Compagnie de Saint-Gobain S.A. (SGO) Earnings Call Transcript & Summary

Good morning, everyone. It's my pleasure today to present our H1 2024 results together with Sreedhar, our Group CFO. 2 main takeaways on our first half. Once again, we delivered very strong results in H1 with a record operating margin. And second important point, we successfully achieved significant milestones in our strategic repositioning. Before I start, let me share with you a few recent examples of our light and sustainable solutions. Let's start, of course, with residential new build with the landmark project of the Olympics Athlete Village where we have delivered 14 Saint-Gobain innovative, sustainable solutions. [indiscernible] as you know, we are an official sponsor, so I cannot miss the great opportunity. We are so proud of having delivered on this landmark job site. Our solutions also bring many benefits in nonresidential applications such as enhanced guest comfort in hotels or also acoustic and light solutions for offices. On renovation, some of you have visited our world-class testing facilities in partnership with the University of Salford in Manchester, where we develop and we measure the efficiency of our full-scale renovation solutions. And finally, our solutions are also used on infrastructure markets, sometimes for very critical applications like the French Guiana Space Center, where we have put our Construction Chemical expertise at work. Moving to our financials now. In H1, we delivered strong, very strong results despite a challenging market environment. Our sales for H1 were at EUR 23.5 billion. New record operating margin at 11.7%, beating our previous record of 11.3% in H1 2023, a strong recurring net income at EUR 1.7 billion and also record levels of free cash flow at EUR 2.5 billion, up 12% versus the first half of last year with a 75% cash conversion ratio. Sreedhar will give you all the details in a few minutes. Our Grow & Impact has proven to be very effective. Once again, during the first half on a strong set of financials, margin, cash and all this is based on 2 things, very important. One, our solutions approach through which we are delivering increased share of wallet within our customers, improved product mix, and also increased pricing power. Second, also, we have achieved very significant milestones in terms of how we have strategically repositioned the group towards high-growth markets and Construction Chemicals. These milestones, you know them, 3 important moves that we have announced and sometimes closed in the first half. On the 2 strategic axes where we have allocated very rigorously our capital over the last years, first, on our geographic axis, growth angle, Canada, Australia. And the second one is on Construction Chemicals, which has been the third milestone achieved, announced in the first half, with the acquisition of FOSROC. Altogether, those 3 moves will add EUR 2 billion of sales and EUR 450 million of EBITDA after EUR 100 million of synergies in year 3. So I'm very confident that our strategy will continue to drive consistent and strong success going forward. Now, Sreedhar, the floor is yours to take us through all the financial metrics.

