Heidelberg Materials AG (HEI) Earnings Call Transcript & Summary

[Interpreted] Well, ladies and gentlemen, I'd like to open the 131st Annual General Meeting of HeidelbergCement AG at 10:00 today, on time is always, this year, for the first time, as a so-called virtual AGM. As the Chairman of the -- I'm the Chairman of the Supervisory Board, Fritz-Jürgen Heckmann, and I'm your Chairman. And I'd like to welcome the shareholders who are connected to us online today, and I'm very happy that so many people are interested in our proceedings. We have received such feedback. I'm happy that many business partners, customers, suppliers and employees and former employees are also with us today. I'd like to welcome the guests who will watch the first part of the AGM via the live stream which is publicly accessible. Now before I start with the AGM and the agenda, I'd like to talk about 3 aspects that we looked at when we prepared this AGM. The first aspect was this new format. We want to ensure to give you reliable information in an understandable way as you are used to from our usual AGMs with people in attendance. Because of this, both the Board and myself will speak extemporaneously in order to make sure that we are easier to follow. Also for those people who are watching us on the Internet, there are some formal parts concerning myself. As in earlier years, I'll try to go through these difficult bits so that we can talk about the content. The second item that we dealt with was how about the future -- about the future of HeidelbergCement and the industry. And this is very much driven by environmental concerns. As you know from the other years from our reports, we are very committed. And we want to be a trailblazer in the industry, and we want to remain so in order to make sure that the -- that our products are ready for the future and protect the environment, and we're doing so day to day, and Dr. von Achten will also speak to this matter. The question about the future is very much characterized by or impacted by the effects of the corona pandemic. The cost of this is outside of anything that can be captured with our normal forecasting instruments [ in getting ]. As we've heard, schools are being closed in Sweden. They're discussing whether their approach to corona was correct or not. So there's a great deal of uncertainty, and this true for us, too. The Managing Board oriented the company together with the Supervisory Board in such a way that we provide for our employees, in such a way that we protect the health, and we want to make sure that throughout the world in all of these complicated international markets the company can respond and adapt to a situation that is very hard to plan for. We believe that with this orientation, we will make it through the crisis and we will be -- we will continue to be ready for the future in spite of all of the uncertainties that will be with us for the unforeseeable future. This also goes for our dividend proposal. We had many intensive discussions. And finally, the outcome was that this year, as a one-off, hopefully, in the history of the company, we want to reduce the dividend. And this has to do with preparing for the future. We want to master all of these uncertainties in a stable situation, and we want to make sure that you as the investor will continue to favor our company, and we want to be able or remain able to shape the future in spite of everything happening in our industry. So our goal, of course, is to make you share in the result with a 35% to 40%. And we want to have you share in a rising dividend policy. And Dr. von Achten will speak about this subject manner in his explanations. I will do so, too, in part. But upfront, I wanted to tell you -- or we wanted to tell you which topics are particularly important to us today and in the next few months. Our AGM will consist of 4 parts. The first one will deal with the information about the formalities. And part 2 will deal with the individual items on the agenda, and this will include the statement of Dr. Von Achten, our new CEO, about the ongoing business last year and the outlook. And the third part will be dedicated to the -- to answering your questions that were handed in on time by 2nd of June 2020, 4:00 p.m. And the last block will deal with the voting. Now the consequences of the corona crisis are the reason for postponing the AGM that was planned for the 7th of May originally. And in order to comply with the need for an AGM, we used the new law to have a virtual AGM. We'll try to answer your questions. A real dialogue, of course, is not possible as in an AGM where everybody is in attendance. The resolutions -- so the draft resolutions were drawn up in the course of the COVID-19 act. Now in addition, we decided to shorten the deadlines to -- and to ask the shareholders to hand in their questions within the defined deadline. Not all of the board members are here in order to protect the health of people. But all of these Supervisory Board members and all of the Managing Board members are present online. In this room, we have Dr. von Achten, the Chairman of the Managing Board; Dr. Näger, Deputy Chairman of the Managing Board and CFO; and the notary public, [ Anna Eurich ], next to me. She will take the minutes of this AGM today. And I'm here, and I will guide you through today's proceedings. Now in addition, we have the 2 company proxies. And location is the [ Dome Room ] of our new headquarters in Heidelberg at Berliner Strasse. Those members of the Board not present -- or those members of the Supervisory Board not present here in this room who are connected online are in constant contact with us because of a special line that we have set up. And this AGM will be broadcast live to our shareholders on the -- in the Internet. My introductory remarks and the speech of the CEO can also be followed by the public on the live stream. We also have simultaneous translation into English. And we are very happy that afterwards, we will be able to answer all of the submitted questions within -- always according to the best judgment, and we want to answer those questions to the best of our judgment. If there are questions that appear twice, we will summarize those questions. As you may have gathered from the invitation, voting today is only possible by absentee ballot or by authorizing the company's proxies. Now your absentee ballot or your instructions to the company's proxies can be until -- it can be changed or submitted on the Internet portal until the beginning of the voting. I will inform when you have a last chance to change or submit your votes. I'd like to point out to you that you should use these voting possibilities quickly because there may be delays due to technical reasons. If you want to vote through the Internet portal, you can also launch an objection to the decisions of this AGM. This is only possible, however, until the end of the AGM and not after the AGM. If you want to use that possibility, please use the button Objection on the Internet portal. And if you click on that, you can enter the text of your objection, and this objection will then be presented to the notary public directly, which is [ Ms. Eurich ]. And in order to make sure that this really works safely, don't wait until the very last minute if you want to launch and -- or if you want to file your objection because there may always be technical delays in the live stream. Now as far as the formal subject matters are concerned. The list of participants will be made available and will be drawn up during the meeting. And later, I will tell you about who's in attendance. No record must be made of the AGM, and the publicly available part will be available afterwards on the website of the company. As in our early years, ladies and gentlemen, I'd like to use this event to regard a minute's silence for those employees and former employees who died in the last year. They all deserve to be remembered. Thank you for your commemoration. Now ladies and gentlemen, there were some changes in the composition of the Supervisory Board. I reported on this at the end of the AGM 2019, and the new Supervisory Board cooperated very well. And because of the pandemic, it has come together in a very intensive way. The changes on the Management Board were announced at last year's AGM. The Supervisory Board provided the way -- paved the way for a change in generations. Dr. von Achten used to be the Deputy Chairman of the Managing Board and took over the chairmanship