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Operator: Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Buzzi SpA First Half 2025 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Pietro Buzzi, Chief Executive Officer of Buzzi SpA. Mr. Buzzi, you have the floor, sir.
Pietro Buzzi: Hello. Good afternoon to everybody. Thank you for joining and listening to our periodic, let's say, or recurring summer calls after the release of the interim results. And we will try to follow -- we are going to follow, let's say, the presentation that was made available to you all, I hope, and give you -- well, as much as possible detailed overview of what has happened in the last 6 months and what we think could happen in the following 6 months. So if we start from a brief let's say, overview of the first semester, we can say that we had overall, let's say, positive results, not as good as last year, but for a number of reasons that we will try to explain during the call. It is true that if we look at the last 2 years, generally speaking, results have been growing and they've also been very outstanding, very, very positive in a situation where the volumes, the demand was not particularly strong. What we have seen this year is in some area, actually, a rebound of the demand or a stabilization of the demand in some others, more weaknesses. And I would say, a trend in prices and costs that has not been as favorable as we had in the last 2 years. And this is in a nutshell, the reason for the -- a little weaker results that we achieved during the 6 months. In terms of volume, we have, of course, to make a difference between the like-for-like figure and the actual figure because some significant changes occurred last year in the last -- particularly in the last quarter with the first time consolidation of Brazil and the exit of Ukraine. So if we consider the actual, let's say, cement volume, the results in terms of sales are very positive. And they include, of course, Brazil for the first time. They do not include Ukraine. And there are some volumes also coming from the consolidation of the UAE plant starting from May. Ready-mix volume were not significantly affected or only in a small way affected by changes in scope, and they are anyway slightly positive versus last year, both actual and like-for-like. In looking at the sales revenue, we have an increase of about 6% versus last year, first 6 months by adjusting for changes in scope and also foreign exchange differences, we are at 1% up. So very, very similar to last year. EBITDA is down 4%, including everything. So also the impact from changes in scope and about 8.5% like-for-like. So after adjustment for no contribution for the new entries in the scope of consolidation and some unfavorable changes in the foreign exchange valuation. Margin suffered somewhat. EBITDA margin, let's say, profitability following, I would say, the decline of some markets, in particular, the U.S. where the average group profitability is above the overall group profitability. Meanwhile, the entrance of Brazil has been positive, but Brazil in the last 2 years has been showing anyway EBITDA margin that is slightly below what used to be or what was the average of '23 and '24. So in a sense, it is contributing negatively to this figure for the group as a whole. Cash generation continued to be positive. Actually, as we will see later, net cash from operating activity was greater than last year, even in a -- after a lower, let's say, a smaller EBITDA -- total EBITDA result. And net cash by the end of the semester is around EUR 690 million versus EUR 755 million at the end of the year -- at the end of the previous year after a significant, let's say, CapEx spending, of which a material portion was devoted to equity investment like we will explain in the following pages. So going forward, if we look at the net sales variance by region, the Italian results are showing, let's say, a small positive for volume and a more significant change, unfavorable variance for scope. I refer here to the disposal of our plant in the Northeast of Italy, which occurred at the beginning of the year, basically for the full semester. And this was a disposal coupled with a more -- with a wider, let's say, let's call it, strategic operation. So together with the disposal of the Fanna plant, we actually decided to receive in a sense -- in exchange, a 25% interest in the bigger Alpacem Group, the same group that has been acquiring, let's say, the Fanna plant. So actually, these results that we have been losing in a sense in the line-by-line consolidation, we think will be more than offset by, let's say, greater equity accounting results going forward. But officially, if we look at the consolidated numbers, we are losing about EUR 22 million for scope reasons. Central Europe performed fairly well in terms of volume. Clearly, we were starting from a low base due to the fact that '23 and '24 has been quite negative, generally speaking, for the German Luxembourg and Netherlands markets in terms of volume. But at least the market did started -- did start to show some rebound. Pricing trend, not as good. I mean, unfavorable variance. This is mainly due to the, let's say, let's say, carryover effect of what happened in 2024 in a sense that 2024 started in both in Central Europe and also some countries of Eastern Europe with a price increase, which later on during the year was not sticking, was not confirmed and started to be somewhat eroded. And so our price, let's say, in the first half of '25 is not so different from the price -- from the exit price of 2024, but compared to the beginning of '24 is indeed lower. Eastern Europe performed generally speaking, quite well, particularly Poland and also Czech in terms of volume. Pricing, a little weaker, talking about Poland, a similar trend to what I was explaining about Germany. So the fact that the pricing were on an upward trend at the beginning of '24 and then somewhat adjusting to a lower level during 2024. And so exit or prices or beginning of prices in the first part of '25 that compared with a higher level at the beginning of '24. FX was not an issue in Czechia and Poland. And scope, yes, changes associated with the disposal of Ukraine. But overall, a good performance in terms of volume and prices certainly in the Eastern Europe -- the remaining Eastern European countries, including also Russia, which did well in terms of volume and also prices. The U.S., the U.S. probably already somehow has been the weakest point in the first half because volumes were definitely softer than what we expected or what we were planning. I think this was a general market trend, partly impacted to some extent from weather until May and also June, we had several weather events or rainy season longer than usual, but also softness of the market, which was -- has been also acknowledged recently again by the American Cement Association with the change in their forecast for the full year. Pricing holding basically at the level of the previous year, not declining and relatively minor foreign exchange impact because the weakness of the dollar has been more pronounced lately. But in the first half was still relatively similar to the previous year. And then we have the addition of Brazil and United Arab Emirates that are contributing respectively EUR 165 million for the full semester and EUR 21 million in the case of Emirates for the 22 months. The company entered the scope of consolidation at the beginning of May. And that's in a short summary, the explanation of our revenue variance. Going to the EBITDA variance, the volume effect, as we mentioned at the beginning, is overall positive, even, let's say, even without considering the major contribution coming from the changes in scope had a price effect that instead is negative. This is driven mainly by Germany, I would say, where we had most of the negative price effect in the scope of consolidation and Poland, to some extent. The rest has been more stable or in some cases, even slightly favorable. Variable costs are somehow, let's say, impacting. There is quite a difference within the different countries. So there are countries where we had variable cost -- portion of the variable cost either declining or stable. In generally speaking, fuel and energy did not show any significant increase with