seen in our business, as we look ahead to the end of the year, we expect the full-year EBITDA to be approximately EUR 3.35 billion, ahead of 2017 and reflecting another year of progress for CRH.
Our EUR 1 billion share buyback program is progressing well, having returned approximately EUR 700 million to shareholders already this year. As announced separately this morning, we're now commencing the next phase of our buyback program and expect to return a further EUR 100 million 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 EUR 7 billion or 2.1 x EBITDA. Turning to slide three, and before I take you through 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. U.S. GDP growth is above 3%.
Job creation remains strong, with over 2 million jobs added in the year to date. From 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 activity supported by both federal and state-level funding initiatives. The non-residential construction sector continues to advance with year-to-date spending +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-term needs, and housing starts are 6% ahead in the year to September, reflecting strong underlying demand.
As I mentioned earlier, our business has experienced significant weather disruption during the third quarter of the year, particularly impacting our operations in the northeastern parts of the United States and in Texas, two large and important markets for CRH. In September alone, we lost almost 23 working days in Texas due to weather. That's up from six 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 have experienced both cost inflation in our businesses and labor constraints within the markets that we serve. Challenges compounded by significant weather disruption, making it difficult to fully offset higher costs through increased pricing. Turning to slide four. At Europe, where we continue to see an improved backdrop in both economic and construction activity, despite ongoing political uncertainty in the United Kingdom.
Western European construction markets are performing well, while Eastern European markets continue to benefit from strong growth in new build residential and infrastructure activity. The recovery in European construction markets remains several years behind the United States. It has been primarily volume-led to date and off an historically low base, but pricing is starting to follow as markets continue to normalize and utilization rates improve. As it is encouraging to see that the pricing momentum has continued to build with cement prices ahead in 12 of our 15 cement-producing markets by the third quarter of the year. We have a strong footprint of businesses across the region, leaving us well-placed to benefit from this continued recovery as it unfolds. Moving on, and against that backdrop, I'd like to take you through the financial performance of our business for the first nine months of the year.
If I can ask you to move on to slide six, as you can see, the table on the right provides an overview of the trends we have seen in our businesses in the first nine months of 2018. Overall, for the group as a whole, you can see our nine-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 on slide seven. As you can see, despite the significant weather disruption in quarter three, our like-for-like sales and EBITDA were 4% and 3% ahead at the end of the third quarter, a reflection of the solid underlying demand environment across our markets.
In our materials division, our nine-month aggregated 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 increases across all product categories, resulting in overall like-for-like sales being 5% ahead of the first nine months of the year. These price increases only partly compensated for the impacts of cost inflation and weather-related disruption. As a result, our like-for-like EBITDA was 2% ahead. When one considers the impact the weather has had on our business in the third quarter, we believe this was a good outturn. We estimate the weather disruption will now have a negative EBITDA impact of at least $100 million for this year. We will mitigate this impact by actively managing our cost base.
In our products business, favorable pricing and a strong performance in our engineering building products business translates into a nine-month EBITDA, which was six months ahead of the prior year period. As I mentioned earlier, the integration of Ash Grove Cement is progressing as planned. The business is performing very much in line with expectations. Turning now to our trading performance in Europe. On slide eight, you will see that despite some continued input cost pressures, the positive momentum we've seen in our business has continued into the third quarter, resulting in like-for-like EBITDA 2% ahead for the first nine months of the year, a small improvement on our first half performance. Our cement volumes were 4% ahead in the third quarter, fueled by good growth in markets such as Ireland, France, Switzerland, and Poland.
U.K. 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 out of 15 markets by the end of quarter three. While our distribution business was impacted by some challenging market conditions in Switzerland, our like-for-like businesses performed well against a backdrop of good demand in key markets such as the Netherlands and Poland. Finally, to our Asia division on slide nine, specifically the Philippines, where trading conditions remain challenging. Despite the welcome improvement in our cement volumes and prices over 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 from 2019 onwards. We also expect to start seeing the benefits of our ongoing debottlenecking programs, which will significantly reduce our dependence on expensive imported clinker. 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 four, we expect the nine-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 first nine 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 Asia division, and specifically our business in the Philippines, is beginning to show signs of stabilization. We are reiterating our guidance that half two EBITDA is expected to be similar to what was reported in half one, resulting in full-year EBITDA of approximately EUR 20 million. For the group as a whole, we expect the overall EBITDA outturn for the year of approximately EUR 3.35 billion, representing another year of progress for CRH. At this point, I'll turn to Senan to take you through some of our year-end balance sheet expectations for the group.
Thank you, Albert. Good morning, everyone. On slide 11, you can see the key components underpinning our expectations for our year-end net debt position. 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 to maintain our debt metrics in line with normalized levels. There has been a significant amount of acquisition and divestment activity in the first nine 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.
