Amrize Ltd Ordinary Shares

Hello, everyone, and welcome to our 2020 Results Analysts and Investors Conference. I'm very happy that you could all connect today, and then we can have our presentation and discussion online today. I have with me Geraldine Picot, our Chief Financial Officer, who will explain the financial performance for the past year in more detail with us I would like to start to talk about the highlights and the conclusions of the year. Then Geraldine will explain the results in more detail. I will close with the outlook, and then I think we have around 60 minutes for your questions and comments as usual. Let me start to give you a summary of results. 2020 highlights and key developments. As we all know, it was a very challenging year for all of us. And I think we mastered this very well. We had a situation where our business was basically disrupted from mid-March to end of May. So for a time period of around three months, we were disrupted by the first wave where construction sites were closed and then we had a very fast rebound of demand for our products already in June back to 2019 levels and that is a trend which kept going until the end of the year. We had basically no more closures of construction sites globally even in the second or third waves construction is declared as essential business activity, and so was our business running quite well. You can see the buildup of our momentum in the second half of the year, and the fourth quarter even saw net sales growth again. And more than that, with our very fast and disciplined action plan, health, cost, and cash, we were able to improve our bottom line significantly in the second half of the year. And even for the full year, we have increasing margins in all of our five regions. Together with the margin increase and our action plan, we were able to achieve a record free cash flow of more than 3.2 billion Swiss francs. This for me was very fulfilling as we had the last record just A year before, in 2019, then, for the first time, we achieved a free cash flow of $3 billion. And I think it's very now convincing that we were able to repeat such a performance. And that gives us also great confidence now to have reached a new level of financial performance at Lafarge Holcim. We have coming with this, of course, we strengthened our balance sheet. Furthermore, we have now a net debt leverage which improved to 1.4 times, which is also a record low and very happy here. That gives us a lot of room and space to do meaningful investments like we did with the acquisition of Firestone Building Products, which is really a milestone in transforming Lafarge Holcim into the leader. in innovation and sustainability. We made big progress also on sustainability. The latest one, we made the A-list at the CDP, at the very recognized organization of CDP. That is also what we want to see, and you will expect and see from us further acceleration in sustainability. Outlook looks good. We talk about this later. Before I pass to Geraldine, I want to share a few more details with you here regarding my remarks. You see the demand situation we described. When you look at the quarters, we had a big COVID-19 impact already in quarter two, and then we had a fast recovery. and in Q4 already back to growth, and especially second half of the year, very satisfying margins and over-proportional growth in operating profit and improvement of all the key financial figures. We were, at the beginning of the pandemic, we were worried about the emerging market a bit. A lot of people believe they will be hit harder. This didn't happen for Lafarge Holcim. We have very resilient business, and this is based on our strong branded product sales, our strong positions in retail. And distribution, you see the result here. Globally, in the second half, the cement bag business increased by more than 4% in volume, which is very significant. And you see here some selection of our brands, which we have here in the emerging markets. On the health cost and cash action plan, we have shared with you already as early as March what we want to do to safeguard the liquidity, to safeguard the cash flow, but also to achieve significant cost saving. And you see here our program. We fulfilled all the targets. We are ahead in fixed cost and third-party products and services cost savings. We are, interestingly, on the CapEx side. We are a bit short of the promise of 400 million, which has a positive explanation. We were well ahead after three quarters, and then the fourth quarter was so good in demand levels that we didn't want to stop our people in doing the right thing. investments to make sure 2021 will be a good year from the volumes. So we left that target. We interpreted that not so strict. And that's why we are not at 400 million CapEx reduction, but at 370 million, I think, for the right reasons. Then all the improvements in networking capital, but also all the other levers of free cash flow have improved. And we come to this record free cash flow of more than 3.2 billion Swiss francs. Let me say a word about Firestone. I'm very excited. This will have a great future at Lafarge Holcim to take this roofing platform now global and benefit from this growing and very sustainable solutions they are offering in the market. Today, I'd like to give you a bit of a progress report. We are almost close to closing the deal already. We just signed about seven weeks ago. Looks like we can already close end of March. And from April 1, this will be fully with us. The numbers look good. 2020 numbers are better than communicated before to you. And also the outlook for 2021 is very good today. also based now on the new President Biden program to build back better. That's all full territory of Firestone to make better insulated roofing and other sustainable solutions. So we're very excited here to start with Firestone on the financing side. We did a good job. We had $2 billion in cash we used or we're going to use to pay Bridgestone for the deal. And then we financed already the remaining $1.4 billion by two bonds. So that goes very well. And I would say we are ahead of plan and expectations. On the bold on acquisition side, we have further increased the number of deals. Even so, we were held back by the pandemic. We couldn't do as many deals as we wished. Nevertheless, we did eight. You see they are all in concrete and in aggregates. Very, I would say, satisfying that half the deals are aggregate deals. And you see they are across here from North America to Europe and to Australia. We did eight, I would say, very fast value accretive deals. And hopefully we can increase the number of deals here further in this new business here. With this, I talked about sustainability. That's really one of our main focus for the future. We make here big progress. I just entered as a founding member for the new MIT Climate and Sustainability Consortium. And also, for me, the most exciting is the global launch of our eco-products. which we launched globally. And I like to share with you that the demand and the interest in the products are way ahead of our expectations. And we are basically sold out at the moment. And we do everything now to make sure we are ramping up the capacities here to fulfill the customer demand for EcoPact and these largely CO2-reduced products. Good. Then we come to Geraldine, who gives us now more details on the performance.

