Titan S.A. (TITC) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I'm Meredith, your Chorus Call operator. Welcome and thank you for joining the Titan Cement Group conference call to present and discuss the 6 months 2020 financial results. [Operator Instructions] The conference is being recorded. Please note, this call and presentation is intended for analysts and investors only. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Michael Colakides, Group CFO; Mr. Dimitrios Papalexopoulos, Chairman of the Group Executive Committee; and Mr. Yanni Paniaras, Greek Region & Group Corporate Affairs, Executive Director. Mr. Colakides, you may now proceed.

Ladies and gentlemen, thank you for being with us today. First and foremost, we hope that you and your families are keeping well and safe this unprecedented situation. Starting with our response to COVID. From the emergence of the coronavirus pandemic, which appeared in our countries of operation in March, we have been taking measures to protect our people, contribute to the efforts to reduce the health impact on society and to maintain operations continuity. Specifically, we took immediate actions with focus on prevention and preparedness to protect our people and our business partners. Living up to our social responsibility, we stood by our neighboring communities at all the locations where we operate, supporting them in addressing their most urgent needs during the pandemic. At the same time, we ensured the business continuity of our operations, taking operational and financial measures, continuously adapting to the evolving situation. Looking ahead, we remain vigilant and flexible to adjust further as the developments warrant. Looking at the highlights of our performance. In the first half of 2020, group revenue remained resilient, reaching EUR 786 million as construction was deemed an essential activity across our regions, and therefore, impact from COVID-19 was moderate. With the easing of restrictions, sales showed a rebound in May, followed by growth in June. Group EBITDA rose by EUR 14.6 million to EUR 137 million, a 12% increase compared to last year, benefiting from lower fuel prices and successful cost containment measures. Group net profit was up by EUR 9 million and reached EUR 22 million. The improved profitability and deferral of CapEx resulted in strong cash generation with operating free cash flow of EUR 69 million, EUR 15 million higher than 2019. Net debt dropped by EUR 28 million since December to EUR 808 million. In July, Titan grasped the opportunity to lower its finance costs and completed the issuance of a new EUR 250 million bond issue due in 2027 with a 2.75% coupon. Proceeds are to be used mostly to pay down other debt, thereby extending maturities and reducing the average cost of debt. Revenue in the U.S. was stable, reaching EUR 476 million and a 0.8% increase in euros or a minus 1.7% decline in U.S. dollars, while our flexible and targeted market responsiveness strategy, coupled with tight cost management drove financial performance. As a result, EBITDA grew by 3.5% to EUR 87 million. In Greece and Western Europe, first half 2020 revenue declined by 7.8% to EUR 114 million, while EBITDA dropped to EUR 8 million, a 16.4% decline as the rebound in cement demand witnessed in the beginning of the year was interrupted with the onset of COVID-19 and exports were disrupted as a result of the global halt in economic activity early in Q2. In Southeast Europe, strict lockdown measures imposed in April and May curtailing economic activity translated into a 3.9% revenue decline to EUR 116 million, but EBITDA rose to EUR 39 million, a 19% increase on the back of resilient prices and lower fuel costs. In the East Med, revenue increased by 16.4% compared to last year to EUR 81 million, and EBITDA turned positive at EUR 2 million in the first half after being a negative EUR 5 million in the same period of last year. The market softness in Egypt was counterbalanced by a surge in volumes in Turkey, both domestic and exports. Moving to Slide 4. We see the evolution in turnover and profitability on a quarterly and half year basis. In Q2, we see that the 5% decline in turnover resulted in our first semester being essentially flat. On the other hand, EBITDA increased by EUR 18.4 million in the quarter, reaching EUR 96 million, aided by targeted cost savings, the prevailing lower prices in solid fuels and overall pricing resilience in our markets. However, we should also highlight the fact that about EUR 10 million of this improvement is attributable to annual maintenance costs, which this year had been incurred earlier in Q1 versus in Q2 in 2019, making the quarters of 2020 and 2019 not directly comparable. Improved profitability in the first half of the year translated into significant margin gains of 180 basis points improvement at the EBITDA margin at group level. Turning to our summary P&L. Despite having a flat revenue line as a starting point, lower fuel costs as well as successful cost containment efforts and lower SG&A expenses led to an important 12% increase of group EBITDA in the first half of the year. All in all, high and sound cost management amidst fairly resilient markets translated into a solid bottom line. Taking a look at our balance sheet. Given the present economic downturn and the uncertainty in the markets created by COVID-19, Titan increased its liquidity position close to EUR 500 million by combining the EUR 240 million cash you see on the balance sheet with undrawn committed bank facilities as of June 30. The increase in short-term borrowings reflect the transfer from long-term debt to short term of the EUR 300 million notes that are maturing in mid-June 2021. Out of this amount, EUR 140 million have already been bought back by the group in early July. Now looking at the evolution of our group volumes. After a good start to the year, trends in sales volumes were affected by the spread of the pandemic and subsequent slowdown of markets. The rebound of construction activity witnessed in May and June partially offset the starting decline, bringing the overall volume performance closer to last year's levels. Cement and cementation materials volume sales were also impacted by lower exports from Greece, overall resulting to a decline of 2% compared to the first half of 2019. Ready-mix sales posted an increase of 1.3%, while aggregate sales were higher by 2.6%. Moving to cash flow. Group operating free cash flow in the first half of 2020 reached EUR 69 million, an increase of EUR 15 million compared to 2019, benefiting from higher EBITDA levels and lower capital expenditure. Group capital expenditure in the first half of the year was EUR 41 million versus EUR 53 million last year. As a reminder, the group has reviewed its capital expenditure plan and suspended EUR 50 million of nonessential expenditure, always subject to market conditions. Group net debt decreased by EUR 28 million in the first half. Moving to the net debt graph. As aforementioned, the improved profitability and cost management and CapEx containment resulted in strong cash generation having a beneficial effect on group net debt levels, which closed at EUR 808 million, which is lower by EUR 31 million compared to June 2019. Net debt-to-EBITDA ratio also improved, dropping to 2.8%. Looking at our debt maturity profile. The prevailing environment of lower interest rates offer the group the opportunity to lower its finance cost and extend debt maturities. In late June, Titan Global Finance launched a public tender offer with the purchase of any and all outstanding notes under the EUR 300 million issue maturing in 2021. On the same date, TGF announced the launch of a new EUR 250 million bond issue. In early July, Titan Global Finance completed the issue of EUR 250 million 7-year notes due 2027 with a 2.75% coupon. The proceeds of the notes were used to purchase tendered 2021 notes and repayment of bank debt. Overall, 2020 maturities were reduced by EUR 70 million, 2021 maturities by EUR 140 million and 2022 maturities by EUR 115 million. The group's liquidity of EUR 500 million in cash and committed undrawn credit lines, combined with an extended maturity profile and reduction of the average cost of debt puts Titan in a strong financial position not only to weather the consequences of COVID, but also to finance its business growth. I will now pass you on to our Executive Director, Mr. Yanni Paniaras, who will brief you on the implementation of our sustainability strategy. Yanni?