As a result, we expect our year-end net debt to be approximately EUR 7 billion or 2.1 x EBITDA. Of course, I should mention that this reflects the partial year ownership of Ash Grove and adjusting this for a full year ownership would bring our pro forma net debt to EBITDA position to below 2 x. I'm going to hand you back to Albert to talk to you now about value creation.
Thank you, Senan. That gives you an indication of our expectations for the remainder of 2018. 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 CRH, we've always sought 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 returns that we generate and the cash that we deliver for shareholders are the two key metrics we focus on. That's what our shareholders want and indeed expect from CRH.
Whilst the long-term value creation has always been a core focus, we are keenly aware of the importance of near-term delivery. Of course, near-term and long-term value creation are not mutually exclusive. They can be if managed mismanaged, and we have seen examples of this in our industry over the years. If managed thoughtfully and carefully, a focus on near-term value creation supports the delivery of significant benefits over the longer term. We operate in 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 at any given time.
In the past 10 years, you can observe how we have managed CRH completely differently in the up cycle compared to how we manage it in the down cycle, 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 that cyclicality, delivering superior returns and cash for our shareholders through the cycle. 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 out 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 identified 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 four years or so, we have received investment proceeds of over EUR 4 billion. Businesses sold at an average multiple of 12 x EBITDA. 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 about how to position our group going forward. Let me expand on that.
Firstly, we focused on our core capabilities in operating heavy materials businesses and how we appeared to deliver superior returns in cash for our base materials businesses. We operate as a part of the chain of vertically integrated materials businesses located in markets where we had leading market positions. It became clear that whilst our individual operations benchmarked 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 and Western U.S., or indeed Eastern Europe, which has the highest construction needs of all of Europe. Also, we advantaged ourselves further by operating in markets that best offered stability with regard to returns and cash and aligned well with our existing market footprint. Of course, markets where the industry remained fragmented provided us with inorganic growth opportunities, which have been fundamental to the successful growth of CRH 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 related and integrated products and services, which enabled us to better serve our customers' needs, aligning ourselves more closely with the changing face of construction, and in doing so, delivering higher growth, higher returns, and improved cash flow. During the downturn, we also saw how these product businesses, through a lesser reliance on new build construction and more on RMI 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 up cycle.
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, capitalizing on the opportunities we saw across our existing footprint in Europe and North America. On slide 15, you can see that over the course of the next four years, we spent EUR 13 billion at an average multiple of 8x doing that. Exactly that. Developing these businesses further by acquiring platforms for growth and integrating them into our existing network to drive further value creation. In 2015, we acquired the LafargeHolcim assets for EUR 6.5 billion, a transformational deal across four regional platforms, quality assets in good markets, and a strong strategic fit with our existing businesses.
As we reported earlier this year, this has been a very good acquisition for CRH, generating a 10% return on our investment after just two full years of ownership. In that same year, we spent $1.3 billion acquiring C.R. Laurence, an add-on to our existing Oldcastle BuildingEnvelope platform. This acquisition increased our exposure to the higher growth non-residential repair and maintenance sector in the United States, and we are now North America's largest provider of architectural glazing products. Another successful and value creative acquisition for the group, generating 13% returns after two years.
In 2017, we acquired Fels, building out our existing lime platform in Europe for EUR 600 million. Of course, the acquisition of Ash Grove and Suwannee Cement in the past 12 months for a combined $4.3 billion 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 complementary 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 highlights us that where we had a simpler and leaner structure in place, we 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 seven divisions to a leaner structure of three, 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. All of these initiatives, the portfolio review, the building out of our strategic business plan going forward, the reorganization of our business, the increased role of the center, enables us now to execute our aggressive growth 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, focuses 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 2x , we estimate we will have EUR 7 billion of financial capacity by 2021, providing significant optionality for further value creation for our shareholders. This margin improvement is expected to come from a combination of incremental business improvement initiatives, previously announced acquisition synergies, further growth across our main markets, and improved operational leverage. It's important to point out that two-thirds of this strand or approximately 200 basis points of the 300 basis points relates to internal self-help measures or acquisition synergies, initiatives that are within our control.
Let me expand a little and give you some examples of the kind of initiatives we are implementing across this group. I'll start with the structural savings we've identified. As outlined on slide 18, we have identified approximately EUR 100 million of structural savings over the next three years. These savings have primarily been made possible by the reorganization of our business from seven divisions to three and moving to more central management of key areas. Some of the initiatives that we already have underway include the de-layering of management structures, the rationalization of administration, reducing overheads, and the consolidation of regional support functions into central and more coordinated 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 category teams.
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 office locations around the group, and we'll keep you updated on our progress as it unfolds. Turning to the next slide 19, and our procurement initiatives, which are expected to deliver approximately 60 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 to carry 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 to save anywhere between 2% and 4% compared to locally managed purchases.
