Wienerberger AG

VSE:WIE

Earnings Call Transcript 2019-Q1

[Klaus Ofner, executive]

Ladies and gentlemen, welcome also from our side to this conference call on Q1 results. Wienerberger representatives on today's call are Heimo Scheuch, CEO; and Willy Van Riet, CFO. As always, we will open the call with an executive summary that Mr. Scheuch focusing on the key development of the first quarter and our outlook for the remaining 3 quarters of the year. Following the opening statement, we will take your questions.

I'll now hand over to Mr. Scheuch for his executive summary.

[Heimo Scheuch, executive]

Ladies and gentlemen, a warm welcome from our side in Vienna. Good afternoon to everybody on the call. This time, I rather will be very brief because we have published the preliminary numbers with the trading update already more than a week ago. So I think as you will have seen, we have had a strong start into this year, with revenues up like-for-like 14% and a strong EBITDA increase to more than EUR 100 million to EUR 109 million to be perfectly accurate. So also with nearly 90% gross compared to the last year, a strong start. It goes without saying that we feel strongly about also the net profit that has turned into the positive terrain that's about nearly EUR 27 million of euros net profit in this first quarter.

You all know that from a building material perspective, the first quarter is not that most important one. But obviously, due to the measures that we have implemented, meaning, also the optimization measures that we call Fast Forward, and I will come to this in a minute, to the obviously good pricing that we have put in place, and I'll come to this also. And to the strong operating performance, which is linked to a strong organic growth rate, we have been able to set the tone for the first 3 months this year.

Let me just come to a couple of items that we view as important for all of you. The transformation process of the Wienerberger Group is continuing. We talked about that. We repeatedly alerted you to the fact that we want to create out of Wienerberger, a more diversified building material company, a company that doesn't offer only products but who offer solutions and also services to our clients and, therefore, we want to grow organically in the markets where we are active and outpace the local, relevant market growth due to the fact that we put a lot of emphasis, and that's what we have done over the last years, on innovation. New products that we have launched in the last couple of years obviously contribute largely to the success and to the better pricing and, therefore, also the higher margins. You can see that this is not limited to one business unit, and we have regrouped our business units as of this year. It is part of all the business units and that is a strategy over the whole group, may be it in the piping solutions area, may be it in the building solutions area or in North America.

And this is going to be a process that continues. It's not a temporary change. It's one that will be a part of Wienerberger, and Wienerberger's development over the years to come. Because we are a strong believer that Wienerberger is and should be a main supplier when it comes to the envelope of the house and envelope of the building, and therefore, offer solutions, may be it for the roof, for the facade], for the wall or for the infrastructure around it, meaning the paving or also the infrastructure linked water and gas or electricity and, therefore, also the supply for those aspects in the housing area. So we will be a complete solution provider for housing renovation and infrastructure in the relevant market in Europe and North America. And we will sort of try to emphasize this and to deepen our market penetration in these local markets over the years to come.

Let me just draw your attention to 2 factors, as I have initially pointed out. First of all, we have been launched this Fast Forward program successfully last year, making an EBITDA contribution of EUR 20 million in 2018. This year, we have successfully proceeded in this direction, with already a contribution in the first quarter of EUR 15 million, to our result. The measures, obviously, are as we explained already last year, a multitude of hundreds of small projects that we are currently implementing, be it in manufacturing, be it in sales optimization, be it also in the administrative funds. So a lot of small and mid-sized measures that our teams currently are implementing, and we're also executing the necessary CapEx with respect to this project. So we feel strongly, and we are -- have a high degree of certainty that the EUR 40 million that we have forecasted for this year will be realized as EBITDA contribution to the result of 2019 as we have guided you towards.

The second thing that I want to mention is that I personally feel also the measures that are necessary for the -- for 2020, meaning the EUR 60 million of improvements are also well on track. When I look at the CapEx, when I look at the efforts that the company and all the employees are making, we're moving also here with respect to the EUR 60 million of additional savings and improvements in the right direction. So fully on track when it comes to Fast Forward.

When you look at the organic side of the business, we have achieved, based on a rather early start into the year when it comes to the bidding season, especially in Europe, that's for sure. But also when we look at the performance in the local market, especially also in the eastern part of Europe and some Western European countries like the Benelux countries and in the U.K., we have seen strong growth rates with respect to our organic performance. This especially due to the fact, as I alerted you, with new products, new solutions, we are benefiting of those and our sales approach that is a more direct sales approach, handling projects and tackling, actually, the final decision maker is improving our performance in these relevant local markets.

