Ladies and gentlemen, welcome to the CRH plc 2018 April Trading Update conference call. Please go ahead, Mr. Manifold.
Good morning, everyone. Albert Manifold, CRH Group Chief Executive here, and you're very welcome to our conference call this morning, which accompanies our trading update issued in advance of our AGM tomorrow. Joining me on the call this morning is Senan Murphy, our Group Finance Director, and Frank Heisterkamp, Head of Investor Relations. Following some short introductory remarks, we'll be available to take any questions you may have on this morning's announcements. We have approximately 30 minutes scheduled for our call this morning, and we aim to finish up here around nine o'clock or so. Our announcement this morning provides details of our trading performance for the first three months of 2018, an update of our recent development activity, as well as giving an indication of our EBITDA expectations for the first six months of the year, and indeed, our outlook for the year as a whole.
We've also announced this morning the establishment of a EUR 1 billion share buyback program, and we'll go into it in a bit more detail a little later on. Beginning with our first quarter trading performance. Overall, it's been a solid start to the year for CRH, considering the extremely cold and disruptive weather conditions experienced across many of our markets. Group sales for our seasonally less significant quarter of the year declined by 2% on a like-for-like basis, with Europe down 2%, the Americas minus 3%, and Asia down 5%. Let me now briefly take you through the trading trends in each of the main geographies. Starting with Europe, where our like-for-like sales declined by 2%. Improved pricing in the majority of our key markets was not sufficient to offset lower volumes as a result of severe and prolonged winter weather conditions.
Also, the timing of the Easter holidays this year resulted in fewer trading days in the first quarter of 2018 compared to 2017. In our Europe Heavyside businesses, like-for-like sales declined by 3% as the severe weather conditions negatively impacted volumes and indeed activity levels. The U.K. had a challenging start to the year with volume declines across all product areas as a result of some particularly harsh weather during February and March. Although the pricing environment remains competitive, it's encouraging to see cement and aggregates pricing moving on ahead in the period. Despite this somewhat slow start, we expect that our U.K. businesses, with its natural footprint and infrastructure focus, will deliver another broadly stable performance in 2018. Lower volumes in France were partly offset by higher pricing in the period. While in Switzerland, we experienced some volume recovery against the backdrop of a competitive pricing environment.
In Finland, our cement volumes were ahead in the first quarter, while prices remained broadly stable. In Germany, we see a positive demand environment, and cement prices are ahead of last year. Extremely cold conditions across most of Eastern Europe negatively impacted our cement volumes in the region, but it's encouraging to see positive pricing trends in Poland, Romania, and Ukraine. Overall, we consider this a resilient trading performance despite the extremely disruptive weather conditions our heavyside businesses had to contend with. Of course, good to see pricing also moving on ahead in a number of our key markets. Our Europe Lightside business had a strong first quarter, also experiencing some challenging weather conditions. Like-for-like sales were up 3%, with increased activity levels across most product segments and with our key markets, Germany and the U.K., and the Netherlands all performing well.
In distribution, like-for-like sales were 1% behind the prior year, primarily due to the challenging weather conditions mentioned earlier. Our merchanting businesses in the Netherlands continue to benefit from good growth in new residential construction, while our sanitary heating and plumbing business in Germany also performed well. In contrast, trading conditions in Switzerland remain challenging as a result of lower residential construction activity. Overall in Europe, you can see the benefits of balance in our businesses, with good growth in our Lightside business helping to offset some of the weather impacts experienced in our Heavyside and distribution businesses. We're encouraged by the progress being made with regard to further price improvements in the region, and the overall strength of the European economy should support continued construction growth for the remainder of 2018.
