Ladies and gentlemen, welcome to the CRH April 2019 Trading Update. [Operator Instructions] I will now hand you over to your host, Albert Manifold to begin..

Americas Materials, Europe Materials and Building Products, three integrated platforms that will support our future growth plans and deliver further value for all our shareholders. So, let me now briefly take you through the trading results and trading trends for the first quarter of 2019 and starting with the Americas Materials division.

First quarter’s like-for-like sales were 4% ahead compared to 2018 benefiting from continued positive momentum across infrastructure, residential and nonresidential markets.

Our aggregates and asphalt volumes benefited from improved weather conditions in the Northeast and Southern regions of the United States, though this was partially offset by less favorable conditions in some of our Western markets. Pricing however continued to make good progress with improvements across all product lines.

Ash Grove Cement acquired in June of 2018 continues to perform in line with our expectations, and the integration of that business is progressing well with synergy delivery very much on track.

Finally, in Canada, cement volumes were negatively impacted by adverse weather conditions during the period although this was partly offset by improvements in pricing.

Of course, it’s worth remembering that our Americas Materials business, in particular, is extremely seasonal with less than 20% of annual aggregate volumes and indeed less than 10% of asphalt volumes being sold in the first quarter of the year. Turning now to Europe Materials where our like-for-like sales increased by 12% year-over-year.

Cement volumes were well ahead the prior year period with particularly strong growth in such countries as France, Ireland, Poland, Ukraine and Romania.

Across our European markets, volume growth and cost recovery continues to support further improvements in our pricing, and it’s encouraging to see cement prices ahead in all 15 of our cement producing countries during the period.

The political situation in United Kingdom continues to weigh on our markets although milder weather conditions in the first quarter of 2019 contributed to cement, asphalt and ready-mixed concrete volumes being ahead of the prior year.

Whilst the pricing environment remains competitive, selling prices increased in cement, asphalt and aggregates in the first quarter. In France, good market demand and favorable weather led to higher volumes and higher pricing across all product lines during the period.

While in Switzerland, despite a competitive market backdrop, we experienced good growth in our cement volumes and a modest improvement in pricing.

In Eastern Europe, more favorable weather conditions compared to the extremely cold temperatures of 2018 combined with good underlying construction activity led the volumes in Poland, Romania and Ukraine being well ahead of prior year.

Cement volumes in the Philippines were also well ahead of the first quarter benefiting from increased levels of infrastructure activity. Pricing also continued to improve during the period with good traction and recently announced price increases in our major markets.

So overall, a positive start to the year for Europe Materials, reflective of improved weather conditions compared to the prior year but also a continuation of that solid underlying demand environment we experienced across our markets in 2018.

And finally for our Building Products division where like-for-like sales for the first quarter were 5% ahead of 2018 benefiting from a positive demand backdrop in both Europe and North America.

In North America, volumes and prices for our Architectural Products businesses were ahead reflecting good underlying demand and early purchasing from home centers in advance of the key spring trading period. Like-for-like sales in our BuildingEnvelope business were also ahead of the prior year led by increased product demand at C.R.

Laurence and improvements in pricing. Our Oldcastle Infrastructure business continued to benefit from good levels of activity particularly in the nonresidential sector, and like-for-like sales were ahead of 2018 with improvements in both volumes and prices.

In Europe, our Products business delivered good growth across all product lines, particularly in our Architectural Products and Construction Accessories businesses, which benefited from milder weather conditions and good underlying demand across our main markets of Germany, The Netherlands, Poland and the UK.

In Distribution, like-for-like sales were ahead of 2018 primarily led by strong performance in our Merchants businesses in Germany and The Netherlands, which benefited from good growth in new residential construction. So for the group as a whole, it’s been a good start to the year.

And looking ahead to the rest of 2019, we expect positive underlying demand momentum in our businesses to continue resulting in another year of progress for the group. Before I go into our outlook in further detail, let me touch briefly on a few other items from this morning’s announcement.