a few exceptions again. But in general, they were pretty much under control. But in some other countries, we did suffer from some increases in raw materials and also power. In terms of fixed cost, this is more impacting in a sense even if the absolute amount is not as significant because it occurred in a general situation where, let's say, the volumes did not increase or in some cases, below last year. So typically, countries or markets like U.S., Italy and Germany where we suffered the volume decline, the impact of the fixed cost on the unit, let's say, production cost has been definitely greater. So this is typical of a situation where we are losing some volumes. It's -- I don't say easy, but it can happen like it did happen in the first half that your fixed cost management is not able or we are not, let's say, able to achieve a decrease or a level there, which can keep the fixed unit production cost under -- at the same level of the previous year, which is what happened actually in, for example, in the U.S., but also in Germany and partly in Italy. We have other costs that are more one-off or maybe more volatile or changing over time, which affected also negatively the EBITDA performance. For example, inventory changes. We had some significant cost one-off, so not repeatable for the second half associated with the acquisition of the controlling stake in the Emirates. All these, let's say, are included among others. Also, as opposed to last year, for the first time since 2, 3 years, we suffered some write-down of receivable due to the situation that needed to be addressed. And again, this is something that in the last 2 years, we almost had none. And the difference is, let's say, more evident versus something that did not exist at least in the last 2, 3 years. CO2 costs for the moment are 0 because, as you know, the accounting of the CO2 cost is -- occurs -- they start to be accounted for the rights when the free allocation are expiring or are becoming -- I mean, you need to use CO2 rights that have not been freely allocated. And this is something that always refers to the second semester. But anyway, we are not expecting big CO2 cost impact for the full year, but we are still pretty much in the range of the fee allocation with some exception in countries that perform particularly well like Poland or Czechia to some extent. And the FX impact is, for the moment, not so significant. And the EBITDA coming from the scope changes is EUR 30 million, and it includes both Brazil and United Arab Emirates. Brazil, of course, is by far the most significant, also referring to the full semester instead of just 2 months. Moving to the cash generation that I was mentioning at the beginning. Again, I think we can be quite happy with the outcome of the semester because also after some variable positive changes into the -- within the working capital items, we were able to achieve net cash flow from operation greater than last year, even with lower EBITDA contribution, as you can see. CapEx are not so different from last year, industrial CapEx. So we are continuing with a similar, let's say, investment pattern as last year. We do expect acceleration in the second half. But for the moment, the outflow is similar. Equity investments, they represent a significant differential versus last year, and they include, as we mentioned at the beginning, in particularly the Emirates acquisition and the 25% stake that we bought into Alpacem, Austria, let's say, Alpacem holding in -- together with the disposal of the Fanna plant. Actually, the 2 items are more or less offsetting. You see that in the fixed asset disposal, we mentioned the -- mainly the Fanna sale. And within equity investment, basically the same amount represents our outflow for the investment into Alpacem, Austria. Dividend payments have been greater than last year according to the shareholder resolution, as you can see, from EUR 108 million in '24 to EUR 124 million in '25. We received less dividends from associates. This was basically related to a timing difference of the dividend flow from Mexico. So besides the foreign exchange impact on the Mexican peso, this component is going to become more similar to the previous year going forward in the second half. I already commented, let's say, the fixed asset disposal. And we had other changes in the net financial position, mostly related to foreign exchange differences on either liquidity or loans in foreign currency like the dollar, the U.S. dollar or the Brazilian real. Taking a little closer look to the different geographic area. We start from the U.S. This is where we suffer the -- I would say, yes, the most significant decline also because in absolute terms, of course, the U.S. are the main contributor to our overall results. And I could say, like we mentioned here, that there was -- still is there some weakness in the market driven mainly by the private sector, the residential, the fact that interest rates continue to be relatively high, and they are not helping this typical, let's say, call it, trading in the U.S. home market that we used to have or we experienced, let's say, until 2023 and partly also in '24. And the public spending continues to be strong and to expand. But at the end, in terms of actual construction activity due to the inflation that is there or has been there in '22, '23, '24, the amount of money allocated to that is not able to -- is not enough to realize the same construction activity. So actually, there is an inflationary tax or toll that has been paid, which translates into somewhat -- so not as many projects as was originally planned. The volume decline is about 6%. Certainly, unfavorable weather was a factor during the first half. So we are more -- somewhat more optimistic on the second half, assuming that the weather stabilizes. Pricing was not particularly strong in terms of, let's say, positive changes. But on the other side, it was also solid with overall stable to slightly increasing pricing level. We did have some additional costs, as I mentioned at the beginning, particularly on the fixed cost side, like personnel, maintenance, not only that in a declining, let's say, production environment, production situation, they translate immediately into lower margin, which is what has been happening. Negative foreign exchange effect was not so significant, but still representing EUR 2.5 million negative on the first 6 months EBITDA. Just to mention as an additional information that inventory changes and other negative impact on EBITDA was EUR 7 million negative in '25 versus '24. And I already mentioned, but this is particularly significant in the U.S. some write-down of receivable, which was EUR 3 million greater in 2025 versus '24. So other items that are adding to the -- or are explaining the weaker profitability trend that we experienced in the first half. When we move to Italy, the situation is more -- certainly more stable as far as volume are concerned. So yes, they are down, but the reason or the only reason, I would say, is the deconsolidation of the Fanna plant. Like-for-like, we are actually showing a 2.7% increase. We had a good performance of our ready-mix operation, which we're up 5.8% during the first 6 months. And this was also, of course, helping our cement sales. EBITDA, yes, somewhat suffering. But if we look at the -- just the second -- now if we look at the, let's say, contribution without Fanna impact, the 22% decline becomes 17%. And I did not make the calculation, but okay, if we include also the one-off costs associated with the Emirates acquisition, which are all part of the Italian business right or wrong because they have -- yes, nothing to do with the operation, but actually, they belong to, let's call it, to the holding level. We increased EBITDA by another EUR 7 million up. So you can see that results are not as bad as they look. And some of the negative impacts are one-off for the first semester and will not repeat themselves in the second one. In terms of margin, well, same reason for the decline, partly associated with the cost, let's say, trend, but some of the costs really not recurring. And overall, I would say, we have a more positive view on the second half with good chances in our opinion to close this gap and get very close to the previous year results, of course, like-for-like, so without