Turning to the Americas, where despite a positive market backdrop, our like-for-like sales declined by 3% due to harsh winter weather, particularly in the central and eastern U.S. In our Americas Materials Division, first quarter like-for-like sales were down 2% compared to 2017. Our aggs and asphalt volumes were negatively impacted by unfavorable weather conditions. However, the pricing environment remained positive, with prices for both products moving on ahead in the period. It's worth remembering that our materials business is extremely seasonal, and the first quarter typically accounts for only 10%-20% of our annual material volumes. First quarter trading in our Americas Products Division was also somewhat mixed. Shipments at our architectural products business were impacted by adverse weather conditions in the eastern U.S., while our precast businesses benefited from good demand in the west of the country.
Our building envelope business was behind due to a combination of unfavorable weather conditions and some lower project activity in quarter one. Considering the severity and persistence of the recent challenging weather conditions in parts of the U.S., we had a satisfactory start to the year in the Americas. Looking at our backlogs and talking to our customers gives us confidence that we can recover any lost volumes in our seasonally more significant second and third quarters. Finally to Asia. Like-for-like sales declined by 5% in the first quarter of the year as declining volumes in the Philippines were only partly offset by rising prices. For the group overall and excluding the impact of adverse weather, it's been a solid start to the year, albeit in our seasonally less significant trading period.
Looking forward to the first half and indeed the rest of 2018, we expect the positive underlying momentum in our businesses to come through, resulting in another year of progress for the group. Before I go into the outlook in any more detail, let me just touch briefly on a few other items from this morning's announcements. First to our recent development activities, during the first quarter of the year, we completed six bolt-on acquisitions for a total spend of approximately EUR 150 million. The recently acquired cement and materials assets in Florida are performing very much in line with expectations, and I'm pleased to announce that in a related transaction, we have reached an agreement to merge Suwannee American Cement with our existing 50/50 American Cement joint venture in Florida.
This non-cash deal leaves CRH owning 80% of the enlarged business, further strengthening our position in Central and Northern Florida while delivering operational and vertical integration synergies for the group. The Fels acquisition in Europe is also performing well, the integration of that business is progressing very much as planned. The Ash Grove transaction is progressing through regulatory approval in the U.S. and is expected to close in the coming weeks. As you know, active portfolio management is an embedded practice at CRH, we continue to assess our portfolio to identify and focus on businesses which offer more attractive returns for our shareholders.
With this continuing commitment and building on the progress we've made in this area in recent years, we expect further divestment proceeds of between EUR 1.5 billion-EUR 2 billion over the medium term for businesses no longer meeting our returns and growth criteria, or for which CRH is no longer the best long-term owner. As announced separately this morning, after careful consideration and having carried out an assessment of the anticipated capital requirements for 2018, the board of CRH has decided to return EUR 1 billion of excess cash to our shareholders in the form of a share buyback program, which is expected to be executed over the next 12 months. Following a very significantly weather-disrupted first half, we expect first half group EBITDA to be in line with the first half of 2017 on a like-for-like basis.
In Europe, like-for-like half on EBITDA is expected to be slightly ahead of the first half of 2017, whilst in the Americas, like-for-like first half EBITDA is expected to be in line. EBITDA for Asia Division is expected to be behind due to competitive conditions in the Philippines. Based on the trading backdrop in our main markets and the momentum we see in our businesses, we continue to expect further progress on a group EBITDA basis in the second half of 2018. Sitting here in April, of course, it's very difficult with our two seasonally most important quarters ahead of us. It's difficult to be specific at this stage of the year about the details, but we will come back to you and update you on our progress as the construction season gets underway.
A final few words before we hand over to Q&A. What you've heard here today is not new. It's not a departure for CRH. We are a group that's focused as ever on delivering industry-leading returns for our shareholders, and 2018 will be another year of progress in that regard. Whether it's the day-to-day managing of our businesses and making them better, managing our portfolio through the allocation and reallocation of capital, or indeed, through a share buyback program, it's all done in the name of returns and what we believe is the best long-term interest of our shareholders. With that, I'm going to hand you back to Q&A. I believe we have some questions on the line.
