CRH PLC (CRH) 2018 Q2 法說會逐字稿

Ladies and gentlemen, welcome to the CRH plc 2018 Interim Results Call.

Please go ahead, Mr. Manifold.

Good morning, everyone.

Albert Manifold here, CRH Group Chief Executive, and you're all very welcome to our conference call and webcast presentation, which accompanies the release of our 2018 interim results this morning.

I'm joined on our call by our Group Finance Director, Senan Murphy; and our Head of Investor Relations, Frank Heisterkamp.

So over the next 30 minutes or so, Senan and I will take you through a short presentation on the results we have published this morning, setting out the key drivers of our trading performance for the first 6 months of 2018 as well as providing you with an indication of our expectations for the second half of the year.

We'll also take some time to update you on our strategic objectives, targets we have set ourselves and the progress we have made in that regard.

We'll set out to you how each of these objectives are helping us to deliver a structural improvement in our margins, our returns and our cash, all translating into further value creation for our shareholders.

Afterwards, we'd be available to take any questions you may have.

So all told, we should be done in about an hour or so.

So at the outset, on Slide 2, let me take you through some of the key highlights of the year so far.

Overall, I'm pleased to report a satisfactory first half performance with like-for-like sales and EBITDA slightly ahead of last year and in line with previous guidance.

Following some significant weather disruptions in Europe and North America during the first quarter of the year, the second quarter showed improved momentum in our volumes and leaves us well positioned as we enter our busiest trading period.

And as you know, the efficient allocation of our capital is a key focus in CRH and the first half of the year was no different.

We completed the divestment of our Americas Distribution business in January for $2.6 billion, and we've reallocated those proceeds with a $3.5 billion acquisition of Ash Grove Cement, which completed at the end of June, 2 large and important transactions successfully executed during the first half of the year.

In addition, we spent over EUR 500 million on 28 small- and medium-sized bolt-on transactions in the year-to-date and the average multiple on these deals was 6x EBITDA and that's before any savings or synergies that we will generate.

In July, we also announced the divestment of our DIY Benelux business for a total consideration of EUR 510 million, representing an exit multiple of 10x EBITDA.

So it's been a busy year so far, a reflection of our continued focus on the efficient allocation and reallocation of capital to create further value for our shareholders.

Of course, a key part of how we create value is the return of excess cash through dividends and share buybacks.

In April, we announced a EUR 1 billion share buyback program and I'm pleased to report we've already completed Phase 1 of that particular program, returning EUR 350 million to shareholders.

All of this is supported by a further increase in our interim dividend to EUR 0.196 per share, reflecting further progress and the strong financial position our group is in.

Now turning to Slide 3 and our financial highlights for the first 6 months of the year.

Overall, I'm satisfied with our performance with like-for-like sales and EBITDA ahead of the prior year period.

Our EBITDA margin was in line with last year's on a like-for-like basis, a solid performance in the context of a severely weather-disrupted first quarter and an inflationary input cost environment during the seasonally less significant first half of the year.

I'm also pleased to report an 11% increase in our earnings per share, a reflection of a positive operational and financial performance during the first 6 months of 2018.

Now turning to Slide 4 and our regional performance in the first half of 2018.

We'll start with the Americas, our largest market, representing approximately 60% of group EBITDA in 2017.

The economic backdrop remains favorable for our businesses supported by continued GDP growth and a strong labor market.

U.S. infrastructure funding continues to be underpinned by federal and state governments with increases coming in the form of gas taxes, infrastructure bonds and various other mechanisms.

The residential construction sector remains robust with strong underlying demand and first half spending up 8% year-on-year.

On the nonresidential side, we've seen good growth in the office and commercial sectors, which are benefiting from the positive economic growth and strong labor market and that will be consistent with what we hear from our customers as well as industry data from the U.S. Census Bureau, PCA and indeed the ABI.

As you can see on Slide 5, after some severe weather disruptions during the early months of the year, our business recovered strongly in the second quarter, resulting in like-for-like sales of 3% ahead for the first half of the year for the whole.

Our Materials division delivered higher volumes across all product categories while the pricing environment was also favorable.

Our quarter 2 margins were ahead.

The severe weather disruptions in quarter 1, together with some increased labor, raw materials and energy costs resulted in our first half margins being slightly behind on a like-for-like basis.

Our Products division also recovered well in the second quarter, recording like-for-like sales slightly ahead of the first half of the year.

Pricing gains and a particularly strong performance in our Precast business helped to deliver a 40 basis point increase in margin, and indeed, higher operating leverage.

And as most of you are -- would be aware, our acquisition of Ash Grove Cement closed in late June.

The integration of this business is going well and trading has been in line with expectations.

Turning now to Slide 6 and indeed to Europe where hereto we see an improving backdrop.

Economic and construction market activity continues to advance at a modest pace despite some ongoing political uncertainty.

The growth outlook for Western Europe in construction markets remains positive, but Eastern European markets continue to benefit from strong residential and infrastructure activity, particularly within the new-build segment.

Turning to Slide 7 and similar to what we saw in the Americas, our European business also recovered strongly in quarter 2 after a weather-impacted start of the year.

Cement volumes were broadly stable in the first half as a whole, while prices were ahead.

Although the price recovery remains modest, it is encouraging to see price moving on ahead in 12 out of 15 countries in the first half of the year, that's up from 9 out of 15 in 2017.

Our Lightside Products business has had a strong first half performance, driven by good growth in our Construction Accessories and indeed our Architectural Products segments.

Our Distribution business was slightly behind in the first half, primarily due to ongoing challenges in Switzerland.

And against the backdrop of inflationary cost environments and given the slow and severely weather-impacted start of the year, I'm pleased to report that we've been able to maintain our margins in Europe at prior year levels.

I'd also like to mention Fels, the European lime business we acquired in October of last year.

The integration of this business is progressing well and trading has been very much in line with our expectations.

And finally, to Asia on Slide 8 where it has been a challenging first half.

Now despite improving trends in volumes and prices, particularly in the second quarter, we have experienced a significant decline in profitability as a result of higher fuel and energy costs and a market backdrop that remains competitive.

A disappointing result overall, but as I said in April, we expect 2018 to be another difficult year in the Philippines with a recovery in profitability from 2019 onwards.

Our equity-accounted entities in India and China showed some contrasting trends in the first half of the year.

In India, demand was supported by several large-scale infrastructure projects.

However, pricing pressure remains an issue due to overcapacity in the market.

