Ladies and gentlemen, welcome to the Holcim Q1 2023 trading update investor and analyst conference call. I am Sandra, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Bénédicte Mayer, Investor Relations. Please go ahead, madam. Thank you, Sandra, and good morning, everyone. A warm welcome to Holcim first quarter trading update. I'm joined today by Jan Jenisch, our CEO, and I'm also delighted to introduce you to our new CFO, Steffen Kindler, who has just joined the group this month. As always, we will spend a few minutes reviewing the business, and then we will be happy to take your questions. I will now hand it over to you, Jan. Benedict, thank you. Good morning to everyone. Thank you for joining our call. Very happy to share our strong start to the year with you. If you have received the presentation, which is, I think, represents the story very well. Let me just go quickly over some of the slides, and then Steffen will go more details on sales EBIT, but also especially on the regional results before we come to the outlook for the year. First of all, I'm happy we have started the year really well. We have organic growth sales of +8% and then over proportional on the EBIT side, +12%. I'm very happy everything plays out how we master this super inflation with cost mitigation, but also with selling higher value products and also with significant price increases in the markets. Here, I'm extremely happy that we do this in a very timely manner. We are in that inflationary environment already for almost two years now. I think at Holcim we have done the pricing in a very proactive way so that our results are not suffering. On the contrary, they are improving the margins. Very happy that our growth strategy also from the M&A side was very active in Q1. We closed 12 acquisitions already in three months time. Could add another five acquisitions in the build-up of our fourth business segment Solutions & Products. Had a record fast closing of Duro-Last. Fantastic acquisition, fully completing our technologies we need in the roofing market. We closed already that acquisition at the end of March, and that's already fully now with Holcim. From April onwards, we bought another roofing company, FDT Flachdach Technologie in Germany. Also in Argentina and Mexico, we could add here roofing companies here for the global rollout. Very happy how this is happening, and you can expect more from us here also for 2023. We have on the climate side, I think we make excellent progress on decarbonization. We just launched our climate report end of March, which will be subject to voting by the shareholders in about 12 days time. In our general assembly, excellent report shows how fast we are progressing now to decarbonize Holcim, but even more to decarbonize the way we are building, which is also very appreciated by our customers and we move here very fast. All together, Q1 was I would say within our expectations and gave us the confidence to upgrade the guidance for 2023 further. We have upgraded the organic sales growth guidance to above 6% and then corresponding over proportional increase in EBIT with a growth of above 10%. I think with this overview and the highlights, I'm very happy to hand over to Steffen, he will run us through sales, EBIT and the regions. Yeah. Good morning, everybody. I'm excited to join Holcim and to join this call. I look forward to being part of this company and the very exciting journey that we're on. I'm equally happy to speak to you today, and I look forward to working with you in the next few days, weeks, months, years, and to share with you how Holcim develops financially and strategically. Let me walk you through a few slides on the current trading, building on what Jan has already presented. Net sales stood at CHF 5.7 billion in the first quarter of 2023. An organic sales growth of 8% compared to the same period of last year. In absolute terms, Q1 net sales decreased by 11.1%. This is mainly due to the divestment of India, which is partially offset by our acquisitions in Solutions & Products. The currency impact was negative CHF 306 million or -4.8%. This is primarily stemmed from the Argentinian peso, the Egyptian pound, euro, and British pound. Moving to the EBIT, we delivered over proportional organic EBIT growth of 12%, recurring EBIT growth to be precise, reflecting our strong portfolio. Again, if you want, we demonstrated our ability to organically expand our margins. Recurring EBIT in absolute Swiss francs declined by 19.7%, again impacted by the divestment of India and the negative currency effects. When we look at the regional performance, you can see on this slide that we have a broad-based profitable growth, which demonstrates the strength of our portfolio and our regional spread. Latin America, Europe, Asia, Middle East, Africa recorded strong organic growth in net sales and EBIT. On the next slide, I will walk you through the regions in a bit more detail. Starting with North America. Market demand remains strong as cement, aggregates, and ready-mix in the U.S.A and Canada. We're benefiting from our unique cement footprint, improved manufacturing performance, and excellent pricing across all markets, which resulted in the record first quarter for these businesses. EBIT in the quarter was impacted by the temporary destocking effect in our roofing business, which also compares to a high baseline in the first quarter of last year. We successfully closed the Duro-Last acquisition and two bolt-ons and aggregates to put the region on the right trajectory for future growth, and we see strong order books and strong underlying demand in all business segments. Moving to Latin America. The region delivered another quarter of profitable organic growth. It's the 11th in a row. The good performance in this quarter is driven by Mexico, Colombia, and Argentina. We expanded the Solutions & Products business, notably with acquisitions in Mexico and Argentina, plus organic expansions, that means CapEx, in Costa Rica and Colombia. Looking ahead, we see this very good trend to continue, also because of the excellent pipeline in infrastructure projects in that region. Moving to Europe. We see strong results across Europe based on excellent pricing and margin management. I'm happy to report the strong M&A momentum in Europe with a record seven transactions closed in the first quarter, ranging from construction and demolition materials to thermoplastic roofs. Looking forward, we expect the strong result to continue for the remainder of the year. Last, but definitely not least, Asia, Middle East, and Africa, our newly combined region. Following the divestment of India, this region is reported as one. Overproportionate organic EBIT growth of the region is driven by excellent performance in Australia and good results in major countries of the Middle East and Africa. The recovery in China is progressing, and we expect to see more of that in the second half of 2023. I would say that was it for me for now for the regions, and I would like to hand