Geberit AG

Good morning, I am the Arcadin operator for this conference. Welcome to the Gaborit conference call. Please note that for the duration of the presentation, all participants will be in silent mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on the telephone. This call must not be recorded for publication of broadcast. At this time, I would like to turn the conference over to Mr. Kirsten Ruhl, CEO, accompanied by Mr. Roland If, CFO, and Mr. Roman Siedler, head of corporate communications and investor relations. Please go ahead.

Thank you for the introduction. Good morning, ladies and gentlemen. Welcome to this conference call. The coronavirus pandemic led to an unprecedented global economic crisis and changed business realities over the last three weeks at a speed never seen before. The objective of this communication outside of our regular financial calendar is to inform you directly and promptly about the current situation at GIBRID. We want to ensure that the capital markets are informed simultaneously and equally about the current situation and the impact of the COVID-19 crisis on our business. We will cover the following three topics in this call. First, the net sales development in Q1. Secondly, a status update on the COVID-19 impact on Geberit. And thirdly, our priorities going forward. Let me start with our net sales figures. Geberit had a solid first quarter with a net sales growth of 1.5% in local currency. The COVID-19 crisis had a negative impact in the first quarter in two dimensions. First, a production interruption of our plants in China and the shower toilet model Mera. And second, a substantial sales decline in March in a selected number of countries where the COVID-19 imposed restrictions led to a shutdown of construction sites. In Swiss francs, net sales decreased by 3.9% to 798 million Swiss francs due to substantially weaker foreign currencies. Let me turn to the regions. Net sales in Europe increased by 2.7% in local currencies, and in America by 0.8%. In Middle East Africa, net sales decreased by 15.3%, driven by weak sales in South Africa and Israel. In Asia Pacific, net sales decreased by 21.6%, driven by very weak sales in China in the first quarter. Turning now to the product areas. In the first quarter, installation and flushing systems net sales grew by 2.2% and piping systems by 2.3%, both in local currencies. Bathroom systems net sales were on previous year's level, negatively affected by the production interruption of the shower-toilet model Meerax. Let me now comment on the current status of the COVID-19 impact on GEBRIT and our business. I start with the current market situation. The main driver for the demand of GEBRIT products is the activity level of building construction sites. In the majority of countries in which we are active, building construction sites are still open. In a few countries, However, building construction sites are largely shut down or closed, either by local authorities or due to discontinued operations of other construction companies. The countries where today building construction sites are largely closed are Italy, France, UK, Spain, Austria, and outside Europe, also India, and South Africa. These countries represent around 25% of our sales exposure. Customer showrooms for sanitary products are largely closed in all countries, in line with the public shutdown of the retail sector. Let me continue with the current situation at Everett. Since mid-March, the COVID-19 crisis has a negative impact on our demand. Overall, order entry in March was down by a low double-digit percentage. This decline was mainly driven by a substantial decrease of demand in the before-mentioned list of shutdown countries since mid-March. The remaining countries also recorded a decline in demand, although much less pronounced. driven by a lower activity level of the building construction industry imposed by COVID-19 restrictions. Let me now comment on the status of our supply chain. We produce mainly in Europe for our European markets and source most of our raw materials and components from European sources. Furthermore, our plans and our logistics are highly automated. Our supply chain, despite the COVID-19 restrictions, is still intact and runs on normal levels. So far, we have access to all important key materials and components. The two plants in China are up and running again. At the moment, three smaller sites are shut down. the ceramic plants in Italy and France, and the plant in India. However, none of these three plants is material in terms of volume, and we have sufficient stock for the coming weeks. Currently, the biggest short-term risk for the supply chain are supply shortages from component suppliers, for example from Italy, and a forced shutdown of a material plant at Geberit. Geberit is financially very strong and healthy. We have a very strong balance sheet with a strong cash position of 300 million Swiss francs and an unused revolving credit facility of 500 million Swiss francs per end of March. The current share buyback program is not impacted by the actual situation and has been further executed according to plan. 261,000 shares in the amount of 106 million Swiss francs have been bought back in Q1. There is a minor part of the current program left. The program will be terminated in Q2 as planned. The dividend in the amount of 400 million Swiss francs, which will be paid out tomorrow, has not been changed due to the COVID-19 crisis. The payout ratio is in line with previous years. Let me now comment on our priorities going forward. We reviewed over the last three weeks the impact, the risks, and the opportunities emerging from the COVID-19 crisis and came to the following conclusions. First, there is no need to change our strategic agenda or operational priorities. We will continue to think long term, to invest and to execute on our strategic and operational initiatives. We also do not see a need for restructuring. We rather prefer to invest some of our margin into the business to emerge stronger from this crisis and to leverage the opportunities as a strong and financially very healthy player in times of market disruptions and turbulence. Of course, we will and already started to take measures to adapt our daily activities approach to the current market realities. This means that we will stop or delay activities or projects which are not feasible, not necessary or not meaningful in the current environment. And we will manage underutilization due to temporary demand shortages or forced site closures. However, we will not make any compromise on our fundamentals or take any measures which would harm our position or future potential, for example, by reducing our R&D efforts and budgets. In this context, we defined the following four operational priorities in this extraordinary situation. First, the safety of our employees. Second, the support and management of our customers. Third, business continuity management to ensure the availability of our products. And finally, an increased focus on liquidity in times of high uncertainty. To maintain our strong balance sheet and to strengthen our mid-term liquidity, we will issue a standard Swiss franc bond in the amount of 150 million Swiss francs or more with a maturity of around two years. The final terms will be subject to market conditions. This will allow us to leverage the currently still attractive financing conditions, to free up RCF capacity for our networking capital management, and to prepare the refinancing of the Eurobond, which is due next year. We refrain in the current situation from providing an outlook for the building and construction industry and raw material markets due to the high level of uncertainty and the lack of visibility. Let me close my introduction with a short summary. Geberit achieved a solid net sales growth in the first quarter, negatively impacted by the COVID-19 crisis in March. Gerrit is not immune against the economic crisis emerging from the COVID-19 pandemic. We will see an impact on our 2020 results, although the severity is still unclear. Gerrit is a highly efficient organization with highly automated plans and logistics producing in Europe for Europe. With a strong balance sheet and industry-leading margins, which allow us not only to navigate through this period of disruptions and turbulences, but also to emerge stronger from this unprecedented economic crisis. Thank you for your attention. We are now ready to answer your questions.

