Cemex SAB de CV (CX) 2006 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the second-quarter 2006 CEMEX earnings conference call. My name is Alicia, and I will be your coordinator for today's call. (OPERATOR INSTRUCTIONS). As a reminder this conference is being recorded for replay purposes. I would now like to introduce your hosts for today's call, Mr. Hector Medina, Executive Vice President of Planning and Finance, and Mr. Rodrigo Trevino, Chief Financial Officer. Mr. Medina, you may proceed.

Thank you. Good morning and thank you for joining us for our second-quarter conference call. I will briefly review our second-quarter results and will share with your estimates for 2006 in light of our performance for the first half of the year. And then our CFO, Rodrigo Trevino, will follow with a discussion of our financial results.

Notwithstanding recent volatility in the financial markets, we believe that CEMEX's fundamentals and outlook remain strong. Our better than planned consolidated performance for the first six months and the current operating plans in our core markets support this view.

For the first half of the year, our consolidated EBITDA grew 22% versus the same period last year, reaching close to $2 billion, while net sales increased by 24%. On a pro forma basis, including the effect of the RMC consolidation for January and February 2005, EBITDA grew 21% and sales increased at the rate of 8%. Given the fact that the first semester of the year is seasonally weaker than the second half, we are increasingly confident that we will exceed our stated EBITDA target of $4 billion and our net sales target of $17 billion for 2006.

Our free cash flow after maintenance capital expenditures should grow at a rate of more than 14% and exceed $2.5 billion by year-end. This represents a 60% conversion rate of EBITDA into free cash flow after maintenance capital expenditures, which is in line with our historical performance.

Our solid performance during the first half of the year resulted primarily from the strength of our operations in all of our core markets, as well as from the realization of the RMC synergies that further enhanced this growth. We remain on track with the RMC integration process. All of the initiatives needed to achieve our stated targets for 2006 and 2007 are already in place. Our current EBITDA estimate for the year assumes that we will achieve synergies at an annual run-rate of about $360 million by year-end or an incremental $240 million over that of 2005.

The results I have just mentioned, as well as our confidence in the benefit of the integration of the RMC acquisition, lead us to approach the rest of the year with optimism and enthusiasm.

Now I would like to discuss the second-quarter performance of our principal markets and our outlook for this market for the full-year 2006. In Mexico market conditions continue to exceed our expectations as demonstrated by the increases in cement and ready-mix volumes of 6 and 20% respectively during the second quarter, despite the fact that this year's second quarter contains two less business days. For the first six months of the year, cement volume grew by 8% and ready-mix volume rose by 23%. These increases reflect continued strength in the infrastructure and formal construction sectors.

Because of our strong performance during the first half of the year, we are increasingly optimistic about the strength in cement consumption for 2006. We now estimate cement and ready-mix volume growth of approximately 5 and 19% respectively in 2006, despite the potential slowdown in construction activity following the electoral cycle.

Two factors remain the primary drivers of cement demand during the year. The first is government spending on street and highway, public buildings, hurricane reconstruction efforts and other infrastructure projects. Given that 2006 is an electoral year, total federal spending on public works is expected to reach $7 billion in 2006. Growth in this sector is underpinned by strong government finances, continued fiscal discipline and higher realized oil prices.

External accounts will be further bolstered by higher foreign direct investment and higher remittances from the United States, which in 2005 reached a record $20 million and continued growing at 20% rate during 2006. Government finances during 2006 will be strong due to higher economic activity and a significantly higher realized price for crude oil exports.

The second factor is growth in the formal home-building sector, resulting from an accelerated increase in mortgages. The number of mortgages sponsored by (indiscernible) and other institutions continues to grow and will likely reach about 750,000 in 2006. That is 11% higher than in 2005.

An increasingly important contributor to this growth is the higher number of mortgages granted by commercial banks. That number is expected to double in 2006 to about 95,000. The average size of these mortgages is approximately four times the (indiscernible) mortgage, thus leading to a greater cement content per unit being financed.

The sales construction sector is showing signs of recovery due to increased disposable income and stable employment. This sector has experienced slower-than-expected growth because the formal construction sector is satisfying some of the demand.