That's a significant saving when you consider CRH procures EUR 18 billion of materials, equipment, consumables, and services on an annual basis. Crucially, only half of that EUR 18 billion is currently managed under our central procurement function. Under a simpler and more focused 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 areas for potential increases in scope and also expect to improve our savings yields by increasing the depth of our existing purchasing categories. Take North America, for example, where we spend approximately half a billion dollars each year on cement purchases.
Up until recently, we had little or no leverage on how we procured cement in North America, and we were primarily a price taker in the cement market there. Following on from our acquisition of Ash Grove and Suwannee Cement, we now have 15 million tons of cement capacity in the region. This gives us the capability to self-supply our downstream businesses 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, and that's from zero in 2015, providing our U.S. businesses with access to internal cement supplies from Canada and pulling greater volume to our Canadian operations.
The decision on purchasing $0.5 billion of cement annually in North America can now, for the first time, be taken against the option of self-supply. That obviously increases CRH's purchasing power and will deliver sustainable benefits to our bottom line going forward. We're also bringing global cement purchasing under the remit of our central procurement function, which we expect to deliver significant benefits going forward. Other opportunities already identified at this early stage from across the group. Through EUR 40 million of savings in the area of maintenance and production services, EUR 30 million in logistics, EUR 20 million in chemical purchasing, EUR 10 million in packaging, to name a few. Next are our process improvement initiatives on slide 20, representing another 60 basis points of our margin improvement target.
Broadly speaking, these initiatives are centered upon leveraging our global expertise and best practice programs to deliver operational and commercial savings across the group. One such example comes in the area of alternative fuels usage. Following the Ash Grove and Suwannee Cement acquisitions, we are now a significant producer of cement in the United States for the first time. Whilst our European cement operations are already well advanced in this area, with our average alternative fuels usage in excess of 45%, combined alternative fuel usage in our cement plants 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, be it in the areas of alternative fuels management, improved throughput, debottlenecking, materials handling, improved kiln economies and kiln efficiency, or predictive maintenance, to name some of the few key areas, all of which will generate further savings going forward. 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 roll this out across the group. Finally, the synergies on slide 21. I'm pleased to reiterate our synergy targets for the Ash Grove, Suwannee, and Fels acquisitions.
On a combined basis, they are expected to deliver approximately EUR 130 million of run rate synergies by year three, a reflection of the significant integration opportunities between our respective businesses and the operational benefits and efficiencies we have identified. Now, these synergies have been identified by our own team of experts, the outcome of a detailed bottom-up exercise resulting in a long list of tangible initiatives. While these synergies will be delivered locally, they are driven from the center by the integrated nature of our group. The $100 million 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 three years by over 100 engineers from within our European operations. Moving to slide 22.
As a result of all this, as we continue to manage our business, and as we deliver on the initiatives we have implemented, we will continue to further strengthen our cash generation capabilities. We're already an extremely cash-generous business, converting approximately 80% of our EBITDA into cash and generating on average over EUR 2 billion free cash flow each year. Furthermore, we estimate we will have EUR 7 billion of financial capacity by 2021. That's EUR 7 billion of optionality after CapEx, after dividends, and after our ongoing share buyback program, which can be used for further value-driven M&A or cash returns to shareholders. 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 2x .
Despite EUR 13 billion of acquisitions in the past four years, our average net debt to EBITDA over that period was approximately also 2x . The cash we generate is not used to service an over-leveraged balance sheet. Instead, we protect our balance sheet, and we use the significant amount of cash we generate to create value for our shareholders. Given the quality of our assets, the attractiveness of end 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. Before I turn over to Q&A, on slide 23, I would like to leave you with a few key takeaways from this morning's presentation.
Taking into account our financial performance of year to date, and based on the current momentum in our business, we expect full-year EBITDA of approximately EUR 3.35 billion. With our continued focus on strong financial discipline, and 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 x. We also spoke about our aggressive long-term growth plan to drive further value for our shareholders. We're focused on improving the efficiency and productivity of our businesses, with a target to deliver 300 basis points of EBITDA margin improvement and EUR 7 billion of financial 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 with any great clarity, as we look into 2019, we expect the positive underlying momentum in our business to continue, and we look forward to another year of progress for the group. That concludes the presentation part of this morning's call, and I'm happy to take your questions. May I ask you please to state your name and the institution you represent when posing your questions. Now I'll hand you back to the moderator to coordinate the Q&A session of our call.
The question-and-answer session will now begin. As a reminder, if you would like to ask a question, it's star one on your telephone keypad. Okay, our first question comes in from the line of Robert Gardiner calling from Davy. Please go ahead.
Just 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.
