Wienerberger AG (WIE) Earnings Call Transcript & Summary

Ladies and gentlemen, a wonderful good morning to all of you who are present here at our Capital Markets Day, to all of you who dial in virtually. As we have a virtual meeting as well, a hybrid, obviously, please be disciplined. We will take all of your questions, but after the presentation, so we will make sure that all of you who listen in and follow us on the virtual side get the chance to ask questions, and you here as well, being present in the room. Take your seats. We have enough place available here in the front, so that Gerhard and myself don't feel isolated. From our side, Wienerberger side, obviously, my colleague Gerhard is here, who will speak with me this morning about an hour about Wienerberger, the development, what is our strategy, our performance and our targets. Then we will have Q&A, as I said, virtually and here we will have a coffee break, a well-deserved one, downstairs. You just walk down the stairs, down you have a wonderful area for coffee and refreshments. And half an hour later, we will meet here again, and my esteemed colleagues who are sitting here in the front, I will ask you to stand up so everybody sees you. Doris and Wolfgang, 2 senior managers from our group. Doris is responsible for the Piping business all over the group, and Wolfgang is responsible for the Nordic region, which obviously, in [ globes, ] bricks and pipes. Thank you very much, both of you. On another note, organizational-wise, you have here Romana and Angelica, that run, obviously, all the administrative things. If you have any questions here from your side, transportation-wise, organization-wise, please address everything to the 2 charming colleagues of mine. Thank you. Then obviously, from a checkout perspective, if you have not done so yet, with respect to your rooms, please do so during the coffee breaks, so then everything is settled organizational-wise. Your transportation to the respective means of transportation from train to plane will be arranged. And if you have here some questions, Romana and Angelica will take care of that. I think I have, from my side, done everything, which is recommended organizational-wise. I have just to say 2 other words, you find on your seats here, a brochure about Wienerberger which gives you a good overview about our activity, what we do, what our strategy is and our products, Capital Markets Day brochure, you have as well. And by the way, you have also a very interesting brochure on our sustainability policy and how we implement it in a country like Belgium, that is also to be reviewed by you. All the documents, presentations and all the live stream is also to be revisited on our website. So you have all documented very well in the traditional form. Before I start, also, one thing you have realized already yesterday, our esteemed colleague, Daniel Merl is not here. Unfortunately, the last minute, he got ill. So he had to stay at home. But as you see, Wienerberger handles also this in the last minute. So everything is fine, and he is well as well. So from my perspective, I think we can start. And ladies and gentlemen, yesterday, we gave you, I hope, a very good overview over the new Wienerberger, our Solution business, our innovative products, how we actually engage with our clients. And obviously, based on this, I would like to walk you through the team I've presented already, but I would like to walk you through the ecosystem of Wienerberger. The Wienerberger company today, our group is a group that lives sustainability. We -- it's part of our day-to-day management routine. From our perspective, it's a 200-year history that we have of sustainable development. Wienerberger is a sustainable company by itself. Why? Because the average lifespan of our products is more than 100 years. It's not a lot of companies in the economic system that can say about their portfolio of products that they last more than 100 years. And that more than 95% to 98% of our products are 100% recyclable. So here, I think the circular economy, the aspect of longevity and durability are part of our business. We obviously have now been very strongly and outspoken about decarbonization, I will give you an update in more detail about that and biodiversity. More than 240 sites that we run in 28 countries have a plan with respect to biodiversity and actions that we put in place. So a very, very responsible way of running the company, Wienerberger. Obviously, that's not enough for us. And our business is based on people. And employees matter for us. They are key for us. They are key for the future success of the company and key for the development. You have seen yesterday how innovative Wienerberger is. And this comes from our people. Because we put a lot of emphasis on education, on the way how we engage with them and how they participate in the success of the company. We have an employee participation program where they actually can buy into the company and get granted shares. And we have a reward program if the necessary KPIs or required KPIs are reached every year. So this is an important part of the development of this company. Obviously, also, we take their feedback very seriously when we engage in a dialogue and obviously try to improve our performance continuously throughout the process. Very important, obviously, innovation. And I can't stress this enough because the success of Wienerberger today in declining markets and in difficult economical development is our innovation skills and is our performance when it comes to solutions. And here again, you have seen that Wienerberger has become much more a customer-oriented company, a company that is very close to its end decision makers, the ones who actually install our products, work with our products or use our products. And therefore, I think it's so important to see also that the achievements in '23 already are great. Great in one respect. This company, Wienerberger, has closed -- has actually been able to achieve a very important transaction. The biggest transaction in its history, Terreal, without any major remedies with antitrust administration throughout Europe. We came through very well in all the major ones like France, Germany or Eastern Europe. You've seen us very thoroughly engaging in a process with them. And actually, we can say today that we have achieved all of this during 2023. We expect that our colleagues from [ SwissBorg ] who buy the Eastern European activities as foreseen because it was never part of our deal, we'll get their approval also in this year. So towards the end of this year, this deal should close. A strong performance of Wienerberger throughout the first 9 months of this year, very strong considering the sharp decline in certain end markets. Innovation rate, above 30% already. So again, a strong focus on this organic development. And very good and very well done by the team of Gerhard that we successfully placed our first sustainability-linked bond in the range of EUR 350 million this year. So a strong performance. Strong performance also financially, with an EBITDA of more than EUR 450 million that we achieved in the first half. Proactive cost management, where we already adjusted the cost structure with a decreased cost base of about EUR 30 million in the first half of this year, where we outperformed the inflation cost increases by price increases. And they stick again, why? Because we are innovative, because we offer new services, new products to our clients and don't stand still in this environment. We, as Wienerberger, invest in this difficult market environment because we're going to get out stronger at the end of the cycle again. And you see that our EBITDA margins have been stable also on a very high level, above 20% in the first 6 months. Again, our company is committed and really committed to do something good for tomorrow, not just say it, not just talk about it, but do it. Do it for the planet, obviously, when we take solutions serious for zero energy, housing, for better infrastructure for the people out there to make their lives better and more affordable. That's a big subject I will talk about in a minute as well. And for the convenience because there's lack of skilled labor. How do you install all of this? How quickly, how fast, the quality that matters? And the cost, and therefore, Wienerberger is not only producing products, and that's why we showed you yesterday in our showroom that's important how we install products and how quick, how fast and from a quality perspective, how well are they installed. So from our perspective here, this matters. And as a company, we can say that 70% of our turnover and our products are already contributing to the 0 energy performing buildings. So here, again, a strong portfolio for the future. All this, ladies and gentlemen, is based on a very sound and very strong corporate culture in Wienerberger. We are active in 28 countries. People speak all sorts of languages, come from different backgrounds. We have about, in some of our factories, already more than 30 nationalities working. So this is a big challenge for us. And independent of culture, religions and other backgrounds, it's important to have key values. Trust and respect are important for us. Passion also drives us, and the creativity is important for the future of this company. So these are very important aspects because we are growing. We are growing by M&A, we are growing organically and attracting the talent of the future is important because all of this is placed under 1 umbrella, Wienerberger. Wienerberger is a very strong brand, and we explained to you yesterday the brand recognition is the key success factor of our business of the future. We told you yesterday, above 80% in this country. And not only by people that are active in the building industry, by everybody. So here, we have really created a consumer brand in Belgium with respect to Wienerberger. Brand recognition, above 80% also in the different sectors because we have a multitude of brands that we use in the different markets and in the different sectors where we are active. And all of them are well positioned, high recognition with all the people who install them, use them or actually draw plans and architects and others that are engaged in this process. So really, really important for the success of Wienerberger is the strong brand recognition in the market. And everything again, this diversity that we have is under 1 roof. Clearly, we are the leading company in the roof when it comes to pitched roof. It's for -- not for the reason that I say this now that Wienerberger is the roof for all of these different brands that we use. The diversity, the local markets where we are active with local brands are clearly put together under the world of Wienerberger, and I will show you why it's important, because we have clear structures in the company. We are one of the only companies in the building materials sector that has chosen for a clear structure when it comes to IT platforms. And that is very important to understand for you as well for the -- from the respective customer cloud where we have all the marketing and sales and services under 1 roof, the industry cloud and also the business support cloud. All of this is 1 Wienerberger. We have now in all the different countries