from Dr. Bernd Scheifele as of the 1st of February this year. We all wish Dr. von Achten much success and would have liked him to have more convenient conditions at the beginning of his tenure, but this is a challenge. And so far, many things have been launched in a very good and pragmatic way. After more than 15 years, the Board -- Dr. Scheifele left the Managing Board at the end of January. In 2005, he joined as the Chairman of the Board, and he had a major influence and impact on the company both on the operating side of things and also as far as the strategic guidance is concerned. And we can -- and this is reflected by the new dimension that HeidelbergCement has received under his leadership, especially with the big acquisition of Hanson. And with this and with other instances of running of the company, HeidelbergCement has become more resistant. I believe that in the 3 major areas -- or product areas, cement, ready-mixed concrete and aggregates, we can now play a leading role all over the world. And with our regional spread, we have a good mix in order to overcome this crisis because crises are spread out all over the world, as we can see right now, and we can respond to that. Now this geographic orientation and the focusing of -- on core activities is something that Dr. Scheifele did very consistently in our company, and we will continue to follow this lead. What I like to -- or what I liked very much about Dr. Scheifele was his pragmatism, his target orientation and his access to employees. Every company has great licenses and great names and great [ queries], but in the end, it's the company's employees who need to earn for the company and who need to be committed. Because of this, I'd like to thank you on behalf of everybody, especially so on behalf of the Supervisory Board and on my own behalf for this excellent cooperation. And I'm very happy that after the 2-year cooling-off period, Dr. Scheifele declared that he will join the Supervisory Board and stand for election as the Chairman of the Supervisory Board. Now the Supervisory Board extended the contract with Dr. Näger, the current Deputy Chairman. And I'm very happy that Dr. Näger was willing to accept because with all of the changes that we have had in the Management Board and Supervisory Board, continuity until May 2022 is very important in this important position of the CFO. And currently, Dr. Näger, we can see how important it is to count on your experience, starting from consequences of the Neiman crisis (sic) [ Lehman crisis ], and you know every single face of our company. And taking over the chairmanship of the company, Dr. von Achten has transferred to -- Western and Southern Europe to Jon Marish -- to Jon Morrish. We have known Jon Morrish for a long time. For a long time, he was responsible for the group area of North America, and now he has taken over this position in Europe in May. And Ernest Jelito succeeded Dr. Scheuer, took over the group areas in Northern and Eastern Europe and Central Asia. Mr. Jelito has been with us since 1982, and he stands for what Dr. Scheuer was -- or stood for, this high technical competence. Dr. Jelito was very successful in running our technology center, and we benefit from this greatly. He used to be very successful as the person responsible for our activities in Poland. After his third term, Dr. Scheuer has retired now, and we owe him great thanks. He was somebody we could use for anything really. When we called him in the morning that we had to send to America, then he said, "Yes, I have to discuss it with my family, but I can already say yes." And when we said, "Well, sorry, it has to be Central Asia," and he was just as flexible. In addition to this great flexibility, he was the person who was in the lead for our concrete activities, and many aspects passed over his desks, and he moved many things forward. We are full of gratitude to him, and he leaves a well-prepared field to Mr. Jelito. In September 2019, Chris Ward joined the Managing Board. And as of February 2020, he took over the group area of North America, taking over from Jon Morrish, who moved on to Europe. And we know Chris Ward. He has been with the company since 1996, and he held several product and regional responsibilities successfully in North America. He was responsible for the exciting field of aggregates. And his last position was responsibility for Canada. Dr. von Achten will later present the 2 new colleagues personally. And I'd like to come back to the formal matters. The invitation to this AGM happened by using a shortened calling period according to the COVID-19 law, and it was published in the federal bulletin on the 7th of May 2020, and the agenda was also published. And a printout is -- our notary public has a printout, and this will be added to the minutes of today so that the items on the agenda and the draft resolutions have been publicized accordingly. I state that all of the formalities have been complied with in due form and time in keeping with the laws and Articles of Association. And we have not received any other request for additional items on the agenda. And we sent out the published agenda to all of the banks and shareholder associations, shareholders. And today, we'll deal with the annual report, the annual financial statements and the agenda. These documents were available -- since day of the calling of the AGM, they were available and were sent out to the shareholders on request. As far as the report of the Supervisory Board, the corporate governance report are concerned, you will find them in the annual report on Pages 8 through 13 and 74 until 97 or page -- after -- following Page 75. So we will, today, not have motions and requests for the floor. Rather, we will answer the questions that you have submitted already. Because of this special form, counterproposals and nominations for election cannot be filed today. And because of this, we will not have to discuss these. But we received a counterproposal that we published on the web page of the company. And no nominations for election have been sent in that we would have had to publish under Section 126 and 127. And the counterproposal that I mentioned was sent to us by the Umbrella Association of Critical Shareholders in Cologne concerning Item 3 on the agenda, following Section 126 of stock corporation law. Item 3 deals with the discharge of the Managing Board. And the counterproposal was published on the web page of our company on the same day. This counterproposal is against our proposal, the proposal of the administration to grant discharge to the Managing Board, amongst other things, because of the planned building of a cement company (sic) [ cement factory ] in Central Java by our subsidiary, Indocement, and with regards to the activities of Ciments du Maroc in the area of the Western Sahara. And later, the Managing Board and the Supervisory Board will make our statement about this counterproposal, but there will be no decision. And now we'll start with the agenda. First item of the agenda deals with the presentation of the established annual financial statement of HeidelbergCement AG. Also, the approved consolidated financial statements of the group, the combined management report of HeidelbergCement AG and HeidelbergCement Group as well as the report of the Supervisory Board for the 2019 financial year. These documents are also available on the website of the company. Also, you will find the so-called remuneration report, the explanations according to the details of the corporate code and the corporate governance code on financial year 2019. On Item 1, we will not pass a resolution as in all the other years because the Supervisory Board is responsible for approving the annual financial statements and has thus made them official. With regard to the Supervisory Board report, I'd like to refer you to Pages 8 to 13 of the annual report. On financial year 2019, you'll have more details later from Dr. von Achten. The Supervisory Board -- and let me give you a summary here on -- the Supervisory Board says that we had a positive development in 2019, even though the conditions remained challenging once more. Even then, we have slightly reduced sales volumes, which we're able to even overcompensate thanks to increasing efficiency and thanks to price increases. On this basis, HeidelbergCement has been able to increase revenue to EUR 18.9 billion, almost EUR 19 billion. And the result was EUR 3.6 billion. Net financial debt before IFRS 