Wienerberger AG

VSE:WIE

Earnings Call Transcript 2020-Q1

[Anna Grausgruber, executive]

Ladies and gentlemen, also a warm welcome from our side from Vienna to the conference call with regards to Q1 2020 earnings. The Wienerberger representatives today are our CEO, Heimo Scheuch; and our new CFO, Carlo Crosetto. Heimo Scheuch will lead you through our presentation today. It is provided on the website. If you don't have it in front of you, you can see and download there. And after the presentation, we will be ready for any remaining questions. I now hand over to our CEO for the presentation.

[Heimo Scheuch, executive]

Thank you, Anna. Ladies and gentlemen, a warm welcome from Vienna to this conference call. I will, obviously, due to the sort of happenings of the last couple of weeks and months, walk you through the presentation. I have given you an update, obviously, during our numerous calls with respect to COVID-19, but let me just say before we start that considering the rather particular sort of situation and special situation that we are currently in, our first quarter has been a very strong start into 2020. We have achieved a slightly better revenues than last year by plus 2% to EUR 793 million, and the EBITDA like-for-like EUR 105 million is more or less in line with last year that was EUR 109 million. So I think altogether, if you look at a little bit more into detail to the first quarter, you've seen a very strong start with January and February, above last year. March was obviously affected already by COVID-19. You can more or less say that we had a drop in revenue here, about 30% in certain -- up to 30% in certain markets. This is something that you will see also during April, May and probably into June when you talk about the development for the Wienerberger Group. Keep in mind that, obviously, the Western European economies have been severely hit by this. We have alluded to this several times due to the fact of the shutdowns, especially in France, in the U.K., Ireland, Italy and obviously affected by these shutdowns is also the Belgium operations because we strongly import into these other economies.

So I think this is from -- in a nutshell, what I can say, when we start, obviously, important also, and I think this is a couple of good news, the pricing that we have put into the markets is covering cost inflation and is holding up as planned. So this is, I think, again, a strong statement from our side that our strategy with respect to value creation with innovative products and solutions is working, and we make here good progress. We have obviously reshaped the portfolio of Wienerberger during the last decade. So Wienerberger is more resilient in such crisis because we have a much more diversified portfolio of products and also touch upon different end markets like the infrastructure and the renovation market. So here, obviously, we have a stronger portfolio than we used to have 10 years ago. And I think what we see also in this market in the run that the focus on customer proximity, the innovation that I talked about, and obviously, the strong focus on digital solutions that we have put into the marketplaces have helped us tremendously in this difficult time to stay in contact with our clients, to work closely with them and to ensure the availability of our products. So I think here, a strong message that we can give from operations to you.

As I said, I think from -- let us move a little bit into the different divisions. Billing solutions has seen, obviously, also due to the fact that we had a rather mild wind in Europe, a strong start, plus 5% in turnover to more or less EUR 0.5 billion turnover in the first quarter. So a very strong start. We see the effects of COVID in certain countries, obviously, more than in others. I talked about this in much more detail during our update calls that the Eastern European economies were not so hard hit in certain of the Western European ones due to the lockdowns, due to, obviously, the state intervention and, therefore, obviously, we see here in March already declines in turnover. And also a good set of news is that the acquired brick assets in Denmark have been integrated rather quickly and create already here additional value and contribute to earnings due to the consolidation effect that we have. So again, from my side, it's a good sort of feedback from the performance of this business unit in Europe.