where we are active, 1 business service center in place or about to install it. We have 1 financial director who runs all the back office. We have 1 human resource manager who runs all of the human resource activities and obviously have professionalized all the processes and the know-how. Why is this so important, ladies and gentlemen? It's so important for the future growth of this company because we can board on future acquisitions on our platforms locally. And so this is a key aspect and a key success factor for future growth. It won't limit us in the future. So this network is obviously a key factor on the back office side. On the front office side, we have worked as well. In the past, 10 years ago, Wienerberger was engaging actually with more or less 1 customer. Who? The distributor, the builders merchants, the dealer. This was the key interface for us with the market. But we actually -- when you remember yesterday, what I told you in the showroom, 20 years ago, we took the deliberate and strategic decision to move in a new era to set showrooms up in different countries and regions to be present in the local market and engage with more decision-makers than just one. And you have, obviously, from the private individual to the contractor, everybody is, for us, a part of this decision-making process and very important to have a touch point with these different decision makers because they play, dependent on the end market, if it's renovation, if it's infrastructure or a new build, different roles, but they play very important roles for us. So by using all of this, and if I take the architect as 1 example, for example, we have been able to increase our touch points substantially from social media, obviously, to websites and emails and exchanges and regular meetings. Two, obviously, also the social aspects where we engage with them on a regular basis. So it's not just on a project-to-project basis, but the continuous dialogue. And that's so important, why we can then be successful in implementing new solutions in the market step by step. We talked about this with colleagues of you yesterday, the traditional communication, marketing, et cetera, doesn't matter that much anymore. You need to be technically skilled. The architect, for example, today, doesn't do a lot of things anymore as he used to do 10 years ago. Technical design, advice, regulation work, et cetera. So some of this stuff we take over and help him in the system. So this is a very important service aspect where Wienerberger has become stronger and stronger. And therefore, it's so important, as I said earlier, to have the right platforms. And here, we have worked in the last decade extensively to create those. But not enough. We have moved also in the digital front when it comes to production, have digitalized our whole production processes, have linked the different aspects of production, and therefore, have been able to professionalize this aspect dramatically over the last couple of years. And if I show this to you in a couple of slides, and if you bear with me for 1 second, if we take, for example, the digital order intake. You see 14% in 2020; today, 60%. So we have dramatically shifted the business over the last couple of years. This is on the customer end side. On the production side, you see how we have digitalized also our production lines. When you look at it in 2020, we had about 1% of the lines digitalized; now we have 55%. So again, you see the fast and very, very strong focus on digitalization in the business. Again, the benefit is that we have 1 Wienerberger, 1 technology for the platform for the whole of Wienerberger in the world of Wienerberger. And this gives us the strong confidence for further growth. I tell you this because obviously, we are doing or about to start a major integration, like Terreal, with completely different cultures. This group is not the group, by the way, there are different businesses that have been brought together over the years. But we, as Wienerberger, can put them on our platforms really fast and integrate them in our local businesses. So again, from our aspect is so important that we obviously can react very quickly to changing and developing local markets. Because actually, there's not 1 European market. There are many markets. And even in Belgium, obviously, there is not 1 market. There's a lot of local markets in Belgium, even with different regulations and different dynamics. So the -- the -- as I said at the beginning, the ecosystem of Wienerberger is a very complex one. It's a very local one, and that's why we have to be fast and quick locally in order to achieve very good results and outperform our markets, but we are only able to do that if we have common platforms and where we have direct access to the decision makers. The ability, obviously, to sell system solutions is only possible if you have this direct contact to the customer and the system in the back office. Let's move on then, logically speaking, to the organic growth of our business. Organic growth means for us that there are megatrends when we have to face these megatrends and offer the right solutions and products for these megatrends. Climate change. You have seen yesterday different solutions for, for example, rainwater solutions, other solutions for heating, for cooling, et cetera, for collecting water. Here again, the company has moved fast from a traditional piping supplier to a solution supplier. Regulation is driving us these days. Obviously, numbers of regulations coming out of the EU, of national or even regional legacy bodies. And also in the U.S., for example, regulation is driving our business continuously, and we have to optimize our solution according to this regulations change. Energy transition is a top subject not only since 2 years for us. Has been so, will be so for the future. And here, we have the right solutions for obviously, using in the transfer and the transition from fossil to renewable energy when we talk about energy infrastructure in the house, in -- outside the house, but also for ourselves. And obviously, as I said, the lack of skilled labor to automatize a lot of processes to make them more efficient and more highly performing. One megatrend, ladies and gentlemen, that nobody is talking about yet in the building industry is affordability. Wienerberger's top agenda is to make houses renovation, infrastructure still affordable. How can you do that? You can do that because you have long-time solutions, for example, when I talk about infrastructure, what matters for municipalities, how long this lasts and do they need a lot of maintenance or not? And here, we propose solutions that last for more than 100 years. We literally know a very low maintenance cost. Again, very important also when you talk about housing and renovation that these solutions last longer, have a very good carbon footprint and the payback over a long period of time. This is the key driver also for people who invest. We are living in difficult times when it comes to financing. So for people, affordability matters. And especially in 1 area where we grow now as we speak strongly, social housing. Proposing solutions for social housing of the future, apartments that are not only cheap but also healthy to live in as far as the indoor climate is concerned, for example. A very, very key subject for us in the future. As I told you already, the green deal, infrastructure deals, et cetera. Yes, ladies and gentlemen, they drive our business. Yes, they are important for our business. If they do the positive effect today, I doubt it because there's a lot of discussions, and you all know what politics means. Promises, only promises, nothing else. The talk is something. Action is a different story. But it's good to have them. It's good that people focus on them. And I'm pretty sure and confident that due to the fact that the EU will never meet its own target of 3% renovation per year because we are more in the range of 1% a year right now, they will need to do something. They will pressure obviously, the member states, but the EU commission has no plan. But that's another subject. It's just important that you see that there's a lot of potential still to be put in place also for new housing because there's a lack of housing. There's a lack of housing from Ireland to Romania, from Poland to Italy. We don't have enough apartments to put the people in and to have here also apartments that are livable. Because in some cities of this wonderful Europe, they are actually not up to the standards that people should live in, in the 21st century, and they are too expensive also to live in. So here is a massive work to be done. And again, I think on the infrastructure side, I don't have to mention to you that in a lot of countries, the infrastructure is outdated. My colleagues will speak about it a little later this morning. And a lot of investments have to be done. So again, here, you see that Wienerberger's portfolio is rightly positioned for this future growth that we will see both in North America and in Europe. When we look at the strategy of Wienerberger, we have clearly said we want to increase our share of innovative products. And you see it clearly in the last 10 years that we've been able to do so. We are now about a little bit above 30% in percentage points; in absolute terms, obviously, much higher because it has increased dramatically in turn over the share of our innovative products. And we have set ourselves, again, a clear target for '26 with 35% innovative products. So again, a strong boost with respect to innovation within our company. On the system solutions front, also strong improvement from simple products to system solutions. And here, obviously, we have said '25, we target by the end of this year. We are on good track for this. And we set ourselves, again, new targets for '26 with about 30%. I have shown with my colleagues yesterday, the system solutions to use, where we get a better feel what the Wienerberger system means. And obviously, we will integrate smart solutions. You remember that we have sensor businesses now within our company and data transfer businesses into our solutions and therefore, improve the performance even further. Obviously, and this is very key also that I mentioned earlier, that's the positioning of Wienerberger when it comes to net-zero buildings. Here today, 70% of our portfolio contributes to this target, and we want by '26 to increase it to 75%. I think this is a very, very key driver. And for you, as analysts and the investors, one of the measurements of our company of the future because here, we really make a change when it comes to our portfolio, and you can check if we have the right portfolio of the future. And again, I think here, we have done a lot, a lot in all aspects of the business, from the roof, to the facade, to the water supply, to the building solutions in the house when it comes to heating and cooling, but also to the infrastructure side. Here, again, a strong, strong performance of Wienerberger in the field of this positioning of our portfolio and the future targets. So 3 major targets for Wienerberger on the innovation side, the system solutions side and the contribution to net-zero buildings. And with this, I would like to hand over to Gerhard to give you an update on '23.

