Ladies and gentlemen, welcome to the Geberit conference call on the third quarter results, 2023. I am George, the conference call operator. I would like to remind you that all participants will be listen- only mode and the conference is being recorded. The presentation will be followed by Q&A session. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christian Buhl, CEO. Please go ahead, sir. Thank you for the introduction, and good morning, ladies and gentlemen. Welcome to our nine-month results conference call. We will start with the third quarter figures, then comment on the nine-month development, and we'll finish, as usual, with an outlook. Let me start with Q3. Geberit delivered in Q3 in the light of an extraordinarily difficult market environment and a challenging top line, strong bottom line results. Despite a net sales decline in local currencies of -5%, all bottom line figures grew double-digit in local currencies. EBITDA grew currency-adjusted by 13% and EPS by 14%, despite a double-digit volume decline and a substantial wage inflation. The results of the third quarter demonstrate Geberit's capability to create value in a declining market environment. Let me now give you some comments and details on the sales development in the third quarter. Net sales reached CHF 728 million. The unfavorable currency development affected net sales negatively by CHF 25 million, or -3%. In local currencies, group net sales declined by -5%. This decline was caused by a volume decline of around -11%, partially offset by sales price increases of around 6%. The volume contraction was weaker compared to the first half of the year in the light of easier comparables. Let me now comment on the sales development of the regions and countries in the third quarter. In Europe, net sales decreased by -5%. Positive growth rates were recorded in Eastern Europe, with +13% benefiting from a weak previous year quarter. In Austria and Benelux, net sales were also up by +3%, respectively, by +1%. Net sales declines were recorded in Northern and Western Europe, both regions down -3%. In Italy, with a net sales decline of -7% due to a negative base effect. In Germany, with a decline of -10% due to a weak market environment for residential building construction. And finally, in Switzerland, with a -11%, driven by a strong base effect. Outside Europe, net sales increased in Middle East, Africa by +2%, decreased in Far East Pacific by -11%, driven by China, and decreased also in America by -6%. I continue with the sales development per product area in Q3, again, in local currencies. Installation and flushing systems declined by -8%, and bathroom systems by -7%. Piping system sales increased by +1%. The significantly better performance of piping systems was driven by our new supply piping system, FlowFit. Let me now turn to the operating and financial results in Q3. We managed to grow all bottom line results from EBITDA down to EPS. Excluding the substantial negative currency effect, all bottom line results grew even double digits. EBITDA grew by 13% in local currencies, and EBITDA margin reached 30.6%. EBITDA margin increased substantially by 450 basis points, despite the strong volume decline, a significant wage inflation, and an unfavorable currency development. Main drivers for the margin expansions were higher sales prices, compensating for last year's cost inflation, lower raw material and energy prices, and a high operational flexibility, mitigating the volume decline. EBIT grew in local currencies by 13%, reaching an EBIT margin of 24.9%. Net income increased in local currencies at a slightly lower rate, with +11%, due to higher financial expenses. Earnings per share reached CHF 4.42, and grew by 40% in local currencies, supported by the accelerated share buyback program in the second half of last year. We continued the buyback program in Q3. We bought back 132,000 shares for a total amount of CHF 61 million. Let me continue with a review of our net sales development in the first nine months of the year. Net sales in Swiss francs decreased by 12% to CHF 2.39 billion, negatively affected by strong currency effects. The negative currency effects led to a net sales loss of CHF 190 million, or -4%. In local currencies, net sales decreased by -8%. This decline was caused by a volume contraction of around -18%, which was partially offset by sales price increases of around 10%.... The strong volume contraction was caused by a base effect from the record high volumes in the previous year and destocking effects this year. Secondly, a decline in building construction market due to building cost inflation and increased interest rates. And thirdly, a declining demand for sanitary renovation due to pull forward effects during COVID-19 and heating-related renovations in selected European countries this year. Moving now to net sales growth per region. Again, all growth figures refer to growth in local currency. In Italy and the Western European region, net sales declined by -1%, supported by a more favorable market environment compared to the rest of Europe. Net sales in Benelux declined by -4% and by -6% in Switzerland. In Nordics, net sales decreased by -8%, with declining sales in most countries. Double-digit declines were recorded in Germany and Austria, both down -13%. Both countries are most affected by