The piping solutions also a strong sign of value creation here. We have improved in this difficult market environment, the EBITDA, by plus 10% with a rather flattish market environment. And this is, again, also due to the fact that we have focused very strongly on the higher added value products. And therefore, obviously, the value addition was a higher one, and we were able to improve margins throughout this business unit. And I think here also, from a strategic point of view, we are focusing on the right set of issues in order to improve the performance. Obviously, the Northern and Eastern European economies were working without most -- without interruption. Obviously, you have lower demand levels also in these markets, but from a shutdown perspective, they were not affected as were some Western European economies. When we look to North America, here, we have 2 sets of issues that we have to keep in mind. We had rather bad start, weather-wise, into the year, very wet weather in certain states and especially in the states where we are operating in, in the South. And then obviously, a rather important impact by COVID-19, especially when it comes to Canada. You know that Canada is a very profitable business for us in the facade business and the shutdown there, obviously, has taken us to shut down the plant. And obviously, there were no construction sites. And we look forward that the Canadian government will take also less restrictive measures, hopefully, in the next couple of weeks, easing up, and then we can go back into production and also into the sales. So this weather and COVID-19 has to be seen when we look at the U.S. business. And again, I think with minus 6% in turnover and a slight decrease in EBITDA, I think, here we have shown that the American business is also more resilient and stronger than it used to be. Again, in a nutshell, from an EBITDA development, you see here, I think, when you take it from a reported perspective into like-for-like, there were not -- no major, I wouldn't say, adjustment necessary, just the consolidation effect that we have seen, obviously, from the Northern European brick business.

When we look to this crisis, in particular, ladies and gentlemen, obviously, we had a triggering effect when we talk about asset valuation. As you know, we were -- or we all are forced to do so when it comes to such triggering events and COVID-19 was clearly one. So we, as management, took every necessary step in order to look at our assets in a very detailed way and also under numerous scenarios and took obviously also very serious scenarios because we're operating in very dynamic market conditions. And therefore, we came to the conclusion that from our perspective, we had to write-off the integrity of our goodwill in the U.S. and North America. This is about EUR 93 million. It's a goodwill. That means it's not cash effective. It's not sort of anything that influences the results, the operational ones. It's on top of it an issue that we carry on the balance sheet, I think, from the late '90s. So it's also some cleaning up that we had to make here, but at the end of the day, it clearly indicates that we have a strong U.S. business because we had not to touch, under any circumstances and in these scenarios, the asset. So actually, it shows that clearly, the cash generation of these assets in the U.S. and Canada is a good one. But obviously, in this very circumstances, we took the decision to write-off the whole of the goodwill in the U.S.

On the other side, we looked at certain assets also around Europe and the EUR 22 million for a group like ours is not allowed. And therefore, I think here, one shouldn't take too much time to talk about it, and it is mostly attributed to Russia. Here, we had to take some sort of precautions due to the impact of COVID in the Russian market. So all in all, when you look at the operational perspective, as I explained, a very good set of results with this COVID-19 impairment and this one-off is obviously affecting our profitability in the first quarter.

When we move, I think, to interesting issues like the working capital, I think, it's important to note here when we compare it to last year and this year, we have managed it very well in the circumstances. When you look at the inventory, we brought it even down in this rather sort of difficult market environment. It shows how proactively we are managing such crisis on the cash side, on the cost side and also on the working capital side. So again, very quick intervention in the business as we speak. Obviously, we took, as I alluded to in a couple of times during our calls to liquidity, we have put a strong sort of additional available liquidity in place, roughly EUR 500 million in order to be well equipped for these crisis.

Let me just -- before we go into Q&A mode, go a little bit through the market so that we have a clear understanding what has changed in recent days. We see on the European map, a sort of easing situation because, obviously, in France, the lockdown is partly now relieved, and we are going back into production in the French operations. So this will take some time, a couple of weeks, to be back in production, but the good thing is obviously that we are moving in this direction. We have moved out of this in Austria. We are also now in the process of getting back slightly step-by-step into production in the U.K. It's not going to be a quick return we do because it's obviously a phased one. And it's also wished like this in the industry, in the market and also from a governmental perspective in the U.K., so it will take some weeks that we are back into production there. But all in all, I think when you look at the European map, only Ireland, Switzerland and Italy are down for the moment. And our indications are also that in Italy, we will see a restart pretty soon.

The focus, obviously, was, and this is also, I think, very important to mention at this stage, the health and the safety of our employees. We have been clearly, and I'm proud to say that everything has been put in place very rapidly, very quickly, and we had no direct incident in our factories, indirectly due to family members. We had to put some people into quarantine, but nothing serious occurred. So I think here, again, a very good management operationally from our local operations in the different countries.

The same is true for North America. Here, obviously, our operations in the southern states have not been affected so much actually by this lockdown. And in certain states of the U.S., we see good running rates even today out of our operations here in the southern part of the U.S. Canada, as I said, is partly now going out of this lockdown situation. And we have started our plant in Ontario and obviously, working together with the local authorities. We will ramp it up step-by-step also in the next couple of weeks.