In China, we achieved strong pricing gains helped by recent supply-side reforms across the industry, but volumes were lower.

Now at this point, I'd like to hand over to Senan who's going to take you through the financial performance for the first 6 months of 2018 in greater detail.

Thank you, Albert.

Good morning, everybody.

So as Albert said in his introduction, we've had a satisfactory start to the year and this is reflected in our financial performance on Slide 10.

As you can see for the first 6 months of the year, our sales were EUR 11.9 billion and that's 2% ahead of last year on a like-for-like basis.

Our EBITDA was EUR 1.13 billion, which is 1% ahead on a like-for-like basis.

Now what I'd like to do is mention a few of the key drivers behind this performance, starting with organic growth.

If you exclude Asia and focus on the performance of our Europe and Americas businesses, our organic EBITDA increased by 2% compared to the same period last year.

We think this is a good result in the context of the challenging weather conditions during the early months of the year and the inflationary cost environment within which we operate.

Our Asia division experienced difficult trading conditions in the first half of the year, resulting in an EBITDA decline from last year.

We move to our development activity.

As you can see on this slide, incremental acquisitions contributed EUR 84 million of EBITDA in the first 6 months of the year.

Included in this are the acquisitions of Fels and Suwannee completed in 2017 as well as a small contribution from the Ash Grove acquisition, which completed on the 20th of June.

That's just 10 days before the end of this financial period.

It's important to say that the integration of these businesses is progressing well and their trading today is in line with our expectations.

And finally, to turn to currency translation where a weakening in the U.S. dollar relative to the euro has been the primary cause of that currency headwind, and that's impacted our EBITDA by EUR 82 million in the first half.

However, if you look at where the dollar is trading relative to the euro today and if we remain -- or if we were to remain at this level for the rest of the year, then we would expect this headwind to ease somewhat during the second half.

Turning to our cash flow performance.

As you can see on Slide 11, we reported a net cash outflow of EUR 311 million in the first 6 months of the year.

An outflow at this stage of the year is to be expected given the seasonal nature of our business and this reflects the buildup in our inventory in advance of third quarter trading, which obviously is the seasonally our most significant trading period.

Now working capital outflow for the first half of the year has increased over last year, primarily due to early season weather disruption and the increased levels of trading activity during the second quarter.

Our cash tax outflow increased over last year as we paid capital gains tax on the disposal of our American Distribution business, which closed in January of this year.

I think it's important to note that we remain very focused on converting our cash into earnings -- our earnings into cash.

And as we look ahead to the second half of the year, we anticipate a significant inflow of operating cash consistent with previous years.

Turning to our net debt movement on Slide 12, and as you can see, our net debt position closed the first half at EUR 8.1 billion.

In my view, there are a number of features in our debt movement that highlight the strength of our balance sheet.

Our portfolio activity in the first half of the year resulted in a net acquisition spend of EUR 850 million, and this reflected the reallocation of proceeds from the divestment of our American Distribution business into the acquisition of Ash Grove.

And the proceeds from the disposal of our DIY business received in July are not yet reflected in these numbers.

We were also able to return at EUR 584 million of cash to shareholders during the first half of the year.

That's a EUR 200 million increase compared to last year, reflecting the commencement of our EUR 1 billion share buyback program.

And as Albert mentioned, the first phase of this program for EUR 350 million completed by the end of July, and Phase 2 is currently under consideration and you can expect further announcements on that in due course.

And finally, as we look to the second half of the year, we anticipate a significant cash inflow consistent with previous years.

As a result, we expect our year-end debt metrics to be at normalized levels, which really highlights the strength of our balance sheet.

So at this point, I'll hand back to Albert to provide you with an update on some of the strategic initiatives underway across the group.

Thanks, Senan.

A lot of moving parts, but a clear summary and you can really see the strength of our balance sheet coming through.

What I'd like to do now is take a few moments to update you about the strategic direction of the group, reminding you of our strategic objectives and the targets we have set ourselves and the progress we're making in that regard.

On Slide 14 of the presentation, we've summarized our 3 main strategic objectives: firstly, an active approach to portfolio management, the continuous process which we are reshaping our business, constantly refining our portfolio and adapting that portfolio for the changing needs of construction.

Another item high in our strategic agenda is the capital -- area of capital allocation.

Our relentless focus on the efficient allocation of capital to maximize value for our shareholders, whether that's through capital expenditure investments, value-driven M&A or indeed cash returns to our shareholders.

And of course, at the core of both of these is our firm belief in the philosophy of continuous business improvement, a deeply embedded practice of making business better through implemented business improvements across the group.

Three strategic objectives all with the same goal or purpose in mind: the delivery of structurally higher margins, more cash and improved returns for our shareholders.

So I'd like to take a few moments to expand each of these objectives.

If I can ask you to turn to Slide 15, well, in recent years, we've been working hard to become a simpler and more focused business, focused on higher-growth regions and product areas within our core existing markets.

You can see that in how we've positioned our business, building out a broad range of fully integrated related products and services around our more traditional base materials, allowing us to better serve our customers' needs while capturing more value across the supply chain.

You will see it as we roll out our simplified reporting structure across 3 divisions including our new building and products platform, which will allow us to better leverage our scale and capabilities in the Product space.

You can also see it in the divestment of our Americas Distribution business, $2.6 billion which we've been able to reallocate from the slow-growth Northeast of the United States into the higher-growth regions of Florida, Texas and the Northwest through the acquisition of Ash Grove and Suwannee Cement.

Through our continuous portfolio review process and the constant refinement of our portfolio, we've become a more unified business with significant opportunities for further growth and value creation through improved horizontal and vertical integration as well as enhanced network synergies across the group.

Our approach to capital allocation is shown on Slide 16 and it's centered around our relentless focus on shareholder value.

When it comes to the allocation of capital, we take a patient and disciplined approach and our long track record of financial strength and flexibility is a testament to that.

Whether it's a capital expenditure project or an acquisition or a divestment opportunity or indeed the return of cash to shareholders through dividends or share buybacks, every capital deployment decision is analyzed and assessed through the lens of creating maximum amount of value for our shareholders.

Continuous business improvement, as shown on Slide 17, is a deeply embedded practice in CRH of making businesses better, a continuous process and very much part of the CRH DNA.

As we announced in May, we are targeting a 300 basis points EBITDA margin improvement by 2021.

As you can see on this slide, we expect approximately half of the increase to come from incremental business improvement initiatives across the group, internal self-help measures, actions which we ourselves are taking to make our businesses better.

