HeidelbergCement AG

XETRA:HEI

Earnings Call Transcript 2022-Q1

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the HeidelbergCement's First Quarter 2022 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Christoph Beumelburg. Please go ahead.

[Christoph Beumelburg, executive]

Thank you, operator. Good afternoon, everyone, and welcome to our analyst and investor call on the results of the first quarter '22. Before we start, let me give you just a short explanation why we moved the call to today, 1 day ahead of the initial plan date. As you know, we will hold our Annual General Meeting tomorrow. And based on the experience of last year, event might take longer than planned. So to avoid any timing conflict with the analyst call, we decided to publish our Q1 results already this afternoon and hold the call now. We ask for your understanding.

So today with us, Dominik von Achten, as always, our CEO; René Aldach, our CFO; and the colleagues from the IR team. Dominik and René will go through some prepared remarks before we start with the Q&A. Over to you, Dominik.

[Dominik von Achten, executive]

Chris, thanks a lot. Welcome, everybody, on the phone. Thanks for joining us later in the evening in Europe and, hopefully, the timing works for you guys in the U.S. I would suggest we've sent you the presentation and also the press release. So in that respect, let me just very quickly go through the key points, and then I think we should take the time for Q&A. I think that's a better use of your time.

I'll go to the first page on the key messages, summarizing the Q1 from our perspective. You remember, last year, October, we very much with you with the question, is there a pricing dynamic that HeidelbergCement can realize. I would say the proof is there, plus 13% like-for-like without any acquisitions. I think that is a very strong performance on the top line, and I'm very honest with you that for me was the clear core focus to get the pricing moving. We'll maybe go into some possible details later on.

On the operational EBITDA, we go against a very strong comp. That is also somewhat with our energy forward buying policy. That's why we will come to that later on. René Aldach will show you the decision change that we have made in that respect. Overall, obviously, the cost pressure continues in all commodities, freight, CO2. I think everything is going in -- continues to go in the wrong direction in that respect. But with a good top line growth, we are able to cope with it.

We have significantly upgraded our commercial excellence program, which I think was exactly the right thing to do last year. Also the timing was good because we started already in the second half of '21 to get into a good entry point for Q1. Otherwise, this top line development would never have been possible because remember, the industry was normally going for price increases in March, April of each year.

The upgrade is steep. We know that EUR 350 million up to EUR 2 billion. So that is a very steep increase. We feel confident about this. We feel very confident about it. We just came out of our quarterly management meetings and the around EUR 2 billion target, I think, is very much what we want to achieve. We will change on the back of that, our energy forward buying policy, not overnight, but René Aldach will share with you the decision and then also the way we will implement it going forward. Key idea is to take out the volatility that I think has occurred because the top line development is fantastic. But I think the bottom line is too much impacted by big up and down volatility on commodity pricing.

And I think that's not what we would like to have going forward. On CO2, very good progress. We now have monthly and quarterly figures that we would also like to share with you. We are very satisfied with our Q1 development that even slightly ahead of our ambitious internal road map target. So also on CO2, we feel very comfortable.

And last but not least, also critical, we confirm our outlook with a strong like-for-like increase in revenues and a slight increase in like-for-like operating EBITDA and RCO.

And last but not least, we are very much looking forward to see many of you either in person or virtually on the Capital Market Day on May 24 that we will dedicate to the topic of sustainability.

I'll now go very quickly through the other pages. Page 3, you'll see the development from revenue all the way down to RCO and you clearly see that a big jump on like-for-like development on the revenue side basically balance itself out then on the EBITDA and RCO line.

Clearly, down from last year, which was, by far, an exceptional one-off year for us. But very much in line with 2020 and also 2019. So remember also, Q1 is a fairly small quarter for us, EUR 91 million is a low percentage figure of our total RCO of EUR 2.4 billion, EUR 2.5 billion. So the EUR 90 million is a very small figure compared to that. So from our perspective, I think we are set in the right direction.

If you go to the different areas, I think it's fair to say that the quarter was a special one in North America. Why? Because we have a robust pricing development on the one hand that differs also between the business lines a little bit. The volumes on our end were quite significantly impacted by heavy winter weather compared especially to prior year in the Northeast that we have a footprint that is very much also treated to the North and Northeast. We did have some significant energy and freight cost inflation in Q1. But we also took a deliberate decision to get our plants up and running. Winter repair and also aggregates plant ramp-up is always an important piece in Q1, and we decided to put an extra effort into this in order to really be fully prepared for, hopefully, strong Q2, Q3 and Q4. That's why I think the North American result is maybe a little bit below your expectation, but these are the, I think, very straightforward reasons for it.