When we look at this situation, we have obviously prepared ourselves for numerous scenarios. We have managed it actively the situation. We got also -- I mean, it's for us also was a first in the history to have such a situation to be confronted with it, and we have seen that when we move out of a lockdown or a shutdown, we have a rather quick return to a certain normality. I refer to a country like Austria, where we were pretty quickly back to about 80% of sales rather quickly. So it is of utmost importance to ensure the supply management, and this is our major focus at the moment. We are actually putting back our operations into full mode because the demand levels are good. We are working on projects, and there's a good demand level in the market. So again, I think, major focus is now to satisfy the demand in the market as we speak. We have obviously a very strict cash management in place and cash preservation policy when it comes to CapEx, to cost spending, et cetera. So this will remain in place. I referred also to the very strict working capital management that you have seen in the first quarter. So this will remain in place as well.

And the team around my new colleague, Carlo, has ensured the necessary liquidity in order to be ready for any sort of scenario in such a situation that might occur. Obviously, and I think we want to be here also very transparent with all of you. We have worked on numerous scenarios in order to estimate what the year might bring, and the experience that we have now after nearly 4.5 months in this sort of year and 2.5 months in such a very sort of extraordinary scenario that we are currently living in. We come to the conclusion that if and in the event, there are no further lockdowns in our markets that we're operating in, if the market demand level goes back to normality as we see in countries like Austria and Germany, then obviously, we would see that all of our markets will decline probably throughout the year by 15% to up to 20% across the group, and we are confident and we obviously put in such a scenario so that the price increases are holding as planned for the rest of the year. In such a case, we would estimate our EBITDA like-for-like, so comparable to last year's EBITDA, which was around EUR 587 million, we should be in the range of about EUR 440 million to EUR 480 million. So this would be the COVID effect that we would see this year on our results. On the maintenance CapEx, you can obviously predict that we will be in the range of EUR 120 million to max EUR 140 million that we will spend.

I think this is a scenario that we give you at this stage and provide you to work with and to analyze. It's one that obviously is produced by us in a very dynamic market environment that we are currently living in, where a lot of things that are moving and the moving parts that are to be considered. But we feel, at this stage, comfortable to give it to you so in order that we have a clear understanding where the year might be going. I think from my side, this was a short introduction to the current situation. I think that Wienerberger, at this stage, I would say, is a very different company than it used to be. We have worked, as I said, very, very thoroughly on the product portfolio, a completely different set of products. We have also worked on our cost side, especially due to the optimizations that we have put in place during the last 2.5 years. So obviously, when you talk about the efficiencies that we have and how we cope with this situation, it's a much different one as a model, it's a more resilient one and takes us through this crisis with a lot of more confidence than in the past.

So I think from a strategy point of view, we will obviously be focusing also this year on innovation. We'll reinforce our efforts in the digital arena in order to bring Wienerberger even closer to our end clients and end users and installers in order to make sure that they can use our products quicker, faster, easier on the construction side and that we can interact with them in a very digital way. We will also reinforce our efforts in the sustainability area, as I said. And I think Wienerberger is not shy even in this situation in order to invest and prepare the company for the future. And I think it's an important message that we are fully committed to the circular economy, as we said. We are fully committed to the decarbonization of our product portfolio. It's even in these market circumstances that we launched a new product in Austria and Germany. It's a completely carbon-free new brick for the wall segment. And it shows the clear commitment from our company to this innovation process and to a new set of products that corresponds to the needs of our clients and gives us, obviously, a major step in the right direction of the carbon-free economy.

So I think, ladies and gentlemen, that was my sort of summary of the first quarter with a sort of outlook, if I may say so, for the whole year. And we, as a team, are ready to take your questions.

[Operator]

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

[Matthias Pfeifenberger, analyst]

Yes. I'll ask them one by one. So the first one, Mr. Scheuch, on the 80%. So that's basically going back to the precrisis volumes, 80% of that. Is that also a level that you foresee, let's say, that it will accommodate any knock-on effect in terms of any negative flows to house builder confidence? And are you adjusting your capacities to that level? I mean we haven't been at full capacity utilization before. So I guess there will always be some lever, but are you basically preparing for those levels to remain in place for the time being?