back to you, Jan. Thank you, Steffen. We come to the outlook. As I mentioned before, we are confident for the year. We believe we have positioned Holcim in the right spot. We're gonna be at 40% of our group sales in North America this year with overproportional EBIT of over 40% for the group. We continue with the acquisition for Solutions & Products on track to achieve 30% of sales in this segment by 2025. I think most importantly for this year, we have the margin at the right spot. We have a margin expansion this year, and that's why we are confident to also guide this for the full year, that we will have an overproportionate growth in EBIT for the full year. Very happy to, of course, confirm our free cash flow targets of around CHF 3 billion and the further reduction of CO2 for the company. I think with this, I'm very happy to hand over back to you for your questions and comments. We will now begin the question- and- answer session. Anyone who wishes to ask a question or make a comment may press star and one on the touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only hands up when asking a question. Anyone with a question may press star and one at this time. The first question comes from Paul Roger from BNP Paribas. Please go ahead. Yeah, good morning, team. Congratulations on the results. I'll have two questions. Maybe before I start, can I just welcome Steffen to his first analyst call? I'd obviously wish him good luck for his career at Holcim. My first question would be for you, Jan, and it's on U.S. Roofing. You've obviously had some destocking in Q1, but you have previously said you expect EBIT to be up for the full year. Just wondering, is that still your expectation? Steffen, maybe if you could just talk us through briefly how you've approached the start of the new job and maybe your initial observations, and if there's anything you think you'd like to change. Hey, Paul. Good morning. Thank you. Look, on the U.S. Roofing, we are not concerned. We have to understand that the last two years we had a disruption in roofing supply, not only for membranes, even insulation board. There was a shortage on plasticizer you need, and there was a shortage even on fixation material. This all led to an overstocking, and not so much at the distributor. It happened at the contractor. Roofing companies basically were having bigger stocks to compensate potential disruptions and being able to deliver the jobs they promised the customer. Now we have a normalization of these inventory levels. You can see that also at other companies in roofing, which have commented on this. As we are in the lowest seasonality at the moment, it's a bit hurtful in percentage, but it doesn't make me nervous for the full year because the order books in roofing systems in the U.S. are very good. We expect to have a very successful year in roofing. We believe the destocking effect has already eased in March. We expect this to further ease in April. When the season fully starts in May, we believe we are on track for a very successful year. I will take the second question. Thanks, Paul, for the warm welcome. I certainly feel privileged to be here with you guys in this group. What I've seen so far in those three weeks. Well, look, I've already met many colleagues across the organization. I find a highly motivated, passionate group of people for what we're doing here. It's a mature and professional organization with exceptional results and a proven track record. Everybody's behind this growth strategy where we evolve the company and its portfolio also towards more sustainability. While this evolution is taking place, everybody is dedicated to deliver results. I think this is an environment I've also known from my past role and where I hope I can contribute with my experience. Of course, everything I've seen in the accounts so far looks good. That's reassuring. Thank you. The next question comes from Cedar Ekblom from Morgan Stanley. Please go ahead. Thanks very much. Hi, everyone. I've got two follow-up questions on the roofing business, please. Could you give us a little bit of color in terms of your channels in that business? How much of it is a project-based business versus more of a distribution channel? Just in terms of trying to understand how much visibility you actually have when you talk about strong order books going forward. The second question on U.S. Roofing, you're a relatively new entrant into that market, albeit buying established businesses. Jan, we know that your agenda in U.S. Roofing is to, you know, grow the businesses that you acquire in a very strong way. Is that influencing your sort of commercial approach in that market? Here I'm wondering how aggressive are you being in terms of trying to take share and wondering if that also has some implications to the competitive landscape for that business going forward. Thank you. Okay. Good morning. Yeah. No, thank you. Just to start with your second question, I think, our entrance into the roofing system is very positive. It's a consolidation of the industry. If you see in the last two and a half years, we acquired from Firestone to Malarkey. Now, the Duro-Last three iconic companies in the U.S., we complemented this with a few smaller companies. Actually we are a driver of the consolidation in this very attractive market. Overall, this is, I think, super positive and super exciting. I shared for the full year results. We shared the success of roofing, where we already achieved a 19% EBIT margin last year, which is not so bad. This is not the end of the game. We have just started, so you can expect even bigger performance from us. We have in the first quarter alone, we made four more acquisitions in roofing. We have just started and very excited here to continue. I think we are also very positive contributor to the roofing market. When you look overall, we are in the U.S. market in flat commercial roofing. We are already the second number two player in the market. For overall roofing in this $40 billion market, we are already number three. I'm very happy how the position we established. Now we have a full range of technologies. We basically, we own all the membrane technologies from PVC to EPDM to TPO, have a bit of bituminous, have a bit of metal. I think we've done this really well, and I'm not concerned at all. On the contrary, we've just started in roofing systems, and I'm super upbeat about it. On the visibility, we have very good visibility. As in roofing systems, we work very close with the contractor. We have from sort of contractor clubs to project specification we do together to the training. Not to forget, we are selling 80% of our roofing sales is system selling. 