Europe on the flip side, very strong pricing. That was also the discussion last year. Do we have the pricing power in Europe? I can only say, absolutely, yes, with 3 exclamation marks. Top line moves very well, and it continues to move very well in Europe, so we are very satisfied with that development.

Asia is coming back from big lockdown scenarios in basically all countries, Thailand, India, Malaysia, also Indonesia was heavily impacted. China, there is still a 0 COVID situation. So volumes were a little bit under pressure. Australia had some flooding very unusual amounts of flooding, especially in the East. So in that respect, a little bit of an impact there and pricing momentum is building, but is it yet on the levels of Europe not. I think we are continuing to move as the volumes come back.

Africa, very strong, just we talk a lot about portfolio. Look at this. Africa is now the strongest in absolute terms, the strongest result contributor in Q1. So I think in that respect, it maybe also -- helps you to understand why for us, the African business is quite a valuable contribution, strong development in Sub-Sahara, also Egypt now clearly turned around. You remember that RCO losing business and also Morocco moving in the right direction.

If you look at the price of our cost, we always guided that the first half of this year will still be difficult. Second half of the year should then go into positive territory. I think the Ukraine Russia war that we didn't have when we talked last pays a little bit its toll again because the energy costs since then obviously went through the roof. And pricing also did move, but it's not yet good enough to cover the full delta. But the trend continues to be positive. Also now we checked the latest figures for April. As far as we already have them, I think the train moves clearly in the right direction. So we are very confident that we will be able to close this price over cost gap throughout the year.

Operating EBITDA margin, I think, as I said, with the low quarter, this fluctuates a lot, so I would not spend too much time on this point. I think Page 7 is more interesting. So you see the commercial excellence program with the dynamics on pricing. We talk about domestic cement price increase. And without giving too much away, this line will continue to rise. And we -- if you look at our April figures, this will continuously creep up by quite a significant steepness. So in that respect, we feel very comfortable to raise the target of the commercial excellence programs up to EUR 2 billion. And the operational side with EUR 150 million, we are also confident to reach.

René, you want to take over on the new energy policy?

[René Aldach, executive]

Thanks a lot, Dominik. Hello to everyone. So just to explain to you what we have changed and why we have changed this. As you know, in the past, we had a rigid policy that we only go 12 months out with our electricity forward-buying policy and you see the green bar that was a little bit -- the maximum -- we -- sorry, the minimum what we could have done for the next 12 months. And the new policy that will go further out up to 4 years. And you see that the old maximum will be now the new minimum for the frontier. So what we want to do with this, obviously, we want to take clearly volatility out because now with this huge energy volatility, it's obviously difficult to plan and to guide properly and to manage the customers.

And how do we do this? Obviously, we will not lock in now with EUR 250 for this year or for Q1 '23. Yes, [ year 3, year 4 ]. There are numbers which you can lock in, which are -- example for Germany below EUR 100 or we have locked in already volumes, which are below EUR 100 which is 50%, 60% below what we have right now. So we started very smooth. We look in every quarter a little bit to get an average cost for the respective years. But for now, what we said for Q2, Q3, we still stay on spot for the open volume because the spot rates are clearly cheaper than the forwards for this year.

So I guess that should be -- I think that's a good change into the right direction to take the whole volatility out and to allow proper guidance.

[Dominik von Achten, executive]

Okay. Then we go to the portfolio, Page 9. We continue to optimize. We always said this never ends. We have added an acquisition in the U.S. in the Atlanta region. We've also tightened the net in Czech Republic, which is a very important market for us. We increased the vertical integration, which showed both acquisitions should help also push the sustainability offering into key markets, both the Czech Republic and Atlanta, also very strong on that. And then lastly, you saw the announcement on Giatec this morning or yesterday afternoon, actually, where we bought a minority -- significant minority stake in the Giatec scientific company that really will drive our sustainability and age digital efforts and complement our offering not only internally, but also externally and link also with Command icon.