Just follow that then with, it's just interesting, I thought the 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 presentation earlier, and I think that's really been a core part of CRH over the past 20, 30 years and the efficient use of that capital. 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's what we consider to be surplus cash or cash plus that we had on our balances. We didn't want to leave it there. We chose to go down the route of returning it to shareholders through the route of share buyback program.
We're currently well progressed through that. We'll continue that up until the end of May. With regard to acquisitions, of course, we recognize that acquisitions are very important in terms of building our footprint and our platform going forward. We have a number of deals that we're looking at this moment in time, but we always do. The pipeline is quite good. For me, it's always about valuations and making sure it fits with the strategic shape of our business going forward. We have the optionality there, and we have got the cash capacity to do so, but we'd only move forward when the value equation works for us. 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.
Of course, we think now, having built that back up after the global financial crisis, we've recognized that by showing progressive increase in dividends going forward. Again, talking to our investors over the last 12 months or so, we do recognize the importance of income at this particular time. I think we've more or less arrived at our comfortable level of dividend cover now. Whilst I don't want to prejudge any decision that we may take in February or March, I think we do recognize the importance that dividends place in investors' minds at this moment in time. I'd like to think we'll be able to reflect on that when we come to our dividend decision, once we sit down as a board in February or March.
Just turning to global products, I think it's probably just to maybe just to set the context of global products when you ask us, is it just about the Americas and Europe coming together? Can we just set that against the backdrop of what we talk about the changing face of construction markets over the past 20 years or so? There's been a few important key developments in those markets over the past number of years. First and foremost, we've seen a big move to improve the quality of the built environment, not just the building themselves, but also what surrounds those buildings and what connects those buildings. There's also been a significant push to compress construction times for contractors, not only from a cost perspective, but there's local site 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 in building codes, pushing people more towards greater energy efficiency, the need for improved ventilation, noise and light and management, and indeed, as we build buildings, and also flexible building interiors. Contractors and engineers and distributors are turning to manufacturers to address those challenges. Now, how that rubber meets the road in specific markets is obvious when you go to look at the individual markets. Take residential markets. Of course, all the points I made above are impacting the residential markets. On top of that, there are changing societal needs. Family formations are changing. Affordability is becoming a big issue.
The willingness and ability to commute, particularly against the aging infrastructures, means that people are moving more towards urban living than they had heretofore in the past. That's leading to the concept of building up rather than building out, you're seeing that with the increase of multi-family homes over single-family homes, specifically in moving towards more modular off-site manufacturing of construction components that are being assembled on sites. On non-residential, we're seeing it again impacted by all of the changes that we're seeing in the construction markets, also how that's impacting on urban and rural non-residential construction. In urban areas, clearly, it's office space, buildings now are built with a core structure and a shell. The interiors have no fixed interior walls. People want to have flexible interiors that they can move over time.
The outside, the facades of business are largely using glass, which are encompassing the aesthetics and energy efficiency and light and ventilation needs I spoke about earlier on. Within rural and suburban areas, obviously with the increase of warehousing and data centers, we're seeing large-scale modular construction again happening, that manufactured off-site modular construction that's being assembled on site. Lastly, the big infrastructure markets are changing. We're seeing an increasing need to protect and secure and a need to transport vital utilities such as water management, waste, water waste, drainage, power, telecommunications, information technology. Sometimes encompassing millions of dollars worth of equipment needs to be protected underground or overground. Indeed, finally, an increasing need of modular construction with regard to infrastructure, be it those that surround road and rail networks using off-site modular manufacturing of bridges, culverts, 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 our business, we have four 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. Serving products which was initially just products with regard to pavers, but now includes the blocks, walling, hardscapes, decking, patio, and garden accessories. The whole outdoor space all tapping into that need to improve the quality of the built environment that surrounds residential and non-residential businesses. That is a whole roll-up and a range of products and services that we serve both in North American markets and now increasingly more so in European markets. Our OBE, our Oldcastle glass business.
Again, that's an end-to-end supplier of a full range of glazing products, it provides the interior walls and indeed the exterior facades, which encompass the aesthetic needs, the energy for non-residential buildings, indeed increasingly for residential buildings as well. Again, architects and engineers are turning to us to address those challenges that are being placed with regard to them. Our Oldcastle Infrastructure business across North America and indeed our European infrastructure and network access business. These are businesses that provide large-scale concrete and composite material products used, again, to protect and secure and transport the vital utilities I spoke about early on. Last but not least, our very important construction accessories business, largely in Europe, but developing across the United States.