considering the Fanna sales. In Central Europe, good performance for the volumes, not as good if we consider the profitability. The main drag or decline actually came from Germany because both Luxembourg and the Netherlands improved their performance. Here, there is, again, a number of reasons that I'll try to explain as shortly as possible. One of the main reasons is certainly the price trend, which was affecting the German business, but also the Luxembourg business and the fact that we were, let's say, continuing on a price that was similar to the exit price of 2024 and still not able to go back to the, let's call it, average 2024 level. So we are -- we have a price impact that is clearly affecting the overall result. In terms of profitability, the German business, which was down about, yes, from '24, let's say, last year, to 50 this year. We have to look mainly at the, I would say, the cost trend, where in terms of variable cost, we suffer from a much higher power -- electricity cost. This is mostly related to the hedging strategy, which is a little different in Germany from what we have in other countries. Typically, their electricity cost hedging is greater in terms of coverage than the rest of the countries. And it's being done more in advance. So at the end, what you see here are, let's say, energy costs that were hedged 6, 10, maybe 12 months before. And so they are not exactly showing the trend of power, which is, let's say, the market price during the first 6 months. So typically, for Germany, if you want to have a clearer picture of the electricity cost, you should look through 2 years in a row or maybe even more. So what, for example, last year was more positive here than in other country, now it's the opposite. But again, in this case, the 1-year cycle is not saying the whole story. And we had also some higher costs for alternative raw materials like slag that Germany uses to a greater extent versus other countries. And this was, let's say, on the variable cost side were the main reasons. Power, we mentioned it. And in terms of fixed cost, like plant personnel and maintenance. There was also some inflation in -- which was overall not as impacted as, for example, in U.S. due to the fact that our volumes anyway performed better than last year. So I would say that here, the main reason for the decline are associated with the price trend and some of the variable cost trend. Yes, this is what we are commenting here so that there was better operating leverage. But yes, there are comparison based on prices in H1 together with higher raw material and power costs affected our results, which was my comment right now. Going to Eastern Europe, this is the area where probably we had, I think, the best performance of the group overall, even in a scenario where prices were not particularly strong. Actually, we mentioned the negative variance in Poland, but very strong volume sales, which more than offset the negative price trend, stable currency, also fuel and power cost, which were showing a positive variance. So all in all, I would say, good development. You can see it also from the EBITDA margin changes, very favorable. So, so far, so good, let's say, not too much to worry about. Also, the Russian performance was overall quite satisfactory. The impact coming from the Ukraine deconsolidation is not significant because at the end, with the -- thanks to the performance of the other 3 countries, we are definitely more than offsetting the loss of Ukraine. In Brazil, the market is doing okay. We have 2%, 3%, let's say, improvement in our volumes. The plants are running at very good capacity utilization level. Main issue or one of the critical, let's say, points remain the pricing level, which did not really change. So in local currency, if we look at the price level, in the first 6 months, we are very, very similar to the year. So not helping, let's say, very much yet in raising the profitability. And costs are, I would say, well under control. But we did have in the first half some higher, particularly maintenance cost associated with the so-called yearly maintenance, let's say, stoppage, particularly in one of the biggest plants that are, let's say, all incurred -- have been all incurred in the first semester. From now on, the plant should be running hopefully well, but we think it will also, thanks to what has been done during the maintenance period in the following 6 months. So they are a little bit misleading in terms of the, let's say, timing difference because we will see much less of that in the second half. We think that the performance will continue more or less at the same pace with lower fixed cost and likely, let's say, better variable cost, particularly as far as power and energy is concerned, which we will be enjoying for the full year versus only part of the first 6 months of the new PPA contract, which is very favorable in terms of power cost for the business. These results, of course, they include what has been a very significant unfavorable variance in the exchange rate, is not, let's say, visible because in the first half, Brazil was not consolidated. So we cannot really compare like-for-like like we can do for other countries that were already in the scope of consolidation in the beginning of the year. But if you do it pro forma or at least if you compare with the FX level that we had originally in the budget, there is clearly an impact in the range of 14%, 15% due to the trend -- the negative trend of the Brazilian real. Hopefully, this will also stabilize in the second part of the year or not get worse. With Mexico, it's not consolidated, as you all know, but it's a very significant part of our business. Performance continues to be overall very good, let's say, in absolute terms, outstanding also in terms of margin. As you can see, our profitability did not decline there as opposed to several other countries. In absolute numbers, we did lose something due to softer volumes on one side. And in this case, yes, we can mention it, of course, because it has been in the scope, let's say, somehow since many years, the trend of the currency. So EBITDA, yes, it is down 15 -- 15%, but adjusting for the currency impact, it would have been down only 1%. So I would say, a situation which is a little more difficult in terms of construction activity, volumes. For example, our ready-mix has been declining quite a bit in terms of volume trend. So not an easy year for the market. But I would say that our, let's call it, efficiency is usually very high in the country. We can, in a sense, afford somewhat lower volumes without any significant impact on the profitability. So not a year where we will see improving results also in local currency, likely to be not as good as, [indiscernible] but still very, very significant, very positive in absolute terms and in terms of relative profitability. If you want to mention quickly how we see the next 6 months. Well, I think we ran some number. We ran the usual, let's say, revised budget or forecast. And in general, we can say that versus the original budget, we are overall a little more optimistic. We have the feeling, let's say, or more than the feeling the -- not the certainty, but let's say, we have enough confidence on the fact that the second half should be somewhat better on what we saw and we experienced in the first one, particularly in those countries like the U.S. which showed a more negative trend in the first 6 months. So in U.S., for example, like we say here, we do not expect to be able to fully recover and to make up for the difference versus the 2024 results, in particularly considering an exchange rate, which will move -- well, we don't know, of course, precisely, but we are assuming that versus the 104 that was our budget, let's say, assumption, the average for 2025 could be 112 or 113. So this means just because of the exchange rate, some 8% negative variance. But anyway, we are a little more optimistic on the second half on our ability to recover, particularly on the volume side, not so much on the pricing and to be able to spread our fixed cost over a greater production volume. The Italian market, we explained already, no major changes in the second half. Demand is pretty stable. Of course, there is a strong support from the national recovery plan. So as long as we have investment flow