Approximately 30% of the increase is expected to come through higher operating leverage as a result of improved business mix across our portfolio as well as continued growth in our core markets.

And the remaining 20% is expected to come from synergies that we have announced as a result of recent acquisitions in Ash Grove, Suwannee American Cement and indeed in Fels.

On Slide 16 (sic) [Slide 18], you can see a further breakdown of our business improvement initiatives into 3 main categories: procurement, process and structural.

We are focused on improving our procurement processes, leveraging our global scale and purchasing power such as areas of transport, logistics, mobile equipment and reorganizing and realigning our procurement network on a global and regional basis, increasing our use of technology in the areas of advanced analytics, e-procurement and indeed through supply chain optimization.

This is nothing new for CRH.

Leveraging our global procurement capabilities is something we do every day.

This is just a further step in the process as we constantly strive for ways to improve our businesses.

Similarly, the process improvements will come in areas of commercial and operational excellence programs, fuel and power optimization, increased automation of certain production processes, transport and logistics efficiencies, all a part of leveraging our global technical and operational expertise and best practice programs to provide enhanced network synergies and vertical integration from across the group.

Further structural benefits have also been identified in the areas of back office integration, ERP consolidation and fixed overhead savings.

These targets are a result of several months of in-depth analysis, a bottom-up group-wide review culminating in a set of real and measurable initiatives with real responsibilities and accountability behind each and every one.

These initiatives are an important part of how we create value for shareholders.

They are critical in the delivery of the targets we have announced and they are an absolute priority for me and the entire senior team.

Turning to Slide 19, you can see the remaining components of our margin improvement targets, including operational -- improving operating leverage, market growth and previously announced synergies.

The reshaping of our business and the reallocation of capital into higher-growth markets has resulted in a better business mix with structurally higher margins and improving operating leverage.

This operating leverage, combined with further growth in our core markets is expected to deliver 30% of our margin improvement target.

The synergies, making the final 20% of the margin improvement, are a reflection of the real and tangible benefits that will come from the integration of our recent acquisitions, particularly the acquisitions of Ash Grove and Suwannee American Cement in the United States and indeed Fels in Europe.

And so on Slide 20, we've set out for you our 3 strategic objectives all with the purpose of delivering structurally higher margins, more cash and improved returns for our shareholders.

Well, what does it look like in practice?

Well, you can see here this gives you a snapshot of the progress we're making against this strategic agenda.

Through active approach to portfolio management, we have significantly reshaped our businesses.

In the past 3 years alone, we have divested 1/3 of our asset base and approximately half of today's assets were acquired over the same period.

That's a significant change in our portfolio and business mix and it won't stop there with a further EUR 1.5 billion to EUR 2 billion divestment program currently underway.

In July, we divested our Benelux DIY business and we are carrying out a strategic review of our [wide] European Distribution business.

Going forward, starting in 2019, we will report under a new organizational structure, a simpler and more focused business across 3 divisions: Americas Materials, Europe Materials and Building Products.

In terms of capital allocation, we remain committed to the return of excess cash to shareholders.

We have returned EUR 1.6 billion in dividends over the past 4 years, and our EUR 1 billion share buyback program is well underway.

We continue to leverage our strong and flexible balance sheet to pursue value-accretive acquisition opportunities as evidenced by the 28 bolt-on acquisitions completed in the year-to-date.

We are also making good progress in the area of continuous business improvement.

Our relentless focus across the group on making businesses better, a core part of how we value and create value for shareholders.

We have announced a 300 basis margin improvement target with benefits coming from business improvement initiatives, improving operational leverage and previously announced synergies.

This is a journey and we have by no means arrived.

We are moving in the right direction.

And as a measure of our progress, you can see that over the last 4 years, we have delivered a 400 basis point improvement in margins and a 500 basis points increase in returns and a total shareholder return on a CAGR basis of 16%.

Moving to Slide 21, you can see all of these actions have translated into industry-leading cash generation.

Over the past 4 years, we have converted approximately 80% of our EBITDA into cash, generating an average of EUR 2 billion of free cash flow each year.

With continued strong cash conversion, and subject to a net debt-to-EBITDA comfort level of approximately 2x, we estimate we will have EUR 7 billion of unutilized financial capacity by 2021.

That's EUR 7 billion of optionality after CapEx, after dividends and after our ongoing share buyback program, which can be further used to create value for -- to create value-driven M&A or cash returns to shareholders and that's before divestments.

Now on Slide 22 and you would have seen this slide before, just a reminder of the medium-term financial targets we have committed to.

As we continue to refine and simplify our businesses, our improving business mix and the higher-margin profile of our businesses is expected to translate into improved operating leverage in the region of 20%-plus going forward.

Through a combination of this higher operating leverage, business improvement initiatives and previously announced synergies, we are targeting a 300 basis points EBITDA margin improvement by 2021.

We remain focused on actively managing our portfolio, on the allocation and reallocation of our capital for higher growth and more sustainable returns.

This is a continuous process, constantly refining our portfolio to maximize value for our shareholders.

And we're progressing well with our plans to deliver a further EUR 1.5 billion to EUR 2 billion of divestments over the medium term.

And finally, to cash, the allocation of that cash.

Over the next 4 years, we expect to generate total financial capacity of EUR 7 billion, EUR 7 billion for further value creation through M&A or cash returns to shareholders after CapEx, after dividends and after our ongoing share buyback program, and as I said before, before divestments.

This slide represents our commitment to our shareholders with each of these items playing an important role in contributing to our overall objective: the delivery of a structural improvement in margins, cash and returns.

And now if I can turn to outlook and our expectation for our businesses for the second half of this year.

Turning to Slide 24.

Against the backdrop of some severe weather disruption in the first quarter and an inflationary input cost environment, our businesses in the Americas performed well during the first 6 months of the year with like-for-like EBITDA 3% ahead.

The trading environment in the Americas remains supportive.

At the second half of the year, we expect EBITDA to make further progress on a like-for-like basis.

In Europe, we see continuation of the positive momentum we experienced in the first half of the year and expect an increased rate of like-for-like growth in the second half.

And finally to Asia and specifically our business in the Philippines, a disappointing first half performance with a number of factors contributing to a significant decline of profitability.

With these challenging conditions continuing in the second half of the year, we expect second half EBITDA to be similar to what we reported in the first half.

For the group overall, compared to what we saw in the first half, we expect a higher pace of like-for-like EBITDA growth in the second half of the year and another year of progress for the group.

