Earnings Transcript for HDELY - Q1 Fiscal Year 2022

Operator: Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining the HeidelbergCement's First Quarter 2022 Results Conference Call. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. [Operator Instructions]. I would now like to turn the conference over to Christoph Beumelburg. Please go ahead.

Christoph Beumelburg: Thank you, operator. Good afternoon, everyone. And welcome to our analyst and investor call on the result of the First Quarter’22. Before we start, let me give you just a short explanation why we moved to call to today, one day ahead of the initial planned date. As you know, we will hold our annual general meeting tomorrow and based on the experience of last year, event might take longer than planned. So to avoid any timing conflicts with the analyst call, we decided to publish our Q1 results already this afternoon and hold the call now, we ask for your understanding. So today with us, Dominik von Achten, as always, our CEO, Rene Aldach, our CFO, and the colleagues from the IR team, Dominic and Rene will go through some prepared remarks before we start with the Q&A. With you, Dom.

Dominik von Achten: Chris, thanks a lot. Welcome, everybody on the phone. Thanks for joining us later in the evening in Europe, and hopefully the timing work for you guys in the U.S. I would suggest, we've sent you the presentation and also the press release. So in that respect, let me just very quickly go through the key points and then I think we should take the time for Q&A, I think that's a better use of your time. I go to the first page on the key messages, summarizing the Q1 from our perspective. You remember last year October we very much discussed with you what the question is? Their pricing dynamic that HeidelbergCement can realize? I would say the proof is there, plus 13% like-for-like without any acquisitions. I think that is a very strong performance on the top-line, and I'm very honest with you, that for me was the clear core focus, to get the pricing moving. We'll get -- maybe go into some possible details later on. On the operational EBITDA, we go against a very strong comp, that is also somewhat with our energy forward-buying policy. That's why we will come to that later on, of any add up we'll show you the decision change that we have made in that respect. Overall, obviously, the cost pressure continues in all commodities, freight, CO2. I think everything is going in the -- continues to go in the wrong direction in that respect, but to -- with the good top-line growth, we are able to cope with it. We have significantly upgraded our commercial excellence program, which I think was exactly the right thing to do last year, also, the timing was good because we started already in the second half of’21 to get into a good entry point for Q1, otherwise this top-line development would never have been possible cause remember the industry was normally going for price increases March, April of each year. The upgrade is steep; we know that $350 million up to $2 billion. So that is a very steep increase, we feel confident about this, we feel very confident about it. We just came out of our quarterly management meetings and the around $2 billion target, I think is very much what we want to achieve. We will change on the back of that our energy forward-buying policy, not overnight, but [Indiscernible] share with you the decision and then also the way we will implement it going forward. Key idea is to take out the volatility that I think has occurred because the top-line development is fantastic, but I think the bottom line is too much impacted. Why? By big up and downs volatility on commodity pricing and I think that's not what we would like to have going forward. On CO2, very good progress. We now have monthly and quarterly figures that we will also like to share with you. We are very satisfied with our Q1 development that's even slightly ahead of our ambitious internal road-map target, so also on CO2 we feel very comfortable. And last but not least also critical, we confirm our outlook with a strong like-for-like increase in revenues and slight increase in like-for-like operating EBITDA and RCO. And last but not least, we are very much looking forward to see many of you either in-person or virtually on the Capital Market Day on May 24, that we will dedicate to the topic of sustainability. I'll now go very quickly through the other pages. Page 3, you see the developments from a revenue all the way down to RCO and you clearly that a big jump on like-for-like development on the revenue side, basically balanced itself out then on the EBITDA and RCO line, clearly down from last year with was Bye-bye foreign exceptional one-off year for us. But very much in line with 2020 and also 2019. So remember also one is a fairly small quarter for us $91 million is a low percentage figure of our total RCO of $2.4, $2.5 billion so the 190 -- the $90 million is a very small figure compared to that. So from our perspective, I think we are set in the right direction. If you go to the different areas, I think it's fair to say that the quarter was a special one in North America. Why? Because we have a robust pricing development on the one hand, that differs also between the business lines a little bit. The volumes on our end were quite significantly impacted by a heavy winter weather compared especially to prior year in the north east, that -- we have a footprint that is very much also tweaked to the north and north east. We did have some significant energy and freight cost inflation in Q1, but we also took a deliberate decision to get our plants up and running. You know that wintery path, and also aggregates planned ramp up, is always an important piece in Q1, and we decided to put an extra effort into this in order to really be fully prepared for a hopefully strong Q2, 3, and 4. So that's why I think the North American result is maybe a little bit below your expectation, but these other, I think very straightforward reasons for it. Europe, on the flip side, very strong pricing. That was also the discussion last year. You know, do we have the pricing power in Europe? I can only say absolutely yes with three exclamation marks. The top-line moves very well and it continues to move very well in Europe. So we're very satisfied with that development. Asia is coming back from big lockdown scenarios in basically all countries