Thank you, Jan, and good morning, ladies and gentlemen. Before going into our full year 2020 result, we feel it is important to give you another view of the Q4 performance, which better reflects the prevailing positive business trends. So as you can see here, the cement volumes were almost stable compared to Q4 last year. On a like-for-like basis, we were back to growth on net sales at plus 1.5%. This was driven by a price increase of plus 2.6%. This price increase more than covered the cost, allowing for an outstanding and over-proportionate improvement in our profitability. Indeed, the recurring EBIT exceeded 14% on a like-for-like basis, and the EBIT margin of the group improved by 170 basis points in Q4. Let's now turn on to our 2020 full-year results, which are a resilient set of results. Of course, our activity and profits have been impacted by the lockdowns of some construction sites in some of our markets. But as Yann explained, we have been constantly able to adapt our cost in spending as well as to manage effectively and actively your pricing to compensate for much of the volume loss. So finally, we report net sales decline at 5.6% on the like-for-like basis. This translates into a recurring EBITDA decline of 0.9% like-for-like. And we will dig into this later, but this is a result of our ability to reduce our operating costs by 7.2% on a like-for-like basis, more than the volume decline. Mechanically, the recurring EBIT is slightly more impacted at minus 1.9% like-for-like. We have been able to further reduce our financing expenses, the restructuring expenses as well, even in the context of a crisis, the tax expenses, and that allows us to publish an earning per share before impairment and divestment of 3.07%. Swiss francs. Pushed by our discipline and the cash protection measure, we have recorded our best free cash flow ever at above 3.2 billion Swiss francs. And this is a result of our intense focus on working capital as well as the close management of our capex. Let's now turn on to our volumes. And here the recovery in H2 is visible. So firstly in cement, overall the decline has amounted to minus 7% after a sharp decline in H1 due to the lockdowns of minus 13%. The situation improved in Q3 and the decline was limited to 1%. And then as we've seen, we were almost stable in Q4. So if we look at Europe first, Europe cement volumes declined by 4% and this is mainly due to the strict lockdowns we have in Western European countries, such as the UK, France, Italy, Spain, from March to May. The situation has fully recovered in H2. On North America, cement volumes declined by 5% as the business experienced a prolonged effect of the COVID-19 in the US and in Canada. If we turn to APAC, the cement volumes declined amounted to 10%. And this is due to the heavy and sustained lockdowns in India and in the Philippines. The situation fully recovered in H2. In China, the volumes were positive in 2020, thanks to the strong rebound when the operations resumed at the beginning of the year. In Latin America, the cement volumes decline amounted to 3% only after 2020. a sharp decline in H1 due to the COVID-19, where the cement volumes of Latam were down 14%. This is a strong performance, as in H2, Colombia, Argentina, Ecuador fully recovered. Also, Mexico recorded an excellent growth in 2020. In Middle East Africa, the cement volumes were down 6%, as many countries suffered from COVID, but actually Nigeria recorded... a positive volume growth and a strong growth for 2020, and countries such as Kenya and Iraq had a double-digit growth in Q4. Overall or aggregates volume for the group were down 5% due to the COVID-19 in the US and the lockdowns in the UK. Already mixed volumes were down 10% globally, also due to COVID-19 in some key markets such as the UK, such as India and such as France. If I now turn on to our net sales, our net sales stood at 23.1 billion Swiss francs, down 13.4%. On a like-for-like basis, the decline amounted to 5.6% under the volume effect I just commented, which was partly offset by a positive price increase. The scope effect results from the divestment of operation in Indonesia, Malaysia, and Singapore that we have divested in H1 2019, partly offset by the Bolton acquisition that we have closed during the last 12 months. The conversion currency effect is strong at minus 7.4%. It represents close to 2 billion Swiss francs, and this is stemming from all the currencies that have depreciated against the strong Swiss francs, primarily for us, the Indian rupee, the US dollar, and the Mexican peso. If I now move on to a recurring EBIT, a recurring EBIT was down 10.4% in total, out of which the like-for-like decline amounted to 1.9%. The scope effect is negligible, and here again, here, the currency conversion impact is negative at minus 8.6%. So the volume here, the volume impact represents minus 775 million Swiss francs. It has been more than offset by a positive price of a cost of plus 793 million Swiss francs, which is coming from a fixed cost saving of 385 million Swiss francs. Of also all the operational efficiencies that we have generated in all the variable unit cost, we have benefited from a favourable energy market, and we have increased our prices by plus 1.8% on average. The contribution for joint venture has declined by here 73 million Swiss francs, and this is primarily coming from our joint venture Washington, which suffered from the COVID-19 at the beginning of the year. Let's now move on to our margin per segment. So here you can see that our cement net sales declined by 4.7% on a like-for-like basis, and this was partly offset by a price increase of plus 2%. This business unit improved its margin by 2 percentage points, thanks to the good execution of the cost-saving programs. Our aggregates business lines net sales declined by 6.7%. That was offset by price increase of 0.8%. The ready mix business net sales were down 6.7% like for like, and that was also partly offset by price increases of plus 1.6%. For these two business segments, the cost structure is less flexible as they are more exposed to fixed cost. The solution and product suffered from a lower activity, notably in the UK, in Australia, and in Canada. This slide gives you an overview of the margins and of the performance of all the regions. And I will now comment into more detail. So let's start with North America. As said, North America suffered from COVID-19 and is presenting here a fairly resilient situation. set of results with net sales down 3.3%, but a very good execution of the health cost and cash plan, allowing for the recurring EBIT of the regions to go up 5.8% like for like. So the main contributors to this performance are Canada East and the U.S. That was mitigating the impact of Canada West, where there is still an economic slowdown in the prairies. Please note that this region has improved its EBIT margin by 160 basis points. Let's now move on to Latin America. Latin America had an outstanding quarter, an excellent year with net sales at plus 2.4% and a recurring EBIT up 13.4%. So even if in H1 the region was impacted by some lockdowns, the recovery was very strong in H2, notably in Colombia, Argentina and Ecuador. The Mexico country has performed very well with an excellent growth and benefited from iconic projects such as the Dos Pocas refinery in Tabasco and the Santa Lucia airport in Mexico. And all the demand in H2 were really driven and sustained by our branded products in all distribution channels, including our own descenser. And that leads to this excellent performance. So Latin American margins are up 3.8%. This is the highest in the group. I now move on to Europe. Europe has been impacted by strict lockdowns from March to May. And in this context, the region has demonstrated a good resilience in 2020, with net sales down 4.2% on a like-for-like basis and a recurring EBIT down 2.5% like-for-like. So again, here the region witnessed a good recovery in H2, with volumes stemming from residential and infrastructure sector. And the volumes really reached 2019's level in Q4. And again, in Europe, the cement prices remained strong throughout the year. If I now turn on to Middle East Africa, here the net sales were down 8.9%, like for like, and the recurring a bit down 4.7% on a like for like basis. Many markets of the region suffered from COVID-19 here. Nigeria recorded a strong volume growth throughout the year, And Iraq and Kenya, for instance, had a double-digit growth in Q4. The region delivered a higher EBIT margin, as you can see, and this is stemming from also here all the strong branded product sales, as well as successful turnaround actions. If I now turn on to APAC, globally in APAC, the net sales were down 9.1% and the recurring EBIT down 12%. India delivered a very solid performance in the context of the strict lockdown experienced in H1. The volumes came back at last year's level in H2. And the strong performance also here is supported by our branded products. And it helped to mitigate the softer environment in the Philippines and in Australia. As you know, China was the first to emerge out of the crisis. and recorded a strong volume growth in 2020. Let's now move on to a full P&L, and as usual, we present here the P&L before impairment and before the capital gain realized on the divestments. So here, on the net income group share, we have a decrease of 155 million Swiss francs, So let's start with the recurring EBIT. You can see the recurring EBIT is actually down by 426 million Swiss francs, and this is largely attributable to the currency conversion effect as presented. And then we have been able to mitigate this. We have lowered our restructuring expenses by 101 million Swiss francs. We have also lowered again our net financial expenses by 89 million Swiss francs. And we have further improved our tax rate by one point. So our effective tax rate is now 25% versus 26 last year. So all of this helped to mitigate the impact of the crisis and allow us to report an earning per share before impairment and divestment of 3.07 Swiss francs. Let's now turn on to our free cash flow. And here, despite the crisis, we have been able to generate our best free cash flow ever. It's a new record level above the 2019 level by 230 million Swiss francs. 2019, which was already at an exceptional level. So here, if we start with the recurring EBITDA, you can see that it has declined by 561 million Swiss francs. And this is almost entirely attributable to the currency conversion impact. But we have been able to fully mitigate that. How? Firstly, we have further improved our working capital beyond the excellent levels of last year at plus 146 million Swiss francs. This thanks to a constant monitoring of our inventory and also a very good monitoring and follow-up of our receivables This is key in the context of a global crisis. We have also been able to reduce our restructuring expenses and litigation expenses. Also, this in a context of crisis is quite remarkable. And in line with our commitment, we have reduced our capex by 370 million Swiss francs. Let's now turn on to our net debt. So to start with here, and despite the crisis, we have been able to constantly reduce reduce our net debt. So firstly, the free cash flow. It's what the business has generated. It's more than 3.2 billion Swiss francs, as already presented. It's after all capex and after all leases. So we have expense 124 million Swiss francs net of disposals for or bought on acquisitions, mainly. And then we have distributed in total 1.5 billion Swiss francs of dividend, out of which 1.24 are LH shareholders. And the minority shareholders of our control subsidiaries have received 280 million Swiss francs. 280 million Swiss francs. So that leads us to a net debt at the year end of 8.5 billion Swiss francs. We're very proud of that. to report this level of debt. Let's now go to our leverage. And here, as an introduction, I would like to remind you that our leverage here is computed with a net debt that includes the lease liability for 1.3 billion Swiss francs. So it's basically this net debt divided by the recurring EBITDA before lease. And this is valid for 2019 and for 2020. So as you can see here, we have further reduced the leverage by 0.1 times, which leaves us plenty of headroom to finance the Firestone acquisitions and to remain below 2 times. This is our return on invested capital, and we are very proud, despite the crisis, to have maintained our return on invested capital at the same level as in 2019. at 7.4%. So we have been able to fully offset the negative impact on the EBIT thanks to the work done on the operational efficiencies, also the good monitoring of the working cap and the capex, and the further improvement of the tax rate. So this, with now better market conditions, we are fully confident to be fully on track to reach the above 8% in 2022. This is without the impact of Firestone, for which we have given a specific guidance. Let me now move on to sustainability. Our sustainability KPIs are part of the metric that we follow as close and as regularly as the financial KPIs. So in 2020, our CO2 emission amounted to 555 kWh. of CO2, a ton of cement, and this is an improvement compared to last year. How have we obtained such improvement? Well, we have several levers. Firstly, we have further increased the use of alternative fuel. To give you an example, we have 20 plants today that are working with more than 70% of alternative fuel versus fossil fuels. Secondly, we have increased the use of mineral components to lower the portion of clinker in the cement. And finally, we have developed a full range of green cement product and green concrete, and Jan has given EcoPact and EcoLabel as an example. Beyond the CO2 emission, recycling, the waste recycling, and the water reduction, of course, are major sustainability metrics that we follow closely. And talking about people in 2020, we have provided COVID support to our communities, reaching more than 6 million beneficiaries. Well, now before handing back to Yann, I'm very happy to confirm that we will propose to the AGM a dividend of 2 Swiss francs per share. Despite the crisis, we stick to our commitment, announcing the strategy 2022. So it will be a cash dividend and will be fully paid out of the foreign contribution reserve, and therefore it is exempt of the Swiss withholding tax. Thank you.

