Geberit AG

Good morning, ladies and gentlemen, and welcome to Gebrit's half-year results conference call. Gebrit achieved very strong results in the first half of the year. Let me start with the three key statements for H1. First, a net sales growth of 6% in local currencies, primarily driven by strong volume growth. Second, stable operating margins. And third... Strong EPS growth of 8% in Swiss francs and 11% in local currencies, supported by accelerated share buybacks. Let me begin our review with a few comments on the top line in the first half of the year. Net sales increased by 3% to 1.71 billion Swiss francs, negatively affected by strong currency effects. Negative currency effects? led to a net sales loss of 53 million Swiss francs, or minus 3%. In local currencies, net sales increased by 6%, driven by an improved market environment in Europe and strong demand for our products across markets and all three product areas. The top-line growth was primarily driven by volumes, with a growth rate of around 4.5%, Increased sales prices contributed around 1.5% to top-line growth. This brings me to the regional net sales development in Europe. All growth figures refer to growth in local currencies. All main countries and reporting regions, except Western Europe, delivered strong growth rates in the first six months. In Eastern Europe, net sales grew by 12%, with particularly strong growth in the Adriatic region and Poland. In Switzerland, net sales increased by 10%, supported by a base effect and strong market demand. Net sales in Italy increased by 7% despite a softening market. In Benelux, net sales grew by 7% with strong growth in Belgium and the Netherlands. In the Nordic countries, net sales grew 6% in an improved market environment. In Austria, net sales grew by 6% despite a very strong comparison base with a growth of 10% already last year. Net sales in Germany increased by 4%, also despite a strong comparison base. Over the last three years, We achieved a cumulative sales growth of 12% in Germany despite the significantly declined market. The only region in Europe that experienced a decline in H1 was Western Europe with double-digit growth in Iberia which was only partially offset by market-driven declines in France and the UK. Let me now turn to the regions outside Europe. In the Middle East-Africa region, net sales increased strongly by 19% despite the war in Iran. Net sales in the Far East-Pacific grew by 6%, with double-digit growth in India and Australia partially offset by the continued but fading market decline in China. In America, net sales declined by minus 5% due to the base effect from the extraordinary growth last year after the tariff announcements. Let me now comment on the sales development per product area, again in local currencies. Installation and flushing systems grew by 7%, piping systems by 6%, while bathroom systems increased by 5%. All three product areas benefited from strong growth with established and new products. Let's turn to the sales development in the second quarter. Net sales in Swiss francs increased by 7% and reached 838 million Swiss francs. The negative currency effect decelerated versus the first quarter. but still affected the top line negatively by 17 million Swiss francs or minus 2% in Q2. In local currencies, group net sales increased by 9%, driven by a volume effect of around 7.5% and a sales price effect of around 1.5%. With a growth rate of 9%, we achieved the strongest quarterly growth rate since the COVID-related boom four years ago. Furthermore, Q2 was the ninth consecutive quarter with currency-adjusted growth. Over the last nine quarters, we achieved an average net sales growth rate of 5%, almost fully driven by high volumes, and despite the market decline during this period. Let me turn to the regional development, again in local currencies for Q2. In Europe, net sales increased by 8%, driven by a generally improved market environment compared to last year, and strong demand for newly introduced but also established products. Outside Europe, net sales increased in Middle East Africa by 24%, driven by strong growth in Turkey and significant double-digit growth in the Gulf region, despite the war in Iran. Net sales in the Far East Pacific grew by 13% with double digit growth in India and Australia, offsetting a decline in China. Net sales in America declined by minus 6% due to the already mentioned PERIS-related base effect in the previous year. I continue with the sales development per product area in Q2, again in local currencies. Installation and flushing systems grew by 10%, piping systems by 9%, while bathroom systems increased by 7%. All three product areas benefited from strong growth with new products. Piping systems benefited selectively from pre-buying before the extraordinary price increase for plastic pipe systems in June. I return to the first half of the year, with some comments on the operating and financial results in H1. All operating and financial results grew, even in Swiss francs, and even when adjusting for the one-time costs in the previous year. I start with the discussion of the ABDA development. ABDA increased in Swiss francs by 3% and in local currencies by 7%. The EBITDA margin reached 30.9% exactly previous year's level. Excluding the one-time effect in the previous year, the EBITDA margin decreased by 60 basis points, driven by increased direct material prices of around 3% due to the conflict in the Middle East, a wage inflation of 2.4%, and dedicated investments in marketing, IT, and AI. We managed to almost fully offset these negative margin drivers with the following levers. First, our efficient and flexible production network coping with the strong volume growth while at the same time keeping costs under control, especially in Q2. Second, a positive sales price