So finally, on Slide 25, before I turn to Q&A.

I'd like to leave you with a few key takeaways from this morning's presentation.

We've had a good start to the year with sales and EBITDA ahead and in line with our previous guidance.

Our EUR 1 billion share buyback program is well underway.

And we've already returned EUR 350 million of cash to our shareholders.

Active portfolio management and efficient allocation and reallocation of capital is a core part of our strategy to create value for our shareholders.

We remain firmly committed to our EUR 1.5 billion to EUR 2 billion divestment program and have already made significant progress following the divestment of our Benelux DIY business in July for a total consideration of EUR 510 million.

And as outlined earlier, we remain focused on improving our businesses day in, day out, all with a view to delivering higher margins, more cash and improved returns.

This is what you get with CRH and this is what we as a management should be judged upon.

So that concludes the presentation part of this morning's event, and we're now happy to take your questions.

(Operator Instructions) And now I'm going to hand you back to the operator to coordinate the Q&A session of our call.

(Operator Instructions) Our first question comes in from the line of Gregor Kuglitsch calling from UBS.

I've got a couple of questions.

So the first one is on the EUR 7 billion number that you're putting out there.

I guess, the question is how do you think about deploying that capital?

So what criteria will you look for?

Is it going to be more M&A skewed?

Or do you think that there's a possibility that if the opportunities aren't there, that you could return that, at least part of that cash to shareholders?

And then can you dig a little bit more into the 300 basis point margin improvement, just perhaps for the avoidance of doubt, how would, for instance, a sale of margin-dilutive businesses play into that?

I mean, clearly, you've just sold a DIY business in the Benelux, for example, which clearly is below group average.

I want to understand is that 300 basis points, will that effectively continuously get -- to be adjusted to the extent that the mix changes?

And then perhaps if you could help us on the pace of that margin improvement because your guidance kind of implies this year it's not going to move much.

Next year, I suppose it is obviously 3 years, so from '19 onwards, so the pace of that step-up would be helpful.

Thanks, Gregor.

I'll take that, the question in terms of the capital allocation, in terms of how we look at the deployment of that EUR 7 billion we anticipate generating over the next 3 to 4 years and also in terms of the -- how that business improvement have -- changing shape of our business affects us.

I'll talk and Senan will come in the end then, just talk about the pace of how that drifts through -- we see it drifting into our margin.

And specifically going back to the capital location question, we take a very simple, clear view on how we allocate capital in CRH and we're very transparent on this.

It is all about value and creating value for our shareholders.

So when we're faced with a number of options at any one time, we can deploy capital in a number of different ways.

Obviously, there's internal capital expenditure to support our businesses.

Actually, historically, they have been the best returns on investments we can make within CRH.

This is something we need to do.

This is something we should continue to do.

And I think you know the run rate in terms of capital expenditure, this is not going to change going forward.

Also, there are M&A opportunities, and I have to say that the M&A pipeline is quite strong at this moment in time.

Of course, one has to look at the shape of the business and how you're creating that and also in terms of the pace of change and also the outlook, there's time to be -- to push ahead with M&A, there's other times to perhaps pull in your horns somewhat.

And -- but we'll make that decision based on what we see in front of us, and then of course, the issue of how we return capital to shareholders.

We've got a very strong record in terms of dividends, and this year, you've seen we've returned -- we've committed to return EUR 1 billion through a share buyback program.

So we make those decisions based on what we see in front of us and the opportunities we see in front of us.

The key issue for us is, is the creation of the option to use that capital and that capital will be deployed in a way that maximizes value for shareholders.

I suspect it will be across all 4 of those particular categories rather than focused on one particular one at this moment in time.

I should say at this moment in time, with regard to our deployment of our capital, we're very much focused on integrating the businesses we have acquired over the course of the last 12 months and delivering upon those objectives.

And indeed, the internal self-help measures, that's where we're focused.

I wouldn't expect to see very significant M&A during the remainder of this year.

I'd expect to see business-as-usual M&A, which we've kind of indicated to you earlier this year.

I don't see any change in that and I would expect to see us to continue with our share buyback program, which I'm sure we'll discuss later.

If I can move on to the second question, which is in terms of the impact of the changing business mix on our basis point improvements in our margins and specifically your question with regards to the sale of our DIY business, which was below our group margin and such, I should say that, that was an as-is statement.

In other words, at the end of 2017, the business shape that was there and the business that were there in 2017, that's the base upon which we improve going forward.

So in terms of deploying capital and redeploying capital, of course, sometimes that will have an impact.

But that's the wise thing to do for our businesses.

I should say that -- you talked about in terms of margin, if I look at some of the businesses we've bought and sold over the course of the last 12 to 24 months, specifically taking our Americas Distribution business, we sold that at a very high multiple.

It was a good business.

It performed well.

But by being able to deploy that back into another part of the United States into the Ash Grove Cement business, which has exposures to the higher growth southern and western regions of the United States and indeed with the opportunities to integrate that business with our existing network of businesses, that gives us value-creation opportunities above and beyond what we could have been able to achieve with the existing U.S. Distribution business that we had.

And therefore, that will create margin enhancement opportunities for us.

So that does feed through into that area.

And as we've highlighted this morning, the growth and leverage section of our business as a group, it comes through in that particular area, greater leverage, greater margins and greater opportunities for pull-through demand.

With regards to the timing of the benefits, maybe, Senan, you...

Yes, Gregor, just in terms of your question on pace, I think as you rightly pointed out, 300 basis points is set out as a target that we would achieve over 3 years running out to 2021.

And as you would expect, that will be back-end loaded.

So you would expect to see more of those basis points coming through in '20 and in '21.

You will see modest improvement in '19, but it is expected to be more back-end loaded.

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

Two for me, please.

So one, just on your -- in a slide there, you mentioned you've improved your return on net assets by 500 basis points over the last couple of years.

So with your new targets out to 2021, I'm just wondering do you have a kind of target RONA in mind?

And how sustainable do you think those returns are over time?

And two, just to come back on the U.S., so obviously an impressive tick-up in the United States in the second quarter.

I think you mentioned your margins had improved in Q2 on a year-on-year basis there.

So I'm just -- I was wondering about the strength of trading through the summer months in terms of like-for-like sales and EBITDA and just in terms of your confidence in your end markets in the United States, if you could give us some sort of sense how that's progressed.

Thanks, Bob, and good morning to you.