Thank you, Michael. Good afternoon from my side as well. We are pleased to announce here the 4 main focus areas in sustainability that will guide the efforts over the next years. This have emerged through a rigorous materiality assessment process, which we last did in 2015, utilizing the SASB process, where we engaged extensively with our stakeholders. The focus areas are the following: first one is decarbonization and digital, where we want to transform our business, focusing on resilience, innovation and on building solutions to serve our customers more efficiently as we move towards a carbon-neutral digital world. This includes 2 material issues. One is future-proof our business model in a carbon-neutral world. This means that the decarbonization has risen in materiality from last time and the new issue, innovation with emphasis particularly on digital and on decarbonization. The second focus area is a growth enabling work environment, where we want to cultivate an inclusive culture with equal opportunities for all our people to grow professionally within a safe work environment. Here, health, given the recent experience of COVID as well, has risen more than in previous materiality assessment at the same level as safety. And the new entry in the material issues of high priority is diversity and inclusion. The next focus area is a positive local impact where we want to enable our business operations and our people worldwide to contribute to the prosperity of our local communities with respect to the social and environmental needs. Here, the relevant material issue is positive local, social, economic and environmental impacts. And the fourth focus area is responsible sourcing, where we want to empower our business partners to incorporate sustainability considerations in their business decisions and daily behaviors, while using natural resources responsibly. The relevant issues here is reliability and sustainability in the whole supply chain, which is new as well as something that we already had and increases in significant resource efficiency, recycling and recovery contribution to secular economy. Of course, our efforts cannot succeed without good governance, transparency and business ethics, which also ran high among our material issues. Now for each of these focus areas and material issues, the next step is to update our existing targets and set new ones for the period 2020, 2030. On decarbonization specifically, we are, as you know, committed to the COP21 Paris global goal to keeping the increase in global temperature below 2 degrees Celsius. And we also support the recently announced European Green Deal vision of carbon neutrality by 2050. Building on our CO2 initiative, which we launched already in 2018, our long-term target remains the achievement of approximately 30% reduction of emissions below 1990 levels by 2030. In the first half of this year, we have made good progress in our efforts to reduce our carbon footprint. 2 relevant highlights. One is the ongoing introduction of the use of natural gas in our operations in the U.S., where gas is particularly competitive as well. And the extension of our alternative fuels' permit in Thessaloniki plant in Greece to cover municipal-based RDF, refuse derived fuel, at the time when Greece is embarking on a major program of processing and managing properly the municipal waste. Beyond that and continuing our addition of disclosures beyond what we disclosed in the annual reports, we are now preparing to submit in August our first response to the questionnaire of the carbon disclosure project. On Slide 13, we are happy to announce that we have been assessed for the first time in terms of ESG performance under the new legal entity of Titan Cement International with positive results. Both MSCI, we have received a rating of A, and Sustainalytics, where we have been assessed as medium ESG risk, put us at par with our industry peers, the largest multinational and European groups. We continue engaging with the rating agencies and with investors, listening to the sustainability priorities and explaining what we are doing to address them.