Last but not least, we stick to our guidance for '22, as I said before, strong increase in revenue, a slight increase in operating EBITDA and RCO. We will keep our CapEx net below EUR 1.2 billion as guided. We would target to get to the ROIC around 9%, and we'll keep our leverage between 1.5x and 2x. And then just a sneak preview to the Capital Markets Day, it is clear, and we've always made it clear that we are fully committed to our sustainability agenda in case I think it's clear that especially also with the hiring of Nicola Kimm, we have clearly put an additional focus on this topic. And I think after she had now about 9 months to ramp up. We will basically then also give you a full picture of our strategy update going forward that will center around sustainability but that will also talk about the offerings to the customer that will talk about the technologies, including carbon capture, that we'll also talk about our R&D efforts as well as our financial story, how do we make this happen for both of our customers, but obviously, very importantly, also for our shareholders.

So I think that should be an exciting event in a couple of weeks' time, and we are very much looking forward to seeing many of you following that event.

So with that, Chris, I would hand back and then we'll go into Q&A.

[Christoph Beumelburg, executive]

Thanks, operator, you we want to start the Q&A, please.

[Operator]

[Operator Instructions]

[Christoph Beumelburg, executive]

First in line is Elodie Rall from JPMorgan.

[Elodie Rall, analyst]

So my first one would be on your guidance. So you seem quite confident that you can actually post sell some like-for-like improvement in EBITDA for the year. And so I'd like to understand what gives you that confidence given the slow start, okay, Q1 is small, but nevertheless, and given that cost inflation is still ramping up. So that would be my first question.

My second question is on price cost. You said you expect the price cost gap to close over the year. Can you give us a bit more granularity about when you think that will start showing. Do you expect that to be already the case in Q2? Should we expect price cost to be flat in Q2? Or is this more back-end loaded in your model? And my last question would be on what would be the impact on your sales if -- and on your numbers, basically, if natural gas supplies from Russia will have to stop?

[Dominik von Achten, executive]

Yes. Thanks a lot, Elodie. I would say, let me take the first 2, and then I'll do -- René on the gas supply for Russia because he covers, obviously, the energy buying. So on the guidance confidence, Elodie, absolutely, we are confident on the guidance. And I think it's very much linked to the ability to move the top line.

So yes, you are right. The cost increases are still coming through, and that will also be true for Q2 because remember, Q1 and Q2 last year was still with very much subdued energy costs. but the price increases are moving. We are very confident to deliver the EUR 2 billion that we shared with you. And you remember that above 2% average inflation. So the real increase is even -- the normal increase is even higher. So in that respect, I think it's important to understand that, that is where we take the confidence.

Is there a slim remaining risk that the cost increase will still be higher, if something unprecedented happened? Absolutely. We all know there is no guarantee on that. But as much as we can influence it for now, we can -- we're absolutely confident that we can deliver on the current guidance.

Price over cost, I indicated to you, as we always said, H2, we are very confident because if you do the calculations, it needs to turn, otherwise the guidance wouldn't work. So absolutely, in the second half, it needs to turn with how much it already turned in Q2, it's very difficult to predict. Again, we go against a strong Q2 last year. April was super strong. May was also okay. June was a little bit lower. So to predict this on an exact month, Elodie, difficult to say. But clearly, for H2, we expect this to turn positive.

[René Aldach, executive]

Elodie, I'll come to your last question, impact on sales of gas supply stops from Russia. Our exposure to Russian gas in our European business is very, very low. So there is no direct impact. But what will happen is if the gas supply stops, obviously, you will have an impact on the gas supply power plants which, to be honest, I cannot give you a professional answer what will happen, obviously, then pricing of electricity will go up. But as I said, we don't use gas a lot in our plant. So there's not a material impact -- direct impact, but electricity to be seen, that's crystal ball, what will happen then.

[Christoph Beumelburg, executive]

[Operator Instructions] The next question comes from Gregor Kuglitsch from UBS.

[Gregor Kuglitsch, analyst]

So maybe 2. So coming back to your hedging slide, can you just -- and forgive me, maybe you have mentioned this, but those ranges, can you just give us a sense like what's the range essentially the new minimum effectively, say, by December is it, I don't know, 60% at 60% to 80% or whatever, just so we can sort of roughly size the hedging?

And then the second one is sort of on the demand outlook, you talked a little about price cost. I think that's clear. What are you thinking on demand? I mean we're starting to see, particularly, for example, in Germany, the developers and REITs are starting to pull back a little bit because of higher costs. I think there was one homebuilder that is [indiscernible] now. So could you just give us a sense what you think is going to happen? What you're seeing, and any color? It doesn't have to be Germany, maybe sort of anecdotes around the globe after your management update with your various country heads.