effect of around 1.5% and thirdly, further efficiency gains in production and Logistics. Thanks to our long-term oriented natural currency hedging strategy, the significant currency losses had no material impact on operating margins. EBIT grew disproportionately by 4% in Swiss francs and by 8% in local currencies. The EBIT margin increased by 30 base points and reached 26.3%. Net income also grew disproportionately by 7% in Swiss francs and 10% in local currencies due to an improved financial result. The net income margin increased by 100 base points and reached 21.3%. Earnings per share increased by 8% and reached 11 Swiss francs 09. In local currencies, EPS increased even double digit by 11%, disproportionately higher than net income thanks to the accelerated share buyback program. The share buyback program launched in September 2024 was completed ahead of schedule in early June. Under this program, a total of 560,000 shares were repurchased for a total amount of 300 million Swiss francs. We launched a new share buyback program directly thereafter. The new program with a maximum volume of 300 million Swiss francs runs for a period of maximum two years. In total, under the completed and the newly launched share buyback program, we repurchased in the first half of 2026 393,000 shares for a total amount of 206 million Swiss francs. This brings me to a few comments on capex and free cash flow in the first half of the year. Capex increased by 10 million, or 18%, to 64 million Swiss francs, driven by higher investments in logistics and R&D. Free cash flow decreased by minus 12% to 217 million Swiss francs due to the timing of tax payments in the previous year and the higher capex. Let me now comment on our market outlook for the full year 2026. Geopolitical risks and the associated macroeconomic uncertainties remain high. This makes it difficult to provide an outlook for the macroeconomic environment. However, The current geopolitical environment and the crisis in the Middle East in particular had so far no material negative impact on demand in the building construction industry and our business. For example, we did not see signs of a weakening renovation sector in Europe. And even in the Gulf region, where we experienced some logistical constraints after the outbreak of the war in Iran, our business grew significantly by double digits in Q2. Therefore, we continue to expect a slight growth of the European building construction industry in the course of 2026. However, no broad recovery yet. In the new build sector, we see positive momentum emerging as indicated by the ongoing turnaround of building permits, which grew in Europe by 5% in the second half of last year and by 8% in Q1 this year. In particular, the residential building permits in Germany are recovering with a growth rate of 16% over the last 12 months. In the renovation sector, which accounts for 60% of our business, we expect for Europe the positive dynamics to continue. Outside Europe, we foresee a mixed picture for the building construction industry. Some markets continue to see good demand, for example in India. Other markets will continue to decline, for example China, due to the collapse of the new-build sector. However, at a slower pace than in previous years. On the supply side, we expect for Q3 overall stable price levels with a sequentially sideways development of direct material prices compared to Q2. Let me now briefly comment on the GEBRIT priorities this year. We will continue to have a strong focus on new products. For example, the new shower solution launched in April, but also important new products introduced over the last years. For example, the DuoFix, FlowFit, Maltress Therm, and the shower toilet Alba. Other important initiatives this year include new marketing initiatives and further efforts in the area of IT, digitalization, and AI. In total, we are increasing our operational expenditures for these initiatives by 20 million Swiss francs this year. Let's continue with our full year guidance. Under the assumption of no material changes to the current market environment, we expect for the full year a net sales growth in local currencies between 5 and 6%, and an APCA margin around previous year's level. Given the extraordinary price increase as of June, the sales price effect in H2 will increase relative to the first six months. Therefore, we expect for the full year a sales price effect of around 2.5%. Next day in July, were like for like above previous year's level and grew in line with the full-year top-line guidance. For CapEx, we expect around 200 million Swiss francs this year. Let me close our introduction with a short summary. Gendry delivered very strong results in the first half of 2026, with a net sales growth in local currencies of 6%. This was the strongest first half of the year since the COVID-related boom four years ago. The war in Iran and the current geopolitical tensions did not affect our business, apart from the impact on raw material and energy prices, of course. However, we kept life-for-life operating margins almost stable, despite the raw material price having, as of Q2, and increased OPEX for various strategic and operational initiatives. As a result, earnings per share grew strongly by 8% in Swiss francs and 11% in local currencies. For 2026, we continue to expect slight growth of the building construction industry in Europe and the mixed environment overseas. Furthermore, and irrespective of the market environment and geopolitical and macroeconomic uncertainties, We will continue to invest in sales and marketing initiatives, in innovation, in efficiency and also in capacity to further strengthen our market position in and outside Europe in the short and in the long term. Thank you for your attention. We are now ready to answer your questions.