Thank you, Benoit. Good morning, everyone. Let me give you some details of our first half 2024 results. Starting with sales, volumes continue to be impacted by the weakness in the new construction in Europe, but were supported by growth in the Americas and in Asia-Pacific. However, sequentially, we saw an improvement in volumes and stability in prices. The structural effect turned positive in Q2 as we continue our strategic repositioning with important acquisitions in the high-growth markets of North America, Asia, and emerging markets, and also in Construction Chemicals. Now let us look at the operating margins. If you look at -- we have actually reached a new record high of 11.7% and operating income remained close to its record high despite the low volumes. We achieved a positive price-cost spread in all segments, thanks to our robust pricing discipline and also the tailwind from certain raw materials and energy costs. As I'm -- and I remain very confident that we will deliver a positive price-cost spread for the full year, although the spread will be much smaller in H2 than H1 due to the comparison basis. This demonstrates the resilience of the transformed Saint-Gobain. Now let us look at the other lines of P&L below operating profit. So you see here, we once again achieved a new record EBITDA margin and an EBITDA in euro terms close to its all-time high. Non-operating costs came to its normal level for a first half year in line with our guidance of around EUR 250 million for the full year that we gave in Capital Market Day. Capital gains and losses are much lower than last year, which was impacted, if you remember, negatively by the divestments of the U.K. distribution business in the last year first quarter. Recurring earnings per share is also at a very good level. Now let's look at the cash situation. We have, again, a record level of cash flow and a very good cash flow -- free cash flow conversion ratio. The strong cash culture that we have installed throughout the organization has started clearly showing a good payoff. And we see that the free cash flow is now structurally higher year after year in all the businesses. The strong free cash flow generation has enabled us to maintain a strong balance sheet, while at the same time, we are investing for growth and also delivering attractive shareholder returns. The net debt-to-EBITDA ratio was 1.4x at the end of June. And if we also include the acquisition that we are going to pay in CSR in the second half, which is already closed now, and the FOSROC which will come typically technically next year. But if I take even FOSROC into account, we are talking about the range, which we articulated in Capital Market, 1.5x to 2x, we would be at the low range of this range that we set for ourselves. Now let us look at the results by segments. So if you just look at Europe overall, the new construction remained down, while the renovation market accounting for 60% of our sales, continues to be resilient. Importantly, we saw a sequential improvement of volumes between Q1 and Q2, bringing us close to a low point. In Spain and Italy, in Europe -- Eastern European countries and in Middle East and Africa, we are seeing volume growth. We have troughed in the U.K., and we are close to low point in Nordic countries and Germany. In France, the new construction market remains significantly down, but we continue to outperform, thanks to our strong exposure to the renovation market with our comprehensive solutions. We expect it to take a few quarters before we reach a low point in France. Despite the challenging environment, the operating margin remains stable at a record level of 8.7%. Turning to the Americas. The growth was supported by North America. North America saw a good growth in both volumes and prices in H1. Despite the tough comparison basis as expected in Q2, particularly in roofing business, this good growth performance was driven by a dynamic renovation market in roofing while the new construction remains at a good level. We saw further market share gains to our comprehensive differentiated offer in the U.S. market. And in Canada, we are benefiting from the integration of our recent acquisitions, Kaycan, Building Products of Canada and Bailey. In Latin America, the markets remain down, and we began to stabilize in Q2 with volumes almost flat in the second quarter. The region saw again a new record operating margin and operating profit of EUR 945 million. And when you look at the margin, we're talking about 19%. Now looking at Asia-Pacific. Organic growth in Asia-Pacific was driven by India, where volume growth continued, and we once again outperformed the market. We continue to play a very leading role in shaping the market through our differentiated and value-added low-carbon offer. In China, in a difficult new construction market, we continue to capture market share against a very high comparison basis in Q2 of last year. Southeast Asia remained at a good level, driven by Malaysia, Indonesia, and Singapore. Again, the region achieved a new record operating margin. Now let us look at the global customer markets. If you see, High Performance Solutions like-for-like sales down by 3.5%, but sequentially, there's a good improvement in Q2. Businesses serving the global construction customers saw a continued weakness in reinforcement glass grade solutions, but a progression in Q2 as well as growth in Construction Chemicals, which were up 3.1% for like-for-like. Mobility sales stabilized against a high comparison basis. We continue to invest in innovation and optimize our footprint with the closure of the plant in Spain. Businesses serving industry declined due to the weak industrial markets, especially those linked in, particularly, to the investment cycles of our customers. And the operating margin remained stable at 12.3%, even though the volume is down. So to sum up, you've seen that we have delivered an excellent performance, even though the market environment remains very difficult. So I remain very confident that we are going to deliver once again in 2024, an excellent year for Saint-Gobain. And now I pass on the floor to Benoit. Thank you.

Thank you, Sreedhar. So let me update you on our strategy now. As the worldwide leader in light and sustainable construction, Saint-Gobain is stronger and more resilient than ever. Why is that? Because we have repositioned the group on strong markets. And second, also because we have put in place all the levers to outperform and deliver very well on what we can control. We have a disciplined capital allocation with clear areas for growth investment to meet one goal, strengthen the group profitable growth profile. We make growth investments along 2 clear axis, geographic and Construction Chemicals. In recent years, we have rotated around 40% of our sales, thanks to a very decisive M&A approach. We have also allocated 70% of our growth CapEx towards North America, Asia, emerging markets. Altogether, thanks to this decisive capital allocation, 2/3 of our operating income now comes from North America, Asia, and emerging markets, and we enjoy a well-balanced geographic footprint. I will now zoom on each of these markets. In North America, Asia, and emerging markets, there are structural needs supporting the demand for light and sustainable construction. In the U.S. and Canada, there is a significant structural housing shortage plus an aging housing stock that does require renovation, notably in the must-have roofing replacement, renovation, which is, as you know, important to us. In Asia, we have a continued urbanization, expecting around EUR 1.2 billion additional urban residents by 2050, so a big need for construction, productivity, light construction, and performance. This means that we see a huge growth potential driven by higher penetration of light and sustainable solutions. I take 2 examples. For instance, we anticipate a 5x to 10x increase in plasterboard consumption in emerging markets compared to developed markets where we are today. The same on ready-mix mortars with 10x in years to come in terms of increased penetration in emerging markets in order to deliver productivity on the job sites. We have made several acquisitions in the past 3 years to expand in those high-growth geographies. And notably, we have built strong leadership positions in Canada, where we have tripled our size in the last 3 years. And more recently, we have finalized on July 9, the acquisition of CSR where we have now established a leadership position in the very attractive Australian market. I would like to bring to you Paul Dalton, who is our CEO of CSR and hear from Paul in a short video.