Rene Aldach: Thanks a lot, Dominik. Hello to everyone. So just to explain you, what we have changed and why we have changed this. As you know, in the past with a rigid policy that we only go 12 months out with our electricity forward-buying policy. And to see the green bar, that was a little bit the maximum will be sort of the minimum what we -- could've done for the next 12 months and the new policy that will go further out up to four years. And you'll see that the old maximum will be now the new minimum for the front year. So what we want to do with this, obviously want to take clearly volatility out, because now we see huge energy volatility it's opposite difficult to plan and to guide properly and to manage the customers. And how do we do this? Obviously, we will not look in now, €250 for this year or for Q1’23. Yes, year three, year four. Now they are numbers which you can look in which are example for Germany below a €100 or we have looked in already volumes which are below €100, which is 50% below what we have for right now. So we start that very smooth. We look in every quarter a little bit to get a [Indiscernible] which costs for the respective years. But for now, what we said for Q2, Q3, we're still sales on spot for the open volume because the spot rates are clearly cheaper than the Ford's for this year. So I guess that should be I think that's a good change into the right direction to take the whole volatility out and to allow proper guidance.

Dominik von Achten: Okay. Then we go to the portfolio Page 9 that we continue to optimize. We always said this never ends. You know, we have added an acquisition in the U.S. in the Atlanta region. We've also tightened the net in Czech Republic, which is a very important market for us. We increased the vertical integration, which shows both acquisitions should help also to push the sustainability offering into key markets. Both, the Czech Republic and Atlanta are also very strong on that and, then lastly you saw the announcement on Geotech this morning or yesterday afternoon, actually, where we bought a minority -- significant minority stake in the Geotech scientific company that really will drive our sustainability and digital efforts and complement our offering, not only internally, but also externally in Link also with command [Indiscernible]. Last but not least, we stick to our guidance for’22. As I said before, strong increase in revenue, slight increase in operating EBITDA and RCO. We will keep our CapEx net below €1.2 billion as guided, we will target to get to the ROIC around 9% and we'll keep our leverage between 1.5 and 2 times. And then just a sneak preview the Capital Markets Day. It is clear and we've always made it clear that we are fully committed to our sustainability agenda, I think it's clear that especially also with the hiring of Nicola Kim, we have clearly put an additional focus on this topic and I think after she had now about nine months to ramp up, we will basically then also give you a full picture of our strategy update going forward that will center around sustainability. But that will also talk about the offerings to the customer that we'll talk about the technologies, including carbon capture, and that will also talk about our R&D efforts as well our financial story. How do we make this happen for both our customers, but obviously, very importantly, also for our shareholders? So I think that should be an exciting event in a couple of weeks’ time. And we are very much looking forward to seeing many of you following that event. So with that Chris, I will hand back and then we will go into Q&A.

Christoph Beumelburg: Thanks, Operator. We want to start the Q&A please.

Operator: Ladies and gentlemen, we're starting now the Q&A session. [Operator Instructions]

Christoph Beumelburg: Alright, first in line is Elodie Rall from JPMorgan.

Dominik von Achten: Hi, Elodie.

Elodie Rall: Hello. Hi. Thanks for taking my question. So make this one would be on your guidance. So you seem quite confident that you can actually push awesome like-for-like improvements in the best year. And so I'd like to understand what gives you that confidence, given this -- the slow start, Q1 is small, but nevertheless, and given that confutation is still ramping up. So that would be my first question. My second question is on price cost. You say you expect the price cost gap to close over the year. Can you give us some bit more granularity about when you think that will start showing? Do you expect that to be already the case in Q2? Should we expect price to be flat in Q2? Or is this small back-end loaded in your model? And my last question would be on what would be the impact on your sales and on your numbers, basically, if natural gas supplies from Russia were to stop.

