Conference is now being recorded. Ladies and gentlemen, welcome, and thank you for joining the Wienerberger conference call on the Q2 2023 results. 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. If you would like to ask a question, you may click the Q&A button on the left side of your screen and then raise your hand. If you are connected via phone, please press star followed by one on your telephone keypad. I will now hand you over to Daniel Merl, Head of Investor Relations. Please go ahead. Thank you, operator. Good morning, ladies and gentlemen. I hope you're all well. A warm welcome to the earnings call on our H1 2023 results. Our board representatives today are our CEO, Mr. Heimo Scheuch, and our CFO, Gerhard Hanke. They will walk you through our presentation, and we'll discuss our strong performance in a quite challenging market environment. After the presentation, as always, we are ready to take your questions. I will now hand over to Mr. Scheuch for the presentation. Ladies and gentlemen, good morning. A wonderful good morning from the whole Wienerberger team, and let me walk you through the results for the first half year and the outlook, and strategically, where we want to go in the next couple of years. When you look at the results of our business in the first half of this year, 2023, obviously, you have to keep in mind that from our side, we have seen a quite, I would say, challenging, underlying, economical development. Why? Because obviously, when you look around, especially Europe and Eastern Europe, we have seen high interest rates, exceedingly so. When we talk outside the Eurozone, that means Poland, Czech Republic, also Hungary and Romania, we have interest rates north of 15% in all of these markets. Obviously, this has influenced the building activity significantly. Obviously, the restrictive mortgage lending policy by banking institutions around Europe has been a major factor as well in sort of provoking a weakening new build and new construction market around Europe. Obviously, the outlook on the economical situation, especially in Europe, has also been weaker. All of it has led to a substantial decrease in markets, in end markets for us in Europe and, as I said, Eastern Europe, especially. However, and that's I think the strong message that we can give you from a Wienerberger side, we have again outperformed significantly those markets in the first half and will continue to do so. Why? Because we strongly focus on solutions, upgrading our portfolio and our strong market positions in the relevant markets. Pricing from our side is very strong and will remain strong for the rest of the year, so that you can see in the margins that have developed very satisfactorily over the last six months and will continue to do so for the rest of the year. Here, I think we are in a very good position, and therefore, the results in Wienerberger's European activity have to be seen in light of this underlying market trends that have been weaker as we have originally expected it for 2023. In this weaker environment, we have performed very well, and I will talk you through a little bit what we have done and what the issues are. North America has done better, and we'll come to this in a minute. When we look at the market, the end markets of Wienerberger. This is an end market perspective, yeah? Not Wienerberger's performance, end market perspective in the relevant markets of Wienerberger, with new residential construction, with the relevant infrastructure market and the relevant renovation market in these different areas. You have seen in Western Europe, obviously, a down trend in new residential housing, obviously, as you've seen here, has continued in Q2. Obviously, therefore, we have to take certain measures in order to do the necessary on the working capital front and the cost front. You've seen also a slight decrease in infrastructure. Renovation has been rather stable. This is good news for our roofing business, especially also for our planned acquisition, Terreal. When we look at the East, obviously here, as I said, because of the high interest rates and the effect of lacking of mortgages and the overall economic outlook for this area of Europe, we have seen rather weak markets in new residential construction, with down trading of about between 30% and about 50% in certain of the markets in Eastern Europe. Renovation has been down and infrastructure because these countries receive, at this very moment, less from the European Union as originally expected as well. This is, I think, a critical remark from that one on the front of Eastern Europe. You will see in the presentation of my colleague, Gerhard, that we have very strong margins in this business in Europe, and we obviously perform well in Central Eastern Europe. North America, as I said earlier, trading well and continuing a sort of, a good, path when it comes to the different markets, renovation, infrastructure, and new build. Especially in our area, I would draw to your attention that we are in the south of the United States, and here, due to, regional effects, immigration and others, we have a positive trend in new residential housing. The general performance of North America is a good one, a strong one, and contributing very satisfactory to the overall performance of Wienerberger. When we look at the first six months, obviously—y ou remember we gave you an, a four, sort of general scenario for the whole of the year with certain market expectations and our overall expectations for the operating EBITDA. We can tell you from this perspective that the markets, as I said earlier, are weaker than originally expected. However, our performance, due to the measures that we have already taken with respect to cost cutting, with respect to self-help program, that are very much on track and obviously also active working capital management, we have outperformed again, the underlying market. We continue to see these markets at this very level as far as we are concerned, for the rest of the year, and therefore, we have taken and take proactive measures in order to manage our cost structure. We give you, under the view of this decreasing markets, a firm guidance. That's the first time that we give a guidance as a company for this year, EUR 800 million-EUR 820 million. Remember, if I compare this to the beginning of the year, that means an actually increased guidance, if you want me, or an increased sign of profitability for the whole year and considering the underlying weak markets of Wienerberger. EUR 800 million-EUR 820 million is a very strong message from Wienerberger in this general market environment. This means also that we grow in the relevant markets of Wienerberger. When we look at the numbers a little bit more in detail, for a little bit above EUR 450 million operating EBITDA, it's a very strong number compared also to the record year last year. Because if I were to exclude, I would say, this extraordinary effects from last