heating-related renovations this year. Eastern Europe recorded a decline of -18%, negatively affected by the exit from Russia and a strong base effect from the other Eastern European countries. Let me now turn to the regions outside Europe. In the Middle East and Africa region, net sales increased by 12%, driven by strong growth in Turkey. In America, net sales slightly decreased by -1%. In Far East Pacific, net sales decreased by -5%, driven by China and Australia. Let me now comment on the sales development of product area, again, in local currencies. All three product areas declined with similar dynamics year-over-year. Installation and flushing systems by -10%, bathroom systems by -8%, and piping systems by -5%. The stronger decline in installation and flushing systems compared to the other two product areas was driven by stronger stocking effects at wholesalers. Furthermore, piping systems benefited from the strong growth of the already mentioned new supply piping system FlowFit. I continue with the operating and financial results in the first nine months. The substantial negative currency effect led to declining operating results on all levels in Swiss francs. However, in local currencies, we managed to grow all bottom line figures. EBITDA reached CHF 749 million, an increase in local currencies by 4%. The EBITDA margin increased by 320 basis points and reached 31.3%, despite the strong volume contraction, the significant salary inflation of around 5%, and the substantial adverse currency effect. The main positive drivers for the profitability improvement were sales price increases, compensating for cost inflation last year, lower energy prices, and the high operational flexibility and cost discipline, mitigating the volume decline. Raw material prices in local currencies were only 1% lower compared to the first nine months of 2022, and did therefore not have a material impact on margins. EBIT increased currency adjusted in line with EBITDA by 4%. EBIT margin reached 26.5%. Net income increased in local currencies with +2%, slightly less than EBIT, due to higher financial expenses. Earnings per share increased, currency adjusted, by +5% and reached CHF 15.35, supported by the accelerated share buybacks in the second half of last year. The share buyback program was continued this year with 379,000 shares bought back in the first nine months, for a total amount of CHF 184 million. CapEx increased by CHF 34 million to a new record level of CHF 128 million, due to strategic plant investments and the construction of a new customer center in Germany. Free cash flow increased by 2% to CHF 421 million, despite the significant volume contraction and the substantially higher capital expenditures. Let me now comment on our outlook for the rest of the year. The geopolitical risks have significantly increased since our H1 communication in August this year, leading to further increased uncertainties. We continue to expect a very challenging environment for the building construction industry this year, with a decline in new build market, as well as a decline in renovation market, driven by increased interest rates and significant building cost inflation. While indicators for the residential building sector in Europe continues to be weak, non-residential indicators prove to be more resilient. Additional and specific challenges for the sanitary industry in 2023 emerge from the pull forward effects from the COVID-19-induced home improvement trend, and the current focus on heating-related renovation in selected European countries. Positive catalysts for the sanitary construction industry emerge from the fundamental demand for renovation and new housing in several European countries. The structural trend towards higher sanitary standards and a quite positive market environment in several emerging markets, for example, in India and the Gulf region. On the cost side, we expect for Q4, sequentially stable raw material prices and higher energy prices compared to Q3 this year. In the context of the declining market environment, we continue to stick to our two guiding principles: strategic stability and operational flexibility. The purpose of these principles remains to manage the volume uncertainties with a maximum of flexibility, however, without harming the midterm potential of the business. The margin improvement in the first nine months of the year, considering the significant volume contraction of -18%, is a testimony for our high operational flexibility, especially in the plants and logistics, and our strong cost discipline. The overarching objective remains to gain further market shares, regardless of the prevailing market environment. To do so, we will focus on several levers and initiatives as outlined at our Capital Market Day, four weeks ago. In the light of the significantly increased geopolitical risk, it's very hard to predict even the short-term future. Volume uncertainties also emerge from the unpredictable wholesaler inventory strategies in the current market environment. Under the assumption of no material changes of this fragile environment, we expect for the full- year, a mid-single-digit net sales decline in local currencies, and an EBITDA margin of 29%-30%. Please note that in October, net sales in local currencies were slightly above previous year's level. Let me close