Dominik von Achten: Thanks, LV. I would say let me take the first two and then I'll do any on the guest supply for Russia because he covers obviously the energy buying. So on the guidance confidence Elodie, absolutely. We are confident on the guidance and I think it's very much linked to the ability to move the top line. So yes, you're right. The cost increases are still coming through and that will also be true for Q2. Because remember, Q1 and Q2 last year was still very much subdued energy costs. So but the price increases are moving, we are very confident to deliver the $2 billion that we shared with you and you remember that's above 2% average inflation. So the real increases, even the normal increase is even higher. So in that respect I think it's important to understand that that is where we take the confidence. Is there a slim remaining risks that the cost increase will still be higher is something unprecedented? Absolutely. We all know there's no guarantee on that. But as much as we can influence it for now, we can -- we're absolutely confident that we can deliver on the current guidance. Price over cost, I indicated to you as we always said. H2, we're very confident because if you do the calculations, it needs to turn. Otherwise, you know, the guidance wouldn't work so absolutely in the second half, it needs to turn. With how much it already turns in Q2, it's very difficult to predict. Again, we go against a strong Q2 last April was super strong. May was also okay. June was a little bit lower. So to predict this on an exact month, it'll be difficult to say, but clearly for H2, we expect this to turn positive. Elodie, I come to your last question, [Indiscernible] of cars supplier stocks from Russia our exposure to Russian gas in our European business is very, very low. So there's no direct impact but what will happen is if the gas supplies stop, obviously, you will have an impact on the gas supply power plants. Which to be honest I cannot give you a professional answer what will happen there. Obviously then pricing of electricity will go up. But as I said, we don't use gas a lot in our plants, so there's a lot material impact -- direct impact, but electricity to be seen. Let's crystal ball what will happen then.

Christoph Beumelburg: Thanks, Elodie for your questions. Since we have many questions on the line, can I ask, please everybody to limit his or her question to two at a time. The next question comes from Gregor Kuglitsch.

Dominik von Achten: Hi Gregor.

Gregor Kuglitsch: Hi, good evening. Thanks for taking my questions. So maybe two. So coming back to your hedging slide, can you just -- and forgive me, maybe you have mentioned this, but those ranges, can you just give us a sense like what's the range? Essentially the new minimum effectively say by December is it, I don't know 60% at 60% to 80% or whatever just so we can sort of roughly size the hedging. And then the second one is on the demand outlook. So you talked a lot about price cost, I think that's clear. What are you thinking on demand? I mean, we're starting to see particularly for example, in Germany, the developers and rights and -- are starting to pull back a little bit because of higher costs. I think there was one Homebuilder debt, just profit one now, so can you just give us a sense what do you think is going to happen? What you're seeing, any color doesn't have to be Germany maybe anecdotes around the globe after your management update with your various country heads? Thank you.

Rene Aldach: Hi Gregor. I'll take the first one, the ranges there for the front year to come. Give you a range so we should be around let’s say, say 50% to 70%, which we target.

Gregor Kuglitsch: Okay, thank you

Dominik von Achten: And then on the demand side, Gregor, I think it's a question I would say that's little bit crystal ball, we do not see drop-off in demand. It's also remember in April and May, it's difficult because there's a lot of holidays, there's Ramadhan, it goes back and forth here and there, so there is also some shift between the months so to have clear visibility I think it takes a couple of months before that has balanced out, but from what we hear from the countries, there is no significant drop-off in demand at this point. Now, is there anecdotally here and there a point where project has been put on hold or postponed to start, yes. I think that's fair to say more so maybe in one area versus others. But I think that's not from what we can see right now. There is no significant impact on demand at this point. Now, how this plays out with volume and pricing, they got very difficult to predict.

Gregor Kuglitsch: I appreciate it. See you soon, hopefully in two weeks.

Christoph Beumelburg: See you soon.

Dominik von Achten: See you there.

Christoph Beumelburg: See you soon. Looking forward to that, next question comes from Luis Prieto from Kepler Cheuvreux.

Dominik von Achten: Hey Luis.

Luis Prieto: Thanks for taking my questions. Two for me. The first one is with the new target in the commercial excellence program, you're aiming for, if my calculations are correct for about 13% overall pricing growth. If I'm looking on a full-year basis, I mean, if this is achieved in 2022, which I assume that's where you're implying. In this context and also combined with Elodie’s question about when you would turn positive in terms of price over cost, what sort of cost inflation are you factoring in for the year in terms of percentage? And my second question and then coming back to Gregor's question, you mentioned demand increase in all business lines in 22. Are you concerned about interest rate and [Indiscernible] rate trends damaging with financial demand at some point, isn't that something that keeps you awake at night? And in this context, where would you place your residential exposure at present? I'm trying to trying to figure out if residential demand faulters what could be the impact on height of the trend? Thank you.

Dominik von Achten: Yeah. Thanks a lot maybe. Rene, you want to take the first one on concentration or should I do those one on the interest rate?