[Heimo Scheuch, executive]

Let me just refer to this question, Matthias. I think we, as you correctly pointed out, the capacity utilization, and this is only for brick operations, was obviously at such levels before the COVID scenario and the COVID crisis. And I think what we are adjusting -- we are not adjusting to -- we have satisfying demand levels, and we will see how demand levels are working out. I mean, you might have areas that are doing better than others. That's a common thing in Europe. After the summer, we will have a better indication where demand levels are sustainably going to. I think at this very moment, you have demand levels coming through rather quickly because projects have been stopped. So we are working on existing ones, and we'll see how the new ones are coming through. It is not that we have to adjust today to certain demand levels yet. I think we need to follow this very closely. As I said, there's a very dynamic market situation to be in, but we shouldn't worry too much. We should now concentrate on having the products for the market-ready and get it out from our stock yards. That's what we are focusing on right now.

[Matthias Pfeifenberger, analyst]

And you will be basically happy to kind of keep the plants in place, not sacrifice them because you are still a big believer in terms of the long-term pent-up housing demand, right?

[Heimo Scheuch, executive]

Well, I think we have a very highly efficient plant network throughout Europe. We talked about that in the past. We need to be in places to be ready to deliver to the market. I mean that's also a distance issue. We -- that's why I'm saying we cover Europe nicely right now. I'm not excluding over the next years that from an efficiency standpoint of view and especially also when we look at the mid- to long-term, and it goes into the discussion of CO2 emissions, it goes into the sustainability discussions, efficiency, as I said, here, we might sort of put some more efficiency in place by putting some plants together in the future, but that's not something we are currently working on.

[Matthias Pfeifenberger, analyst]

My next question would be on the pipes business now actually showing the resilience from basically the hiccups we had over the last couple of years, the margin is up year-on-year. Can we expect it for the fiscal? And would you also say it could be up in terms of absolute earnings?

[Heimo Scheuch, executive]

Well, I think from a margin perspective, you should keep in mind that we are working on that, and this is a continuous work and will continue. For the rest, I think I would be cautious right now because, obviously, we are just at the May level, so we will see what the rest of the year brings, and especially when we talk about demand levels from the infrastructure part. So I think here, good -- the management does a terrific job in this business unit in upgrading the product portfolio here, and I have no reason not to believe that we will have the positive margin effect.

[Matthias Pfeifenberger, analyst]

And the last one would be on working capital net debt. Can we expect the working capital release over the next several quarters? Or do you have to keep inventories to satisfy demand? And maybe, let's say, at the midpoint of the scenario, what is the implicity of debt level that you have?

[Heimo Scheuch, executive]

Now as you well appreciate, I think, we always have this working capital swing that we have and it's even better, which is about EUR 200 million or EUR 250 million depends on the turnover. But I think this is what we have every year, and this will obviously be the case this year as well. So I think you will see this normal swing level throughout the year.

[Matthias Pfeifenberger, analyst]

Okay. And for the swing to reverse basically in the second half as usual?

[Heimo Scheuch, executive]

Okay? Matthias?

[Operator]

The next question comes from the line of Yves Bromehead, with Exane BNP Paribas.

[Yves Bromehead, analyst]

Just a few questions on my side. I guess the first one is I'm trying to understand your sensitivity and your scenario that you built on your guidance for 2020, and I believe that the run rate would be at around 20% for the remainder of the year. However, I think, in the last few weeks, we've now seen construction sites reopening and the percentage of them being opened now in the U.K. is even higher than France actually from what I'm getting. So I'm just wondering whether or not you're being overly cautious on the pace of the recovery that you expect in those markets, especially as these are very profitable markets for you in the U.K. and in France and in Belgium. So just a bit of color on that would be really helpful. I'll take that first question, and then I'll jump to the next one if that is okay.