Ladies and gentlemen, we will now begin our question and answer session. If you have a question for our speakers, please dial 0 and 1 on your telephone keypad now to enter the queue. Once your name has been announced, you can ask a question. If you find your question is answered before it is your turn to speak, you can dial 0N2 to cancel your question. If you are using speaker equipment today, please lift the handset before making your selection. One moment, please, for the first question.

Hello?

Yes, we received a first question. It's from Andrea Cookman, Credit Suisse. Your line is now open. Please go ahead.

Good morning. Thanks so much for taking my questions. I'll start with the resilience of your aftermarket sales, please, first. Could you share with us the experience you've had in countries like Italy, Spain, France in the last couple of weeks of March where the construction sites are closed, but was there any activity into existing buildings and replacement demand?

If you refer to the countries which we call currently shutdown countries, referring to the shutdown of construction sites, the level of activity was, of course, very low. So, for example, in Italy, there was a very low level of activity of construction sites, and obviously showrooms are more or less completely closed. And that has an impact on our demand and already failed in March. for these countries.

Yes, it was exactly what I was wondering, but understanding shutdown of construction sites, but in terms of sales kind of into existing buildings and replacement demand, was that also at kind of near zero activity?

If we refer to construction sites, We refer to new build and renovation. We do not make a big difference. You know, if the construction sites are closed down, you're also not allowed to do renovation work in channel. So there's no difference.

Got it. Got it. Thank you. And just to follow up on that, in countries that shut down the earliest, like Italy or Spain, are you seeing any signs or any initial moves towards thinking of reopening in the coming weeks?

I can only refer to the figures which we see per end of March. And per end of March, we do see nothing in terms of normalization or recovery.

Got it. Thank you. And a broader question on the last points you were making on the priorities and assessing the situations from an old perspective and obviously from also a position of strength of Geberert. Is there an opportunity in this situation for you beyond just the normal kind of stronger companies get stronger, weaker get weaker in these kind of cataclysms? Is there anything you can do in terms of, I remember in the crisis you used this as an opportunity to train a lot of plumbers. in places like Spain. Obviously right now there are restrictions on moving people and meeting people, but is there anything that you see right now that you can potentially utilize?