Hello. I'm Paul Dalton, and I'm honored to have been appointed the CEO of CSR. I'm a civil engineer. I have a rich experience of over 30 years in the construction industry in Australia, and have led organizational transformation focused on supply chain, commercial excellence, and innovation. I've been part of the CSR team for 4 years, leading the Interior Systems division, which includes our plasterboard business and acoustic insulation. The construction market in Australia has good mid to long-term growth prospects, supported by a growing population and immigration and an increasing need for light and sustainable construction solutions. Indeed, our new construction code and regulatory frameworks are accelerating progress to more sustainable and energy-efficient construction. There is also a significant structural housing shortage in Australia and government support for programs currently targeting to build 1.2 million new homes over the next 5 years. As you know, CSR is a leader in the Australian construction market with iconic brands, and we're excited about the many opportunities that will open up in the Australian market now that we are part of Saint-Gobain, a global leader in light and sustainable construction. The well-planned integration has kicked off, and I'm very confident to accelerate CSR's growth and deliver the synergies and the strong value creation.

Paul -- thank you, Paul. We have a great team in Australia. I was there again 3 weeks ago for the closing, and they are all super excited and motivated to join Saint-Gobain and to benefit for Australia from all what we can bring to them in terms of innovation, sustainability, operational excellence, you name it. Along with the geographic axis, our second growth axis is Construction Chemicals, where we are building a very strong global leadership platform. As you know, we are delivering well on Chryso and GCP acquisitions. And we are, of course, very excited about the recently announced acquisition of FOSROC, which will put us all together at EUR 6.2 billion annual sales in Construction Chemicals and enhance our presence in the fast-growing markets of India and the Middle East as well as Asia-Pacific. We are expecting the close to happen in the first half of 2025. And here again, I can tell you that all the internal communication we have done with the FOSROC and the Saint-Gobain teams has been extremely positive. Moving to Europe. We are also well positioned with our comprehensive solutions for renovation. The European renovation market continues to demonstrate resilience. First, all the EU member states are actively implementing regulations for energy renovation, be it for public buildings or private buildings in terms of energy efficiency. On top of this, and I think we shared that at the beginning of the year already, we can already see a green value, a green value being reflected in the property valuation of buildings like in France with almost a 50%, 5-0, gap between the best and the worst in terms of energy efficiency within buildings. Besides that, we observe positive macroeconomic trends in Europe, some recovery in household confidence, lower mortgage rates and improving affordability for home transactions as well as encouraging lending data at the EU level. So you see that we have positioned the group on strong markets. Let's move now to all the levers we have put in place to outperform. At Saint-Gobain, we have a powerful operating model based on the country-led organization. Our local teams are close to their customers, they understand their markets. They are eager to deploy adapted solutions and their decision-making process is agile and execution is fast. Second, our CEOs are incentivized on their margin management, and they are empowered to take proactive decisions on pricing and cost actions in order to deliver for their country the best possible results. Our country CEOs also leveraged the full breadth of Saint-Gobain offer to design and deliver comprehensive and complete solutions that bring value to our customers. Let's see directly from Mike Chaldecott, our CEO in the U.K. on how Saint-Gobain has become a one-stop shop in the U.K. for solutions of all construction types. Let's hear from Mike.

The U.K. is a strong, profitable country and Saint-Gobain's operations within our country have transformed over the last 4 years post several divestments. Now we're in growth mode. We have strong brands a broad range of complementary solutions, an expertise in specification and system selling, underpinned by deep customer relationships and unique capabilities in building testing. The U.K. market has strong tailwinds to support our growth. New regulations from 2025 pushed for higher standards on new buildings and the renovation of the U.K.'s aging housing stock means 27 million homes need to be retrofitted by 2050. That's 90% of the existing housing stock. We have transformed our business and are now a leading one-stop shop for solutions for all construction types like our complete through-the-wall solutions to meet new residential standards in timber frame, comprising of 8 different Saint-Gobain solutions or our low and medium-rise steel-framed solutions, helping customers build faster with less embodied carbon and lightweight foundations. Our approach is customer-centric, and we have well-established relationships with our customers, with distributors, with contractors and with house builders. Saint-Gobain is the leader in light building materials in the U.K. with strong double-digit margin with iconic brands, full solutions for all customer segments and all parts of the building through the walls, through the floor, and through the roof. Our close customer relationships help us deliver strong specifications and solutions that add value for our customers and Saint-Gobain and drive our purpose of making the world a better home.