Thank you, Heimo. Year-end is coming closer, and we are constantly reviewing also our end markets. And what we have seen also since the summer that end markets are quite volatile, stay volatile. One war is following the other. What we have seen during the last months is that especially on the new build side in Europe, that we have seen a slowdown, a further slowdown. So we expect, from today's perspective, a new build market in Europe of minus 35%. You remember, we announced in August a minus 30%. We confirm from today's perspective, also the renovation markets in Europe. So renovation, we see this on a lower level, but still much more stable than we have seen in the new build sector of Europe. And we basically revised the infrastructure activity. Infrastructure improved. We had -- our latest estimate was a minus 10. From today's perspective in Europe, it is around about minus 5 for Europe. So it is much more stable and even better what we -- in the beginning of the year and let's say, during the summer, expected. North America, more stable on a low level, but still basically development. What we see is much more stable than what we see in Europe. So the minus 20 is also what we see from today's perspective. Renovation, minus 3. And in the U.S., especially in the U.S., when it's about infrastructure spend, we are also benefiting basically from the -- from the huge infrastructure program, which is up and running in the U.S. So we see for this year a more stable development on the infrastructure field. And we had in August a minus 5. So we see here that volumes are picking up, so we see also here a more stable development when it's about our exposed end markets for 2023. I think important to keep in mind, we confirm our guidance. We don't see any need to adjust guidance. We are confident to our guidance, what we gave also during August. It's EUR 800 million to EUR 820 million despite this difficult market environment. And basically, we can only basically repeat once more. We have a difficult market environment. On the other side, Wienerberger has a very strong financial performance. We do the necessary things. We take out the costs, we take out fixed costs, we flexibilize the fixed costs where needed. So we take our shifts. Basically, we -- we try to flexibilize all the fixed costs up to a certain extent. That means shift patterns, that means also temporary shutdowns, that means also taking capacity out. And important to do that very fast. Because also the markets are volatile. So you have to be in the decision-making process you have to be very fast. And we succeed very well, I would say, because we see also that the fixed cost structure is fine. We stick to our pricing. So also, pricing is very strong. And we work constantly on our cost inflation. In the beginning of the year, we assumed the cost inflation of plus 10%. Half year, I communicated a plus 8%. I expect for the full year at plus 6% on cost inflation. And you see already there, we're basically working on your consumed cost inflation and then consciously use this wording, consumed cost inflation, because it's the cost increase which we have to digest via our P&L. We are working constantly basically on the cost structure, on the efficiency of the fixed costs, but also basically on our purchase prices, what we have basically to consume. So we have strong margins. And we confirm, as I just mentioned, our guidance for 2023. I will give you also a first outlook on our net income, profit after tax, because I think also this is a good chart where you see how resilient, how strong and how different maybe also is compared to the past. We had in 2021 -- and this year was one of the years which had, I would say, the highest building activity or, let's say, the highest activity on the construction side, but also on the infrastructure side. And if you see basically the chart, what is basically in the -- when you see the line, which is the market index, you see that the market dropped basically by 27%. And -- and we are able basically to keep our net profit stable, respectively, we expect by the end of the year to have even a slightly higher net profit compared to 2021. Net debt, financial leverage, I think a very solid financial position of Wienerberger. By the end of the year, we expect a net debt position below EUR 1.1 billion. This comes along with a net leverage below 1.5x before Terreal. Including the Terreal acquisition, I expect net debt or financial leverage which is below 2x. Heimo mentioned it before. First half, very strong performance with a EUR 450 million on EBITDA, operating EBITDA, we are consequent and very disciplined. It's about cost management. We are fast, taking fixed costs out, flexibilize the fixed costs and also bringing basically the necessary contribution from that side. So we had a EUR 30 million from the fixed cost or from the cost management side. We are still continuously implementing also our self-help program. We had around about a EUR 20 million contribution from there. And we are very careful with our pricing because we had a cost inflation in the first 6 months, as I said, of 8%. This will come down for the full year to plus 6%. And pricing is very strong. So we are also clearly outperforming our cost inflation in the first half. And also, we expect for the full year to outperform the cost inflation for 2023. And this finally results also in an EBITDA margin, which I would say for the first half year is even, I would say, exceptionally high with almost 21%. I expect that the EBITDA margin will be basically more on a level of around about 18% to 19% on a full year base for 2023. So a very strong position even in this difficult market environment where we are in. I think on the ESG focus, Heimo, I hand over back to you.