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 telephone. You will hear a tone to confirm that you've entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to disable the loudspeaker mode while asking a question. Anyone who has a question or a comment may press star and one at this time. Our first question comes from Daniela Costa from Goldman Sachs. Please, go ahead.

Hi, good morning. Thanks for taking my questions. I'll ask two quick ones. But first one, maybe just trying to get a little bit more color into your confidence on Europe going forward. If you could comment a little bit, you know, tie a little bit those comments versus, I guess, what's implied in your second half for organic sales growth is weaker than what you've delivered so far despite pricing changes. Slightly picking up, so maybe if you can help us tie the confidence versus what you got for the second half. And the second question, just quickly, where are inventories at the dealers at the moment versus what normalized rates are?

To the first question, we expect, as we said in our introduction, a slightly improved marketing environment also in the second half of this year in Europe. With regards to our volume expectation for the second half of the year, we expect a deceleration, which is mainly driven by a base effect. You might remember that we had a strong volume growth last year in the second half of the year. Our volumes grew about 5%. Driven by two special effects, we had a new product introduced, the dual fix-off, here in the second half, and also a strong December. That's the reason why we expect a certain deceleration of volume growth in H2 versus H1 this year. Second question around the wholesale inventory levels. We believe that there are more or less normal levels, maybe with one exception for plastic pipes, which are basically drainage pipes, where we have increased prices much stronger than for other products. And there we think there was a certain pre-buying effect and therefore also most probably slightly higher inventory levels than normal. But the rest of the assortment, the large part, we don't think that they have higher inventory levels at the moment at wholesalers.

Very clear. Thank you. The next question comes from Elodie Rall from JP Morgan. Please go ahead.

Hi, good morning. Thanks for taking my questions. My first question is on the strong volume development in Q2. I was wondering if you could give us a little bit of insight on whether you've seen some pre-buying helping in that strong volume growth. And second, the guidance that you gave us on margins, It does assume costs stay at this current level, I imagine. But what gives you the confidence that you can achieve this margin guidance? What's in there? If costs rise again, how much ability do you have to raise pricing on time to offset this cost inflation? I mean we have in mind that in 2022 you were caught by surprise on H2 for the rise in raw materials. I was wondering what kind of confidence you have on this one. Thanks very much.

I start with question number one. Question number two will be answered by Tobias. So the volume growth of 9% in Q2 was only very limited impacted by pre-buying. We only have seen a pre-buying effect for their fully plastic-related materials. That's what I said before. That's basically for drainage pipes. In drainage pipes, they are 100% out of plastic. Plastics there increase prices by high single-digit, even double-digit. This triggered some pull forward. But for many other areas, we didn't increase prices at all. For example, metal... Pipe systems, with the exception of carbon steel, we didn't increase prices at all. For ceramics, for example, we increased prices in June only by 2%, so very low. That didn't trigger any pre-buying effect. So very limited, driven by basically plastic drainage pipes.

And when it comes to the margin, I mean, clearly the extraordinary price increase we did as of June will fully kick in in H2. And that gives us the confidence that we will achieve the margin that we set out. Currently, these price increases that have been defined do fully compensate the raw material increases we've seen. And therefore, at that stage, we do not see the need for further price increases.

The next question comes from Martin Huesler from ZKB. Please go ahead.

Yes, good morning, everyone. So my first question is about, can you share some details on the shower toilet business within bathroom systems in terms of volume and value development in H1?

Shower toilet business continues to do very well. We have Very nice double-digit growth in value and in volumes in the first half of the year. Obviously still a big driver is Alba, which is also still growing significantly double-digit. Growth rates are coming down, but still significantly double-digit. And still the same as last year, the other products are not cannibalized, even are growing as well. So the top product, Mera, is also growing double-digit in the first half of the year.