Very good. Thank you, Géraldine, for the details on the performance. I now like to make a few comments. on the outlook and the guidance 2021. We enter the new business year with a great momentum. You have seen the good numbers we had for quarter four. Not only the growth comes back, the volumes are back, but also the over-proportional operating profit margins and the cash flow is fully there. So we expect a very solid quarter. 2021. We enter with good confidence when we look at the order books. And then in the second half of the year, we believe that a lot of the stimulus programs announced by the government will also hit our order books. Let's look a little bit in the details. We have one, I think, exciting chart with some selected stimulus and infrastructure projects that Everyone talks about President Biden's program in the U.S. now, Build Back Better. I think these are fantastic programs, not only for infrastructure and roads, but also especially to make housing and buildings more sustainable. This is the home turf of our new company, Firestone Building Products, and we are very excited here to see more growth coming in the U.S., You look at the other stimulus programs and you realize they basically are in all our key markets. We have the selection here from North America to Latin America, from Europe to India to Australia. So it looks like we're going to be a big part of this Build Back Better program and of the stimulus to have the economies in the countries back running well. And we are looking very much forward to that. to be part of that. So with this, we have, I would say, a very good outlook for the year. We think the volume is going to be somewhere close to 2019 volumes tonnage-wise. And then on the other hand, we're going to have very good margins. When I look at the cost position, we have now improved so significantly in 2020. We enter with a very healthy price over cost ratio into the new year. So we are quite excited here to execute a very successful year 2021. On top of that, we want to have more growth now. I want to start now with Firestone, April 1st, and really unleash here the full potential globally of this business. In addition, we have a full pipeline of Boldon acquisitions, and I wish that we do more deals than last year. Hopefully, we will have a run rate of one acquisition deal per month. This is our target here. So in summary, then, on the return side, we stick with our guidance for strategy 2022. And at this point, we guide that the EBIT should be at least 7% or above. Cash conversion will stay above 40%. We will be disciplined on the finance side. Our debt leverage will stay below two times and also the capex lower. will be less than 1.4 billion Swiss francs. I think with this, I'm happy now to open the floor for your questions and comments. Let us stay a little bit disciplined with maximum two questions per person so that we can allow everyone to have a question or a comment.

