Wienerberger AG (WIE) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to today's conference call of Wienerberger's Q2 2026 Trading Update. My name is Judith, and I'm your operator for today. [Operator Instructions] The conference is being recorded. [Operator Instructions] We are looking forward to the presentation. And with this, I hand over to the Senior Officer, Investor Relations, Alfredo Sibilia.

Thank you, Judith, and good morning, everyone. Welcome to the call. Just a couple of words from my side. I just recently joined the Investor Relations team. I've been with the company for a little over 3.5 years, and I look forward to working with many of you on the call. Before we get into the results, I hand it over to the Chair of the Supervisory Board, Mr. Peter Steiner, for some opening remarks. Thank you.

Thank you, Alfredo, and hello, everyone. Good morning, good evening, good afternoon, wherever you are joining us from. I know it is not the usual format. The Chairman of the Supervisory Board does not typically open an analyst call. So let me explain why I'm here. Before Gerhard and Dagmar take you through the key developments and numbers, I want to address the announcement we've made the day before yesterday, and you deserve it to hear it from me personally. On Monday, we announced that our CEO, Heimo Scheuch, had asked the Supervisory Board to accept the early termination of his mandate to allow him to fully focus on his personal health. The Supervisory Board accepted this decision, and we appointed Gerhard Hanke, who was Deputy CEO of Wienerberger and will now act as Interim CEO with immediate effect. Heimo Scheuch took the helm of Wienerberger in 2009. Think about what the company looked like then: a traditional brick manufacturer, solid but narrow scope. What is Wienerberger today? A leading international group, a business spanning the entire building envelope and infrastructure, a company with a clear and credible sustainability agenda, present across markets that matter. That transformation is his achievement, 17 years as CEO, 17 years of decisions of resilience, of building something that lasts, and is well positioned to get to the next level. On behalf of the entire Supervisory Board, I want to express my profound gratitude for everything Heimo has built. We deeply respect his decision and sincerely hope that he can now dedicate all his energy to his health. So where does that leave us? As Supervisory Board, it is now our responsibility to ensure continuity, and we are in a very solid position to do so. Let me tell you why. With Gerhard Hanke as Interim CEO, we have exactly the right person to lead us through this transition until we have appointed a new permanent CEO. Gerhard has been with Wienerberger for over 25 years. He knows the company, he knows the business from every angle: operationally, financially, strategically. As he served as CFO from 2021 to 2025, many of you know him well. In March 2025, Gerhard became COO Central and East. And in June 2026, he took on the role of Deputy Chairman of the Management Board. At the time, it reflected our commitment to strong operational leadership and the ongoing evolution of our management structure. As it turns out, that decision serves us very well today. The rest of the Management Board remains unchanged. Dagmar Steinert continues as CFO. Harald Schwarzmayr continues as COO West. The leadership team around Gerhard is experienced, stable, and aligned. We are now conducting a structured search for permanent CEO successor and will communicate further in due course. So let me close with this. Today's call is about performance, about results, about what more than 20,000 people across more than 200 sites across the world have delivered in the second quarter of 2026. There is no doubt some markets are currently facing very challenging conditions. At the same time, I want to emphasize that Wienerberger is a company with a clear strategy and a strong team, a company that has pushed forward, evolved and reinvented itself again and again. That does not change today. Thank you very much for your attention. With that, I will hand over to Gerhard and Dagmar. Thank you.