associated with the national recovery plan, we can remain quite, I say, quite happy about the demand, the domestic demand. Once this recovery plan will come to an end, there will be probably a different scenario. But for the moment and probably also in the next year, meaning 2026, we can -- we should be able to rely pretty much on this kind of project using cement and concrete. Central Europe, we have changed our expectation somehow after the first half, which in terms of volume was anyway better than the original budget. So not great results, still some difficulties as we explained in the -- particularly in the German market. But our view is now somewhat more positive versus the original view of the original forecast that we made back at the end of 2024. Eastern Europe, we continue to be -- to remain optimistic, particularly for Czech Republic and Poland. And here, we don't have, fortunately, any significant impact coming from foreign exchange. So we should see a continuous good trend in these 2 countries as we experienced in the first half. Brazil, we mentioned it already. We see demand going forward improving rather than the opposite. We will have less due to, let's say, associated with timing with winter maintenance, et cetera, in the second half. So see the margins growing in the second half. And there are no great expectation about the pricing trend. But on the other hand, it's also more likely to see some -- with the, let's say, capacity utilization going up in the country, it's also more likely to see price improvement than the opposite, if not immediately in the coming months, maybe in 2026. The negative factor -- the main negative factor is the exchange rate, as you mentioned. Mexico. Yes, there is some low economic growth or limited growth in the country, which translates into a lower level of construction investments. But the company performance is expected to continue to be good, somewhat lower than last year. Yes, affected by the exchange rate. But overall, I would say, very satisfactory as it has always been in the last 5, 6 years. So that's why we -- by running the number, we came up with some revision or amendment of our expectation, not to a large extent actually, but we think that the original message, which was the one of being able to match last year results, including, let's say, the contribution coming from Brazil, Emirates was not considered, let's say, is unlikely to be achieved. So even considering the contribution of the change -- the positive changes in scope and considering the trend of the currencies, what our best, let's say, guess, best assumption or, let's say, assumption based on the information that we have and the knowledge of the market trends for the next month is that we will probably close the year somewhat in between EUR 1.1 billion, EUR 1.2 billion versus the [ EUR 1.28 billion ] of last year, which is -- yes, there's a bit of a decline. And of course, the fact that this happens occurs after a positive change in scope of consolidation is not ideal. But I think we have to look a little bit more down the road. It's very positive the fact that we have been increasing our volumes in a sense of the group. And this volume increase over time, it will certainly translate into better results. So we have to be confident. We are confident that the strategic moves that we have made will play for the better. And this year, I mean, it's a matter of time. And this year, there are other components, including the trend of the currency that are impacting on us, but that we can certainly, let's say, overcome in the -- going forward and looking like we always do to a longer-term horizon. So I would leave the appendix available to you for any detail or answer that may come to -- based on your question. So yes, let me finish with that, and we can move forward with the Q&A session. Thank you.
Operator: [Operator Instructions] The first question comes from Tom Zhang of Barclays.
Tom Zhang: So 2 for me, please. The first one, just maybe again on costs. I think we've seen quite a significant step-up in operating costs, which you've given a lot of color on, but certainly compared to peers, I guess it's a little bit more stark, and I get there's a lot of moving parts. Could you just remind us the total one-off cost impact that you saw in Q2? So you mentioned the one-off legal costs, some one-off write-downs, I think, of receivables. Could you just give us an idea of how much is one-off and so what we should see already reversing out in the second half? And then the second one, just on your sort of like-for-like earnings growth. So your EBITDA was down 8.5% through H1. But I guess you've talked a little bit about one-off costs going away, Italy, a bit of catch-up; Germany, easier price comps; Brazil, maybe a bit better; U.S., a bit better. What are the levers that might mean earnings growth should get better in the second half based on all these comments, right? What would be the risk that gets you to more like EUR 1.1 billion EBITDA instead of EUR 1.2 billion?
Pietro Buzzi: Well, on the first question, I think that I did not mention before another -- which was the opposite, was the opposite actually the other way around the positive income that we had last year in Germany, in particular of about EUR 5 million, which was associated with the sale of some Eco Point -- Eco certificate that we gained in the past, that's a long story. But okay? So I think we can have -- we can consider, let's say, the EUR 7 million of the legal expenses, the EUR 3 million of the write-down of the receivable, the EUR 5 million of the let's say Eco Point, which again play in the opposite way, but it's always, let's say, one-off. And I would say another EUR 3 million to EUR 5 million in terms of maintenance cost due to timing in a sense of winter usual -- let's say, heavier winter maintenance or heavier winter maintenance cost versus what should be or should have been. So this is, I think, is a reasonable figure that you can consider for Q2, let's say, not repeatable in Q2. And for the rest, I don't know, I mean, in a sense that we tend to be, I say, conservative, realistic running, let's say, our numbers, we come to something that, yes, it's basically in between EUR 1.1 billion and EUR 1.2 billion Does this mean that we cannot achieve EUR 1.2 billion? Who knows? Maybe we will. The major changes are, I would say, versus budget, we are certainly below expectation in Brazil, but it's mainly a foreign exchange impact. So we are 7%, 8% below, but the foreign exchange is hitting more than that. And in the U.S. yes, we are another, let's say, 9% below budget, so which is anyway less than the foreign exchange impact or -- well, we will see because the foreign exchange impact, of course, in the case of the dollar is more unknown. But certainly, this is where -- also due to size, we are affected the most. For the rest, we don't see -- versus the original budget, we don't see really a difference or an unfavorable variance in other countries. So the trend should be slightly better.
Tom Zhang: So just to confirm, I guess, the -- outside of the U.S., H2 versus H1, you're not seeing sort of major risks on the horizon. Obviously, there was this big downgrade because of FX. But on a H2 versus H1 kind of run rate basis, you're not seeing big risks in any region?
Pietro Buzzi: No, no, I would say no. I don't know. Well, on the U.S., of course, there was also a recent -- we are currently in this forecast, more optimistic than, for example, what used to be the PCA, which is now the ACA because if you look at the very recent -- when was it 2 days ago, they issued their summer forecast, and they are now assuming some 5% decline for the market as a whole. And then, of course, it depends on where you are in the geographies, et cetera. But let's say, we are now assuming a volume trend, which is not minus 5. Even if it was minus 6, let's say, in the first half, we are assuming a stronger performance in the second half. But we may be too optimistic if this, let's say, forecast by the association is correct. Sometimes I'm not correct. It depends. But we will see. So yes, I would say that overall, this is where our potential risk is the greatest, but more related to volumes, I would say, in the second half than to cost.
Operator: The next question is from Ephrem Ravi of Citigroup.
