Geberit AG (GEBN) Earnings Call Transcript & Summary

Good morning. I am the entity operator for this conference. Welcome to the Geberit conference call on the first quarter results 2020. [Operator Instructions] The conference is being recorded. [Operator Instructions] This call must not be recorded for publication or broadcast. At this time, I would like to turn the conference over to Mr. Christian Buhl, CEO, accompanied by Mr. Roland Iff, CFO; and Mr. Roman Sidler, Head of Corporate Communications and Investor Relations. Please go ahead, sirs.

Thank you for the introduction. Good morning, ladies and gentlemen, and welcome to our conference call on our Q1 results. Geberit delivered in a challenging environment, very good results in the first quarter. Let me start with a few key statements. Net sales grew in local currency by 1.5% despite the negative impact from the COVID-19 pandemic since March. The profitability further increased and all operating results on EBITDA, EBIT, net income and EPS level grew in local currencies disproportionately to net sales. However, the strong Swiss franc led to a negative inflation effect and the decrease of our reported figures on all levels of our P&L. Let me now start with a brief summary of our sales development in Q1, which we already communicated on April 6. Net sales in Swiss francs decreased by 3.9% to CHF 798 million due to a substantial negative currency effect of minus 5.4%. In local currencies, group net sales increased by 1.5%. The COVID-19 crisis had a negative impact on sales in 2 dimensions: first, a temporary production interruption in our plants in China and for the shower toilet model, Mera; and second, a severe sales decline since the second half of March in a selected number of countries where the COVID-19 imposed restrictions led to a de facto shutdown of construction sites. I will now comment on the operating and financial results in the first quarter. EBITDA slightly decreased by 0.7% to CHF 260 million due to the negative currency development. In local currencies, EBITDA increased, and the EBITDA margin reached 32.6%, an increase of 100 basis points. This margin increase was driven by positive onetime effects on raw material costs of almost 1 percentage point in the first quarter, which we will not see during the rest of the year. Excluding these onetime effects, the operating margin would have been only slightly above previous year's level. Positive strides for the margin were lower raw material prices of minus 2.4%, increased sales prices, various efficiency projects and a high cost discipline. These positive effects were almost compensated by substantial tariff-related increases in personnel expenses and dedicated investments in strategic initiatives for digitalization and the brand harmonization. The negative currency development had only a minor impact on the EBITDA margin due to our continued efforts to maintain a natural currency hedge. EBIT decreased in Swiss francs by minus 1.6% to CHF 224 million, and the EBIT margin reached 28%, 60 basis points above Q1 of 2019. This slightly lower margin improvement on EBIT versus EBITDA level was driven by higher depreciation costs due to investments last year. Net income decreased by 4.4% disproportionately to CHF 184 million due to negative currency effects and a slightly higher tax rate. Earnings per share decreased by 4.3% to CHF 5.10, also driven by the negative currency inflation effects. In local currencies, EPS grew disproportionately to net sales. Let me now comment on the current status of the COVID-19 impact on Geberit and our business. I will start with the demand side. Demand in almost all our countries is negatively affected by COVID-19 imposed restrictions on our end markets. In a selected number of countries, demand declined severely due to a de facto shutdown of construction sites either by local authorities or due to voluntarily discontinued operations of other market participants. These countries which are affected most include, per end of April: Italy, France, U.K., Spain; and outside Europe: India and South Africa, 2 countries where activities came to a complete standstill. These shutdown countries represent around 20% of our sales. In Austria, construction sites started again to reopen since mid of April and demand started to recover. The remaining countries also recorded a substantial decline in demand, although less pronounced, driven by a lower activity level of the building construction industry imposed by COVID-19 restriction. The only country where demand is on normal level, again, is China. Overall, sales and order entry at group level are down by a lower double-digit percentage in April. However, there are some positive signals. First, customer showrooms for sanitary products are starting to reopen across various countries. Second, several countries with a more or less complete shutdown of construction sites announced to reopen construction activities during the coming 2 weeks. Let me continue with the status of our supply chain. Our supply chain is, despite the COVID-19 restrictions, intact. We have access to all important key materials and components. At the moment, 2 smaller sites are still closed due to governmental decree: our ceramics plant in Italy and the plant in India. However, these 2 plants are not material in terms of volume, and we have enough products on stock. Let me now comment on the financial situation of Geberit. Geberit is financially very strong and very healthy. We have a very strong balance sheet. Per end of April, we hold a cash position of CHF 350 million and an unused revolving credit facility of CHF 350 million. Furthermore, we have no covenants on outstanding debt. We completed our share buyback program as planned. In total, we bought back 1,026,000 shares since June 2017 for a total consideration of CHF 440 million. To maintain our strong balance sheet and to strengthen our midterm liquidity, we issued a standard Swiss franc bond in the amount of CHF 300 million with a maturity of 2.5 years and a coupon of 0.35%. Let me now comment on our priorities and how we want to navigate through this unprecedented economic crisis. First, we will not change our strategic agenda or operational priorities. We will continue to think long term, to invest and to execute our strategic and operational initiatives. Second, we do not see a need for restructuring. We are financially very strong and consciously decided to invest some of our margin into the business to emerge stronger in times of market disruptions and turbulence. Third, we adapt our daily activities and projects to the current market realities. This means that we stop or delayed certain activities or projects which are not feasible, necessary or meaningful in the current environment. However, we will not make any compromise on our fundamentals or take measures which would harm our position or future growth potential, for example, by reducing our R&D efforts and budget. We refrain in the current situation from providing an outlook for the building construction industry and raw material markets since the implications of the COVID-19 crisis are fast-moving and impossible to predict. Let me close my introduction with a short summary. Geberit achieved very good results in the first quarter, so far, only minor impacted by the COVID-19 crisis. Geberit is not immune against the economic crisis emerging from the COVID-19 pandemic. We will see a significant impact on our Q2 and 2020 results, although the severity is still unclear. However, Geberit is a highly efficient organization with highly automated plants and logistics produced in Europe for Europe, with a strong balance sheet and industry-leading margin, which will allow us not only to navigate through this period of disruptions and turbulences but also to emerge stronger from this unprecedented economic crisis. Thank you for your attention. We are now ready to answer your questions.