year, we would be on a sustainable level, 2022 of about EUR 490 million. So even considering the down trading in the end markets that I've explained to you in detail, EUR 450 million is a very strong number. You see it also on the EBITDA margin front, where we are slightly below the record year last year, but considering the developments, I think here, very good. As I said, firm on pricing, and I'm very sort of positive about the rest of the year, as well as pricing, and we keep control of the costs, especially also when you take inflation into account. Very important, and this is strategically very important, that we keep our clear focus on innovation. More than 30% of our turnover comes from this innovative products and solution products, more than 25% of our turnover. This helps us significantly in pricing and in margin going through this more difficult time as end markets are concerned. Cost management, as I said, from our perspective, very important. As management, we take proactive measures. We see obviously the individual markets going down, the end markets, therefore, we are cutting, obviously, production. What does it mean? We cutting production shifts, where last year we were still producing 100% or even more in our factories because there were strong demand levels. We are cutting back on that right now, and as we speak, and have done so in the second quarter as well in certain areas of Europe already, and manage this effectively. You see here the strong efficiency of Wienerberger, cutting its overhead and cutting fixed costs and flexibilizing it as in the maximum way in order to adjust to market demand. This is the major focus of management right now. Inflation is still at the level, I would say, around 8%. For the whole year, it will come down a little bit, because first half was still certainly a little stronger compared to the second half, but I would say from a first half perspective, it's around 8%. The self-help program, again, very, very positive contribution, with about EUR 22 million to the performance. Here, again, innovation, manufacturing excellence plays an important role, and we're fully on track to deliver the full sort of capability that we have here in the self-help initiatives. Last but not least, when you look at the numbers here, again, from a perspective of market, end market, you see here the strong drop in the, in the first half of 2023 compared to the years before. Record year, as end markets are concerned, has been 2021, where we have set the 100%, obviously, as a reference. You see how the down movement took already place last year and especially this year. In the light of this, I think here, Wienerberger shows clearly, and this is what we have always told you, that we are able to outperform the underlying markets, outperform on the performances as far as sales are concerned, and especially margins when we talk about the solution and the business of innovation that we put in the marketplace. All in all, I think a very satisfactory the first half year. To analyze it a little bit more in detail, Gerhard will walk you through the numbers. Gerhard? Thank you, Heimo. Ladies and gentlemen, as Heimo mentioned, the second quarter was a rather tough one. We have seen a strong drop in the end markets. When we look separately to the second quarter, we have seen mainly the Eastern European end markets, which were below expectations. It was there, the new build, which we have seen basically across Europe, that new build activities are below expectations, but also in Eastern Europe, we have seen a lower demand in renovation and also in infrastructure. We see that the affordability, the high financing costs, due to the interest level, is somehow depressing the purchasing power, basically, of Eastern European markets. In Western Europe, we see still a stable demand in renovation. We see that the energy-efficient renovation is further gaining importance. We see that there is a stable demand in this field, so that countries like France, like Belgium and Netherlands, we see a strong demand when it's about our roofing business. In North America, in line with our expectations, profitability is strong. I will more explain that later on, but the North American business is developing in line with our expectations. This brought us finally to revenues in the second quarter of EUR 1.15 billion, which is 19% below prior year. EBITDA-wise, at EUR 245 million, which is a 23% below our prior year. You see already, yeah, if you look how revenue developed and how EBITDA developed in the second quarter in the strong declining markets, that we are working hard on the operating leverage, basically by initiatives on the price and on the cost management side. Revenue development, as I mentioned, - 19%. We see, due to the market decline in the second quarter, that the market or the revenue decline is mainly driven by a volume decline, which is in the range of 25%-26% in volumes. Prices are up still in the second quarter, year-on-year comparison with 10%. Looking to the EBITDA impact, we see that EBITDA is moving down from EUR 320 million to EUR 245 million. Please also keep in mind that second quarter 2022 was basically the strongest second quarter in the history of Wienerberger. We also had last year some exceptional effects in our last year results. Keeping that in mind, and also considering all the measures which we have initiated, you see that the -23% is a moderate, basically decline, compared to prior year. When we look to the first half year, and when we also dive in into the regions, the Western European region, if we start with Western Europe, as I mentioned before, we have seen a strong development, a stable development, still on a high level in Western Europe, especially from the renovation segment in U.K., Belgium, and the Netherlands. Also there, we have seen that the new build activities in the second quarter were coming down, were slowing down, and infrastructure is on a, I would say, on a, on a stable level, what we have seen during the second, or during the first half year. Which brought us to revenues, which were coming down by - 10%. Volume-wise, this is round about a -20% in the first six months, and price-wise, a +15%. You see already, basically, based on these parameters, that the roofing business is developing strong in the first half year and is also supporting not only the EBITDA development, which is more or less in line with prior year, but you see it also directly in the profitability. We were able basically to improve our EBITDA margin by 2 percentage points to 19% in the first six months. Eastern Europe. Eastern Europe, as mentioned before, we have seen the hardest decline in the markets in Eastern Europe. We have seen there that not only the new build activities, but also the renovation activity is further declining, was further declining in the second quarter. What we have seen by the end of the second quarter, that Eastern Europe is stabilizing. We expect