When we look at the businesses as such obviously, we have anticipated and we talked about this when we talked about the guidance of this year, that certain inflationary cost increases are to be provided for. And I related, especially to the fact that the wages are increasing and you have obviously some Eastern European countries substantial wage increases, up to 8% to 9% in certain markets in order to offset those and, obviously, all those some minor other inflationary cost increases throughout the business, we have already moved in 2018 to improve our pricing and I have been doing so also at the beginning of this year. We are glad to report that, obviously, this pricing movements were sticking, and we are confident that they hold on these markets that we're operating in. And, obviously, the inflationary cost increase will come step-by-step throughout the year. So obviously, the first quarter, that was affected by the positive pricing, especially in a -- to a very high degree and, obviously, this will flatten out throughout the year because, then, obviously, the cost side will also increase as we speak in the second and third quarter. So again, to summarize, very good organic performance, strong pricing and offsetting, obviously, the cost increases that we will see in the business for 2019.

If we move on the M&A side, we have seen also some sort of steps in this direction we have for the company that is offering excess rates for roofs -- in the U.K,. a good company, in order to bring to our business because it enlarges our portfolio and will enhance also our roofing sales. In this very market of the U.K., however, also we will implement certain of these accessories in our product range in Western Europe and add it towards this offering and, therefore, grow this business overall. So it's a good platform to build on for our strategy, as I've told you, with the respect to solution-driven approach on the roof.

We move now to the piping side. Again, here, we have seen a small acquisition but also strategically important one when it comes to the electro part of our piping operations. You'll remember that we have a strong foothold in this market, not only with our Preflex pipes but with also other pipes for electrical applications and, therefore, the small acquisitions of Reddy, where we have another part of accessories that we etch in components to be added to our electro business is an important one to roll out this strategy throughout the group.

So again, here, you will see us move very focused on certain targets that we have, we have a quite a substantial pipeline of interesting acquisitions that we are currently working on and potential ones and projects that we pursue. So again, here, seeing some interesting ones to happen also in the foreseeable future when we discuss about the M&A strategy of Wienerberger in the years to come.

So all in all, again, a good performance in the part of M&A also and ones, obviously, when you look from a perspective of paybacks, of strong paybacks and they're all in line with what we have communicated to you in 6x for example after integration, even low-end after synergies. So again, very strong value-enhancing acquisitions that we are able to implement.

I think when you look through the business for the whole year, and now I want to come finally to the outlook. I just want to reemphasize again that from a guidance perspective, we stick to our guidance with EUR 560 million to EUR 580 million. Please ladies and gentlemen, don't misinterpret on this one. We remain optimistic. We are very positive. It's still a step to be undertaken, and a strong and a important one. So we have a lot of work in front of us. There are certain uncertainties out there, and I'm referring only to political ones and financial market ones that we cannot manage. But on the ground, I don't see any sort of major changes right now happening. Also, if I take into consideration, the month of April and the beginning of May, we are cruising along in this direction and are fully on track in order to meet our guidance that we have provided you with for this year. So I think this remains only to say with this positive outlook, I think, I have made a short summary of the first quarter, and we all, as a team, as usual are ready to take your questions.

Thank you, very much for your attention.

[Operator]

[Operator Instructions] First question comes from the line of Matthias Pfeifenberger from Deutsche Bank.

[Matthias Pfeifenberger, analyst]

Congrats to a strong quarter. The first question would be on these effects in terms of what has really boosted the Q1 performance? So much you mentioned in the prelim release, maybe some additional color on that from your side. And also related to that, you mention in the past, you were expanding the inventories a little bit in terms of safeguarding any disruptions. Now that Brexit date has been moved and you were quoted in an interview that you might drive down some of this excess inventory again. Has that also helped the first quarter in terms of expanding some of the working capital? And then related to that, I'm looking at a EUR 1 billion of net debt, I mean, it's not a lot -- a lot of your EBITDA guidance, but what can we expect for the full year? If it's maybe below, EUR 800 million you're looking at? And that would be it for now.

[Heimo Scheuch, executive]

Thank you, Matthias. I think Willy will sort of address the 2 questions if I may.

[Willy Van Riet, executive]

So the boost to the Q1, if you want additional color, it's because we've been able, of course, we had a very good, I would say, climate wettish environment as well with good temperatures, which has helped also on the energy consumption, yes? So we were really -- we're not facing anything where we have a wet climate or we have -- with the exception of the U.S. a little bit, but that has helped us. So as you can see in the bridge that we've provided, both the volume and, of course, the pricing effect with which will be carried forward also from last year and the contribution of our Fast Forward with this EUR 15 million so all of those come into play.