Rene Aldach: We can do -- hi, Luis. Let me talk about the concentration or what we assume I give you a though the ones for energy and then a little bit of guidance for the rest. As the energy cost inflation, we see a roughly 52%, 55% and 60% for the full year. And if you assume and you know, the number of roughly we spent last year, $2 billion and you put that on top. There's a $2 billion energy cost inflation on top, which we will cover through the $2 billion commercial excellence and the other $1 billion is stretched across the others

Dominik von Achten: And then on the interest rate, Louis, remember our thoughts residential and that's the global picture, it's the global speed of the pie about 1/3 [Indiscernible]. So it's only if you should say so 1/3 of the cake. Now, I would say in the U.S. for the time being, we receive quite resilient demand despite increase in interest rates. Let's wait and see how this plays out. It also depends a little bit how quickly the interest rates will move up. I think also in Europe; the residential sector is still quite resilient. An introductory -- remember interest rates are clearly below inflation right now. So there is quite also a good incentive to look in interest rates for now also for the residential side and continue to build. So why we do not see yet a significant fall off. And then in the other markets, Africa and APAC, there is very limited residential impact at this point also interest rates are still fairly subdued because the volume is also not really coming in that respect, as I said earlier. So the interest rates at this point do not keep me awake at night. May that change? Yes. But right now, I think we're still in safe waters.

Operator: Thanks for question the Luis.

Luis Prieto: That's perfect, thank you.

Operator: The next question comes from Rajesh, CEO from HSBC.

Dominik von Achten: Hey there?

Rajesh: Good afternoon. So I had two [Indiscernible], so the first one is in the pricing. If I look at the pricing you reported in December was around 13.3% increase, and now per Q1 you talk about 13.5% so just wondering if you could give a little more color how the momentum is building up as we move towards April, May? And the next question is around Egypt and their -- I believe the agreements with government is up to June 2022. Have you seen any change or any talk with the governments at this point in time to exchange that production gap to further out into’23 or’24?

Dominik von Achten: Sorry, you were talking about Egypt, right?

Rajesh: Yes.

Dominik von Achten: Okay. Listen on there on the pricing, as I said earlier, you're right about your December number that we disclosed in the last call, the trend goes in the right direction. If you look at the month that you mentioned, March, April, it's above, obviously otherwise, we would not end up at the €2 billion it's above 13%, so we continue to move in the right direction. And on Egypt, the negotiations continue, this is the typical normal cycle. At this point we remain confident that the agreement will be prolonged, but there is no final decision to the best of my knowledge, at this point. But obviously the negotiations continue and as I said, we remain confident that this will be prolonged.

Operator: Thank you. The next question comes from Yuri Serov from Redburn.

Dominik von Achten: Hey, Yuri.

Rene Aldach: Hi, Yuri

Yuri Serov: Yes, hi. Can I ask my questions one by one, please? So the first one, the topic that we don't really talk about that often, but it will come. So CO2 -- you're still not spending any money on buying any premise. One is not going to change, when will you have to start buying premise for your CO2 emissions?

Dominik von Achten: Hey, Yuri, if you don't mind, let's park that question for the next 10 days and we'll come back to that because I know it's on everybody's mind, I don't want to spend an all 30 minutes taken also the little bit the way the thunder from the Capital Market Day. We have understood that this is on everybody's head. The question around how many certificates do we still have, how do we play it out with our investments that drive down the CO2, including carbon capture? What is the capex amount? What does that mean for the total business model? We know that's on your mind and we will address that question diligently in the Capital Markets Day. So if I may ask you to just be patient for another 10 days, that would be fantastic on that one.

Rajesh: Another one, I don't know whether it qualifies as a question or a comment, but your energy forward-buying policy, the change. I'm just wondering, aren't you too late because the prices for energy are astronomical and everybody expects them to start falling whenever, next year, year after and normalizes over time. If you start forward-buying now, you will actually lock in high cost rather than low costs.

Dominik von Achten: But let me make one general remark and then -- you're right, with your remark if we would do that, that could be stupid and that's why we don't do that. Maybe if that was misunderstood, then Rene maybe you clarify again, because that's exactly what we want to avoid.

Rene Aldach: Yuri your comment is absolutely right, and that's why I said, we start with the outer years where pricing significantly down, and the move to these limits will not happen now overnight, we don't start now in Q3 by or are now buying 60% of our exposure for’23 now with these elevated prices. This is clearly what we are not doing. The move to the policy to come to the limit that I have shown in the chart that takes a little while because as I said, we will lock-in quarter-by-quarter over the next months and years percentages to get the proper average cost for the outer year. And as I said, we don't stop now looking in for €250 per megawatt that would be stupid. I would agree with you.

Dominik von Achten: And Yuri if I may add the orientation point is always the long-term average. We're not buying on peak rates, that's one point. And then, I would say there is a life beyond forward-buying, because if you look at the spot rates, there are parts of the year where the spot rates are clearly cheaper than forward-buying rates. So I think this is becoming quite an art, a very sophisticated setup. We changed the general rules, we've done a very diligent analysis over the past months, we do this without any haste. And what we clearly will not do is to do stupid things in terms of buying at completely elevated levels.

Yuri Serov: Since you didn't answer my first question, can I chip-in with another one, please?