our introduction with a short summary. Geberit delivered in Q3, in an extraordinarily difficult market environment, strong bottom line results. Despite the volume contraction of -11%, we managed to increase our margins and to grow all bottom line results in local currencies, even double digits. EPS grew currency adjusted by 14%. These results confirm our strong and consistent pricing management, our high operational flexibility, and our cost discipline in a declining market environment. Geberit is well-prepared to master the challenges emerging from this environment, as already demonstrated several times in the past. Our confidence is based on our resilient strategy and business model, our strong and long-lasting customer relations, our industry-leading financial strength, and our long-term focus and track record. Thank you for your attention. We are now ready to answer your questions. We will now begin the question and answer session. Our first question comes from Daniela Costa, from Goldman Sachs. Please go ahead, madam. Hi, good morning. Actually, three things, quick ones, if possible. So first, can you comment in terms of, like, where do you think the inventories at the wholesalers are now, if you think that they, they have already bottomed out? And then second, on pricing, I think when we mechanically aggregated the various price increases from last year, we would get to even a slightly higher amount of pricing. Is, is that, you know, is that the 6% just because of the mix, that pricing is maybe lower in piping, and you've done better on piping? And then how shall we think about pricing in Q4 and, and into next year? And then the third one, just a very quick clarification. I, if I heard you saying a comment on October or the start of Q- We can't hear you anymore, Daniela. Sorry. Sorry, you couldn't hear my question? We could hear question number one and two, but three was interrupted. If you repeat question three, please. Oh, question, question number three. Yeah. So I don't know if my line was interrupted before, and I didn't and you said something about October or the beginning of Q4. I just wanted to clarify if you did say something, and if not, if there's any observations on how sometimes you comment on the start of the quarter. Thank you. Understood. Question number one, the wholesaler inventory levels. We have seen in Q3 still a little bit of destocking on the wholesaler level, at least that's what we have heard from some wholesalers. However, we have also got feedback from wholesalers telling us they have not further lowered their stock levels with regards to our products. So what we assume is there were still a destocking effect, but much less than in the second quarter. Question number two, about pricing. The 6% price effect in the third quarter, which was a bit higher than what you could technically expect, because we increased prices over the last 12 months by around 3.5%. The reason for that is that we had a delay effect in Q3 last year. You might remember, we had a little bit of lower price effect in Q3 last year, due to late deliveries or still deliveries in Q3 last year of volume of, product at lower prices. And this delay effect, from Q3 last year, has obviously an impact on Q3 this year. This is the reason why the price effect is around 6%, a little bit higher than what you'd technically expect, if you just add the static price increases over the last 12 months.... The question, sorry, and then the question about Q4 pricing, we expect that price effect is now coming down because we did not further increase prices. The price effect in Q4 could be around 2%, that what we currently expect. For next year, we do not yet communicate what we do with our pricing, because we are currently in the final decision what we will do, and we will communicate first to the customers in terms of pricing decisions for next year. So I can't give you an answer there. And number three, in October, we mentioned that net sales were currently adjusted slightly above previous year, October. Very clear. Thank you. Our next question comes from Yves Bromehead from Société Générale. Please go ahead. Good morning. Thank you for taking my question. I'll have two. My first one is, I just wanted to come back on the strong performance of the FlowFit, and generally speaking, the pipe division in the third quarter. Can you maybe elaborate on some of the key drivers and remind us, I think you introduced FlowFit into new countries. Was that in Q3? And should we expect you to roll out FlowFit into new countries as well in Q4? My second question, just on the volumes, with the comments, obviously, of the October month, but also your performance in the third quarter. Does this suggest that you do not expect volumes to continue to decline sequentially, at least with the visibility that you have? Are you comfortable given the volume performance versus sort of the outlook that you're giving, which is still quite challenging and negative on your end market? So I'm just trying to reconcile the two together. Thank you. Hello? Yes. Do you hear me? Yes. Now we can hear you, yeah. Did you hear the answer about FlowFit's, or we have some? No, I repeat my answer to FlowFit. So FlowFit's strong development in Q3 was not driven by new countries. We introduced FlowFit this year in the U.K. and France already