[René Aldach, executive]

Gregor, I'll take the first one. The ranges are for the frontier to come. I'll give you a range. So we should be around, let's say, 50% to 70%, which we target.

[Dominik von Achten, executive]

And then on the demand side, Gregor, I think it's a valid question. I would say that little bit crystal ball. We do not see a drop off in demand. It's also -- remember in our April and May is difficult because there's a lot of holidays, there's Ramadan. It goes back and forth here and there. So there is also some shift between the months. So to have clear visibility, I think it takes a couple of months before that has balanced out. But from what we hear from the countries, there is no significant drop-off in demand at this point.

Now it's anecdotally here and there a point where a project has been put on hold or postponed to start, yes, that I think that's fair to say. More so maybe in 1 area versus others. But I think that's not from what we can see right now, there is no significant impact on demand at this point. Now how this plays out with volume and pricing got very difficult to predict.

[Christoph Beumelburg, executive]

Next question comes from Luis Prieto from Kepler Cheuvreux.

[Luis Prieto, analyst]

Two for me. The first one is with the new target in the commercial excellence program, you're aiming for -- if my calculations are correct, for about 13% overall pricing growth. if I'm looking at it on a full year basis, I mean, if this is achieved in 2022, which I assume that's what you're implying. In this context and also combined with LED's question about when you would turn positive in terms of price over cost, what sort of cost inflation are you factoring in for the year in terms of percentage?

And my second question and coming back to Gregor's question. You mentioned demand increase in all business lines in '22. Are you concerned about interest rate and more its rate trends damaging the financial demand at some point? Isn't that something that keeps you awake at night? And in this context, where would you place your residential exposure at present? I'm trying to figure out if residential demand falters. What could be the impact on HeidelbergCement.

[Dominik von Achten, executive]

Yes. Luis, thanks a lot. Maybe René, do you want to take the first one on cost inflation? Or shall I do the one on the interest rate first.

[René Aldach, executive]

We can do -- Luis, let me talk about the cost inflation what we assume, I'll give you the one for energy and then a little bit of guidance for the rest. So the energy cost inflation, we see roughly 50% to 55%, 60% for the full year. And if you assume -- and you know the number, roughly, we spent last year, EUR 2 billion, and you put that on top, there's EUR 1 billion energy cost inflation on top, which we will cover through the EUR 2 billion commercial excellence.

And the other EUR 1 billion is just across the other raw materials, logistics, freight, whatever staff cost -- whatever you can imagine, the answer is EUR 1 billion energy. The other EUR 1 billion is other cost, which we will cover via the EUR 2 billion price increase.

[Dominik von Achten, executive]

And then on the interest rate Luis, remember for us, residential, and that's the global picture. It's the global split of the pie, about 1/3 -- 1/3 residential. So it's only if you wish to say so 1/3 of the cake. Now I would say, in the U.S. for the time being, we will see a quite resilient demand despite increase in interest rates. Let's wait and see how this plays out. It also depends a little bit how quickly the interest rates will move up. I think also in Europe, the residential sector is still quite resilient.

And remember, interest rates are clearly below inflation right now. So there is quite also a good incentive to lock in interest rates for now, also for the residential side and continue to build. So while we do not see yet a significant falloff. And then in the other markets, Africa and APAC, there is very limited residential impact at this point. Also interest rates are still fairly subdued because the volume is also not really coming in that respect, as I said earlier. So the interest rates from -- at this point do not keep me awake at night. May that change, yes. But right now, I think we are still in safe waters.

[Christoph Beumelburg, executive]

The next question comes from Brijesh Siya from HSBC.

[Brijesh Siya, analyst]

So I had 2 as well. So the first one is on the pricing. If I look at the pricing you reported in December was around 13.3% increase. And now for Q1, you talk about 13.5%. So I was just wondering if you could give a little more color how the kind of the momentum is building up as we move towards April, May.

And the next question is around Egypt. And there, I believe the agreement with government is up to June 2022. Have you seen any change or any talk with the government at this point in time to extend that production kind of gap to further out into '23 or '24?

[Dominik von Achten, executive]

So you were talking about Egypt, right?

[Brijesh Siya, analyst]

Yes.