Thank you. And then the second question, sorry about a bit nitty gritty, but in May, if I remember correctly, you said you had a sales growth mid-single digit. Now for the full quarter, it was plus 9%. So what happened actually to the last couple of months? Did you see an acceleration in June? Obviously, yes, but what was the reason according to your estimates?

Yes, it was an acceleration in May and June, you're right, obviously. But no specific observations. The market is improving, that's what we said. We are doing very well with many of our products, not only new products, also established products. And a little bit of pre-buying, as I said before, for the drainage pipe systems, that obviously helped as well. But, yeah, nothing specific. I will not look too much into monthly numbers. There's also some volatility in these monthly numbers, as you know.

Yeah, I fully agree. But just maybe, did you see a similar pattern also for Germany the last couple of months?

To be honest, I don't have the numbers for Germany month by month now in my head. I can't give you the precise answer. I don't know exactly the monthly numbers in Germany in the second quarter.

Okay, no worries. Thanks a lot.

The next question comes from Cedar Ekblom from Morgan Stanley. Please go ahead.

Thanks very much. Hi, gentlemen. I just want to probe a little bit more on your messaging around the raw material cost outlook flat into the third quarter. If we look at how some of the spot raw materials have developed, the exit rates, at least at the end of the second quarter, I would think would suggest, particularly with a lag, a bit of a headwind on the material margin into the third quarter. Has anything changed in terms of how you've been buying raw materials? Are you sitting on any inventory that's sort of softening some of that inflationary risk into the third quarter? I appreciate that obviously the outlook, the spot market might be different, but just interesting to hear your comments around why you don't see sequential headwinds on raw material costs into the third quarter. Thank you.

So we didn't change anything of strategy or set up with regards to raw material buying. No changes there. Of course we have, if you go into the raw material basket, you have different developments in Q3. For example, for plastic, we expect even slightly lower prices after the strong increase in the second quarter. On the other side, we expect metals to go up a bit. But all together, our purchasing department has calculated and is expecting a sideways development, but no structural changes in terms of buying strategy or timing or contracts, no changes.

The next question comes from Martin Flueckiger from Kepler-Chevreux. Please, go ahead.

Good morning, gentlemen. Thanks for taking my question. I've got three and I'll take one at a time. The first one is on your remarks in the press release regarding building permit growth in Europe. which obviously is driving the new build construction sector. Now the thing is mortgage volume growth across Europe has been pretty tame compared to building permit growth and I think if I'm not mistaken and correct me if I'm wrong, I think mortgage volume growth in Germany was even flattish, maybe just marginally up so far year to date. Just wondering how you explain that discrepancy and the likely impact on your business going forward. That's my first question. I'll come back for the second one.

Indeed, I mean, there's a correlation. What I think is key is there's simply a timeline as well between the building permits and the mortgage. So what we've seen in the permit growth, we expect then as well to be reflected at some point in time if they really start with the work to see on the mortgage development.

Okay, so clearly you expect mortgage volumes to follow building permit growth at some point, yeah, depending, I guess, what the mortgage rates are going to be.

As you know, Martin, we are not doing any forecasts on macroeconomic numbers, so we don't have any view where mortgages are going. We're focusing on our business.

Okay, thanks. Second question relates to the, I think, your Christian statement regarding efficiency gains in production in Q2 having a positive impact on the EBITDA margin. I was just wondering whether you could quantify that, please.

We could quantify, but we don't want to quantify, to be very honest. And I don't have the number exactly in mind, but we have a number, but I don't have it in mind. We do that on a full-year basis, and we also share that with you in the full-year conference always, as you know.

Okay, thanks. And then third one, and I'll go back in line, is could you provide us with an update on the installers or the backlog in Germany and what you're seeing there in terms of industry sentiment across the solar sector?

The installer backlog in Germany in Q2 this year went up to 11.9 weeks. That's slightly higher than in the previous year's period, about 5%. Also, that is an indication that the market in Germany is Doing well and is not struggling.

Thank you very much.

You're welcome.

The next question comes from Arnaud Lehmann from Bank of America. Please go ahead.

Thank you very much. My first question is on the margin guidance. Just to clarify, when you say your margin broadly in line with last year, you're referring to the 29.4 because I think there was like 60 basis point one-off effect from a plant closure last year. So you're referring to the published margins, not the restated margins.

Yes, that is correct.