80% of all the roofing we are doing is a specified build-up roofing systems, membrane insulation, the whole installation kit, and with all the calculations on wind load and other aspects. We are very, very close in this market to the end market. This is also why I can report today we have good order books. We have a good market situation for roofing in the U.S. Last but not least is we do more than 70% of reroofing in the U.S., which is a bespoke solutions. Then for reroofing, we are even closer with the customer because reroofing you need a bespoke solution for the existing building and the existing situation on the roof compared to a new build, where you basically have more like a general specification where more than one company can apply for the business. That's very helpful. See that answer your question? It does. It does. Thanks for that color. Very helpful. The next question comes from Yves Bromehead from Societe Generale. Please go ahead. Good morning. Thank you for taking my question. I'll have two, if I may. Just wanted to follow up again on the roofing. Maybe the first part of the question is, when you're referring to order book, are you referring to value or volume terms? Also wanted to sort of go into maybe the details of the type of customers that you serve. Are they typically large customers or small customers? Have you already seen any impact of sort of tightening financing standards in the U.S.? Second, a very quick question on the buyback. Could you maybe give some color as to whether or not we should expect any additional trench beyond May for the rest of 2023 to be announced? Thank you very much. Okay. Yeah, great. Let me just quickly, on the share buyback, we're very happy. We announced, as you know, with the Q3 results, that we're gonna do a share buyback for up to CHF 2 billion. We have not provided an update now, but I'm expecting that we're gonna use CHF 2 billion up to the general assembly in 10 days' time. We're gonna buy back something around 6% of the outstanding shares. We have the proposal at the general assembly to destroy the shares and reduce our share count by 6%. This is at the moment my expectation, so all running according to plan. will be, I think, an excellent increase of earnings per share, as we then have a reduction of 6% of the outstanding shares. I think this was very well-planned and very well-executed. Final details you will receive in 12 days' time, and we have the general assembly. When we look at the roofing market in the U.S., and you were asking a little bit on the outlook, I think, volumes and customers and so on. We're very confident on the outlook. You have to see that, you know, in the last years, we were very busy to build logistics centers for Amazon and others. Now we are very busy to build data centers, also very much linked to all the digitalization of the economy and the consumer. Now we have this big Anti-Inflation Act coming in, where we have all this onshoring. We see this already that we have a lot of industrial buildings, factory extensions and so on. We're very positive about the outlook in roofing for the U.S. and for North America. Plenty of projects will come. We are in a good situation now, and all the big bills, Anti-Inflation Act, the onshoring, and also the infrastructure and Build Back Better plans, they will just come into our order books. They will only come towards the end of this year. This will be a runway for the next 8 to 10 years. For the U.S., I think I'm very bullish for Holcim, and I'm very happy that we have positioned Holcim here so strongly to benefit from these positive market trends. Thank you again. Just to be clear, are you more exposed to the smaller nature of the projects or larger, significant size type of projects in reroofing special? We do now all of the above. We have basically, the Firestone, our first acquisition a little bit more than two years ago, was very focused a bit on larger projects. That's a bit their core competency. With Duro-Last, that's more focused on smaller projects. They are extremely strong for smaller roofing. They are focused very much on reroofing. While we do 70% reroofing overall, Duro-Last is more in the 90% range. They sell direct. They don't sell through distribution, so they have their own contractor club which they serve and, which has a very, very resilient demand structure. We have all of the above. As we now have built up a $4 billion roofing business, you can imagine we have a very good footprint across all different types and sizes of projects. Thank you very much. Very helpful. The next question comes from Elodie Rall from JPMorgan. Please go ahead. Hi. Good morning, everyone, and welcome, Steffen, indeed. Moving away from maybe roofings for a second, and I know you don't disclose the split between price and volume, and everything anymore, but could you give us some color on the volume development by region, and if there was any surprise versus your expectation? And whether the upgrade to guidance was driven by better pricing and cost or by volume? And if I can push it on the CHF 50 million organic growth that you reported, you could give us some color between the split in price and volume, and whether you're expecting cost inflation to ease in H2. That should mean price cost accelerating in terms of positive slide. Thank you. Good morning, Elodie. I'm very happy you asked the question because it's important to me that you all understand that we will report with full transparency, especially going forward. Please, we have the smallest quarter of the year, the Q1, where we already supply you with the margins and everything. For us, what's important to show you we're in good shape for growth and good shape in the margins, and we will, in the half year report, give you a lot more color. You will get the details on the four business segments and all of that. Be assured that we are not here cutting out information from you. It's Q1. It's a small quarter. From the next quarter onwards, you will get the full information like you received also last year in quarter three especially, also for the full year results. Having said that, I give you a bit more color, Elodie. Our guidance is actually based on confidence across many KPIs. You mentioned volume versus price, and very important. First of all, I can share with you that we are positive price over cost, basically across all segments, across all key markets. That made us so confident to say, you know, that's looking very good. At the same time, we have an easing of the cost at the moment, or not at the moment, it started in November. We peaked in the cost, in the third-party cost in Q3 last year, then eased in quarter four, and further eased in Q1 this year. Nevertheless, consider that we have still a lower comparison base compared to last year. The energy costs have eased a lot compared to Q3, but also Q4, but was around 20% higher than Q1 last year. The other costs there may be 10%, 12% ahead of Q1, but obviously we were able to overcompensate with the pricing. That is very key, and I'm very proud that our people in the markets were able to responsibly, but dynamically improve the pricing that brings us in this comfortable situation where price over cost is positive in all key markets for us. The second part of the confidence and other volumes or the demands in the market, I give you a