Yes, we defined three priorities for our sales organization in times of underutilization. Number one is an ongoing support of our customers if possible, maybe via phone or more digital instruments. if the customers are still operating, of course. Some companies' customers are also closed. Number two is strengthening our competences. So we are training our organization. We have digital tools and other means. And number three is what we call housekeeping, making sure we clean our house in these times, for example, CRM databases, et cetera, to make sure that we are emerging stronger from this crisis afterwards.

Got it. Thank you for your time. You're welcome.

And the next question is from Fabian Hickey, UBS. Your line is now open. Please go ahead.

Yes, good morning. I hope you can hear me well. I got two questions. The first one is on the Middle East. Was the double-digit decline already an impact we've seen from COVID, or is there any other reason or just general volatility here? That's my first question.

It was driven, on the one hand, by COVID already. In South Africa, we have seen very weak sales in March, and also Israel. Israel is a relatively small country for us, but if the decline is very substantial, it has also an impact on that region. And the second reason was a generally weak environment in the Gulf. I would assume also without COVID-19, we would have a difficult first quarter in the Gulf anyway.

Okay, thank you. Then my next question is a bit, you know, trying to look back in 2009 and compare a bit, you know, how your revenues behaved and your margins and your revenues being down also in the mid to higher single digits, but you had a record margin in that year of 32%. It's not all comparable, I know. but also mainly thanks to lower raw materials and also now raw materials are coming down. Do you expect, I mean, I don't want to call for record margin, but your margin to be similarly resilient or is this time of things clearly different versus 2009?

I will not make any statement around the margin expectation for this year. But I think what could be comparable to 2009 is, and that is the high-level conclusion of the crisis 2009, we emerged stronger from this crisis. And I'm convinced that we are also able to emerge stronger from this crisis. But I refrain from making any comments on margin expectations for the full year.

Okay, thank you. There may be a last one. You said there's no change in strategic priorities or in the Does that also include your digitalization projects and the extra costs for this year?

Correct. This is one of the examples.

Okay. Thank you.

And the next question is from Martin Fritiger, Kepler Chauveur. Your line is now open. Please go ahead.

Yeah. Good morning, gentlemen. Martin Fritiger from Kepler Chauveur. Thanks for taking my questions. I've got three, actually. I'll go one at a time. Just firstly, on your containment measures that you have started to implement, do these include short-time work as well? That would be my first question.

As a last resort, we would also include short-term work. At the moment, that depends, of course, on the country situation and also on the function. At the moment, we implemented short-time work in two countries, in France, and in UK. In France, as you know, the market is very much retail-driven, so DIY stores are completely closed. And in the UK, there is a public COVID-19 retention scheme, which led to the reality that most customers closed their businesses. That is the reason why we implemented short-time work in France and UK, not to zero, of course. Both organizations are running about at 50% still, but we adapt the organization to the very low activity level of customers at the moment. in all other countries or in no plans currently we have implemented short-term, short-time work.

Great, thanks. My second question will be on the development of raw material prices that you have seen over the last three months. If you could talk a little bit about those and what you're expecting for Q2 at this stage. I know you gave some guidance four or five weeks ago, but I guess a lot of things have changed in the meantime.

Robert, your price in the first quarter came down compared to the fourth quarter last year, so that will support our margins in the first quarter. I refrain from making any outlook for your second quarter.

Okay, thanks. And, okay, I guess you're not going to answer that question either then, but just for the sake of it, you know, from an analyst's point of view, estimating the current impact of COVID-19 is, to put it nicely, a nightmare. Could you provide us any kind of reference of how you would look at, you know, the growth opportunity or the decline opportunity, I should say, for the second quarter in terms of sales?

I think we are sitting in the same boat in that context, Mr. Flückinger. And we do also not have any comparables or whatever. I really think that is a an unprecedented situation, especially to speak, what happened over the last few weeks. Therefore, I can only say, sorry, we are the same boat as you do. I don't know.

Okay, thanks a lot.