16 fell by EUR 1.2 billion. And another important point, HeidelbergCement once more earned a premium on its cost of capital in 2019. IFRS 16, as I just mentioned, and I mentioned that last year, and Dr. Näger explained it, too, is a reclassification of leasing expenses. And Mr. Näger will forgive me if I abbreviate the process. It means that it's not regular expenses under which we book leases. The financial bid goes into financial liabilities, and this is why the figures are not really comparable unless you use a bridge to explain them. The Supervisory Board worked very closely with the Managing Board. After all, it's our job to consult and monitor the Managing Board. And we supported the Managing Board in determining the general policy of the strategy. And we also looked into all critical business transactions that needed to be scrutinized. We coordinated closely with the Managing Board from the -- and Supervisory Board has, of course, met with the Board in the plenary but also in committees. And once more, we had a strategy meeting, which will play separately. In all matters of critical importance, the Supervisory Board was directly involved. The Supervisory Board, once more, convinced itself that the company has a well-functioning risk management system. And the auditors have confirmed that. And also, we confirmed the efficiency of the compliance program. The Audit Committee will regularly meet those persons responsible and who will meet people from risk and compliance management. All audit-relevant issues were discussed within and outside meetings. And we also dealt with matters, if necessary, with the auditors. And of course, being the Chairman of Supervisory Board, I was constantly and regularly in contact with Dr. von Achten outside meetings as well. Last year, the attendance was high in the Supervisory Board, 98.8%. And in the committee meetings, last year, we had an attendance of 98.75%. There were no conflicts of interest of Supervisory Board members in dealing with the subjects on our table. And in the last year, we did not have any consulting service or work agreements between members of the Supervisory Board and the company, with the exception, of course, with the contracts -- employee contracts of the employee representatives on the Supervisory Board. Last year, the Supervisory Board focused on the financial decisions that needed to be taken. The Supervisory Board agreed to the issuance of a bond under the EMTN program. The bond value is EUR 750 million with a maturity in December 2027 under favorable conditions. After all, the purpose is to keep our maturity profile smooth, and this helps. The prospectus was updated last year. And this year, we've already done another update of the terms and conditions. Well, there is corona, and there's uncertainty. But despite that, we've been able to issue another bond with a value of EUR 650 million by the end of April 2020. And that once more attests to the trust that the capital markets have in our company. And that means the financial basis is strong for the company both in the short, medium and long term. We encouraged the Managing Board to refinance financial instruments at favorable terms, if they come up. And we appreciate very much that -- the Managing Board and, in particular, the CFO, that the maturities profile is, as usual, very smooth so that we will be able to earn a premium on our capital costs. Well, of course, there are the special effects created by the corona crisis, which might make it more difficult. Also, the Supervisory Board has encouraged the Managing Board to keep the dynamic debt rate within the target corridor of investment grade and to reduce that level of debt continuously in the future. And the last part of my report deals with the long-term strategy of the company, which is in constant focus. In physical meetings, we have discussed critical investments, divestitures, portfolio optimization and so on with a focus on profitable growth for the company. And of course, we kept in mind that we'd like to keep the balance sheet structure solid wherever possible. And also, the company has a program to continue improving operational excellence. If you've been with us for a while, you will know that this is an important pillar of growth. HeidelbergCement has always insisted that, that was the way into the future. In 2019, our focus on strategic activities was digitization, digitization against the background of internal processes but also with regard to customer focus, customer orientation, value chains and so on. And another important point for us was, of course, reduction of the carbon emissions in cement production. This environmental orientation is something that Dr. von Achten will tell you more about. It is very important. For us as citizens of this Earth, it is important. But it is also important as we serve the company, HeidelbergCement. We also dealt with the strategic challenges that our industry is faced with against the background of emissions trading. There's also the matter of digital transformation. And we also studied the opportunities for HeidelbergCement to avail itself of venture capital activities. Also, fundamental strategies were adopted, and we also launched them on our way. In autumn this year, the Managing Board will address the public with these matters in mind. Here's corporate governance now, and you'll find the statement -- the current statement on Page 75 of the annual report. You will also find our diversity goals there. Diversity goals are important for filling positions in the Managing Board, in the Supervisory Board and all other levels within the company. You will have noticed that we are a bit more diverse now on the Supervisory Board from -- and on the Managing Board. We have 5 non-German nationals. Of the 2 Germans, 1 is based in Baden-Württemberg, if I remember correctly. And we are very -- trying very hard to diversify membership. Also, it's one of our goals to bring a female colleague onto the Managing Board. And so this is a challenge against the background that in our industry, there are mainly men to be found because of the training that they've undergone. And so the managing team will have to pave the way for women to find their way up the ladder. Also, there's the field of health and safety that we've been focusing on. In fact, health and safety is now among our goals. So for our management team members, health and safety has always received a lot of attention at Managing Board level as has compliance and sustainability, the conversation of the environment and also the sparing use of resources. The remuneration report can be found on Pages 79 to 92. And the new system has been in place since the 1st of January 2019. You will find the most current version printed into remuneration. That's it under Item 1 of the agenda, that the financial statements have been approved by the Supervisory Board. And that means that prior to that, the Supervisory Board and the Audit Committee have reviewed those statements carefully with the auditors present, and the Supervisory Board has then approved the results of the preaudit. And the Supervisory Board had audited the financial statements once more. It agreed with the proposal made by the auditors. The Supervisory Board has thus formally approved the financial statements, which make them official. Also, the Supervisory Board looked into a form and content of the nonfinancial statement in the management report. It is very important for us to be very close and watch over the shoulder of the management team. We did not raise any objections. And you will find the nonfinancial statements on Pages 47 following of our annual report. Now the major challenges for the economy and for HeidelbergCement in particular as a consequence of COVID-19, of the pandemic, is something that I already mentioned and is something which is on everybody's mind, of course, also explain that there was a high degree of uncertainty, which was why after long discussions, so we decided to propose a dividend of EUR 0.60 per share. Originally, it had been planned to propose a dividend of EUR 2.20. We hope that you'll understand this. Well, we want to keep our financial structure intact and also would like to have you partake of the success of the company -- in the company through the dividend. And Dr. von Achten will explain that in more detail. That much on the report of the Supervisory Board in the last year. And with that, I'd like to hand over to our CEO, Mr. von Achten.