[Operator Instructions] And the first question we received is from Andre Kukhnin of Crédit Suisse.

I firstly wanted to follow up and just to calibrate a little bit your comment on the low double-digit run rate in April. Can we interpret that as 10% to 20% range? Or do we think about the mathematical low double digits that, I guess, spans from 10% to 99%?

It's a lower double-digit percentage. So mathematically, it's between 10% and 50%.

Okay. And if I could try just another way, some of your lateral peers talked about kind of somewhere around 25% and 35%. Would you be able to help us place in -- your run rate in that range?

No. I just repeat what I said just before, lower double-digit percentage between 10% and 50%.

All right. Yes, of course. And can I -- in Austria, because I think that's the only country so far, apart from China, where we have had the shutdown and restart, how far back to normal are we now?

As I said before, back to normal we are only in China. In all other countries, we are not back to normal. Almost all countries are affected by this crisis. In Austria, the dynamic is less severe. Since mid of April, this construction site started to reopen. But also in the second half of April, we have seen a substantial lower demand still in Austria, but not as severe as in the first half of April or in the second half of March.

And then in countries that did not shut down, Germany and Sweden -- again, just trying to really kind of calibrate the model. We've seen some read-acrosses of companies reporting stable developments; some talk about still down 10% to 20%. Where is the demand for sanitary products in those countries from your perspective? The run rate kind of end of March, April?

I do not want to quantify again also not for these countries, but it is a substantial decline also in these countries across the board, where construction sites are officially open but impacted by restrictions from COVID-19.

Right. And substantial starts at 10% for you? Is that...