Thank you, Gerhard. And ladies and gentlemen, obviously, ESG, as I said, sustainability is in the key of our management attention. We have decided to break down ESG into different projects, into different periods. We have launched, as you are well aware, a first program that took us into '23 from '22 -- 2020 to '23. We have then a next one from '23 to '26 and then one till '30. So why do we do this? For 3 reasons. First of all, we want to be clearly ensuring a long-term sustainability focus in the group. Clearly communicating what we want to achieve, what are transparently and communicating it clearly what are our targets, not just talk about them like a lot of people, but clearly say, what do we want to achieve and make it part of our business expansion. So these are 3 key elements. And if I walk you through the first program that we have, not every detail, but you see that all the different targets that we have put out in '20, we are meeting it. We are meeting the CO2 reduction, we are meeting the biodiversity and others and the circularity. So here, a clear communication, what our targets and what we achieved. We have worked extensively over the last 12 months, how do we need to adjust our second program. That brings us into '26. And we have engaged with the stakeholders, materiality analysis and a strong communication with all the stakeholders. And clearly, you find here, for example, 4 elements, and I took only the 4 that are important for us here in this meeting, revenue from products supporting net-zero buildings. I talked about it. It's a very important subject for us. Water management, waste management and health and safety are also now newly part of this communication and target setting. And here, again, if I take only a few out of this, I take, for example, our decarbonization. We have again set ourselves targets. Baseline is 2020, when we talk about CO2 emissions, we say clearly up till '26, 25% reduction. Now also Scope 3, 10% reduction and 15% renewable energy use in the own operations. So here also, a clear target setting there. If we take water management, for example, and waste management, you see here reduction targets also with respect to our business clearly defined, to be then communicated to you so you can follow the progress of our development. And I take here diversity and inclusion, we have set ourselves also targets that all of our business, all of them from India to the United States, having -- have diversity and inclusion plans with equal action for pay and for opportunity in the company. So also here from a social perspective. As I said at the beginning, people matter for us, and we are clear on this front as well when it comes to communication on these targets. So here, clearly targets for all the different aspects. And I don't want to walk you through all the details, you can find them, but I just wanted to put attention to this fact. I just want to go a little bit deeper into the focus when we talk about the products that are supporting net-zero buildings. And here, I said, obviously, it's important because there's a lot of regulatory work coming from the EU Commission, but not only from the EU Commission national states, also the U.K., for example, has its regulations with respect to these products and these solutions. And again, here, we -- with our portfolio, as I have explained already today, we are very, very well positioned for this promising future. The target is very clear for us, 75%. We are currently at about 70%. We have also a Moody's second-party opinion about our performance and how we set our targets you see here. The rating is significant when it comes to contribution to sustainability and the alignment to the principal is best practice from Wienerberger in the industry. So here, we have set a new, I would call it baseline. Let me walk you a little bit more through the decarbonization strategy of Wienerberger. And I hope with the next 2 slides, I give you a clear picture what the company is currently doing and where we are. When we look at the measures, switch to green energy, for example, is obviously a major target for us when we talk about mechanical use. That means green energy in the production process. And the thermal use when we move more towards green electricity and green gases, for example. We have achieved already the mechanical use, and ongoing is the thermal one, and that's a big part, and we'll talk about this in a minute. Raw materials. Decarbonization of raw materials use, secondary raw materials, all this is currently taking place, and we are running very efficiently on this part. A lot of optimization comes from this in the near future. Efficiency improvement. You have seen us and heard us talking about the different fast forward projects, et cetera. So this is ongoing in the company and running. When we talk about new technologies in carbon capture, we have testing phase or planning in the company where we have already the necessary investments done and testing them and can so obviously, over the period report on that. If you look at the time frame here, '23, 15% is achieved. '26, the target of 25%. And 2030, we will effectively have reduced 40% of our carbon emissions. So well on track with respect to this. What does it cost? This was always a question from all of you, what does Wienerberger invest here in this field? And by the way, so that we have no misunderstanding on the hybrid meeting, the virtual one and here. This is integrated in our growth CapEx. This is integrated in our growth CapEx. There's no additional CapEx, so that you understand it very well from my perspective. We have obviously achieved the 15% with this EUR 100 million invested that we have invested already. The next phase is 25% which is planned and we have estimated the CapEx of EUR 200 million, which is then in the guidance that I will give you at the end of this meeting included in the CapEx. So there's no additional CapEx to be planned. And obviously then, the '30 is about 40% reduction with the EUR 300 million. So I hope I'm very clear on this part. We are very confident at Wienerberger that we'll achieve our targets. We have set here the different measures and put them in place and are working on them. It's not a home run, as the American footballers would say. It's a very big challenge. But we are confident that we will achieve those results. And we also link them to our financing. As Gerhard has put it also yesterday in our meeting, and he will talk about it also today, the successful placement of the bond shows that clear KPIs are well perceived by the investor community. And here again, decarbonization targets and the net-zero building contribution from our product and solution side are the key drivers for the KPIs of this bond. So again, here, we keep our promises throughout the whole strategy, throughout the whole development and positioning of our business. Let's talk a little bit about M&A and the future of the company towards what have we done. This company has performed successfully in more than 40 deals, successfully has integrated them. I've shown you, we have common platforms. We have not just bought the companies and put it on the balance sheet. Now we have integrated them, have given them a strategy, have developed them. Have integrated more than a couple of thousand people. That's why I told you it's so important to have a common culture and not just stay to your part of the Wienerberger Group. When we set criteria for acquisitions, we set them clearly because we want to create value, we want to have a strategic fit. You know our strategic fit to improve our performance in renovation, water management, energy management and also in the new build when we go about efficiency in installation and a cultural fit. So clear criteria when it comes to acquisitions. Let's just talk about 1 major acquisition in the past. Sorry, I was too quick. This is Meridian in the U.S. A true success story, ladies and gentlemen, a payback of less than 2 years. And you can say, sure, you were lucky. Yes, yes. Yes, you need luck in life, but you need also hard work to get there. And the people did a great job in North America to put this company on our platform to restructure it completely, to put it in a perspective where we have significant synergies coming out of this deal, significant improvement in the plants and in the output and much faster integration than we originally planned. Because 2 years, it took us to get there where we are. You remember -- just a little side track. When I told you about the acquisition that we will realize about EUR 60 million cash in from real estate sales. And we will. By beginning of next year, we will sign the last deal and we'll come to the EUR 60 million. So we keep again our promises when it comes to M&A activity, a very, very successful one. If you look at the performance of our North American business, you can see it, obviously, from the nearly 200% in turnover to the 400% in EBITDA. A very, very strong performance of our North American acquisition and the performance in all aspects of the business. Yes, ladies and gentlemen, it was the right timing. Yes, we were lucky, but it was a damn hard work to get there. But we show that Wienerberger can do it, and we have the right platforms to do it. Now let's move to the other one that we are currently in the phase of getting to an end. It's the Terreal acquisition. Again, a very promising one for not only 1 reason, but a lot of reasons. First of all, we consolidate the industry, very important aspect. Consolidation is a key driver of future growth and of margins, of pricing, et cetera. Here again, being the 1 company that is really the leading one in pitched roofing and clay roof tiles in Europe is important. 29 sites, we have no remedies, no sites to sell. Very good for us because we can integrate the whole business that we buy. We will sell about 75 million square meters a year of roof -- pitched roof in Europe. That's a lot. That's a lot. It's difficult to imagine what 75 million square meters are, but it's a lot. What does it mean for Wienerberger? Not selling only roof tiles. You've seen it yesterday. Accessories on the roof, under the roof, insulation, photovoltaic. There's a lot of things to be done at a lot of people that are currently working in Wienerberger to get the whole portfolio right for the different markets. And it means also integrating 3,000 people with a different blood group. And putting them culturally in our perspective, giving them the passion to drive the business further. This is our key one. And we will be a French company in France and a German company in Germany. And that's how we are strong, local business with a common platform. And this is the successful integration. The preparation has started already even if we are still in the closing phase and we'll have to wait formally a couple of months, but we are already engaging with the teams on the ground to do so. So here, the work has started. We become a leading supplier. And here, I have given you because I anticipated your questions. Your well appreciated questions about what you have to put as numbers. And here, you have, I hope we give you the right numbers that you can then use. We take the baseline of the business is about EUR 100 million that we add on the cash flow side to our business. We will achieve the synergies from the cost side and obviously also from building this new platform on the roof and get to the EUR 150 million by '27. Is there somebody in the room or in the virtual room that will say, Mr. Scheuch, are you a little later than expected? No, I'm not, just the closing takes also a little longer than expected. So we are fully in line with our original planning. And as I said, we used the time wisely and we've learned from the U.S., preparation is everything in integration, get the teams together. Gerhard is working very hard from Paris to Vienna, and obviously, getting the IT platforms, then already prepared for next year and the whole teams together. So this is the major part of the work that is already put in action. So here, again, I think you have a clear overview over the different steps of the integration and the synergies of the Terreal transaction. Again, if you look at it from a financial perspective, here, as I said, the run rate is about EUR 100 million, the post synergy is EUR 150 million. If you take the multiples, this is about 6.6 multiple pre-synergies; post-synergies, will go down to about 4, and the payback should be around 4 as well. Gerhard mentioned also the EBITDA, net debt to EBITDA level, the 1.9 here is without the EBITDA contribution; it would be, obviously, if we were to have this on the balance sheet, without the EBITDA contribution in '23. So that's a pro forma one. Okay. So this is on the synergy side and the Terreal one. And now I hand over on the financial track record to Gerhard again.