bit of color here, Elodie. Again, it's Q1, but nevertheless. We have a very good demand in the Americas. We have, especially in the traditional segments, cement, aggregates, ready-mix, we have a volume growth between 3%-7% in North America. In Latin America, a growth between 1% and 8% on the volumes only. That makes us, of course, very confident. We then also have very good order books, both in the U.S., in Canada, but also in Latin America, where we have several big contracts for large infrastructure projects. All good. We have in Europe a bit a different situation. Europe has the big burden from the Ukraine war, specifically, where you have this huge cost inflation on energy, on others, we have this big burden of the European Green Deal, which, you know, puts especially export companies into difficult situations. We handle this very well. My estimate for the first quarter, also for last year, that maybe building materials as a whole has softer volumes of 5%, 6%, or 7%. We managed this very well. You have seen the numbers. We are up 8% in sales in Europe, the margin has increased very substantially against last year because we were able to have very significant price increases. Also, remember that we are at the forefront to introduce all these sustainable products for the customer. Most notably our ECOPact, our new global brand for low-carbon concrete solutions. Our Sika Holcim ECOPlanet, our more than 30% reduced CO2 on the cement. This year we launched at the BAU in Munich, we launched the ECOCycle, which will be our fundamental brand logo for making circular construction a reality in all metropolitan areas. All those three brands and the products behind enable us to improve margins significantly. Is that a good answer, Elodie? It's very good indeed. Thank you. The next question comes from Martin Hüsler from ZKB. Please go ahead. Yes, good morning. Thank you for my questions. First of all, congratulations to this really excellent start to the year. I have a question on your plans for the CC U.S. project, CapEx of roughly CHF 2 billion until the end of, I think, this decade. What does this mean for your overall CapEx or your annual CapEx? Should we expect this to increase? This is the first question. Martin, excellent. Thank you. We're very happy that we have a very substantial investment plan. You remember we have started to report the green CapEx, which last year out of CHF 1.4 billion CapEx has already been more than CHF 400 million. We believe that the CHF 2 billion we now plan for the carbon capture is within those CHF 1.4 billion. You remember we have started to set this CHF 1.4 billion CapEx guidance. We established that around, I think, four years ago. We have substantially lowered the unit cost for CapEx at Holcim. We had a big potential back then to lower and systemize the CapEx, use more standardized solution, and we could decrease the CapEx significantly. The CHF 1.4 billion, they come in, I think now in a good level. For the first time last year, we were below 5% of CapEx in relation to net sales. I'm very proud of that, and it will stay in that range. Don't expect us now to start with CapEx which goes beyond. I think the company will be dispositioned now to decarbonize within this CHF 1.4 billion envelope. Also consider that our Portfolio focus on North America and Solutions & Products is also connected with less capital intensive businesses like the roofing systems, and that all helps us to stay within the CHF 1.4 billion. Very happy. Lastly, also consider that the investments in sustainability have super high returns, and you can already get a taste from the margin increase in Europe. We talked about this, I think a few weeks ago, that this decarbonization in Europe has a huge incentive system. If the carbon credits and costs for around EUR 100 per CO2 ton, this helps Holcim here to benefit as we decarbonize the fastest and are able to then generate here significant margin increase. Thank you. That's super helpful. As a second question on, you elaborated on the roofing market in the U.S., more on the commercial side. What about Malarkey? What's the development in more residential where I think the numbers don't look that good, the macro outlook? What's your view here? Oh, good. Yeah, we are very happy with Malarkey. Look, we bought a fantastic company. They do 90% reroofing, because they have an advanced shingle system, which is polymer modified. It's much more lasting and it has a much more higher weather resistance here. Very happy with the company. We have huge potential. You have to imagine that the Malarkey company currently is only participating in 40% of the markets in the U.S. It's a big focus on the west side from manufacturing, Portland, Oklahoma City, up to LA. Very good markets, but huge potential for Malarkey. Very focused on reroofing. A comment maybe on residential, you know, we had a lot of views on with the interest rate hikes that this will put the residential market in the U.S. in a crisis. I have seen now that people anticipate here a much better market situation for this year and the coming years. There's huge housing needs and we expect this not to be a crisis scenario for Holcim. Okay. Thanks a lot. The next question comes from Lars Kjellberg from Credit Suisse, please go ahead. Thank you. It's just a couple of follow-ups. When talking about the high value solutions in Europe as being a meaningful part of the margin progression, can you provide a bit more color on what that really refers to? I mean, you mentioned ECOPlanet, the Susteno, I suppose, and the new recycling products. How much of that is now your revenue base and how would you see that progressing going forward? Also, I mean, in the past you've commented on very strong growth in India, which you of course no longer active in. How is this sort of package of high value solutions developing in other geographies outside Europe and does it command the same premiums there? I guess the other question I just had is how should we think about incremental revenues from your 12 acquisitions that you've done during the first quarter for the balance of the year? Thank you. All right. Hey, Lars, good morning and thank you. Yes, I'm super excited about our sustainable solutions. We have one slide in the presentation, I think it's Slide 5, where we talk about accelerating climate action. You see on the right side my personal favorite, the branding. We just launched ECOCycle at the big construction fair in Munich this week. This is gonna be a super big part of our future. We are already the biggest recycler of construction and demolition materials. Last year we recycled 6.8 million tons, which is more than 1,000 food truckloads every single day brought to our recycling centers being recycled, upcycled, and reused as raw materials for cement, reused as a mineral for cement, and of course, reused as an aggregate for road construction and also into concrete. This is super exciting. It's super high value and this will be a big part of Holcim future to make this