I think -- the reason why we refrain from giving concrete figures, Mr. Kukhnin, is very simple. The world is very volatile. It's a high uncertainty. It's very fast-moving. And I think that we think it's not worth to discuss individual sales figures on a monthly level especially in our industry, where we have a very low visibility. Keep in mind our visibility is low only 2 weeks. And that is the reason why we want to refrain from discussing too many detailed figures, even not on the country level, for a single month.

I understand then, these answers not to be taken as indication in any way of the future. It's just to kind of understand the current situation and to have a base to model from. But I appreciate that you've kind of given as much disclosure as you decided to give. My just last final question was on raw materials, to pick up on your comments that Q1 benefited, but it's something you don't expect in the rest of the year. Do you expect raw materials in Q2 to be up sequentially versus Q1? And could you give a bit more detail on which pieces have gone up?

As I said, during my introduction, due to this highly volatile environment, we refrain from any outlook also not from raw material markets. But what we have seen in the first quarter, the raw material price has been down by 2.4% compared to the first quarter 2019, but no outlook for Q2. Too uncertain, too less -- too low visibility.

And the next question we received is from Fabian Haecki of UBS.

Yes. The first one is what do you see -- how do wholesalers react to the crisis in Europe? Have they started to reduce inventories? Or are they -- and do cash management? Or are they rather doing the opposite and actually restocking for recovery? Is there any substantial kind of impact you have seen so far?

What we have seen during March, more or less before the shutdown of the countries, we have seen that wholesalers started to build up their inventory. At the moment, it's quite difficult to have a detailed view how they behave, but I would assume that a further piling up of stocks would not be possible because they were riding at a high level already end of March. So if at all, rather reducing but not increasing stocks during April.

Okay. So they have increased inventories in March. But in the second half of March, you had a sharp drop in revenues, right?

Driven by demand, of course, yes.

And despite the buildup of inventories? Or did that happen rather in the first half of March?

Sorry, repeat again.

So you had a sharp decline in the second half of March despite the buildup of inventories from wholesalers, right, due to the demand that outweighs the buildup of inventories.

Yes. As a consequence of the first half of March, it was rather strong, which we interpret as a buildup of stock levels of wholesalers, a sharp decline in the second half of March.

Okay. And maybe a bit on short-time work. You said last time you introduced them in France and the U.K. Did you expand this into other countries like Germany or Switzerland?

No, we didn't. From a group perspective, we have not introduced short-time work on a material broader level, only in the 2 countries, U.K. and France. We reduced activity level by about 50% in selective functions only. So no changes and no material short-time work on group level.

And then a last one on the prices. I think if I'm not mistaken, you said you -- before you increased your selling price normally by 1% in April. But now with the low oil price, is there any extra discussion you see with wholesalers on that front?

We implemented our price increases as of April as planned.

And price discussions or raw material discussions? Raw materials did not have an impact on your price discussions afterwards?

I don't want to go into detail of our pricing discussion with our customers. So we implemented our price increases as planned as of April.

And the next question received is from Denise Molina of Morningstar.

Two questions, please. Really on the variable costs. So if you think about the cash payment to customers that you used to report, I think that was somewhere around 11% to 12% of gross sales. Just wondering if that's all variable now. It did seem to help you during the GFC in terms of protecting the margin. Then the other variable costs, I guess, you talked about before, is the raw material. So I'm assuming that those 2 buckets are variable. And then on the fixed side, if you look at the personnel, it looks like you've got about 6,000 or so in manufacturing. Just wondering why those haven't seen any -- why you haven't done anything in terms of reducing work hours or reducing your exposure to that, because I imagine a lot of those employees are idle at the moment.

I'm not 100% sure if I understood your questions correctly. I think you were talking about sales deductions and if they are fixed or variable. Sale deductions basically are variable costs. Raw material costs are predominantly variable costs and personnel costs are predominantly fixed costs.