Thank you so much. My second question is on your innovation pipeline. Obviously, you've been talking a lot about Alba shower toilets, the FlowFit systems. I mean, these are new, but they've been around at least a couple of years, a bit more than that, I think, for FlowFit. Are they still driving incremental growths? And separately, do you have any plans to launch another blockbuster innovation in the coming months? Thank you.

Two times yes. So the first question, they are still contributing substantially to growth. Even Flowfit introduced now more than four years. Alba, as I said before as well. So they are all still contributing to growth. And the second question also yes, of course we are thinking about new blockbusters. Don't forget that we launched last year the new DuoFix 4, it's a very important product. It's a large part of our business. There was not a complete new innovation, but it was a very important upgrade. And this is a relatively recent innovation. So we are continuously updating or also working on so-called blockbusters. But obviously, for obvious reasons, I don't want to go into details what is in our pipelines.

Makes a lot of sense. Thank you for that. And just a clarification, finance costs are down quite a lot in the second quarter. Was there any one-offs?

Sorry, if there was anything else, I mean, that's due to ethics losses in the previous year. That's the main reason for the difference year on year.

Okay. Thank you so much.

The next question comes from Patrick Raffaez from UBS. Please go ahead.

Thanks and good morning everybody. Three questions for me please. Two clarifications first. One would be on the July comment where you said like for like in line with the full year guidance. Does that mean on track or in line within the range? I realize it's a similar order of magnitude but just trying to understand because if pricing is now three and a half, More or less, that would mean volumes would be then somewhere around two, two and a half. Is that the correct assumption for July? No.

So in line means that we took the actual numbers from July into consideration when we formulated our guidance of five to six percent.

Okay. And can you make a comment on the growth rate then in July?

I could, but I don't want.

Okay. Good. Moving on.

It doesn't make sense. We have now our four-year guidance, so it doesn't make sense.

Okay. It's just usually you would have provided a comment on the first month of the new quarter.

If we don't have four-year guidance, yes. Only if we don't have four-year guidance.

Okay. Then wage increases because personnel costs were down in Q in H1. I remember that there was an FX element in there that helps. Would you say that on a full year basis wage inflation is still running at the 3% more or less rate? Is that correct?

Yes, absolutely. We still expect that. Q2 was indeed quite lower when it comes to wage inflation. It was expected so and the reason was because last year in Q2 there were large one-off payments and that decreases obviously then the rate for this year. But that was known and was taken into consideration when we formulated a roughly 3% wage increase for the previous year.

Okay, understood. And then the last one would be on... Pricing. Just two clarifications here also. The first would be, can you just confirm that there's no significant surcharges except for what you already announced on copper in the pricing for H2? And the second one on pricing is, assuming nothing changes, input costs stay where they are, Would you consider to do a pricing holiday again in 2027 because of the extraordinary price increases from this year? Or is there actually a chance that maybe you give back some of these prices if raw materials decline?

Understood. Let me briefly repeat what we did in terms of pricing this year. So we did a regular price increase of around 1% as of April. We also did, as of April, an extraordinary price increase for copper piping systems, but that's a very small part of the business, so not too much impact. Then we did the extraordinary price increase, as of June, for plastic and energy-related products only, with an impact of around 2% on group level. and from now on we do not expect, as Tobias said before, at the moment further price increases because raw material prices are expected to develop sideways. And with regards to 2027, it's too early to give you an indication. We are currently not yet clear what we will do for 2027, so I can't give you an answer on the price in 2027 yet.

Okay, good. Thank you, understood.

The next question comes from Chase Kuglern from Lansford Kempen. Please go ahead.

Hi, good morning all and thank you for taking my questions. I just have two. Firstly, going back to pricing, so you've obviously said you expect your sort of 2% to 2.5% on a full year basis. Could you comment on where you see this relative to, let's say, the price increases from competitors? Are they matching this or are they going a little bit above? Do you have any more color on that?

Sorry, we don't make any comments about pricing of competition. Sorry, I can't give you an answer here.

Okay, no problem on that one. Then just my second question. You've obviously provided some commentary around the residential pickup, especially in Germany, in terms of building permits. Could you also provide some form of commentary around what you're seeing in commercial markets, so non-resi, either in the first half or also what your expectations are on a full year basis?

So non-resi is doing not as well, not as good as the residential sector, especially in Germany. Non-residential businesses are even slightly down over the last 12 months. But keep in mind, non-resi is less relevant for our business. It's only about one-third. The much larger part of our business also in Germany is the residential sector.