Stocks in the U.K., Matthias, we have a good demand there. So yes, we've been using those stocks, but that's not really boosted our results. It's more that we try to keep a little bit of an extra safeguarding stock in the U.K. as far as possible, but the market is driving very well and we're using the product to the best extent that we can, not only in our U.K. market, but also in our Belgian and our Dutch markets because these are products that can be used in whole of the markets there. And thirdly, the -- don't forget that on the net debt includes, for the first time, the linear effect. So that's a EUR 160 million, roughly, which is included there. And secondly, what I look at, at the year-end is a net-debt-to-EBITDA, which will still be in line with last year, with 2018 because we will make cash flow and we will drive it down, and we will, of course, have a slightly improved EBITDA also from this -- from the IFRS additional EBITDA that we'll make.

So I don't see any major changes. If possible, we will even get a low to a lower figure at the year-end.

[Matthias Pfeifenberger, analyst]

Okay. So that's, that's roughly EUR 800 million.

[Operator]

Next question is from the line of Ami Galla from Citi.

[Ami Galla, analyst]

Just a couple of questions for me. The first one on the pricing effect. You had quite a strong pricing, price increase in the quarter. Could you differentiate between what was the mix effect of change in products that you sold in the quarter, and what was the underlying price increase in the quarter? The second one is in terms of -- you touched upon the increased innovative products being used. Could you give us some examples in markets where actually newer products are making a bigger impact in terms of your sales mix. My third question was on M&A. Could you give us some color or guidance in terms of the sort of spend that you're looking for a budgeting on potential acquisitions for this year?

[Heimo Scheuch, executive]

May I just take your last question first, and please, understand me correctly. I'm not giving any guidance on M&A this year. We will, and as you have seen from the financial flexibility that we have provided for as a company, we have room to move on certain targets. And, therefore, we will certainly look at those. And as Willy has said earlier, we be very, very sort of strict to our policy of ratio and net debt -- and EBITDA-to-net-debt, so we will keep those and keep an eye on those closely. And if there are some of those potential M&As that realize, then we will realize them. And I can't be more specific because these are also smaller ones and mid-sized ones, where you're dealing with families, and things might then be delayed for a certain period and you are never sure. A calendar year is a calendar year, and some things might flow over then to the next one. So again, yes, you will see us move on targets and again, it being in the direction as we had them in the past, but no specific guidance on amounts. Your second question on innovative products, yes, we have a number of those. And as I explained earlier on the front of our piping operations, it's in the electro business, where we do more of the pre-wire, for example, where we're making higher impact in terms of also market share and pricing and margins. And, therefore, this makes it a significant change there. In the building solutions part as well, we talked about highly insulating blocks for example, maybe it in the Czech Republic, but maybe it also in Australia or Germany, where you have higher margins and these products are obviously taken now to a certain degrees more by our clients than in the past. So we have organic growth there and better margins. So 2 examples for this and for the last one, Willy?

[Willy Van Riet, executive]

We don't split, really, through -- our guidance into -- the pricing into what is a mix, what is a country mix effect. But what I can tell is that if you compare, really, the growth in our Building Solutions, we have sold more of in Eastern Europe of our blocks. So these are usually higher-margin products. We've also been able to sell more roof tiles. Again, a higher margin product. And on top of that, if you look into the pipes there, we have not in total grown in volume, but as such, the mix has been completely changed there or completely has been changed there to the extent that certain of the commodity products, we have not been making and we've not been offering anymore. And that's the main reason why you see, also, there's certainly a mix effect in the price increase. But to strip it out, to that extent, it's not possible, certainly, not for a first quarter. Moving to the higher-margin products is clear, yes.

[Operator]

Next question is from the line of Paul Chabran from On Field Investment Research.

[Paul Chabran, analyst]

Just one question from me related to your M&A activity. So when I'm looking at it over the past couple of years, it's mostly, bolt-ons, small deals with family businesses. Now you are looking to diversify and you start, I think, a sub central firepower. So my questions is, are you considering to take advantage of this position and maybe even re-leverage and going for bigger acquisition, 1 or 2 big acquisitions? Or do you plan to keep dealing with smaller businesses, family businesses?