Thank you, Peter, for your opening remarks and also for joining us today. Also a lovely good afternoon from my side and the whole Wienerberger team. I'm glad to have you on the call today. First of all, let me also take a moment and wish Heimo his speedy recovery and all the best for his future. Also from my side, I would like to express my sincere gratitude for his vision, dedication also for Wienerberger during the last almost 30 years. You have received our trading update a few weeks back. We sent out on July 21st, where we informed you about the performance of the company. The next 30 minutes, we will focus, Dagmar and myself, on the most essential points of the half year numbers, respectively on the second quarter numbers. So let's walk quickly through the half year numbers and the second quarter results. In general, the first half year 2026 was more challenging than we expected in the beginning of the year. On the one hand, you heard about, we had quite harsh weather conditions in January, February. We had a Middle East conflict, which started in end of March, which led to a higher cost inflation and also to higher financing costs. And we had market developments, especially in the U.S., U.K., and Canada in new residential housing, which were further declining. And all that resulted that the group's performance stayed behind expectations. Let me walk you especially to the -- through the second quarter. I mentioned it, we had this year, maybe a little bit a different start. We had on the one side, the harsh weather conditions in January, February. By the end of the first quarter, the Middle East conflict started. So we had this year, let's say, a little bit later, a good view on the markets, on the quality of the markets and the market conditions, basically where we are in today. The market conditions are characterized, let's say, by significant regional differences. We see that the infrastructure and the renovation markets remained resilient. They are according to our expectations. We see that the renovation market was supported by the decarbonization projects on the old European housing stock. While in the piping segment, respectively, the infrastructure market, we have seen a solid demand driven by the European water resilience strategy and also by upgrades of the European power grids. The activities in Continental Europe, we have seen a normalizing after the first 2 months. We see a bottoming out even if across Europe, Continental Europe, we have different dynamics. But overall, we see that the markets, the activities in Continental Europe are bottoming out and coming back to a normalized level. In contrast, and it was mentioned also already in our trading update, the residential housing markets in North America and U.K. remained substantially below our expectations. We have seen even a further decline, and this was definitely not foreseen or expected in the beginning of the year. And this, at the end, translated to a second quarter performance financially that our revenues increased by plus 13% to EUR 1.4 billion, which reflects a 7% organic growth driven by volume and price and 6% came from the scope from the acquisitions, which we realized in the second quarter. Operating EBITDA declined to EUR 230 million. We have seen a EUR 30 million headwind from weaker residential housing markets, mainly, as mentioned, in the U.S. and U.K. and Canada. And we were also -- or the result is impacted -- heavily impacted by cost inflation, which is driven by logistics, energy, and also by higher resin costs. Let me say some words on our strategic transformation as we also took significant steps in the second quarter. The portfolio is continually transforming. We are moving further away from our cyclical residential new build portfolio to a more resilient renovation and infrastructure portfolio. We have today after the last 2 acquisitions, around about 60% of our group revenues coming from these end markets, meaning renovation and infrastructure. So we are today structurally much more diversified, less cyclical, and much better positioned also to navigate the delayed recovery in residential new build markets. The last 2 acquisitions during the second quarter, especially Italcer, but also NEWS Group are contributing significantly to this transformation, as I just explained. But let me give you once more some insights on the Italcer acquisition. As most of you most probably know, it was -- the deal was closed in April this year. We bought a major stake in Italcer, an Italian specialist for ceramic wall and floor tiles. And we bought a strong scalable platform to further create value. It is complementing perfectly our strategic focus on the building. And I put also here 2 pictures, which I think we're very nicely reflecting where this company is also in. And it's not traditionally the floor tiles and the wall tiles, what you have maybe in mind from the kitchen and from the bathroom. No, it is a strong footprint also in the facade. And this is also what we see after the first few months of integration that we see especially in the markets, Italy, France, U.S., where we have a strong footprint and also Italcer has a strong footprint or, let's say, a strong commercial network that we are realizing first commercial synergies by common customer basis. So we see that especially from investors, developers, but also construction companies that we are able to benefit from our strong commercial network, but also from that what Italcer is providing to the group. So we are happy with this acquisition. Things are moving. We see already a strong contribution in the second quarter to our group results, and we're expecting basically the same also for the second half of this year. The second one is a significant smaller one, what we realized. We bought in April the NEWS Group, a Swedish company located in Sweden, which has a turnover of plus/minus EUR 20 million, EBITDA of roughly EUR 3 million, EUR 4 million. So different size, more specialized, more specialized in the sense of water recycling and sewage treatment and brings us or provides us a good footprint also for the -- not only for Sweden, in principle for the whole Nordic region. So these 2 acquisitions are contributing also to the transformation where we are constantly working on. And let me also just to complete, we did a major step also in 2024 when we bought Terreal Group, a major investment in the roofing business, which has a strong footprint also there. I mean, it's about renovation activities around the building, especially in the residential building. We took a major step also here a few years back. The last slide before I hand over to Dagmar. For me, when Peter asked me, respectively, the Supervisory Board asked me to take on or to step into this Interim CEO role, it was clear for me I do that with a strong sense of commitment, respectively, with also with a great responsibility and with a lot of respect because we are fully aware where we are in. We just sent out a trading update where we had to adjust the guidance. So it's clear what is needed and what is expected from us as Managing Board. We had -- we are basically facing a headwind in our EBITDA of around about EUR 100 million, as explained due to the markets which we -- which I described before. When we did in the beginning, our regular pricing measures, what was foreseen and then was confronted with the Middle East conflict by the end of March, where basically the cost inflation started to increase, which we have seen then mainly in the second quarter, it was clear we have to take a second step on pricing, on the pricing measure. And we also see that we are realizing now by end of June, beginning of July, that our pricing level is almost 5% above the beginning of the year. And this is also needed for us to cover the cost inflation what we have basically also in our books. Secondly, it was clear we have to improve or to accelerate our program, our Fit for Growth program. We expect this year a contribution of around about EUR 25 million. So roughly about EUR 10 million in addition to that, what we have communicated in the beginning of the year. Working capital management, it is -- there will be a strong focus in the second half year on the balance sheet. Part of it will be working capital management. Dagmar will say a little bit more about it, but we are expecting a EUR 50 million organic reduction, and we will also reduce our CapEx program to the most necessary things what is needed for the company. Still, when we look to our balance sheet, I'm confident we have a robust balance sheet. We have a good and sound liquidity position, and we have a stable financing cost, which is important. Top priority for the next months will be or will remain to proactively manage the performance, but also the leverage. And that means that things like capital allocation and working capital management, other cash conservancy measures are basically on top of the list of the Managing Board. With that, I would like to hand over to Dagmar. Dagmar will provide you much more details also on the numbers for the second quarter in the first half year.