Thank you, Mike. I think a lot of you could interact with Mike during our Investor Day on July 2, which was a great day in terms of showing in real life on the ground of Saint-Gobain solutions. We also bring specific solutions on energy renovation for public buildings, such as schools and hospitals. Here, this is an example very specific for a hospital in Paris, where we combine insulated exterior facade solutions, our COOL-LITE XTREME solar control on double glazing and also external thermal insulation on the facade. With that, we can decrease, and we measure it, the energy consumption by more than 50% and also greatly improve the thermal comfort in summer by 40%. This ability to outperform is also driven by our commitment to innovation, which I would like to illustrate with 2 examples. Glasroc X and Gypsum is a great example, launched successfully now in 81 countries where we have tripled ourselves since 2019. Another example is Lanae, our soft eco-designed glass wool. These are great examples, among many others, of innovation and also to show how our group innovation and marketing and development teams are rolling out new products across the group, working with country CEOs according, of course, to the local needs of any specific country. As part of our innovation, all our initiatives also in terms of leadership on sustainability and low-carbon offers are an excellent way to differentiate ourselves from competition and bring additional benefits to our customers. We have the widest range of low-carbon solutions in the world across all the product lines of Saint-Gobain. And you can see several examples on this slide in terms of plasterboard, glass, siding, et cetera. To conclude, the group is strongly positioned, and we have all the levers to continue to outperform, a value-accretive capital allocation towards high-growth markets, innovative and value-added solutions for our customers and also leadership on sustainable construction. Let me give you now an outlook for the rest of the year to come. We expect some of our markets to remain difficult overall for 2024. But in the second half, we should benefit from an easier comparison basis and also the sequential improvement in certain countries. So to conclude, we expect a double-digit operating margin for the second half and for the full year 2024, which will be the fourth consecutive year, and I'm very confident about the strategic positioning of the group for years to come. We are now at your disposal together with Sreedhar to take all your questions.

[Operator Instructions] The first question comes from Elodie Rall of JPMorgan.

I have 2. The first is on top line. I was wondering if you could give us an update on your forecast. You had previously guided for volumes to be down low single-digits and pricing down 1%-ish. So I was wondering if you had an update on that, what kind of initiatives in terms of pricing you've taken since the start of the summer maybe? And what kind of current trends you're seeing on volumes? And my second question is on margins. So you said margins will be double digit in H2. But could there be -- what would be the reason why they would be below last year in H2, so below the 10.6%? You said you expect a lower price-cost in H2 versus H1, but still positive, if I understand correctly, and you expect some volume improvement sequentially. So why wouldn't H2 margin be above the 10.6% level of H2 last year?

Thank you, Elodie. You asked all the questions in one. So I will do my best to answer one by one. On -- let's start with volumes. We have reached the floor, as we said, at the group level. We have seen the sequential improvement for the group and also in Europe between Q1 and Q2. In Europe, volumes were down 8.2% in Q1. They are down 3.7% in Q2. So we remain confident in our expectation of low single-digit volume decrease for the group at full year level. We are confident on H2. As I said, the worst is behind us. So in volume percentage terms, it should be better than H1 with a further improvement in terms of certain countries, and of course, a slightly easier comparison basis. So sequentially, we will continue to improve in volumes towards the second half. Second, on pricing -- so we will continue on pricing. We remain confident to deliver a price-cost trade in the full year and also in the second half. You have to compare always because there is seasonality. In the last years, we have a smaller margin in the second half than in the first half. That has been the case for the last 3 years. So you have to compare H1 to H1 and H2 to H2 because of seasonality. So on the pricing, and then I will comment on the margin. We expect the price effect to remain negative, but slightly less than in H1. So still slightly negative in the second half, but slightly less than in H1, which was around minus 1%. Now all this will translate in the margin. We are not going to be more specific about that. As you know, we always try to do our best and to deliver the best possible margin. You need indeed to compare H2 versus H2 like we have improved H1 versus H1. We are confident to deliver a strong success for Saint-Gobain in 2024. I gave you some color on prices and volumes for the second half. And all together, we are confident about the margin for Saint-Gobain.