[Dominik von Achten, executive]

Okay. Listen, on the pricing, as I said earlier, you're right about your December number that we disclosed in the last call, the trend goes in the right direction. If you look at the that you mentioned, March, April, it's above. Obviously, otherwise, we would not end up at the EUR 2 billion. It's above 13%. So we continue to move in the right direction. And on Egypt, the negotiations continue. This is the typical normal cycle. At this point, we remain confident that the agreement will be prolonged, but there is no final decision to the best of my knowledge at this point. But obviously, the negotiations continue. And as I said, we remain confident that this will be prolonged.

[Christoph Beumelburg, executive]

The next question comes from Yuri Serov from Redburn.

[Yuri Serov, analyst]

Can I ask my questions one by one, please. So the first one, the topic that we don't really talk about that often, but it will come. So CO2, you're still not spending any money on buying any permits. When is that going to change? When will you have to start buying permits for your CO2 emissions?

[Dominik von Achten, executive]

Yes, Yuri, if you don't mind, let's park that question for the next 10 days, and we'll come back to that because I know it's on everybody's mind. I don't want to spend now 30 minutes taking also a little bit the way the thunder from the Capital Market Day. We have understood that this is on everybody's head. The question around how many certificates do we still have? How do we play it out with our investments that drive down the CO2, including carbon capture. What is the CapEx amount, what does that mean for the total business model? We know that's on your mind, and we will address that question diligently in the Capital Market Day. So if I may ask you to just be patient for another 10 days, that would be fantastic on that one.

[Yuri Serov, analyst]

Okay. Another one, I don't know whether it qualifies as a question or a comment, but your energy forward buying policy, the change I'm just wondering, aren't you too late because the prices for energy are astronomical, and everybody expects them to start falling whenever next year, year after and normalize over time. If you talk forward buying now, you will actually lock-in high cost rather than low cost?

[Dominik von Achten, executive]

Let me make 1 general remark, and then -- you're right with your remark, if we would do that, that could be stupid, and that's why we don't do that. Maybe if that was misunderstood, then René maybe you clarify again because that's exactly what we want to avoid.

[René Aldach, executive]

Yuri, your comment is absolutely right. And that's why I said, we start with the outer years where pricing is significantly down. And move to these limits, will not happen now overnight. We don't start now in Q3 by -- now buying 60% of our exposure for '23, now we see elevated prices. This is clearly what we are not doing. The move to that policy to come to the limits that I have shown in the chart that takes a little while, yes, because as I said, we will lock-in quarter-by-quarter over the next months and years percentages to get a proper average cost for the outer years, yes. And as I said, we don't start now locking in for EUR 250 per megawatt hour, that would be stupid, I would agree with you.

[Dominik von Achten, executive]

And Yuri, if I may add, the orientation point is always the long-term average. We're not buying on peak rates. That's one point. And then I would say there is a life beyond forward buying because if you look at the spot rates, there are parts of the year where the spot rates are clearly cheaper than forward buying rates. So I think this is becoming quite an art, a very sophisticated setup. We changed the general rules. We've done a very diligent analysis over the past months. We do this without any haste. And what we clearly will not do is to do stupid things in terms of buying at completely elevated levels.

[Yuri Serov, analyst]

Since you didn't answer my first question, can I chip in with another one, please.

[Dominik von Achten, executive]

You got clever.

[René Aldach, executive]

Exceptional -- exceptionally, yes. Go ahead.

[Yuri Serov, analyst]

Okay. You had a very strong performance in Africa, Mediterranean. And you mentioned a few places were strong. Can we talk in a bit more detail what you think the outlook for that region is? Do you think that it can deliver plus 13% growth in EBITDA for the full year? And if so, why? From which places?

[Dominik von Achten, executive]

Yuri, I know that we don't talk a lot about Africa in too much detail. I think maybe at some point, we should also do a deep dive on some of our emerging markets. You -- I think it's clearly -- we've also shifted the portfolio in Africa for a good reason. We were at very, very many places. We have divested out of a couple of places, Sierra Leone, for example, we divested -- so we are -- even within Africa, focusing on some core markets that are driving both the top line growth and the bottom line impact. We strongly believe that Africa in mid and long term has a good growth trajectory.