We will now begin the question and answer session. Webcast viewers may submit their questions or comments by video conference by clicking on the video Q&A button. An operator will quickly check your line and give you access to the video Q&A session. You will be live for everybody. You will know that you're live once the operator will announce your name as next questioner. Anyone who wishes to ask a question or make a comment by phone may press star and one on the touchtone 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 use only handsets while asking a question. We kindly also ask you to limit your question to two and register again for any follow-ups. Please note that a recording of this webcast will be published on the Farge Hall Sims website. Anyone who has a question or a comment may click on the video Q&A button or press star and one at this time. The first question comes from the video conference from Ms. Elodie Rahl. Please go ahead, madam.

Oh, hi. Can you hear me, see me well?

Perfect, Elodie. Thank you for joining us.

Hi, Jan. Hi, thanks for having me and us. Thanks. Hi, Jardine. Hi, Jan. So, I'll limit to my two questions. First of all, on the guidance for 7% like-for-like growth by 2022, should we expect to be seeing a stronger like-for-like growth in 2021 to coach up from the weaker growth that we've seen in 2020 and maybe a lower growth in 2022. How do you think about that? Should we have a linear coach up or a stronger one in 2021, given where we come from? And second one on cost inflation. I mean, it's a big topic of the sector at the moment, obviously. You said you're coming into the year with a healthy price-cost, but do you think cost inflation could continue to rise, and do you see the price increases that you've actually passed through to be strong enough, or do you need to make more going forward? If you could give us a bit more color on the price and the cost side. Thanks very much.

Yes, Elodie, thank you. And I think there is obviously, we say, minimum of 7% EBIT growth. So that means it can be anywhere above 7%. We want to be a bit conservative in the guidance at this point of the year, as the pandemic is still in full swing in many markets, not really affecting our business anymore, like we saw in the spring last year. But nevertheless, I think it's a time we should continue have some caution on the outlook, and this is what we did. Now strongly related now here with your cost question, we made a big improvement in cost in 2020, and the smallest part was the tailwind from lower energy costs. The biggest part was really to reduce a fixed cost, but also to reduce a lot of variable costs when it comes to logistics, to spare parts, to third-party services. And these big and important cost buckets, they are not at the end of the reduction. We have targeted them with our health cost and cash program, and this program will still run into this year. So our managers globally, they clearly have to execute further cost saving in all those areas. You were on mute, Elodie. Can you repeat? Can you hear me now? No, yes, I hear you now.

Okay, and just on the pricing side, I understand costs will be kept lower, but given the rise in energy that we're seeing at the moment, do you feel like you need to pass more on this?

We obviously had a very solid pricing situation in 2020, and this is also the target for 2021. I think also the move now for more sustainable products is helping us to have a solid pricing. So no worries on the price, Elodie. Okay.

The next question comes from a conference call from Mr. Lars Hjelberg with Credit Suisse. Please go ahead.

Thank you. Just if you can comment a bit about your expectations for infrastructure benefit in the second half, where you can kind of see concrete projects that you should benefit from. And also if you can expand a bit about the Firestone building products, the 110 million in synergies, you're closing that quite early now, or earlier than you had expected. And also, will you stand on both in that particular business as you want to accelerate growth?

No, thank you, Lars. And no, I think the infrastructure I shared with you, the overview of this selected business, programs by basically all the key markets we are active in. Even now, we have a lot of infrastructure projects which have started, which we are supplying. I think you can see that from our volumes in Q4, how solid the demand is. And I think a lot of governments will now start rather sooner than later their promised stimulus programs. I think it's a special situation. as governments have to avoid to be in recession or in unemployment. So I think these announced programs have to be effective rather faster and sooner. On the Firestone side, yes, we are ahead a bit on the timing. We are ahead on the margin and the results, as I shared with you. So we have a very promising future. year ahead of us the first year with firestone building products we believe they will benefit a lot from the biden program because build back battery is based on more sustainability for all type of buildings which means fully insulated roofs and firestone has here the right solutions to to do that um On the Synergy side, you ask, we will fire some building products. For me, it has to be a growth story. So we want to double the business in the next few years. That's my number one priority. We have many opportunities to grow in the U.S. market, their core market. And in addition, we can bring the products to Latin America. where we have our Desensa retail network, and then we want to accelerate the expansion in Europe, where we have a small footprint of Firestone with two factories, but here we can help to do a lot. So on the Synergy side, I want to make sure that we use the growth opportunities. The first priority, the saving will come automatically. We have a lot of savings on the logistic side, where obviously Lafarge Holcim has much bigger volumes and better pricing. And also on location side, shared services, we have quite some cost synergies, but clearly this acquisition has to be establishing a global growth platform.

The next question comes from the conference call and is from Mr. Arnaud Lehmann with Bank of America. Please go ahead.

Thank you very much, and good morning, everybody. My first question is on your reporting. Just make sure I understand the change. So you are merging the European region with Middle East Africa into one new region, but at the same time, are you going to separate the products business from the region? Is it going to be reported as a new, let's say, global business like some of your peers are doing in the sector? That's my first question. And my second question is, could you give us an update on potential asset disposals? You've been relatively quiet in the last month on this side. I guess COVID-19 didn't help. Should we expect more activity on asset disposals in 2021? Thank you.

Arnaud, thank you for the questions. And you can expect from us full transparency regarding the regions. I think we make now a great step. to have our dedicated global business unit solutions and products, where Firestone is, of course, the most prominent member of. And we want to really also here report to you in the future and make sure our people have the right guidance and incentives here to grow the business. So that was very important to us, that we have a dedicated profit and loss leader. And with Jamie Gentoso, we have an excellent leader. talent from the group. We're stepping up now to the executive committee. For the regions, please expect from us we'll give you a precise overview in the years to come and we will not report too big of a region. We will give a granular view here for your analysis. Your question regarding divestment, of course we discussed before we have some We have been, I think, rather modest. We had a great divestment in Southeast Asia with the three markets of Indonesia, Singapore, Malaysia, with a very good enterprise value, something like 2.8 billion Swiss franc. I think that was very successful and helped us in deleveraging and reducing the net debt and making the space for meaningful acquisitions like Firestone. And now we have to carefully see what this year brings. We are ready to discuss maybe two, three positions, and we will report back to you as soon as we can.

The next question comes from the video conference from Mr. Tobias Werner. Please go ahead, sir.