In framing your questions, please be aware it's still very early in the season, and so many of our responses are going to be more directional than quantitative at this stage of the year. May I ask you to please state your name and the name of your institution that you represent when posing your questions. Now I'm going to hand you back to the moderator to coordinate the questions and answer session of our call.
Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our first question comes in from the line of Gregor Kuglicz, calling from UBS. Please go ahead.
Hi, good morning. I've got two questions. The first one is on the buyback, which is obviously, I think, the first time you've gone down this route for, I believe, around 10 years. I want to understand to what extent that signals the value that you see in external growth relative to your own shares. Is that part of the thinking, or is it purely about returning excess capital that you believe you've got to shareholders? First question. The second question is on disposal. Obviously, I understand that this is a bit of a continuation of what you've actually been doing for a number of years.
Is the idea here to try to unlock value, a little bit like with the U.S. distribution sale, where obviously you managed to get a very high multiple, or is this more like perhaps the early days of your disposal program when you took over as chief executive, where it was a bit of a portfolio cleansing and less about trying to unlock value? I guess the reason why I ask is because obviously disposals in its own right can obviously be quite good, but if the value achieved in terms of multiple, I guess from a longer term perspective isn't there, it perhaps doesn't add as much. That's where that question is coming from. Thank you.
Thank you, Gregor. Two questions there. With regard to the buyback, the buyback is really us taking an opportunity, looking at the strength of our balance sheet at this moment in time. That we have a unique situation here. We have a particularly strong balance sheet given the proceeds received from the disposal of Allied, the very strong position we had on our balance sheet at the end of 2017 with a very strong year of cash generation, but the benefit of U.S. tax reform coming through. Looking at that and looking at the fact that last year we completed in the Americas over $4.2 billion worth of acquisitions, which have yet to be integrated and delivered value, with the Fels acquisition of another EUR 600 million.
It's almost EUR 5 billion of deals done last year that we need to focus on embedding them within our businesses, integrating them and delivering value. So perhaps hitting the pause button on development to focus on that, much the same as we did at LafargeHolcim. With that in mind and our needs for cash going forward and the particularly strong cash position we're in, we find ourselves having excess cash. That combined with the fact that when we look at what we consider to be the intrinsic long-term value of our business and look at the dislocation there is with that value with the current share price, we're taking the opportunity to use our balance sheet to create value for our shareholders by using that balance sheet to launch the share buyback program. It's really down to those unique set of circumstances.
As you rightly say, it's something we've used before, I suspect it's something we'll use again. Really, it's just really a further demonstration that whatever we do in CRH, we'll pull whatever lever is possible to try and create value for our shareholders going forward. With regard to the disposals, the disposal program is really just about capital efficiency within our businesses. Making sure that wherever we have a dollar or euro of invested capital, it's working as hard as it possibly can to create value now and in the future for our businesses. It's as much about looking at underperforming businesses as it is about reshaping the group for the future, looking at the future demand for our businesses. When we look at our group going forward for the future, we look at future trends in terms of where the markets are going.
We're looking for obviously increased revenue growth driven by good macro environments, but also our ability to deliver within that. In addition to that, we're looking for further acquisition opportunities. We work, thankfully, within a fragmented industry, and if we have acquisition opportunities to build on top of the naturally recurring organic growth, that gives us further opportunities for growth. Hugely importantly, it looks about how we shape the group. In terms of buying businesses or having businesses remain within a group, they must be able to contribute to the overall group. The integrated nature of the business is very, very important. It's why our returns are industry-leading. In looking at the business we have, they have to be able to provide revenue growth, acquisition opportunities, and they have to fit within the group in terms of the value creation within our businesses.
Not just for today, but also going forward for the future. They're the main criteria which we look at to reshape the group going forward, and that's what drives the portfolio decision whether a business stays within or without.
Thank you very much.
Thank you.
The next question comes in from the line of Robert Sheridan calling from Goodbody. Please go ahead.