Remember, it's a growing population. It's -- the cement per capita consumption is the lowest in the world. The return on invested capital goes through the roof. If we would just operate in Africa, we would never talk to you again about our ROIC performance because it is very, very attractive. So there are good reasons to be in Africa. Is it easy to operate in Africa? No. I think we have figured out how to do it over many years. It's a strong management team set up. And I think the core markets we have always shared with you. I think it's clearly Morocco, it is Egypt. It is Ghana, Tanzania and Sub-Sahara, also Togo, Burkina Faso. I think those are probably the key markets for us that we will continue to build out. We have made our strides in Tanzania. We will continue to do some more.

And we should also underestimate the sustainability impact that Africa may have. Stay tuned on this. There is more to come because I always internally tell the story about the mobile phones. Nobody has a fixed telephone line in Africa. -- Because -- so they have spare billions of investments by just going into the mobile phones. And I think there is some quite nice potential also when it comes both to sustainability and digitalization in Africa. So we should not underestimate that continent, and we feel very comfortable with our position in Africa.

[Yuri Serov, analyst]

No, I get you. But are you saying that it so happens that all the key markets where you are growing very fast right now.

[Dominik von Achten, executive]

At this point, that's the case, but will that stay there -- Africa remains also a little bit volatile. Some markets will outperform others. So I think you saw Egypt. We need to fix it then at some point, and then you enjoy the situation again, but there may be also bumps in the road here and there that will -- that may happen, but you need the management excellence to cope with these things in order to make the overall performance work. As I said, for us, it's very much also contributing to the top line growth. I think this quarter again shows that the Africans can absolutely deliver on that.

[Yuri Serov, analyst]

Okay. But I understand from your that you're answer that you're not really suggest that you can deliver double-digit growth in EBITDA for the full year. It's too early to say that.

[René Aldach, executive]

It's too early to say, but I would also say -- not say no.

[Christoph Beumelburg, executive]

Sorry, you sneak in 5 questions, very clear Yuri.

The next in line is Sven Edelfelt from ODDO BHF.

[Sven Edelfelt, analyst]

Can you share with us your hedging for H2? I believe your 100% hedge for Q2, especially in Europe. Can you share a little bit in H2 if it has changed compared to your previous release? That would be the first question.

And the second one, can we have an update on the Command Alkon investment. Where do you stand? And is there some new elements important to share with us? I think it was a substantial investment that you did back in September last year.

[René Aldach, executive]

Sven, so I'll take the first one. So I'll give you a rough forward buying percentage what we have for Europe for the second half of the year, we are sitting roughly about 40% to 55% for electricity for H2.

[Dominik von Achten, executive]

And then next one on Command Alkon, the transaction has just closed end of April. There was a slight delay on that, and that was -- on the one hand, we were a little bit surprised. On the other hand, it shows us that there was quite some interest on this investment because the European Commission for EUR 7 million, I think, turnover in Holland went into the details, and that took some time to clarify. So no issue, but only closed now by end of April.

You know we have 1 board member focused on the topic of digitization. He's now also residing in the U.S. So we take it very serious. And they have gotten operational 24 hours after the deal closed. They have already made the necessary management changes that were targeted for a long time. So we really get going now, early days, but we are very confident that this will be exactly the right investment going forward. And we will focus the Capital Market Day now on sustainability, but the next one will then be focused on digitalization to bring some more color on the whole setup. You also saw the announcement on Giatec that will also contribute a piece of the puzzle to the whole exercise but we remain very confident that we are on the right track there.

[Christoph Beumelburg, executive]

Next question comes from -- next one comes from Nabil Ahmed from Barclays.

[Nabil Ahmed, analyst]

The first one is on North America. I know it's a small quarter, and I understand volumes were impacted by weather, but some of your peers seems to have managed better price cost in the region. Is there anything specific holding back your pricing here? And maybe if you could elaborate a bit on whether this is primarily a U.S. cement problem or if it includes other materials and Canadian cement as well?

And my second question is, actually, sorry for that, but I can't resist the temptation to talk about the Capital Market Day on the 24th, which I understand will focus on sustainability which is, of course, a key topic. Should we also expect some update in financial targets and maybe strategy or feasibility simply too limited now to discuss midterm targets?

[Dominik von Achten, executive]

Yes. Nabil, First off, let me answer the 2 questions. I think in North America, we've also obviously followed the results of the competitors. We cannot comment because we don't know the details. We can only look at our own feet in that respect. The picture is a little bit scattered. The North American footprint is all the way going from Canada over the Midwest the Northeast and then to the South. Remember, our southern footprint is less pronounced, very much tweaked also to aggregates, less so cement. So I think there is a footprint element on our end, combined with the weather. We are following the pricing and the cost development very diligently in each of the different regions.