also there that we have seen basically a kind of a stabilization in the Eastern European markets. In the first half year, looking to our numbers, we see that the revenues dropped by -23%, which was mainly driven by lower volumes, which was round about a -30%. The pricing still strong with a +12 on a year-on-year comparison. What we have done is also we initiated, I think this is something what we already communicated earlier. We initiated and started already last year. We have seen, the Eastern European markets are slowing down already in H2 2022. We already initiated first cost management, cost-cutting initiatives in the end of last year, but also in the beginning of this year. So we already have implemented first measures in the sense of taking out fixed costs, flexibilizing our fixed cost structure, adapting, as Samuel mentioned before, adapting shift patterns, taking out fixed costs in, in, in personnel, in, in material costs, et cetera, to optimize and to, to, to keep the profitability of the business in Eastern Europe on a good level. By the way, 19% is also still a level which is a strong profitability in Eastern Europe for the first six monthss. North America. The North American business is developing, as we said before, more in, in line with our expectations. We see that even in Q2, that we see even first positive signals from the market, especially from the west, southwestern part of the market, we see positive signals. We see a higher volume on on mortgage lendings. We see also that basically the volumes in the southeastern part, so meaning Texas, Oklahoma, and these new markets for Wienerberger, are picking up again. We are positive for the North American business. You see also, I mean, we look to the revenues, they are down still by 10%, yes. Comparing it to the market, we still see in North America, we're strongly outperforming definitely our markets, and especially in the U.S., but also in Canada. This results finally also in an EBITDA, which is even above the EBITDA level of last year. As mentioned already earlier, it is that the synergies partly came faster than we originally have expected, and they are basically materializing in a way that profitability of the brick business is going up steadily and also very consequently. We still have a high level of profitability in the pipe business. This, even as you see, the improvement or the increase in the operating EBITDA margin by 3 percentage points is mainly driven by the strong performance of our brick business. For the first half year, looking to revenues, as I mentioned before, revenues are going down by -14%. Yes, it is, the -14% is driven by the market decline, is driven by lower market developments. It is around about a 25% lower volumes, and it is pricing still strong. As Heimo mentioned, we expect to keep the pricing level also for the rest of the year. We have a strong market position, we have a strong pricing position, so this will also support basically the profitability, the high level of profitability also for the second half of the year. EBITDA-wise, in the EBITDA, we had an impact out of the volume drop, as I mentioned. We worked hard on the cost structure, which we started already last year, so there is a strong impact in it out of our self-help program, which contributed with round about EUR 22 million, cost management with EUR 29 million. Yes, we still perform significantly with our pricing above our cost inflation. Yes, this is also supporting our EBITDA development of EUR 454 million for the first six months. Summarizing the first six months, with the EUR 454 million, we believe a strong performance for the first six months, considering this difficult and challenging, and rather weak, market environment where we are in. High profitability, the high profitability is strongly supported by our initiatives, which we are driving, meaning the self-help initiatives, the cost management, and that we successfully outperform the cost inflation, what we see. All in all, a strong performance for the first six months. Heimo, by that, I'm handing over back to you. Thank you, Gerhard. Let's have a quick look to our sustainability program, which I think has been successfully implemented in the company. As you are well aware, we have one program currently running from 2001 to 2023, with all the different targets. I just draw your attention to a couple of those: decarbonization, with - 15%. We are well on track on that. circular economy, also by the durability of our products and obviously, the degree how we can integrate old products in the production processes, again, biodiversity and other targets that are clearly communicated. We have received a very strong feedback and good feedback from all the investors, and the rating agencies have been upgraded. Also, very importantly, in this respect, belong now to the top-notch in the building material industry. Wienerberger is not running this sustainability program as a separate one. It's embedded in our corporate strategy, it's embedded in our management, and obviously, all people are incentivized throughout the company. This is a very important thing that is forming and will influence the business of the future. We have learned from this program, we have analyzed it, we've talked to stakeholders, and especially also internally, and have come up with a program, again, a three-year program, leading us into 2026, where we integrated all the aspects and feedbacks that we got from all the stakeholders, and have integrated in the existing one, things like revenue from products supporting net zero buildings, water management, waste management, and health and safety. These are the central ones that we have added in the new program. The new program, again, has ambitious targets that we will communicate today to the outside world, but also then internally. Again, we have set ourselves initial targets and ambitious ones with respect to decarbonization further, bringing down, again, with another 10% CO2 emissions up till 2026. We are well in line with our overall plan to bring it down in a very considerable way up till 2030, with measures and not just talking, but there's underlying measures in the company. Here we have long-term policies in place that are fully integrated in our CapEx plans and et cetera. Here, again, a very strong message to the market, decarbonization is top of our agenda. Circularity, I think it's very important, and it's rare that the company can say this about its own products and solutions, that 80% of these ones have a durability of more than 100 years. It's a very strong and positive message that we can recycle the major part of these products and solutions and reintegrate it in our production processes, and from a biodiversity aspect, that we increase biodiversity around our sites, on our sites in the future, and have clear plans to do so. Here, again, a strong message of Wienerberger, that we are not standing still, we're moving, and obviously also on the other fronts, like water management and waste management with clear targets. By the way, I want to draw your attention also to the fact that more than 70% of our products contribute to net zero buildings. Again, here, I think Wienerberger is setting a trend here with a portfolio that is innovative and modern. Here, I think we have a strong basis for future growth within the company. Also, important and very, very key for the future success of Wienerberger is training and development of our own employees, but also our stakeholders and the installers. Here, again, we have set ourselves clear targets. 