In the United States on a like-for-like basis, our cement volumes decreased during the quarter by 3%, ready-mix volumes decreased by 16%, while aggregate volumes decreased by 21% over the same quarter a year ago. The decline in consumption during the second quarter was driven mainly by a weaker residential sector and unfavorable weather conditions in the Western region. It was also affected by a shift in consumption from the second quarter to the first quarter due to favorable weather conditions in the first three months of this year when compared to 2005.

In fact, for the first six months on a like-to-like basis for the ongoing operations, cement volumes increased by 6%, while ready-mix and aggregates decreased by 8 and 11% respectively. Public sector construction spending put in place was up 10% for the first five months of 2006 with the spending for streets and highways up 15%. On the back of continuing growth, we see cement volumes in both of these sectors increasing by about 8% during the year.

Two primary factors are driving growth in the public sector in 2006. The first is the $287 billion six-year surface transportation program known as [safety loop]. And the second is the continued health of the economic environment and fiscal conditions of the states. The industrial and commercial sector continued its growth trend as demonstrated by a 14% increase in construction spending during the first five months of the year. We expect cement volume growth to reach about 9% in this segment on the back of continued economic expansion.

In the residential sector, construction spending was up 6% for the first five months of the year. However, housing starts, a leading indicator for construction in this sector, decreased by 2% in the same period. Despite continued growth during the first two months of the year, we expect this segment to decline by about 5% for the year as a whole. This decline will have two drivers. The first is a rise in interest rates, and the second is a slowdown in home sales due to escalation of home prices which have reduced affordability, as well as a buildup in inventory levels. Because we expect the continuing strength of the public and industrial and commercial sectors to offset weaknesses in the residential sector, we maintain our expectations that cement volumes will grow at about 4% for the full-year 2006.

In Spain cement volumes increased by 6% during the second quarter, despite the fact that the quarter contained fewer business days. Ready-mix volumes grew by about 6% after adjustments for the integration of the Readymix Aslan assets. For the first six months of the year, cement volumes increased by 9%, and ready-mix volumes grew on a like-to-like basis by 13%. All segments of demand remained very strong in asset (indiscernible) expectations that we had at the beginning of the year. In light of our quarterly performance, we are increasingly confident that we will achieve our estimated cement volume growth of about 5% for the full-year 2006.

The residential sector continues to drive robust cement consumption this year -- the strongest year ever. We expect housing starts to grow in mid single digit range to reach a record number of 760 to 800,000 for the full year.

Demand in the public works sector also continues very strong -- to be very strong. Its main driver is the central government's current infrastructure plan under which several new projects have started at the transitional period during which the new government settles in. This infrastructure plan has an estimated total budget of $300 billion and runs until 2020.

Local municipalities constitute another important driver of the public works sector. And while they may not rate their activities throughout the year, we expect demand to remain strong. This demand will come mainly from several local elections that will take place in 2007, which should positively influence construction activity during the year.

In the United Kingdom, cement volumes decreased by 14% for the second quarter, and on a like-to-like basis for the first half of 2006, volumes are down 7%. During the quarter we made several enhancements at the Rugby plant kiln, including capacity expansion efforts. These resulted in a below average kiln output, which affected our volumes for the quarter. Notwithstanding the lower than average production, we will start recovering volume in the second half of the year as a result of higher cement production capacity. We see construction output and cement volumes in the UK remaining roughly flat compared with those of the last year. For the full year 2006, we think that our cement sales volumes will decline by about 2%.

Public expenditure on infrastructure will be weaker than expected, and we anticipate a further slowdown in the private housing and repair maintenance and improvement sector. We think the industrial and commercial sector will remain healthy, and we expect an improvement in the development of public housing programs to keep the public housing sector strong.

In France our ready-mix volumes decreased by about 1% during the second quarter and during the first six months of the year on a like-for-like basis increased by 5%. Given this performance we now expect our ready-mix volumes to grow at about 4% during the full-year 2006. This strong housing sector and to a lesser extent the non-residential sector are driving this growth. We expect the public works sector to remain relatively flat for the year.

In Germany our domestic cement volumes increased by 11% in both the second quarter and the first half of the year on a like-for-like basis. The main driver of demand continues to be a strong residential sector, which experienced double-digit growth in building permits in the first half of 2006. To a lesser extent, the non-residential sector, which is benefiting from the current economic upswing, and the civil engineering sector, which is benefiting from higher taxes and toll road revenue, are supporting cement consumption. Going forward, we see domestic cement volumes in Germany increasing by about 8% for the full-year 2006.