As I said, I think pricing, we are quite on our right move in cement. In other materials, I think here and there, there is still something to be ahead. I think that's fair to say. We remain also very ambitious on that end. And then on the cost side, you have to be very careful because there is obviously then also a large inventory play always in the first quarter, combined with weather. And then there is the whole winter repair element, which is obviously tweaked very much towards cement but also to aggregate I think if you put all of that together, as I said earlier, Nabil, could this be -- could this all put together have been a little bit better from our perspective, I would say yes. I think we should be fair. But is this way out what we think the whole year can then deliver no. I think that's that one.

And then on the Capital Market Day, yes, the focus will be sustainability. But yes, you should also expect an upgrade or an update not to take away too much thunder an update on the financial targets, and that will then also, obviously, be part of the Capital Market Day on May 24. And we will also give an update on the strategic direction in some elements. So it will be the combination of the 3 that will comprise the story. But obviously, and that's why it shouldn't be a surprise to you. We always said sustainability is the core of the strategy going forward. And that's why I think you also deserve to understand how we combine this with our financial targets and our other targets that we are chasing.

[Christoph Beumelburg, executive]

Next is Cedar Ekblom from Morgan Stanley.

[Cedar Ekblom, analyst]

So 2 questions. Can you give us what your group pricing was across all products and all regions in the first quarter. I know that you got 13.5% in cement, but clearly, your price cost development was negative. You're guiding to 13% for the full year, effectively. I'm just wondering how far you are off that mark in the first quarter?

And then secondly, again on price cost, how much of your negative cost impact in the first quarter could we think about being linked to some of the points around extended maintenance in the U.S., just to get a better understanding of what maybe the underlying price cost development was in Q1? Because it looks pretty weak versus some of your peers that have reported. So I just want to see if we can sort of back out how you see our underlying performance.

[Dominik von Achten, executive]

Yes. Let me make maybe a general remark on your second point. I think -- Cedar, I think as we said, for us, the core focus was getting the top line go. And I think in our key markets, I think the top line is absolutely moving in the right direction. I'm not quite sure whether I understood your first question exactly right. In terms of average pricing, I think the pricing on the group level is as we disclosed. And that obviously differs region by region. I'm not sure whether that's what you were asking. But...

[Cedar Ekblom, analyst]

No, I'm not so -- the pricing that you've disclosed, I think, relates to cement? Or is that across -- so if I look at Slide 7, it says the domestic cement price increases. But I'm wondering what it is across all products if we include aggregates and ready-mix because, clearly, you delivered 13.5% in cement, which is below the sort of 13% that you get if you look at your commercial excellence program for 2022. But even with that 13.5%, you had negative price cost. So I'm just wondering what the average is or the blend across products.

[Dominik von Achten, executive]

Yes, yes, understood. So the cement price increase is indeed leading a little bit compared to the other products into ready-mix, that makes a lot of sense because there is only not all products necessarily are increasing at that rate. So -- and cement is one of the key ingredients. I think on aggregate, as I said earlier, I think there is a clear progress, but there's also a footprint issue in this one. So but if René will maybe add something to that. René?

[René Aldach, executive]

Cedar, so the aggregate number is not far off the 13%. We are talking roughly 11%. And for ready-mix, as Dominik alluded to, there's a little bit footprint here and there, which is ready-mix is just below 10%.

[Dominik von Achten, executive]

And then on the extended maintenance figure, Cedar, I think that is not so easy to peel out because it's not only the extended maintenance is also then an inventory impact that you have that is that you have to put against it. So I think the price over cost element, as I said, it's the first quarter for us then don't forget what René was sharing with you earlier. It is, for us, not a surprise that there is now also in the competitive comparison quite a tweak in the numbers because that very much depends on your forward buying policy and the way you have locked in quarter-over-quarter different commodities.

And I'm -- quite honestly, I'm long enough in the business. This is for me now a quarter-over-quarter fluctuation, which I understand from your capital market perspective is not so easy to follow. But from my perspective, in the end, everybody has a fairly similar cost hit if you take it in the long run on commodities. But it does differ now quarter-over-quarter. And that's also why we have decided to change our forward buying policy because as much as you have a hard time to follow this now, we want to take that volatility out. And I think this is -- this will now take a couple of quarters to do that. And I think it's a more level playing field.