Picking up again to cover our regional performance, starting with the U.S. The U.S. delivered a resilient financial performance in the first half of the year. The result of the flexible strategy applied to cost control, while strictly responding to market demands. Revenue edged up to EUR 476 million, and EBITDA increased to EUR 87 million compared to last year, 1% higher in dollar terms compared to last year. Operations continued uninterrupted throughout the period. The effect of lockdown measures was more pronounced during April on our import terminal Essex, which supplies the New York Metro area. By May, June, volumes in our U.S. markets caught up with pent-up demand, ending on a solid note in June with strong performance recorded across regions and products. Operational profitability and margins improved, owing to focused cost management and logistics optimization. In line with long-term goals to reduce its carbon footprint, Titan invested in the conversion of its cement plants from solid fuels to natural gas. The Roanoke plant in Virginia is currently running at about 90% gas, while the Pennsuco plant in Florida is also close to obtaining that flexibility expected sometime in early Q4. The fundamentals remained in place, supporting the residential segment amidst an environment of low mortgage rates and a persistent shortage in housing inventory. Furthermore, continued infrastructure spending underpinned demand in the first half of the year. For 2020, the PCA in its preliminary estimates forecast a 3.8% construction in the market to be followed by a 2.1% compounded annual growth in the 5 years 2020 to 2025. Moving to Greece. In Greece, the year started off with strong growth, but came to an abrupt halt when the epidemic struck and subsequent lockdown measures were imposed. Revenue declined by 7.8% to EUR 114 million and EBITDA was down by 16.4% to EUR 8 million. With the easing of restrictions, demand bounced back in May and June with domestic sales across all products posting strong growth. Overall, the domestic market in the first half recorded growth compared to the previous year, with projects already underway prior to the onset of the pandemic picking up pace as well as Brazilian demand in small-scale private construction. Exports were hindered during lockdown as international trade was curtailed globally and lockdowns were imposed in many countries where the group exports. Export flows have since resumed, however, remained below the same period in 2019. Infrastructure spending is expected to pick up towards the end of the year as key projects have already kicked off and will normally translate into more meaningful volumes into 2021. Operation has continued to benefit from lower petrol prices. On the other hand, electricity costs were higher in the first half of the year, but are expected to decline in Q3. In the region of Southeast Europe, Southeast Europe continued to deliver value with a sustained well-grounded performance. In the first half of the year, revenue declined by 3.1% to EUR 116 million, with EBITDA growing by 19% to EUR 39 million. Following the easing of strict lockdown measures, demand bounced back in May and June, supported by the region's solid underlying trends. Pre and post effects of election cycles in some of the countries of the region served to underpin demand. Profitability benefited from significantly lower fuel costs and a drop in electricity market prices. Efficient cost curtailment supported the results further. The group continued its efforts to reduce its carbon footprint throughout -- through the use of alternative fuels with Bulgaria reaching 35% substitution rate this year. Moving now to East Med. This market -- the markets continue to suffer from structural and macroeconomic challenges. Specifically, revenue in the East Med increased by 16.4% to EUR 81 million, while EBITDA turned positive at EUR 2 million compared to a loss of EUR 5 million last year. After posting a healthy growth in Q1, market demand in Egypt recorded an abrupt drop in Q2 as the epidemic set in affecting business activity and subsequently, cement consumption. The underlying trends and the structural changes of the market remain unchanged and were exacerbated in Q2 by the government's decision to suspend building licenses in many metropolitan areas. Still, EBITDA was aided by lower petrol prices. Turning now to Turkey. The market in the country had a strong start to the year, but took a hit in April and early May as the epidemic started to be felt and lockdowns were imposed in some cities. Construction in our region was, however, largely unaffected, and our domestic sales posted growth throughout the semester. The group's subsidiary in Turkey, Adocim, is actively pursuing a successful export strategy, thereby also supporting higher sales volumes. Strong export sales and the benefit of lower fuel costs and a weak Turkish lira assisted Europe profitability for the domestic as well as export sales. Turning last to our joint venture in Brazil. Total cement demand in Brazil for the first half grew by 3.6% year-over-year with demand growing by higher rates in the North and Northeast regions, where our joint venture operates at 5.7%. A quick and sharp recovery in construction activity were recorded in Q2, which, combined with the reduction in fuel costs, led to improved profitability. Revenue and EBITDA were stronger and recorded growth in local currency, but both declined in euro terms, affected by the sharp devaluation of the Brazilian real. I now turn you over to Dimitri for our outlook statement.