First, our development activities, and in the year-to-date, we have completed 16 bolt-on acquisitions for a total consideration of €200 million, the majority of which were in our Americas Materials businesses.

One of the largest deals competed in Americas Materials involves a strategic expansion of our aggregates and ready-mixed concrete operations in Oregon, a prime example of our unique capability to leverage the platform we acquired through the Ash Grove acquisition to develop future bolt-on activity and value creation for our shareholders.

As you know, active portfolio management is an embedded practice at CRH and we continue to assess our portfolio against buying and focus our businesses, which offer the most attractive return for our shareholders.

This morning, we announced that we have reached an agreement to divest of our European Shutters & Awnings business for a total consideration in excess of €300 million, representing good value for our shareholders and further progress in our €1.5 billion to €2 billion divestment program, which we announced in April of last year.

A strategic review of our European Distribution business is also ongoing. We’re continuing our thorough review of the entire business and are considering all options to maximize value for our shareholders. We expect to complete our review in the next 2 to 3 months.

Ultimately, this is a capital allocation decision, and it’s important to ensure that any final decision is the right one for our shareholders. Efficient use of capital is a core philosophy at CRH. We are an extremely cash-generative business generating over €2 billion of free cash every year.

Every capital allocation decision we make is analyzed and assessed through the lens of creating maximum value for all of our shareholders.

Earlier this month, we announced the completion of the most recent phase of our ongoing share buyback program, returning a further €200 million to shareholders during the first 3 months of the year and bringing total cash under our share buyback program to €1 billion over the last 12 months.

In the light of our strong balance sheet and cash generation and having assessed the cash requirements of the businesses for the months ahead, the Board is proposing to continue our share buyback program with a further tranche of up to €350 million to be completed before our interim results in August.

Subsequent tranches will remain under active consideration, and any decision in relation to future buybacks will be based on an ongoing assessment of the capital needs of the business and general market conditions.

And finally, in keeping with our strong focus on continuous business improvement, the implementation of our profit improvement program is advancing well and we continue to make good progress across all business areas.

Turning now to outlook, following a good start to the year, we expect to report first half the EBITDA in excess of €1.5 billion, over €400 million ahead of last year. This reflects mid-single-digit like-for-like growth and a good contribution from acquisitions.

Of course, that will also include the benefit of currency tailwinds and the impact of the transition to IFRS 16, the new lease accounting standard. And as we look to the second half of the year, we expect group EBITDA to be also ahead of the second half of 2018 on a like-for-like basis.

Sitting here on the April 24 with our most important trading period ahead of us, it’s very difficult to be more specific at this stage of the year, but we will of course update you on our expectations as the year unfolds. So with that, I will now hand over to Q&A. I believe we have some questions on the line.

In framing your questions, please be aware that it’s still very early in the season, so many of our responses are going to be more directional than quantitative at this stage of the year.

May I ask you please state your name and the institution that you represent in posing your questions? And I will hand you back to the moderator to continue and coordinate the Q&A session of our call..

[Operator Instructions] Our first question comes in from the line of Paul Roger calling from Exane BNP Paribas. Please go ahead..

Yes, good morning everybody. So thanks for taking my questions. I am conscious of what you said about it being early in the trading year, but going to ask you to be a little bit more specific on guidance if possible.

And basically the question is you have specifically said that European profit growth will decelerate as you go through the year after the strong start. Could the reverse happen in the Americas? Obviously, you had an easy base in the second half of 2018.

And when you think about the overall group, you have sort of said mid single-digit profit growth in H1, is there any reason why it can’t do better than that in the second half? And then my second question is on the European Heavyside, obviously, very encouraging to CMO price increases coming through.

Actually looking at also in places like France and Switzerland, I think that’s the first time.