And the next question is from Bjorn Reckere. Reuters, your line is now open. Please go ahead.

Good morning, gentlemen. I have a couple of questions, if I may. Can you tell me, are there any kind of job cuts or financial size of cost savings that you're planning to deal with this downturn? That's my first question. And then the second one is, could you give a bit more color on why you decide to keep the dividend when some people, I've seen Rolls-Royce today, they're not paying their dividend after all. So could you give a bit more color on why you decide to keep the dividend in place and the share buyback? Thank you.

question number one about job cuts as I said we do not plan or do not see any for restructuring so we have not any plans to cut jobs but of course we put in place a hiring freeze in these times of very high uncertainty, but no chop cuts or restructuring plans are foreseen. The second question, we didn't really understand. Can you repeat again?

Can you just give us a bit more background on why you decided to keep the dividend this year when a lot of companies have decided actually to keep the money in-house to deal with the situation, basically?

Yeah, our balance sheet is financially strong enough that we can pay out the dividend. Also, the liquidity situation was strong enough. The share-by-back program, that was the old share-by-back program, which we have almost terminated now in the first quarter. Obviously, the second share-by-back program there, we continue with the preparation, but that will not be started until we have a better visibility of the development of the situation. Thank you.

And the next question is from Armin Reichsberger.

Yes, good morning, gentlemen. My first question would be about China. You mentioned that the plants are up and running. I mean, all my companies, they tell me their plants are up and running, but I mean, they are ready to work, but there is no work to do, I assume. How do you see the situation in your plants in China?

So the plans are up and running, but I think you referred to the question about the demand and the market. Demand is coming back to China over the last two or three weeks, but it's not yet at the normal level pre-COVID-19 crisis.

At what level are they then? Is it then the demand?

Sorry, say again?

At what level is the demand back then?

It's difficult to say because there's a lot of volatility. I would estimate about 50% of the pre-COVID-19 demand. But keep in mind, China is a relatively small country for Everett in terms of share of sales.

This press release you published this morning was not scheduled. You scheduled a later date in the year. What is the reason that you had to release that press release?

The reason was just to make sure that we communicate simultaneously and equally to the capital markets in these times of very high uncertainty and in these times of very volatile information flow. So that was the main reason why we said we want to communicate as fast as possible about the first quarter, which we see as a good, solid quarter. and to give you a status update about our situation. That was the only reason why we decided on short notice to communicate today already the status figures and the status update at Gabriels.

And my last question, the influence of foreign exchange rates was rather strongly negative than we thought, Martin Huesler thought. So why is that? Which currencies were especially weak?

I can't answer the question because I don't know what Martin Huesler thought. Therefore, which are out there? Public information.

Yeah, sure. But did you see some currencies especially weak to mention?

Of course, the Euro is very weak. Yeah, yeah.

I mean, except the big ones we know.

So the important is about 65% of our states are exposed to Euro, 5% are exposed to US dollars. And these are the main drivers, all currencies are exposed.

Okay, I'm sorry. I'm not so familiar. I'm calling for Martin Hüssler, who is otherwise engaged, so I'm not so familiar with Kepprit. I'm sorry for that.

No problem.

Thank you. These were my questions.

And the next question is from Arnold Wissen, Main First. Your line is now open. Please go ahead.

Yes, good morning, gentlemen. It's Christian Arnold, Main First in Zurich. clarification question first you were mentioning that your orders were down low double digit in the last three weeks were you referring to the overall group or were you referring to the closed or the construction closed companies I was referring to the entire March

and I was talking about the order entry for the entire March, which was down by a low percentage. The entire March, the entire group. The main drivers were, of course, these shutdown countries since the second half of March.

Okay, and what kind of lead time do we have here?

Not really alone. Do we have a visibility of about two weeks at best?

That is simply our order book level and that's also currently the case Okay, then a question on the performance of the different product lines I mean we have seen pattern which was quite similar to what we have seen last year so installation systems as well as piping system outperforming the bathroom systems by a certain extent and Now, looking at the situation where all the showrooms are closed, do we have to expect a larger gap between the, let's say, traditional business and the bathroom system business going forward?