Good morning, everyone. Just two questions from me. Just on the U.S. and specifically around infrastructure. Over the last 18 months, we've had a lot of uncertainty about funding, Trump hype, delays in getting FAST Act up and running. What are you seeing on the ground in terms of backlogs? If you can even put a few figures around it in terms of potential growth in that segment, just given that uncertain backdrop that we've had for some time. Staying with the U.S., from a lot of corporates, we're hearing about cost pressures, whether it's labor or other elements of the cost base. Just what are your experiences at the moment? I'm talking outside of oil-related costs. They're my two questions.
Okay. Maybe if I can just take the two big picture questions to start, Robert, on the funding and the backlog, I'll ask Senan to talk about the cost pressures we're seeing within our business in North America. The overall picture on funding for this year, actually, it's probably a better picture than we've had for a number of years. Of course, the FAST Act has certainly been well integrated in terms of what the funding backdrop is in terms of going forward. What I think you know, but maybe a lot of people haven't picked up on, of course, is that when on the 23rd of March, when the actual appropriation was made for 2018, a further $2.5 billion of federal funding was allocated for 2018, which means the total federal spend this year is actually up 8%, which was very significant.
The states themselves are up about 3%, which gives you a total increase of about 5%, which is a good couple of percent ahead of last year. The overall funding backdrop is quite encouraging. Within our backlogs, the backlogs are going to sound very encouraging when I go through them for you, but you've been around long enough, so you'll know. Normally when you come out of a slow first quarter, because we have weather here, first quarter, the backlogs will build. They are quite strong. Our Aggs backlogs as we start into. This is only last week's information, so our Aggs backlogs are +11% on last year. Asphalt backlogs are +12%, ready-mix is +18%, construction, overall construction up 14%, and margin well ahead as well. They're particularly strong. They're stronger than just the rollover of the first quarter.
The momentum seems to be good within the business as well. In April, we've had a good run of weather during the month of April. Those backlogs are last week, so we've had a good first couple of weeks delivery. The backlog seems to be quite strong, quite good. Pretty much in line with what we said about sort of a very positive backdrop for U.S. public infrastructure spend going forward. Maybe on the cost side, Senan.
Yeah, outside of energy, which is the way you set the question up, Robert, labor is a big cost element. Labor inflation for us in the business, we're still seeing numbers of about 3%, maybe 3%-4% in North America. The one thing I would say about labor, I think it's as much about the availability of labor as it is the cost of labor.
I think, as you mentioned and we talked about, we've strong backlogs at this point in the year now, and the main challenge really for us on the labor front will be making sure there's availability of labor to get the work done in the months ahead as opposed to the cost number is still modest enough in terms of inflation.
Okay. Thank you.
The next question comes in from the line of Robert Gardiner calling from Davy. Please go ahead.
Morning all. 2 from me as well, please. 1, a lot of comment in your Europe Heavyside Division there around pricing. I count 8 geographies there where you talk about prices increasing or ahead in the first quarter. Just be interested to get your thought there and momentum around pricing in Europe as a whole. I just want to come back likewise on kind of disposals and bolt-ons. I'm just wondering, you've divested your U.S. distribution division. I'm just wondering, do you see a shift in the business
Away from products distribution or cement, or how should we kind of think about that? Should we be thinking more about the balance of the group in those terms? Thanks very much.
Thanks, Bob. Good morning to you. 2 questions there. With regard to European pricing, yes, you're right. Look, we've been talking to the market about obviously the tail end of 2016 and through 2017. Momentum continuing to build in a positive way, and good to see it. The pricing season is upon us, and in fact, it's nearly finished now at this stage. As you've seen this morning, a lot of the pricing moving in the right direction. More anemic than I would like, but not surprised given the early stage recovery that we are in. It feels to me like this is the United States of about 2012. Anybody who was around then will remember volumes had only just started to recover from a very low base, and we were slipping in sort of 1, 2% price increases.