Thank you, Michael, and good afternoon, good morning to everyone. Compared to where -- what we were looking at when we last communicated 2.5 months ago, May and June have been positive surprises on the demand side. And I would also add that July is also shaping up to be a solid month. The exception to this is Egypt, where demand remains depressed in the last few months for reasons that Michael explained briefly, further exacerbating the severe and persisting structural challenges we face in that country. Having said that, it is even more appropriate than usual to point out a number of disclaimers on any forward-looking statements. The tweaks and turns of the pandemic evolution are one source of uncertainty with Florida and Brazil for now being hotspots. The macroeconomic impact of the crisis, given all the fiscal and monetary bazookas that have been used, can still only be guessed at. Sector-specific demand drivers, such as confidence measures, interest rates, housing inventory, infrastructure pipelines, government or state spending and so on, provide both positive and cautionary directions depending on what one chooses to focus on. And global politics remain volatile with an approaching U.S. election looming large. Having made those big fat disclaimers, our teams on the ground are cautious, but certainly not pessimistic for the next few months. Construction has been proven to be a safe and resilient activity. Project pipelines have thinned a bit during lockdowns, but are so far also demonstrating a fair amount of resilience and in some cases, even recovery. The recently agreed recovery fund in Europe and the talk of infrastructure spending in the U.S. across both aisles are generating positive expectations, although these clearly lie beyond 2020. Energy costs will continue to provide support to margins for the rest of the year and selling prices remain firm. It is, of course, a valid discussion to be had on what 2021 looks like, but it would take a braver person than I to dare start that discussion today. In this context, we are aiming to keep an agile and flexible posture in order to adapt quickly to changing conditions. Our first priority remains the health of our people based on careful protocols and contingency plans, which allow us to operate safely, then effectively serving our customers and positioning ourselves intelligently in the marketplace. I should add to that, that we have not yet changed our defensive posture. We are keeping for now a tight lid on costs, on capital expenditures, and on working capital, and therefore, emphasizing cash flow generation. I am proud of how our teams have implemented so far on all of these fronts. The encouraging results of the first half of the year are hardly just the result of buoyant markets, but also their good work. I remain confident in our ability to adapt to evolving scenarios. At the same time as we're managing the present, we are also working actively on our long-term challenges as we never tire of repeating during our past calls, mostly centered around the 2 key priorities, imperatives, I would say, of our times, decarbonizing and digitizing. That would be -- conclude our prepared remarks so far, and we would like to open it up for questions. Thank you.

[Operator Instructions] The first question comes from the line of Siya Brijesh with HSBC.