Thank you, Heimo. Just some slides on the financial track record for the last 10 years because it's, I think, also impressive what we see and what we can report and also how this transformation is paying off basically that we put a lot of focus in reducing the new build exposure, which was 10 years back in the range of 65%, even to 70%, and we constantly basically reduced the share of the cyclic business now below the 50%. And we are today with the share of infrastructure of around about 20%, renovation is around about 30%. And the new build sector has an exposure below the 50%. Taking now Terreal into consideration, how will this develop? This will be next year already look a little bit different because we will further decrease the share of new build. As Heimo just said, the Terreal business is also strongly exposed business to renovation, to roof renovation. This is a big share, around about 2/3 of the business is renovation business of Terreal. So renovation will increase around about to 35%, and new build will further come down more in the range of 45% and maybe slightly even below. Just some KPIs, how they developed during the last 10 years. Revenue, we have -- we started basically 10 years back with the revenues, which was around about EUR 2.5 billion. And you see with an average CAGR of 8%, we had last year revenues of almost EUR 5 billion. On EBITDA, from EUR 0.2 billion, up to EUR 1 billion result, which we reported last year. And also concerning the cash conversion we have today or let's say, during the last year's, a cash conversion rate which is around about between the 85% and the 90%, which is also a very high and strong share, which also shows how strongly cash generative the business is. I think there is no better chart than this one to explain how different -- in the sense, how strong and how resilient Wienerberger is today. And we just present here the last 6 years. And you see also, the dotted line is the market index. So you see how the market is basically according to our market exposure, meaning that's the weighted average of the market index according to our market exposure, so meaning infrastructure, new build and renovation. And you also see where the market is today. As I said in the beginning, we have a difficult market environment. We have a market index according to our market exposure, which is 27% below the record year concerning basically market activity of 2021. And you also see how EBITDA develops. As I said before, we confirm our guidance for 2023, which is in the range of EUR 800 million to EUR 820 million. And you see also where we have been, where markets were clearly stronger than what we see today or where we are in today, and where the performance was. So it is also clear how this development of this clear transformation to a more innovative and also to a highly strong margin business is developing. We had, at that time, EBITDA margins which was in the range of 14% to 16%. We are today in the range more of, let's say, close to 20%. And we have basically an EBITDA which is in the range of EUR 800 million to EUR 820 million for 2023. So a very strong performance when it's about 2023. Let us have a first look on 2024. What we see, as I said in the beginning, markets are volatile. The geopolitical situation is also very unstable. But still, we already have a first view also for 2024. And when it's about cost inflation, we expect the cost inflation which is in the range of around about, let's say, 4% to 5%. The major driver of cost inflation is, I think, without any surprises, personnel costs. We simply see also during the last years that the personnel costs constantly increased and it moved the cost inflation from more or less from energy, from -- to logistics. And also arrived now in the personnel cost to be the major cost driver for next year as it is also one of our biggest spends, if I may say so. Cost position in our cost structure is personnel costs, which -- where we expect a plus 5%. So this is basically what we feel in our cost structure, which hits us simply the hardest. We've seen the raw materials, plus 6%, which is also more driven by the indirect costs, meaning by energy costs, by logistic costs. Raw materials itself are not increasing that heavily. And maybe even here, seeing further, maybe there is even a small, let's call it, reserve or however, maybe this is even a little bit slightly lower for 2024 on the raw material side. Energy, plus 7%. Yes, we are benefiting simply by -- out of our forward buying strategy on the energy side. And on the granulates, on the plastics, we expect a more stable development. The granulates were decreasing in the second half and still basically on a decreasing path basically in the second half of 2023. We expect that also the grains are stabilizing into 2024. What does it mean for our pricing? We are preparing our markets for a further price increase in 2024 in the range of 2% to 3%. This is also what we need to cover this cost inflation, which is in the range of 4% to 5%. When it's about financial position, financial policy, we mentioned that quite often that we said, okay, basically, with the financial leverage in the range of 1.5x to 2x, we feel comfortable. This is a range which is fine. When you do an acquisition, it goes up to 2x, let's say that way, then we try to bring it back on 1.5x. As Heimo mentioned before, by the end of the year, we expect a financial leverage of below 1.5x. And also thinking forward on 2024, it is what we expect it will be by the end of 2024 in the range of 1.6x, 1.7x depending, but considering also basically the Terreal acquisition, what we have in front of us. Working capital swing, we will move back to a more normalized working capital swing. Please keep in mind that the working capital ratio is what you have seen during the last years, especially after COVID. You remember after COVID, basically, the second quarter of 2020 was a quarter where everyone basically was slowing down the production output. And then there was a very quick catch-up in the third quarter and in the fourth quarter. And then, it started in 2020 that our working capital ratio was since then more in the range of, let's say, 16%, 17%. But this is, for us, too low. So we need a working capital level, which is in the range of 18% to 20%. So that means also for the end of this year for 2023, we will expect a working capital ratio of around about 20%, which is fine for us, which fits, which makes us ready also for 2024 to have the right products, basically on our stock yards and to be ready to move into 2024. You also see that we have quite a significant swing in our working capital. You see that half year that we build up basically our working capital in the range to 24% to 26%. And then basically, due to the seasonality of the business, we bring down working capital on a normalized level of, as I said before, to 18% to 20% by the end of 2023. CapEx, we also give already a first guidance on the CapEx, on the maintenance CapEx. These are the CapEx what we have to do to keep everything up and run, to keep our industrial base in shape to do the necessary things, and we guide for 2024, a number of EUR 150 million to consider. This is slightly lower than what we would normally invest into the business, and this is including the Terreal acquisition. So all the plans, what we mentioned before are included from a maintenance perspective. So we had, in the past, most probably you have still in mind, a EUR 140 million. This was our normalized CapEx before Terreal. Due to the difficult market environment, we will reduce this year, our maintenance CapEx to EUR 125 million. We will also move into 2024 with maintenance CapEx of EUR 125 million, will add a EUR 25 million for Terreal, and this is the number EUR 150 million what we foresee for 2024 when it's about maintenance CapEx. A normalized maintenance CapEx based on the industrial base considering Terreal acquisition would be EUR 170 million. So keep in mind, so after 2024 to 2025, 2026, we will come back with maintenance CapEx in the range of EUR 170 million. When it's about gross CapEx, gross CapEx, we keep going with our gross CapEx. You know that we invested during the last years in the range of, let's say, between EUR 150 million and EUR 250 million. We also keep investing into the business even if the market environment is difficult. So we further invest and grow the business. So we foresee also in the next years, a CapEx program, a growth CapEx program in the range of EUR 150 million to EUR 200 million. And as Heimo emphasized before important, this is an all-in number. This includes also our necessary ESG investments, what we have to do to fulfill basically our targets, what we have set in 2026, -25%, -10% on Scope 3, et cetera, et cetera. So this is an all-in number between EUR 150 million and EUR 200 million, we will invest in 2024 and going forward. And this is basically what we expect with a payback -- with an average payback of 5 years because, yes, on the ESG side, the paybacks are not in the range of 4% to 5%. They are a little bit higher. They're more in the range of 7% to 8%. But we have many of other projects, which are more in the range of, let's say, the good ones, the really good ones are in the range of 3%. Then you have a lot of payback CapEx in the range of 4%, so you come to a weighted average payback basically in the range of 5x. Coming back once more to the integration of Terreal, Heimo, I think some additional [ thoughts ] on that.