[Interpreted] Dear Mr. Heckmann, thank you very much. First of all, from my point of view, thank you to the Supervisory Board. Thank you for giving your trust a non-Swabian to run HeidelbergCement. Thank you for that. And I'll try to satisfy your expectations of me. Ladies and gentlemen out there on the Internet or at home or in the offices, I'd like to welcome you on behalf of the full Management Board. I'm very happy that we are moving on. Why? Well, Dr. Heckmann already said this is the first virtual AGM since [indiscernible] [ for the 6 years ]. And this is a joint milestone. And as Dr. Heckmann said, we are in the new headquarters at Berliner Strasse 6. And under the stewardship of Dr. Näger, this new headquarters was built on the same site but replacing the old building from the 1950s. We have not fully moved in, but this is a new milestone for HeidelbergCement. And we're very happy that we can broadcast this AGM live to you from our new premises. And, of course, we all realize that something is missing. This is the personal contact that we normally would have in the City Hall of Wiesloch or maybe in the future, hopefully, right here. And what is missing are the discussions, the personal discussions, the eye contact when you listen to us and when we listen to your questions. Hopefully, we are also missing out on a good lunch. But as always, there's also a fresh opportunity in every crisis, and your opportunity today as shareholders is that you may get even better coffee either at home or at the office. The opportunity for our customers is that you have a chance to use our [ products ] even more productive by not having to travel to our AGM. And the opportunity of our employees is follow us live because in the past, we only have this opportunity for a few, and I'm very happy about this. At the beginning of my presentation about the results of last year and as to our moving to the new year, I'd like to thank you, dear shareholders, for your trust. Dr. Heckmann already mentioned this. Mr. Beumelburg has mentioned this. It's you who support this company and -- with your decision. So you make a major contribution to the success of the company. So I'd like to thank you on behalf of all of us. And then of course, it is you, as customers, who support us because without you, we wouldn't be here. We wouldn't be able to work here. It is you who use our products and who apply our products. And we are very grateful to you. And it's also our suppliers and service providers cooperating with us in order to achieve the very best for our customers day after day. And please bear with me, our special thanks go out to our 55,000 employees all over the world. It is because of your loyalty and because of your extreme commitment day in and day out that we can yield the results that you, as shareholders, expect of us. And allow me to emphasize this. In these difficult times, my special thanks go out to the representatives, for our employees who've gone through challenging months. And many more challenging months lie before us. And we are very happy that we have a very constructive and always-friendly dialogue with our employee representatives, leading to the best possible result for HeidelbergCement. So thank you very much to all of you. Mr. Heckmann already said that there have been 2 key changes on the Management Board. And we thought even though this is not as easy online, but we would -- we wanted to introduce the 2 new colleagues on the Managing Board. What is very important to me is that both of these new colleagues represent a lot of experience of the company. Let's start with Ernest Jelito. Ernest, as Mr. Heckmann mentioned, is a Polish national. And he has been very successful for almost -- for more than (sic) [ for almost ] 40 years working for HeidelbergCement. And what I note whenever I cooperate with Ernest Jelito is that there's a great balance between his thorough knowledge of cement combined with a surprising market know-how that he showed when he was in the leadership position in Poland. [ That's his stream. ]