Yes, we have made good progress with regards to improvements in margins and returns and the cash over the last number of years.

And I do think what we've done is that has been delivered by an improved business performance in terms of our businesses themselves, helped largely by a recovering U.S. market.

We've had little or no help from the European market at -- to this point in time.

I think it's been achieved by running our businesses better, lower cost base, tighter, sharper.

It's been achieved by reshaping the portfolio and it's been achieved by recovering U.S. markets.

And as we go forward, in terms of including the margins and including the efficiency of our business, of course, that will and should increase the returns of our business going forward.

And the actual amount of those returns will be determined over time because, of course, the pace of acquisitions, the pace of investment would determine that.

But I think, for us, the key issue for us is, of course, we're focused on that returns figure.

I think it's the most sustainable way of measuring what our business can achieve, but we don't put a specific target out there for that.

For us, the targets are the ones we can control, such as cash, such as margins and that's the ones we're very much focused on.

And we do believe we are building a higher-margin business, that does have higher returns, and will generate more cash and that is sustainable going forward.

And with regards to the markets, you referred in the United States in terms of end use out there, I have to say I've been pleasantly surprised by the robustness of the markets that we're seeing during quarter 2 and including into quarter 3. And as you know, U.S. construction is divided about 50% into public infrastructure spending and about 50-50 into residential and nonresidential.

If I look at those 3 segments, I think that the funding and indeed the demand levels for U.S. infrastructure continues to be robust this year.

Overall funding is going to be up about 8% on last year and I think that we're seeing that coming through in terms of overall spend.

And I think that will remain for the rest of the year, absent any massive weather impacting our very busy season.

We've had a reasonably good July and a reasonable August weather-wise.

The residential sector remains solid.

Good growth this year again, off a low base, still way too low, it's 1.2 million homes.

Demand is at least 200,000 to 300,000 above that, but we're up about 6% year-to-date and I expect that robustness to continue.

It is noticeable that it was very tight on the supply side over there.

And inventory levels in terms of housing, as you read, in the U.S. are probably at historical lows and I think that, combined with the strong demand, that is going to sustain that sector for quite some time going forward.

And lastly, I've been pleasantly surprised by the robustness and the continued growth of nonresidential.

The ABI, as you well know, has been ahead now for sort of 10 of the last 11 months.

It has -- the last one -- it was just released again earlier this week and we're seeing that in our numbers coming forward pretty much across the commercial, office and warehousing sector where it's ahead sort of 3%, 4%, which is at a higher pace of growth than we would have seen perhaps at the tail end of last year or start of this year.

And with the ABI as shown in the figures [that are just there], it should continue at those levels.

So as we look at the remainder of this year and looking at our backlogs, our backlogs are probably stronger now than they had been at any time over the last 3 years, not only the activity levels, but also in terms of the margins within that.

It gives me confidence that there is a solid demand fundamentals in our U.S. market going forward for the remainder of this year and indeed into next year.

And I think we would -- with CRH having such a large business in North America and particularly in the United States, I think we are a canary in the coal mine.

We could smell the change on the wind if it's coming well in advance.

And after saying this one time, we don't see anything at all other than the continued growth profile that we're seeing in front of us.

So we feel quite good about that.

It's, for us now, it's about going to work, working at our business, ensuring we deliver, ensuring we try and recover as best we can the cost inflation which just spiked up during the early season and recover that, as much of that as we can, in the second half of this year because we have little or no opportunity to do that in the first half of the year.

So that's why I still think despite, all of that, it's quite a good performance by our businesses across Europe and the United States.

But those markets are in good shape, yes.

The next question comes in from the line of a Paul Roger calling from Exane BNP.

So just three for me as well then.

So the first one is on operating leverage.

You are talking about a 20% drop-through margin medium term.

If we look at what consensus is implying, it seems to imply that already for 2018, obviously you did lower than that in the first half.

So do you think that's realistic?

I think it would imply something like 25% in the second half?

The second question is really on Switzerland.

Can you explain a bit more about what's driving that pricing pressure and whether there are any signs of stabilization or improvement in that country?

And then, thirdly, on American Materials, obviously, you've just given a very optimistic outlook.

You've talked about the desire to recover more cost inflation in the second half.

But overall, when we look at that second half, would you expect margins to improve compared to last year?

Or is it just a case of less margin pressure compared to the first half?

So I'll start with the leverage question on that one, Paul.

In terms of the operating leverage, I think, as you pointed out, you mentioned a number of times the first half of the year, obviously it's important to look at operating leverage on an annual basis.

I think it gets distorted when you look at half-year performance, particularly looking at our first half, which is obviously the small half in the year.

I think you asked the question about the second half in terms of do we see stronger second half performance and the answer to that is yes.

I think in terms of our like-for-like earnings growth in the first half of the year, you've seen from us a 1% like-for-like improvement.

In the second half of the year, we would expect to see mid-single-digit like-for-like improvement in terms of our earnings performance and that obviously will filter through into operating leverage.

I think your comment around the operating leverage in terms of being above 20%, as you look forward, I think that fits into the conversation we have around the 300 basis point synergy look forward.

We would expect that our businesses will generate at the higher end of that operating leverage as you look at out over the 3- to 4-year period that we talked about.

So that's operating leverage.

On Switzerland, yes, I'll take the Switzerland part of the question, Paul.

You can see very significant increase in volume from us last year.

And last -- first 6 months of this year well up on last year and really that's a matter of 2 things.

First and foremost, there's a bit of mix in that.

We have -- it's just the type of product we're selling into the marketplace, the demand of our customers.

It's also as a result of certain particular contracts in the regions where we are.

And also it's a bit of recovery of market share that we lost over the last couple of years.

And those of 3 things have reflected themselves.

And although it's the lower level of activity for the full year, it's reflected itself, in [some] price decline net-net.

But there's no significance in that and I would expect that figure to equalize out by -- for the remainder of this year.

I mean, I guess -- sorry, Albert, I guess, it's just a little bit surprising when you've got 3 players in the market to have a 7% price decline.

I mean, is this due to imports?

Or is there something more competitive going on in the underlying market itself?

No, it's more to do with the nature of some of the very large-scale contracts where we've got very large volumes going into very large contracts and those contracts are committed at a particular price to get those volumes and those contracts will be for some of the very large (inaudible) jobs, which might require specific types of products that would be at a lower price because it'll be lower-grade types of cement, Paul, rather than any specific competitive activity.

And I might take the margins question about the Americas Materials.