I have 2 questions, if I may. First one is on the U.S. As you rightly said, Florida has been the hot spot of late. Can you tell us what's the trend look like in July? And if you just stop back in the last 2 months, how things have evolved there. And relates to that, in the U.S., there has been talk of like Martin Marietta, you have seen that, have withdrawn the guidance citing this significant slowdown in the infrastructure spending in the near term. Can you comment on that and what you see in your project pipeline? And probably on pricing, have you announced anything for the second half or any plans? That would be great.

Okay. Let me pick up your question. July continues to be a very strong month. June, July have both been, I would say, what I would call, normal months. And we have not seen any slowdown. Obviously, there is less visibility ahead. We have not seen any slowdown in infrastructure projects. We are seeing less new projects being announced, but there is no -- we have no picture or no, let's say, sound information that there will be less volume coming forward. We do have the macro concerns. We do follow the political announcement and intentions. As Dimitri mentioned, it is an election year, and we should not expect anything dramatic to happen before the elections. But it's -- so far, things in the U.S. look good with the obvious disclaimer as to how far we can see. Beyond a quarter, I would say, there is limited visibility. In terms of pricing, prices have held very small increases, $1 or $2 achieved in our Florida and mid-Atlantic markets, nothing planned in the near future.

Okay. Can I come back on the -- your comment about PCA projecting a 3.8% fall in 2020? What are your expectations for U.S. for 2020?

Well, for our markets, we expect a better performance than the national projection of PCA.

Okay. I mean having down close to 2% in the first half, would it be fair to say that you will be probably closing flat on 2019?

If I may intervene here, you are talking about the second decimal point when we are still worried about -- or say, have considerable uncertainty about the first point before the decimal. So you are fine-tuning more than you should at this point in time, if I may be so bold.

The next question comes from the line of Roger Paul with Exane BNP Paribas.

It's Paul Roger speaking, obviously, from Exane. Congratulations on the results. I've got 3 questions. I don't know. Do you want me to ask them all at once or one at a time?

One at a time.

I thought you would say that. So let's start with the domestic market then with Greece. Obviously, some -- well, a lot of uncertainty near term. But some more optimistic comments about 2021 and a few of the bigger infrastructure projects sort of ramping up. Can you put a bit more color on that? And how big these could be and how meaningful an impact it could have on volumes, thinking about next year?

Talking about the Greek market?

Yes, in Greece, yes.

Yes. Well, there are a couple of big projects, which already kicked off. The one is the Heraklion airport. The other is the Hellinikon project, the urban development, very large, but development where the old Athens airport used to be. They are in -- well, in the Hellinikon, demolition stage of the older airport buildings and in Heraklion, they are already in the excavation stage. So we don't know exactly how fast they will move. But we are very well prepared that we are setting up our infrastructure in order to be ready to supply both projects. Again, barring COVID development, they can add significant volumes in 2021 if they move according to plan.

That's great. And my second question is on exports. I mean, clearly, there's a lot of new competition around the [indiscernible] from Turkey and North Africa. And obviously, you have a bit of a hedge because you're in Turkey as well. But also in the Northeast and U.S. and then if you think about the extra cost that Phase 4 VTS might add to Greece, it looks like Greek exports could become quite uncompetitive potentially. So my question is basically, what is your export strategy in this context and why you think about just in your capacity base accordingly?

Well, let me try and answer the question, but first, reframe it. We view ourselves as actively involved in internationally trading cement, buying and selling cement. We are a big exporter of cement from Greece, but we're also a big importer of cement in several parts of the world. And we are managing this activity to be optimal on lots of fronts and just focusing on the export part and any export margin of any Greek production does not do justice to a fairly elaborate structure that allows us to flexibly address cement demand in the most efficient way possible. Having said that, let me return to Greek exports. As things stand today with the current system that is run from -- on the basis of European law, the -- for as long as this stays in place, the net effect is a relatively small -- tangible, but relatively small addition to variable cost. It is such that the overall logistics of running an export business are influenced by it, but not dominated by it. So the fact that we have export capacity on the water or that we have efficient port operations or whatever have you is at the end of the day equally important, even -- if not, even more important. So there is an issue of other new exporters with newer plants, different setups, adding competition and being potentially more competitive than us. But at this point in time, we are reasonably confident of our ability to continue competitively serving the export markets.

That's very clear. And then finally, on sustainability. Well, first of all, congratulations on the [ ranking ]. And I think it's good news that you're contributing to the CDP. One follow-up question on sustainability. I mean a number of your competitors today have talked about new products, in particular, low-CO2 concrete. Is that an avenue Titan Cement is exploring? And how meaningful do you think less polluting downstream products could be as a solution going forward?