And I just wonder if overall you are basically guiding an expected margin expansion in European Heavyside this year and whether that’s likely to be the sort of 10, 20 basis points that we saw last year or whether it could be something more material as we saw in the American Materials business when that starts to recover pricing?.

Thanks, Paul. Some interesting questions there, but I will try and be a little bit more detailed, but as I said it’s hard to be very specific at the early part of the year. And the reason why we saw some acceleration in growth from the first quarter, because it’s seemed so strong in the first quarter and it is of course to do with the comparators.

As you will recall, the first quarter of 2018, we had the extended winter and some very challenging periods with regards to construction. We had a more normalized winter here in Europe and hence we had a very strong first quarter compared to last year. Markets are ahead, growth is ahead and volumes are ahead, but it just won’t continue on at 12%.

It will decelerate. The extent to which it will decelerate, of course, is that we will tell as opposed as to – so we look at a moderation of growth as I said to you as we go forward into quarter two, but the extent of that we will see.

I should also say that the price increase which is encouraging to see all 15 of our markets are ahead, those price increases didn’t kick in, in the January 1. They kicked in during the course of the first quarter. So we haven’t really got the full benefits of those yet as well. So there is a little bit of upside there as we move forward.

But it’s encouraging to see good pricing.

With regard to a specific question, should we see the reverse happen should we see an acceleration growth there in the second half of the year in the U.S., I think that the pace of growth during the course of the 12 months, the whole period, in the U.S., and recall we’re seeing, of course, a very quiet period of time of the year for construction in North America, the first quarter, I think it’s probably moving at between 3% and 5% of volume growth rate depending on where you are.

Obviously, the smile states, you’ve seen higher growth and out west it’s higher growth. It’s between 3% and 5%. I think that’s the phase of volume growth during the course of the year. You will see some prices on top of that, and it’s encouraging to see prices ahead in all our products in North America as well.

So let’s see how that plays out during the remainder of the year. But I think that’s what we will see during the full year. That means over this 4% like-for-like for the first quarter in Americas Materials.

If you see a mixture of volume and pricing coming through the second half of the year, it should be slightly ahead of that if we get the full benefit of the work and we get the good weather until we get out and do some work. We had some difficult weather last year, as you recall, in quarter three in the U.S.

And with regards to Europe Heavyside on pricing, I mean, that’s just – I’ve spoken as to how it’s encouraging to see. I think your comments are correct. The reason why we’re seeing such good pricing is because, for years, we have seen little or no pricing power coming through the European businesses.

I think the real issue for us is the fact that now there is a clear momentum and a desire, of course, the major players in Europe. We’ve got to start to see recover the very significant cost increases that we have taken over the last 3 or 4 years and we’ve got to recover pricing.

But back to the pricing, there’s a real strength and commitment to do that because European pricing has significantly lagged pricing in North America and you can see the separation in price that I have referred to before. What that will mean with regard to margins, we will see.

My own assessment is that in Continental Europe and in Ireland, that should lead to a net margin expansion because our costs are broadly under control in Continental Europe and I think that our pricing should see an expansion in margin over last year. The one call out I would make is the UK.

We have had a soft first quarter in the UK I think it’s been well flagged that the nonresidential sector of the UK market has been challenged particularly since the Brexit vote in 2016 or we’ve seen a slowdown particularly in the Southeast with regard to office space. And that continues on, but that was expected.

Likewise, we were anticipating a slowing and a flattening out of the residential construction. But again, that was expected and that was seen to us. Probably what’s taken us a bit by surprise in the first quarter this year is how soft the heavy infrastructure work has been.

Some of the larger projects, which we anticipated were going to slow, have stopped completely. And we are really – we are almost now completely reliant on small county infrastructure work at this moment in time. That’s not to say it’s not going to kick on, but I think that our challenge there is the volume.

And also with regard to the UK and costs in particular, we don’t have the benefit of winter fill in United Kingdom as we have in North America. And therefore with higher bitumen cost rolling forward from last year, they will take a while to work through the system.