When we talk about M&A and what Gerhard has explained, the gross CapEx is CapEx that we can decide, it's discretionary. So we decide if we invest more or less in the business, the same goes with M&A. Obviously, '24 will be marked by the integration of Terreal. But ladies and gentlemen, I tell you also these days is our interesting days because a lot of companies are under pressure. They've financing issues, have balance sheet issues. And for us, obviously, when we want to expand our business, that's the right time to focus on that. Yes, so we have, as we speak, a very interesting pipeline of smaller, midsized and bigger acquisitions in North America and in Europe. It doesn't mean that we have to do them, but we can we can, in a very relaxed way, look at them, prioritize them and then come forward with the one or other acquisition. When we talk about performance, if we say that this year, we'll close in the range of EUR 800 million to EUR 820 million, considering the market development, we foresee, as we speak, the end markets being as they are today, that we will be able, including the contribution from the Terreal acquisition to end about in the range of EUR 900 million for next year. So a very clear strong statement from us as of October, what is it today? Mid of October, I would say, for next year, with all the volatility that we face in the marketplace, obviously, but we love the stormy waters at [ Wienerberger ]. We have always operated in this environment. It's rather -- it's not as nice as outside today there. It's -- you can ask questions about pricing, about markets, et cetera. Yes, it's not easy. As I said, it's not a home run. Is it easy to raise the prices next year about 2%, 3%? Certainly not. Certainly not. Our teams are very committed. They're working hard. And they need to go out there with some innovation, not the same products, old stuff, et cetera, that we had in the past. So you -- as I said, you have to sell something more, something additional in order to achieve that. That's our target, that's our commitment, that we have in front of you. So it is a strong statement of confidence and of strengths that we put forward to you for this year. Especially, when we talk about guidance and especially for next year when we give you an estimation. But as I said, we, at Wienerberger, don't stand still. We just don't. We love these crisis times because you can create a lot of value for you as shareholders. And we -- if we look at the midterm. Midterm, you have seen our targets '26 ESG, other targets when we talk about innovation, about systems, about net 0 buildings and contribution to them. What does it mean for us business-wise? Bottom-building, I think, will be in '24 next year. Why? Because obviously, you see the permits are going down due to the simple fact that financing is not assured. You know that a lot of people cannot finance today their projects individually or project developers, et cetera. Literally, in some countries of Europe, the new-build sector for apartments, for houses has come to a standstill. That's what it is. It's a very dramatic situation right now. I don't shy away of saying this because some governments actually caused the mess, like the German government, for example. It's a real messy situation there. So we would say that this will take us through '24. We see some bottom-building here, slight growth in '25 and then a sort of normalized level from a Wienerberger perspective. I'm not a forecaster for the whole markets. But from our perspective, we see here a normalized level. What does it mean? You remember the chart of Gerhard, when he made the index 100% in 2001 and then coming down. We say that this normalized level is not going up to the '21 levels. We say it's about 86% of this index that we will reach in '26. So this is where we position ourselves today as Wienerberger. What does it mean for us, money-wise or financially-wise? As I said, we start with this guidance for this year, EUR 800 million to EUR 820 million. And ladies and gentlemen, let me say something. We won't keep this automatically in the years to come. We need to fight hard to keep this level. And this is only possible with innovation and continuous improvement in our business in order to keep this level and the margins. As I said, in year 3, and you have seen my chart earlier, EUR 130 million will come from the Terreal acquisition. EUR 100 million will come from the gross CapEx. You remember between EUR 150 million and EUR 200 million, we will invest in the business with a 5-year payback. This is innovation. This is a system solution. This is Fast Forward. There's a lot of sort of things that we do in business, and we will grow it, therefore, organically with about EUR 100 million over this period of time in the next 3 years. And obviously, as I said, we anticipate a certain degree of market recovery over the next 3 years from the 73% index that we see in '23, up to about 86% in '26, with normalized margins, with not improving margins with normalized margins. So that we don't say that this year is out-performing the current situation. So this, altogether, obviously, you are better than myself when you do arithmetics, but I've done it for you. So it's easy that at the end of the day, we will end up more than about EUR 1.2 billion estimated in about '26. Is this achievable target for Wienerberger? Yes. Clear, yes. That's what we commit ourselves to as management. You have seen us committing to numbers in the past. We do this also this time. As I said, we love stormy waters, yes. We love it. It's a good time to set new goals, to set new targets, it's challenging. But as I say, today, in this environment, I'm optimistic. I'm in this industry for more than 26 years, and I've seen a lot of declines in going things up and down. But I've never seen a Wienerberger stronger than the one that we are today, enormous commitment from our management teams, enormous commitment from the more than 20,000 people working for us. These days, they are highly committed to the targets that we have set. And keep in mind, ladies and gentlemen, over the last 10 years, we have significantly consolidated the industry, significantly, yes. There are a lot of players that have left. There's a lot of change that came to the industry, and there's a lot of performance that has changed technology-wise, sales-wise and otherwise, that we have sort of brought to the company and to the positioning of Wienerberger as it today. And this makes all of us very committed to these numbers and very optimistic that we will reach them. That's why, obviously, on this growth course, we will focus very strongly on a portfolio expanding and expanding our portfolio when it comes to renovation and infrastructure. You've seen yesterday certain of our solutions, you have seen how we constantly focus of them. And I can tell you, when you look back personally 20 years, it was difficult to conceive where we are as Wienerberger today. Some of people in the market, they have probably still in mind this is the old brick industry. We have nothing to do with this old brick industry anymore. We are a very modern and future-oriented company when it comes to solutions for our clients. And this is, I think, the major driver when we talk about organic growth for this company in the future and obviously, you have seen how fast we react. Ladies and gentlemen, last year, we were working with management to get as much product out of our production units as possible because demand levels were very high. Today, we have to manage a completely different scenario. And as Gerhard has explained, we manage costs. We manage capacity utilizations. We manage margins, but it's very different from last year. And you see how quickly Wienerberger adjusts to the situation, how fast we are. And we are preparing ourselves, as I say, also for the next 3 years already. This is what we focus on, and this is our major driving force within Wienerberger. I do sincerely hope I gave you a good overview together with Gerhard about our company, what we're currently doing, what we are focusing on and what our targets for the next couple of months, next year and the next 3 years are. Thank you very much for your esteemed attention. I do hope that you will have some questions. Otherwise, we run all of us down for some coffee for some well-deserved. Thank you very much for your attention.