Well, let me take a shot at that and ask Yanni to complement if he wants. That's clearly something in the pipeline. As an industry, we have embraced -- maybe I should say, at this point, as a big part of the industry, both the Global Cement Association and Cembureau in Europe is embracing the goal of contributing to carbon neutrality by 2050, as Yanni pointed out, and we're working in that direction. Clearly, that implies that to get there, we have to both produce more clinker with less carbon, fewer carbon emissions and use less clinker. And these are areas that we are exploring, as everybody else is exploring. It's a fascinating area because there are several opportunities. And this is an area we are also working on. And if and when we have announcements to make, we will make them. But there's a lot of interesting experimentation going on in that front. Having said that, it is a big and steep challenge for the industry. There are no sort of silver bullet solutions that will provide huge improvement in a short period of time. But we have our plans and our maps, and I think, good prospects.

If I may add -- to add to what Dimitri said, for sure, we are working also on new products. And we actually announced in our annual report, an example, low clinker cement produced in Greece in our Patras plant and being tested. I think that the main issue here is how quickly will the regulatory environment move in line with the R&D efforts that we are doing and that other cement players are doing as well. First of all, in terms of setting the standards and specifications that will allow in order cement to be used. And secondly, setting the framework that will allow these products to be priced properly in the market. But we are preparing for this. And as Dimitri said, we'll announce as we move on.

That's great. So if I can just ask 1 cheeky -- 1 follow-up question. I remember, Dimitri, many years ago, you described forecast in Egypt [indiscernible] and I guess things haven't really changed much since and indeed, you've been proven light. So my question on this is very much, are we at a stage yet where you think profitability in Egypt has troughed? And when you think medium term, how do you think about that market? Why does Titan Cement need to actually be there?

Let me start with the end. The obvious -- the answer to your question, we don't need to be there, and we don't need to be anywhere. And we need to evaluate each of our holdings and positions looking ahead and not looking backward. And that's something I show you we do. Having said that, we are -- it's fascinating. When you go quarter-by-quarter, you kind of lose track of the longer-term trends. In a country where the population is growing by a couple of million a year, a couple of million people a year, who are all tucked into a narrow strip of land around an island on the coast and where they have an alternative building materials and they have sort of an earthquake prone zone and everything and a massive urbanization wave at the same time, with all those underlying long-term fundamentals, demand has been going down for the last 5 years in a row basically. Remember that following the revolution in 2011 and all the turmoil that followed, Egypt went through a very difficult economic period, and it also went through a -- following that to a period of belt-tightening and putting the house in order economically. So we've basically been through a long decline in demand that we don't think is representative of the longer-term trends. But for the past 5 years, demand has gone down. On the flip side, new -- as you know, a big new plant was built by the Army, 13 million -- 12 million, 13 million tons with Chinese financing, which exacerbated the already existing overcapacity problem. So it doesn't take rocket science to figure out what happens when demand goes down and supply goes up. Our experience in the industry over the years is that cycles or cycles and timing correctly any actions, whether it's buying an asset or selling an asset is one of the most important success factors in being successful in the long term. And certainly, our thinking on Egypt is not based on 1 or 2 or 3 quarters results. I don't know if that rather broad sweeping statement is helpful to you.

Yes, it is, Dimitri. I mean my thinking was really -- I mean, obviously, the Army has lots of competitive advantages. Not least, very, very strong local connections, clearly. And I just wonder, long term, whether it's in that context, whether it is possible to actually compete against them. That was really the origin of my question.

It certainly hasn't been easy.

Yes. I can imagine.

The next question comes from the line of Woerner Tobias with MainFirst.

Yes. I hope you're all well. If you could -- I hope -- just a few questions from my side here. Let me start with Greece because it seems you've done very well during this crisis as a country there. Your unemployment is going down now for a number of years, obviously still high. But my question here is really about the mortgage market. How would you describe the mortgage market to somebody from abroad like myself at the moment? Is it -- is it starting to work properly again? Or are we still having trouble there?

Well, supply is there, and the banks are eager to make more mortgage loans. Liquidity in the banking sector has been restored, and the bank's main problem now is booking new loans and new revenue. Demand is still relatively low. That's why we haven't seen so much volume growth in house purchases. But at least there is a positive element that supply is available and rates are competitive.