In Venezuela volume growth during the quarter reached 26%, despite the fact that there were fewer business days in the quarter and for the first six months reached 32%. Increased public spending as a result of the direct recycle fueled the infrastructure sector. The sales construction and formal housing sectors were also important drivers of cement consumption. For full-year 2006, we expect cement volumes to grow at about 20%.

In Colombia our volumes remained relatively flat during the first half of the year. We expect that the strength in the infrastructure spending and investment in industrial and commercial building will be the major drivers of cement demand throughout the rest of the year.

On the other hand, we see the sales construction sector and the formal housing sector growing at a lower rate than last year. Accordingly, we expect our volumes to grow at about 4% during 2006.

Before I turn the call over to Rodrigo, I want to reiterate two important commitments to our shareholders. The first, which we made last year and reaffirmed throughout 2006, is to achieve the effective and timely integration of RMC into CEMEX. We remain focused on realizing the synergies that we have identified and to extract as much value from this acquisition as we can. Toward this end, we remain committed to maximizing the synergies inherent in this acquisition. We are on track to realize $360 million by 2007.

Our second commitment is to ensure that in the short, medium and long-term, our capital allocation strategy remains in force to sustain our track record of disciplined profitable growth. Going forward, we intend to invest our free cash flow in three ways.

First, we intend to invest part of our free cash flow to increase our production capacity of cement, ready-mix and aggregate in the markets that we currently serve. We will do this in order to further integrate their position on the value chain and to ensure our ability to serve future growth in our markets.

Second, we continue to monitor cement markets and the entire value chain for investment opportunities outside our current markets that would create even greater shareholder value and add to our organic growth trajectory.

Third, in the absence of acquisitions or investments that meet our strict criteria and our benchmark return of at least 10% on capital employed, we will continue in our bias towards deleveraging.

As we commemorate our 100th anniversary, we are optimistic about the prospects that lie ahead of us. We have the people, the culture and the opportunities to continue on our path of disciplined profitable growth.

Thank you for your time. I will now turn the call over to Rodrigo.

Thank you, Hector. Good morning, everyone, and thank you for joining us today. Higher volumes and strong supply demand dynamics in most of our markets supported our performance during the first half of the year. In particular, during the second quarter, the successful integration of RMC brought savings that enabled us to achieve an EBITDA growth of 16% on the back of 5% net sales growth. This despite a weaker peso to dollar exchange rate on June 30 versus the year ago.

In fact, EBIT was up in most of our major markets including Mexico, the United States and Spain. The increases in these markets more than compensated for the weakness in our UK operations. For the trailing 12 months, our EBITDA exceeded $3.9 billion. After adjusting for today's exchange rates, our current trailing 12 months EBITDA reached nearly $4 billion, and free cash flow after maintenance capital expenditures has reached nearly $2.4 billion.

As Hector mentioned, consolidated EBITDA grew by 22% during the first half. Even in the unlikely event that we achieve 0% EBITDA growth in the second half, we will attain our stated guidance for the year in terms of both EBITDA and free cash flow as the second half of the year is stronger because of seasonality.

This is the first quarter since we acquired RMC that we have a full like-to-like year-over-year comparison of our financial results. We are pleased to inform you that our consolidated EBITDA margin went from 22.6% to 24.8%, mainly as a result of the implementation of the RMC postmerger integration initiatives.

In addition, higher average volumes and pricing in most of our markets had a positive effect on the margin and compensated for higher energy input costs. This increase in our energy cost during the first half is in line with our full-year forecast. We expect that in 2006 our energy cost will increase by slightly more than 10% versus last year. This increase should be more than compensated by higher average prices in most of our markets.

Our majority net income decreased by 21% during the quarter to $579 million. Our strong operating performance was partially offset by foreign exchange non-cash (technical difficulty)-- associated with intercompany transactions, arising from the depreciation of the Mexican peso against the U.S. dollar. These losses contrast with gains realized during the same period a the year ago. I want to emphasize that these non-cash foreign exchange losses are the result of intercompany transactions, and as such they will have no cash natural impact now or at anytime in the future. (technical difficulty)--.