Dominik von Achten: Go ahead.

Yuri Serov: You had a very strong performance in Africa -- Mediterranean, and you mentioned a few places we're strong. Can we talk in a bit more detail what you think the outlook for that region is? Do you think that it can deliver plus 13% growth in EBITDA for the full-year? And if so, why? From which place?

Dominik von Achten: Yuri, I know that we don't talk a lot about Africa in too much detail. I think maybe at some point we should also do a deep dive on some of our emerging markets. I think it's clearly, we've also shifted the portfolio in Africa for a good reason, we were at very, very many places. We have divested out of a couple of places, [Indiscernible] owner for example, we divested. So we are even within Africa focusing on some core markets that are driving both the top-line growth and the bottom-line impact. We strongly believe that Africa mid and long-term has a good growth trajectory. Remember, it's growing population, it's the cement per capita consumption is the lowest in the world. The return on invested capital goes through the roof. If we would just operate in Africa, we would never talk to you again about [Indiscernible] performance because it is very, very attractive. So there are good reasons to be in Africa. Is it easy to operate in Africa, no, I think we have figured out, how to do it over many years? It's a strong management team setup and I think the core markets, we have always shared with you. I think it's clearly Morocco, it is, Egypt, it is Ghana, Tanzania in Sub-Sahara, also Togo, Burkina Faso. I think those are the probably the key markets for us that we will continue to build out. We have made our strides in Tanzania. We will continue to do some more, and we should also not underestimate the sustainability impact that Africa may have. Stay tuned on this, there's more to come because I always internally tell the story about the mobile phones. Nobody has a fixed telephone line in Africa, because there's -- so they have spared billions of investments by just going into the mobile phones. And I think there is some quite nice potential also when it comes both to sustainability and digitalization in Africa. So we should not underestimate that continent. And we feel very comfortable with our position in Africa.

Yuri Serov: No I agree with you but are you saying that it so happens that all the key markets where you are growing very fast right now?

Dominik von Achten: At this point, that's the case, but will that stay there? Africa remains also a little bit volatile. Some markets will outperform others. So I think you saw Egypt, we need to fix it then at some point and then you will enjoy the situation again, but there may be also bumps in the road here and there that may happen. But you need the management excellence to cope with these things in order to make the overall performance work. As I said for us, it's very much also contributing to the top-line growth, and I think this quarter again shows that the Africans can absolutely deliver on that.

Yuri Serov: But I understand from your answer that you're not really suggesting that you can deliver double-digit growth in the EBITDA for the full-year, it's too early to sell, is that --

Dominik von Achten: It's too early to say, but I would also say -- not say no.

Yuri Serov: Okay. Thanks.

Operator: Serov, you sneak in five questions, very clever Yuri. The next in line is Sven Edelfelt from ODDO BHF.

Dominik von Achten: Hey, Sven.

Sven Edelfelt: Yes. Good evening gentlemen. Thank you for taking my question. Can you share with us your edging for H2? I believe you're 100% edge for Q2, especially in Europe. Can you share a little bit in each if it has changed compared to your produce release? That would be the first question. On the second one, can we have an update on the [Indiscernible] investment. Where do you stand on, is there some new element important to share with us? I think it was [Indiscernible] starting investment that you did back in September last year.

Rene Aldach: Hi Sven. So I'll take the first one, so I give you a rough, forward-buying percentage, what we have for Europe for the second half of the year, we're sitting roughly about 40% to 55% for electricity for H2.

Dominik von Achten: And then Sven on [Indiscernible], the transaction has just closed end of April, there was a slight delay and that was -- on the one hand, we're a little bit surprised. On the other hand, it shows us that there was quite some interest on this investment because the European Commission, for €7 million, I think turnover in Holland went into the details and that took some time to clarify. So no issue, but only closed now, by end of April, we have one board member focused on the topic of digitalization. He's now also residing in the U.S. so we take it very serious and they have gotten operational 24-hour after the deal close. They've already made the necessary management changes that were targeted for a long time. So we really get going now early days but we are very confident that this will be exact the right investment going forward. And we would -- we will focus the Capital Market Day now on sustainability. But the next one will then be focused on digitalization to bring some more color on the whole setup. You also saw the announcement on Geotech. That's will also contribute a piece of the puzzle to the whole exercise. But we remain very confident that we are on the right track there.

Christoph Beumelburg: Next question comes from -- thanks, Sven. Next one comes from Nabil Ahmed from Barclays.