Yeah. Okay. That's very clear. Thank you.

The next question comes from John Reville from Reuters. Please go ahead.

Good morning, everybody. Thanks for taking my question. I was wondering, you said you saw a strong increase in direct material costs in the first half of the year. Is the figure for how much that was in a kind of breakdown, how much of that was basically fuel and how much of that energy and how much of that was plastics? And then secondly, I'd like a little bit more colour on the mitigation measures you've basically introduced to deal with this. It just says on the release, Thanks to high availability and efficient processes in production logistics. Could you just give us a bit more colour on what that actually is and any examples? And that would be quite helpful to know. And also you said about volume growth. Has volume growth gone from what to what and how has that helped? So just what the high prices were, what the breakdown was, and just a few more details on how you were dealing with it. Thank you.

Question number one about the raw material prices in the second quarter. The increase was primarily driven by plastic raw materials, which went up significantly after the outbreak of the war in Iran. Some others, sorry? Okay, so it was mainly by plastic raw materials. Energy was not in there because energy, we do not report on the direct materials. Energy is separated, but energy went up as well. Second. Second question about the mitigation measures in production and logistics. That's basically the operating leverage, that we are able to really deliver an operating leverage also when volumes are strongly growing. That's what it's meaning, that we are able to cope with much higher volumes with a relatively stable cost base or a much lower increase in cost versus top-line. That's what it's basically meaning.

Right, okay. And is there anything kind of like...

I mean, your volumes went up. Can you say what your volumes went up by to get this leverage, could we say?

Sorry, the connection line is very bad. Can you repeat the question?

Sorry, sorry. The volumes increased by, how much did the volumes increase in the first half to kind of get this leverage, could we say? Volumes increased by what and what was driving that, do we think?

The next question comes from Remo Rosenau from Helvetische Bank. Please go ahead. Yes, thank you. You not only had higher material costs, also

IT marketing and digitalization costs were elevated as planned for some time already. Now, will these elevated levels on these items persist going forward, i.e. that kind of the new normal, or will these costs again go down at some stage in the future, at least in relative terms or also in absolute terms?

In absolute terms.

In absolute terms, yeah.

And with any further increase, and therefore keeping content in percent, that is a part of the budget and mid-term planning is not yet decided.

Okay. Then on the price increases, you explained quite in detail that it was a very differentiated price increase in June by product lines. Now, in geographic terms, Were there also different price increases or have these price increases by top product line been the same everywhere?

The general answer is yes. Everywhere the same price increase with one exception, that's Switzerland. In Switzerland, the price increase was lower because of the currency development. But with the exception of Switzerland, the price increase was more or less the same in all countries.

Okay, great. Understood. Thank you. That's it for me. You're welcome.

The next question comes from Christian Arnold from Odoo BHF. Please go ahead.

Yes, good morning all. Just one question from my side about your outlook you have given for Europe. You're talking here about slight market growth is expected. In 26 overall, but no widespread market recovery yet. Three months ago, however, you were just talking about no market recovery yet. So you added this one word, which implies that you do actually some recovery in some countries. Can you tell us where you see now a more positive development? Thank you.

Don't put too much emphasis on one word, Christian, but we are still positive maybe one region, which I can mention, where we are more positive maybe than a quarter of all is the Nordic region, where we think, I would still not talk about the recovery in the Nordics, but the Nordics as a market, not just coverage specific, we think is a bit better than what we expected a couple of months ago, as an example.

As an example, okay. Thank you.

You're welcome.

The next question comes from Pujarini Ghosh from Bernstein. Please go ahead.

Hi, good morning and thanks for taking my questions. So my first question is on the exceptionally strong volumes in H1 of around 7.5%. How much do you think of this is driven by underlying market recovery versus Gaborit taking share? If we drill a bit into France versus Germany, we've seen permits being strong for quite some time. And if you look at your performance in the two countries, Germany is very strong, whereas France is still a bit weak. So can you talk about the differences that you're seeing in these two countries on the ground specifically? My second question is on the outlook. Of the 5-6% local currency growth, how much do you estimate is coming from volumes versus price? Thank you.