Very much providing solutions for anchoring and fixing and connecting and lifting the heavy modular components that are being 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 generate higher margins. They are more resilient to the cycle because they have a higher RMI content. They have a higher cash conversion and provide 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 have a very significant level of self-supply 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, where the complementary footprint is between 75%-90%. Of course, it shouldn't go unnoticed that the acquisition of Suwannee Cement and Ash Grove of course significantly improves our footprint across the United States, and I would expect that figure to increase. All of those needs in the industry, all of those divisions we have are coming together with regard to global products and addressing the changes that are there. In forming global 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's there, but principally to get the scale benefits of operating one integrated product group, going narrower and deeper, as we say, and leveraging the internal knowledge and scale across operations, commercial or indeed for new products and indeed product rollout. Crucially, leveraging the multi-market knowledge we have and using our first-mover advantage to build out the existing successful platforms we have in one market into new markets and regions. Our sense is that global products will very much be at the forefront of demand for construction markets going forward. We just think it's no longer enough just to be a business that digs materials out of the ground and sells it by the ton. Markets and customers need more than that.
They demand more than that, and they're changing, and we need to adapt to those changes, and our global products, we believe, does just that.
Okay. Yeah, thank you. Very clear. Thank you very much.
The next question comes in from the line of Elodie Rall calling from JPMorgan. Please go ahead.
Oh, hi. Thank you for taking my questions. The first one, if I may, is on the input cost. We've seen a big rise in this year. Now we've seen some decrease very recently. I was wondering what your forecast is for 2019 and if you could remind us of your hedging strategy, in particular for asphalt cost. Will you be looking to locking the usual requirement, which is about, I think, 40% for the full year, at the current pricing? That's my first question. The second question is on the guidance on net debt of EUR 7 billion for this year. I was trying to reconcile it with regard to divestments and buybacks. Just to confirm, that doesn't include the additional buyback that you have announced this morning.
Also, in term of divestment, I think you said that you've divested about EUR 3 billion year to date, but in the bridge, you're showing EUR 2.5 billion. Just trying to understand because the EUR 7 billion is above consensus on what we had. Thank you.
Okay. Thank you. Good morning. I'll just give an overall comment in terms of the directions we see where input costs have been this year and where they're going next year. I'll let Senan fill out some of the numbers around that, and also he will give you the detail with regard to the net. This year has been a very challenging year for us with regard to input costs, particularly on energy. We have said it here many times before. We are used to managing for 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 if you're able to recover those costs. In 2018, we had two very significant spikes. One came through in the period late April to early June.
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, and you would've seen this from our first half results, our bitumen cost, of course, half of our total energy cost bill, which is a very significant number, almost EUR 1 billion, excuse me. In the first half of the year, our asphalt pricing, we tried to recover those big price increases, but our asphalt pricing was up 7%. During quarter three, actually, our asphalt pricing rose, and we actually were up by 12% by the end of quarter three. We started to recover further those spikes, those high spikes. Unfortunately, what happened, at the back end of quarter three, oil went up, spiked up again. The back end of September, October, oil went back up again.
Again, we got behind that equation. When we got to next year, it seems to be that perhaps energy costs are going to be flat to slightly declining. We do have a hedging program that applies through various different ways. We tend to hedge forward a lot on our coal and pet coke. We tend to hedge forward a little bit on our bitumen with regard to a winter filler program. Again, that's a key part of how we manage, and of course, we focus very much on the management of that. With regard to just, Senan, saying your own thoughts in terms of the numbers behind some of the energy costs this year and maybe your own thoughts next year on that, and also maybe just talk on the debt number.
Yeah, I think you've covered most of the energy situation. We talked about double-digit energy price increases across all of our main categories, as you mentioned, bitumen, gas, coal, diesel costs, et cetera. In terms of putting a scale on it this year, it's about EUR 300 million worth of energy cost headwinds that we've absorbed. Remember, we talk about energy costs as being about 10% of our sales or revenue numbers for the year. I agree with your guidance in terms of next year, in terms of we expect to see that stabilized. Most importantly, we manage margin, and therefore, most importantly, it's about making sure that we are pricing to catch up that input cost increases and be able to expand our margins.
On your net debt question, Elodie, 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 EUR 7 billion 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. The gross headline number, as you see in the announcements, is EUR 3 billion of proceeds and divestments, and then EUR 2.5 billion is the net cash we receive in on that. Acquisitions is a big feature of that as well. I guess the big positive is that we have very strong cash flows coming from our operations.
Those cash flows are effectively allowing us to give back a significant quantity of money to shareholders in the current year through the buyback program, which will now be forecast to be EUR 800 million by the end of the year. If you recall, we announced a program of EUR 1 billion back in May that we would do over a 12-month period. By the end of the year, we should be substantially through that and with the remaining portion completing after the year-end. Another feature that's there is obviously 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.
As you know, the exchange rate has strengthened in terms of the dollar recently, that obviously means the euro value of that dollar debt is higher than would have been earlier in the year. Those are the major items that are set out there for you.
Thanks. That's very clear. Thank you.
The next question comes in from the line of David O'Brien, calling from Goodbody. Please go ahead.