The next question from the conference call is Cedar Ekblom of Morgan Stanley.

You guys have done a good job on cutting costs in the downturn and keeping a lid on CapEx. I'd like to understand as we start to exit a negative volume environment and hopefully, we get a bit of volume growth going forward, how do we need to think about how costs and CapEx evolve? Are there costs that have been taken out that actually need to come back into the business? Basically, have fixed costs been very variablized. And same on CapEx, if we're going to be getting into a growth environment, do we need to be thinking about a step up in CapEx spend? And similarly, on working capital, that's been ranged in very nicely. Does that need to start to be invested in as we hopefully grow, basically, just to try and understand how much of the cost base actually has been deeply cut, which needs to come back?

Sreedhar, can you take that?

Yes. So thank you for your question, Cedar. In terms of cost, you have seen, we have taken a lot of proactive steps. Country by country, all the CEOs are really quite quick in adapting the cost structure based on what the market situation is. There are cost structures, which are structural, there are cost structure, which are discretionary. I would say that you should see some positive effect of leverage as and when the volume comes back, but it's not mechanical, but you should see some positive impact. And there is a super discipline and rigor in managing the productivity in every single industrial site. And you know that Saint-Gobain is very successful in driving the world-class manufacturing program, this also helps us to quickly offset all the inflation we see from time to time. And particularly, when you see the manpower cost, we have been quite successful in offsetting these kind of increases. CapEx is -- we are clearly allocating CapEx in a much more disciplined manner. You have seen that we have made a significant progress on maintenance CapEx. We have actually reduced close to 20%, if you look at the past averages. The growth CapEx is very much focused on where we see opportunities to grow, create value. That has been the sole objective. So the allocation of CapEx will continue to happen. Again, this will be dependent on the market opportunities, the growth opportunities, where we think Saint-Gobain can go and get more market share. Working capital, you are right. We have been super disciplined. You've seen the focus on cash in the last 5 years. I mean, you're talking of more than half of the working capital has been reduced. And this is, for me, a large part is structural. So you can be rest assured, the discipline, the rigor on cash. We will continue to remain super-focused on cash. And yes, in terms of euro terms, the working capital will go up as and when the volume comes back. But in terms of number of days, I think we will remain super vigilant and manage it well as we did all these years.

Thank you. Next question. Maybe -- sorry, one question in the room. Do you need the mic? Some have been courageous enough to travel in Paris during the Olympic day. So thank you for coming.

So I have 2 questions, if I may. The first one is about your -- the GCP and Chryso margin. Could you give us more details on the maybe improvement of GCP margin? And the second question is about France. It's one of your worst geographies in H1. What about the MaPrimeRenov 2025 version? It seems to be more attractive than the 2024 version. So maybe if you have more details on this.

Thank you. Thank you for those 2 questions. So we told you that last year, we improved by 400 basis points. The margin of the combined entity, GCP plus Chryso. So we continue to make progress. We delivered very well on the synergies we outlined at the time of Chryso plus GCP. So we continue to make good progress. We have seen that we delivered 3% organic growth in this segment in the second quarter. So we have a good -- we continue to have a good winning momentum on GCP and Chryso. On France, well, in France, if I take a bit of a macro view the last 2 weeks have been a bit of a limbo on the political side. So I'm not an expert, and I will not take any risk on that. So it has created a bit of a wait-and-see attitude, to be frank, in France. So we think it will take a few more quarters for trends to reach the trough. Nonetheless, all the energy efficiency renovation trends are there. And indeed, the MaPrimeRenov has been simplified on May 15, if I'm correct, to allow not only the global renovation, but also come back to the single easy-to-do gesture. If I take just the months of May and June, the public body are now collecting that 10,000 global renovation in May, 10,000 again in June. So those trends are there to continue. And if I'm correct, a decree has been published mid-July in France, to lower the threshold in terms of income for all the households to benefit from MaPrimeRenov going for month. So I would say all those measures are there to stay. They have been made a bit easier on single plus global renovation plus lowering the threshold so that more households could benefit from it. So I think it's something that will continue to be positive on energy efficiency without targeting, and this is why we wanted to highlight public buildings. They are programs to renovate public buildings in France. So we are still in this low new consumption environment, but resilience in renovation. And as you know, we are very strong on renovation in France, where we outperformed the market. So I'm confident that, that trend going forward, even though the short term is challenging.

We are talking of 70% of our sales in France comes from renovation market.

Is there another question in the room? If not, I go back to the call. So let's go back to the questions on the phone.