We have a higher cost base coming through and that’s with the fact that the infrastructure work is not coming through as we have seen yet has led to perhaps a more competitive pricing dynamic in the UK, so that may impact upon the net margin in the – will impact upon the net margin in the UK.

business and what the impact would be on the overall European Heavyside business, we will see. But absent UK, I have to say I think we should see net margin expansion across all of Continental Europe and in the Ireland environment as well..

That’s great. Thanks very much..

The next question comes in from the line of Gregor Kuglitsch calling from UBS. Please go ahead..

Hi. Couple of questions. I think two are kind of interrelated. So on energy costs, be helpful if you can kind of update us where you see things trending in terms of either kind of percentage inflation or deflation into 2019? I think last year your bill including bitumen was kind of €2.4 billion.

I think you should have a pretty good view now with the winter fill tank particularly in the States? And then related to that, can now remind us where you are on carbon and CO2 rights in Europe? I presume I think you are a net buyer, so perhaps that’s an element of cost erosion that shows up in a different line I guess? And then related to that, do you as CRH have any plans to adjust capacity in light of the next phase? And then one technical question, if you could just remind us your expectations for H1 and perhaps also full year ‘19 of the net M&A contribution as we sit here today based on all the different transactions that have happened? Thank you..

Okay. Thank you, Gregor. Three questions there, just to repeat them. First question with regard to energy cost, overall energy cost and cost movement this year, I will pass up to Senan in a moment. Also your third question was on net M&A contribution this year first half, second half, again I will pass that to Senan.

Maybe I will just talk briefly about the carbon cost this year, last year, this year and also of our plans we have in place to address capacity with regard to that. And just to remind people on the line, last year, our overall CO2 cost, this year it was net cost, about €15 million. You are right, Gregor, we were a buyer of CO2 credits last year.

With the increased volume coming through this year in Europe, that figure would increase, I suspect. If I were you guys, I’d factor in something at around plus €10 million to that this in 2019. It’s kind of manageable. I think it’s clear to us it’s something in and around that. It wouldn’t be much – wouldn’t think any more than that.

With regard to what we are working on and trying to reduce that, of course, we have signed up to the Paris accord. We have specific requirements to meet, which we will meet with regards to reduction of CO2 usage.

Of course, our businesses which we’re online – on track to beat by 2020, we are doing all that we could do in terms of lowering our content, increase our alternative fuel usage across Europe, all of which reduces CO2 emissions quite significantly.

And I would hope that we’d be able to reduce and mitigate somewhat any of that anticipated increase we spoke about there. But that’s principally what we’re doing within our cement plants. The overall more, more general comments on energy cost, Senan, in terms of....

Yes. I think in terms of energy cost, looking at the components, Gregor, as you mentioned, about €2.5 billion was spent on energy last year, which was about 9% of sales. Within that number, about half of that is bitumen which is obviously largely North America, and to a lesser extent, it’s in Europe, in the UK, particularly in Ireland.

On that side, obviously, the winter fill program, we’ve talked about. We’ve bought through the winter. Pleased with that level of activity and that will continue on through the end of this month. But given where prices are today, I think we feel good about the winter fill activity that we have conducted over the year.

Now we will see that coming through. I think we’re more focused on making sure that we get margin expansion, as you pointed out, rather than the absolute amount in terms of how that comes through. So winter fill looks good. Let’s see where prices play out now in the bidding season over the next couple of weeks and months. We’ll get into that.

Albert did mention bitumen particularly in the UK in terms of that’s an area where we don’t have winter fill. And as you know, we hedge forward. About 80% of our activity is hedged going into 2019. So they are sitting at 2018 prices and that’s part of the conversation Albert mentioned earlier about bitumen.

Remaining other energy costs, I mean, electricity is a big part of the equation as well.