I'm Ernest Jelito, board member of HeidelbergCement, responsible for Northeast Europe since July last year.

Ernest, you have a degree in Chemistry from the University of Science and Technology in Krakow. What made you enter the building materials industry?

I was fascinated by the construction of 2 high-tech cement plants close to my hometown. It was a clear sign to me that the building material engineering will develop very fast.

You are responsible, amongst others, for Northern and Eastern Europe, Central Asia and R&D. What do you consider the most important competencies that are required to steer such a diverse area of responsibilities?

Firstly, deep knowledge and product experience. I worked at different management positions from plant to country manager, and I managed the Heidelberg Technology Center for 11 years. As a result, I know our HeidelbergCement business in every one of my countries very well in terms of assets, staff, markets and stakeholders. Secondly, you have to be creative in terms of business and product development. Change management skills are also important. Thirdly, people motivation, their empowerment and respect of a diversity inclusion.

What fascinates you most about cement?

I'm fascinated by the manufacturing technology, but it's always product involvement. Key words are circular economy, automation and digitalization. I'm also excited by our ability to further develop our products in a sustainable way. Cement is just a fascinating product that can be used with any construction system. You can build everything, everywhere.

[Interpreted] Well, dear Ernest Jelito, much success and a really good cooperation opportunities. And now Chris Ward, Mr. Heckmann introduced him, too. I had the pleasure of meeting Chris Ward during my time in North America. I worked with him intensively. And so Mr. Heckmann mentioned this before, Chris Ward ran our aggregate business in the Southeastern United States before. But this was very important at HeidelbergCement. He started taking over the vertically integrated region of Canada. Vertical integration is very important for us. And Chris Ward did excellent work there. And because of this, I would like to ask Chris Ward to introduce himself personally.

Good morning. I'm Chris Ward, member of the Managing Board responsible for North America.

Chris, you've been a member of HeidelbergCement's Managing Board since last September. What's it like being in America on the Board of a company based in Germany?

I'd say very energizing to be part of this group and to see the opportunities our teams are working on across the globe. And at the same time, humbling to work with such a professional and experienced leadership team.

Throughout your career in the building materials industry, you worked in many different areas within North America. What is the biggest challenge for you in managing such a diverse region in 2 very large countries?

First off, it's very rewarding to see the development of our leadership teams and the great progress they've made in improving their local businesses. An ongoing challenge is to encourage local entrepreneurship while still leveraging our proven business systems for execution and efficiency.

What do you like most about working in the construction materials industry and the aggregates business, in particular?

My earliest roles with this company were very hands-on in the aggregate operations. I quickly learned and experienced how rewarding it was to lead teams that were so committed, hardworking and professional. Local businesses with local employees helping responsibly build our local communities. I can't think of a better industry to help lead.