2026, it's a new sustainability policy in place that is part of our strategy and the development of Wienerberger. Let me give a short update with respect to our Terreal transaction, a very important one. As you see, as you have appreciated during the presentation, renovation is a more resilient business, therefore, Wienerberger's strategy was always to get here a stronger foothold. With Terreal, we get here a very strong presence on the roofing market, especially in renovation in Europe. We have now achieved, I think, a great step forward. We have regulatory approvals in Germany and France, the biggest two markets that are obviously affected by this transaction. Without remedies, this comes with a great satisfaction to us because we can integrate Terreal as a whole, benefit from all the employees, the production sites, and obviously, if I may say so, in this setting, also from a maximum of synergies in these two countries, which is very important for Wienerberger. We are still waiting for a couple of minor things that have to occur in the next weeks, but I think we can anticipate a closing probably end of October, beginning in November this year. Here we have, I think we are set nicely as far as the integration of this business is concerned. I draw to your attention also, that this business is not included in any of the guidance that we have given to you, EUR 800 million and EUR 820 million for this year, nor have we given you any indication for the future. Let me tell you when I walk you through the future, that this business will and is on track, the perimeter that we take over, to make about EUR 100 million also this year under these circumstances. I would say it's a fair assumption to have about EUR 100 million EBITDA to be integrated for next year when we talk about the performance of Wienerberger. Again, here, a strong step forward for us as a company. Let me come to 2023 and the outlook. Ladies and gentlemen, when we look at the general economical environment, as we have tried to explain to you and our underlying markets, where are the major differences? The major differences are in Europe only, not in the U.S. U.S. is pretty much on track and will deliver a very satisfactory result for this year. We anticipate also that it will stay on this level for next year. No major changes on the North American front. On the European one, we have seen in new build a decline. Yes, ladies and gentlemen, it has been a strong decline in Eastern Europe. Gerhard and myself have drawn your attention to the fact that we have reacted quickly, fast, because it's our style. We see already a stabilization in these countries. Obviously, there's a state of shock in the first half of this year. People were confronted, as I said, with these high interest rates, with the lack availability of mortgages, and the political instability. All in all, I think we have seen the worst in these countries. We will see a stabilization, probably next year, even a slight growth again, when people have adjusted to this situation. Renovation, more stable in Western Europe, as I said, a little down, more down in Eastern Europe due to the affordability and the lack, obviously, of financing here again. Infrastructure, strong in Western Europe, and for the reason I mentioned, weak in Eastern Europe. Ladies and gentlemen, the question will come: Is this the new reality? No, it's not the new reality. It's a matter of fact, I will call it a crisis that has been provoked by a very severe impact from the interest rate side and obviously some regulatory issues as well in certain countries. Is Germany going to perform - 40% in new residential housing for the next five years? No. It's this year that is the worst. We therefore prepare ourselves for this, and we have taken measures in order to address this situation. The inflation side of the business is about, as I said, lower than 8% for the whole year, probably in the middle of 6%-8% for the whole year, if we can give you here a guidance. When you look at our guidance for the whole year, EUR 800 million - EUR 820 million means, compared to our scenario that we have prepared for you at the beginning of the new year, actually, that we increase our expectations as far as profitability is concerned, because it's much weaker markets than we originally expected. It shows you clearly that we are able to adjust and digest such crisis scenarios very quickly as Wienerberger, and deliver a strong set of results already this year. You can be sure that we will do our utmost to achieve this. It's going to be a, a challenge, we are doing this because we, in the second half, some of you will come with arithmetics and math. I understand that, because you will say EUR 350 million EBITDA in the second half is not enough. Ladies and gentlemen, keep in mind that we will manage actively working capital. That's very important in our business, we therefore will be extended standstills. We will manage, obviously, our production capacities significantly down in the second half, not in order to say that this is the new reality. No, ladies and gentlemen, it's about managing it actively because we don't want to go into next year with too high stock levels. That means that we are well prepared, we do it now because it's faster, cheaper, and better to do it right now. That means that the second half of this year will be affected by this active working capital management and cost cutting. This means that we will end up, at the end of the year, about EUR 800 million - EUR 820 million. Again, a very strong set of results when you look at Wienerberger's performance. Compare it, please, to the sustainable EBITDA that we have given you for last year, 2022. You remember, it was EUR 910 million EBITDA. Only about EUR 100 million or less as a minor performance, considering that the markets are down from about 90% to 74%. We digest actually nearly 20% further decline in markets with such a performance. Again, I think for this year, a very strong set of results. The question will come also, what, what's next? I can tell you from the experience that we have and the estimates. When we take now 2024, there won't be a lot of changes in the underlying market. That's what our assumption is. We said Eastern Europe is stabilizing, probably a slight increase for next year. Western Europe, also on this level, for example, and North America. Let's