Nabil Ahmed: Hey, good evening. Thanks for taking my questions. The first one is on North America. I know it's a full quarter and I understand volumes were impacted by weather but some of your peers seems to have managed better price costs in the region. Is there anything specific holding back your pricing here? And maybe if you could elaborate a bit on whether this is primarily a U.S. cement problem or if it includes other [Indiscernible] and Canadian cement as well? And my second question, actually -- sorry for that but I can't resist the temptation to talk about the Capital Markets Day on the 24th which I understand will focus on sustainability which is of course of [Indiscernible]. Should we also expect some update in financial targets and maybe strategy or feasibility simply to limit now to discuss midterm targets?

Dominik von Achten: Yeah, Nabil, first, let me answer the two questions I think in North America, we've also obviously followed the results of the competitors. We cannot comment because we don't know the details, we can only look at our own feet in that respect the picture is a little bit scattered, you know the North American footprint is all the way going from Canada, the Midwest, to the Northeast, and then to the South. Remember our southern footprint is less pronounced, very much tweaked also to aggregate less so cement. So I think there is a footprints element on our end combined with the weather. We are following the pricing and the cost development very diligently in each of the different regions. As I said, I think pricing we are quite on our right move in cement. In other materials I think here and there, there is still something to be had. I think that's fair to say. We remain also very ambitious on that end and then on the cost side, you have to be very careful because there is obviously then also large inventory play always in the first quarter combined with weather. And then there's the whole window repair element, which is obviously tweaked very much towards the cement, but also to aggregate. So I think if you put all of that together, as I said earlier, Nabil, you know, could this be -- could this all put together have been a little bit better from all perspective, I would say yes, I think we should be fair. But is this way out what we think the whole year can then deliver? No. I think that's one. And then on the Capital Market Day, yes, the focus will be sustainability, but yes, you should also expect an upgrade or an update not to take away too much time, an update on the financial targets, and that will then also obviously, we be part of the Capital Market Day on May 24th, and we will also give an update on the strategic direction in some elements. So it will be the combination of the three that will comprise the story. But obviously, and that's why shouldn't be a surprise to you. We over set sustainability is the core of the strategy going forward, and that's why I think you also deserve to understand how we combine this with our financial targets and our other targets that we're chasing.

Christoph Beumelburg: Thanks, Nabil.

Nabil Ahmed: Great, thanks.

Christoph Beumelburg: Next is Cedar Ekblom from Morgan Stanley.

Dominik von Achten: Hey Cedar.

Rene Aldach: Cedar.

Cedar Ekblom: Hello. Hello. So two questions, can you give us what your group pricing was across all products and all regions in the first quarter? I know that you got 39.5% in cement specs. Clearly your price-cost development was negative, you're guiding to 13% for the full-year effectively, I'm just wondering how far you are off that mark in the first quarter. And then secondly, again, on price cost, how much of your negative cost impact in the first quarter could we think about being linked to some of the points around extended maintenance in the U.S. just to get a better understanding of what maybe the underlying price-cost development was in Q1? Because it looks pretty weak versus some of your peers that have reported so I just want to see if we can back house how you see underlying performance. Thank you.

Dominik von Achten: Let me make maybe a general remark on your second point. Cedar, as he said, for us the core focus was getting the top-line. And I think in our key markets, I think the top-line is absolutely moving in the right direction. I'm not quite sure whether I understood your first question exactly right, in terms of average pricing, I think the pricing on the group level is as we disclosed and that obviously different region by region, I'm not sure whether that's what you were asking but --

Cedar Ekblom: No, I'm not -- the pricing that you've disclosed, I think, relates to cement, always that across. If I look at Slide 7, efficient domestic cement price increases but I'm wondering what it is across all products if we include aggregates and ready-mix because clearly you delivered 13.5% in cement which is below the 13% that you get if you look at your commercial excellence program for 2022. But even with that 13.5%, you have negative price cost. So I'm just wondering, what's the average [Indiscernible] across products. Thank you.

Dominik von Achten: Yes, I saw the cement price increases indeed leading a little bit compared to the other products. Into ready-mix that makes a lot of sense because there are only not all products necessarily are increasing at that rate and cement is one of the key ingredients. I think on aggregate, as I said earlier, I think there is a clear progress, but there's also footprint issue in this one. But if Rene will maybe add something to that, Rene?

Rene Aldach: So the aggregate numbers mode far off the 13% we're talking roughly 11, and for ready-mix as Dominic alluded to this a little bit footprint here and there, which is ready-mix is just below 10%.