Morning, guys. Thanks for taking my questions. A couple short term first and then a couple of long term, please. Firstly, just given the backdrop we've seen in the U.K., it seems like top line in Europe overall has been quite resilient and momentum maybe on continental Europe is growing. Can you give us or quantify performance into October to give us a sense of what the 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?
More longer term, 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. Finally, you've just said, look, you can centrally procure kind of EUR 9 billion of the up to EUR 18 billion 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 them as you go, you've given them to me there. With regard to the U.K. or, well, European markets, actually, I have to say, I think the trading has improved through the course of quarter three and indeed into quarter four. In the month of October alone, European cement volumes are 13% ahead of last year, which is very encouraging to see. There's good momentum and good demand across all major continental Europe. I'm very pleased with those market dynamics are going. I think that will carry forward into next year well. We can see our order books and our projects look good. I'm particularly pleased to see the pricing continuing to gain momentum across our European markets.
That'll be crucial in the years ahead as we seek to recover price increases, which have been pretty much nonexistent for the last six or seven years. Feel quite good about the momentum that we're exiting this year at and building towards next year, looking across all of our major continental markets. There probably isn't one area I'd be concerned about apart the U.K. With regard to the United States, again, I have to say that I'm quite pleased with the level of backlogs we're 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 the weather disruption during the course of quarter three, that will, of course, lead to increased unfulfilled work that's done.
I would take about 1.5% off that 7.5%. By and large, I think that the underlying backlog increase over last year is probably between 5% and 5.5%. It shouldn't go unnoticed. I've talked about it in the presentation there. The weather has really been awful during this year, particularly for us in quarter three. In our biggest state for CRH, in the biggest month of September, we lost 23 out of 35 working days completely. We would normally lose between five and six. At our biggest state, in our most important profit month in all of CRH, we lost 23 out of 35 days when we would normally lose six. Against that, we managed to pull back our costs, we managed to make other changes across the business and protect that bottom line as best we could.
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 exit this year about the momentum across our major footprints, both in regional Europe and the United States. You talked about vertical integration. Let me just explain a lot about this and the importance of it within CRH, because we do produce superior returns across the cycle. 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. CRH started downstream and actually worked upstream. From that point of view, we are different because everybody else started upstream and cement and actually tries to go downstream.
From our point of view, there are tangible benefits on being a vertically integrated player. There are three or four ones which are internally. First of all, there's increased pull-through demand. We target on supplying 35% of our base material supplies to our own internal source business. That gives us tremendous security of supply and sales, and of course, it is 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 regard 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 that focus on quality, higher volume suppliers through rebates, security of supply.
It allows us to become an important part of how the customer thinks and embeds us as part of our customer's supply chain through our ability to supply a full range of products and services. Operationally, the fact that we can supply a broader range of products to either not just cement or aggregates, but also to concrete products and indeed our contracting business, that means we actually have structurally much lower waste in our upstream businesses as a percentage of materials used compared to single-focus operators. Again, lower waste, lower cost. Last but not least is lower asset intensity of those downstream businesses as compared to the upstream businesses, gives a tremendous advantage as we smooth our returns, have lower CapEx needs, and helps with the cash generation of our businesses.
All of this helps in terms of how we look at building higher returns and superior cash for our businesses. All of this helps the whole vertical chain through that. With regards to procurement, your last question, you're right, we have EUR 18 billion of procurement goods and services across our businesses. I was all over this in the global financial crisis when I was the chief operating officer of our businesses, and we looked at centralizing across certain key areas. There was a limit to what we could do with that because we had seven divisions there. In moving to three divisions, we've been able to bring more and more of that into the central procurement function. We would estimate it's probably getting somewhere between 75% and 80% coverage of the EUR 18 billion will be the optimal level where we should try to get.
We should be able to get there. What I can tell you is where we pull procurement into centralized controlled service, we save between 2% and 4%. There's significant advantages for us to do that, and I have to say the early signs of what we've achieved, some of which I mentioned this morning, having really just started in recent times, have been very encouraging. This is work that's going to carry on for the next couple of years.
That's really helpful. Thanks very much.
Thanks, David.
The next question comes in from the line of Paul Roger, calling from Exane BNP. Please go ahead.
Hi. Yeah, good morning, everyone. I'll just have three quick questions, please. Just going back onto the outlook in Europe. You made some comments about the U.K. 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. I wonder if you can be a bit more specific and say what you expect in terms of the outlook for 2019. The second one is actually on France. 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? Also, maybe if you could comment on the impact you think some of the new grinding capacity that's coming in the next few years could have on pricing in that country.
Finally, just a very quick one. Is CRH long or short CO2 credits?