Yes. Dear Chris, you are following us from Texas. It's now, I think, 4:00 in the morning. Great to have you on the team. I'm really looking forward to working with you very closely. All the best for you as an important part of our Management Board. [Interpreted] Dear shareholders, before I continue with the reporting of the past year, there's one thing that I would like mention. As you have found in the past weeks and months, these are very difficult times for everybody and especially so for HeidelbergCement. We are facing major challenges. But as always, in each challenge lies an opportunity, and we want to use this opportunity together with our 55,000 employees. And in order to do so, we set to ourselves 4 guidelines that we will take our cue from, and I'd like to tell you about them first. First of all, continue. Mr. Heckmann pointed out that HeidelbergCement is in a very good -- was in a very good situation when it entered the crisis. Because of this, a lot of continuity remains along the lines of operational excellence, clear cost leadership and a very well-anchored performance. In every crisis, or a change for that matter, there is an opportunity. Because of this change, and this regards the way we work with our customers, we want to take our cue even more from our customers together with them. We want to further develop our products and services to benefit our customers. Also, change refers to simple processes. Because during these times, we can clearly see that when it becomes simpler, it becomes better. And once processes are simpler, we will have to digitize them in order to be more precise and faster in communicating with you. The third element is -- has become very clear, which is care. We want to take care of each other and of our customers. This regards health and safety at work, and I'll speak to that in a moment. Then sustainability, which is an item that has been important to us for a long time, but we want to focus even more on this aspect. And compliance in all areas. This regards subject matters where we want to follow a zero-tolerance policy, and so we want to see our standards implemented and further developed. And lastly, this is very important to me, personally, is collaborate. We want to work in teams with 55,000 employees, and all of these colleagues can make their important contribution to the success of the company. This is only possible on the basis of teamwork. At the end of the day, it's about creative solutions because today, we cannot know what will happen tomorrow. COVID-19 drove this message home to us. And it is only with teamwork that we will be able to give creative solutions. And the nice thing is, and we can see this today right here, communication has been reinvented. We have huge opportunities as a big global company to move ahead, and we have made steps ahead in the past weeks and months, but a lot more is possible. And this is the very important last element. So continue, change, care and collaborate. Now onto the look back on 2019. I want to be brief because you have already been informed in detail the results of the annual report. We delivered, that's the summary, basically. Revenue and results have improved. And if you're honest, revenues have not improved by as much as we had envisioned. We had hoped to add a lot more in Asia, specifically Australia and the India business did not go as foreseen. Well, it doesn't always turn out the way you want it. Sales improved, but not to the extent that we had hoped for. Cash flow was very important for us. It has reached record levels. At that time, we were not able to know that a crisis was in the making, but we have nevertheless been able to reduce our net debt, and this strengthens as in times of crisis. We earned a premium on the cost of capital, as Mr. Heckmann mentioned. And we've been able to further reduce our CO2 emissions, and I'll talk about this in greater detail later. Last important -- the last important bullet point is, as Mr. Heckmann said, we made sure that we achieve a smooth management team transition. And I'd like to thank Dr. Bernd Scheifele for this. For the past 12 years, I was able to cooperate with him on the basis of trust. And Dr. Scheifele had moved the company into an excellent position. He got [ EUR 19 billion ] in sales from a mid-sized Australian company, so all of us owe him great thanks. And I look forward to the future cooperation with him once he assumes his new role on the Supervisory Board. Let me talk about the key figures. I mentioned revenues, which were only -- slightly improved like-for-like, plus 2%. The developments in Australia and India really put the brakes on us, but we've been able to add a small shovel so to say. And the result from current operations increased nicely, plus 5% on a like-for-like basis. We are satisfied with this. The same goes for the adjusted earnings per share. And the sale of the Ukraine business, which had no effect on cash, but with EUR 150 million. It's the books, it was on the books. And this has been taken out. And with this, we had a nice growth, plus 23% development in the adjusted earnings per share. And another key figure that we look at is ROIC, that is return on invested capital, and Mr. Heckmann mentioned this before. What is important here is that this is about the cost of our capital, and the cost of capital is 6.6% right now, and the ROIC was at 6.9% last year. So from our point of view, this is a useful result in development. Now at the beginning of the crisis, the cash flow level was good. Free cash flow reached record levels, almost EUR 1.5 billion, plus 14%. And as a result, together with the good increase in earnings, we were able to reduce net debt by more than EUR 1 billion. And this also led to a reduction of the leverage from 2.7 to 2.3. Altogether, I think this is a fairly good financial position, especially prior to entering the crisis. In all of our countries and regions, dear shareholders, we are overcoming frontiers or limits every day, sometimes in our minds and sometimes quite physically. And so here is the picture of the Brenner Base Tunnel. This is a construction site that will go on for more than 10 years. It started in 2015. And by 2028, the construction job will be done. The longest railway tunnel on the road, with probably -- that is 64 kilometers of length, so that you can travel from Berlin to Palermo on rails much faster than in the past. And as HeidelbergCement, we're very proud that we are delivering products to that construction site. And these are very sophisticated products, both in terms of cement as well as with regards to the concrete that we deliver. And with this, I'd like to talk about our regions. The areas of development, Western and Southern Europe. With regards to sales, it went well. We had a nice, nice increase. But the key success in Western Europe was the good increase of results, which is a combination -- was a combination of our intensive improvements of our margins and the reduction of our costs. And both together lead to a significant increase in result of plus 30% in the Western and Southern European region. Northern and Eastern Europe. The sales side, the business was difficult, especially due to a reduction in sales in Northern Europe, which is an important part of the region for us. But as far as the results are concerned, we moved ahead. This was mainly driven by the strong business in Eastern Europe. And Ernest Jelito together with this team in Poland, but also in other areas ran by Dr. Scheuer, he did a great job. And we worked hard to reduce costs, so we have been able to see these results. Then talking about North America, I would say that on sales side of the things, things went well because the market in North America was strong. Generally speaking, as far as the results are concerned, we're not that satisfied both in the field of cement and aggregates, that the plants did not always produce or doesn't always been able to produce what we had expected them to produce. So we are working hard to improve things. So we did not produce as smoothly last year, so the result was not as good as we had intended it to be in North America last year. Now Asia Pacific, the results improved significantly mainly driven by Indonesia, which is an extremely important market for us. But Thailand also lent a hand. After a few difficult years, Thailand has moved