as of Q2. The basic reason for the strong growth is just the demand, which is very pleasant in all the countries where we have introduced FlowFit so far, which is almost all countries in Europe. The second question about volumes in Q4, yes, we expect a sequentially improvement of the dynamics of the volume, meaning at least a less negative dynamic, maybe even a stabilization or a slight positive growth in Q4. However, I wanna restate that the uncertainties are relatively high, but we are a little bit more optimistic for Q4 in terms of volumes than what we have seen for the first nine months. Thank you. The next question comes from Martin Flueckiger, from Kepler Cheuvreux. Please go ahead. Morning, gentlemen. Thanks for taking my question. I've actually only got one left. On raw material prices, I saw that they were down a little bit less than what I had expected sequentially. I was just wondering what your observations were with respect to raw material prices here, and, you know, whether that's... and whether I'm correct in calculating the positive impact on the EBITDA margin of around 180 basis points. Thanks. Can you be more precise? Is that the impact in the Q3 or nine months? Yeah, sorry. Of course. Yeah, sorry, that's Q3. Tobias, you have a view on that then? Let me quickly see. I'm not sure. Well, I would say, just to, yeah, I think you're right. Yeah, roundabout correct. Roundabout correct. Yeah. Yeah, I would say it's correct, yes, roughly. We don't have the exact figure, but I would say roughly, yes. Um, Q- Okay, thanks. And was there any... If I remember correctly, raw material prices- Yeah. -were down a little bit more than what you had expected. Could you elaborate a little bit on that? And- Nothing specific, to be honest, because as you know, we don't have a lot of visibility also not on the raw material price side. There were some prices just a bit more down than what we expected. Nothing specific which I could mention here. Martin, just to reiterate, the 1-point data, correct. Thanks so much. Next question? The next question comes from George Speak from BNP Paribas. Please go ahead. Morning, gentlemen. Thanks for taking my question. Do you mind just helping us understand your margin guidance a bit better? So we had nine-month margins of over 31%, but full- year guidance of 29-30. So I appreciate the seasonality, but given costs are gonna be lower, you're saying sales could be up in Q4, volumes could be stable, pricing's resilient. Why couldn't Q4 margins be a bit better than the low 20s or mid-20s that you're implying? Two reasons for that. There are two reasons for that. First of all, we have less positive effect from sales price increases. As I mentioned before, that will come down substantially compared to the first nine months. And secondly, we also, again, expect rising energy prices sequentially in Q4 versus Q3. Okay. Very clear. Thank you. The next question comes from Arnaud Lehmann, from Bank of America. Please go ahead. Thank you very much. I have two questions, please. Firstly, coming back on the Q3 numbers, your net sales is coming down quite a bit relative to the first half or the second quarter. ... Is there, is there any one-off in there? Is there good cost discipline? And I guess, the, the actual number, I think, is CHF 117 million in Q3. Is, is that the new normal compared to the, let's say, CHF 130, CHF 140 that we saw in the first two quarters of the year? That's my first question. And my second question is on the pricing trends. They seem to be quite steady on a sequential basis. Do you still see good discipline on pricing in the industry? Any sign that some of your competitors might be trying to be a bit more competitive on the pricing side? Thank you very much. Question number two. I think question number two and number one will be answered by Tobias. We don't want to go too much into details of pricing of competitors, for obvious reasons, but in general, I would say there is quite a stable price environment, what we observe at the moment in the industry. No big outliers. And question number one is Tobias? Yeah. No, there's no special effects that would influence it in any special direction. So, the 117 is like a new level that is sustainable, you think, into the coming quarters? Yes. Yeah. On the other op... Yeah, again, it's always a seasonality, but simply there's no specific effect in the other operating expenses in Q3 that would be noteworthy. Very good. Thank you very much. The next question comes from Patrick Rafaisz from UBS. Please go ahead. Thank you. Yes, thank you. Good morning, everyone. Three questions, please. The first is a follow-up on the discussion around Q4 and October. I know you don't like to talk about monthly trends, but if I go back to Q3 last year, you had indicated October to be slightly down in local currencies, which for volumes had implied around -10 or so. But you closed the quarter with -20% on volumes. So my question is, you know, the slight increase in October now, does that mean that we should see a sequential acceleration November, December, given that the comps will get progressively easier or much easier? That's the first question. Second question is follow-up on piping. I understand what you said about FlowFit and the strong reception in the market. But I don't see FlowFit contributing 5-6 percentage