Thank you, Gerhard, and a warm welcome from my side. I will guide you now through our numbers, starting with the first quarter -- the second quarter, sorry, then, of course, give you the picture for the full half year and more insights about our measures, what actions we take to deliver. So let's start with the overview. And what you see on Chart #9 is Wienerberger really shows resilience. And that is the result of our transformation, and what you see as well, the second quarter has a really strong growth. It's 13% above previous year's quarter. Yes, 6% is regarding to scope, but 7% organic growth. That's really a great number. Unfortunately, on the results, operating EBITDA, as already mentioned, is below previous year's quarter. You heard about difficult market conditions, especially in new residential housing in U.K., U.S., and Canada, that really is a burden on our numbers. But I can assure you we focus on the right topics to maintain our profitability. Looking slightly into working capital development in absolute numbers, it's EUR 1.4 billion. And compared with previous year, it's 6% up. But of course, due to acquisitions, scope that is included in that number. So organic, we are below previous year, even with quite a high inflation in the second quarter. Coming now to the revenue bridge. And I would like to start with scope, the 6% or EUR 77 million growth because that is Italcer, it's NEWS Group, and Gerhard explained how it fits into our strategy and how it opens up our opportunities for further growth for the whole group. As already mentioned, quite strong 7% organic growth in the second quarter, and despite these difficult market conditions for us. So new residential housing remains under pressure, and we've seen this weakness in our key markets. So looking at the 7% a little bit deeper, it's like almost 2/3 volume and about more than 1/3 price. Why do we just see a bit more than 1/3 price in the second quarter? Because it's not on a full, like, run rate because the pricing effect in the second quarter is limited due to the lead times between announcement of a price increase and of course, the effective date. There, we will see more in the second half of the year. Our growth, our organic growth, volume growth is supported by a strong performance in renovation and infrastructure. And that shows as well our resilience. Coming to the operating EBITDA bridge, Chart #11. Scope gave us 8% higher operating EBITDA in the second quarter, mainly driven, of course, by Italcer and the NEWS Group. We show a negative organic growth of minus 15% or minus EUR 38 million. And this is mainly the reason because we are missing a lot of contribution from our key markets in U.K., Canada, and U.S. in the residential new build sector. And it's not only that the demand is weak, of course, as well due to lower volumes, we see underutilization, we have higher cost of idle capacity. And that there, we have not been able to offset that by a stable performance in renovation and infrastructure, which is in line with our original expectations. As already mentioned, our price increases in the second quarter are, of course, visible, but not in a full effect. On the other hand, the inflation, which is -- or higher inflation, which was driven by the Middle East conflict really showed up, like, the full effect in the second quarter. Therefore, overall, we have still in the second quarter, a negative price over cost, and that's the reason why we show a negative organic growth. Overall, we see an inflation of around 7% in the second quarter. The working capital bridge to give you there some -- a little bit more insight what we are doing regarding our working capital management and so on. As you can see, we see in absolute numbers, an increase of 6%. But if you take out M&A, we see already minus EUR 29 million or between 2% and 3% organic working capital reduction despite higher inflation because there's quite a high inflation in plastic and resin prices, in energy prices, and logistics, and all other commodities. So we have a strict working capital management in place. That is key priority. And we want to see at least a net organic reduction by EUR 50 million to support our net debt by the year-end. Just a little bit view on our operating segments, Europe West, Europe East, and North America for the second quarter. In Europe West, starting with Europe West, that includes U.K. Therefore, the operating EBITDA is below previous year's figure. On the other hand, our acquisition Italcer is partly included in the region Europe West and partly included in the region Europe East. So overall, looking at the performance and having in mind the difficult market environment regarding new build, we see a stable performance in Europe East. We see, if you take into account the really double-digit negative development regarding U.K., you see a stable development in Europe West and a significant decline in North America. And in North America, it's not only driven by the weakness in new residential housing, but as well, there's a pressure on pricing for PVC products in the U.S. I will give you some more insights into the regions regarding the development of one or the other country coming to our first half year figures. A little bit just to sum it up about the inflation development. In the first quarter 2026, we've seen 2% inflation, which was broadly in line with our expectations. We've seen a stable development of energy prices, and there was not any impact of the Middle East conflict, which just started by the end of February. In the second quarter, everything, of course, shows up. We've seen resin market with shortages, plastic prices really increased. We've seen increases, especially in Europe, in resin between 60% to 70%. We've seen very high peaks regarding gas prices. And as you know, we always have a portion of unfixed volumes. And of course, higher oil prices impact everything, all other commodities. Overall, we have seen an inflation in our second quarter by 7%. And for the half year 2026, it sums up to 4%. I'm coming now to our -- to the development of our first half year, and I would like to start a little bit with our volume and price development. And you see here a slightly different picture because we excluded U.K. and North America, and put the rest of Europe into one figure because it's just easier to explain. So overall, you can see we have a really steep -- strong decline in new residential housing in U.K. and North America. Volume-wise, it's minus 12%. That at the end results in the group, it adds up to a figure by minus 4%. Rest of Europe in new residential housing, quite stable volume development of plus 1%. Renovation is as well not as good in U.K. and North America as in the rest of Europe. Therefore, there we see a negative number of minus 7% positive. Continental Europe is plus 4%. So within the group, we see a positive figure, plus 2%. And infrastructure as well, U.K. and North America negative, but that's mainly North America. Looking at the prices, price development. One number really pops up, that's minus 8% in infrastructure, U.K. and North America. And I would like to make really clear, that's only North America, and it's not U.K. And the number of negative price effect in North America is a double-digit number. Overall, in the group, we see a price effect of plus 2% as well as in Continental Europe plus 2%. Coming now to the revenue and operating EBITDA bridge for the first half year, starting with the revenues. We've seen a weak first quarter affected by bad weather conditions. We've seen a strong second quarter on the top line. And overall, of course, we see plus 4% in our revenue bridge as an increase. It's more or less attributable to our acquisitions to scope and just a really moderate organic growth. Therefore, let me say or put it in other words, the weak first quarter was compensated by the strong second quarter. And therefore, organically, it somehow