After 2 years, it builds momentum. It's good to see now it's pretty much broadly spread. The only part where we have still got a little bit of difficulty due to local issues is in Switzerland. Broadly speaking, across all of our European markets, pricing are moving ahead. That momentum is good to see, and I think that momentum will continue to build. Remember, we've had no pricing in European cement for, gosh, I'm going back to 2009 at this stage, 2010. There's 5 or 6 years of latent potential there to come through, and that'll be a big fill-up to our businesses as we go forward. With regard to the disposal and the fact that we've disposed of Americas Distribution. Does this signal a shift of the business in any particular way or not.
Look, CRH has a very well-proven strategy, which is one of balance and balance in terms of end markets and geographies. That has served us very well and will continue to serve us very well as we go forward. When we talk about balance, it doesn't matter what the product you sell, it's the market you sell it into. That can determine what the demand for that particular product is. The fact that in recent years we've disposed of our distribution business, I think we made it very clear why we were doing this, in terms of that we had run out of road in terms of acquisition opportunities and the fact that we saw greater value creation in other parts of the business. The fact that those opportunities happens to be on the heavier side doesn't signal any shift whatsoever in our strategy of our business.
Our business has been built on being a balanced business across different sectors, different geographies, and different end use, whether it's new or RMI, res, non-res, public infrastructure, the Americas or Europe. That will continue to be the case going forward. That balance has served us well through many, many cycles, and I think one of the key things that you will see about CRH is we manage the cycles better than anybody else. The success we have seen in our business over the last five years in terms of profit growth and revenue growth and value of our shareholders, that is delivered on the back of how we managed the down cycle from 2009 to 2014. It's how we manage that cycle.
It's done by balance and balance end use and by geographies, that's a fundamental part of our investment thesis and will continue so for the years ahead.
Okay, great. Very helpful. Thank you.
The next question comes in from the line of Yves Bromehead. Please go ahead.
Good morning. Two questions from me as well. On your H1 full-year 2018, like-for-like EBITDA outlook, it seems that quite a lot of it's dependent on the European earnings growth. Could you maybe give us more granularity as to what has been driving the strong Lightside like-for-like sales in Europe in Q1 versus other products? It doesn't seem like they've been suffering from much weather-related issues. Do you expect margins in this division to offset pressures in Switzerland and the U.K. possibly? Just sticking to the U.K. a minute, do you expect the recent price increases that you've seen recently in aggregate and so forth to cover the cost inflation? My second question will be on your H1 outlook in the Americas Division.
You mentioned that you've got almost a double-digit increase in the backlog across your different products, but you expect a flat like-for-like EBITDA growth in H1. Could you give us maybe the reasoning behind this and if at all it is impacted by the recent surge in the oil price environment? Thank you very much.
Okay. Three questions there. Firstly, on European Lightside and the performance of the European Lightside business. Really it's more to do with the fact that the end use exposure, maybe perhaps relating back to the previous question I had there, is that you find that the businesses that are not totally exposed to Heavyside new build construction are the ones that perform better. Our products business, generally speaking, across Europe, are more exposed to RMI work than they are new build construction. RMI work, by its very nature, is less heavy and in fact, a lot of it can take place inside buildings or in protected areas.
That is why that has been less impacted by the weather, and hence we've seen better performance and perhaps more indicative of the trends, the construction trends in Europe, because not so heavily impacted by the weather that's actually out there. With regards to price increases in North America, in terms of the aggregates and the heavy side businesses, I do think that the price increases that we're seeing there, which we, of course, we have to deliver them, but the indications are quite good. There'll be some good progress this year with regard to price increases across all our products. I think it will offset in terms of any cost increases we see coming through our businesses. There are higher energy costs, and as Senan has already talked this morning about the labor costs coming through there.
From our point of view, of course, that's something we have to manage. They're well signaled and well understood, and from our point of view, we believe that they will at least cover those costs coming through.