Yes, good afternoon. Two questions for myself. Your countries in Ecuador and India were quite hard hit last year and it seems to me when I look at exit rates of these markets, that there is some kind of improvement going on. Ecuador seems to be sort of flat in January and when you look to India, it seems to be running now at 6%, 7%. Are these numbers you can confirm, i.e., that more harder countries are now starting to come out of this as well? That's question number one. And question number two, the question of pricing was already asked, To be a bit more specific, some of your more important countries, Mexico, India, again, seem to have seen some very strong price increases towards the end of the year and going into the new year in February. I think as much as 6% in Mexico now and 4% or 5% in India. Is that what you're seeing as well?

Yes, Tobias, thank you for the question. If I just... Start with the pricing, and that's well observed. We had a very, I would say, solid pricing last year, and markets in India but also other parts of the world have seen healthy pricing, especially also in Europe. We had good pricing in the main markets, maybe some of the best pricing we have seen in many years, and this is all in the right direction. On the volume side, also your observation is correct. I would say in Latin America, Ecuador was one of the harder hit or disrupted markets in the region. Nevertheless, they are fully back on last year volumes now. The same from India. India went into full lockdown, if you remember, March, April, everything was closed. And we had in India alone, we had a I think a minus in sales of 80% for April because there was no construction activity. At least all the bigger sites were closed. Nevertheless, India fully came back on stream already in June, and volumes in India at the moment are even above 2019 levels.

Thank you very much.

To give you maybe also a bit more flavor, I like to mention the pricing very strong. The biggest only pricing issue we had was in China, where there was a bit of uncontrolled, I would say, overflow of cement supply after the lockdown, so April, May. So here, we have to slowly come back to a good pricing. And besides China, we really were able to have a very satisfying pricing results. On the volume side, I would say the most disrupted country we have is the Philippines, where we have ongoing lockdowns. Nevertheless, the volumes are coming close to 2019 levels now.

The next question comes from the conference call from Mr. Martin Hisler with ZKB. Please go ahead.

Yes, good morning. Can you hear me?

Yes, Martin, please. Now we can hear you, Martin. Please go ahead.

Okay. My first The question is about the whole ECOPAC development. Can you say something? At what stage in time, maybe three to five years, do you see significant contribution from that in terms of percentage of sales? That's the first question. And the second one is just about Switzerland. I saw in the annual report that actually sales was quite significantly down in Switzerland by more than 10%. I was just wondering what was the reason for that.

All right, Martin. Geraldine, did you get the second question? Sales were down in Switzerland?

Yeah.

Okay, you take the second one. I take the first one, EcoPact, the success of EcoPact. So this is the largely CO2 reduced concrete we have been introducing from Europe to North America. Even in India, we introduced it last month. It's a fantastic product using recycled waste material. In most markets, we can use demolition waste from construction sites. So all the concrete, all the bricks from the old buildings, and reuse them in our product. That's a fantastic product. Our people in the market are surprised by the high demand and interest. At the moment, we produce at maximum capacity the EcoPak products, and we do now everything to increase capacity to follow up with these projects. a higher-than-expected demand in the markets. I think, Martin, we will update you later this year with some solid numbers, how fast the penetration goes. The margins, I can already tell you, they are very good. And I can give you concrete examples for Switzerland, where, like our Sustaino cement, which is a cement using 20%, recycled demolition waste inside, that product will probably be one-third of our entire cement sales in three years' time in Switzerland. So these green products, they have quite a speed and quite a traction, and we are very happy about that, and we do everything to make them fully available in the markets.

Yes, and on your question, Martin, about Switzerland, so What we report includes also the sales of trading, the trading activities domesticated in Switzerland. But the business or building business in Switzerland has performed very well in 2020. The net sales were up like for like in the recurring EBIT even much on a much higher. So no worries about the business in Switzerland.

The next question comes from the conference call and is from Mr. Nabil Ahmed with Barclays. Please go ahead.

Good morning. Thanks for taking my question. I have two, actually. First one on this new EMEA region. Could you elaborate maybe a bit on what's the rationale behind the integration of regions Europe and EMEA? Is it just related to the new management leadership, or do you expect synergies as well? And also, how we should interpret it with regards to your intentions to potentially sell parts of Africa. Second question I had was on a mix between back cement and bulk cement. I mean, currently back cement has been more resilient than it was last year, actually even growing in H2O. As you contemplate various new crop plans and stimulus packages and therefore potentially a stronger recovery in bulk, should we expect a negative mixed impact on margins? It would actually be helpful if you could quantify the margin difference between bulk and bulk for the group or maybe for the key countries such as India, Mexico, Nigeria. Thank you.

Super. And, Geraldine, you want to take the second question? Mm-hmm. And then I take the first one. We made a very important modification of our organization. We had the five region model for the full profit and loss responsibility. And now we decided that with Firestone, but also our future plans, our very ambitious targets for solutions and product segment, that we will have a dedicated global leader here. And that's the big change and we are very excited to have that and we want to make solutions and products a very significant part of the future of Lafarge Holcim. I think at the same time we saw the opportunity to merge the leadership of Middle East, Africa and Europe This is supported by the fact that they both basically work out of the same location and we can here have a bit of a more efficient structure. You were sneaking in a second question here regarding divestments in Africa, which we cannot answer as of today. We have to see if... On the divestment side, there will be one or two things we can do this year, but we can only report back to you whenever it's possible. I think the important step is really what I always promised, that this company is lean and the company is fully managed by performance. And this means the profit and loss leadership is always with one person. And that's how we have it for myself. down to the regions, down to the countries. That's why it was so important also for solutions and products to introduce a dedicated profit and loss leader.

And Nabil, with regard to your questions about bags and bulk, actually in the emerging markets where we have bags, you mentioned Nigeria, we have 95% of our sales of cement iron bags in Nigeria. So you cannot, therefore, compare on a market-per-market basis in such markets what the difference between the margin of bags and bulk is. There's no bulk in these markets. But we can say that, in general, we have a very strong margin on our bags business.

The next question comes from the video conference and is from Mr. Yacine Douari. Please go ahead.

Yes, good morning. So I've got actually three questions on behalf of Arnaud Pinatel, who couldn't connect to the video conference. So you've got the first question is, how do we intend to change the culture of the group? Semen producers are not educated into solutions and marketing. And what is explaining the gap of margins between Firestone at 15% and Carlyle at 20%? Can you close it and how fast? And the last one, if I may, is how do you intend to develop the new division and what cash allocation will the group devote to organic capex and bolt-on deals per annum at a time when your legacy cement business will also need to reinvest into sustainability?