Ephrem Ravi: So just going back to the point on costs. Obviously, there's been some increase in fixed costs in particular. Are you planning some kind of a fixed cost rationalization plan in the second half and into early next year? Or are you basically relying on operating leverage as volumes increase to spread that fixed cost over a wider volume base? So again, the question is kind of in terms of cost cutting, do you think kind of the market outlook is robust enough to not kind of take down some costs in the near term? Secondly, given the consolidation of Brazil and going into GCC, your exposure to emerging markets and consequent kind of currency exposure has increased. Are you planning to change your sort of hedging policy on currencies, i.e., kind of do more proactive hedging especially on the real and the dirham and other currencies?
Pietro Buzzi: On fixed cost restructuring, I would say no, but that doesn't mean that we are not -- we cannot -- we do not have, let's say, improvement plans or trying to being, let's say, making continuous effort to try to reduce them. Big things like changing the industrial footprint, we don't have plan for that, particularly because in a sense, this will be more needed in Europe than in other regions because it's where we have the lowest capacity utilization. But Europe is biased and is anyway affected by the overall environment with the ETS, the free allocation, et cetera. So it's much more costly in our opinion to lose free allocation for a certain plants than the benefit of the restructuring. So the fixed cost reduction coming from shutting down one plant. So this is a theme that may become more significant, but I would say when the free allocation will -- if they will disappear in some years from now. On the hedging policy, I mean, we have to be -- try to be a little maybe more careful with the lending to some extent. We could use -- we did in the past, we could use a little bit more the borrowing in dollars. But this is -- on one side, okay, it can balance at least not the EBITDA, but in terms of net equity or partly also net interest expense can offset partly the negative foreign exchange variance. But on the other hand, it is, let's say, more costly and does not really change the operating results. I mean, any kind of hedging can have an impact, first of all, would be, I think, very costly in general. And second, would have an impact only on the financial portion of the income statement, not on the operating portion. So we are -- I mean, we are lucky to belong to a business lucky, that is anyway buying and selling in some area, 100% and in some other area, 95% in the same currency. So if the performance of the U.S. is very good, let's say, in terms of operating results like it has been lately, we may have a surplus of dollar. This is true, but this can be used for, let's say, CapEx spending there or potentially other also, let's say, investment project where you need the dollar. And it has also the advantage of, yes, potentially being subject to devaluation, but on the other hand, higher interest rates on the liquidity. So I think we have to carefully manage all these different reflections and impacts. But to start really, active, hedging policy on the financial side, we don't think so. At the end, it's mostly an accounting issue due to the translation effect.
Operator: The next question is from Elodie Rall of JPMorgan.
Elodie Yvonne Daniele Rall: My first one is on FX. I was wondering if you could give us your expectation for the full year in terms of revenue and EBITDA impact in euros, please, in euros million? That's my first question. My second question is on the U.S. So you've talked a lot about what's impacted performance in H1. I was wondering if you're planning to push a bit more price increases in H2, if you think that could be possible? How much of the difficulties come from imports at the moment for your business? And if there is more inventory cost management to have in mind, hopefully not for H2? My third question is on price cost in Germany and Italy, clearly, it was quite negative in H1. So what are you doing to improve that from here? Peers have reported relatively positive numbers. So it's a bit surprising. And my last question is on capital allocation. If you could give us an update on where you are with regard to your buyback program. And how much more is there? And how you're thinking about allocating the net cash position that you have?
Pietro Buzzi: I hope to be able to remember everything. So the first one was the FX. So on the -- this is versus last year the revenue. But you were asking for the full year impact on the -- because you can maybe do it yourself that I think -- for me to give you the FX that we have been using lately to adjust for the forecast. If you look, for example, at 2024, the actual U.S. dollar was $1.1 -- $1.08, okay? And we have in the forecast $1.12. In terms of real, for example, we had 5.8 was 2024, and we are now at 6.50 for the forecast 2025. Mexican peso is not actually impacting on the sales revenue. But there are also some positives, for example, because Russia was 140 in 2024, and we are now assuming 98.8 in 2025. But if you want the actual number, we can give it to you. I mean we will send it to you later. On the strategy, let's say, pricing strategy for the U.S., I don't think we should push on the pricing side. We have to be very careful on the volumes because as we have seen, I mean, the main reason for the decline in profitability is actually the decline in production, the decline in volumes. So if we can keep the volumes up, I mean, obviously, in a consistent way with what the market does, I mean, if the market goes down 5, we cannot expect to go up 5 and keep the prices and increase the volume. But maybe we can do slightly better than the market and keep our production up, which is very important for the operating leverage and the profitability. Clearly, there are a number of critical points in the U.S. market right now. It's not only a question of slowing down of the construction activity. There are many changes. I mean, the QUIKRETE acquisition has changed a lot of the market landscape. You have big ready- mix companies that are importing cement. You have independent importers that are pushing, let's say, and trying to gain market share. So you can accommodate in a sense, all these different factors like we were able to in a situation like 2 years ago where the capacity utilization was very close to full. When the capacity utilization starts to decline, and if we assume that the American Cement Association is correct with minus 5 in '25 and you some -- '23, '24 and '25, you get to some, I don't know, maybe 15% decline or so, which means a lot of cement available. So push on prices doesn't seem to be, in our opinion, the right strategy if you want to keep our market share and our volumes. The last question was on the buyback. Well, okay, you cannot -- it's not immediately visible in the numbers that are in the first half, but our investment plan continues to be quite significant. So we have a number of projects that have been approved or are close to approval, including some associated with the famous decarbonization, particularly in Europe that will require -- likely to require in the coming years, significant money. Again, some of them are not 100% approved, are just in, let's say, engineering studying phase, detailed engineering, and we will see if we will come to a final decision or not. But certainly, a certain reserve of money devoted to the industrial footprint is necessary. Also, I think we mentioned several times also in the U.S., we have some, let's say, situation that are not certainly long term. And if you want to keep like we want to, let's say, the same capacity and improve our efficiency and over time, also lower our cost versus what we have seen also this year. So the difficulty is to decrease our maintenance cost. We need to do something in terms of, let's say, upgrading our capacity and in the U.S. And this is particularly true after what has happened with the tariff adjustment. CapEx is where we will have most of the impact due to tariffs because the equipment is mainly coming from Europe actually. So any kind of improvement, let's say, addition to plants or increase of capacity will be subject to tariffs in a country where already the investment costs are much higher than anywhere else. So again, we will try to use our money at best, but there are potentially on the industrial footprint, many projects that can absorb a significant amount of financial resources. The buyback for the moment we didn't start it, is something that may come to, say, on the table -- with the Board in the next occasion. For the moment, we didn't consider yet, let's say, the possibility to open the program, but it's something that we, let's say, regularly discuss and a decision could be taken in the next occasion. Partly, it also depends to some extent on the share price. Certainly, I do not -- I'm not, let's say, I don't like the fact that the share price is going down or is not performing. But on the other hand, if you want to start with share buyback, it's a needed decision also for the Board if the share price is not at its peak and is somewhat lower. And this would be good for the -- for any shareholder actually to buy at the lowest price possible. But on the other hand, between the 2 alternatives, I would prefer, of course, a share price that is going up and use the resources for other reason or for, again, a strategic reason that may become available in the near future also besides the industrial, let's say, necessities.