As you pointed out, the first half of the year, we would have had a 20 basis points like-for-like decline in our American Materials business if I ignore the contribution from acquisitions.

And I think that's really driven by the weather disruption in the first quarter of the year, but also the energy cost headwinds that we would face in that business.

I think in terms of energy costs in the first half of the year, they're up 10%.

As you know, we have the ability and we do pass that on in terms of our escalation activities in pricing.

But there is a lag between a significant spike in costs and of our ability to be able to recover that.

I think we're very confident that over time we will recover that.

And as you look out to the second half of the year for that business, we would obviously expect to see progress in margins in the second half of the year.

So I think it is primarily down to the significant spike in energy costs you see in the first half of the year, which we have increased obviously the headline prices in all of our key products as you can see, but obviously not sufficiently to offset the significant spike in the first half.

But we anticipate obviously catching that up in the second half.

One thing I should add there as well, Senan, as well.

Everyone focused on asphalt and bitumen, of course, the energy cost, the impact upon electricity and diesel and gasoline and natural gas, all of which we use on inbound and outbound and internal logistics.

And all of these are used across all our products, it's not just an asphalt issue.

Significant aggregate, increase in cost of production which -- was a result of those and it just takes a while for us to price them back in because we have big fixed contracts that we have to work through before we can reprice that back in.

It just takes time more than anything else, particularly when there's a spike in energy costs as there has been this year.

The next question comes in from the line of Elodie Rall calling from JPMorgan.

I have 3 questions as well, if I may.

The first one is on FX headwinds.

They were EUR 82 million in H1 and you expect a further headwind in H2.

However, we've seen an improvement in the euro-dollar rate.

So what kind of a headwinds would you actually expect for the rest of the year?

What currencies are driving that?

Second, if I can, on net debt, you end up EUR 1.7 billion higher in H1, but you expect that to normalize through H2 through much stronger cash inflow in H2.

But overall, can you give us a little bit more granularity about your expectation for the year-end in term of net debt?

And three, if I can ask about the buyback program.

You've done EUR 300 million so far.

You have EUR 1 billion planned for this, what, for '18, '19?

Any views on when you will launch the next phase?

Okay, Elodie.

I may take those questions.

Starting with currency, as you pointed out, obviously we had a headwind in the first half on the translation, primarily of dollar earnings into euros.

And the order of magnitude, as you saw, was approximately EUR 80 million.

If you look at spot exchange rates today and let's call them 1.15 and if you were to assume that, that 1.15 rate carries through from now through to the end of the year, then the calculation we would have on the full year currency headwind is probably somewhere in the region of EUR 100 million to maybe EUR 120 million max in terms of currency headwinds.

So a significant easing of the headwinds in the second half of the year.

Bear in mind, the average last year in terms of exchange rate on the dollar was 1.13.

The average we closed out the first half at was 1.21.

And obviously, we're sitting at 1.15-ish today.

So if we ended the year as total average of 1.18, then obviously that leads to a sizeable improvement in the strength of the headwinds in the second half of the year.

Your net debt question, EUR 8.1 billion at the half year, the first thing to bear in mind is that the proceeds of the DIY sale are not included in that debt number.

So that transaction closed in July.

So there's another EUR 0.5 billion to come off that in the early weeks of July.

And as we look out to the second half of the year then, which is where obviously we have a significant trading period, as in previous years, we would expect a significant inflow of cash.

And as we look out to the end of the year, I think we're very comfortable that our net debt position would be at or below EUR 7 billion.

And our net debt-EBITDA would be at the -- we would describe as normalized levels.

So I think we're very comfortable that we have a very strong balance sheet.

We already have a strong balance sheet, but we'll have an even stronger balance sheet as we get to the end of the year.

And then I think to your buyback question, obviously included in those debt forecast is buyback.

EUR 350 million completed at the end of July.

Obviously, remain committed to the EUR 1 billion program.

We have active dialogue and discussion and consideration going on at the moment in terms of Phase 2 on that program.

And obviously, we'll update you in due course once there's further announcements to be made on that buyback, but it's certainly under active consideration at the moment.

The next question comes in from the line of Will Jones calling from Redburn.

A couple for me as well, please.

The first maybe perhaps you could explore the performance in Americas Products a little bit more, that seems to have been the standout performer in the first half.

I think plus 1 on like-for-like sales converted to plus 5 like-for-like EBITDA.

Was there any mix issues there between the business lines that helped?

Or is that just a good price/cost or savings performance?

And I think back at the IMS, you talked about BuildingEnvelope being slightly slow in the first quarter.

Has that started to come back?

And then just a couple of sub-questions, I guess, going back to the targets.

The first really is why now in terms of giving a target for 2021.

It's not really been your style in the past to make medium-term predictions.

So just, I guess, why that change in tack would be great to understand.

And then, again, within that, when you look at the regional contribution to improvements, be it Europe or the Americas, would you say 1 area is due to contribute more of that 300 bps than the other?

And I guess, within that Europe Heavyside probably is the business when we look back long term, that's most below its prior averages.

Is that a particular focus for improvement?

Or does that one really need market to come back?

Well, 3 questions there.

Let me take them as you've given them to me.

With regard to the Americas Products business, actually it really almost a microcosm of CRH.

The margin improvement is the result of the reshaping and the reallocation of capital across that portfolio over the last 3 or 4 years.

So it's quite a different business than it was 3 or 4 years ago.

The addition of the C.R. Laurence business, which we talked about in 2015, if you recall, we talked about that being a business, which has a higher margin and would integrate well and deliver synergies, but of course, that's starting to deliver and that's improving the margin of our business going forward.

And of course, we've had very tight control of our costs as we do within CRH, looking at how we shape that business and support that business.

And we've done some structural realignment that has lowered our cost base there, that helped our bottom line.

So it's down to the portfolio management.

It's down to how we run our businesses better.

It's down to reallocating capital to higher-margin businesses and that's dropping through and I think that's all contributed to an improved performance and should see a continued improved performance across our Americas Products business, of course underpinned by strong commercial excellence, strong operational excellence and good markets.

And with regard to OBE, you're right, it followed -- the first quarter of the year was quite tough for us.

Things have improved so much in the second half of the year.

I would have expected its main exposure to -- second quarter of the year, excuse me.

I would have expected to see that their exposure to the nonresidential markets should see that build a momentum within this business for the remainder of this year.

And again, that's a fine business, delivers good profit and returns for us.

And actually, should be a good performer for us.