leveled out in the half year. Looking at our operating EBITDA, the picture is a little bit different because our operating EBITDA was -- in the first quarter, it was below previous year, in the second quarter as well. Therefore, overall, for the first half, we report minus 15% operating EBITDA and come out with a result of EUR 326 million. Our negative organic growth sums up to minus EUR 71 million and that's driven by the weak volumes in the first quarter and the massive underperformance in new residential housing in our key markets, U.K., U.S., Canada, and of course, higher inflation. So these are the 3 reasons why we have this negative organic growth. Coming now to our operating segments. And I would like to start with our region European West, where you can see that we have an increase in our top line by 5% and minus 8% operating EBITDA development. And just to remember, U.K. is included in the region Europe West. So I would like now to give you a little bit more details about our markets in the different regions. And new residential housing that remains in the region Europe West at low levels, even if we see increases of planning permissions, but they are not translating into more housing starts. And this is especially true for markets like France and Germany. And I can't mention it more often, but U.K. is even worse. On the other hand, we see housing starts in Benelux, they are stable to positive, but we see as well the swing towards more multifamily housing, and that is something which we see especially in Netherlands and that impacts, of course, our new build products as well. Renovation, our renovation-driven demand in Europe West remains solid. It's supported by energy transition initiatives. And with the exception of Germany and U.K. where we see really a lack of consumer confidence, funding programs, driving the impact on the market, and that's really overall a stable development for us as expected. Infrastructure is supported by, of course, raw material price increases, and we have seen stock building of one or the other customer. And -- but underlying demand is still okay, and our price increases are working. I'm coming now to the region Europe East. And in Europe East, of course, as well, we've seen the difficult first quarter, but looking now at the half year figures, I would like to guide you through the market. We've seen in new residential housing, a positive trend in building permits in some Eastern European countries. I would like there to name especially like Poland. And -- but that is almost offset by declines in other Eastern European countries, Italy, Croatia, and the demand in single-family houses is largely stable, while growth is as in Western Europe, more in multi-story residential construction. Coming to renovation. In renovation, our roofing business is okay. And we see there as well an increasing trend towards flat roofs in single-family homes, but the development is, as I said, quite balanced. The infrastructure business in Eastern Europe has been generally very stable in the first half of the year. And I would like to point out here, for instance, Poland, for example, where the public sector is currently the most important driver for the growth. In North America, our most typical segment in the current year, we see, of course, these very high interest rates, market uncertainty, which is really bad for housing demand, and in new residential housing, there's a double-digit decrease. And if you make the split between U.S. and Canada, Canada is even worse compared with U.S. Renovation is solid in North America and infrastructure has a difficult development as well because prices are going down. And therefore, of course, that gives us as well a pressure on profitability and operating EBITDA. But overall, looking at North America, we have on the other hand, a lot of initiatives to reduce costs and especially SG&A costs. Now I would like to give you a little bit more insight about our reconciliation of EBITDA on group level to operating EBITDA because you see there a significant number of EUR 70 million one-off. And EUR 7 million are related to acquisition costs, mainly Italcer. We see EUR 17 million restructuring measures. That, of course, is as in the past, to improve profitability in the coming years through optimizing our industrial footprint. In that case, especially in the piping and facing brick business, we took out one or the other capacity. And -- but that's, I would say, not a surprise. What was, I guess, for you a surprise is this minus EUR 47 million U.S. antitrust lawsuit. And that is something where we had a lawsuit in the U.S. at our Jet Stream subsidiary, that Jet Stream is in the piping business, and we agreed to a settlement in the antitrust class action. And at the end, we have to pay a total amount of USD 52 million or EUR 47 million. Why have we not been published that in our trading update? We haven't been allowed due to legal restrictions. Therefore, we want to apologize that you get it presented today and not earlier, but it was not possible. Very important, we didn't do anything wrong. The question is you are part of this lawsuit, this action class in the U.S. and with other companies and other companies started to make settlements and then the risk increases that no matter if you didn't do anything wrong, that you might face a high number of -- that you will -- you take the risk that you have to pay really loss of million, much more than USD 52 million. And therefore, the management decided to go for that settlement, to take risk away from the company, to avoid the uncertainty, and of course, to go out of that litigation. For us, we treat that amount as a one-off, but we will have to pay it in the current year. Therefore, it will reduce our cash flow. This brings me to my next point, balance sheet management because besides profitability, besides our operating EBITDA, it is most important to keep a robust balance sheet to have actions and management plan in place to reduce our net debt because due to -- first, we are missing EUR 100 million operating EBITDA. Second, we have an additional around EUR 50 million outflow from the settlement in the U.S. So we are missing EUR 150 million cash flow roughly. And that, of course, changed our net debt position by the year-end 2026. And therefore, we are going to give you here an outlook on our leverage where we expect it to be by the end of this year, unfortunately, at 2.8. And there is a plan in place not only for the current year, for the running year, but as well how going forward, like, the next 18 months until the end of 2027, and the leverage 2.4 for us is the absolute minimum -- or maximum. The minimum target, but the maximum where we want to come out. We want to show a lower number, of course. What are we doing? We have our cost management and saving costs, of course, Fit for Growth, which will contribute up to EUR 25 million in the current year, will save cash as well. We have strict working capital management. We are analyzing our inventories to see how are we able to decrease our inventories, our stock to get the positive effect on the working capital. We have our departments like purchasing to even search more on the supplier side to optimize our procurement. We have a focus on CapEx, what do we need, when do we need it, and do we really have to spend it? Does it really has to be that much? And there are a lot of things in place to manage and to reduce our leverage. And I want again to repeat this 2.4 by the end of 2027, that number is the maximum and would like to keep it like that. On the other hand, looking at our financing costs, the financing cost will increase by EUR 10 million in the current year, and our interest rate is stable. It will be 4% in 2026 compared with 3.8% in 2025. And that's just the result of the financing the acquisition of Italcer. And with that, I would like to hand over again to Gerhard to give you the outlook.