[Heimo Scheuch, executive]

Listen, I'm obviously, as always, transparent and frank with you. I mean we take a point of view you might call it conservative, optimistic, realistic, pragmatic. It is one that we have to take in a very difficult market situation that we are operating in with a lot of things that move every day and develop every day. I think if something is doing better, we will obviously inform you, keep you posted, but I think we have still a year in front of us that will see certain development, ups and downs as we have seen in the last couple of months, as you well appreciate. I hope that we come back to normality, but nothing is excluded at this stage. So I would say, from our perspective, I didn't use the word guidance, I said it's a scenario that we are working with because that's what we can tell you at this stage. I mean, there's no such things as certainty in such situations that we are currently in. So I think if you appreciate, I would answer your question with everything is possible at this stage, but that's the best guess that we take.

[Yves Bromehead, analyst]

Okay. Cool. So just on the second question, in terms of the discussion that you've had with your clients, and especially the house builders, how are they feeling about kind of presales activity and the [ Lang ] auction in the permitting stage. And then thinking about that, how should we think about demand going forward into Q4 and 2021? Do you think there's a risk that there is a strong lapse of time when there was absolutely no activity, which could start to fall into the residential sector and/or even the renovation sector?

[Heimo Scheuch, executive]

I think that there's no activity, I don't see that, to be very frank with you, but I think that we need to follow very closely a couple of things. And I'm not referring to one country only because that would be too shortsighted. If we take the whole of Europe, we have major issues like availability of workers for construction sites. So this is one thing that we need to keep an eye on because still a lot of people have not yet been able to move and come back to countries from outside the EU. So this is, I think, some effect that will keep us busy for a while because the construction sites cannot go back to full activity. So this is certainly something we need to keep an eye on. Secondly, I think from a perspective of permit issuing and also granting permits, it's something where you need to understand that certain administrations around Europe did not work, so they were down as well. So I think here, also in certain areas, we will have to speed up processes, get it much quicker and faster in place. Otherwise, we will see some declines in certain markets in the later part of the year and into next year. So I think I've addressed this with certain people in administration in Europe. They're aware of it. But I think it's an important factor that we need to understand. And obviously, it's the overall sentiment that you are referring to, which is also one thing that we have to keep in mind. And we don't yet see this because, obviously, we are just moving out of this current situation. And our clients and customers, I would say, as everybody in this world, enthusiastic to be able to work again and put themselves back on the sites and do the work and we'll see, as I said, a little later in the year, what really happens. And that's why I'm might be -- you might consider me cautious, but I think we need to -- it's the first time in our lives that we face such situation. So we need to understand better what will be happening in a couple of months.

[Yves Bromehead, analyst]

Okay. And just last question. At the start of the year, you mentioned that you didn't expect a decline in energy prices, but now gas prices are down very significantly. So I just wondered if your views have changed on that side.

[Heimo Scheuch, executive]

No, I've not because we have obviously -- you know that we buy forward. We have done so also for 2020. So we are basically well covered. Please keep in mind that due to the shutdowns in certain countries, we were and have successfully negotiated with the providers in order to push it back into the future. So there's no penalty. But I wouldn't sort of expect major gains from this year.

[Operator]

Next question comes from the line of Markus Remis with RCB.

[Markus Remis, analyst]

First question relates to the top line that's built into the earnings outlook. Is it fair to assume that the 15% to 20% market share decline is also kind of a good proxy for the top line? Or do you think that your top line terrain could be a little less given market share gains, for instance?

[Heimo Scheuch, executive]

Listen, I think, this is something not to be answered today because I think we need some more experience in that. We just monitor very closely our markets. We -- as you have seen in the first quarter as well, we're confident that our products and our solutions are performing well in such markets. We'll see how we can sort of get along with it, but at the end of the day, we need to operate in a market environment that is under pressure, and that's why we give you this indication of 20% -- up to 20% market declines around our businesses. And it will vary, obviously, vary -- from market to market. We will have different product segments. I think it's very complex at this stage to give you here a much more detailed indication. It's very early in the year for us as well and early in this crisis. Just keep in mind that 2 months ago, we were just moving into it. And now we are moving out of it, and we try to give you some indications. But I think, half year, more or less, then we will have a better view and to give you some better indications there.

[Markus Remis, analyst]

Sure. Just a clarification on the goodwill. Did you test other goodwills also? Or was it just the North American one?