Operator: The next question is from Alessandro Tortora, at Mediobanca.
Alessandro Tortora: Let's say I have 3 questions, okay. The first one is on Germany. You mentioned before this unfavorable hedging due to the timing made 6, 9 months ago. The question is, can you give us, let's say, kind of idea of which impact had in the sense exactly, let's say, the spot prices or, let's say, kind of normal energy prices you would have had. So can you help us understand because clearly, if we look at the second half of the year, you shouldn't have, let's say, this negative effect or maybe a lower impact from this hedging. So that's the first question.
Pietro Buzzi: It's around EUR 4 million or so EUR 4 million, EUR 5 million for power -- only for power in Germany, could have been better. But again, we have to look across at least a 2-year time. So yes, it is true that we suffered this year. But probably, if we look at last year figures, that we were the opposite way around. But anyway, yes.
Alessandro Tortora: Okay. Okay. And then I know that, let's say, the details on Russia are not, let's say, so high. But in reality, Russia performed, let's say, pretty good, okay? So what's the reason why we saw that huge contraction into profitability from Russia?
Pietro Buzzi: There is no real good view -- well, yes, there is contraction because they did well in terms of volume and also pricing. But yes, that's a good point from Russia -- well, I received the number basically. I assume that there was again some -- certainly, the inflation in the country is high. And so the fact that we were able to improve prices, but maybe not beyond inflation. So I think that this is probably the main reason. Unfortunately, we don't have too much information. So what we received is what it is. I was trying to look at the forecast. We are a little more optimistic, as I said, with the exchange rate on the forecast -- the forecast, yes, we are better off than budget, but anyway below last year. So we expect more or less to double the result of H1, but it's above the original budget certainly. And in part, it is due to better ForEx, but in part also to better operating performance. I assume there is a question, yes of cost due to inflation, which is in the country, I don't remember exactly the rate, but it's probably more than 10%...
Alessandro Tortora: Okay. So let's say that -- okay, maybe slightly more than the double we saw, but clearly with this EBITDA margin. So on sales, lower due to maybe some -- okay, some cost inflation. Okay. Okay. Then the third question is on your CapEx plan. You mentioned, let's say, this -- I'm referring to the operating, let's say, EUR 290 million first half, a kind of acceleration or maybe also in the second half. And then some other initiatives. Can you give us, let's say, a sense of this year CapEx, but also sort of -- should we expect, let's say, kind of acceleration? You mentioned the possibility also to invest in the U.S. Clearly, it would be in tranches, not, let's say, a full amount in a year. So can you give us a sense of we are moving, I don't know, towards the [ EUR 500 million ] per year CapEx. So just a direction.
Pietro Buzzi: You mean specifically on '25 or...?
Alessandro Tortora: For this year, yes, considering the second half, if you can, let's say, give us a kind of indication. And also in the medium term, should we expect, let's say, maybe a slightly higher rate of your CapEx?
Pietro Buzzi: Okay. Actually, the overall forecast for, for '25 is now set at around EUR 600 million, of which -- which means, yes, a little bit more on the second half than on the first one.
Agostino Pieressa: Including equity...
Pietro Buzzi: Including equity investment, clearly, which were -- but they were all in the first half. Let's say, all what we can imagine or disclose. And I mean, the run rate, let's call it, in the next few years, it depends a lot on the 2 or 3 main projects that could be approved or yes, become actual with the next budget approval, which means basically the decarbonization project in Germany, if it goes through, which can represent, I don't know, some 50, 60 per year additional or maybe even more. It depends on how quick we are in, let's say, developing the project. And the capacity replacement of -- capacity expansion in the U.S., which could mean probably depends, again, in 3 years' time -- 3, 4 years' time, if we do it, it will be done in steps. So not so -- I mean, the total amount is very big. It could be in the range of EUR 1 billion but spread over a number of 5 to 6 years. So big projects, but let's say, with a really long-term horizon and approach to execute it, let's say, by steps. So it could easily bring, let's say, in the first 2, 3 years, maybe EUR 100 million, EUR 150 million additional. But this is clearly a very specific project for, again, you can call it capacity expansion or capacity replacement to the U.S.
Alessandro Tortora: Okay. Okay. And sorry, the last is, I see, let's say, below the EBIT line, you have, let's say, net financial interest benefiting from these foreign exchange gains on loans denominated in dollar. So can you give us a kind of bridge in order to understand the impact of this item, excluding, let's say, the recurring charges and income you get? And is there any comment on this line? Is it something that is going to stay? Just to understand because it should be huge the impact of this effect...
Pietro Buzzi: We have both third party and also intercompany loans that are playing in...
Patrick Klein: No, it's basically referring mainly to some, say, transfer and let's say, we have closed some position, intercompany position, which were denominated in dollar between U.S. subsidiary and, let's say, headquarter. And this played in favor from the FX...
Pietro Buzzi: Because we are structurally, let's say, borrowers from the U.S. So if the dollar declines and you adjust and then you close the position, let's say, theoretically, you have a benefit. It's more virtual than real.
Patrick Klein: And then there's a position with third party, but it's less important than the intercompany position...
Operator: The next question is from Yassine Touahri of On Field Investment Research.
Yassine Touahri: A couple of questions. First, a follow-up on the previous question on your CapEx. So if I understand properly, you're expecting CapEx, excluding equity investments of approximately EUR 500 million in 2025.
Pietro Buzzi: Maybe a little more, but let's say, yes, in the range of, yes.
Yassine Touahri: EUR 510 million if you're talking about EUR 600 million, including EUR 90 million equity investment. And then if I understand that if you decide to go ahead with the project of decarbonization in Germany and the U.S. expansion, we could add a couple of hundred million of CapEx. So we could end up with a run rate CapEx of something like EUR 700 million in the coming years if you decide to go ahead with projects?