Thank you, Dagmar. Ladies and gentlemen, before we go to the outlook, let me say some words on the assumptions which we took in the beginning of the year as certain things really drastically changed also when we started this year and where we are today, and we tried to summarize this on this one slide. And in principle, there are 2 major effects that would make the world differently than what we have assumed in the beginning of the year. On the one side, we have not considered or foreseen the impact -- the heavy impact of the Middle East crisis. This was not reflected. And this had also the consequence that we have seen quite some inflationary pressure in the second quarter. And that also will have some inflationary pressure also in the second half as a consequence and also interest rates were going up, financing costs are going up. So this was definitely not foreseen in the beginning of the year. The second thing is that we, in the beginning of the year, have assumed flat markets when it's about residential housing in U.K. and North America. And on the other side, we have seen a further decline actually. And considering these circumstances, this led to this EUR 100 million headwind, what Dagmar was mentioning before. I think important is the measures which are in place are clear. It's about discipline. It's about execution. We expect market-wise, not a different picture in the second half. We expect that the infrastructure and renovation end markets stay on that level where we are. Residential housing, independently, if it is Continental Europe or if it is U.K. and North America, what we have seen in the second quarter, we believe, reflects also quite good what we expect for the second half. So it's about implementing consequently measures to secure the performance. And on the other side, also executing measures when it's about capital allocation and also securing and controlling the leverage. I mentioned it, I just wanted to repeat once more one crucial point. To reach the EUR 700 million on operating EBITDA is the pricing power, and we are confident there as we are seeing already almost the 5%, that this will cover our cost inflation, what we expect for the second half. Supported will be this measure by extra efforts out of our costs saving program, where we do an additional EUR 10 million this year. And on the other side, we are focusing on our debt position to reach, as Dagmar mentioned, the 2.8x till the end of the year by bringing working capital down, and also reducing once more the CapEx for the second half to the minimum level. And this is the first step and the second step will follow then in 2027. And the midterm goal, which we communicated already years before, the 2x is still valid, respectively, is a full commitment from the Management Board on this net debt leverage. And with these words, I would like also to stop here, and I would like to hand over to you, ladies and gentlemen, and to get the Q&A started. Thank you.