happen. You see that the two brands, we gave a bit of a taste. ECOPact is already 16% of our entire ready-mix concrete sales in the first quarter of 2023. You can estimate that this has even a bigger part in Europe, right? Because Europe was the core, was the developer of ECOPact. Here we have significant blockbuster sales here with ECOPact. We are sold out. We are doing everything to further scale up here our supply chain here to make ECOPacts available for every customer. That's super successful. We have ECOPlanet for cement, which has started about one year later. It's also very promising. We don't have a number here, but this is also already around 10% of cement sales, so very successful. Here most exciting is that we have launched this first cement Susteno in Switzerland, which already contains 20% construction demolition materials. This will be rolled out now in Europe. European Union gives us the approval here to change the building codes this year, and then this will be rolled out in France, in Germany, in Austria, in Italy, in the U.K., in all our key markets, and will be, again, a big part of our future. You saw the side comment. We have I think we are the first company who has now two lines of calcined clay production, one in France, one in Mexico. This addressing a little bit your second question, how does this work for other regions? I very much like that the European Union has the most developed incentive scheme for decarbonization. They are pushing us here to accelerate and we can take that technology to the other markets, Latin America, the ECOPact and the ECOPlanet brand is very, very strong. Also the U.S., we introduced that. If you go through our annual report, there are a couple of customer reports from Amazon and other companies, and they all go for ECOPact and ECOPlanet for their building needs. Very exciting, Lars, and there's gonna be a huge part here for Holcim, and I'm really happy we launched also this branding at the right time, about three years ago, to make this our roadmap and to take the customer here on this journey of decarbonization. Just a quick follow-up on that. Do you command the same premiums in the other markets outside Europe, but there's less focus otherwise on carbon reduction? I know, of course, Lars, you know I like to make money, and we make sure that those premium products and premium solutions, they have a new dimension for the customer. We are now able to make sustainability a new customer dimension, a new unit selling proposition, and of course, there's a premium in price. We do this, I think, very responsibly and smart. We don't have a premium of 100% or something, 'cause if you do that, we will stay in the niche for those products. We have a responsible smaller margin, again, to make sure that these products become our blockbuster volume products, and that's, that is our goal, that our whole range will be ECOPlanet, ECOPact, and will be based on ECOCycle technology. On that point of incremental revenue from M&A, if you can comment that would help. First of all, Lars, I'm very happy that we were able to close 12 deals in the first quarter. We have not provided the information. We know that the Duro-Last business is a $600 million business, and we have now still nine months of sales, and we have the high season sales. You can estimate that Duro-Last alone will contribute close to half a billion dollars in revenue for us. The other acquisitions, I don't have the right number, but we're gonna see a couple hundred million, I think, from those acquisitions over the next nine months for this year. Thank you very much. The next question comes from Yassine Touahri from Onfield Investment Research. Please go ahead. Yes. Good morning. Couple of questions. First on your carbon, on your CHF 2 billion investment in mature technologies. I understand that when you're reducing carbon in Europe, you will make a savings because of the high cost of the carbon allowance. I understand that in the U.S. there is also a tax credit. The question is, have you, how do you assess the return on those CHF 2 billion investments? Do you think you can achieve like the 10% return on invested capital on this CHF 2 billion investment in carbon capture? That would be my first question. The second question is again on U.S. roofing. When you look at the second part of the year or June or H2, after the distancing is finished, do you expect volume to be up in the second part of the year? Also, how confident are you in your ability to improve the material margin? Because I understand that the chemical costs are declining. How confident are you in your ability to keep this raw material deflation in roofing in the U.S.? Thank you. I start with your last question. We are confident we have also a positive price over cost in roofing systems for the first quarter. Usually, when the cost input declines, we are able to have less pressure on our own sales prices. Normally, we have the margin expansion in times where the input costs flow lower. The last two years, we made the opposite happen with this hyperinflation. Nevertheless, we had the margin expansion. We're very confident that we're gonna have a good situation for Holcim overall, but even for each of our four business segments, you will see a margin expansion for 2023. On the volume side, I comment the roofing before. We have good order books. After the stock rebalance will be done, we expect good markets and let's see how the second half goes. Obviously, with another four roofing acquisitions in Q1 this year, we are very excited to bring this all here at work or to work. On the CapEx, you know, I was never more positive on green CapEx than today. Because we see that all the investments we have done to make circular construction a reality. All the recycling centers we put in place to take back construction demolition materials and to recycle, that's all highly profitable and highly growth products and solutions. With very short payback terms, and this is all positive. You asked specifically the carbon capture projects will be high return for us. You have seen we even receive very high subsidies. The European Union Innovation Fund will give us more than EUR 300 million to finance the projects in Poland and the project in Germany. Even besides the subsidy, the projects will be very profitable because we are saving a lot of CO2 related costs. At the same time, we will be able to sell the product at a premium because it will be decarbonized building materials product. We're extremely positive. We catching up. We have also very concrete projects in U.S. and Canada, and we will also get big support from the governments there in terms of tax credits, but basically subsidies, but also in terms of making the Carbon Capture, Utilization, or Storage work, you know, to help us with building pipelines to storage facilities or helping us to build up utilization centers. Very optimistic. We will give you more data and information as we move on with the projects. I'm extremely positive that these