[Heimo Scheuch, executive]

As I indicated earlier, we made a very thorough analysis of all assets, all goodwills of Wienerberger, and I think this is an important message that we can -- Carlo and myself can provide to you that obviously also under this stress test and analysis that we made, there was nothing to be done, and we have enough and significant headroom when it comes to address goodwills.

[Markus Remis, analyst]

Okay. Very clear. Does the goodwill impairment play a considerable role in the -- your decision to call the hybrid because essentially, it's not cash, but it reduces the equity.

[Heimo Scheuch, executive]

Not at all. We have not put this into any equation when we talk about this. This is a purely related issue to this testing and triggering effect and the scenarios that we calculated.

[Carlo Crosetto, executive]

And if I may add, the hybrid is actually due in 2021. So we will make an internal decision towards the end of the year how we want to deal with it. But clearly, we do have enough liquidity to potentially address this. But the decision has not been taken. And as our CEO already mentioned, the goodwill impairment is basically no impact on the cash situation. So it's -- there's no consideration whatsoever in our discussions in terms of how to secure the liquidity and what to pay or not to pay.

[Markus Remis, analyst]

Yes, I'm not coming from the liquidity side, I'm coming from the equity ratio side if you want, because it's -- that's the angle I was taking.

[Heimo Scheuch, executive]

You are right.

[Markus Remis, analyst]

Okay. Can I finally ask, if you have already an idea about the kind of size of special CapEx?

[Heimo Scheuch, executive]

No, no. Not yet. I think what we are doing and we are contemplating in certain projects. You know that we will move on, on our efficiency programs and also our expansion when it comes to new products. And step-by-step, as we move out of this situation that we are currently in, we'll put these in place. Keep in mind that we are not even allowed to move our technicians around Europe at this stage because otherwise, they would spend the whole of their working time in quarantine somewhere, but I hope that in the later part of the year, July, August, we'll be able to do this and then we'll pick it up. And again, at half year, we will be in a much better position to give you an update here. But it is going to be certainly -- and this I can indicate to you, certainly less than EUR 19 million, obviously, that's for sure.

[Operator]

[Operator Instructions] Next question comes from the line of Xintong Ouyang with On Field Investment Research.

[Xintong Ouyang, analyst]

I've got 3, actually 4 if I may. I'll go one by one. The first one is on the -- I'm just wondering, can you provide a little bit color on the April and May trading? So is the 30% decline in -- at the end of March applicable for April and May?

[Heimo Scheuch, executive]

Yes, I can confirm this to you.

[Xintong Ouyang, analyst]

Okay. But then if that is the case and based on the volume guidance that you -- volume scenario that you provided for the end of the year, it is suggesting around a 15% to 20% decline of volume, the top line, in H2 as well for this year. Is that what you have in mind?

[Heimo Scheuch, executive]

No, no. I think we need to keep in mind the following. When we talk about the scenario for the whole of the year 2020, we talk about -- our assumption is that the market might decline by 15% to 20%, the market. That's a market decline that we see. And in such markets, we operate in. So that's the indication that we give to you at this stage. When you ask me about the performance in April and then obviously, more likely also in May and probably into June, I'd say, then you can sort of say that our turnover is down by about 30% as a group, yes, as a group. And keep in mind also to be clear here that these declines are sharper and obviously more important in certain Western European markets where we have a strong exposure. They are very profitable, and I talk about the English one, especially. Where we have seen, obviously, this low level of activity in April, especially. And in May, we will see it also, even if we now start slightly to produce there. So this is, I think, the important aspect that you need to keep in mind when you analyze our performance.

[Xintong Ouyang, analyst]

All right. Great. That's very clear. And then the second one is on the cost savings side. So before, I think, in previous calls, you said that there will be some kind of delay of the Fast Forward program and you achieved EUR 9 million in Q1. I'm just wondering, looking at full year with all the, say, restrictions being gradually lifted, what kind of amount are you trying to achieve for 2020? And how much would that actually run into 2021?