I would say that the half one comments that you made about the Americas, and if you take the backlog conversation that Albert mentioned, the backlog that's there at the start of Q2, it will take us Q2, Q3 to work our way into that backlog as opposed to expecting that to be caught up by the end of half one. Obviously bear in mind that half one, while it's a very small quarter, has been a slow quarter. We have work to do in the early part of Q2 to catch up on the slow Q1 that we've had, and hence the like-for-like commentary around half one for the Americas. It's not a statement about energy costs and the ability to recover them.
Just to clarify the point about if our backlogs are up so strong in terms of our guidance for the first half of the year, it's more a question of capacity in our customers rather than the capacity for us to deliver. There's only a certain amount of resources available to get work done, and it's really more to do with that. It'll just take longer to unwind, Rob. If you miss, effectively, the construction season can start from, broadly speaking, mid-February, sort of start to build momentum during March. We pretty much lost sort of 10, 15 days across North America. The U.K. alone lost 15 days. To find 15 new days during the course of the next quarter, if it was to all unwind to be sort of normal levels of activity at the end of the first half, you won't find that.
It'll unwind during the course of the season.
Great. Thank you very much. Have a good day.
Thank you.
The next question comes in from the line of Elodie Rall, calling from JPMorgan. Please go ahead.
Oh, hi, good morning. I got two questions, please. The first one is on the listing of the U.S. assets. There's been some potential news in the press. Could you please comment about that, please? The second one on the U.K. It's been a slow start of the year. The pricing environment seems to be still quite robust. Can you help us in understanding what your expectations are for the rest of the year, especially on volume? Do you think you can make up that slow start of the year? What the environment is looking like in the U.K. in general. Thank you.
Okay. Well, with regard to the U.S., of course, we have seen a number of reports recently, which are high-level reports talking about if we were to move some or all of our listing to the U.S., maybe perhaps it might create value or generate value for our shareholders. Look, this is something we've looked at a number of times over the years in CRH, it's never made sense for us in the past. We continue to look at it with our advisors and keep the matter under review. What some people miss when they look at this is the fact that we're very much an integrated group, we very much drive value not only within the group through vertical integration, but significantly across the group.
If I just look at the year ahead of us, I think of all the work we have to do, particularly in North America, in driving some of the synergies of the large deals we have over there. We've already announced on the cement businesses synergies across Ash Grove will be EUR 100 million, the synergies within Suwannee are EUR 20 million. We talked this morning about the merger of our Suwannee and American Cement businesses. That's going to generate probably another EUR 10 million to EUR 15 million of synergies. Pretty much all of those synergies are going to have to be delivered by our European-based cements teams. We will have teams on the ground of somewhere between 50 to 150 people for a year or two years working within those businesses, delivering value that way. That was very much the case as well when we had the LafargeHolcim transaction.
We put the specific organization in place to deliver the synergies, they did deliver the synergies and deliver value for our shareholders. Of course, there's big procurement programs, global procurement programs that we work on, we on average save between 2.5%-3.5% of our procurement save by putting products and services into those procurement programs. They're group-wide programs. If you're going to look at splitting up the business, you have to take into consideration the dis-synergies that are caused by those areas. Areas such as OPEX and CAPEX, the whole ideas of how we manage markets and customer management, the way we handle development in terms of coordinated development and synergies as well, across that. All of these factors are what we take into consideration when we look at how different ways we could structurally unlock value for our shareholders.
We do keep an open mind to it. We do keep it under review, and we'll continue to do so. With regards to the U.K. and the strength of the U.K. and in terms of where pricing is, well, you're absolutely right. Broadly speaking, the prices of products have been strong this year, and we've moved on ahead. We needed to. The U.K., of course, went through the recession like the rest of Europe and went through a number of years where pricing didn't move. The first quarter, we've had very significant weather impact. Anybody who's been in Britain or Ireland will know that. Because of that, we've had a very slow first quarter of the year. The underlying demand and potential is good. Residential markets continue to be fairly robust in our business in the U.K., particularly our Tarmac business.