With regard to the targets and why now, why we've set them out, I think it was in the context of trying to be transparent and communicate to shareholders basically the work we are doing within CRH.

And our business has gone through got a lot of reorganization and a lot of reshaping.

I think in terms of looking at how shareholders can make a decision in terms of looking at investing within CRH, we don't feel we have fully communicated to them that story of what the plan we were working on.

That is also, I think, is incumbent upon management of business to actually share what they are doing within their businesses to try -- and with self-help measures improve what they're doing.

In CRH, we have little or no interest being slaves to the market and rising and falling with what's going on out there.

Of course, the macro trends will hugely impact what we do.

But I think it's also important to communicate to shareholders so they can make an assessment in terms of whether to invest or not to invest, in terms of what we do in our business to improve the businesses.

And I think setting that out in terms of -- in terms of how we want to improve the efficiency within our business, I think that's the key task of all the businesses now is to move beyond what the market is doing for them and to structurally improve their businesses by becoming more efficient at what they do.

And we do that every day in terms of allocating capital into higher-growth and high-returning areas, whether it be products or different regions.

We do that in terms of going to the work every day in terms of continuous business improvement, usually the thousands of initiatives that can bottom up, to all of our business that we're working on a day-to-day basis to improve what we do that would contribute to that 300 basis point improvement.

And then the whole, of course, reason why we're in M&A, it's not just to buy businesses to become bigger, it's to buy businesses to become better.

And better returns means better businesses and that's delivered through synergies and a strategically stronger and a more sustainable profitability going forward.

And all of that converts into very significant cash optionality.

I think that really was the crucial trigger point for us is that we had become a business now over the last number of years, we create over -- we generate over EUR 2 billion of free cash flow every year.

And I think what we wanted to communicate to shareholders was that we are not an M&A machine, we are people who are focused on creating value for our shareholders and we will allocate that cash to whatever is the most appropriate way to create value for our shareholders.

M&A will be part of that as indeed will be increased dividends, as indeed will be share buybacks.

I think communicating all of that information, internal business improvements, reshaping the portfolio, the absolute relentless focus on capital allocation and the size and scale of the cash we're generating.

I mean, if you stop for a moment and think that in 4 years' time we believe we will have EUR 7 billion of financial capacity there to generate value for our shareholders in whatever way we feel is appropriate, that's an enormous advantage to have.

And we felt it was appropriate for investors to have that information so they can make a proper decision and that's why we did it at that particular time.

Your last question talks about the regional contributions we see across our businesses, I prefer to think about it rather than regional contributions, think about them as divisional contributions.

The 2 big businesses that we currently have, our Materials businesses, they are too big supertankers that drive our business forward year in, year out.

We have the largest building materials business in North America.

We have the largest heavyside business in Europe.

Given where those markets are at this moment in time, we need to go to work every day and be excellent, but we think our mark-to-markets are going to help us for the next few years.

Volumes are moving ahead.

U.S. is in a good place.

Prices are moving ahead.

Europe is recovering.

We believe volumes and prices will continue to recover.

At a slow pace of growth, we will continue to recover.

And therefore, in those areas, we expect to see the improvements in margins, the improvements in cash and the improvements in returns that we set out to you this morning.

And in particular, I like the idea of the whole global Products business, which, for us, represents greater options for the future for growth in CRH.

This Products division had been put together to really address the changing face of construction needs as we go around the world.

We talk about supply-side constraints, particularly on the labor side.

This is a real fact in our markets that we're in and construction is changing to address these supply-side constraints because it's not only with regard to environmental, it's in terms of speed of construction.

These are real constraints that are going to continue going forward.

People like ourselves are looking at developing new products, options for people to construct materials and buildings to address these particular changes and our Products business allows us to facilitate and will give us further spur for growth as we go forward, and we have tremendous ambition for that division over the next coming years.

So I think that the 300 basis points will be delivered across all 3 divisions.

But for the foreseeable future, I think it'll be largely across our Materials businesses.

But the longer-term top line growth and bottom line growth will also be aided by an improving Products business.

The next question comes in from the line of David O'Brien calling from Goodbody.

A couple on Europe first, please.

You've highlighted that there's been progress to 12 countries now looking at stable or positive pricing.

Can you give us -- or help us understand where are we in terms of the journey of price cost in Europe?

And when can we expect it to significantly contribute towards either profit or margin growth for the business?

And can you give us some commentary on individual countries and how they are managing the price cost across Europe?

And more generally, can we just get some color on how the U.K. should be expected to perform for the remainder of this year.

And one final one, if I can.

Look, you've talked about very encouraging backlogs and you mentioned labor constraints.

Is there any change in pattern of how you're converting those backlogs into actual business on the ground?

Or are you hitting any constraints in terms of -- or bottlenecks in trying to converting into actual activity?

Yes, you have 3 questions there and 3 good diverse questions.

Let me take talk about the cement pricing across Europe or cement-to-concrete pricing, which drives a lot of the market share, certainly our business across Europe.

I go back to say that the philosophy in our industry is really driven by the fact that volumes have to come back first and I think we always feel that it's kind of a 2-year volume recovery before you start to see pricing coming through.

And it really was at the tail end of 2016 that we started to see pricing starting to emerge.

It builds momentum during 2017 and we're seeing that momentum continue to build during 2018.

I think we're very much at the early stages of where that pricing recovery is going to be.

I've said before I feel that we're kind of like 2012, 2013 in the United States, in Europe in terms of recovery of pricing.

I think there's a long road for us to recover back pricing because the margins that we are making -- in all cement players across Europe, margin that have been made in the business are not sustainable to meet the level of ongoing investment, or future investment in the industry going forward.

And there has been a long history in our industry of being able to recover costs over time and bring margins back to levels.

The levels we are at now at the moment have not been seen historically at this level for quite some time.

And I believe that we have quite a journey ahead of us.

And I believe momentum is building and I would expect over the next 2 to 3 years, the volumes continue to grow.

Even at the pace they're growing with, that pricing will build momentum because it's owed.

And the last thing I would say, David, on pricing in Europe, the silver lining to the cloud, cost inflation this year, it just really hammers home the point for all players that actually we need to get that cost inflation reflected in the price that we charge for our product because we can't absorb that.

I think that would give added stimulation and spur to that when we go into the pricing season in the back end of this year, for next year.

So I would be quite optimistic about pricing across our European markets for the next few years.