The completion of the sale of our minority position in Semen Gresik will generate an extraordinary gain of close to $100 million in our income statement during the third quarter. On June 30 we have seen continued favorable performance in key variables such as the Mexican peso exchange rate that affect our derivative instrument positions. As a result, the aggregate fair market value of our derivative positions has improved by $215 million through the end of the second quarter, growing from a positive $166 million to a positive $381 million as of July 24.

Looking at our capital structure, our interest coverage for the trailing 12 months through June increased to 7.7 times on 6.5 times a year ago. Our leverage ratio as measured by net debt to trailing 12 month pro forma EBITDA decreased from 2.9 times a year ago to 2.1 times for the trailing 12 months ending the second quarter. In fact, taking into account the proceeds from the sale of Semen Gresik, which will be received shortly if the transaction is consummated as expected, we will now be at below two times net debt to trailing 12 months EBITDA. These improvements result from our stronger operating performance and from our preferred use of free cash flow to reduce debt during that period.

At the beginning of 2005, we committed to use most of our free cash flow to reduce debt and we did. Since completing the acquisition of RMC on March 1 of last year, we have reduced our net debt by more than $2.3 billion or about 40% of the total enterprise value acquired. We achieved this reduction by applying the majority of our free cash flow generated during this period to pay or prepay the most onerous debt on our balance sheet. The average maturity of our debt remains at about 3.2 years, and strong free cash flow and committed facilities in place means that we have no refinancing needs going forward. As of today, we have committed credit facilities of close to $900 million, which are more than sufficient for us to maintain our financial flexibility.

In addition, during the past three months, we amended various credit facilities for a total amount of $4.7 billion, which is more than half of our total debt. We have taken advantage of market conditions and our stronger credit profile to reduce our average credit spread and to lengthen the debt maturity profile.

During the quarter we used free cash flow of $654 million primarily to reduce debt by $473 million, although net debt was reduced by $343 million during the quarter as a result of foreign exchange conversion effects in the amount of $130 million related primarily to the euro to U.S. dollar exchange rate.

As Hector mentioned, we remain comfortable using free cash flow to pay down debt. Going forward, we will continue to invest resources in order to take advantage of higher returns investment opportunities in the value chain in our existing markets. We will do so as part of a highly disciplined return-driven process that ensures that our discretionary capital investments are aligned with our corporate objectives.

Toward this end and as you are already aware, at the beginning of the year, we allocated about $500 million during 2006 for expansion capital expenditures in different projects around the world to increase our production capacity. These projects include clinker capacity expansions in the United States, Mexico and Latvia, as well as additional cement grinding facilities in Spain and the United Arab Emirates.

Then we have identified additional investment opportunities with equally attractive perspective returns, and thus we intend to increase the capital allocated to these initiatives. As we have indicated before, we expect these initiatives to generate returns well in excess of our cost of capital, thus creating additional shareholder value.

Our first priority continues to be extracting maximum value from the RMC group acquisition. We remain committed to exceeding our 10% return threshold on capital employed for the RMC portion of the business, and we expect to achieve this objective during 2006.

Finally and as always, I have been asked to remind you that any forward-looking statements we make here today are based on our current knowledge of the markets in which we operate and could change in the future due to a variety of factors beyond our control.

Thank you for your attention, and now we will be happy to take your questions.

(OPERATOR INSTRUCTIONS). Mike Betts, JPMorgan.

I had two questions if I could. The first one was on U.S. cement pricing, and I wonder if you could just confirm, Eagle was indicating yesterday that the $10 price increase had been announced from January 1. Could you confirm whether that is right the way across all of your operations and whether you have announced anything for July?

Maybe related to that, Florida Rock had indicated today that there was more resistance to the July price increase. Maybe you could talk about whether you have seen that and whether that was just Florida or more broadly?

Thank you, Mike. One, on the announced price increases for January next year, that confirms some regions where prices have been announced. Not all of the regions. Some $12 short ton increase has been announced for some of the Southeast and Midwest markets, and another $12 for short ton in March for the West. There are some places where there has not been an announcement yet.

And as for the July increase, we're not expensing any unusual [cyclicalities], and as such, we expect to implement for real-life also the increase of $5.50 per metric ton that was announced.

Okay. My second question, if I could, Hector, just on the UK, just a bit more detail on this Rugby issue in terms of what you have done? Or probably more importantly, how long now has the plant been up and running without any production problems and maybe how much more capacity did you add to the plant by what you did?