[Heimo Scheuch, executive]

I think to address your question, as you have seen and as you correctly have pointed out, we -- our priority lies into this sort of approach of small and mid-sized businesses that we can add on to our existing platforms because we can realize immediate and value out of it and create additional business. So this will be our primary focus. And therefore, I don't sort of see the need for being a burden now to talk about very big deals or whatsoever. If some mid-sized potential acquisitions come along, we will obviously thoroughly look at it and look at the value creation and potentially also move on such. But I can exclude at this stage, very big transactions.

[Operator]

[Operator Instructions] Next question comes from the line of Gregor Kuglitsch from UBS.

[Gregor Kuglitsch, analyst]

I've got few questions as well. So one thing I think that has changed is your -- I appreciate, it's the smallest segment, but it's the North America segment. I think you're guiding now for flat earnings, I think, previously for growth. I wanted to understand kind of what changed, I think, with Canada? And then just maybe a slightly technical point, but is that guidance kind of underlying if you get few deals in there? And or is that kind of how we should think about, it that organically you'll be flattish, is that what you're going for? And I guess, a bit more broader on kind of cost v price. I think you were quite clear that the price increase in Q1 was kind of front-end loaded, and I guess we should expect the moderation of the percentage growth, correct me if I'm wrong. Can you actually give us what the cost inflation was? I don't know how you measure that, but if you sort of have a cost inflation for the quarter or something indicative that it has to be precise. And then, finally, you mentioned in your introductory remarks that April and May, I think, you said it means you're on track to meet guidance. I guess, could you provide a little bit of color? Has there been any flow back from the obviously very strong Q1, with the mild weather? Or are you still seeing volumes increasing? Or is that kind of more stable now?

[Heimo Scheuch, executive]

So I very appreciate this about your questions because, obviously, you look at us in a very critical way and have been doing so over the past. So, obviously, to put a little bit more light into this discussion that we have here is, when I talk about my -- when you referred to my initial remarks, the April and May one is obviously one when I talked about it that sees volume growth, so we don't see full preliminary sort of things from the first quarter, that there is no more outflow. So it's a continuous positive development that we're talking about. So this, I think, addresses your third question. On North America, I think, here, by all due respect, I think when we look at what we have been writing and what we have given as a guidance, we see in the market a slight growth. That's what we are -- and that's what we are also guiding for, for the year. We have also said the Canadian business, and that, obviously, a smaller chunk of the business in Canada sees some regulatory influences, and you'll know that, obviously, the Canadian regulatory -- the regulatory authorities came in and said, obviously, we want to have not such a hot market in, especially, Toronto area and, therefore, intervene when it comes to financing. So also, here, we see still good and very strong performance of our business, but we always we caution it with respect to this regulatory measures that the Canadian government has put in place.

In the U.S., from a perspective of sales, volumes remain on the growth part, also when we look at the last weeks and months. So I see here a good trend forward for the rest of the year. So we have no extraordinary items in it like you referred to M&A deals. Also, it's a purely organic-driven development. And on the cost and price issue, I think I'll refer to the cost increases when it comes to wages and some sort of energy-related cost increases. But we don't, at this stage, cannot give beyond and won't give any sort of deeper or a more detailed guidance when it comes to this sort of percentage points to the business. So I think at this stage, we can say that, clearly, and that's what I said also last year, all the cost inflation will be covered by the price increases, and then some markets have certainty also, I think, towards the last quarter of the year. We can be clear on that, and you will see a better margin because we have been able to improve pricing due to a mixed effect, also, as I said at the beginning. I hope I addressed you're 3 questions accurately.

[Gregor Kuglitsch, analyst]

Yes. Appreciate it.

[Operator]

The next question is from the line of Klaus Umek from Petrus Advisers.

[Klaus Umek, analyst]

I have a question with regard to the acquisitions that you transacted last year, and I wanted to understand what you think the EBITDA contribution will be from these businesses this year. The second question is, I haven't fully understood the issue of taxes that again had an impact on the net income for the first quarter, if you could explain that in more detail to me, I probably wasn't smart enough to understand. And the third was really to understand what you think net income will be. Because, obviously, with this massive increase in EBITDA, it looks you're going to have a massive year in terms of money that will ultimately be potentially dividend income for us. So I wanted to understand what you thought the EBITDA that you currently are forecasting, how that translates into real tangible net income for shareholders.

[Heimo Scheuch, executive]

Okay. Let me -- your first question was about M&A from last year.

[Klaus Umek, analyst]

I think, yes, the EBITDA that [indiscernible].