We've just happily, we won the maximum five big major contracts we could win out of the seven big contracts we bid on major infrastructure programs. We're very, very pleased with that. That will continue to deliver value and volume for our products going forward for the next number of years. We're sitting here in a good position as a true national business, and we think that during the course of quarter two, three, and four, the slowdown in quarter one will unwind, and we expect overall it to be, as we said, broadly stable for the U.K. for 2018 to 2017.
Great. Thank you.
Thank you. I think we have time for just one more question before we lose the time here, if I can take one more, please.
Our final question comes in from the line of Will Jones, calling from Redburn. Please go ahead.
Thanks. A couple from me, please. One was just focusing in on the asphalt business in the U.S. Perhaps you could update us on how the winter fill program is going in terms of how much you've done, how much you plan to do, and the kind of cost change in that process thus far. I guess more generally, how would you rate your chances of matching or beating the, I think, asphalt price? The selling price last year of the product was +3% for the year. Do you think that can be bettered in 2018? The second one is just around the Philippines. I know obviously a small part of the group now, but there's a comment there that cement prices were ahead of 1Q17.
Is that just because pricing gave way in Q2 onwards last year, or has there been a change sequentially in Q1 against Q4, if you see what I mean? Thanks.
Thank you, Will. Good morning. Just with regard to our winter fill program, I have to say our program starts pretty much about August, September, goes all the way through to April and May. Just to give you the extent of that program. We're almost at the end of it now at this stage. I think we've bought well through the season. We bought all well through the last sort of almost six months, seven months. We're happy with spots in our tanks. Overall, the costs are slightly higher than last year, but no surprises given where oil prices has been. As we often say, it's not about the price of the actual asphalt, it's actually the margin spread between what we pay and what we charge.
The key competitive advantage we have with our winter program is that bitumen, which we buy during the winter months, is structurally, seasonally cheaper than it is in the bidding season. What we do is it not only gives us an advantage on cost, it also gives us certainty of supply and security of supply as we bid into those contracts. If you do want to see prices of bitumen up, you want to see them up at this time of the year, because as contract work gets bid now, and remember, the work we're bidding in the month of April will get performed and executed in the months of June and July. You don't want a low bitumen price and a high oil or bitumen price in June or July.
You actually want it now, so you get it bid into the work and at least you get paid for it. Given that, I think that we are in a pretty good position with the winter fill season we've had, what we have in our tanks, the price we have in our tanks, and the fact at this point, at the time, we think that oil is up where it is going to be for the next couple of months. We think that we're pretty well-placed in terms of maintaining a margin and hopefully increasing a margin with regard to asphalt during the course of this year. Just looking, turning to the Philippines, you're right, the pricing has been up in the first quarter versus last year. I think that's maybe two things.
Last year was very weak as a result of intense competitor pressure, both nationally and indeed in terms of imports. I think a number of things happened during the course of the year that meant, I think that the pressure from imports was somewhat lessened. I think the fact that the pain of last year has bitten hard with everybody, both the importers and indeed the national producers, and that meant that prices improved. I would expect this year to continue to be a difficult year, but I expect this year to be the bottom, and I think the building blocks have been put in place during the course of the end of last year, this year. This business will continue to build back its profitability from 2019 and beyond.
The price increase in Q1 was an improvement over Q4. It's not just year-over-year, but it's also quarter-over-quarter.
Great. Thank you.
Okay, thanks, Will. Well, ladies and gentlemen, that's all we have time for this morning. I want to thank you for your attention. As always, if you have any follow-up questions, please feel free to get in touch with our Investor Relations Team here in Dublin, and we look forward to talking to you again on August 23rd when we report our interim results for the first six months of 2018. Thank you very much, and have a good day.
Ladies and gentlemen, thank you for joining today's call. You may now disconnect your handsets.