Well, the detail of that I would have to follow up with you. We would expect now the plant to be up and running at around 89 to 90% efficiency on a steel rating, so around 91% of the old rating. There is an increase of around 2 to 3%. I would like to follow up with more detail on that, but that is more or less what is the case.

Steve Trent, Citigroup.

Just two questions on what you mentioned about your CapEx expansion. You had previously mentioned the UAE and Latvia as earmarked for a possible additional investment, and I could not hear. I believe you named a third area, but I wanted to confirm that I had the geographic locations correct.

Yes, those are two areas where there is some CapEx but also in Spain, and we also announced the expansion in Mexico.

Great. And with the respect to the nature of those projects, I know in the UAE, for example, it looks like that country is getting ready for the A380 super jumbo, so it would have to expand its airports. Any sense or any color as to the basic nature of demand in those markets? Is this mostly coming from infrastructure type projects, or are we seeing road projects in Eastern Europe, or is this something more residential driven in some of the markets?

No, it is essentially a structure spending, and as I mentioned, airports are a big part of (indiscernible). I don't have specific color on the increases, but they are -- they would be very large.

All right. That sounds good to me.

Paul Rosenberg, Bear Stearns.

Actually it is Daniel Altman here. There is actually a problem dialing into your line. I don't know if you have encountered that. Just two questions then.

Firstly, on the rest of Europe, if you could give us some categories in terms of who is contributing the most to EBITDA in this quarter. And the second question is, on the U.S. your volume numbers look different to the construction spending numbers that we are seeing. I wonder if you can tell us in kind of broad terms if there have been any changes in terms of cement intensity in each of the main sections, i.e. public, private, residential, etc.

Sure. Well, I will tell you the rest of Europe as soon as I do my numbers here. But, in the case of U.S. volumes, there hasn't be any major change. It might be that there is a dislocation between the capacity that we have and the average numbers in terms of construction spending.

But we are also going to be more concentrated in Northern California in terms of housing, and that might have an effect also. But I would have to check with Rodrigo whether there is any change, but there has not been any that I know of. And as for the rest of Europe, I would guess that (technical difficulty)-- hello? France is probably the largest contributor with probably some of the Eastern European markets like -- well, not Poland -- Austria and Croatia, but they are more or less at the same assembly. So there is not any major difference. France is definitely the largest.

Is France a majority of that category?

I'm sorry?

Is France a majority of that category, the rest of Europe?

The rest of Europe? No, it is probably around 25% of the rest of Europe number.

Okay. Maybe we can follow up --

We will follow up with you with more details on that, but it is more or less that.

Okay. And just to make sure in the U.S. business, residential is how much of U.S. consumption these days, U.S. cement consumption?

About 30.

About 30%. Okay. Thanks very much.

(OPERATOR INSTRUCTIONS). [Arnad Penatel].

Exane BNP Paribas. I have several questions. The first one is on Mexico. Could you just give us an outlook on pricing there? We heard that you could have announced a second price increase for the second semester, so just to have an update.

The same question on Germany. We heard that some cement producers have increased the price again in July. Have you followed this trend? And the last question will be on your greenfield project. I guess you have highlighted that you're looking at other projects and the one you have already announced. Could you just give us a little bit more flavor of where you should or you could build new plants within your network?

Okay. For pricing in Mexico, there was a price increase in March -- May, I'm sorry. That is holding, and it was 50 pesos. (technical difficulty)-- so that is doing fine.

Which means you expect better pricing trends for the second half of the year?

It is really going to depend on how the demand/supply situation happens after. As we mentioned in the opening remarks, we expect the electoral cycle to lose some changes in (indiscernible). Nevertheless, we still feel the market is doing fine and the demand is clearly on the upswing.

If I may add, June foreign exchange was 1125 pesos per dollar. Currently we are at 1090. So we are looking at pricing in dollar terms with stable peso pricing. Of course, in dollar terms the price improves during the second half at the current exchange rate.

Okay.

Let me take the third question, the second one I did not really catch. I will have you repeat that for me again. But the third one on the greenfield that you know we announced the (indiscernible) expansion, and we have said, well, we are always reviewing our supply situation, not only in Mexico but everywhere else. As such when the [situation] is reached as to where we will add capacity either in Mexico or anywhere else, we would certainly and readily announce it.