First, around that, I think the increase in electricity prices is probably at normal levels, so not expecting anything unusual there and something we’ll work through in terms of looking at the price conversations, as Albert mentioned earlier, to make sure we get margin expansion in the year ahead.

To your M&A conversations and contributions, the way I’d look at that is in the 2019 year, first half of the year, we should see an increase in earnings net from M&A. I’m expecting a number, about €125 million, €130 million net in the first half.

So that’s part of the improvement over last year and that is primarily as a result of the contribution from Ash Grove, including the synergies that go with that. I would think then that the DIY sale that we concluded last year will net off against our bolt-ons that we did last year, so that should be a net wash.

And then if I look at the first quarter activity this year, again, we announced €200 million of bolt-on deals in the first quarter this year. We are also announcing the disposal of Shutters & Awnings. And again, as you look at that over a 12-month period, they are pretty close to a breakeven or a wash between the two of those.

So the Shutters & Awnings business will take about €30 million of EBITDA out of our business, and then the bolt-ons should contribute the majority of that back in its place.

So, but then the net movement over the first half of the year or for the full year will be about €125 million, €130 million, which is largely coming from the contribution of Ash Grove..

One point I would like to add, Gregor, you didn’t ask the question, but just to add it from a point of view in terms of where we are at this point of the year, we are just at the start of the bidding season for big asphalt work. I mean, as you know, we were kind of sort of a 45 to 90-day bidding cycle.

So, now bidding work now which will come through in our busy season, what we do like to see, of course is we do like to see, which doesn’t normally happen, we do like to see higher oil and higher bitumen prices at this point of the year.

Remember, our bitumen and our tanks will be at lower prices than – because oil, as you know, it’s not perfectly correlated, but oil has come from about $55 to about $75, Brent over the last 3 months. So, we would have an advantage in that going forward.

We would like to see higher – we would like to see higher prices at this point of the cycle, because that’s when people are tendering for the work and that’s what we are seeing. So it means that we start the season well, in terms of our price, it’s managed that way..

Great. Thank you..

The next question comes in from the line of Robert Gardiner calling from Davy. Please go ahead..

Good morning. Two questions from me please. So, one maybe just on capital allocation, you have announced an extension of your buyback, €350 million, to get you to August.

So just wondering how we should think about the potential for a rolling buyback or the decision that comes in August? What are you weighing up there maybe in terms of acquisition versus a further buyback? And until then you referenced a lot of the long-term targets in terms of cost takeouts and the procurement, the process and the structural savings.

Just if you wouldn’t mind giving us a short update in terms of what’s going on there and what we can expect in 2019 or possibly later in 2020? Thank you..

Thanks Bob.

And the issue with regard to the roll forward again or the proposed roll forward again, excuse me, of the buyback program, it’s really to do with the fact, if you can recall, at the end of February we said that certainly for the first 6 to 9 months of this year, we will be very much focused on the successful integration of Ash Grove, that’s one, it’s a very big deal as we did last year, settling them down into the group, number one.

And number two we had a very ambitious program to improve the profitability, the efficiency and the effectiveness of our businesses with a plan and a program to increase our profitability. That was where our focus was going to be this year and it is going to be where it is going to be this year.

With that in mind, of course, we are a significant cash generator.

And we have said that we will allocate capital the best we can for our shareholders, but if our focus is on integration and internally within our businesses in driving performance and not on acquisitions, which it probably isn’t for this moment in time and going forward for the remainder of certainly when we get to the summer period of time.

The cash has been allocated back to shareholders through buyback. That’s what’s behind this decision now.

But it is a decision that we will again revisit in August because at that stage then, we’ll have clear visibility with regards to where quarter 2 and quarter 3 are and will know exactly we’ll have a good sense of where the year is going to come out.

So that’s the purpose of that decision now and we’ll see where we stand at the end of August with regard to integration and the achievement of those plans.