[Operator Instructions] Daniel Khajenouri from Morgan Stanley. The stage is yours.

Daniel, cannot hear you.

And I do want to send best wishes to Heimo and his family given his recent health challenge. Just back to my question on performance. It would be useful to start with the Q2 EBITDA bridge. It does look like you experienced quite a lot of cost inflation despite the hedging program. Is there anything in last year's comparison base distorting the year-on-year movements? Am I wrong to assume you're benefiting from CO2 credit sales last year, which were included in the operating EBITDA and you're now missing that benefit? Am I wrong there?

No, there are no material CO2 credits in the last year's figures. And of course, there are not any in the current year.

Okay. Okay. And just a question on the full year guidance, the updated guidance. There's an implied pickup in H2 versus H1. And I know you walked through some of the working assumptions on the slides already, but it would just be useful to understand expectations around volumes and perhaps if you could talk to the updated phasing of the cost optimization program. I know you added some cost savings. So just the working assumptions behind the new budget and the phasing of the cost optimization would be useful.

Well, the working assumptions behind our H2 in the running year, it's quite simple because we will see the full effect of our price increases, which have been just partly coming through or visible in the second quarter of the current year. And therefore, we are looking towards a balanced price over cost number, and we don't expect that the new residential housing market, especially in U.K., U.S., and Canada is going to develop any better nor any worse. And we see a performance as expected regarding in Continental Europe regarding our renovation and infrastructure business. And inflation, which accounted for minus 7% in the second quarter, of course, that will stay at a higher number in the second half of the year because 4% for the first half of the year is not a run rate because we haven't seen any inflation in the first quarter of the year. And additional contribution, we will see through our Fit for Growth program. There we have around EUR 10 million contribution in the first half, and we expect a higher impact in the second half 2026.