projects will be high return projects for Holcim. Thank you very much. The next question comes from Arnaud Lehmann from Bank of America. Please go ahead. Thank you very much, Jan, Steffen, and Bénédicte. My first question is on Asia, Middle East, and Africa. There is an improvement there, and I think it's welcome after a slightly more challenging 2022 in Asia. However, the China contribution is still down in the first quarter relative to last year. Could you give us a little bit of color on China? Is there any impact of the reopening there expected for the coming quarters? My second question is on the CEO transition process. Could you give us an update? I think there was some comments this morning from the Germany's presentation, if you don't mind reiterating them here. Yes. Good morning, Arnaud. No, we are all on track. Look, I'm very happy we have a great leadership team at Holcim. You met everyone. You know, we have super P&L leaders. We have five strong P&L leaders. We have now Steffen joining us as the new CFO. We have very good leadership team. You see the speed of execution we are having with 12 transactions in just three months with the very positive profitable growth we are achieving. Very happy with the team. I'm also very happy that the board has the courage to decide let the team continue for another year plus or so. We will, I think, find the succession of the CEO position will come from within Holcim, and we will announce that, let's say, as we said, within the next 12 months or maybe beginning of next year. This will be a, I think, a very positive continuation of the executive team here at Holcim. On your question of Asia, Middle East, Africa, and China, thank you for your comment. We are quite happy that also here we have a positive price over cost. We have a good organic development of the business. We have in China, to give you a bit more information, I think we wrote something like recovery in China is progressing. You know, China was still heavily disrupted last year with all different lockdowns from the pandemic. My personal estimation is that maybe building materials or construction market was down 5%-10% in 2022. This year we expect a recovery. Recovery will not be super strong. They have reopened the country. I think in the first quarter we are around the level of last year first quarter. Now I expect for the next nine months to have a, you know, a positive development in construction, maybe 4% or 5% in volume, something like that. Thank you very much. The next question comes from Gregor Kuglitsch from UBS. Please go ahead. Hi. Good morning. Thank you for taking my questions. Can I go back maybe a couple of questions on the sort of costs and so on. Firstly, can you tell us what you now think energy costs will do after the sort of 20% of the first quarter? Could you help us break down also in the first quarter, the volume price of the organic growth, right? Which I think was 8%, sort of the headline level. Similarly, within your +6, that you're over +6, I think that you're now guiding, you know, what are you thinking on pricing and volumes within that? Obviously, it's changed around or the range now. That would be sort of maybe, I don't know, and it's a two-part question, I guess. Secondly, a more strategic one. Is there anything you can tell us what you'd like to do on divestment, which you've done in your last year? That's now some time ago. Should we be thinking about anything coming up on the sort of perhaps more substantial divestment side? Thank you. Hey, Gregor. Good morning. Look, maybe on the divestment side, I think we have done, I would say on the geographic profile of the company, we are 80% done. We have repositioned Holcim now strongly into North America. It will be this year 40% of group sales in North America, above 40% of EBIT in North America. Plus, we have our very strong Latin America business, 10% of group sales this year, but EBIT maybe rather closer to 20% of group EBIT. We're gonna have a very strong and developing Americas business. The other leg of us is, of course, our European business. We are 80% done. We are very happy with these three strong pillars. We have very attractive markets also in Asia, Middle East, and Africa, a very successful business in Australia. I would say a very smart, attractive participation in Washington and China. We have very, very good other selected markets. You can expect from us. There will be the one or other market where maybe we have owners which are better to run those markets, so you can expect a few divestments from us going here also into the future, but nothing to announce at this point in time. A bit more background. Volumes, pricing, cost, that's a great question, Gregor. I would like to leave it in Q1 with some more general statements because the development is quite diverse. We have, I shared already, Elodie had a bit of a question in that direction, that we have very good demand in the Americas. I shared that with you earlier that in North America in Q1, volumes are up somehow between 3%-7% demand based on the different business segments. Plus the pricing, bringing us to a very, very good situation outlook for the year. Same situation Latin America. In Europe, we have a different picture because the markets in Europe have been softer since May last year, we have super prepared for the situation, with the super increase in margins. For now, I would not like to go any more details with this. Let's discuss in the half-year reporting. We will give you a lot more data on this one. For now, just we are very happy how volumes pricing are developing. I'm similar positive on the cost side. Q1 was still for us a tough comparison base. I shared before that the energy cost was still up 20% in Q1, because in Q1 last year, we still had comparably a much lower base before we totally peaked in the Q3. My expectation is that energy costs, especially in comparison to last year, will further ease, and we're gonna have a very good situation the second half of the year. Don't forget, we're also going to have a strong second quarter this year because we have done our homework on the pricing side, and I have little worries about the cost inflation for this year. Okay. Do you think the cost, energy cost could be down this year or too early to call? No, they came significantly down. I mean, starting in November, they came significantly down. If this continues, we're gonna have a much lower energy cost for the remaining months of 2023. Thank you. The next question is from Luis Prieto from Kepler Cheuvreux. Please go ahead. Good morning, everyone. Thanks a million for answering my questions. I have two. The first one is, despite the upgraded operating earnings guidance that you have provided, you have not changed the wording of your fee-free cash flow target. Does this mean that cash conversion could be lower than you initially expected a few months back? The second question is following up on the pipeline of acquisitions and Solutions & Products. If my calculations are