I would add that if -- as we had discussed previously, if it -- COVID hasn't come around, they were very encouraging signs on new building activity, financed partially with own funds, partially with -- from banks. There was and still is a fair amount of interest from abroad to buy property in Greece, some of it sort of driven by platforms, renting platforms or tourists, what have you. And so we were encouraged. Now how much of a setback the current situation represents? Again, we come back to -- it's too early to say. But clearly, I think that what I read in -- and I guess, we read the same stuff is that countries and areas that depend on tourism are likely to see a longer term time -- need more time to return to normality. So it's -- it might take a bit longer.

The follow-up question I have from here is when I look at the next-generation recovery plan by the European Union here in front of me, you, as Greece, get a EUR 33.4 billion contribution, net contribution, which is about 18% of GDP. That's only over 2 years' time. How do you see the ability for the country to execute this? And where does it go?

Why do you say 2 years? I think it's 4 years, '22 to '26.

Well, the bulk of it is 2 years, but it will take time to get the plans done and approved. So it is mostly year 2 or 3, I would guess.

What I would say to that is a couple of things. One is that we have a government that is -- has proven its competence over the last year it's been governing. And on a number of things, including COVID and they are preparing for this, I think, in a structured way. And Greece's capacity to absorb structural change has certainly improved in the last 2 years. It's -- it may be not appropriate to open again this whole discussion of how effectively -- how effective the reforms have been in Greece over the crisis over the last several years. But there have been some underlying gains in our ability to execute. So no, I'm not as pessimistic as your question seems to imply.

Okay. No, I'm not pessimistic. I'm hopeful. The next question and only 2 more, I apologize in advance. The next question is around Turkey, where sort of get mixed signals. It seems to me that the housing market is really starting to take off on the [ rental ] demand for holiday homes. And that infrastructure is still being spent there. How do you see the year developing from here in Turkey?

I think Turkey has different performance in different regions, both in volumes as well as in prices. We cannot make general comments about Turkey. On the residential side, our reading is that there is more domestic demand by government subsidized lending on the -- for house purchases and tourism-related real estate, I would suspect. It's closed in the same way as it is in Greece and most of South Europe. But as I mentioned before, we have grown our domestic sales by much higher than the market average. Our region has been doing very well. And obviously, all other Turkish players, not just ourselves, have been very active on the export market as well.

One more thought on that, if I may add, is that obvious, maybe that Turkey entered a financial crisis 2 years ago and demand was already at fairly low levels. So there was a -- if I remember correctly, I don't know if you remember, Michael, [ by heart ], it was like 40%, 50% down between sort of end 2017...

Over 40%, 42% somewhere in there.

Within 2 years. So the starting point in Turkey is from a relatively low point when you think of the outlook.

Understood. And then just lastly, probably equally regional answer required. But Brazil, I mean in terms of the results they delivered as the year progressed, it didn't seem to fit with how they manage the COVID crisis. In other words, volumes were stronger. What do you put this down to? What is happening in Brazil? Is it commodity demand coming back? Or what is it?

Infrastructure was on a positive trajectory in our region. In Fortaleza, there is also a new metro under construction. The overall Brazil [indiscernible] have been on a decline for something like 5, 6 years and turned around in terms of construction activity last year. It hasn't been halted by COVID, at least not yet. The restrictions there seem to be relatively lax. And the workers themselves were in other places like in New York, we had the workers themselves requesting not to show up for work. It's not only the opportunity in Brazil. People cannot live without their work. So nothing has dropped practically in most of the construction sites.

[Operator Instructions] We have a follow-up question from the line of Roger Paul with Exane.

Sorry to come back. Just to complete the sort of [ going ] around the world. Southeastern Europe, this is a region which is, obviously, over the last few years, gone through periods where it's been quite competitive. Can you say a bit about the pricing and the competitive landscape at the moment?

There have not been any major disruptions there. There was an extended time of weak prices, competition. We were able to improve prices in the last year or 2. And in the context of falling energy costs and improving prices, that has led to widening of the margins recently. Structurally, there hasn't been much change. Demand has been down this year, but...

It has been on a growing trend. [indiscernible] because of COVID. And in fact, the growth in the market helped to increase prices.

[Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Colakides for any closing comments. Thank you.

Thank you all for attending our conference call today. We wish you all to keep safe and enjoy your holidays. Have a good summer. Goodbye from us.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling and have a pleasant evening.