points to the segmental revenue. So I'm just wondering, with piping often an early indicator, does that also support a view that the market is maybe slowly improving? And then the last question is on Austria and Benelux, which were positive against the trend. You talked about the reasons behind other regions. Can you add some more color on Austria and Benelux as well? Thanks. I start with the October questions. You're right. Last year, we had a negative dynamic within Q4 with regards to volume. And as I said before, also in October, volumes were slightly up. And this year, it's very hard to say what happens in November and December, to be honest. Therefore, I've got to be careful. I don't want to give you an answer considering the little bit easier comps in November, December last year. But it would be too much speculation just to talk about one or two months. The second question about piping. There's one other reason we didn't mention again, but don't forget, pricing, we had also piping, had also a bigger pricing effect. We increased prices also a little bit more. That also contributed to the better performance on the piping side, but the main driver was indeed FlowFit. It is, I have to say it, I've already said it two years ago, it is a blockbuster for us, and it turns out to be a blockbuster also in terms of numbers. With regards to Austria, just maybe one comment with regards to development. We have seen a very weak first half of the year and some, let's say, normalization in the third quarter. I would call that a bit quarterly seasonality in a specific country. There's nothing specifically that changed the structural, the fundamental demand and also challenges which we are facing in this market. And the second one was Benelux, if I remember correctly, where you could have expected a bit better Q3, because we had a very weak Q3 last year already. So that was a bit maybe on a disappointing side, but it shows that these countries, especially Netherlands, are a little bit later with this negative effect from the heating- related renovations. That's what we believe is one of the reasons why Q3 was a bit weaker in the Benelux, having in mind that we had a relatively easy comparison basis from Q3 last year. I hope that helps. Ms. Rafaisz? The next question comes from Alessandro Foletti from Octavian. Please go ahead. Yes, good morning. Thank you for taking my questions. I was wondering, maybe one general view. I mean, is it too early to basically call the bottom? ... Are you still here, Mr. Foletti? Yes. That's a very interesting question. As I said before, as we said before, the uncertainties are high, and therefore it's very difficult to where is the bottom, and especially in this environment, we will not give any answer to that because we just don't know it. Right. But when I look at next year, you know, Q1, Q2, Q4, Q3, Q4, now, we have had really lots of quarters with double digit declines. What are the risks? And unfortunately, the new permits are really indicating very, very low trading that might be upcoming. But what can basically go wrong for you when you talk about this uncertainty? Depends how you define wrong. You know, obviously, the more tailwind we have in the market, the better. On the other hand side, and that is our overarching goal, to gain market share. So what could go wrong is, that we miss the opportunity in this environment to gain market share versus competitors. This is the biggest mistake, what we could do. And, we are quite confident that we do the right things, that that will not happen, but we can't change the market. So the worst what could happen is, not gaining market share in this difficult market environment. That could go wrong. Okay, thank you. You're welcome. The next question comes from Yassine Touahri from Onfield Investment Research. Please go ahead. Yes, good morning. I would have just one question when I look at your raw material cost. So, I understand your volume were down by approximately 11% in Q3. You had a raw material price decline of -6% and a negative currency effect of -3%. So, based on this, I would have expected your raw material cost to decline by approximately 20%, -11% volume, -6% price, and -3%, FX. But you only reported -11% decline in raw material cost. Am I missing something? Well, I'll take that answer. There's various stuff which... The calculation is, I think, so far correct, but there are various other effects which are not quantifiable that easily for you. I will mention a couple of these. The first one is destocking. We have relative strong destocking during the summer breaks that affects the quarter negatively. We also have some value adjustments. There's some mixed effects as well that go into there, and lastly, there's also a time lag until the lower prices are really reflected in our raw material quota. And the sum of all that should explain the difference between your calculation and the reported figures. So should we expect a better trend in the coming quarter? Definitely there's no summer anymore, so the destocking effect from the summer break is not there anymore. There's still inventory, so let's see. On the time lag, that definitely will help. So, you know, difficult to tell it all together, but there's at least the time lag effect and the destocking should ease. And then another question on your