correct, you would have spent in excess of CHF 7 billion, and you seem to be well on track to your 25 target. Can we now talk about a more stable or normalized annual light side acquisition spend versus a significant spend previously? Thank you. Wow. Okay. Look, to the last question first. I mean, we have just started to last three years to make M&A a big part of our growth strategy at Holcim. It's a twofold strategy. One is the expansion and development of Solutions & Products. We had another five acquisitions in the first quarter. Also the very high synergistic and high-value acquisitions, the bolt-on ones, where we buy traditional family businesses in local metropolitan areas to strengthen the aggregates and the ready-mix concrete business, where we also made seven transactions in the first quarter. My personal estimate is that we're gonna see more than 30 transactions in M&A at Holcim for the full year. This will remain a big part of the Holcim strategy. Now, I cannot give you exact numbers now how much capital we will spend on that. This depends largely on the opportunities, the valuations. I think we have proven in the last three years that we do M&A very well, very, very valuation-driven, that we are able to execute the synergies very fast. We gave some examples at the full year results, how fast we improved profitability in Solutions & Products and in, particularly in roofing systems. You can expect all of that we keep fully disciplined on the valuation M&A. I cannot give you at this point in time a more exact capital allocation split, and we can talk about this maybe later this year. On the free cash flow, that's a good point. I'm looking at Steffen, and I pass this message over to Steffen, that we should make more than CHF 3 billion in free cash flow. I hope you see that we wanted to give the free cash flow guidance. We just wanna give comfort to everyone that the CHF 3 billion free cash flow is the new run rate at Holcim. You remember times in the past where we were not able to achieve sufficient free cash flows, and now for the fourth year, we have we have shown this sustainable free cash flow. This is just an indication that the free cash flow will be not only a top KPI at Holcim, but we will deliver CHF 3 billion. I give this over now to Steffen to achieve more than CHF 3 billion. Thanks, Jan. Yep, exactly. The guidance also around CHF 3 billion. It's a good catch, of course, that free cash flow is the variable for the conversion rate. The guidance is around CHF 3 billion. We didn't up the guidance at this point in order also to keep some flexibilities here for the business and to keep some firepower, but we are currently optimistic to make this number, I would say. Super clear. Thanks again. The next question comes from Yuri Serov from Redburn. Please go ahead. Yes. Hi, good morning. My first question is, can I talk to you about CO2 permits, please? We haven't spoken about that for a while. Can you just remind us on how much you still have left? Until what time can you continue using what you have in the bank? Maybe you can give us the year when they're gonna run out. Previously we're talking 2020, 2024, 2025. I don't know what it is now. Obviously CBAM will change that, but I'm just talking about the current regime. The other thing is what are you doing with them now? I mean, are you using the permits entirely, or do you still buy additional permits? Thanks. A great question. Look, we have some, we have some permits in the bank, but we are short on CO2 certificates. In fact, the whole market is short, and this is why the CO2 certificate price is up to EUR 100 per ton, because everyone is short, everyone needs to buy. Even you have some in the bank, it's an asset, you cannot just waste it, basically free of charge. This is one big driver, and we talked about this at the full year results. We had a good discussion on how the CO2 incentive system in Europe is now reshaping the building materials industry and making decarbonization the number one priority. My target is to be faster in decarbonization than others, to be needing less CO2 certificates, and benefiting from the very significant price increase for building material products and solutions because of this increase in CO2 costs. Everyone is short. You see this a lot of, especially smaller companies, they sometimes seem to have less ability to decarbonize, and they are very much hit by these CO2 costs. Holcim, we have done not only the homework, we have accelerated the decarbonization. You can see that a big part of our margin expansion in Europe is actually driven by CO2, by this new CO2 framework. Okay. Wait, can I just clarify? You say that you have some permits in the bank, but on the other hand you're short. I just cannot connect those two statements. What does that mean? I mean, you know, because some people argue that if I have some CO2 certificates in my balance sheet or something, they believe that's a free CO2 certificate, but it's not. It's valued. It's an asset, right? Basically important is how is your run rate for the certificates. Everyone is short on certificates. This is why this incentive scheme is now working so extremely well. That's why, you know, certificates five years ago were at EUR 7 per ton. They went up, what, three and a half years ago, they went up to EUR 20. EUR 20 was a trigger point for us, where acceleration in decarbonization became high return. We started a lot of investment projects in Europe to decarbonize faster. That went up to EUR 100 and all the projects we kicked off with a return of EUR 20, suddenly, the return became two, three times higher and faster. This is a bit the mechanics that, which I'm a big supporter because it's a market-driven incentive system, and it rewards the company, decarbonizing the fastest. What I'm hearing from you is that you do have some permits in the bank, but you're still buying them in the market, right? Yes, absolutely. Okay, fine. Another question which is obviously related is about pricing. Yeah. I mean, prices have been strong in Europe, volumes are down, prices up, which is a very unusual situation. CO2 is higher. What's the outlook? I mean, we hear about price falls in other building materials industries. Steel's down significantly, has been going up, but still down year-on-year. For how much longer can the strength in cement prices last? Now look at Holcim. We have just increased the cement price. If you want to know specifically cement price, we have increased the cement price significantly in all key markets. From European markets to U.S. to Latin America, and they are all holding, they're all holding based on the principle that in Europe it's now a decarbonization game. Decarbonization not only imposes extra CO2 costs for a lot of players, as everyone is short, at the same time, it's limiting the volumes of the production factories, because usually you get a maximum of certificates at around 80% of capacity utilization, which means no one wants to produce more than 80% of the capacity, which