take, for example, for an example, they stay where they are right now. This result is achievable next year as well, EUR 800 million-EUR 820 million. There's no new reality for the second half to take this as a measure, it's the EUR 800 million-EUR 820 million. As I said earlier, we will take over Terreal in the last part or the later part of this year, EUR 100 million will come on top. We will end up for next year above EUR 900 million. I think, again, you will see that Wienerberger, even in this depressed market scenario, will show some strong growth next year, and I think we are well set for a good performance, as I said, this year and next year. Important, this is, I think, the key message to you: we manage these sort of crisis very well, very actively, proactively, and also, and above all, pricing remains very strong and margins very strong throughout this cycle. Again, ladies and gentlemen, this is the message that we can give you for, for the year, the outlook, and the performance of the first half of this year. Thank you very much for your attention. It has been a little longer than usual, but it was important for Gerhard and myself to explain the overall situation to you very well, so that as usual, you are best informed about our underlying markets and our performance. We are ready, obviously, to take your questions. Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may click the Q&A button on the left side of your screen and then raise your hand. If you are connected via phone, please press star followed by one on your telephone keypad. Again, I repeat, anyone who has a question may click the Q&A and raise your hand button or press star followed by one at this time. We have the first question from Bri Siya, from HSBC. Please go ahead. Hi, just, good morning. I have a question. To start with the, the volume side, you kind of tried to point it out, there's a weakness in H2, which is kind of accelerated from Q1. Then when I look at the H1 volume, the market you're indicating is down 24%, so basically from 97%, it came down to 74%. Your volume are more or less around that. You've been telling us that you are going to outperform the market. I was just wondering how much outperformance happened in H1? A nd what would, or what should we expect for full year when you are guiding the market will be down close to 20%? From Wienerberger perspective, how much outperformance you can do in the market, or, or rather you will perform in line with market? Okay, that was your first one? Yeah. Yeah. Yeah. Can I take the second one? Yeah. Sure. The second one is on the cost inflation. You helpfully guided for the full year, 6%-8%. Can we just discuss a little more about 2024? You haven't given those hedging numbers for this time around, but if you could give us what's the hedging for next year. Within that hedging, can you give us how much it's basically implying either inflation or flat for next year? That will be helpful, and how we are going to price to the market. If you compare those hedged pricing with the spot market pricing, whether you are below, ahead, or in line. That will be helpful. The last one is on the cost savings you have done around EUR 29 million. Can you give us how much cost incurred to achieve those EUR 29 million? What's your plan for second half, whether furthermore to come, and what would the cost to achieve those savings? Thank you. Sure. Thank you very much for your questions, and Gerhard and myself will start with that. Gerhard? Maybe start with the last one. You mentioned the cost savings, as we said. Yeah, we had the EUR 29 million in the first six months. There will be a much bigger share will come in the second half of this year. We had in the beginning of let's say in the first half-year, around about EUR 5 million on one-off costs, basically to generate this EUR 29 million on cost savings. As also in the cost savings of the EUR 29 million, there is also a lot of fixed cost flexibilization in it. Yeah. The second one, maybe on the cost inflation side, you were asking, basically, what is the hedging level already for 2024? What do you expect on cost inflation for next year? What do you expect, on pricing for 2024? Our assumptions as of today, as we see that market's basically on a lower level than, we originally have, assumed. We are on hedging level, or we have fixed above 90% already on, on our energy, expected energy consumption. When it's about cost inflation, we expect the cost inflation, which will be around between the 4%-5%, for next year, which means a pricing, of, +2%-3% of next year, what we foresee as of today. The energy prices are below spot. Right. This is, I think, still our level. We feel very comfortable with the prices, what we have fixed. We expect also for the next months, again, slightly increasing energy prices on the market, and we have a very favorable pricing level or cost level when it's about energy costs, also for 2024. Your first question was about outperformance, from our perspective, the outperformance comes from a mixture of volume and price. Because as you see, the margins are very strong at Wienerberger, so we are shifting also in our portfolio to solution business and to more innovative products. Otherwise, if we were to stay only in commodity products, then obviously our results would look very different, and you can see this in the history of the company when we were still a commodity producer, by the way. Here, here, again, this outperformance is there, and we obviously stick to what we said, that we do at least 2% better than the market. It's what we keep saying, and that's what we will do in the future and also this year, at least 2%. All right. Super helpful. Thank you. Thank you. The next question is from the line of George Speak with BNP Paribas Exane. Please go ahead. Morning, morning, gentlemen. Thanks for taking my questions. I'll take two. I think Gerhard mentioned protecting operating leverage with, with price actions. Can I just clarify if that comment applies to just Eastern Europe or if we should expect weaker pricing in other markets? That's my first one. Then just on the U.S., do you think the stabilization or the recovery in new residential construction looks sustainable? Clearly, mortgage rates are still at 7%, and we haven't really seen the labor market soften yet. Is it a bit premature to, to give the all clear on, on the U.S.? That's my second question. Thanks. Thank you. The second one first, if I may, from a North American and U.S. business, we don't take the assumption that we see here an increase. As I said, for myself, it's more stable- stabilizing at, at this level and continuing at this level. That's how we anticipate it, and, as you clearly said, it's too premature to make any conclusions. We are ready if there's more demand to satisfy, but for the moment, we are, we are sort of anticipating the performance as is, no major volume increases. To the other thing, I think you need to clarify a