Yes. And thanks for confirming the variable portion of those 2 buckets, the first 2 buckets. But in terms of the employees that you have in production, which I think you have around 60% of your employees for production, about 26% for sales and marketing. I mean I'm just wondering why you haven't reduced more of that spend in the short term. I'm assuming that you're not producing as much as you did before and you've got most of your employee base on the production side. Are you not reducing their work hours? Are you doing anything proactively to reduce your fixed cost structure on that?

I'll try to give you a more general, high-level answer. I think the question is how can we adapt our organization, especially our operations, to the fluctuation in terms of demand and the decline in demand? And I think so far, we have managed quite well to adapt our operations, production plans, logistics, to the fluctuations in demand by temporary workers which we have but also by flexibility, sometimes an increased flexibility, of our permanent staff.

Okay. Just one last follow-up on that. In terms of the number of employees that you have relative to the GFC, I mean you have almost doubled the number of employees. But would you say that you're not taking as much -- as many measures as you just did then because you think of this as being more short term? Or are you going to...

As I said during my introduction, we decided consciously not to restructure our organization. But of course, in terms of short-term measures, we have in place a hiring freeze in this time of high uncertainty but no restructuring plans.

And the next question we received is from Martin Hüsler of Zürcher Kantonalbank.

I have a couple of questions, first of all, maybe coming back to the personnel cost. In local currencies, it seems like they increased quite substantially by about 6% or so. I was just wondering what was the main reason for that. And if you could remind us how digitization cost and also rebranding cost impacted in the first quarter personnel and other operating costs.

I ask Roland Iff to answer the first part of your question.

Yes. Your observation is correct with regards to the increase in local currency. Remember, in Q1, we did not yet take any measures like hiring freeze, et cetera, related to the COVID-19 pandemic. So in that number, we had a buildup related to our initiatives. You mentioned digitization. That started as planned. And we have substantial tariff increases, again, 2.5% this year. And our employee participation programs, which usually are charged in -- which always are charged in Q1 relate always to the year before. That was a good year, so the cost was a little bit higher. So those were the main reasons why the -- in local currencies, personnel cost was up.

And the second part of your question regarding the impact of the specific initiatives, for example, digitalization, that has an impact on personnel costs and other operating expenses.

About 50-50?

Well, I don't want to go into the details.

Okay. Then maybe a second one, and that's, of course, a high-level question. But from your experience coming out of crisis in China, what's a good assumption for actually Europe coming out of crisis in the second half? I don't expect you to give any concrete number. But is it reasonable to expect that in the second half, we will have kind of a normal situation again if you compare it to China?

I'll rephrase your question. I don't know what happens in the second half of the year. But I think the fundamental part of your question is do we expect any catch-up effect if the shutdowns are over. And in China, we have now this first observation. The construction sites are running normal again. And we have seen that demand came back to normal, previous corona level, but we have not seen a significant catch-up. And that is what we also not expect in Europe. On the short term, significant catch-up effect is just driven by the limitation of installation capacity because people have to install our products, and you can't suddenly increase your capacity of installation or double your capacity of installation. Therefore, if there is a catch up effect, you would expect that it's just distributed over a longer period of time and not very -- in a short period of time.

Okay. Well understood. And then just the very last one, the one-off impact in the raw material costs, 100 basis points impact, what was this exactly?

That was mainly driven by inventory revaluations due to process optimization. So we had some projects. They optimized processes that had an impact on our inventory valuation, a positive one. And that then led to this onetime effect of almost 1 percentage point in the first quarter on raw material costs, which we will not see in the remaining year.

And the next question we received is from Arnaud Lehmann of Bank of America.

I guess I'm trying to think a bit more medium, long term. We would expect existing buildings, whether it's in the housing or the commercial sector, to be completed. But have you seen any signs that we could see new projects or future projects being delayed or canceled with potentially a bit of a medium-term effect into the second half or into 2021? That's my first question. And my second question is on your product mix. Considering the economic crisis, would you expect over time maybe a bit of an effect with more kind of low-end products being more popular relative to your more expensive range?