And we will move on to Isaac Ocio from On Field Research.

Thanks for your presentation and best wishes to Heimo. First, I wanted to follow up on the Q2 EBITDA bridge. And kind of trying to break down the organic decline. So correct me if I'm wrong, but prices were kind of up 3% in Q2, so that would imply a EUR 40 million positive impact. And with cost inflation of 7%, which implies maybe a EUR 70 million hit. And then you've got currency and scope adding EUR 16 million. So putting these together, we get to an EBITDA decline of around maybe EUR 40 million, excluding your volumes. And you had a positive volume impact. So we would have expected some offset from that. So we're kind of struggling to reconcile that against your EUR 23 million decline. So could you maybe help us understand the gap? Is that the volume impact was lower because of geographic mix? And could you give maybe some color on that? Or are there some additional costs beyond the 7% inflation you disclosed? Or am I missing something?

Well, we have the negative effect from new resident housing in U.K. and Canada and U.S., and that accounts for more than EUR 20 million. And of course, that includes as well underutilization in that area. We have a positive volume effect in Continental Europe, and, like, a negative price over cost of yes, the figure in the mid-30.

Okay. And maybe so on volumes, have you seen any prebuying? And how is July tracking against Q2?

Well, volumes, of course, there might be one or the other prebuying, especially in infrastructure piping business because due to the really high increase of raw material prices, of course, customers expected on our side increasing prices as well. But we can't, of course, identify what is prebuying and whatnot. Therefore, it's a little bit difficult to make any statement regarding that. And July is always not the strongest month in the summer. It's more or less everywhere, holiday time and...

I think the prebuying effects, what you have seen or what we have seen, we have seen more or less in March, April when the Middle East crisis started, and it was clear that we will be hit by some cost inflation. And therefore, there, we have seen some of them. As Dagmar mentioned, July, August are rather, let's say, months which are maybe what you anyhow have to combine and what you have to add up as you have always within Europe and also North America, you have some shifts between July and August. But we do not expect any prebuyings or we do not see actually any prebuyings now in July. So we see so far a normalized, according to the expectations, July results.

Okay. And maybe finally, last question, sorry, but you had -- yes, so 3% pricing in Q2. So what would be your exit rate in Q3 and maybe H2? And could we get to a 5% pricing in the back half?

Well, just looking at Q3, Q4, it's not a number which is totally out of range. And -- but maybe to your former question, I would just like to add, we've seen, of course, in July, a very hot temperature, a very extreme summer, and that might even impact one or the other building activity.

And we will move on to Michael Marschallinger from Erste Group.

Also, all the best to Mr. Scheuch and a speedy recovery. I have 3 questions. Firstly, given the scale of the profit [indiscernible] and the much weaker-than-expected residential new build markets in North America, how should we think about the midterm targets you presented just a couple of months ago at your CMD? Are these targets still valid or delayed or need a reassessment?

Maybe if I may start with the first one, the scale or, let's say, the delay in the recovery. Yes, we confirm the EUR 1 billion. It is linked to the recovery of new housing in Europe and in the U.S. mainly. Keep in mind, we are running our production sites today with a capacity utilization of plus/minus 60%, 65%, bringing this back on a normalized level to 80%, 85%, and this is also what we have communicated in the past. This will give already quite the leverage. In addition to that, you remember all the initiatives what we have taken on restructuring costs, taking costs out. So I strongly believe we will emerge stronger if housing comes back than we are -- than we basically -- where we were before. So yes, this midterm target is confirmed.

Okay. Then could you please comment on further possible one-offs in H2, either structural adjustments or sale of noncore assets?

Well, of course, we intend to sell one or the other noncore property as already announced. And we will see there one or the other in the second half. Major restructuring costs are not...

We will see smaller things across the portfolio. We see some smaller things in East. Also, we have some smaller things in the West. We just discussed yesterday about U.S., the plant network in the U.S. So I would say, yes, we will see some of the one-offs, but I would say maximum to EUR 10 million one-off of restructuring.