Paul, three questions there. Just to pick up the last question, it's just a straight answer. The CO2 credits, this year it cost us probably about EUR 11 million or EUR 12 million. Next year, it costs probably maybe EUR 15 million - EUR 19 million, something like that. It's not a significant headwind for us. It's a concern for the whole industry post 2020, the situation is very unclear yet, and it's an industry question rather than a CRH question. That's the visibility we have for those particular years. With regard to the U.K., I thought you were going to ask me to comment on 2018. God knows what's going to happen in 2019.
Sorry about that, yeah.
Yeah. You're right. I'll preface 2019 by 2018. 2018, you're right. There are mixed messages, and there are mixed messages in our own businesses. The big picture, of course, is the southeast of U.K., particularly in the London market, particularly on the back of slowing non-residential and residential, has meant that volumes are down. Overall, across the U.K., volumes have held up reasonably well. The change in mix of businesses has meant that, if I can call it lower quality business, it's lower priced and therefore lower profitability. The issue has been that there's more competition for the lower quality businesses and therefore price is being impacted, and that's impacted upon margin in the U.K. The volumes have held up broadly across the United Kingdom. London has been hit.
The quality of the business and the pricing of products has hurt us during the course of 2018. I don't see any change to that in 2019, but I can't interpret what's going to happen, Paul. We'll see what happens after the 29th of March in terms of confidence levels, et cetera. With regard to France, yeah, I think we have held up quite well. I think it's down to a couple of things. First of all, I think you're right. Our footprint helps us. We have a big exposure and a good position with regard to some very significant infrastructure projects in and around the Paris area, particularly Grand Paris, that helps us. I shouldn't also go without, our level of vertical integration in France, again, supports our business and supports our cement prices.
That's the whole point of vertical integration, being that it supports the profitability of those businesses. We're not a price taker 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. That's been holding up quite well for us as well. On the gas, that's your grinding capacity coming on stream. There's grinding capacity coming in, say, 2019, both in Belgium and in the northeastern part of France. That's focused, I think, probably, I'd say 60%-70% more on Belgium, Netherlands, than it is on France, where the, how do you say, the dynamics downstream are perhaps more favorable for an independent player to come in. There is a history of independent players supplying or having grinding capacity on the Belgian coastline, as you know.
This is a replication of that again. In fact, one of the individuals involved did his 10 years ago and then exit the industry, it's back again. I think it's more focused on Belgium and the Netherlands than it is in France, I don't think it's going to have huge influence on our French business. On our Belgian business, of course, we're now actually a consumer of cement, and from that point of view, I expect it to be overall an advantage to us, actually. It's more a problem for the integrated cement players, like cement producers and cement suppliers to those markets.
That's good. Thank you.
Thank you.
The next question comes in from 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, because obviously the accounts talk about EUR 1 billion or just over of energy conversion costs, but is the correct kind of all encompassing, is it about EUR 2.7 billion and it's going to go to about EUR 3 billion this year? Is that the right reading? The first proper question was just on European heavy side, Albert, when we think about the first half, you had 2% sales, 2% EBITDA, clearly at the nine 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. Given the history of expectations around getting prices up and getting that price cost to go positive, are you as comfortable looking at next year?
I'm just conscious that 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 in 2019, or is there a risk that we just go sideways again? The second one was just on U.S.A., 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?
I'll take the first one there, and Albert, you can take the rest then. In terms of the energy question that you asked, just in terms of numbers, John, right? Total energy bill for the group in 2018 will be just north of EUR 2 billion. As Albert mentioned earlier on, bitumen makes up about half of that, which is about EUR 1 billion, and the remaining half then is made up from energy, diesel, natural gas, coal, et cetera, around the group. That's just the magnitude of that. As we guided in terms of looking at that picture overall, in terms of its increase from 2017 to 2018, as I said earlier, a double-digit increase, and we talked about EUR 300 million of increase. Last year's number was just over EUR 2 billion. This year's number will be EUR 2.3 billion approximately. That kind of range. Okay?
Brilliant.
That's the magnitude on that. Albert?
Okay. Excuse me. Just on your question in terms of energy cost recovery, look, our two main markets are Europe and North America. I would be very confident that the pricing dynamic will continue in North America, given the strength of our order book and what we feel that the markets will perform next year, that we will be in positive pricing territory with regard to costs. I think I just got behind the curve ball, the eight ball, I should say, this year, because the market moved, it spiked quickly and spiked over short periods of time. I'd be very positive about North America. Actually, I would be also positive about Europe as well.
I think Europe is earlier in the cycle of recovery, I think that you hear when you talk to all the other main players in the business, there's a bit between their teeth with regard to pricing now 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 the previous year. That dynamic is there. Of course, I think the fact that volumes are recovering, as we've always said, volumes have to come back before price. I would be confident that we will be able to push on pricing again. I know the way discussions are going with our customers already at the end of this year with regard to discussions for 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, it's actually something we have across Europe. This really has been at the heart of our, we say our pricing across our European business for the last two to three years, where we moved to central controller pricing. This effectively is what we call a pricing committee for major product categories. Pricing is strategically too important to the group just to leave it in the hand of local individuals. We have got to set our targets and our objectives. From that point of view, that means the price bands are set by our central committee, and then they're implemented at a local level.