We have seen, to your first question, an impact on projects which are delayed currently due to the restrictions. I can't comment if these projects are more midterm oriented or short-term oriented. I do not know. But in general, we see a delay in projects currently. And I don't know what the impact will be next year. Second question regarding product mix. What we could expect in terms of product mix, the impact on our product mix, is that the showroom closure, which we have seen and -- since mid of March, will have a stronger impact on bathroom systems compared to piping and installation and flushing systems. If there is an impact in terms of pricing levels, I think that it's too early to have an opinion or we do not have any signal so far. The biggest product mix impact we expect is more on the product areas. What will be on the pricing levels, we will see.

And the next one is from Martin Flueckiger of Kepler Cheuvreux.

I've got 2, actually. First one, looking at your EBITDA margin bridge, I see that the impact from the so-called other cost block was quite low, only like 50 bps minus, much lower than what I had anticipated. Just wondering, firstly, what was the impact from cost containment measures on that cost block that you call other cost effects? And if you could provide a range for this cost block for 2020. I realize it's difficult, but I guess the range would probably be rather appropriate going forward. And then my second question is just some clarification question. Sorry, that run rate, that double-digit run rate you were talking about in April, did I understand correctly that this is for organic growth? And also the inventory question that you answered previously, the acoustics weren't very good for me. Just double checking. Did you say that you expect inventories to be worked down again going forward? That would be my second question. Then my third question, actually, just wondering which countries are you seeing starting to reopening showrooms and also maybe on your initial thoughts regarding end customer traffic going back into those showrooms. And in this respect, not only talking about showrooms but also construction sites. Could you just repeat very quickly which -- in which countries you as Geberit are seeing a reopening of construction sites?

The first question on the other cost impact from our -- in our EBITDA margin bridge, which we show in our presentation, there are -- the main impact there is that this onetime effect from raw material costs we talked about before, that has a positive impact on other costs. That is maybe the main reason why you have a more negative assumption. That is the main reason because this onetime effect does affect the other cost effect there. Second, regarding inventory. The only thing I said is that we believe that the inventory levels of wholesalers were at a higher end versus end of March, starting -- due to a pileup of inventories during the first half of March. We do not know what happened during April. But if at all, then inventory levels would have been lower during April and not higher because they were more or less at a max level, end of March. Third question, reopening of showrooms. Actually, these countries which are in general open, that you can read in the newspapers that are open, these countries which are reopening showrooms, for example, in Switzerland, showrooms started -- we start to reopen again. Also in Germany, showrooms started to reopen. Of course, in Italy, showrooms are still closed. Also in France, they are closed, but they are announced to reopen during the next 2 weeks. So it's pretty much the countries with the complete closed construction site, there are also more restriction on showrooms. The other open countries, how we would call them, there you see the most openings of the showrooms at the moment.

Okay. And just to clarify because you forgot the organic growth clarification question. That was on organic growth, that double-digit run rate, right, and not something else?

Organic, you mean in local currency and organic, yes. Not taking into account any currency effects.

And the next one is from Charlie Fehrenbach of AWP.

Is the assumption correct that the biggest influence on your EBITDA margin, the biggest positive influence, is coming from the raw material prices?

It has -- it's a combination of raw material prices and also sales price increases.

And we go on with Manish Beria of Societe Generale.

So I have 3 questions. The first 1 is on your fixed cost, variable cost. I know you have said it like you're not doing any big restructuring. But just wanted to see, I mean, if this fixed cost somehow can be converted into some sort of semi-variable cost. I mean obviously, like 2020, Q2 will be down. Maybe 2020, we might see volume declines. Obviously, you have to make some adjustments. So I just wanted to understand if that can be like semi-variable sort of mix. The second question is on the depreciation. I know you talked about higher depreciation because of increased investments. But I was wondering, I mean, because of the CHF appreciation and EUR depreciation, you should see some impact of depreciation going down because of the ForEx. So we have not seen in Q1, but maybe this is just a timing issue. When you remake your balance sheet, probably you see this impact of depreciation coming down later. This is the second question. And the third is, you have not mentioned anything about the new buyback program that you have initiated. So is this still on? Or that is off now?