back on the path toward success. Australia did not develop so successfully with regards to sales. But as far as the results are concerned, Australia had remained stable. So this led to an almost 20% increase in results in Asia Pacific, led by Kevin Gluskie for Asia Pacific. Now Africa and Eastern Mediterranean, this is now run by Hakan Gurdal, with a slight increase in sales mainly due to the difficult business environment in Egypt, that -- the results side, the developments have been stable in spite of the difficulties in Egypt. So the business in Morocco continues to be doing well and also in sub-Saharan countries, where we are active in Ghana, Tanzania, Togo, those are the strong markets for us, and we've been able to stabilize those strong markets. Then the step to 2020. And I think we can call this a success even though it lies far behind us. But first quarter, our performance was good in spite of the fact that as of mid-March, sales started going down in individual countries. And because of this result has been, as you can see on this slide, decline in sales. Well, this looks more dramatic than it is from a point of view, minus 8%. Sounds like lot -- 6% of this are solely due to a reduction of the business at HC Trading, which was done on purpose. And without this effect of HC Trading, we would have been fairly stable now, we would have had a reduction of minus 2%. So on the sales side, the situation is not as negative as it looks. The result development is positive in spite of the decline as of mid-March. And the same goes for the results from operations -- of current operations, like-for-like, plus -- minus 4%. And so altogether, a fairly solid stretch to 2020. Now people are in the foreground for us, as Mr. Heckmann said. And in these days of COVID-19, this becomes very clear. We try to connect people, though. For us as Europeans, the COVID-19 crisis started in Italy, too. And because of this, we're very happy with that right now, our Italian colleagues are working hard on a fresh Italian departure in Geneva (sic) [Genoa], where the old Morandi bridge collapsed in 2018 after one year of construction. We can see this new bridge in Genoa. We are proud to be part of this with our subsidiary, Italcementi. And we're very happy that 40% recycled materials are used in our cement products, and that the CO2 footprint of this product is much lower than on average in our company. So our Italian companies have made a clear step ahead, not just for Genoa, but also toward further product development. So thank you for this to our Italian colleagues. Now COVID-19, of course, means help is all-important. It's not just because we are sitting 1.5 meters apart here, and so not just that we are holding a virtual AGM, but we are also responsible to making sure that our 55 (sic) [ 55,000 ] employees stay healthy and happy. And in fact, we've taken steps in the company to guarantee that this is true for our cement plants, for our ready-mix plants, our aggregate plants, our asphalt plants and the prefabricated concrete part factories. We made sure that we have hygiene action plans in place everywhere. And at headquarters, we now use smart working, as we say. That is we mainly work from home. Fortunately, we have a technology in place already, and we've been able to test everything to their cause really carefully now. And we are pleased to see that it does work, and we've been able to keep the good work up, and that despite all the additional hygiene required. Of course, we are no longer shaking hands as we were used to. But in fact, it worked out quite positively for us. But there's a downside to the crisis. We need to be careful as a company. We need to sort of weather the storm successfully. This is why the Managing Board thought very hard about it in order to make sure that we could execute. Well, as always, in the crisis, we want to guarantee liquidity. We will not forget earnings, but earnings don't take top priority at this time. The main priority was to stabilize the cash situation and to keep liquidity at a very good, high level that we have before the crisis. So up to EUR 1 billion in cash was our goal to save, thanks to our COPE program, which stands for COVID Contingency Plan Execution. In these days, we need a quick name for everything, so we call this our COPE program. It helps us cope with COVID, and it is to help us take out cost. And -- well, it's not like that will be a cost reduction forever. The point here is that we can reduce costs for the time being. Of course, we reviewed capital expenditure plans and decided to save our breath wherever necessary. In the course of the year, we will then take up [ steam ] where required. But we will, by no means, jeopardize the midterm future of the company. Dr. Näger heads up tax and working capital plans, and we've done whatever we could so that we could push out tax payment where possible and reduce tax payments, where that is a possibility by law, for instance, in the United States. And we've also tried to optimize working capital. However, these cash savings depend a bit on the business development. So for business to bounce back better than expected or assumed internally, we'd have to review our plans, revise them, but we are prepared so that we can, in fact, reduce cash expenditure by EUR 1 billion, should that be required. Now let us turn to our COVID clock. In fact, it looks like a clock, as you can see, and we've been watching this clock in the last weeks and months. It has helped us to see what the status is for our activities around the world. This is a snapshot, which we're showing to you here. Unfortunately, some countries have come out green once more. They had a drastic decline in earnings, on volumes. On the left, you see China, India, Bangladesh, Belgium, France, Italy, Spain, U.K., Morocco. These countries are on their way up. They're recovering already, first recovery. There are some countries which are still hard hit, in particular, Malaysia. They are only now working up from their lockdown period. There are other companies where sales volumes are still declining. This is true of the United States, but also of Canada, Indonesia, Thailand and, to some extent, is also true of Russia. But fortunately, there are some countries, which were hardly impacted at all by the crisis. And this why we feel we have a strong portfolio at HeidelbergCement. Germany, in fact, proved itself highly resilient, and were at the same level as before and doing very well. Other countries are also doing well, even though the development might be different. Northern Europe, going strong; Australia doing nicely. Well, their markets are declining somewhat in Australia, but it has nothing to do with COVID-19. So the world is still a colorful one, and I just wanted to show you what our colors are in the company around the world. Now Mr. Heckmann, you mentioned the dividend proposal made by the Managing Board and mentioned what the Supervisory Board felt about it. The original idea had been to pay out a dividend of EUR 2.20. We have reduced that to EUR 0.60 per share. This is our proposal to you, dear shareholders. And Mr. Heckmann already said, this idea came up after intensive discussions at Board level, at Managing Board level, but also at the Supervisory Board level. And both Boards also discussed the matter once more, and you can imagine that it was a highly difficult decision. Well, our idea was to have a progressive dividend policy, which, however, we had to suspend due to the crisis. We did that exclusively to preserve the excellent financial profile that we went into this crisis with. Dr. Näger and myself, we were on Board already in 2008 and '09 when we had a tricky situation before. And this is why we were unequivocal, we wanted to tread carefully here, and we wanted to preserve the EUR 317 million in liquidity that we had in the company. We wanted to keep it for the company. Shareholders, please believe us. Rest assured that we will use this money prudently. It is your money, and we will make sure that we will use it reasonably. Also, we decided that after the crisis is over, we'll return, as Mr. Heckmann said, to our progressive dividend policy. Then -- well, that's the matter of the future. We want to enable the future. We want to make the future possible. And this is a job site in Darmstadt, where we get to deliver a lot of concrete. We