No, I think the showroom effect is too early. It does not have yet an impact on bathroom systems. So, first of all, you're right. The showroom effect is mainly on bathroom systems, but with a certain delay. insurance are closed since around three weeks maybe in Europe. So we did not see that effect yet in the figures. The reason for the underperformance of bathroom systems in the first quarter is mainly the production interruption of our shower toilet Mera. Keep in mind Mera is our premium model and has of course the biggest impact on our shower toilet business. And we were not able, as you know, to produce for a couple of weeks this shower toilet and to deliver due to the lack of a component from China. That is the main reason for the underperformance in Q1.

Okay, but thinking now about the closed showrooms, it would be fair to assume that the gap will widen going forward.

It's fair to assume that the showroom closure will have mainly an impact on bathroom systems. From that perspective, your hypothesis is correct.

Okay, and then maybe last question on your centralized logistics center in Pullendorf. I mean, you are producing over Europe, but I think all products more or less are going through your logistics center Pullendorf. Did you have any hiccups so far in terms of logistics, in terms of shipping around the goods to the center and out of the center? Is it slowing down or you don't experience an effect at all?

I would say not an effect at all, but the logistics is running relatively normal. We have from time to time some issues with capacity of logistics suppliers, but that is solved. So at the moment, it's really running relatively normal if you talk about the logistics.

Okay, very good.

Maybe last question and attempt. I don't know if you can give us here some color, but nevertheless, I try. Germany as your most important single market. I mean, how did the demand develop here? What do you see here in Germany? Any color would be appreciated.

As I said during my introduction, also in companies where construction sites are technically open as they are running, for example in Germany, we have also seen somewhat lower demand. Of course, not to the same extent as Italy, France or the UK, but we have also seen impact. And that impact is mainly driven by the restrictions of COVID-19 also in markets like Germany. Basically, there are three reasons why there is also a lower activity level. First of all, social distancing, also implemented in Germany or in Switzerland, has an impact, a slowing impact on construction sites. Secondly, keep in mind, a lot of construction workers in the countries are foreign construction workers, so people coming from Poland to Germany working on construction sites. Of course, they are restricted. That's another impact on construction sites. And number three is we are in a component business. A building is one product made out of several components. If you have a delay for one of the components, whatever it is, that has an impact on the rest of the components. So that means that also in other countries where construction sites are open and running, the activity level is somewhat impacted. And that is also the case for Germany. and therefore we have also seen somewhat lower demand since the second half of March in these companies.

Thank you very much.

And the next question is from Angelika Gruber, Tagesanzeiger. Your line is now open. Please go ahead.

Thanks very much. You mentioned the forced shutdown of the plant as one of the biggest risks. So I was wondering if there was a big discussion about the safety of your employees between employers and unions, how you see that and whether it was possible to adjust your production facilities to make them corona safe for people at risk.

Of course we are in an exchange with our employee representatives constantly, but I can say we have very good relationships with our employee representatives and they are informing each other very openly and we did not have any heavy discussions or disputes or conflicts coming from this very challenging situation also for the plant.

So the forced shutdown does not come from these restrictions for employees?

Yes. Now we have to differentiate plant by plant. We have three smaller plants. India is closed down because of the local authorities. They shut it down. The same is true in Italy. The ceramic plant is shut down because of the governmental restrictions. And the smaller plant in France is just more or less down because of demand. but also some employees which were unable to come. It's a smaller plan.

I see. And I would have one more. Is it a concern for you that especially in countries where construction sites are shut down, all the plumbers might have problems and there might be bankruptcies as they are your sales force, kind of?

That will be a question which will come up. So far we have not seen any impact from this crisis directly on customers or wholesalers, installers, going back. It's a bit too early to answer this question.

Thank you.

You're welcome.

And so the next question is from . Your line is now open. Please go ahead.

Yes, thank you. Is it right to assume that in the countries where construction sites are closed, basic plumbing plumber services are however still available in kind of an emergency? I mean, if there is a problem in the building with the plumbing, you obviously need to fix it. So all the plumbers still there to work for, you know, repairs, even in Italy, or how is the situation country by country?