little misunderstanding. Right. I think there is no pricing actions or. Basically, what I tried to explain is that we keep our pricing up and secure profitability. As I mentioned, it is not only the strong pricing, what we try to confirm, it's also about cost management. We are taking out capacities, we are taking out costs. We are consequently performing our self-help program. This is what I meant to secure or to protect, basically, our operating leverage, yeah? There is no price campaigning or that we come down with pricing. It's the other way around, we keep the prices up. As we simply see, as I said, we have a cost inflation of around about 8%, in Eastern Europe, slightly higher. We still stick to a price level for the first half year, which is on a level of +12%. This already shows how strong the price positioning is, and it is also key for the second half. I think this is a key point to all of you listening to this call at Wienerberger. In this market environment, a price increase of 12% is a very strong message, and I think this shows, as I said earlier, that the shift in product, in innovation and solution helps us to set this sort of strong pricing. By the way, pricing is strong throughout the group, from North America to Eastern Europe. Thanks. That's really clear. Cheers. Yes. Cheers. The next question is from the line of Cedar Ekblom from Morgan Stanley. Please go ahead. Thanks very much. Hi, gentlemen. I've just got one question on inventory and working capital. In H1, you had quite a big increase in your inventory, despite the fact that volumes were down, and you've alluded to the fact that your H2 will be impacted by that inventory normalization. Can you talk about what's happened as it relates to inventory and working capital, and why that should unwind in H2? Thank you. I think, as we said in the beginning, Cedar, we have seen that markets were dropping significantly sharper or faster than we have expected in the beginning of the year. We started already in the first quarter, basically, to slow down the output and to take out capacity. We also see that we have to do, basically, to end up with a normalized inventory level by the end of the year, that we have to take out production in the second half. This will have an impact around about on our second half results of around about EUR 40 million-EUR 50 million. Yeah. It is a significant amount, and it is not that we basically were surprised, but we have simply seen that the markets in the second quarter are dropping harder than we originally have assumed in the first quarter of this year. Therefore, we see, as you said, maybe it seems like a shift between the first half and the second half, but it is also due to this rather sharp market drop, what we have perceived in the second quarter. Yeah, and if— Right. Cedar, if I, if I may come in at this point. If you take the EUR 50 million-EUR 60 million that, obviously, Gerhard is mentioning, coming from this reducing working capital, and you add it to the EUR 350 million that you imply, when leads us to EUR 800 million or so from the currently EUR 450 million, you end up anyway where, where we were at the beginning. I think it's very clear and very transparent from our side what we are doing in the company. This is a proactive measure, as I said, it prepares us well going into the next year. Helpful. Thank you so much. Thank you. The next question is from the line of Yassine Touahri from On Field Investment Research Please go ahead. Yes, good morning. Maybe a follow-up question on this, on this, inventory situation. If I understand properly, when you are increasing your inventory, it has a positive impact on your cost, but when you are destocking, it has a negative impact on your margin, and you're expecting a negative impact on EBITDA of something like EUR 40 million-EUR 50 million in the second part of 2023. Is that correct? That's absolutely correct. It's more EUR 50 million than EUR 40 million, if I may say so. If we were looking at your cash, your EBITDA generation in H1, excluding the destocking, it would be closer to EUR 400 million. And in H2, excluding the restocking, it would be closer to EUR 400 million in H1, and in H2, your EBITDA, excluding the destocking, would be also closer to EUR 400 million. Is that correct? Right. This is very well explained. Maybe a second question. Thank you very much for the clarification. A second question on the volume. It looks like if your pricing was up 12%, it looks like your volume were down, like 30% in the second quarter of 2023. Is that, is that correct? This, this, he was referring obviously to Eastern Europe, so that, that was a very specific regional approach, in the, in the, in this, area. Yeah. For the pricing at the group level is more, is therefore, more than 12%? It is 12%, yeah, for the group. Yeah. It is around about between the region, plus, minus, in Western Europe, a little bit higher, in North America, it's slightly lower, and in Eastern Europe, plus, minus in line with the group pricing level. Yeah. Okay. I think last question would be on the, on the pricing development. When I look at this pricing development, it suggests that at the group level, there was a little bit of sequential pricing deterioration in Q2 versus Q1. Is it just because of the mix effect between region? Or, can you— or is it because of your piping, your plastic pipe business where you got a little bit of a pricing deterioration? Or a m I missing something? You have to consider, yeah, with that last year. It is more an arithmetic, I think, thing that we had last year. In the second quarter, still, a price increase. On a year-on-year comparison, even if you have this year a flat price, you see if you compare quarter one pricing and quarter two pricing, that it is slightly lower. It is, it has to do that we still had realized in the second quarter, and I mentioned it before, the second quarter, 2022, was the strongest quarter what we had in the history of Wienerberger, yeah. Where we still increased basically in starting falling, markets, the, the pricing level, yeah. It is, we have a stable pricing also in quarter two, yeah. This is important. The, the last question maybe on to continue on pricing. We've seen the volume decline of maybe 25%-30% in the second quarter. It's very difficult, especially in Germany, in Eastern Europe. At the same time, gas costs and electricity costs are down considerably compared to last year. Do you see any of the small independent brick and tile manufacturer cutting prices and giving back the, the cost deflation in some of your market? Listen, we have always we are operating in 28 markets with a lot of sort of local competition. Some of these people are, are doing certain things and try to probably to do some price actions. We, clearly, as the market leader, we are firm on this. We have good relationships with our clients and customers long term, so we are not so concerned about this. This might be a very local thing