And to reference those plans that you talked about, and again if you recall in February, what we did say was that if some of these plans are more, longer term in nature, we expected to see most of the benefits start to kick in, in 2020 and 2021.

We do think we will start to see some of the delivery at the back end of 2019 because they take time to put in place, changing the way we process materials and changing the way and the location of where we produce materials in terms of more efficient and effective production means we’ve got to move things around a bit.

Factories, machines, people to do that. In terms of how we procure business procure products by our businesses, we’ve got to unwind existing procurement programs and embrace and bring more products into those procurement programs. That takes time and effort and teams to do that. And of course, structural changes take place. There are back offices.

There are systems and support and factories need to be closed and changed and amalgamated and integrated together. And all of that takes time and cost. So, we’re working through that process. As we said in our statement this morning that we’re very pleased with the work that we’ve done. We’re in line with our plans.

And as I said, I should expect to see some of it to come in at the back end of this year, but most will start to be delivered in 2020 and indeed 2021..

Okay, thank you. Thank you very much..

The next question comes in from the line of Rajesh Patki calling from JPMorgan. Please go ahead..

Hi good morning everyone. It’s actually Elodie Rall from JPMorgan. I have a couple of questions, if I may. First of all, in the U.S. housing market, we’ve seen a mixed we’ve seen some mixed data points recently, not necessarily consistent with regard to mortgage rates or home sales or permits, ABI and HP.

So just wanting to have a bit of color of what you’re seeing and expecting there specifically. Second, on U.S.

infrastructure, can you give us a bit of color about where your order book is and how it has evolved recently? And are you still hopeful to see a new highway deal to be announced in May? And lastly, on your strategic review in general, given that you don’t have any Asia division anymore, I was wondering if you could give us a bit consideration about what you’re thinking of doing in emerging markets? Would you actually contemplate some central divestments, maybe in the Philippines?.

Thank you, Elodie. Three questions there. Just first question was on U.S. housing, our sense of U.S. housing. Well, we’ve seen the housing stuff. We’ve seen the some of the external stuff that you talked about as well.

But our own sense is, as we’ve talked to our customers, we talked with our contractors and we looked at our workflow going out, actually, we think it’s fairly solid, at the same pace of growth as last year, probably at around the rate of 2% to 3%, a little bit, as I sit here, a little bit stronger out west and down south.

We do think what backs that up is mortgage rates are down again. There’s basically good sentiment across the homebuilders. There’s good demand there, still below long-term need. Inventories are pretty much at record low levels now at this stage. We’re seeing inventories down sort of at 30-year lows in terms of 3-month rather than 6-month stock.

And again, I think our footprint is quite favorable in terms of that. Big states that are important to us, just Texas and Florida, where the housing residential housing building is significantly ahead of the rest of North America. So, I have to say I think that we’re fairly okay with regard to U.S.

resi even though there has been some other commentary with regard to that. And with regard to U.S. infrastructure, we have no expectations of any new word of infrastructures bill going forward. We hear a lot of talks, but that’s all we have at the moment. We’ve got the current bill, which runs through the end of 2020.

The next 3 years, we’ll see overall about 7% increase in overall spending over the last 3 years, our focus is very much in delivering against that.

It’s clear to us probably at the one point we’ve got the greatest clarity with regards to our backlogs because it’s more long-term work that we do and our view is that we’re focused on that and anything else comes beyond that, it’ll be a surprise to us all. And then we will revisit our forecast and our predictions that we’ve got based on that.

But basically, current program running to the end of 2020, we can see where the funding is coming from it’s a continuation of the trend, which is more and more it’s falling on the states through initial initiatives and the state taxes to support that. Our figures are now it used to be 50-50 5, 6 years ago.

We now find the states are providing almost sort of 65%, 70%. They providing $54 billion and the federal are providing $49 billion this current year, so significantly more money coming from the U.S.

And with regard to emerging markets, look, we’ve been fairly consistent in our emerging markets and we were very cautious in our expansion to emerging markets over the last 5, 6 years.