operating expense, on your other operating expense. Usually it's a little bit higher in Q4 than in the third quarter. Should we expect again this increase because of energy price and because of seasonality? Like, because you did, like, only CHF 117 million in Q3, could you see an increase in Q4, or do you believe that you can achieve again other operating expense of less than CHF 120 million? I think you're absolutely correct. You mentioned that the main point, energy, we're seeing higher prices, that will influence it, negatively. The other factors are relatively stable, compared to Q3. Q3, slightly positive influence as well from taking holidays, et cetera. But all in all, it's likely that we see slightly higher, Q4 than Q3 out of that. Maybe then the last question on the pricing outlook for next year. I understand that you have not decided about the price increase. Does it mean that you have not yet sent a price increase letter? Because we're already at the beginning of November. I would have expected you. Or is it because you don't want to communicate it to the market at this stage? This is very country specific. In some countries, you do that earlier, and you later. Don't forget, pricing is not just send out the price list, it also includes negotiation about rebates and bonuses, and that has not yet taken place. Therefore, it's not yet communicated what is the final price effect for a customer. Okay. Thank you very much. You're welcome. The next question comes from Charlie Fehrenbach, from AWP. Please go ahead. Good morning, gentlemen. Regarding Germany and Switzerland, you had a sales decline in Q3 in local currencies of around 10%. Is the assumption fair that we will see further declines in the coming quarters, given the situation of the building permits in Germany and regulation situations in Switzerland? ... First one remark to Q3, the -11% in Switzerland had different reasons compared to Germany. In Switzerland, it was basically a base effect, because in Q3 last year, we were up by 11%. In other words, Switzerland is doing quite well. In Germany, however, we have this negative market environment, which most probably will prevail in Q4. We will not talk about the next year. We will do that as usual with our first info, providing you a detailed market outlook as far as possible then, with our first info results in mid-January. Okay, that's fair. Would you maybe be ready to say something about your expectations 2024, besides any positive indications, of course? What's your general expectations? No, because the uncertainties are too high. I also said it before. We should not forget the geopolitical risk significantly increased over the last 4 weeks, and therefore, I think it would not be professional to do that at that moment. Sorry. Okay. Thank you. Thank you. The next question comes from Stefanie Scholtissek, from Mirabaud Securities. Please go ahead. Yeah, good morning. I have a question on the Near East. What exposure exactly do you have to Israel and overall in the region, maybe also to Egypt and to other countries which are close to Israel? We have business in Israel, which is relatively small. It's clearly below 1%. We have a small organization there, around 15 people, not affected directly, but obviously a very difficult situation also. The construction industry is basically down at the moment in Israel. For the group, as Geberit, not a material impact. In the rest of the region, we have a more important exposure. Middle East, Africa region is a significant part, driven by the Gulf region, where we have offices in Dubai, and as a headquarters, sorry, where we are serving the region, including Saudi Arabia. There we have a more significant business. But this business is not affected so far, or we have not seen with that business now in October. Okay, thank you. Maybe two other questions, if I may. I mean, the standard, the shift towards the heating solution, has this accelerated Q3, or is it on the same level as it has been since the beginning of the year? How do you view this situation? Very hard to answer, because we actually do not know it exactly. However, what we hear, and I guess you have that heard as well, that, for the heating suppliers, Q3 was also quite difficult as far as I have heard from a couple of, these companies. So it seems also there are some challenges in the heating sector for various reasons, especially around the uncertainties of legislation, but maybe also some strong demand before, which is now cooling down. So it seems that over there, it's not always sunny weather, but the direct impact on us, as usual, very hard really to quantify or to give a clear answer to that. Sorry. Okay. And then, a last question on your product. You presented the new shower toilet, Alba, some months ago, some months ago. What are the first feedbacks from your clients and from your wholesalers? How did they receive this new product? We actually did just after the capital market day a big customer event here in our headquarters, inviting most important customers mainly from Central Europe, and presented the product first time to customers. I must say, sorry for the word, the feedback was overwhelming, because I've heard literally the sentence, "This could be a game changer," a couple of times, because, as you know, the big difference now is that we have a