Gregor Kuglitsch from UBS. I guess my first question is maybe just on the markets and kind of what you're assuming, obviously, you're saying sort of the current run rate. I just want to understand in terms of, let's say, '24 versus '23. I guess that still implies a decline, but if you can give us a feel because the exit rate is lower, right? So if you can give us a feel what kind of decline you're thinking for your business, maybe simplistically in volume terms for next year to get you to that sort of EUR 900 million? And secondly, I mean we've seen some perhaps evidence of some local price cuts. You're kind of saying it's not really happening. If you can just sort of tell us what you're seeing in pricing more broadly? And then maybe a final question, which is strategic. You kind of alluded to it, but perhaps there could be some distress, maybe valuations come down. So what are you willing to do? I mean, you're obviously just about to close Terreal, which leverage the balance sheet a bit. But what are you prepared to do in case something comes up?

I might take, with your permission, your last question first. Yes, there is already some sort of signs of distress among industry colleagues, some smaller ones. You've seen us move on these targets if we can very quickly. This is not a big sort of amount that we need to contribute to those transactions. So step by step in different markets, we will focus on them. And if some interesting opportunities arise, we will certainly do that, yes? But this is nothing to sort of a big -- we are not talking big numbers here. It's a couple of million euros to be honest, yes. Midsized transaction between EUR 10 million and EUR 60 million, for example, yes, they might come, and we will look carefully at those because they are highly value creative transformational deals. I think for the moment, it's too early to talk about those because we have, as you correctly say, one transformational transaction that will close and have to implement. So I think from the perspective of strategy, I think here, focus on smaller ones and midsized points if they are available. So not -- you've heard my colleague, Gerhard, very clear on the balance sheet and our sort of target when we talk about net debt level, and we are committed to this one. Pricing generally is stable, I would say. Obviously, in a company when you have 28 markets, national markets and a lot of regional ones, you have competitors left and right, that sometimes cut prices and are very excited about this. So this is a thing I think, which we have to deal with. Nothing, I would say, to get excited ourselves. We are the market leader. We know how to act in such situations. This is nothing where I should sort of say, I throw -- I'm completely nervous, so I'm unrelaxed with this. This is a normal situation, which we will have to face. Again, I said, we as the leader, when it comes to innovation, to solutions, we have to show the way forward and just stick away from the commodity businesses. So far, I can say that the price increases that we have positioned and our prices stick. Do you want to say something to that...

I think I can confirm basically about the pricing, what we have seen. And I think what is important, we prepared also last year, the price increases for 2023, we realized them basically in the first quarter, and we see also prices up, they are stable. And I think what we are working on is more on the cost side. We see also that cost inflation, as I said before, we assume the cost inflation of plus 10%. This will be plus 6%. Cost structure, taking out basically costs were needed and to have basically the margin what we earn stable and protect basically the margin because we know prices are under pressure. It's not easy basically to go out with price increases, no doubt about that. But then basically, you have to first secure the price setting, what you have on the market. Secondly, you have to work on your cost structure. If it is on the cost inflation, on your procured cost inflation or on your cost structure, this is basically where we are putting a lot of focus on.

Your first question was relating to market development in '24. Let me put it this way. When you talk about infrastructure and renovation, you will see more stable trends, I would say, for '24, and that's what we have assumed based on the numbers that we see towards the end of this year. So this should continue into 2024 as well. On the new build side, I think you will have a mix, and it's difficult to predict at this stage because it's very early, but some markets might be slightly down next year because they are entered the down cycle a little later and some markets should stabilize. If you want me to be more precise, I would say, on the Eastern European front that has seen sharp declines already in 2022 and into '23, they will stabilize. We talk about Hungary, Poland, Czech Republic, those countries. And on the Western European front, you might have still some declines in 2024.

Markus Remis with RBI. Can you maybe elaborate a bit on the capacity adjustment and curtailments that you've implemented? And if you have more plans in the drawer. And then also on the walk down through '26, what I -- what at least I might be missing from my perspective is the self-help, which you usually have penciled in, in the guidance -- was it just me missing it? Or is that some sort of buffer that you have baked in that waterfall chart to kind of have some leeway in case markets do not recover as expected?

I think if I may take this together with Gerhard, but in the EUR 100 million, you find everything included. You see that's the growth CapEx, as I said, that we put into the business. That's the automation, that's the energy efficiency things that are the sort of short paybacks also that Gerhard was alluding to. Here you find this part of the Fast Forward going forward. By the way, for us, Fast Forward is a continuous project to defend our margins, to improve the business to grow organically. This is something that you will see continuously going forward.

So self-help will not Fast Forward, however, we call it. Basically, it is simply to work on a continuous improvement. This will not disappear. As we said, this is part of the DNA. We still have our program up and run. So many, many initiatives that we follow up. We see a shift more in the direction of manufacturing excellence. We see that there is also with the energy transformation, a lot of things to do, opportunities where we can further improve basically our cost structure. So it is a combination of manufacturing excellence and also basically out of innovation because the new products are also contributing. And this is how we also see the EUR 100 million for the next 3 years contributing basically to organic growth.

And coming back to your first question, Markus, when we look at the market developments that we have shown to you, you have followed us, obviously, very thoroughly, how we came down, especially in the new build one since the beginning of the year and adjusting capacity market by market. Yes, we are doing this proactively. That's why we have the EUR 30 million for active cost management already for the first half of this year, we will do so. It's included in the EUR 800 million and EUR 820 million guidance. It's included in the target set in for 2024 with the EUR 900 million. So we have obviously built this and factored in according to our market estimates. As the markets are very volatile these days and as we adjust basically, I would say, on a monthly basis, it would be very, very detailed to give you these numbers. But you can assume that everything is included in our numbers that we've shown to you today.

Can you maybe just indicate the percentage of capacity you took out so far? And will you incur any major costs in the coming quarters?

No, I think that's -- I would say it's pretty digestible from my side.

I think it is a difference because you have to distinguish between really capacity taking out with final closures, then we also go for temporary shutdowns, and we take capacity out by shift reduction. So this is really a 3-step approach, basically. And finally, even a fourth approach is to reduce basically the shift speed. And this is a combination really to take out finally capacity. This is overseeable.