I think that caution has been merited and we’ve seen the fact that it’s very challenging for all companies and actually very challenging for ourselves to make long-term sustainable returns in emerging markets and I don’t think that’s going to change anytime soon.

We have a lot on our plate dealing with the developed first world markets that we’re in with 3 very focused divisions and we’re focused on driving value and profitability through those divisions and with lots of opportunities to grow organically and indeed inorganically.

With regards to looking at our portfolio of emerging markets or indeed any of the businesses, every business in CRH has to satisfy the same requirements as any other business. At the same time, whether to invest in emerging markets or developed markets, it must be able capable of generating returns and cash for our shareholders.

And we those who under-perform, be they in emerging markets or in developed markets, are under the same critical eye wherever they maybe. So, I’m not going to comment on any 1, 2 or 3 individual markets. Just to say that our focus is not on emerging markets going forward.

But the existing assets, it’s the same capital allocation criteria are applied wherever those businesses are..

Thanks very much..

Thank you..

And we have time for maybe two more questions..

Okay. So, the next question comes in from the line of Arnaud Lehmann calling from Bank of America..

Just maybe one follow-up on your capital allocation thoughts. So, you’re announcing a share buyback for the next 3, 4 months. You said you would take a decision on the strategy for European Distribution within 2 to 3 months.

I’m just trying to understand if these 2 decisions are related to each other, would you expect to have to sell more assets in Distribution before you commit to more share buybacks or these are completely unrelated and it’s more about how you see trading developing through the year or maybe your acquisition pipeline, I guess is my first question.

And just on European Distribution, I believe you also have an option in, SAMSE in France, to increase your stake.

Have you taken any decision on this?.

I’ll take the first one in terms of the capital allocation conversation. Maybe, Albert, you can talk about SAMSE. Just in terms of capital allocation and share buyback considerations, Arnaud, I think it’s safe to say that this is not dependent on what happens with Europe Distribution.

In terms of looking at capital allocation, as Albert has said, it’s looking really at our trading performance, looking at the cash we’re generating from our operations and considering our balance sheet position as well at that point in time. So it is not dependent on Europe Distribution..

With regard to SAMSE, obviously, there’s is we have an agreement between ourselves and other shareholders. All I can confirm is that you’re absolutely right, as we’ve announced, we have an option to step-up within SAMSE. It’s a very fine business.

We would see that as being a plus to our overall business plans going forward and with optionality with that particular option going forward. And as we go forward, we will factor that into our considerations when we’re assessing how we wish to allocate capital going forward with regard to remaining with Distribution or looking at other options, yes..

Thank you very much..

Thanks Arnaud..

The final question comes in from the line of Will Jones calling from Redburn. Please go ahead..

I have three if I could, please. First, is it possible to just be a little bit more precise around the pricing change year-over-year, I guess, firstly, across that basket of 15 countries that are all in positive territory.

Is there a percentage number you’d put against that? And I guess a similar question, if possible, for your, I guess, 3 key materials in North America, cement, AGGS, and asphalt, appreciating that asphalt clearly is not in the season right now.

The second was just coming back to guidance for the first half, the mid-single-digit like-for-like EBITDA growth.

Could you help us with what first half like-for-like sales you’re assuming behind that profit growth, please? And just to double check if Q2, any materially different from Q1 in value terms? Obviously, we don’t get the hard figures within the first half.

And then the final question was just around just wind back to the €7 billion of surplus capital that you flagged as being possible for your business by 2021 about a year ago.

Does that number still apply in your mind? Do we need to knock off €1 billion from it from what you spent over the last year on the buyback? Just, I guess, related thoughts on medium-term capacity on that point. Thanks..

Okay. Well, I’ll take the first question with regard to the pricing change and I’ll ask Senan to comment on the half one, half two EBITDA in terms of price and then also on the cash the overall cash number there. Look, the cement pricing, as I said to you, some of it has kicked, some of it is kicking in as we speak as such.