Dominik von Achten: And then on the extended maintenance figure, Cedar, I think that is not so easy to peel out because it's not only the extended maintenance, it is also then an inventory impact that you have that is -- that you have to put against it. So I think the price over cost element, as I said, it's the first quarter for us and then don't forget what Rene was sharing with you earlier. It is, for us, not a surprise that there is now also, in the competitive comparison, quite a tweak to -- in the numbers because that very much depends on your forward-buying policy and the way you have locked in quarter-over-quarter, different commodities. And I'm -- quite honestly, I'm long enough in the business, this is for me now a quarter-over-quarter fluctuation which I understand from your capital market perspective is not so easy to follow. From my perspective in the end, everybody has a fairly similar cost if you take the long run on commodities but it does different now quarter-over-quarter. And that's also why we have decided to change all our forward-buying policy because as much as you have a hard time to follow this now, we want to take that volatility out and I think this is -- this will take a couple of quarters to do that and I think it's a more level playing field.

Cedar Ekblom: Okay. Thank you.

Operator: Thanks, Cedar. Next question comes from Bank of America Arnaud Lehmann.

Rene Aldach: Hey Arnaud.

Dominik von Achten: Hi, Arnaud.

Arnaud Lehmann: Hello. Good evening. Thank you for taking my questions. I guess the first question is on Spain. I appreciate that you're selling your -- you have sold already your assets. But there was an article about some capacity closer in Spain due to the high cost of energy, it's something that you have experienced in March. Many other places beyond Spain and as the Spanish [Indiscernible] being reopened. Secondly, I'm just trying to link your new energy forward-buying policy, which is as I understand, is aiming to reduce the volatility in cost base, that makes sense. But how do we make -- how do we link that with your new pricing policy in Europe, which was actually potentially implying more volatility in your selling prices in Europe. Does that mean that this pricing policy eventually will not be needed anymore and you can, let's say, progressively increase your costs and progressively increase your pricing or am I misunderstanding it?

Dominik von Achten: Arnaud, let me start and then Rene may add on especially on the second piece. I mean on Spain, the capacity closure that's for us, Spain is not a core market. To the best of my knowledge, there is not a broad global of capacities here and there may be some smaller pieces, but we should also at this point we have -- that's not what we have seen beyond the example you mentioned from Spain. And on the energy forward-buying policy, I think I said it earlier, for me, the forward-buying policy is to take out the volatility on the bottom line, not on the top-line because the top line is only partially driven by this energy. I said it very clearly from all perspective with the transformational step change that the industry has to do. My personal conviction for HeidelbergCement, but that's only my view, is that from our perspective, the price point for a ton of cement that comes from HeidelbergCement and the price points for over a ton of aggregates, but especially also the price point for cubic meter of concrete will need to materially change because the product gets much better. If society wants a carbon-free product in the end, this will not come at the same price point. So from our perspective, that must change, and that's why for me this price development here is only partially driven by energy price increases. It is driven by the necessity that our customer base, and their customers, need to understand that the price point will change. We will make a competitive edge out of this, and that's why I think we're also very convinced that we will convince our customers that eventually if they want to get the superior products, they will also be willing to pay the increased prices. So, for me, there is no -- and we've also not tied our pricing to promises, if the energy prices come down, the prices will come down again. There may be volatility but there is no link to a 100 percent on this end except for the reason that I've shared with you.

Arnaud Lehmann: Thank you very much.

Christoph Beumelburg: Thanks, Arnaud. Next one comes from Tobias Woerner from Stifel.

Dominik von Achten: Hi, Tobias.

Rene Aldach: Hi, Tobias.

Tobias Woerner: Yeah. Hi, thanks for taking my questions. Two from my side. You've alluded to one of them actually, just now, which is that you won't keep back pricing if costs come down. But I understand in the industry across numerous countries and Germany in particular, price increases have been sent out as energy surcharge. Is that incorrect or is that right? That's the first question.

Dominik von Achten: I think as I said -- that's why I said no to 100%. I think there are different elements that deliver on the pricing side in market-by-markets -- please understand that I cannot comment -- also for competitive reasons, I cannot comment on single market. But there is a different element that need to this price increase. But I can only talk for HeidelbergCement, for us large majority are real price increases, are their energy surcharges here and there, yes, the vast majority are price increases that on energy costs related in their argumentation. At least not to 100% that's what I said earlier. Are there surcharges in some markets? Yes, and they may fluctuate, but we don't talk about the majority of these increases.

Arnaud Lehmann: Okay and just secondly, with regards to your energy cost hedging. I mean, I might not have gotten this correctly here but you talk about electricity and gas but what about your coal buying across the world and your [Indiscernible] buying?

Rene Aldach: Okay. Tobias, so yes, we talked about electricity and now coal. As you know, for pet coke, you can't do financial hedges, yeah, so that's not possible. So that's just availability, physical availability, and then for the others, as far as you have API2 or API4, that's difficult to do, so therefore it's about physical availability. And then if you look at -- just give you India or Indonesia, the asset is local markets where you come to merge with forward-buying, let's say, same for Eastern Europe. Saw there's a little bit opportunity of what you can do for Germany and being a looks, yeah, but that's the whole scheme of things, it's limited. So and that's the answer to this, there's no such a, let's say, view on, okay, we can now look in 20% of coal for Q4 for a country exits not how it works and that's why we weren't the same.