Pietro Buzzi: In some years, yes, it's absolutely possible because the absolute amount or the decarbonization project, we don't know exactly in the sense that the budget is still under both budgets, also the U.S., let's say, replacement expansion is under construction. But let's say that there are more uncertainties, probably, on the decarbonization project than on the U.S. line. But yes, I mean, these are numbers that could be -- could impact, let's say, up to EUR 200 million, EUR 250 million per year if we do both together.
Yassine Touahri: And the question related to that is what kind of -- let's say, if you go ahead with this project in the U.S. to spend EUR 1 billion until the end of the decade? What will be the -- what kind of return would you expect on this?
Pietro Buzzi: The return is not so quick. The return is probably something that you have to consider in the range of 12 to 15 years in financial return. But what is the reason? The reason is that anyway, if you don't do it, you will end up in some years' time, maybe in the same time frame or even earlier with much less stack available because the -- some of the existing plants do not have either the raw materials or the -- or the availability or the reliability of the equipment to carry on for the same time period. So at the end, it's a decision whether you want to remain with a certain presence in the U.S., with a certain market presence and with a certain -- actually not the same and improving significantly your efficiency or you want to give up that position because this is the trade-off. And so on paper, the return is not -- maybe not justify immediately such a decision. But we have also learned in the past that some of the assumption which we made, for example, when Maryneal was renovated and expanded or even earlier when the Festus plant was totally renovated, all the assumptions historically speaking, proved to be, in this case, conservative. So we had from those investments, at least a quicker return than the one that we were calculating on paper. Doesn't mean that it's going to be the same, if you do something now, but we don't know. It's true that the costs are going up. It's true that the tariffs are impacting and adding cost to the -- for the equipment. But still it is a decision whether you want to remain a producer of a certain size in the U.S. in the long run or not.
Yassine Touahri: And on the decision to invest in Germany, is it a financial return question as well? Or how will you decide it to go?
Pietro Buzzi: It's more difficult to justify clearly, at least with the current CO2 cost, which is, let's say, relatively low. And there, again, it could be a matter of remaining in business after 2040 or when -- remaining a cement producer when all, let's say, allowances -- when there would be no allowances available, not either to buy. So theoretically, I don't know if this will be the case. I think -- I mean, I don't believe it too much because this would mean to let, I don't know, 80% or more of the European industry -- cement industry go away. But if this really happens, at least you will have some, let's say, production in Europe fully decarbonized, which you can still carry on. So I think that, again, the future is unknown and probably the targets set by the European Union are not feasible or at least they are not feasible for the industry as a whole. But Europe is the only place where today, in the light of what could happen in terms of availability of CO2 allowances, it could make sense at least to -- maybe not fully, but to decarbonize some of your production as much as possible, at least where the conditions are there because as we all know, it's not just a matter of being able to install carbon capture equipment. There is all the surrounding logistics, transportation, storage and whatsoever. So if you have all the conditions in place, you are already, let's say, derisking to a large extent the investment, you can expect the CO2 price to go up over time and you anyway would be ready to continue to be a producer if and when no more allowances will be available.
Yassine Touahri: And the last question on the cash allocation is that even when -- even assuming all those investments, you still -- you can still finance them with your operating cash flow and the dividend. You will end up the year with nearly with close to EUR 1 billion of cash in the bank. As a family member, is it for you the best way of the cash in the bank? Or are you thinking of a better use of it?
Pietro Buzzi: I think that the investment plan, it will be with such, let's call it, significant projects, we will be absorbing a significant amount of it with no immediate return, as we mentioned already because in the short run, there will not be a significant return. Probably in the long run, yes, but not so immediate. If we are able to finance it in full, of course, not a bad idea because it's anyway a usual use of cash, which, in our opinion, for what I just explained, makes sense for the group, at least in the longer run. If there is more availability, well, there are the usual potential, let's call it, uses, which can mean either something in terms of external growth, if it makes sense, if it's available. I mean, all the condition, there is a greater shareholder return. I mean, we have many different ways of using it in the -- we hope, let's say, in the best possible interest of all shareholders.
Yassine Touahri: And the last question is, could you comment on the July trends in your key markets. In the U.S., for example, you seem a bit more optimistic for H2 than what you've seen in H1. Have you seen activity being a little bit less difficult in the last month or in the first month of the [indiscernible].
Pietro Buzzi: It was a little less difficult.
Yassine Touahri: Could you give another range maybe [indiscernible]...
Pietro Buzzi: I cannot, but I can tell you that it was a little less difficult.
Operator: The next question is from Cedar Ekblom of Morgan Stanley.
Cedar Ekblom: Just a follow-up question on costs and CapEx. With your fixed costs coming in a lot higher than expected and you're guiding to a meaningful step-up in CapEx, some of which is obviously around expansion projects, I understand. Do we need to be concerned that the business has been underinvested for a couple of years and that the reason why maintenance costs and fixed costs are going up is because, actually, the assets are not entirely fit for purpose. Is that something we should be thinking about? Because often when businesses have a notable rise in CapEx and a notable rise in fixed cost, it does sometimes raise red flags about the operating integrity of assets. So that's the first question. And just the second question, in the press release, you talked about a meaningful increase in volumes in your Netherlands and Luxembourg business. But you did not report an increase in pricing. And I just wanted to understand why that is? And do we need to be thinking about that kind of relationship to the extent we start to see a more meaningful increase in volumes in other European regions? Why are you not increasing pricing if you're getting double-digit volume increases in that market?