Okay. And then my last question. With net debt operating EBITDA now guided to 2.8x at year-end, and if you take reported numbers, maybe above 3 even, does this higher leverage in your view affect the timing or likelihood of exercising the call option for the remaining Italcer shares in H1 '27?

No. We will continue because buying Italcer in 2 steps was to, like, make it a little bit easier for our net debt. And Italcer fits perfect into our strategy. And therefore, no, we will -- this doesn't defer that. And if you look on the Chart 22, you see the roughly EUR 180 million amount, which is outstanding for acquisition to buy first, like, minorities of Italcer, which will be a number of EUR 160 million and the EUR 20 million are other purchase price liabilities we have to pay. So that's all included.

And we will move on to Julian Radlinger from UBS.

Yes. So 2 from me. First of all, if we could dig in a little bit on that neutral price cost assumption you're making in H2. So you sound -- on this part, you sound quite confident. And I just wanted to double-check, is that based on an assumption of oil and gas, and as a result of oil, obviously, plastic resin input staying at the current levels? Or are you assuming a little bit of a drop-off or something over the course of the second half of the year?

Well, the assumption is, of course, that it is neutral or balanced only, but for renovation and infrastructure and the, like, negative price over cost we see in new build in U.K., U.S., and Canada is, of course, part of the EUR 100 million we are missing.

But maybe if I may add here, we have considering the hedging levels what we have on the energy and what is open positions, we -- this is why I think we feel comfortable to show a balanced price/cost spread in the second half. We have basically a clear understanding based on the long-term contracts and also on the hedging levels, what we have for the second half.

Okay. And then my second question is, so in Eastern Europe, your sales were up 29% year-on-year all in. I think you said that Italcer is sort of partly in Eastern and partly in Western Europe. So if I split it down the middle, I'm left with double-digit organic growth in Eastern Europe in Q2. And based on what you're saying about pricing, I guess the bigger part of that will be volume. So my question here is, first of all, is that correct? Did you have double-digit volume growth in Eastern Europe, which would be, I mean, really strong, obviously, in Q2? And I know what you said about customer stocking and maybe you had some here and there, it's hard to say. But are you factoring any kind of a reversal of that into the guidance? Are you seeing any reversal of that? Has that continued so far? Would love to understand that a bit better.

The volume growth in Eastern Europe is not double digit. It is a high single-digit volume growth. The rest is pricing in Eastern Europe. And the second part of the question, you said if we reverse...

The question was -- I think it was asked already before, basically whether you're assuming any kind of reversal from what might be stock building in the second half -- in the second quarter, basically, if you're factoring any of that into the guidance?

No. No.

No. No.

And we will move on to Markus Remis, who is currently via the phone in this call. Welcome Markus Remis from ODDO.

The first question relates to the investment volume that you have baked in your net debt target for the full year. Can you give us an update here? And related to that, I see EUR 130 million out for Italcer. If I'm not mistaken, the equity value was EUR 160 million mentioned at the Capital Markets Day. So is there still EUR 30 million then coming in the third quarter?

No, it's what you see, like, in the cash flow statement, it's EUR 160 million minus EUR 30 million net cash in hand on Italcer. So the purchase price for the 50% plus 1 was EUR 160 million. And there's nothing more to come in the second half of the year.

Okay. Very clear. And on the CapEx figure for 2026, can you give us an update?

Well, on the CapEx figure 2026, we are working on it. We have a program initiated and in place to reduce it. We have a strict control of every CapEx, not only growth CapEx, but maintenance CapEx as well. And you will see a lower number than originally communicated.

Okay. Staying on the net debt figure, you had quite a positive contribution from factoring at the end of last year. What's kind of the level you're currently running at the end of the first half and the cash inflow that you guided from working capital, is that -- is there also a share of rising factoring?

Well, working capital management is, of course, what we do, we focus on inventory, reducing inventory to have the real cash effect. Regarding factoring, of course, we do factoring. We increased factoring in 2025 because we integrated Terreal into our factoring programs. We integrated one or the other country. And yes, there is a level of factoring in the half year figures, of course, as well, but less because we are changing a partner regarding factoring. Therefore, there's less factoring in June 2026. And on the other hand, of course, the strong increase in receivables is due to the strong growth we've seen in sales, especially in May and June.

Okay. And 2.8x net debt target, just to make it clear, does it include an increase at year-end versus the '25 level?