I'll start with the second question. This increased depreciation level will remain -- will not go back because it's driven by higher investments last year. So that will be the level for the rest of the year, more or less. Your third question about the new share buyback program, we are now preparing the new share buyback program, depending on the further development that we started in Q2 or Q3. The first question, we didn't really understand. Can you try to phrase it again?

Yes. So basically, you said like you are not doing any big restructuring, I mean, despite knowing that 2020 will be a bad year in terms of volume decline and things like that. So there are some fixed cost in your business like personnel, and there might be some other costs as upticks. So I just wanted to understand, even if you're not doing big restructuring, but can it be turned into a semi-variable sort of things? I mean taking some measure where the fixed doesn't remain fully fixed? I mean it is like slightly semi-variable?

I'm sorry, I still didn't understand. I recommend that we take that off-line, these questions. Is that okay for you afterwards?

Okay. So no problem here.

And the next question is of Christian Arnold of MainFirst.

I also have a question on the EBITDA margin bridge you show here on the volume and product mix effect, which was basically flat plus 0.1%. So looking at the product line performance, I would have assumed that we would see a positive product mix effect as installation systems and piping systems were better than the bathroom systems product lines. Could you comment on that?

We have seen a positive impact from productivity effect. That is right.

So that means that you actually had a negative volume effect?

No. No, but keep in mind that the price effect in the first quarter was quite strong. We have still the price effect from last year's price increase, which was more towards 1.5%, not around 1%. If you take that into your consideration, that works out.

Okay. And then I try to get a quantitive answer, maybe I am not successful, but I try. So if -- let's assume that we have in the second quarter a decline in volume of 10% to 20%. This volume and product mix effect, assuming we have the same product mix, I mean what will we see here? Is it a minus 100 to minus 200 basis points? Is it more? Is it less?

Of course, I will not go into the details of numbers. But of course, if we have a negative volume, we will have also negative volume effect, of course. And since we are not restructuring our operations, that we keep more or less our setup, this effect is more or less symmetrical, meaning downwards the same as upwards.

And the next question is of Remo Rosenau of Helvetische Bank.

Yes. I've got a little bit similar question as Christian about -- in a more general view about the operating leverage. I mean if just for the sake of the argument, we would assume that in a given year, your organic growth would be something like minus 15% organic, not CHF, in a full year, not in a quarter, and taking into account that then you certainly would have some contingency plan in the corporate which you would then pull out, what would the effect on your EBITDA margin be? 15% decline in a full year of your top line organically? What would then the effect be on the margin EBITDA?

Again, I think I repeat the same answer as before. Since we are not fundamentally changing our set of nonfundamental restructuring, the operating leverage of the company is the same in a positive world as in a negative world. We have taken some measures to adapt the organization. But as I said before, we delayed some projects but nothing fundamental. So the operating leverage of the company remains more or less the same as it has been pre-crisis. And that applies for positive development and negative development. And if you look into the past coverage, you have a good indication about the operating leverage of our operations.

Yes. But what I'm saying is -- I mean, obviously, you're kind of expecting a recovery not in 2 years. But if we say in a full year, we would really go down 15% organically, it would most certainly change something on the structure. Or am I totally wrong here?

No, that's exactly -- and I have to repeat that what I said during my introduction. We are not starting restructuring. We are -- we took the conscious decision to invest margin in that period of crisis. So we expect low margin levels due to this stable operations more or less. We are not fundamentally changing something. We want to invest during this period, for example, R&D budget. And that has, of course, an impact on our margin.

Okay. So do I understand you correctly that if the second quarter, which will certainly be quite a bad quarter, obviously, would repeat itself in Q3 in Q4 so that there will be no recovery in the rest of the year, you would still continue like that?

At the moment, if the situation is developing, what we see currently, we do not have any plans for restructuring. And I also do not believe that we will change this decision after the second quarter.