[Heimo Scheuch, executive]

Let us sort of, as I say, let us please do our homework at this stage. We have given you a sort of indication of EBITDA for the whole year under certain circumstances. Obviously, as a scenario, EUR 440 million to EUR 480 million, which includes any effect from operational and performance enhancement measures. So let us sort of work our way through in the next couple of weeks and months that we are in a position to give you a clear update. As I said, keep in mind, we are not able to move technicians around. We are not able to sort of -- to perform certain projects due to the fact that our factories are down right now. So I think we need to have a little bit better visibility ourselves and then we can provide you with an update, but it's going to be, again, a very transparent one as is in the past. There will be some sort of projects that are running then over the year-end into 2021 for sure. Because, obviously, the delivery of machinery or other suppliers are not able to do this right now. So again, I think, nothing to worry about because the performance will be there, but give us some time to clearly give you a detailed update.

[Xintong Ouyang, analyst]

I see. That's very clear. And the third one is more like running into 2021. As you've mentioned, there are a lot of uncertainties on the underlying markets, especially for the new build projects. So I'm just wondering if that is the case, do you have any contingency plan to say, for example, if the underlying market is quite sluggish, the number there will be able to actually outperform the market and achieve a better result. So what is your plan to actually currently do that?

[Heimo Scheuch, executive]

Yes. So I fully appreciate your question. I think it's the right question to ask at this stage. We have shown in the past and also in the recent months that we are very quick and fast in implementing all sorts of plans if required, on the cost side, on the capacity side. I think keep in mind that today, we are living in a very special situation. We all don't know how this is going to sort of turn out. There might be and also I -- just to throw these arguments to -- for your consideration on the table, there might be big programs coming from the EU when it comes to the green plan for renovations, for new builds, for infrastructure. There might be national plans in order to reinforce infrastructure or spending in housing, especially social housing in order to create jobs. So I think at this stage, it's too early to make speculations on this. I think we keep ourselves in a position to be ready for anything that comes our way. We have plans in place, don't worry about that, and we are very quick in implementing them. But on the other hand, we need to be ready also to satisfy demand levels that might be also higher in the future because some sort of in -- plans are coming from EU institutions or national governments.

[Xintong Ouyang, analyst]

I see. Okay. And the last one is actually very quick. It's just a very technical one. So the tax rate in Q1 seems a little bit higher than the previous level. So I'm just wondering, what will be the tax rate -- the run rate in 2020?

[Heimo Scheuch, executive]

Carlo, if you want -- no, go ahead.

[Carlo Crosetto, executive]

I mean the reason for the slightly higher tax amount in the first quarter was due to the fact that we had to reevaluate the so-called deferred taxes related to the updated business case with regards to the North American cash generating units, which then resulted to this impairment. So that's basically the escalation. But otherwise, from a purely rate point of view, we don't see any significant difference.

[Heimo Scheuch, executive]

And for the whole year, I think, it's too early to give any indications. We will -- at the end of the day, I think, we will see what happens in this market. So I think it depends very much where the cash generation takes place. But at this stage, it's too early to give here a final indication where the tax rate is for the year.

[Operator]

[Operator Instructions] Next question comes from the line of Rushil Paiva with MainFirst.

[Rushil Paiva, analyst]

I'd just like to follow-up on 2 points that were raised, if I may. The first is regarding the COVID-19 scenario and the assumptions that are in-built. Looking at the EBITDA like-for-like range using the midpoint there would imply a year-on-year decline of around about 21%. Putting that in context of the expected or the market decline of 15% to 20% that you've assumed in that scenario, the EBITDA decline does seem quite low in that sense. Could you just talk me through any other assumptions that are built in that may be offsetting the earnings decline or essentially softening that blow from an earnings perspective?

[Heimo Scheuch, executive]

Well, I think, as I said, it's a mixture of things that are here to be accounted for. As I tried to explain, it's a product mix issue that we need to take care of when we talk about the scenario. And all the new solutions and products that we'll put in the marketplace. The second one is obviously linked also to the fact that we will do some performance enhancement measures that are kicking in. So -- and also at the end of the day, the geographic mix that plays an important role here, especially when you talk about markets that are now under pressure, because there's no -- literally no sales and that are predominantly high producers of profitability or contributors of profitability. So it's -- I hope you appreciate that this is a very early stage into the year and in the middle of this crisis, but we try to give you an indication, but this is -- as I said, it's a mixture of a lot of things. At the end of today, as I hopefully try to make clear, it shows clearly that Wienerberger is a more resilient company and has a stronger grip on its cost structure than it used to have.