from time to time, but it then tends to go away. Would you say that you're confident that the situation of 2010, 2009 will not reproduce, where you had to cut prices, which significantly impacted margin? This is absolutely the case. As I said, we are a completely different company, and I think this I need to underline three times. When you were referring to this very difficult period, 2009, we were a commodity producer, and from a commodity perspective, it's very difficult to distinguish then to your competition. That's where first, the first reason. We have changed our product portfolio dramatically. Keep in mind, the second one is obviously that the competitive landscape has changed dramatically, because due to the crisis, 2009-2011 or 2012, depending on the market that you are in, we have seen a completely change in the competitive landscape because a lot of competitors have left the market. We have a completely different supply-demand level in these areas. Thank you so much. Thank you. The next question is from the line of Markus Remis from RBI. Please go ahead. Hello, gents. Firstly, a clarification. I didn't quite acoustically get what you said on 2024. It sounded like, you, you were indicating EBITDA of more than EUR 900 million, including Terreal. Is that what you said? Correct. You got me. Okay. In that sense, I mean, you would be probably roughly flat organically. I mean, based on what volume price assumptions, is that, is that, figure built on? Listen, I, I think we are very early, and to give a gu— I'm not giving a guidance for 2020— No, just indication. Indications, yes. I said basically, if there's no change— I, I— So sorry. I just want to make clear. I said, if there's no change at all in the underlying market, EUR 800 million- EUR 820 million is achievable for us next year as well. I added the EUR 100 million so that we have here, at least— Okay. — a good general perception, because otherwise, some people think that next year will be even worse than this year. That's what I'm trying to say. It's not a new reality, it's something we are building on. I'm saying there can be also some growth. We will see in six months' time or five months' time, what 2024 will really bring, yeah? You might see initiatives by the EU, you might see initiatives by local countries, and this dramatically then change the overall sentiment and the performance. Again, just saying, keep in mind that Wienerberger will show independently of what's happening, and EBITDA higher than EUR 900 million next year. Right. Okay, then a question on, on Terreal and its earnings development. In the current year, you said EUR 100 million, that would be about flat of the run rate mentioned upon the publication of the transaction for 2022. I was wondering how Terreal managed to keep profits flat in arguably lower market. Then also when you guide for EUR 100 million accretion next year, I mean, is that built on the assumption that the kind of cost savings and synergies will compensate for a potentially lower market, or is that also based on a flattish market development in 2024? More based on a flattish market development. We don't put anything in this. It's too early. Yeah. But coming back to, to what you said, if you look at my chart on Western Europe, you see that renovation is about staying flat, end market-wise. T he major part of the business of Terreal is in France, and France has performed pretty well on pricing and then on volume in 2023 and continues to do so. The best assumption at this case, at this stage, is to say flattish, and if it's flattish, then it's EUR 100 million contribution. Okay, very clear. On your capacity adjustments, can you maybe shed some light if that rather kind of comprises take out of shifts or, or, or is it, is it curtailments of, of, of plants or production lines? I mean, are you, yeah, are, are you expecting any, any one-off costs related to that in the second half? We have already some one-off costs in the first half, by the way, and Gerhard, it's about, I think EUR 5 million or so. EUR 5 million. What we have in, they will be significantly higher in the second half. As you described, it is, when we speak about cost management, it's taking out as fast as possible fixed costs, so to flexibilize fixed costs. It begins with shift patterns, with taking out temporary workers, lease workers, et cetera, up to basically mothballing or finally closing production locations. This is what we are doing, and this we also intensifying for the next weeks and months. We are adjusting the cost structure very fast to the market environment where we are in. It is, I think something what we already explained you, by the end of last year, we already have seen that the new build markets are coming down in the second half of 2022. So it is something where we already started last year. Right. Okay, significantly higher restructuring costs in H2. That's, that's understood. I mean, on the, on the mothballing or, or closing, is, is that—c an you, I mean, can you kind of, ring-fence that to, to certain regions? Is it more CEE than, than, than Western Europe related? I think when you go through the, the, the business as such, obviously Eastern Europe will be most affected, and the standstills, extended ones, winter ones that start earlier, I mean, as early as October, beginning of October, for, for the winter. This is things that we will do. Shift patterns that will change, these are things that will kick in as we speak, basically. This is what's going to happen. Ring-fence it, yes, it will be certainly mostly in Eastern Europe, to some extent, in certain areas of Western Europe, like Germany as well, obviously. Mm-hmm. Okay. Okay, a final question would be, on the, also related to the, the cash, preservation, if you want, on the, on the CapEx side. Is that, also an area where you, want to adjust your, your plans to, to the lower market, development? Or in other words, what would be like the, the guidance for, for the current year? Basically, we will also concerning the liquidity, as we said, we will bring down inventory levels, working capital levels. This will bring in, in the second half, quite some cash flow in the second half of the year. We will cut our CapEx program by EUR 30 million, that we consider the lower production output, especially in the east, with round about EUR 15 million in the maintenance CapEx and around about EUR 15 million on the special CapEx side. We'll take out EUR 30 million on CapEx this year. Okay, that means then something like EUR 280 million on a group level? Right. Is that correct? Right. This is what we basically— Okay, okay. Yeah. EUR 275 million [audio distortion] picture. All right. Thank you very much. Thank you. The next question is from the line of Gregor Kuglitsch with UBS. Your question, please. Hi, good, good morning. Thanks for, for, for the questions so far and answers. Maybe just to summarize very quickly, I know this was answered before, but the fixed cost and