I do not know all the legal sections on country level, but I assume as you said that for emergency cases also in Italy you are allowed to work. I do not know the details in Italy, but I would assume yes. So this service business you mentioned technically will be available in all the countries, especially in emergency cases, but we see what we see is an impact that, let's say, for your small little bathroom equipment replacements, you might currently refrain as an end user to call your installer because you don't want to have installers or foreign people in your house. So for emergency cases, I would say yes, it works. For the general service level, also on a much lower level than normal.

OK. And then what about the price increase, which should have been implemented on 1st of April in most of the countries. Have you been following through that or not?

Yes. We did not change anything with our pricing trees. We implemented them as planned.

Okay. Thank you.

You're welcome.

And the next question is from Evan Keller, Independent Credit View. Your line is now open. Please go ahead.

Thank you. Thank you. Good morning for taking my questions. Some of them have already been answered, so I just have two left. So the one would be to get a feel a bit more about the flexibility of that to your cost structure to this new situation. This would be the first question I have. And the other one, you seem quite confident from a liquidity point of view as you still pay the dividend and now you're tapping the bond markets. So what do you feel, and given that you have to feel that you're going out stronger than before, how do you see M&A and M&A target? So can this be also an opportunity for you to look more intensive to M&A transactions? Do you feel that your rating actually can be held on an A-plus level? Thank you.

First question around flexibility of our operations. Keep in mind that we are highly automated in our plans, but also the logistics. And the workforce, of course, is partially flexible. We have, in some plans, temporary workers, so we are able to adapt to a certain level also the capacity in operations, but there's a limit, of course, to that. Second question. No change on our M&A agenda due to this disruptive crisis, so it's not that we have currently more appetite on M&A than what we would have had before. Currently, it's all about maintaining the business and making sure we get stronger out of this crisis than we have been before. You asked about the impact on our rating.

I ask from this We don't see, we don't have any indications that our rating should be impacted or changed for the moment. And we assume that the strong balance sheet together with the rating will help us to go successfully to the bond market.

Okay, perfect. Thank you very much.

And the next question is from Bernd Pommel, your line is now open. Please go ahead.

Yes, good morning, gentlemen. Just one question left on Austria. Strabag and Paul, they announced a week ago that they would open their construction sites in Austria again gradually. Is this something you are also seeing? So are you again seeing some activities in Austria? Thank you.

Not yet, but we expect this week that the picture should improve in Austria. I think it's a good example which shows how fast things are changing. So Austria should, again, be better this week because large construction companies reopening their construction sites. So we expect this week a positive effect.

Excellent. Thank you, Christian.

You're welcome.

And the next question is from Pierre Rousseau in Barclays. Your line is now open. Please go ahead. We can't hear you at the moment. Perhaps you're still on mute.

Yes, hello. Thank you for taking my question. So you mentioned the rate of decline of low double digits for March. Can you give us the number for the last two weeks or maybe for the last week of March? That would be a better indication of what the current shutdown implies for you. The second question would be on ceramics. You've mentioned the Italy plant was closed, so I was wondering if you could give us some details on the supply chain in that specific business and if there are any, you know, consequences on the rest of your bathroom operations. And the last one would be on CapEx. You mentioned that all your priorities weren't changed, so it's best to still assume that $180 million is the right guidance for your CapEx in 2020. Thank you.

First question around the order entry in March. As I said before, for the entire March, order entries were down in a low double-digit percentage, driven by the second half. In the first half of March, we even have seen a stronger order entry, because there were some free orders, stock orders, from wholesalers. And the second part of March was, of course, much worse, or was worse. I do not give you any details in terms of figures. Number two, the ceramics plant in Italy, in Gaeta, does not have a material impact on our operations. It's a smaller plant, and we have also a lot of stock there, and it's also a plant which is manufacturing strongly for the Italian market, which is anyway in Dallas. Third question, CapEx 2020. We expect now lower CapEx than originally guided for. We planned originally CapEx of around 180 million Swiss francs. That will be less this year because some of the projects we are not able to pursue due to the restrictions. So that will automatically lead to a lower CapEx budget this year. But as I said before in my introduction, we do not want to cut systematically CapEx budgets to save our liquidity. Next question.

The next question is from . Your line is now open. Please go ahead.

Yeah.