Pietro Buzzi: Starting from the last one, it's mainly because we are not, first of all, we have to be in the market. So we have to be able to compete with what's happening. So if the market trend goes in one direction, and we can partly, of course, partly influence that. But for example, in Luxembourg or in the Netherlands, okay -- Luxembourg, we are, of course, significant player because there's not much production. But actually, Luxembourg is selling much more of its production outside of the country versus what's inside. And I think we need to see -- we need to go back to greater capacity utilization, which has been strongly reduced in the last 2 years down to probably 65%. When we are back to 85%, then there could be more chances to improve or a clear, let's say, cost increase, which may come from the CO2, I don't know, other items that are somehow affecting the entire industry. On the underinvestments, I don't think so, at least in our mentality, I think versus other company has been maybe the opposite way around. But the problem is also sometimes how you invest because not always the money that you put at work turns out to be successful or as successful as you would have imagined when you approve certain projects or certain maintenance expenses. And this goes to a point which is also critical and certainly, I think for the entire industry, sometimes it goes back to the human resources to the -- sometimes the ability and the knowledge of our, let's say, technical people. For example, in the U.S., we certainly had particularly in some plants, a lot of turnover. So very difficult to keep the people, to create knowledge to have not so much in the headquarters. But yes, at the plant level, a sound team steadily, let's say, in place for a long time. And when you change maybe maintenance supervisor for I don't know, 3 times in a year or 3 times in 2 years, this can be a problem. So we need to address that because, again, you can put a lot of money at work -- potentially at work, but then if your team is not responding the way you would expect, you can have these kind of issues. And together with the inflation trend, the cost of labor, et cetera, but let's say, cost of services, et cetera. But this is an issue that certainly more in the U.S. than in Germany, we are facing, and we need to -- very difficult actually to address to overcome. But we are here to do it, and we'll try certainly to go in that direction to improve it, but quite difficult.
Cedar Ekblom: Okay. And sorry, I just want to follow up on your points that you made around sort of capacity utilization rates and pricing. Are you going to take that type of commercial approach in the other footprints that you operate in, in Europe as volumes hopefully recover over the next 2 years or so? Will the intention be to lift utilization rates first before you try and lift pricing? Or are you focused on value over volume, like your peers tell us they are? Because I think it matters, right? You've got big footprints in Europe and you're a big player. And if the intention is to go for volume rather than price, it's a very clear difference in the message we're hearing from others.
Pietro Buzzi: No, no, no, no. I think we have played a role, which was actually the opposite because, okay, there are not readily available market share, let's say, indication of statistics, and it's always difficult to have data that are consistent over time. But from -- if we look at our internal, let's call it, sales knowledge or how do you call it, commercial know-how, certainly, in some countries, but I would say in all countries, priority in the last few years was given more to prices than to volumes. But sometimes, you come to a certain point, which is what happened maybe last year in mid of the year, let's say, in Germany, also Poland. Poland was easier to recover as the market is stronger. And Luxembourg, which means Luxembourg in the surrounding country where you don't want to go below a certain capacity utilization level, let's say, that there is certainly a threshold in your capacity utilization level, which you don't want to hit. I mean you want to stay above. So -- but again, we can influence the market only to a certain extent. We can give a message sometimes we did in a certain direction, but then -- and the announcement, also the public announcement of the -- what you hear from other companies is not necessarily translating into the same message when you go down the organizational chain. So particularly, in bigger companies, there are more differences, let's say...
Operator: The next question is from Jon Bell of Deutsche Bank.
Jonathan Matthew Bell: I think I've got 3. The first one would be, could you just elaborate on your earlier comment about the QUIKRETE deal changing the market dynamics, maybe there been some specific impact that you've seen? The second one is just going back to carbon capture in Germany, accepting that your kind of thought process involves where the CO2 price goes to. But are you negotiating the subsidies? Are the discussions with governments going on? And then the third and final question is, when I look at the U.S. performance, your ready-mix volumes held up slightly better than your cement volumes. And I just wondered whether you could just explain that to us given that residential was clearly a weak end market and bad weather was also an influencing factor?
Pietro Buzzi: Yes. Well, on the first one, which was elaborated QUIKRETE. Well, there are -- this is really a major thing in the U.S. market and for 2 main reasons. QUIKRETE is a big cement customer for anyone, for us too. And the fact of becoming also a cement producer. And by the way, 2 days ago, they would become even bigger cement producer because of this agreement to buy the Midlothian plant from Martin Marietta indicate a clear strategy that's on their side, which is wherever I can buy, let's say, cement from myself, I will do it, which makes a lot of sense. So they cannot, due to logistic reason, buy cement in any place, they produce their mixing product from themselves. So they will continue to be, of course, an important customer, but the trend is clearly to become as independent as possible, which puts pressure on the volumes, so also on a company like ours, which has been -- continues to be, let's say, a significant supplier of cement to them, but it's a big change. Second, their, let's call it, approach towards, let's say, decarbonization or whatever lower carbon cement is, is purely, I would say -- it is driven purely by economic reasons and by simplicity and by tradition in what has been and to a large extent, continues to be the U.S. cement market. So again, to speak more clearly, they do not have any interest and any willingness either to buy or to develop or to being a cement producer now to push on the lower clinker factor. For companies like us, which have been promoting and trying to push as much as possible in the market, cement with lower clinker factor can be an issue because we have more difficulties to sell type 1L limestone cement in the market if there is more availability of type 1. And yes, again, I think these are the 2 main impacts that are somewhat changing the picture of the customer mix and the product mix in the U.S. that needs to be addressed, but they are very, very challenging. At least if you are willing to follow a certain pattern in the direction of lowering the clinker factor. If you don't care, not a big problem, but it means a reversal versus what has been done so far, which is what is happening actually in the U.S. In terms of CO2 capture in Germany, [indiscernible] you can comment maybe, Lorenzo briefly. Of course, we'll try to find something.
Lorenzo Coaloa: There are several options, let's say, at European level, but also country level. We are preparing, I mean, we are trying to understand if we are -- I mean if we can participate to the European funding stream and to the national funding. I mean national funding is a bit more uncertain because the country is trying to allocate money on an investment also in this field in decarbonization. European, let's say, stream is of course, a bit more clear because there's the innovation fund story. So we are trying to participate to this stream. So we are definitely trying to understand if we can be part of the game on both sides.
Pietro Buzzi: We'll see if we are successful or not, not too easy, but we'll see. In terms of ready-mix performance in the U.S., well, ready-mix for us is actually very much, let's say, limited to a certain area of the market. So our footprint is quite large because if you look at the cement sales, we go from Minneapolis down to New Orleans. So we cover a very large portion of all the Midwest market. But ready-mix, we operate basically in 3 regions. We are -- well, 2 regions, Houston, San Antonio, Austin and to a much smaller extent in Memphis and St. Louis. So the reason is that Austin, San Antonio, et cetera, also Houston to some extent, perform, let's say, better than the other regions for cement where we sell cement. And also, you have to consider that anyway ready-mix is much more volatile versus cement. I mean if you gain a big project in 1 year or 1 month, you can do easily 10% more than when the project is over, you lose this 10%. So this is the reason.
Operator: [Operator Instructions] [Audio Gap]