Pricing, as you well know Will, has been somewhat slow over the last 4, 5 years, it’s been coming through piece by piece by country. Broadly speaking, it goes from a low of about 1%, 2% to a high of 6%, 7%. And those countries that were slowest to come through were the ones that are getting a higher percentage.

And obviously, the ones that have been coming through over the last couple of years are, I think, at the 1%, 2%.

It is, again, as I started at the very first question, it is broadly in response to the fact that we had taken very significant cost increases across all energy inputs in the last number of years and they have not been passed on to the customer, even if we take a couple of years to do that. That’s what’s behind this and it’s not just ourselves.

You can talk to all the other cement players across Europe they would feel exactly the same. With regards to the overall pricing, of course, our businesses in North America, our main product area, with regard to aggregates, cement and concrete, absolute price increases are important.

Again, but very significant energy increases last year, we’d expect to see something in the region of sort of 3% to 5% range coming across that. Asphalt is a little bit different because, as you know, asphalt is very much about managing the margin while managing the price increase. And it’s very early days.

Only about 10% of our asphalt volumes are gone in yet. So, we’ll see how that goes.

But as I said to you, the reason why I made that comment after Senan spoke about the asphalt the bitumen cost was because of, as I said to you, in looking at our experience, as we start the most important bidding season now at this stage, the next month, 1.5 months, we bid all the work for, let’s say, the height of the summer starting on bidding that work.

We’re the only ones who do winter fill. So, most people are bidding that work against high bitumen and high oil price, that’s probably a good position to be in with regard to overall positive territory with regards to margin expansion.

But we won’t actually know what the margin will be until get through that bidding season and get through that visibility of work, which will be June, July or August..

Just in terms of half 1 guidance, Will, then in terms of your questions, I mean, there are 4 key elements to our half 1 performance versus last year. Organic growth or like-for-like growth is the first one, which we guided at mid-single digit, and I’ll come back to that in a second.

Also, what’s in there obviously is the contribution from acquisitions. I think the question that was asked earlier about net acquisition contribution, we anticipate €125 million to €130 million extra from acquisitions in the first half compared to last year.

The other two features to bear in mind are obviously currency, which is we move into this year a positive position on currency, which is we anticipate a tailwind for the half year as opposed to last year we had a headwind. And that tailwind at the moment, we would size it as being worth about €50 million to us for half one.

And then finally, is obviously lease accounting changes, which take effect in 2019. And the full year impact of that we’ve estimated to be €380 million, which we guided earlier in the year and that should come in evenly throughout the year, half one, half two.

I think to your organic growth question like-for-like growth question, yes, we are guiding like-for-like mid single-digit earnings growth for the half year, top line, not that much out of line, probably similar range. So, probably slight margin expansion in the first half of the year.

But we’re looking at margin expansion over 12 months rather than over a 6-month period. And then I think in terms of your question around Q1, Q2, when you look at the revenue in the first quarter, obviously, it’s a smaller quarter as we’ve talked about.

What we are saying is the Europe Materials one in particular you should expect to see that sales number moderate in the second quarter and end up what I would regard as more normal half one when you put it together.

To your surplus cash question, of course, we’re still focused on the €7 billion of surplus capital that we can generate from our cash from operations as we look out over the next 3 years. And when we’re arriving at that number, we had already identified €1 billion buyback that was in the pipeline.

So that was taken into account when we’re arriving at that number. Obviously, further buybacks now as we continue going forward will be a part use of that €7 billion as you look forward..

Thank you, Will. Well, look, that’s all we have time for this morning. I want to thank you all for your attention. And as always, if you have any follow-up questions, please feel free to get in touch with our Investor Relations team.

We look forward to talking to you again on the 22nd of August when we report our interim results for the first 6 months of 2019. Thank you..

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