the, the sort of stock build absorption, roughly, you're saying EUR 50 million tailwind H1, EUR 50 million headwind H2, therefore neutral at the full year stage. Is that, and therefore not a headwind into next year? Just to be 100% clear on that. I, I, I presume the answer is yes. The second question is on working capital— I, we answer yes. We answer yes. Just to be clear, yes, Gregor, as you said, it is like that, yeah. Okay. Then in terms of working capital, you're actually guiding for below 20% of sales. I think last year you were like 16% or 17%. With the lower revenues, so what does that actually imply, I guess, for working capital cash out to the extent there will be any, and year-end net debt, let's say before the Terreal deal? I appreciate that will obviously add something like EUR 450 million. Yeah. Well, what we are striving towards is a 20% on working capital. This is how basically our second half is planned and forecasted at the moment, 20% on, on revenue and working capital. The second question, Gregor, you had was? The net debt, I guess, maybe pre-Terreal, I, I, I guess it'll add 40— The net debt question, right, and we will end up with 1.4x, round about, pre-Terreal, yeah. Okay. 1.4 EBITDA, yeah, just to be clear, on, on financial leverage, yeah. At 1.4 x. Okay, okay. Right. Okay. Yeah, okay. Then can you actually tell us, as things stand today, I guess you have a pretty good view, what would be the year-over-year price impact in half two? I guess, if prices are stable. Right. Prices will come down, not basically the price level, but arithmetically, yeah, on a year-on-year comparison, as basically still prices were slightly going up in the second half of 2022, and the price level of the second half of 2023 will be more stable. You will see a slight decrease for full year due to arithmetics, yeah? Just to be clear, yeah. We keep prices stable, that this is our clear assumption for the full year, but due to the arithmetics, you will see basically not the 12%, more in the range of +7%, +8% for the full year then, yeah. Okay. Thank you. Can you help us roughly reconcile the EUR 800 million-EUR 820 million into roughly what you're thinking on the segments? How much do you think North America, Eastern Europe, and Western Europe each roughly contribute? I appreciate there's a bit of a moving feast, but so we get a bit of an idea. The reason why I ask this is because in North America there was always this thing around the pipe business kind of over-earning, I think, to the tune of EUR 50 million-EUR 60 million. I wanna understand if that's already unwound in, in your guidance, I guess, this year. Well, I think if you, if you allow me and, and not my colleague, CFO, to answer this question, because he can blame me then anyway. At the end of today, we will roughly have about a little above EUR 200 million coming from the U.S. or North America, and about the same amount from the East, and the rest comes from the West. Yeah, I gave you already, I think, a very sort of detailed analysis. Absolutely. In North America, the pipe business has now normalized, or is it still— I appreciate maybe there's ups and downs, but do you think it has normalized largely in these numbers? It's still, you know, infrastructure spending, and you follow the U.S. policy is very, really strong still, and I think we're taking full advantage of that. I would say we are still in a very good terrain. Okay. Thank you. I appreciate the answers. Thank you. Ladies and gentlemen, as a final reminder, anyone who has a question may click the Q&A and raise your hand button or press star followed by one. The next question is from line of Tobias Woerner. Excuse me, I just saw he withdrew the question. So far, a h, sorry, he's back in the queue. Tobias, please go ahead. Back and forth. Thank you for taking my questions, just sort of to round off previous questions. Two, if I may. The 12% price increase, just to be absolutely clear here, this is Q2, this is not H1, right? This is H1, Tobias. Right. The 12% for the group is year-on-year. Please also keep in mind, yes, there is also a carryover from last year, logic-wise, yeah? It is a 12% year-on-year, first six months versus the first six months, 2022, yeah. Okay. In the first quarter, it was 15%, right? Right. Okay, the momentum is slowing in that context. As I said before. Yeah. We have a more stabilized pricing level, but as last year, we have seen an increasing trend in the pricing from quarter- to- quarter. Arithmetically, also the 12% is basically decreasing, yeah? Okay, understood. Then Heimo referred to, you know, I understand 2024 indications, in terms of the second half not, being marked, markedly worse, and pointing to sort of a stable level on an organic basis, at the EBITDA level at EUR 820 million as well. Is that how I should have understood it? The, the follow-on question to that is, when you look at the last three years, your you know, your improvement programs delivered on average about EUR 45 million. Would, would that be prior to such a program, or would that be after such a program? Have the programs come to an end now, effectively, because you only pointed 2023? Yes, we indeed, Tobias, we have pointed 2023. We have not come up yet with another program. I think you need to give us a little bit of time. We will have a capital markets day in October, where we will certainly address this in more detail. I just wanted to give a, a clear message to all of you that we should not take the second half of this year as a new reality. That was my clear message to all of you, that we are actually in a more than a quarter-by-quarter approach, and the mid to long-term one is obviously that Wienerberger grows, and Wienerberger can manage very well such difficult, such challenging, such weak market environments, in the sense of high profitability and increasing market shares. I think this is the key message that I wanted to give. Maybe, Tobias, one, one addition to the pricing, what I explained before. Please keep also in mind, before you take any conclusions on profitability, that also cost inflation arithmetically is going down in the second half. As Heimo mentioned, we expect a cost inflation, which will be clearly below the 8%, yeah? That means the same effect, what we see on the pricing, we also see this arithmetic effect on the cost inflation side in the second half. Understood. Okay. Thank you very much. Thank you, Tobias. Thank you. Far, there are no further questions, and I hand back to Daniel Merl for closing comments. Thank you, operator. Ladies and gentlemen, thank you very much for taking the time and dialing in today. The next conference call will be held on the 9th of November, 2023, when we release our results for the first three quarters of 2023. For today, I wish you a nice remaining afternoon, and goodbye. Ladies and gentlemen, the conference is now concluded, and you may disconnect. Thank you very much for joining, and have a pleasant day. Goodbye.