So it is too early to share with us the markets you're studying?

When our decision is made and we are ready to answer it, we will.

Okay and my second question was on Germany. We heard that one of the largest cement producers in Germany has announced price increases in July. I just wanted to know if you have followed this price increase?

No, our marketing strategy in Germany is to look at the local situations and react accordingly to what is our situation. But [that will depend] on our situation.

So you cannot answer the question on the second price increase off the mix in Germany in July?

I cannot now at all, not (technical difficulty)-- have not made a decision yet.

Katie Blacklock, Thames River Capital.

I have just two questions. First of all, on the Spanish market on the ready-mix side, you guided towards a quite sharp increase in ready-mix volumes, up 24% I think, and the like-for-like actually came out 6%. Can you give us some insight as to what happened in that market and why there was such a slowdown on the ready-mix side?

And then a similar question for the UK in terms of the volumes that came in. I think they earned 14% against guidance of down 9. I just wondered if part of that was to do with the output from the kiln, the reduction in output from the kiln being not anticipated and whether that might actually hit the third-quarter numbers as well?

Thank you. The case of Spain is a case of a different comparison basis. First of all, for the guidance we used the Legacy CEMEX volumes for 2005 and the Legacy plus the assets that we got from Readymix Aslan for 2006. Whereas for the reporting, the comparison was made with the Legacy plus 50% of the Readymix Aslan assets in 2005 compared to CEMEX Legacy plus -- the assets that were acquired from Readymix Aslan, which are less than 50% of the original -- what was the original joint venture. So that is where the difference in the guidance -- the difference with the report that the numbers come from.

Will that impact the second half as well?

Not really. I don't think so. No.

Okay. I just wanted to check just so that I'm not confused next quarter. But will the comparisons in terms of the guidance and then what is actually reported, will that be on the same basis?

We will make a point to be clear in making the same basis for comparison.

Okay, thank you. And on the UK?

In the case of the UK, yes, the [drying] cement was essentially geared to the Rugby plant profit. We are guiding to 2% decline for the full year in our volumes, and that, of course, is taking into consideration all the volumes that will first come from Rugby after it is already in operation. But considering the fact that imports are still very tight and the saving situation in Europe, you know it is very tight. That is why we're considering that we will have a 2% decline in our volumes in the UK. (multiple speakers)

Could I just ask one more question? It is just on Mexico. Could you give me the revenue split, the ready-mix and cement in the second quarter and then also in the first quarter?

I don't have that breakdown with me now, but let me follow up with you on that if you will.

That would be great. Thank you very much.

(OPERATOR INSTRUCTIONS). Gonzalo Fernandez, Santander.

Sorry if you have already answered this, but I had a lot of troubles connecting to the call. Based on the results, have you changed your guidance for full year or your view in any of your main markets and based on what you have seen during the first half of the year?

We have sustained that in terms of EBITDA for the full year our guidance is still achieving 4 billion. And essentially the same situation for free cash flow. I don't know if you wanted to add anything, Rodrigo.

Well, clearly some of the markets are performing ahead of plan, and we have adjusted our guidance accordingly. For example, Germany and Mexico are doing stronger than we had expected, and so we now expect stronger volumes out of both markets. Other markets are slightly weaker, for example, the U.S., some regions of the U.S., and we have adjusted from the original guidance slightly downward for the full year because of that. But net net we're increasingly confident that we will exceed our full-year guidance because, as we mentioned during the teleconference, at the current exchange rates, we are already close to $4 billion in operating cash flow and EBITDA, and we are close to $2.4 billion in free cash flow after maintenance CapEx for the trailing 12 months ending in June. And, as you know, the second half of the year is seasonally stronger. So we remain confident that we are on track, and we should be in a position to exceed our target.

So our guidance remains that we will exceed our target of -- (multiple speakers)

Which is our guidance that we will exceed that target.

Okay. Thank you.

At this time we have no more questions in the queue. Mr. Medina, I would like to hand the call back over to you, sir.

Thank you very much. In closing, I would like to thank you all for your time and attention, and we will look forward to your continued participation in CEMEX. Please feel free to contact us directly or visit our website at anytime. Thank you and good day.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes today's presentation. You may now disconnect. Good day.