shower toilet at an entry- price level of around EUR 1,000 for an end consumer. And that might be reopening new market segments, which were not accessible so far with our higher priced shower products. Feedback so far, very positive. We will start to deliver only as of Q2 next year. We do our best and utmost that we are ready as of Q2 next year to deliver then also the product to the customers. Okay, thanks a lot. You're welcome. The next question comes from Cedar Ekblom, from Morgan Stanley. Please go ahead. Thanks very much. Hi, gentlemen. I've got one follow-up question on your other operating costs. I wonder if you could dig a little bit into the improvement there, just in terms of the big buckets. So your freight costs, your energy and maintenance costs, marketing and admin. It came in a lot better than my expectation, and I'd just like to understand how much of that is around the energy benefit, which is obviously variable, and then around the other items which might be stickier at lower levels. Thank you. So I would say there were three main drivers for the significantly lower operating expenses in the third quarter. First, freight cost and freight prices obviously came down significantly. Number two, energy prices, as you said it as well. Last year, Q3, we had record high energy prices. And the third is lower marketing expenses, because also there, we implemented some flexibility measures, I would call. We did some selective marketing activities at a lower level because just demand was not there. These are the three main reasons why other OpEx were substantially lower in the third quarter. Perfect. That's helpful. And then just in terms of the marketing expenses, should we assume that when volumes recover, that the marketing expenses should move with that? And I just ask that with respect to a previous answer, that we should think about other operating expenses being at this level going forward. So just, just want to understand what might come back if, if volumes recover. Thank you. ... So I would say in general, we try to keep marketing expenses also quite stable. However, a little bit of operational flexibility is in there as well, going down and going up, but not to the effect that it has a material impact on the total other operating expenses as Tobias laid out before. Great, thank you so much. You're welcome. The next question comes from Nitesh Agarwal from Citi. Please go ahead. Hi. Thanks for the presentation. I have two questions, please. So first one is basically a clarification on the prices. Did you say that you expect overall prices to be up 2% in the next, in the current quarter, in fourth quarter? And, my second question is basically on heat pumps. So I was just wondering if there is a mechanism that you follow to track the volumes that shift to heat pumps, and, if so, what kind of forward-looking data do you get on that? As in, how soon will you be able to monitor if there is a reversal in this trend or not? Thank you so much. First question, we expect in this fourth quarter, price effect from sales price increase is around 2%. And the second one, I'm not absolutely sure if we understood the question. If we have a framework to follow the heat pump trends. Was that the question or? Yeah. So the question was basically if there is a way, how do you follow the volumes that actually shift towards heat pumps from sanitation? And if so, how like how early is it possible for you to track, you know, that this volume shift is basically changing, this trend is basically changing, reversing from heat pumps to back towards sanitations? Yeah. No, we don't have any special mechanism to track that. That's, we think, actually impossible. We follow some competitors, but would be too tough to give an overall direction here. Thank you. The next question comes from Christoph Dolleschal from HSBC. Please go ahead. Hey, good morning, gentlemen. Just to follow up on what you said could go wrong and gaining market share. We've been talking a lot about price increases now for 2024, but if the markets were to remain, say, difficult, would that also include price decreases? Because you said you want to gain share, and would that also imply that you would be willing to lower prices? Or let me phrase it differently, what kind of a utilization level would get you to consider lowering prices, and where's the current utilization level? So, I can't give you a clear and sharp answer, because that depends obviously very much on the input cost development, or in other words, how raw material prices mainly develop. If raw material prices would collapse massively, obviously, I would assume also our industry would decrease prices. So it all depends on the question, how big is the extent of a potential deflationary environment on the input cost side? And the second part of your question, are we looking at utilization in terms of pricing, and if you refer to utilization in the plants, for example, we do not look at that at all. If we look at pricing, the only most important question is: Do we have the perfect price point in terms of gaining market share, not losing market share, by using our pricing power? That is the main purpose of pricing, not about the utilization, for example, of our plants. There, the task is different. They need to react as flexible as possible in terms of volume from