Yeah, Yacine, thank you for the question. And I think very exciting. We have the opportunity and a bit of a cultural change or a bit of specialist. I think this is always part of a successful business in building materials. We already have it today. You know, we have super leaders on cement who are not natural, the best leaders for concrete or for aggregates. So we have already in our organization today dedicated profit and loss leaders for the other three business segments. Now Firestone, it's a lot more about innovation, about branded products, specification selling and all of that. So I'm very excited to have that culture shift. I think this will also be important for the group. When you look into the future of EcoPak concrete, I think that's a product which will also be more specified in the future and will be more made the solutions of choice by the customer. So we are going to move the whole company towards this type of marketing and innovation. I'm very excited to do that. You talked about the margin. I think when we introduced the margin for 2020 to you for Firestone, they were displayed at 13% operating profit margin, which is already a solid one in building materials. Now we closed the year better. I think they are at 13.5% or something currently. And you are mentioning that the benchmark is already set, right, which I think is a fantastic situation. And I see no reason that we cannot improve the margins much closer to – I forgot the company name you mentioned, but I think we can move much closer to there and we will do everything – to demonstrate that for the years to come. For capital allocation, also clear that this business has a quite low capital intensity. We shared with you that the current depreciation level is only 2% of sales. We're going to move that up to maybe 3%, but 3% capex in relation to sales already means one new factory per year. So you can see even with an intense run rate of one new factory per year, we have quite an insignificant capex, and the group is very happy to, of course, allocate here the right capital. We are also excited to extend the business by more acquisitions. This will happen as the opportunity arises. We have to see what opportunity comes up. We are ready. Geraldine is running a very tight balance sheet, and I think we have quite space to maneuver here when we have the right opportunity.

Next. The next question comes from the line of Gregor Kuglic from UBS, from the Conference School. Thank you very much. Please go ahead, sir.

Thank you. I apologize. I desperately tried to get on the video, but I failed. So I'm afraid it's only the call. A few questions, please. So just coming back on cost, the cost inflation, can you give us a sense of what kind of energy cost inflation is? you think you'll be incurring in 2021, kind of considering pricing and your hedge position and maybe contrast that to the deflation that you observed last year? That would be interesting. And then maybe a detail on Firestone questions. Actually, give us the numbers. So I think you said you're ahead. I'm looking at the presentation. You did 238, I think you said, in January in terms of EBIT and 270 million of EBITDA. If you could just give us the actual outcome, I think you implied it was stronger than you had guided at the time. That would be helpful. Thank you.

Good. Gregor, thank you very much. Let me start with the cost, but I hand over to Geraldine. She has usually a very conservative outlook on cost inflation. My personal view is we are halfway with our health cost and cash program, so I expect significant savings there. on all cost buckets for the year, except for energy, where there will be some inflation, as we all know. And in total, I expect lower costs compared to 2020. But I think Geraldine will give us maybe her view on the details.

Yeah. So, Gregor, if I may jump in. So, you're right, we have benefited from a favorable trend. energy market you call deflation in 2020 and we've seen this reversing in Q4 already 2020 so for the coming year we see effectively some inflation we estimate that in power around 3% and in the fuel part maybe something around for the full fuel usage around 10% but this is only prediction we'll see what happens What is sure is we have programs to optimize all the inflationary effects. Firstly, we are very agile on our fuel mix. Secondly, as I said, we are very strong on our sustainability execution, and we really intend to increase the alternative fuel usage. And of course, as Jan said, we will increase our selling prices.

Gregor, your second question was a bit around the targets for firestone building products. As of today, most important to share with you that it looks good. We are ahead of plan and track. And I think you have to give us the next couple of months to report back to you with more firm numbers. And you can expect from us that we will report very transparently on the situation and on closing the gap to the benchmark.

The next question comes again from the conference call and if Mr. Remer Rosenau from the Helvetische Bank. Please go ahead, sir.

Yes, thank you. After the Firestone deal, you broadly doubled the sales there in solution and products. But still, even after the deal, the total share of sales of solution products will only be around 14% of group sales. Now, when you say that you want to make solutions and products an important peer of the company, which would also change the investment case, basically, could we imagine something like, at some stage in the future, a share of total sales of something like 40% of the whole group? Is that kind of the vision? Or is that a bit overambitious?

Yes, Remo, obviously I'm happy to kickstart the segment. And to kickstart it, we needed always a global platform who has the full range of technologies, systems, but also experts to really grow it organically and then through M&A. And happy to have this done. Now we fire some building products, and this is just the start. So I don't have the number for you today. It will also depend on the opportunities we have for further acquisitions. But the target is clear. We want to create a new leg, a new future for Lafarge Holcim with solutions and products. As of today, I cannot give you the precise share of sales or profitability, but it will be significant.

And adjacent to that, I mean, obviously this needs additional bigger deals comparable to Firestone to get there. And would you still keep the net debt EBITDA level below two times at all times? Or would you also be prepared to go above that level within the process temporarily?

I think it's very important for a company to keep to a certain discipline. I don't like we go above two times and make a big promise to come back down. I think below two times, that's what we want to deliver in any single year. And I'm asking my team to generate enough free cash flow to make space for these acquisitions. So we have already delivered the last two years. of more than 3 billion each year. And my plan is to continue with that type of cash flow in order to finance all investments which we would like to make.

The next question comes from the video conference from Mr. Paul Roger. Please go ahead, sir.

Hi, everyone. Can you see me okay?

Paul, we can hear you. We cannot see you.

Oh, that's disappointing. I've tried everything to make it work, but I'll stick to audio then. Okay, so two questions. When we think about the growth drivers this year, Do you still expect the sort of landed segments to be the main driver, or could it be a bit more balanced with even aggregates and red mix maybe doing better, particularly in the second half, I guess, when you get some of the stimulus kicking in? That's the first question.

Yes, Paul, I think we want to grow in all four segments. We will be very – we keep the team very ambitious. We will not keep them accountable against 2020 numbers as we – all know we probably don't get a disruption like we had in spring 2020. Instead, we want to keep the teams accountable compared to 2019 numbers. At the moment, the outlook is very good. We have in every of our four segments, we have growth plans going forward, you know, from cement, from full recovery to new eco products, for concrete aggregates, the same numbers. good new products plus bolt-on acquisitions, and then, of course, solutions and products. I would hope we already can demonstrate very healthy organic growth plus maybe already some bolt-ons. So at the moment, I'm optimistic for all segments as well as we are optimistic for the regions. You have seen the momentum we had in the last quarter in all regions, and also here we ask all all companies, all countries to go here on a growth path.