We find working in the building materials area, our guys are better off focusing on the operations and focusing on managing their markets. Most of the senior executives at CRH, if not all of them, have come up through the operations and have a full understanding of how markets operate, but they also fully understand the importance of returns and cash. Rolling this out across the United States really gave us, it came from the opportunity of the fact that we now are a 15-million-ton producer of cement across the United States. That requires coordination and discipline with regard to ensuring we maximize returns in our businesses and our cash flow. We've seen the advantage of doing that in Europe over the last two or three years. That's what's behind the coordinated range of price increases across all 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.
Got you. It's more cement, though, Albert, rather than, obviously when you get down to ready mix and aggregates, it's so much more local market dependent. This is more a cement issue or is it everywhere?
No. Let me dictate. The downstream markets are largely dictated by the upstream products. Pricing in the downstream markets is largely dictated by the base material, the aggregates and cement that are priced into them. That's when I was talking at the first of the presentation earlier, I talked about the fact that if you are in the downstream market, the ability to have shaped that market, if you're an upstream player, is very important in terms of shaping pricing strategy. I would say that they are very connected. Of course, there are times where we have to take local initiatives to ensure we protect market share, and we do that. We have mechanisms to be aware of that. Largely speaking, all the price direction, strategy, and returns criteria are directed from the center.
Of course, the main base materials and the downstream business tend to follow that direction.
Brilliant. Thank you.
The final question comes in from the line of [Chris Millington] calling from Numis. Please go ahead.
Hi. Good morning, gents. Just a couple of questions from me, really. First of all, you pointed to managing the business and the group for the cycle. I just wondered where you feel the U.S. is in terms of its business cycle at the moment. 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 heavy side, assuming that weather was good. What do you think in regards to that? Thank you.
Okay. Well, they're kind of two connected questions. I'll try and answer them together, actually, in terms of managing the cycle and the volumes, because I think the cycle is a result of where the volumes are. If I look across the three main markets that we service across North America, I think the biggest market is construction, which is the infrastructure spend. A lot of that is underpinned by a very firm commitment with regard to federal spend on infrastructure. That's clearly indicating going forward, combined with the state spending, which is increasing, indicates that over the next three years, there will be about a 15% increase in overall infrastructure spend for the next three years. That gives us, we say, good runway for those businesses and those major states there for that particular category.
With regards to non-residential, we've seen the ABI has been up for 13 consecutive months. Of course, it seems to be particularly changing now where we're getting focused very much on warehousing, factories, and office space. Hardly surprising when you consider that there are over 2 million new jobs created in the United States this year. That strong employment level, that low level of unemployment, is driving not only job creation, but also these need to have office spaces and factories to go to work in. That growth is continuing forward because, again, that ABI, and we're seeing it in our business up to good starts that I saw again in 2018. Non-residential, of course, the levels of residential construction are a long way below long-term need for 1.2 million homes per annum. Most people will tell you it's between 1.4 million homes and 1.5 million homes.
We would agree with that figure. Housing stocks are getting very tight. It's about a four-month supply against an average of six-month supply. Of course, again, the statistics tell you that for each new job created in the United States, you should have 0.9 of a home. You should have, with 2 million new jobs, you should have just over 1.7 million, 1.8 million new homes, and we only have 1.2 million. I think there are constraints on the residential side. I think it's down to affordability, I think it's down to supply, I think it's down to contractors' ability with shortages of labor and logistics that are causing difficulties in doing this. Underlying demand is up about 6% in residential this year, and it expects to continue.
With those volume levels that we're seeing this year, where are going forward, we'll see infrastructure ahead, good solid 3%, probably more with state funding increasing, non-residential 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 edge of a cliff. As we look into 2019, I feel quite comfortable that we're going to see sustained levels of growth across the year. In addition to that, I think this pricing will be coming back in a more positive way as a result of the cost challenges seen this year. I feel quite good about where the U.S. and the cycle is during 2019. That's all I have. The crystal ball only sees that far. I could talk about 2020 when we get through 2019.
Thank you very much.
Thank you. Okay, well, look, I think that's our time for today. I'm afraid about that. Sorry, we couldn't give more time for that. I want to thank you for your attention this morning. I hope that we've managed to answer some of your questions. For those of you with further questions, Frank Heisterkamp and his team are available to answer any of your follow-up calls that you may have throughout the day. We look forward to talking to you again on the 20th of February next year when we report our preliminary results for 2018. Thank you and have a good day.
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