Dominik von Achten: And then maybe just two additional thoughts on the trend [Indiscernible] as I think North America, keep in mind that's longer-term contracts in coal. I think there's so you don't buy typically spot and that's longer-term contracts. So that's not an important market. And secondly, I think there is a link with alternative fuel rate push that we have increased substantially our alternative fuel rate target and especially in some markets that Rene was sharing with you that has a significant impact on our total [Indiscernible] bill. So I think that is one reason why we accelerate our agenda on alternative fuels in order to also reduce the exposure on fossil fuels.

Tobias Woerner: In essence, very little of your fossil fuel is hedged.

Dominik von Achten: [Indiscernible] the hedged it's as well for us. If we have a long-term contract in North America that you can call as hedged because the pricing is fixed. So we have as well in some other countries, but what you can't do for all the countries. Let's say for all the deregulated markets. Let's say, like in electricity, you can't do the same hedging policy or hedging process, like you can do for electricity that's clearly not possible.

Rene Aldach: Tobias, I think just to give you an indication for 2022, around 60% are covered so Nuvera's hedged us, so it's not likely sit here and [Indiscernible] book on coal that's not the case. Okay.

Tobias Woerner: Okay, excellent. Thanks guys and looking forward to seeing you all at [Indiscernible] thanks.

Dominik von Achten: Thank you.

Operator: Thank you. So we have two more questions, one from Yassine Touahri, from On Field.

Dominik von Achten: Yassine.

Rene Aldach: Yassine.

Yassine Touahri: Good evening. So a couple of question. My first question with be on the volume, l think in the first quarter of 2020 your volume was up a couple of percent. Have you seen any change in the month of April, is it around the same? Is it a bit better over it was? And then my second question also are on volume. When you're guiding for small like-for-like, increasing EBITDA, what kind of volume contribution do you have in mind in your guidance?

Dominik von Achten: We have -- to do the second piece, I think we have been -- we're going to split this in volume and pricing because that's still -- the guidance anyway is a guidance is difficult to do the exact [Indiscernible] on volume and pricing. To answer your first question on the volume side, the numbers have been disclosed for Q1, as I said, April is difficult to judge because you have to take out -- there is a lot of -- there is a big shift in working days between last year April and this year April, there is also the Ramadan shift, there is Eastern moving around. So I think very careful with these numbers. But if you take -- if you try to do a like-for-like comparison, we are too confident that we are on the track that we target for the full year.

Yassine Touahri: Thanks so much.

Operator: Thanks Lastly. Harry Goad from Berenberg.

Dominik von Achten: Hey, Harry?

Rene Aldach: Harry?

Harry Goad: Good evening and thanks for taking my question, but I've got two unrelated questions please. So the first one is regarding I guess the price inflation we're seeing in cement everywhere. I'm particularly focusing here on emerging markets. Are you concerned at all that at some point we might see some level of whether it's government or state intervention to put some form of price caps in place to contain to local build cost inflation in some of those emerging countries? And then second question on unrelated is, can you just give us an update on your thoughts on the buyback program, because it looks -- I think from what you're saying this evening, that the second chance will be finished by the end of August. I guess the question is will the final third be completed this year, please? Thank you.

Dominik von Achten: Harry, let me answer your two questions. One on the price inflation state intervention, that's not what we see at this point and we very much watch also the cost development for other construction materials in each of the core markets. And although our price increases may seem high from a historical perspective concerning our products compared to other products on the construction sites, they are minimal. That's -- so we -- if there would've been intervention, clearly, we are not the first ones to do target. From our perspective, that's at least if you look at the facts and that's also not what we've seen so far that there are broad state interventions on the pricing side. And on the buyback, Harry, I understand you're impatient, that's very much welcome. We're all impatient but let's do the first -- let's first do the second tranche again. Now, we have some time, I think, and then we'll take the decision as we go along. That's what we've done with the first one and then we are a couple of months further down the road. So one step after the other and then we'll continue to move as we have concluded -- once we have concluded the second tranche.

Harry Goad: Fantastic. Thank you very much.

Dominik von Achten: Thank you.

Christoph Beumelburg: Thank you. That concludes our call just within the hour. Thank you very much for dialing in. May I remind you of the Capital Markets Day, again, 24th of May. for those who haven't registered, please do so, for the virtual part and they're still a couple of slots open for physical attendance. So in case you change your mind, want to come to lovely Heidelberg, more than welcome here. See you all in a fortnight.

Dominik von Achten: Thanks, everybody. Thanks for dialing in. Thank you.

Operator: Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.