That's very clear. And maybe on my second one, maybe more for Geraldine. Thinking about the cash flow and the cash conversion, obviously a great job in 2020 and 2019. You're sticking with the 40% conversion target. Is that just because you want to be conservative and it's at least 40%? Or is there a situation where some of the cash might flow back from working capital or cost cutting or capex or anything like that?

Yeah, great question, Paul. I think we are fully committed with our strategy 2020 to target, which is to remain at all time above 40% cash conversion. Then you're right in a way about the working cap. So we have, you know, done extraordinary good progress in 2019, and we've continued in 2020 by reducing the numbers of days, as you've seen, in inventory increases. We went down 36 to 32 days. Can we go lower? I don't think so. But we will continue to optimize. But I think we've reached a kind of a good level. Receivables as well. We've gained four days. So that has obviously a limit at one stage. Now, of course, with the activity going up, you will see an increase in value. But we want to keep the discipline in terms of... days of sales, and we are fully committed to deliver the 40% cash conversion of the strategy 2022.

And to be precise, it's above 40%, and I think we did a fantastic two last years. And not to mention, besides networking capital, we reduced the restructuring costs, so all these one-off costs who in the past appeared almost every year. So we reduced that, and I'm very confident and maybe a bit more bullish than the CFO or the cash conversion, but at least we say it's above 40% for now.

The next question comes from the conference call, and it's from Mr. Harry Goat with Berenberg. Please go ahead.

Yeah, good morning. Thanks very much for taking my question. A couple of questions on Berenberg. the carbon topic, please. Just with regard to the sort of carbon, I guess, more carbon-friendly products you alluded to earlier, Sustaino, Ecopac. When you think about the pricing for those products, and I guess what you'll be aiming for is a pricing premium, is your sense at the moment customers are willing to accept higher prices because of what the product is, or do you think in terms of You'll need building regulations to really support the pricing trajectory on those sort of products. And then secondly, just any updated thoughts on the carbon border tax and where we're at with that, please. Thank you.

Hey, Sven. Yeah, thank you. I think in principle I was always a big believer that anything for sustainability will improve the pricing. Sometimes I get the question what investments you need to make to – to match new demands or levels for CO2 or something. And my opinion is I'm always happy to do that because if I keep to be the front runner in doing that, I will have a great return on those investments. And you can see that also last year, we probably had the most healthy pricing in Europe in a long time, which – I believe is strongly driven by sustainability, by CO2 certificates and so on. So we are not afraid of that. We actually look forward to have more sustainability demands we can work with and we can be the leader and we will, I think, have a good return on that. The same is true for the products you ask about. So the EcoPak, the EcoLine we are introducing has a premium on price. and very healthy margins. And we are, again, we are surprised about the high level of demand, and we're very happy here to fully accelerate here the capacity buildup in order to benefit from this change in demand pattern from our consumers.

The border tax, maybe one or two words on that. We are expecting... the computation to come in June sometime this year, the way they're going to compute it, and also when it will be implemented.

The next question comes again from the conference call and from the line of Mr. Sven Ederfeld with Oddo. Please go ahead.

Yes, hello, good morning, and thank you for taking my question.

Sven, can you restart? We didn't hear you in the beginning. Your volume was too low.

Now it's good. Yes, sorry. Sorry, thank you for taking my question, and good morning. So I have two questions. The first one is on CO2. To what extent do you believe mineral component could be a permanent solution to lower substantially the clean-care content and reduce CO2 beyond the 474 kg per ton of cement that you're targeting? And how advanced is Lafarge-Holcim in finding natural product in sufficient quantity to substitute clean-care or slag? On this topic, shouldn't the regulation evolve to a new standard to make it possible? That's the first question. Sorry, it's a bit long. On the second one, very quickly, a follow-up on Arnaud's question on disposal. I noticed a change in CEO role in the Philippines. So does that mean this asset is no longer for sale?

Okay, Geraldine, you take the second question. I think on the first one we are very confident. We have all the projects and tools in place to further reduce CO2, and the clinker factor is one, but we all have to work that the final product, concrete, becomes more sustainable because that's actually the real product being used. So we work on the recycling. We are already, as of today, one of the biggest, recycler in the world, and this we go forward. We don't have to forget that to do that, we need higher prices for the product, which now is coming from consumer willing to pay premium for those type of products, but also has to come from regulation. At the moment in Europe, which is probably the hardest regime in CO2, the certificate prices are something above 30 euros per ton. That's actually not very high. Maybe in my vision, I would appreciate if that price is higher. That would enable us to accelerate the next steps.

And Sven, your question on the Philippines. Can you please repeat? Is it about the change of the seal? Did I get it right?

Yes, you get it right. I noticed a change in CEO role and I was wondering whether this asset was still for sale.

No, I mean, look, we had the sale which didn't work out last year in the Philippines. And the Philippines is a great market. We have a great business. We are the leading cement brand of choice there. So there's no reason for us to make any hectic steps. So we decided to send one of our best guys to the Philippines in order to fully take advantage of the good market conditions. So there's no plan to sell the Philippines now. Our plan is now to make it shine.

The next question comes from the conference call and from Mr. Jean-Christophe Lefebvre-Moulin with CIC France. Please go ahead, sir.

Good morning. Good morning, Jardine. Good morning. I have two questions for you. First, coming back to the U.S., could we have a flavor on the price hikes in 2021 in dollar per metric ton first? Secondly, in your wording, you are very excited by the prospect and also the 2020 results. I would like to raise the three difficult countries. Could we have a flavor on South Africa, Egypt, and Algeria? What was the situation in 2020? What is the outlook in 2021? Are these countries loss-making? Can you return rapidly to positive numbers? Vielen Dank.

Many thanks. Jean-Christophe, thank you very much. I'm happy to answer the country questions. So first of all, North America, I'm excited. I'm excited because also 2020 was a great year. We have even increased the profit overall for the full year. And this even in the face of pandemic, even in the face of West Canada, where there was a slowdown in the oil and gas industry. So North America for us is the single best market, if you want to say that. Now we have reinforced ourselves globally. With Firestone, we are already now an $8 billion business in North America. And to be honest, we had a good situation last year. And I think with the announcements by the U.S. government, this is going to be an even better year in 2021. You asked about Algeria and South Africa. These are markets we all know they are a bit troubled for different reasons. We have in South Africa was one of the hardest hit countries by the pandemic, so they are in a very difficult situation. Our company there is doing not so bad. They are a bit in a turnaround. I don't think we are losing money at the moment in South Africa, and I think we have a solid plan for this year. For Algeria, we never lost money in changes in production capacity there. Nevertheless, it's still one of the countries we make a margin there, which is above group average in 2020 and also in the coming year.