And the next one is a follow-up of Andre Kukhnin of Crédit Suisse.

I just wanted to check on the raw materials one-off that you flagged in Q1. You quantified it 100 basis points. That's 100 basis points of sales. Is that right?

Yes, correct. That's almost 100% in terms of sales, yes, correct.

Got it. And on the cost measures that you have taken, is there any way to kind of scope them out? I think you've received a lot of questions. People are trying to kind of address it in so many ways. But I guess if we think about your labor bill or number of employees, is there any way you can help us quantify that kind of buffer that you're creating with these cost measures?

No. We do not quantify these cost measures. As I said before, it is based on projects which are not feasible at the moment, the hiring freeze. There is a certain impact, of course, but we are not quantifying it.

All right. So -- and then in terms of taking down working hours, that's just the countries like U.K. and France, where you're using short-time schemes but not elsewhere? Or are you taking -- take up working hours elsewhere now?

No. That's what I said before. Short-time work, we only implemented limited -- implemented in France and in the U.K. From a group perspective, it's not material.

Right. But the cost measures you're taking, is there -- are you letting go temps or something like that? Or are you negotiating like shorter working weeks or something like that with workers outside of the government schemes but just...

Yes. As I said to the previous questions, we are able to adapt our operations, mainly plants and logistics, quite well to the fluctuation in demand by adjusting temp workers but also by some flexibility for permanent workers in working hours but also rotation planning and so on. Of course, we use as much as possible flexibility in these areas.

And finally, what is the percentage of plants that you have kind of running normally, so, say, as of 1st of January 2020?

Maybe 10%, that would have an exact figure. I can't provide you an exact figure.

And the next one is of Alessandro Foletti.

Yes. I have 3 hopefully quick questions. Maybe can you provide a CapEx guidance for the year? I saw many companies reducing CapEx from previous levels. So I just would like to have an idea how much down are you going in Swiss francs. And then could you repeat, please, the answer on the previous question regarding the cost of rebranding and digitization? Sorry, I missed that one. And then my third question, maybe a little bit more general. Do you already have an idea on how the behavior, the customer behavior, related to social distancing basis, basically when it comes to accessing your showrooms, i.e., do you expect them to, I don't know, fall back as before, fall back less, do you have to implement measures? What kind of activity level can we sort of try to estimate in the showrooms going forward?

Our CapEx guidance for this year is around CHF 160 million, slightly lower than what we previously guided for. Previously, we guided with CHF 180 million. That is driven by the currency effect and by, as I said before, some projects which we are not able to completely execute this year. But again, a good sign that we are not fundamentally restructuring, we keep our CapEx budget more or less on the planned level, around CHF 160 million this year. Our investment in the initiatives of digitalization and brand harmonization this year are unchanged. This means we invest about CHF 15 million in the additional digitalization efforts and CHF 10 million in the brand harmonization this year. Third question about customer behavior and social distancing. This social distancing is exactly one of the reasons why we see in all of the countries a decline in our demand. Social distancing has an impact not only in showrooms but also in our construction sites, which leads to delay. So there is a negative impact from social distancing across the countries on our business.

All right. I imagine for the time being, you don't expect this behavior to change quickly.

I have the same knowledge as you. I have the same knowledge as you. That is not industry specific. If you know the answer, I'm happy to hear it.

All right. I'm going to send it to you as soon as I have it.

And the last question from today is from Marta Bruska of Berenberg.

Just wanted to clarify, as most of the questions were already answered. From this CHF 25 million of the rebranding and digitalization cost, how much was booked in Q1?

I would say it's around -- I don't know the exact figure, but there is not a lot of seasonality in these figures in general.

So you would say about CHF 6.5 million?

That's your assumption. Not much seasonality in these 2 -- in these figures across the year.

As there are no further questions for today, I hand back to the speakers for closing remarks.

It seems there are no further questions. Thank you for your participation. We wish you all a great and healthy day. Goodbye.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.