is another driver of the pricing in the market. It's all good. I can just tell you from the Holcim side, we have this very good margin situation already in Q1. We expect this to be rather more expanding throughout the year. As the costs will further ease, my pricing will fully stick for the year. Okay, thank you. The next question comes from Matthias Pfeifenberger from Deutsche Bank. Please go ahead. Yes, thanks for taking my question. One left actually on the M&A, on boosting M&A. Now, I accept the Strategy in roofing, expanding that further. In the rest of the business, also very sizable number of years, are they getting quite diverse? I read about metal distribution being attached to a distribution network. How do you actually manage the speed and high number of deals? Is there a lot of time to do the due diligence, and is there a risk to get too scattered or too diverse in terms of M&A selection? Thanks. Oh, a great question. Look, if you want to do an M&A part of your strategy like we have it now, and I shared that I expect maybe a bit more than 30 transactions this year, you have to have the proper process systems and tools in place, which we have. We have a very strict valuation modeling, how we evaluate the businesses based on discounted cash flow. We do this, one version is a standalone version, the second one is an integrated version with the synergies. The model is the same for every single project. We are very good to include the countries, especially in the bolt-on acquisitions. They have learned now over the last three, four years, how to handle M&A and the tools are in place and this is what enables us here to make such a large number of transactions. If you recall, when we started the M&A as part of the strategy, I think in 2018, the first year, we had four bolt-on acquisitions, and then the following year was maybe eight or something. It was a big learning across Holcim and all based by a strict process-driven and tool-driven system based on discounted cash flow valuation. Obviously, we do this very well. To complete the picture, the integrated version of the discounted cash flow is the business plan for the acquisition. The people who are responsible to run the acquisition have a very challenging business plan. Then of course, we review the progress and the performance also here very intensely. I'm very happy we have this, and that's why this will be now a very value contributing part of our strategy going forward. Okay, thanks. The last question for today's call comes from Tobias Woerner from Stifel. Please go ahead. Yes. Good morning, Jan, Steffen, Sutcliffe and team. Thanks for taking my questions. Really just follow-up questions here from my side. When we look at the M&A, you have obviously done huge strides in the U.S. or North America. Your pipeline looks good, it seems to me. Europe, in terms of Solutions & Products, development is still not as progressed as North America to an extent. What do you see the picture to be there? Do you feel that there will be more opportunities coming up? Hi, Tobias. Yeah. No, great question. Yeah. Yes. Now look, first of all, I'm very happy that we could make this inroad in the U.S., which is the single most attractive market for Holcim. We did two things at the same time. We made this fast inroad into roofing systems, and at the same time we made this big shift in geographic focus on North America. I think this was really very well done. Now you are mentioning we have also potential in Europe and potential in Latin America. You see that a bit from the transactions we did in the first quarter, that we actually bought here the first significant roofing company in Germany, the Flachdach Technology Group, a very good company, which will be a new growth platform for us in Europe. Also we bought two roofing businesses here in Latin America, in Mexico and Argentina, to also further roll out our roofing systems in these very attractive markets. Okay. Then if I may follow up on the divestment side of the equation. You mentioned earlier, scenarios. How should we see it in terms of timing? Obviously, M&A, you can't time perfectly, but for you, is this a nearer term or is this a midterm situation, i.e., is it six to 12 months or 12-24 months of what you're looking at in terms of finalizing your rounding out of the portfolio? Yeah, I think, Tobias, the time pressure on divestment is not there for us. I mean, we made such a value accretive divestment with India and Brazil and before with Indonesia and Malaysia, where we are selling or divesting very low return companies at super high multiples. As you know, they've brought us to the ever strongest balance sheet of even a debt leverage below one time, you know, with, we had a cash of around CHF 10 billion at the end of the year in the bank. I think we have done this so well and gives us now all the freedom for capital allocation, gives us the money to invest into the decarbonization, gives us the money to make further M&A transactions. On the sideline, we can make a very attractive share buyback. We have done, I think on the investment side, we have done the value accretive part, which we wanted to do, and now we have no time pressure, and we can carefully evaluate what of some of the emerging markets maybe are better off with a different owner. Okay, understood. Just one last confirmation, if I may. I was really pleased to hear that you're gonna give us more information in the half year again, and I think you alluded to the fact that it will be in line with previous years' disclosures, i.e., price, cost, volumes. As noted in the full report, there was also no mention of capacities and so forth. Is that what's, what we're, what we should expect, or what should we expect? Well, look, Tobias, I think we always are very transparent. We also focus. We have a lot of additional reporting on the roofing systems, what type of characteristics we look for. We give you a lot of information on roofing, what is reroofing, what is system selling, all of that. You can expect a lot more, and I just wanted to share that with you today that with Q1, it makes no sense to go too much in the details because of the seasonality. For the half year report, please expect all informations you need to develop a proper opinion on the future of Holcim. Thank you very much. Much appreciated. Thank you so much. I'm very excited to have all your interest today. I wish you good writing in your reports and very much appreciate also all your attendance at our analyst dinner in London, and I hope we can repeat this very soon. It was a great day we spent together, and I hope we can reconnect in person very soon and discuss all these exciting opportunities Holcim has in the building materials world and how we expand and how we decarbonize. Look very much forward to meet you all in person very soon. Thank you very much. Have a good Friday. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, thank you for participating in the conference. You may now disconnect your lines. Goodbye.