So the next question is from Brijesh Siya of HSBC.

I have 2 questions. The first one is on the mobility segment. That has made an improvement in Q2 on a sequential base, sorry, the decline is a lot less compared...

Brijesh?

Sorry, can you hear me?

Yes. Now better. Can you please start, please?

Sorry. Yes. So I'll start again. So the first one is on the mobility segment's improvement in Q2, we saw, given the headline news about electric vehicles as well as the auto production, what we are -- I mean, seeing that there could be a slowdown coming into second half. How do you see that mobility segment growth evolving in the coming quarters? And the second one is on your margin comment. You helpfully set out how you think about second half. But if we are going to see another volume decline in second half, will that margin still be remain in double-digit terms? Sorry, Sreedhar, that's a question for you.

Sreedhar will take the second. So mobility, I think you should always decouple a bit what could be the short-term news on the overall mobility market around the world and what we deliver because as you know, it's depending on the models that you have taken sometimes 1, 2, 3 years ago and what you can deliver on the ground. So we expect our performance on mobility to be around stable in the second half. Why? Because it's not only in Europe, it's also in North America. It's also in Asia, it's also in India. So altogether, we expect to be in a flattish scenario in the second half for mobility, benefiting from the innovation drive and also the models we have taken on all kind of segments in the past years. Maybe on the margin and also maybe comment on the price cost spread in the second half, Sreedhar.

Yes. So the price cost spread, as I said, for the full year, we are going to have positive. And also for the second half, we're going to be positive. So we are very confident of delivering a price cost spread, I think. Thanks to the discipline on the pricing discipline. I think it's important to just keep in mind that we have -- when you look at the price cost spread for the H2, it will be much less than what we have seen in H1. It's primarily due to the comparison basis. If you recall, last year, the large part of the inflation was in H1. So in H2 onwards, we started seeing the reduction in energy and raw material costs. It's just pure technical comparison basis as far as the discipline and our ability to continue to deliver price cost remains very high.

Thank you, Sreedhar. Next question, I think, is from Yassine, On Field.

Maybe a first question on the latest trends that you see in July. Do you see anything that is consistent with what you mentioned for H2 is like better volume than in H1? Then second question on pricing. I think your competitor [indiscernible] couple of weeks ago suggested there might be a risk of negative impact from sales prices in the second part of the year because they want to preserve market share. At the same time, we see some price increase announced by other insulation manufacturer in the U.S., in the U.K. I just would like to get your view on insulation. Do you see a risk on pricing? Or do you feel that the margin on business development should be good in the second part of the year?

You take the first, and I'll take the second.

Yes. So in terms of H2 volume, right?

Yes, I think we answered, but you repeat again.

On July, if you've seen anything -- if you see any trends in July, that would give you confidence on H2 outlook?

Nothing specific. I think it's in line with what you're seeing. And we continue to believe that we should have a -- H2 should be better than H1 for sure. But again, it's all sequential improvement we are talking.

And on pricing, I think we should take a broader view. As I said, we expect prices to remain slightly down, a bit less negative than in H1. I'm not going to comment specifically on one product line versus the rest. We adjust based on the solution, based on what we bring to our customers. I can tell you that there are a lot of pricing actions on the positive side function if I take the U.S. If I take roofing. We are pushing prices up in the summer, and it will stick. We had positive pricing. If I take gypsum, U.S., if I take insulation, so see on there. It depends on the market dynamics, the product benefits and merit that you can bring to the market. So I have nothing negative to report. We are very disciplined on the pricing. And we are very strong on our pricing power, thanks to the benefits we bring with our solutions. And thanks to the proactive management that our countries use have on the ground. Next is from Arnaud Lehmann from BofA.

2 questions, please. My first is on the volumes. I think you mentioned in the introduction that Latin America volumes were stable in Q2. However, the Americas region, I think, was down 3% or 4% in volume in the second quarter. So I'm assuming this is coming from U.S. volumes. Could you please give us a bit of color on that? Is it a choice for making in terms of favoring pricing over volume? Or is it underlying market getting a bit softer? And the other question is on European volumes. I think you were down 5% or 6% in the first half. Do you think you outperformed the market? Did you take market share? Or do you think you perform more or less in line with market trends? And the last one is probably for Sreedhar. After all the acquisitions that have been announced like closed or CSR, Bailey, FOSROC, et cetera. Do you have an order of magnitude of the purchase price accounting effect in the P&L in terms of run rate from next year?