And specifically with regards to the U.K., we have been looking at our business over the last year or so in the context of the Brexit vote, it's been quite stable and it's held up quite well.

Residential has held up well.

We did see a little bit of softening the area of nonresidential in the Southeast of England, but that was really offset by sort of good growth on the area of infrastructure spend.

I have to say during the months of May, June and July, we have seen some uncertainty leak into the market and perhaps a little bit of softness come into the demands out there.

Nothing significant, just a little bit of a softness and I think that until there is clarity with regard to how the exit of Britain from the European Union is going to take place, I think that uncertainty is going to drift back into our market with a bit of softness coming across many in the infrastructure markets, nothing significant this year, just perhaps a little flatter than -- maybe flat to slightly down rather than just flat and I think it'll be decided and determined in 2019 by how the negotiations go.

But a little bit softer than we would have anticipated early this year, but not a big issue at this moment in time.

And with regard to the labor constraints comment that you're making, I would say that labor constraints impacts us in 2 or 3 ways.

Actually, primarily it's a problem for our customers rather than a problem for us.

It is a problem for us, but it's a bigger problem for our customers because they are much more labor intensive than us in terms of contracting.

And it's probably more acute in the United States than it is in Europe.

It's not really a big issue -- regionally, in Europe it can be a bit of an issue, but it's mainly in the United States.

And what it's doing is you're kind of caught in a bit of a perfect storm this year because with a longer winter, the construction season has become compressed, so we would normally have a kind of 8.5 to 9.5 month construction season in North America, longer if we're lucky.

But now actually with the longer winter, everything is being compressed really from April onwards so it's really only May people started going to work, and with that, it highlights the bottlenecks in the system and the bottlenecks in the system is the supply of labor.

And that really is, for me, is probably one of the stories of this year in addition to the cost inflation is the fact that the demand level is significantly ahead of supply side.

And in our major customers, you can see the increase that are there for construction, for residential construction and nonresidential construction, are running down to record levels -- record low levels.

Actually, that's quite good for the long-term needs for the industry.

It's quite a good comment for the long-term health of the industry, the demand is there, but it is coming through.

And we are seeing a little bit of labor inflation coming into the market.

Nothing significant.

It primarily comes through in our direct operators.

With regards to the logistics and transportation, that's really a pass-through cost and it doesn't really impact upon us.

So the cost side of it comes through in our direct operators.

It's more to do with the constraints on the ability to get work done by our customers more than anything else and that's just putting a check and slowing the pace of growth.

If we had a longer season, it would have been a little bit easier.

Because we have shorter season, it compresses the season and makes that bottleneck a little bit more acute.

But it's something that we're going to have to manage through and it goes back to my comments earlier about the reshaping of our business and the importance of building up our Building Products business, which looks at the whole area of more -- higher value add, less labor intensive and more -- a quicker construction-type process and products, which is why we believe this is a trend that's going to continue going forward for the short to medium term and why we need to focus on that, developing business in that sector.

Great, Albert.

If I could have one follow-up maybe.

In terms of U.S. backlogs, can you give us any color or quantify the level of year-on-year growth you're seeing in them?

Yes, I'll take that one, David.

I mean, look, at the half year, when you go across major product lines, you're talking about some nice double-digit increases over prior year in terms of backlog, right?

So if we look at -- and that's both in volume terms, but also in terms of margins.

So we see that across our asphalt backlogs, across our construction activities in terms of that coming through.

And you're sort of talking about backlog percentage increases over last year of somewhere in the range of 12% to 15%.

So that looks very healthy and it ties into what Albert mentioned earlier in terms of our view in terms of the strength of the demand in that market.

The final question comes in from the line of Andy Murphy calling from BAML.

I've got three.

Just thinking about the DIY business, first of all, can you give us a figure for the full year EBITDA contribution and just give us a little bit of flavor around the extent of the seasonal contribution, H1 versus H2, at disposal?

Secondly, following on from that, you've obviously raised EUR 0.5 billion from the disposal of this, but you're still pointing to EUR 1.5 billion to EUR 2 billion of cash being raised as a target.

Obviously, having raised EUR 0.5 billion, your target is still the same.

So I was wondering whether you're effectively indicating that you're going to overachieve on that initial range.

And just, sorry, just to push you on the share buyback, given what you said about the cash generation of the business being extremely high at EUR 2 billion a year, having already completed the EUR 350 million of the share buyback, I was wondering why you seem to be a little bit coy on just pushing ahead with the share buyback program?

Are you thinking about perhaps extending it?

Or is there something else we should -- that we're missing?

Just 3 questions there, I'll deal with the issue in terms.

I'll let Senan deal with the DIY and the share buyback in terms of the extent of the program, the divestment program, we've set out in May.

Look, we highlighted -- there's no precision on this.

We said it was EUR 1.5 billion to EUR 2 billion.

We don't have a list of business we're saying we're going to dispose of A, B and C. We have a number of businesses that we're looking at in terms of whether we feel we can improve them or whether we indeed should divest of them.

There are a number of factors that are impacted by that, not just financial performance.

And our program was EUR 1.5 billion to EUR 2 billion and that still is our program.

Of course, we've divested, as you rightly say, for EUR 510 million or 10x EBITDA our DIY business in Benelux.

We feel it's good price.

We felt it was the right thing to do for us and that is part of that particular number and part of that particular program.

And we'll continue to work through that through the next few years.

It's no change to the overall headline figures.

With regards to the contribution?

In terms of DIY, in terms of its annual contribution, it runs at about EUR 55 million of EBITDA.

I think the split is not quite even, but it's close to.

So second half impact of not owning DIY in terms of asking that question is somewhere in the range of EUR 25 million to EUR 30 million, that would come out of the business.

In terms of the share buyback, I certainly don't see any concern in terms of your comments and question.

We're fully committed to the EUR 1 billion buyback program over the 12-month period.

And I think if you misinterpreted my comments earlier, I think we're actively considering Phase 2 at this point in time.

So certainly wouldn't read what you did into the comments earlier.

Okay.

Ladies and gentlemen, thank you very much.

I'm just going to close it down here.

Look, I'm afraid that's all we have time for this morning.

I want to thank you for your attention this morning.

I hope we've managed to answer all of your questions, but Frank Heisterkamp who heads up our IR team and his team are available to answer any follow-up questions you might have throughout the day.

And we look forward to talking to you again in November when we provide a trading update for the 9-month period through September 30 of this year.

Thank you very much.

Thank you for joining today's call.

You may now disconnect your handsets.