Oh, can you hear me? Yeah, just a bit of a clarification. You say the order intake in March was down sort of low double-digit range. Could you give us a bit more clarification on that? Because that's basically anything from 10 to 99. So between 10 and 20, or can you just give us a bit more sort of a bit more of a ballparky kind of area there, please? Thank you.

I don't want to give you a more detailed figure, and the reason is very simple. You know, we talk about more than two weeks, and the volatility is very high. So if you talk about a figure now, maybe we are all, you and I, ourselves, speculating too much. That's the reason why I stick to my guidance before low double-digit percentage, but between 10 and 99, obviously closer to 10 than 99, because it's low double-digit, so to speak. Okay, thank you. It's much smaller.

and we have a follow-up from Andre Koopman Credit Suisse your line is now open please go ahead yes hello again and thank you very much for taking the follow-up I just wanted to come back to Austria and what you said on a couple of questions earlier frankly I haven't followed it as closely as some other countries could you give us an idea on kind of when they shut down and so how long we've seen their shutdowns for and just Broadly, is there any reason why this is not the playbook for kind of the rest of the countries in Europe, in your opinion?

So in Austria, it was not basically driven by the government who closed construction sites. The major impact was coming from a large construction company, Strava, which decided, and also Paul affected one, to close their construction sites around two weeks, two and a half weeks ago. And as explained before in a question or in an answer, Starbuck is reopening their construction site as of last week. That should have a positive impact because it's a large player on the construction sites in Austria.

Okay, so the key difference is that it's actually industry driven rather than government. Exactly.

That's what I said before. It's not always the case that you are not allowed to work on a construction site. Also, the UK construction sites are not officially closed. But if some players, or large players, or many players decide not to work, that has an implication on the entire construction activity, of course.

Got it. And in terms of your, just if I may, another follow-up, in terms of your repair activity, or kind of back to what I was asking originally, if you look at your sales mix, could you quantify at all how much of it is that kind of essential repair activity? Do you have any idea on that? I appreciate you guys are on the same channel.

It is, as we always say, about two-thirds of our business is exposed to renovation, RMI, and about one-third is exposed to new build.

But within that renovation segment, is there a kind of there is a part of it that is just literally replacement demand where something's broken down and it will be replaced as it's usually an emergency. Do you have any estimate of how much that is?

No, no estimates.

Okay, got it. Thank you very much.

You're welcome.

And the next question is from Christian Quad. We just see your line is now open. Please go ahead.

Good morning. Thank you very much. I just would like to ask if you have changed anything in your approach to working capital. I'm thinking especially about receivables. So do you now require more prepayments from your clients to protect yourself or have you maybe relaxed prepayments to support the remaining demand? Have you changed anything in this regard? Thank you very much.

No, up until today we have not changed our approach to working capital management. We are paying our suppliers normally. Obviously, we keep a close eye on our outstanding receivables, but no major change so far.

All right. Thank you very much.

And the next question is from Marta Burska, Berenbach. Your line is now open. Please go ahead. We can't hear you at the moment. Perhaps you're still on mute, Marta Burska.

Yes, hello. Good morning. Thank you for taking my question. Actually, most of my questions were already asked. answers so far so maybe just a one follow-up with regard to the lead times I was a little bit surprised with indication of two weeks from orders to them to actually the sales for you and if you could please tell us a little bit more of the split between the how this differs when you sell directly to the construction site and when you sell to them and distributors through the wholesalers. Thank you.

To the first question, our order book level is about two weeks. That is normal. That is the case since years. That's the case in our industry because the inventory management to cope with the fluctuating demand in our industry is basically done by the wholesalers. That is the reason why we have a relatively low visibility and a relatively low order book. The second part of the question we didn't really understand. Can you repeat it again? The quality was a bit difficult.

Sorry, it's from the mobile. So perhaps, can you remind us what's the split in your sales between the sales to the wholesalers and directly to the construction site for larger projects? such projects when you have the renovation of the entire building and perhaps you sell some products directly to the construction site and how the lead times differ for those. Thank you.

But we're only selling to wholesalers. I'm still not sure if I understood your question. We only sell to wholesalers. And these wholesalers sell then to installers, maybe sometimes directly, I don't really know, but we only sell to wholesalers.

So you never sell directly to the construction site? No. Okay, thank you.

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