Markus, I don't want to go in all details. It will go much too far with 28 countries. But for your benefit, if you take -- and it's easy to assume take the Hungarian market. The Hungarian market, everybody here in this room knows is in the new build sector down above 50%, 5-0, minus, compared to last year. That's what it is. So you need to adjust your capacity. Would we have temporary standstills? We have sort of taking vacation. We all do sort of plan this, yes? And there will be always longer stances over the winter. That's what it is. That we take out capacity. We manage it. But on the group level, we have [ pulled it ] in. So this is a step-by-step approach, country by country. Trust us that we know how to do it over the years. We have experienced it. COVID, we had pre-COVID declines. We had after COVID adjustments. Now we have a very different setting. So we have actually already done the necessary homework when we come to these countries. And do it continuously country by country.

Two questions from my side. When I look at the exposures, I have our own estimates, what actually is residential and new -- and nonresidential infrastructure? You only give it by new build and renovation. Can you just remind us what the renovation split would be into the subsectors, residential, nonresidential and infra? I suspect most of it would probably residential on the [indiscernible] side.

Correct. Correct.

And then the other thing, which I think is a very interesting trend in the mega trend, as you rightly say, which has not been picked up, which is social housing. You see very diverging permits between private and public spending on the housing side. So it would be quite interesting to know how much exposure you, as a group, would think have to that side of the equation, i.e., public housing for us to get a sense of how material that actually is. And then the second question is around pricing, just to follow up on pipes. When I look at the latest date of August, it seems to me that pipes year-to-date or plastics are probably up 3%, 4% or something like this 2%, 3%, 3%. But actually, sequentially, they are already starting to be down. So when I look at your granular number, minus 1%, it would tell me that next year, you'll struggle to maintain your margin on the piping side.

Maybe to start with the last one. I think this is what we expect, how we steer the company, how we steer basically the business on the grains, pricing and also how we set basically pricing to market can be something different. So we basically foresee stable margins also on the piping side. So we not foresee that basically our margins on the piping side will come under pressure.

Social housing, yes, if I may say so, bricks are red and red. You know what I mean. It's actually a product that is very much appreciated by social housing builders in certain areas. The urban construction, when we talk high rise, obviously, bricks are not so much present when we talk about clay blocks. So the good news for you, and I told you this over the last couple of years that we get back into this market in Austria, for example. We built the first multi-residential housing unit in Graz, in the city of Graz with 9 floors. So this is then entirely brick building. So again, here, you see a good, I would say, trend in social housing. The numbers we will check and give you what our exposure is to the sector. There are a couple of questions. The ladies will handle it.

Malina [indiscernible], Erste Group. I have a more strategic question. How do you integrate artificial intelligence already in your business? And what potential do you see out of this?

May I just say one thing? I don't want to go away from your question, but you have seen how we take digitalization serious, with the charts that I have shown to you and how committed we are to set here the trend in the industry and measure it clearly. I think it's a little early stage for artificial intelligence. And again, it depends a little bit what you understand by it and some people understand different things. But I would say it will obviously play also an important role when it comes to our [ automization ] process, when it comes to administration, invoicing and other stuff, for example...

The financial reengineering of the other field is the manufacturing excellence where we discuss, brainstorm about first ideas, fields of application. But as Heimo said, it is, I think, stage too early to already speak about it seriously.

Still, if I may say so, and I might sound old-fashioned, sorry about that. I'm getting older every year. But the personal contact is still very, very important in the construction, infrastructure and renovation business. All the sort of back office things, yes, you can change, and we do this. But the personal contact and for those who have been in the showroom yesterday, it's still key because it's a very important decision, building a house, renovating and house infrastructure. Even public sort of customers or institutions still look for the personal context. So this is important. Yes, we will use it wisely. We must not be always the first company. That's what I'm trying to say. Yes. Thank you. There was 1 question in the front.

Yes. Two questions. Maybe first a question on your roofing strategy. We see a lot of changes on the commercial roofing. And part of the clients of commercial roofing are your clients, they are roofing contractor. Do you think there is an opportunity for Wienerberger to do the same as [ BMI ] did and to have both a flat roof offering and high [ slope ] offering. And in the U.S. as well, the same standard industry has an interesting offering with asphalt shingle on flat roof. Is it something that you could consider to use your relationship with roofing contractor to move into asphalt shingle or to offer the whole range of solutions for your clients? That would be my first question. And then the second question on pricing. We start to see pricing coming off a little bit when we see the statistics in Germany, in Romania for brick and tiles. Is it your competitor offering discounts? And it looks like some of your competitors, at least the market might enter the year 2024 with a pricing level which is lower than 2023. Is it something which is just affecting your competitor and not Wienerberger? And if it is the case, is there a risk of you losing a little bit of market share and underperforming a little bit in the market?

Thank you for the 2 questions. I don't know if you want to jump in. Just one thing on the pricing. I'm very conscious that a lot of smaller midsized competitors, and we talk here exclusively about brick and clay blocks, have used a model that is not -- was not uncommon in the industry and still is not. It's not used by Wienerberger. They have set prices and have then included energy supplements, yes? And they have basically increased and their prices set to the clients because my energy is more expensive, I have to put up my prices 20% or 15% whatever. And now they're obviously having cheaper energy and reduced it. So that you see in the statistics. We have obviously never used this model because it's actually a shortsighted one and puts you back to what I said earlier in the commodity race because you are just a commodity, you're traded like this. So this is something where we have a completely different pricing approach to our competitors, first thing. Secondly, I think market share-wise, when you have small competitors with one site, yes, sometimes they might, and I told you this when we talked about the extremely good result in 2022. I said we gained some market share in certain areas. You remember because we were able to produce and we were delivering products where some of our competitors were not even in the market. So we have esteemed that some of these markets will be taken away from by the small competitors, but it's very regional things. So it's around the factories, et cetera. So it's nothing that I'm too worried about on the big scale. Hopefully, I addressed this one. On the roofing side, one other item. We carefully monitor our competitors, what they do, et cetera. Putting pitched roof and flat roof together is not a good option, not a good option. It has not proven to be very successful. Sales, technical-wise, installation-wise, very different. Don't want to judge the esteemed colleagues of us and how their performance is in the market, but we get the feedback from the clients, we get the feedback from the customers, and we see their performance. It's not a good option. When you go into this field of flat roofs and you were alluding to commercial roofs, obviously, in Europe, as well, then it's a different business with different materials that you use. We are about to look at it with certain solutions that we have already testing in the market. So this would be an add-on. Obviously, you use your context, yes, your network, but it's a different sales approach to your point here. On the U.S. front, I can exclude formally that we enter into shingles. Why? Because ESG-wise, this is not a product that Wienerberger feels comfortable with. It's not a long-term product. You have to change the shingles on the houses every 30 years or 25 years. It's, for us, not the right product to be in. It could be that we come up with some other solutions on the pitched proof side in the U.S. But from our perspective, the shingles are not the right one. I hope I addressed this clearly.

Maybe a follow-up question on the system that you can sell. Part of it is the underlay that you produce.

Correct.