The next question comes from the conference call and is from Mr. Arnaud Pinatel with On-Field Investment Research. Please go ahead.

Yes, good morning. I think I've seen several of my questions. I have just the last one, perhaps a naive question. Looking at the Firestone acquisition, people are questioning a little bit the limited synergies between cement and insulation and waterproofing. However, when we look at your systems, what Firestone is selling, It's roofing, waterproofing, and it's attached to concrete modules. So could we imagine in the future, especially if Lafarge was integrating more modular construction, that Lafarge could provide some solution, marine insulation and concrete modules?

Yes, I know. This is something we have planned for, like, second step in the integration. You have noticed that when you see our presentation of Firestone with these fantastic buildings from the Apple headquarter to the Nike buildings and so on, they are all building concrete and the roof, the Firestone products are directly attached to the concrete via mechanical fastening or via an adhesive. So there's already quite a connection. And I think we're going to use it in the future to not only specify the roof, which is one of the key parts of any building, but also to specify our eco-packed concrete, where I think these big owners have a huge interest to improve the sustainability footprint of the building. And we would like to add the right concrete solution to the roofing solution. So this is a bit championship specification process we like to make in a second step. In the first step, don't underestimate the synergies we are having. Lafarge Holcim can provide quite a lot of backbone for the expansion of Firestone. So from locations, from procurement, from sales offices, to even retail networks in Latin America, to resources in Europe to make the right steps to build new factories to make acquisitions. So even when you look at the business itself, how we want to expand now, I think... Lafarge Holcim will have a very solid backbone to enable Firestone to accelerate here the expansion.

Very clear.

Thank you very much. The last question for today comes from the line of Samuel Weber with Samuel Weber for Mergen Verwaltung. Please go ahead.

Yes, hello. Can you hear me?

Yes, Samuel, please go ahead.

We hear you well. Okay. Yes, so first of all, congratulations. You are over-delivering on all aspects of your transformation, including sustainability and cash flows especially. So you are talking to a very happy shareholder. And I wanted to ask you, there is a big discrepancy between your income statement and your cash flow statement. And the main reason is that depreciation is almost three times as big as the maintenance cap that you show on the last pages of your annual report. So my question is, do we have to expect that you continue to depreciate on a much higher rate than your maintenance capex until this is kind of on the same level? Or should we expect capex to increase, which I doubt from your former communication, or should your assets have been written down more to bring depreciation on a similar level to a maintenance capex. How should we look at this discrepancy, which is quite peculiar because it shows a different picture, whether you look at the income statement or the cash flow statement?

Great. Let me start to explain a bit the mechanism for the capex, and then maybe Geraldine has to step in and take reference to the different – reporting pages. So in principle, what we see here is that we will spend less for CapEx in the future for development CapEx, but also for maintenance CapEx. And this is not necessary because we want to do less. This is because we are reducing the unit cost per CapEx by factor two. So we discovered in the last two or three years that we are still paying too high prices for CapEx units for development, but also for maintenance. And we have to take advantage of these significant lower CapEx costs, which basically are introduced by Chinese players, by Chinese suppliers. And here we are just on track to make it happen. So you will expect from us low CapEx, what you will see at the moment, and the depreciation will then follow step by step. Did I explain that well, Geraldine?

Very well. Very, very well. No, the trend, I think we're guided, you know, on a like-for-like growth or for depreciation and amortization to 1% last year. This year we're at 1.2. But it's true that the depreciation will remain at a higher level for some time compared to the capex level that now we monitor and we challenge the unit cost of capex as well, as Jan explained. So that's the main difference you're having.

Okay, thank you very much. That's very clear. I think that's one reason for a little confusion of market participants and The second question is I read yesterday in Bill Gates' book that he expects cement demand, volume demand, in 2050 to be at the same level as this year or as 2019. So do you agree with that, the forecast?

Look, I think, first of all, Bill Gates makes very smart comments, of course. He's a very good observer and analyst of technology trends and so on. So I think two factors. First of all, I think also he said that for the next 30 years, the demand from the population growth and all that growth is in the cities. So this big trend for urbanization leads to a situation where we will build one entire New York City every single month of the year for the next 30 years. And I think this is a fact. so that we're going to have more building, more infrastructure is true. The second part, that we need more sustainability to do that, is also true. And then thirdly, we want to be part of the solution, and we want to provide the right products with the right sustainability to make all of that happen.

And Samuel, if I may complement, you might have also a difference with the lease. So you have the depreciation of the lease that is chosen in DNA and you don't have it in capex. So that also explains part of the difference.

We conclude today's Q&A session with a question coming from the line of Bernd Pomren with Fontobo. Please go ahead.

Yes, thank you for taking my two questions. Firstly, How much of your capex is or will be directed to upgrade the sustainability profile of your plants, so carbon capture programs, et cetera? Is it possible to give a ballpark number here? And the second question, there have been several announcements of cement producers to take out some capacity in Europe. What impact do you expect the carbon dioxide regime in Europe to have on the cement capacity development in Europe in the coming years? Just a ballpark figure as well. Thank you.

Yes, hey, Bernd. Hello, and thank you for the questions. So I think what we will see on sustainability, what we see at the moment, we believe with our CAPEX framework of 1.4 billion, that will include the sustainability projects we are foreseeing. That, for example, includes the 50 projects we have in Europe alone to reduce CO2. And we believe we will go on with that pace. We should not forget that any capex we do for sustainability leads normally to quite high returns in principle based on higher pricing. So I'm very confident here that any investment we make will have a strong payback and that for the foreseeable future, we see the 1.4 billion Swiss francs as a good framework to guide us. On your capacity question in Europe, well, if you look at the volumes we have in Europe now in the second half of the year, 2020, and also when I look a little bit at the order books going forward, I think at the moment there is not so much space for capacity reduction. There are, I think, the usual suspected plans where maybe they are not efficient anymore or the sustainability investment is too high. So I think this is driving a few announcements at the moment, but we have not seen a lot. And looking at the volumes at the moment, I don't think there will be a lot of plant closures this year or next year in Europe. Excellent. Hey, thank you very much. That was a It was a great session. Again, thank you for joining online today. I think that worked quite well. I hope, of course, to see you all personally again in the very near future. And until then, I wish you to stay healthy and stay safe. And I wish you a good business here and look very much forward to see you very soon. Thank you for joining.