The first question about the volumes in the second quarter, market versus Gable's outperformance. We do not try to estimate, to be honest, market numbers on a quarterly basis. Therefore, we also do not quantify or think about how much we outperformed the market. So I can't give you an answer. We do that, if at all, we do that on a yearly basis. A quarter is too short. Part of the question was the difference between France and Germany. As you said, rightly, they have a much stronger position, obviously, in Germany. Our position in France is not that strong. And the stronger your position is, the better is also, obviously, sometimes the capability to outperform the markets. And that might be a reason for the difference you just mentioned. Second question, the full year guidance, top line of 5% to 6%. Thereof is around 2.5% pricing, and the rest is volumes.

Thank you.

You're welcome.

The next question comes from Isaac Otio from Onfield Investment Research. Please go ahead.

Hi, thanks for taking my question. So yeah, we're coming back to the sales in Western Europe, the kind of lag. Could you also give us some color on maybe on the situation in the UK specifically? And second question on your input costs. So is it maybe fair to assume that high-density polyethylene is one of your main plastic costs and aluminium, zinc and copper are the key metals that you're looking at?

Thank you. In the UK, we see not a really strong market at the moment. We think it's still quite a challenging market, and also, as I said before, the same as in France. The second question was about raw materials. Yes, polyethylene is an important plastic which we are buying. That's part of the 25% of our raw materials which we source in the plastic area, and an important part is polyethylene. There was, I think, a third question, I can't remember.

Yeah, so is aluminium, zinc and copper a fair assumption, you know, as your key raw materials? Are those the key metals?

These are key metals. We are not buying directly aluminium, but we are buying semi-finished or finished goods made out of aluminium and aluminium zinc are metals which have an impact on our raw material prices. That's correct.

Okay, thank you very much.

We have a follow-up question from Martin Flueck again from Kepler Chevrolet. Please, go ahead.

Yeah, thanks for taking my follow-up. It's just one, actually. And I guess it's a number question for it to be. On the CapEx guidance, Please clarify, did you say 200 million for this year? And based on my notes, at least, that number looks a little bit lower than the previous guidance, or am I mistaken here?

Thank you, Martin. That is correct. We said 200 million, and that is lower than with the Q1 communication due to the concrete offers we now have for the logistics projects, which have more favorable timing splits. And that reduction of this year is then likely to be caught up then in 2027. Okay, so we're talking about 260 in 2027. We have not given a 2027. We've given the range over the next couple of years. So concretely then for next year, we'll give with a full year result or the first information.

Okay, thanks.

The last question for today's call comes from John Reville from Reuters. Please go ahead.

Hello, I'm on a different line now, so hopefully you can hear me a little bit better. I was just wondering, Christian, you mentioned about operational leverage earlier was a big sort of factor for you. Can you just tell us, give us a bit of a figure, like your factors are running at what percent capacity now compared to what, could we say, which obviously helps you get the efficiencies here? That's the first part of it all. And then the second one as well is it mentions efficient processes in production and logistics. I mean, that usually means efficiencies usually mean cost cuts. So has there been any kind of cost cuts as well as part of this plan to deal with the higher energy and plastics costs? Thank you.

So first question, we do not talk about the utilization rate. We don't share this number.

Has it gone up, can we say, though? Has it gone up, can we say? Without numbers, but in form of words.

Of course, if you have one machine and the machine is producing more than before, then the utilization is higher, of course.

But that's what's happened. It's gone up a lot for most of them.

Of course, that's part of the operating leverage. Second question, maybe more important, about efficiency versus cost. That was not at all a cost-cutting exercise, not at all. It's the contrary. Costs went even up, but the costs went up less than volume growth. That's the meaning of operating leverage. That's the reason why you can improve margins. But that's easy said, but it's quite difficult to execute, and that's the strength. If you have the opportunity next time, I invite you to visit our plant, and you get maybe an insight how we do that.

I'd love to do that. That would be great.

So we managed to grow costs less in the plant than volume was growing, and that has benefits to the margins.

Absolutely. Okay. And you say you don't give a figure for capacity, but I mean, is it substantially up? Is this a form of words or up a lot or just a form of words? How much is more is production gone up at your factories now to deal with this increased demand?

As I said, we don't talk about numbers of utilization. Utilization went up. That's quite a logical result.

Yes. Okay. Okay. Thank you.

You're welcome.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Christian Buhl for any closing remarks.

Thank you all for your participation and your questions. We wish you all a great day. Thank you. Bye bye.