pitch. We do not think these two, two things together. Okay, thank you. You're welcome. The next question comes from Christian Arnold, from Stifel. Please go ahead. Yes, good morning, gentlemen. On personnel expenses, which you broke down, I think, from 6% year to date. That looks, first time looks good, but thinking about the volume mix effect of -18%, thinking about the FX impact, which was in favor, I believe, one could even thought that these personnel expenses could decrease further. So, I mean, I wonder, what shall we do for next year? Assuming volume effects, let's say, being stable, thinking about wage inflation, shall we expect harsh increase of personnel expense going forward? Also on the back, because you probably have asked your personnel to be very flexible, to take holidays because of lower volumes, and so that will be less of an impact. So what's a little bit... Yeah. Can you give us here some little bit more color, what we should expect or modeling for next year when it comes to personnel expense? Thank you. Two parts of the answer. One is wage inflation, the other one is capacity, number of people. The first one, we do not yet know, but we expect that we will see again wage inflation, maybe significant wage inflation next year, because we have heard first results from the tariff negotiations in Germany. So we will face, again, wage inflation next year. That is clear. On the capacity side, basically, we'll continue with our two principles. There are areas where we will not change the capacity at all. For example, in R&D or in the sales organization, so no decrease, maybe even slight decrease, increase. And on the operational side, we try to be flexible as we did this year. Obviously, it will become more and more difficult, but we are confident that we still have room for flexibility, whatever the volume will do next year, also in the operational part of the business. Could you remind me about the wage inflation impact this year? Around 5%, 5% in the first nine months. In terms of, I don't know if that goes now too much in details, but in terms of holiday credits, I mean, where do you stand on a group-wide basis? Have they been used now completely, or you, yeah, somehow at normal levels? Yeah. What's the status here? So that is obviously one of the levers for our flexibility, and we have required flexibility from that part, point of view, also in the third quarter, because volumes were down, so that we're continuously using this kind of flexibility. But as I said before, we still have some room for flexibility. I don't want to go into individual holiday accounts, but we still have room for flexibility going forward, although it becomes more difficult. Okay. Wish you a nice holiday. Thank you. Bye. Our next question comes from Remo Rosenau, from Helvetische Bank. Please go ahead. Yes, morning. I would like to come back to this, sanitary heat pump switch. I mean, the, the backlog of sanitary installations went up a lot the last 18 months or two years due to the switch to, you know, installers going into heat pumps a lot. I mean, given the slowdown in the market, do you have any indications if the backlog is now coming down somewhat or not? We don't have an indication, a quantitative indication, and maybe it's also not yet at the plumber level. But I agree with you. Obviously, if people do less sanitary, let's say less renovation of bathrooms, or they delay their bathroom renovation, this demand piles up, obviously. Maybe only at the end consumer investor level at the moment, but at a certain point, that will come because people need to renovate at a certain point. And, you know, renovation is 2/3s of our business. So we don't have a quantitative indication, maybe even not yet reached the plumber, but this demand, this fundamental demand for our product will pile up. That's what we mean when we always talk about fundamental demand for our products. You can delay to a certain extent, especially renovation. You can also delay the number of new apartments built, for example, in Germany, which is going down at the moment, but at a certain moment, you need apartments. So that is piling up. We can't quantify. Okay. But the other effect, however, was that at the when it was still booming, the sanitary plumbers could not just not do the work because they were busy doing heat pumps. And so that was also kind of a backlog. And has that been reduced? So if you refer to the quantitative backlog of German installers, sorry, that came down a bit. It's around, I think, 17 weeks at the moment. I don't have the exact- 17.7. 17.7 weeks. Thank you, Roman. At the moment, that came down a bit, also driven by seasonality or another, or it didn't increase further. Let's put it this way, but as you know, this is the all, backlog of a plumber, including heat pumps as well. That has come down a bit. Okay. What was the peak there? It was 21 something, if I remember correctly, around 6 months ago. But there are also some seasonal effects, so don't take that one for one. Okay. But still, I mean, rather a bit down than up. Yes. Okay. Good. Thank you. You're welcome. Ladies, gentlemen, that was the last question. I would now like to turn the conference over to Christian Buhl for any closing remarks. Thank you all for your participation, for your questions. We wish you all a great day. Goodbye.