[Heimo Scheuch, executive]

In the first quarter, I think, we have EUR 1 million consolidation effect from those. And Klaus, I think, it's going to be about EUR 7 million for the whole year, yes? From the M&A only done in 2018. So it's EUR 1 million in the first quarter, EUR 7 million for the whole year.

[Willy Van Riet, executive]

Our income taxes are in line with our conservative guidance between 20% and 25% for the first quarter of 2019. And if you compare that to last year, last year, we had minus EUR 7 million of taxes and that was because of taxation in those areas where we had profit.

[Klaus Umek, analyst]

Okay. And we have any impact losses, carryforwards there? Because, obviously, there was a bit of rapid expansion that cost us money. So are we not able to use any of this or there are some?

[Heimo Scheuch, executive]

Most of them in those areas will be paid taxes, we have used them obviously. The larger bit of -- large tax loss, carryforwards is we have in the U.S., and we have in Germany. And there, we are getting into the profit zone and we're starting to use, but we have also book them as profit carryforward. We have are also booked them as a deferred tax asset. So then you'll start hitting that OpEx loss. So no positive effect of those in these figures that is posted.

[Klaus Umek, analyst]

And net income, because we just realized that there's a huge [indiscernible] contribution from cost savings in Q1, and that obviously, as we cannot annualize, this but it looks here, you're substantially ahead of guidance in terms of your cost saves. Is that the correct impression or is it just that measures came quicker and you still from the [ wait up ]?

[Heimo Scheuch, executive]

We're still guiding for the EUR 40 million on the full year, yes? We are cautious because we will see some inflation creeping in during the next quarter as we've [ been hinted ] to already. So yes, we take, of course, already the low hanging fruits we have taken already the low-hanging fruits we have taken already, and now we have to see the cost will definitely increase. So we are there. If something is still left over above the EUR 40 million we entered, we will of course take it, but it will not be to the same extent. You can certainly not extrapolate what we have been doing in the first quarter for the full year. And to the net profit , we have not given a guidance. We've said on the AGMs, we've given a guidance and I think, that's still a fair guidance for where we see where we will go into, is that related to the best forecast we've put forward.

[Klaus Umek, analyst]

Yes, that will be key because we all know that, obviously, things can be quite adjusted, especially EBITDA. And I think you should stop doing that and adjust less and just show it as it is, and then we can all make conclusions from that. But the key thing is really to understand where you think you're going to guide the business in terms of net income and dividend. So that will be our wish, but we'll see how you've developed and addressed this year.

[Heimo Scheuch, executive]

Just one thing, if look into the first quarter, there's virtually no adjustments at all because like-for-like and reported is virtually the same thing.

[Operator]

[Operator Instructions] The next question comes from the line of Yves Bromehead from Exane BNP Paribas.

[Yves Bromehead, analyst]

My first one is actually on the guidance, which you haven't changed. But when I look at the run-rates and I strip out the increments of benefit of cost savings to come until the end of the year. This implies a very [ an existent in line ] earnings growth from your businesses in pipes and in the Building Solutions. So I just want to understand is, what is not driving this at Wienerberger? Are you waiting to see the trend in Q2 and then come back to the markets? My second question is on cost inflation. You mentioned that you haven't been impacted yet by cost inflation. So that suggest that a larger part of your hedging strategy is based on Q2 forward curves? And given that energy, actually, rose significantly during Q2, does it also mean that you're not going to see any type of decline in gas and electricity as for the recent spot prices? And lastly, if I may, some of your peers have actually published very strong numbers in Eastern Europe but manifested a slowdown recently in some markets, including Poland. Can you maybe give us more color on markets where permits are turning down, such as Belgium, Poland, France specially on single family?

[Willy Van Riet, executive]

Well, to start off with the energy, we've hedged forward into the year, and we have hedged forward different tranches. And yes, we have seen higher tranches coming into force of the year, of cost inflation. But -- and therefore, your remark about spot prices is really not applicable to us because we do not have that much business, basically on spot. And that's why we know that part of the cost inflation will still come, but not to a large extent as Heimo said earlier on, and we still feel very comfortable to be able to offset that without price increases and to pass that on to the market. To your guidance -- to your question about the guidance, we have seen a first quarter -- or first quarter is a very small quarter. We see a positive trending of the businesses. We see a continuation of that not to be the same magnitude in percentages, in the first months that we've closed in April and, obviously, May, how it is progressing. But there's still quite a bit of time before we actually see how much is coming in. So I do not feel that it's overly cautious. It is not--it's in line, I think, with previous guidance is that we have said. And then on the individual markets, we've not seen any slowdown in Eastern Europe. To the contrary, we see it's still -- it's very [ vibrant ]. We see also Belgium is still on a good level. Yes, France, there we have seen, but there we have hinted to as well, is a weaker market in the whole of the markets that what we addressed.