work together with Dyckerhoff, Buzzi Dyckerhoff, in fact. And well, this is a particle accelerator at a center, which is called the FAIR. And this is where -- when the project is completed, some 2/3 -- by 2025, more than 3,000 scientists will be at work. And it's a complex, which has more than 20 buildings. And as you can see, that is a ring tunnel with a length of 1,100 meters. So particles are to be accelerated to light speed, some 300,000 kilometers per second, which is very fast. And our product is ideally suited for that purpose. And also, the walls and ceilings are radiation-proof. So once more, an interesting application here of a highly performing -- high-performing product, that is this combination of cement and concrete. But we do not only want to build for the future, we want to also build our own future. And as Mr. Heckmann said, this is why sustainability is so important for us. Well, we are well underway here. We're right on track, and we communicated our goals clearly. By 2030, our specific net carbon emissions per ton of cement are to be reduced by 30% compared to 1990, which is the comparison, the reference line. This was discussed with the Science Based Target initiative, and the initiative has verified those goals, and we are now in line with the Paris Agreement. That makes us the first cement company in this world to have had reviewed our carbon reduction targets by scientists. At the end of the day, we are also making progress already now. The carbon emissions were reduced by 2% in one single year. That is between 2018 and 2019 from 20% to 22%. That is a reduction from 20% to 22%. So we're making headway there. And it remains our intended and published goal to rather try harder and reduce more carbon than slow our efforts down. At the end of the day, what we want to do is to be carbon-neutral with our product. Our vision is that by 2050, we want to be able to offer carbon-neutral concrete. And that requires a few steps that we are already working on. One step is that we will reduce the carbon content in all our products. That's a general strategy. The pre-product clinker, also comes to mind, in clinker, we will also reduce carbon, which is not a trivial thing to do, but we're working hard on that. Then there's also, as I mentioned, recycling of concrete because concrete recycling can help to reduce the carbon footprint massively. And then there's also carbon capturing and that is the carbon that arises during the production processes to be captured so that the carbon can then be reused for something else. And this is where we focus on the capturing technology so that, as I said, the carbon can be captured so that it then can be stored or be reused. Well, we find it important to be as transparent as possible in our efforts, both internally and externally. And this is why we work very closely with rating agencies, such as CDP and others. And let's just take the example of CDP, the rating agency. And we are in a good rank in the Climate Change A List from 2019. And -- well, that I suspect shows that we're well underway. We do not only do that to prove that we're doing something. It's also important for us, ourselves, because we wanted to be able to do so ourselves clearly that whatever we've started, we'll produce some positive results. Well, that already takes me to the subject of digitization. But in our industry, it is not that obvious really -- or didn't use to be originally, but now in the situation of the COVID-19 pandemic, things have changed a bit. We've all grown aware, and that is also something borne out by our customers, that digitization, in fact, offers many an opportunity, an opportunity even for us as a relatively traditional industry. And for this reason, our activities will continue -- definitely continue in this field. I have 4 elements here for you that shows you what our efforts are focused on. First of all, we need to become digitally fit in our plants. The plants that we have can now be reached remotely. We can remotely control and maintain production sites, kilns, mills and other units. Plant and equipment can be remotely controlled. We've made headway here, and we'll continue working on that. On the concrete side, we want to be more customer-oriented. The concrete mixers, the recipes are to be improved to make things much more efficient. There are many opportunities there. As we enable our plants, that is really just one opportunity to be closer to our customer and to communicate much more efficiently with our customers, and this is why one point in our digitization initiative is about the digital exchange and contact with customers and suppliers. Last but not least, we're also improving our own processes. And the internal workflows are simplified so that they can be faster, that they can be automated and digitized. So here we go. In conclusion, the outlook, we need to be honest. As Mr. Heckmann said, it is difficult to foretell what 2020 will bring. Well, we have already 6 months under our belts, but still development remains unpredictable. There are consider fluctuations, there's a lot of volatility. Sales fluctuate very much, so that we cannot give you any figures for 2020. And it must be clear that the pandemic will have an impact on the results of 2020. We cannot tell you otherwise. The mid and long-term across things, however, remain positive, if not very positive. You will have been reading the newspapers and you will have learned that in Europe, with the Green deals, with the business development programs, funds are beginning to flow. And there are other discussions in other countries. And the United States will have elections in November. The question is whether there will be any development programs by then. And the U.K. is also discussing these opportunities. So in the mid and long-term, we remain positive. We expect a favorable development. And as we have communicated, despite the pandemic, despite COVID-19, the Board of Management has decided that by mid of December, after discussions with the Supervisory Board, we will review and revise our strategy and then present it to the public. The crisis will not keep us from doing that. I said, the crisis usually also offers many opportunities. Last but not least, I'd like to talk about our focus areas once more that we have identified for 2020. First and foremost, to protect our good financial and balance sheet position. And this is the reason for the COPE action plan, with savings of up to EUR 1 billion of our cash reserves. And let me mention that the managing team of HeidelbergCement and the Supervisory Board of HeidelbergCement have decided to make a contribution by forgoing the fixed component of remuneration, that is by reducing the fixed component of our pay by 20%. So my thanks to my colleagues on the managing team and to the Supervisory Board members. Business continuity is also important for us. Well, we need to work hand-in-hand with our customers. We must use the opportunities offered in the local markets or we will not be successful. So we need to stay nimble and fast on our feet and on our toes. And this is why business continuity is a top priority. And, well, the plan is to focus on sustainable business. Sustainability is very important, and that will remain so. And I had described the factors that flow into it, and all of that will -- and for the time being, with a new strategy that we'll publish in December. And I'm sure this is a very solid foundation for us to continue the good development of HeidelbergCement in the future. And I'd like to close with this picture showing that concrete is the most versatile construction material. And, Mr. Heckmann, that means back over to you.

[Interpreted] Thank you, Dr. von Achten, for this report and for the results of 2019 and the current financial year. Thank you for the information on the agenda. And that means that we will now end the live stream. This ends the public part of the meeting. Only our shareholders will be able to remain with us. Those who have come in through the Internet portal, and you would have needed your shareholder number and a password. And those shareholders who are still on the general live stream, will you please switch over to the nonpublic meeting? To all others, I'll say thank you, and goodbye. And you have a good rest of 2019. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]