[Rushil Paiva, analyst]

And just the second question, just a follow-up regarding the current liquidity situation and the hybrid bond that has its first call date next year. I know, as mentioned earlier, that the company will be making a decision regarding the hybrid bonds later in the year. If you were to pursue redeeming it either all or part of that hybrid, are you able to talk us through how you would consider your current liquidity situation? We know that as part of the last COVID-19 update, there was a bridge line that was in place. So can you maybe just talk us through what your future liquidity plans are and how they may be impacted if you choose to redeem the hybrid?

[Heimo Scheuch, executive]

Carlo will handle this, and I hand over to Carlo.

[Carlo Crosetto, executive]

Yes, thank you for the question. Obviously, when this COVID-19 pandemic came into play, we started calculating different scenarios, even more extreme scenarios than we are actually expecting today. And obviously, based on these scenarios, we have decided to secure additional liquidity beyond what we have already secured today. Obviously, we have additional liquidity opportunities lined up, which we are, let's say, going a bit slower on just for the purpose that we also should not have the risk of ending up with too much liquidity on our balance sheet. As the COVID crisis hit us, we were on the process of considering the opportunity of placing a bond. And given the volatility and the market situation and the opportunity to make a sensible placement, we felt it would be more appropriate to wait for, let's say, the waters to come down a bit and have instead decided to sign or put in place, also called, a bridge to bond loan. This bridge to bond facility is -- duration is about -- is 18 months. So we have theoretically enough time to replace this with the bond later throughout the year. But the intention so far is to potentially not to wait so long to issue the bond, which could even be higher than the bridge to bridge facility. And so we have basically enough time to replace this bridge to bond facility with, let's say, a proper, more long-term financial solution. That is on the liquidity side.

We are obviously monitoring the market and the intention was really to just have enough security in terms of liquidity for all possible worst-case scenario. Right now, the focus is more about not securing liquidity, but security that we have the right structure of our funding going forward and the necessary flexibility, which is obviously, given the lessons learned, going to be probably a little bit higher than it was in the past, just to be on the safe side.

[Rushil Paiva, analyst]

Okay. Sure. And just with the bridge loan, can you -- are you able to tell us what the interest rate or the cost of that loan is?

[Carlo Crosetto, executive]

No, we don't disclose interests paid for each single facilities that we have with the different banks.

[Heimo Scheuch, executive]

And we are currently under negotiations anyway.

[Operator]

We have a follow-up question from Yves Bromehead from Exane BNP Paribas.

[Yves Bromehead, analyst]

Yes. One quick follow-up. We've been hearing a lot more about potential demand for either secondary homes or even people trying to move away from the urban life towards the rural life, if that's possible. And I was just wondering how would you think about that phenomenon for rig demand in [indiscernible] and also in terms of potential extensions to build office spaces in [indiscernible]. Are you already seeing some levels of interest on that on the web traffics and on the feedback that you get from your sales team?

[Heimo Scheuch, executive]

I think when you talk about the movement into investments in 1 and 2 family houses, we see clearly in certain areas of Europe a certain demand level that is good and sustained, where people are obviously ensuring the building of a house and move on, on this project. We have also from a demand level, and when we check the hits on our website and after that the leads that we have, I think, it's quite a strong demand and interest level that we see there from people to be checked and analyzed in the next months if it materializes or not. And I think, obviously, any such movement when people have to stay months in their homes and are confined in apartments, they are dreaming of moving out rather quickly and getting a home in the countryside. But we will see how this turns out. The only thing that I can tell you for sure, in all the markets that we are strong in when we come to brick share, this is obviously very favorable, because this is the classical bread and butter business of Wienerberger, if I may say. So because people tend to use then bricks for such small houses and single houses, especially.

[Anna Grausgruber, executive]

I think we don't have any further questions. No. I don't see anyone in the line.

Ladies and gentlemen, thank you very much. That was it then for today. We will be back with the next update in August -- on August 12, with Q2 and half year results for 2020. Thank you very much for dialing in today and wish you a nice afternoon, and goodbye.