[Operator]

Next question is from the line of Till Hufnagel with Petrus Advisers.

[Till Hufnagel, analyst]

First of all, congratulations to what looks like a great first quarter and a very good progress operationally. I just had another question, following up on Klaus' point regarding the savings. So just to sort of understand that you had there impact of EUR 15 million from the savings program. And typically, we would expect that something that does, actually can be analyzed because once savings hit, it shouldn't reverse. So you would expect the effect is at least EUR 60 million. As a matter of fact, it should be more because, presumably, you're working on more measures that hasn't been implemented yet and the EUR 15 million impact would point to I would say EUR 80 million to EUR 100 million run-rate, way beyond the EUR 40 million that you have in you assumption. So If you could shed a little bit more light on what's happening here? What measures have been implemented? And why we cannot analyze or should more than analyze it on the run-rate basis? That will be helpful.

[Heimo Scheuch, executive]

First of all, I appreciate the questions, and all of you are sort of extrapolating the first quarter. The first quarter is -- I mean, on the cost side, it's not purely costs, it's a mixture of measures that we have put in place. And when we talk about operational excellence and figures excellence, we have also a number of measures that we have put in place in order to improve our pricing. And here, I think, we have made also clear that over this period of time, we will see some effects also coming later in the year with respect to inflationary cost increases. That's what I would like to do.

[Willy Van Riet, executive]

Willy, we are starting with our plant, we are doing the diagnostics in our plant, the things we can immediately address we are doing. But on the other side, we still know that for a number of actions we will make additional costs, and those costs are not completely there. We still need to build up some of our teams on certain parts as well, so there will cost will come in. And we are faced with the EUR 15 million we have, those we will keep, of course, but then those, again, that we will see some increasing some cost in the remainder of the year.

[Till Hufnagel, analyst]

Can you say how's the EUR 15 million you will give up again in the rest of the year? Because, otherwise, you would get strictly EUR 60 million, and that is because you have to temporarily invest in the new measures, and that it will come back in 2020 or is it all because you assume that you lose a net pricing effect in the rest of the year, that's why it will net only be EUR 40 million for the year?

[Willy Van Riet, executive]

If I may jump in here quickly. I mean, mean you're trying to just take EUR 15 million in Q1 and now times 4. We are saying that the EUR 15 million will continue to impact our cost position for the rest of the year, because it's true. But we said last year, we want to generate the EBITDA improvement out of the Fast Forward of EUR 40 million incrementing against 2018. Because now we've achieved already EUR 15 million as a first step, which we will keep, that is clear. And now we also will see in the rest of the quarters that there will be additional improvements we want to realize from all of the [indiscernible] reflect the market, maybe in manufacturing and even down to supply chain management and administration. So we are very -- don't take it just times 4, that would be too easy because, then, we could claim it's there already. We are very fast and experiencing now step by step, we want to further tackle and realize additional incremental savings. That is our guidance, and that is our way forward for the rest of the year.

[Till Hufnagel, analyst]

But just to be clear to investors, we have already seen EUR 15 million, and if you say it's EUR 40 million for the year, that means you have a negative impact, or what you do is not sustainable, but slightly struggling with this concept. That EUR 15 million cannot be taken by. So that's why either you've done it or you haven't done it. Or you've done it and you lose some, but you can't keep EUR 15 million and not go to EUR 60 million, unless you give up some of it.

[Willy Van Riet, executive]

The movement is on a net basis. That means, we do have some positives now and we will make some additional costs in the course of the year. So yes, the net movement will not be as big any more in the next quarters to come, that's basically the message we are giving.

[Till Hufnagel, analyst]

Okay. I understand that there will be negatives in the quarters to come because, otherwise, the maths doesn't work. So that's my conclusion on the presentation.

[Willy Van Riet, executive]

Not because they give up [ three two ] separately. But that's...

[Till Hufnagel, analyst]

That's a good idea.

[Operator]

There are no further questions at this time.

[Klaus Ofner, executive]

Okay, ladies and gentlemen, thanks again to all of you for dialing in today. At the end of this call, we would like to already look ahead and invite you to join us again on August 13, when we will release our half year results. All that is left for today is to thank you for your attention. Have nice day, and good bye.