[Christoph Beumelburg, executive]

Next question comes from Bank of America, Arnaud Lehmann.

[Arnaud Lehmann, analyst]

I guess the first question is on Spain. I appreciate I think you're selling your -- you have sold already in those assets. But there was article about some capacity closure in Spain due to the high cost of energy. It's something that you have experienced in March many other places beyond Spain and have the Spanish plant being reopened.

Secondly, I'm just trying to link your new energy forward, buying policy which is I understand it aiming to reduce the volatility in the cost base, that makes sense. But how do we make -- how do we link that with your new pricing policy in Europe, which was actually potentially implying more volatility in your selling prices in Europe. Does that mean that this pricing policy eventually will not be needed anymore and you can, let's say, progressively increase your cost and progressively increase your pricing? Or am I misunderstanding it?

[Dominik von Achten, executive]

Arnaud, let me start and then René may add on especially on the second piece. I mean, on Spain, the capacity closure that's -- Spain is not a core market. To the best of my knowledge, there is not a broad closer of capacity here and there, there may be some smaller pieces, but we should also -- at this point, we have -- that's not who we have seen beyond the example you mentioned from Spain.

And on the energy forward buying policy, I think I said it earlier, for me, it is -- the forward-buying policy is to take out the volatility on the bottom line, not on the top line because the top line is only partially driven by this energy piece. I said it very clearly our perspective with the transformational step change that the industry has to do, my personal conviction for HeidelbergCement, but that's only my view is that from our perspective, the price point for a tonne of cement that comes from HeidelbergCement and the price point for a tonne of aggregates, but especially also the price point for a cubic meter of concrete will need to materially change because the product gets much better. Its society wants a carbon-free product in the end. This will not come at the same price point.

So from our perspective, that must change. And that's why for me, this price development here is only partially driven by energy price increases. It is driven by the necessity that our customer base and their customers need to understand that the price point will change, we will make a competitive edge out of this. And that's why I think we are also very convinced that we will convince our customers that eventually, if they want to get these superior products, they will also willing to pay the increased prices. So for me, there is no -- and we've also not tied our pricing to promises. If the energy prices come down, the prices will come down again. There may be volatility, but there is no link to 100% on this end, exactly for the reason that I shared with you.

[Christoph Beumelburg, executive]

Next one comes from Tobias Woerner from Stifel.

[Tobias Woerner, analyst]

Two from my side. You've alluded to one of them actually just now, which is that you won't get back pricing if costs come down. But I understand in the industry across numerous countries in Germany, in particular, price increases have been sent out as an energy surcharge. Is that incorrect? Or is that right? That's the first question.

[Dominik von Achten, executive]

Yes, I think, as I said, that's why I said not to 100%. I think there are different elements that deliver on the pricing side and market by market please understand that I cannot comment also for competitive reasons, I cannot comment on a single market. But there is a -- there are different elements that lead to this price increase, but I can only talk for HeidelbergCement. For us, the large majority are real price increases. Are there energy surcharges here and there, yes, the vast majority are price increases that are not energy costs related in their argumentation at least not to 100%. That's what I said earlier. Are there surcharges in the markets, yes, and they may fluctuate, but we don't talk about the majority of these increases.

[Tobias Woerner, analyst]

Okay. And just secondly, with regard to your energy cost hedging, I mean I might not have gotten this correctly here, but you talk about electricity and gas. But what about your coal buying across the world and your pet coke buying?

[René Aldach, executive]

Okay. So yes, we talk about electricity. And now coal, as you know, for pet coke, you can't do financial hedges, yes. So that's not possible. So that's just availability -- physical availability. And then for the others, it's as of API 2, API 4, that's difficult to do. So therefore, it's about physical availability. And then if you look at -- just give you India or Indonesia, assets local markets where you can't do much with forward buying, let's say, same for Eastern Europe. So there is a little bit of opportunity what we can do for Germany and [indiscernible], but that's in the whole scheme of things, it's limited. And that's the answer to this. There's no such let's say, view on, okay, we can now lock in 20% of coal for Q4 for a country, it's not how it works, and that's why everyone is same.

[Dominik von Achten, executive]

And then maybe just additional thoughts on the front, Tobias I think North America, keep in mind that longer-term contracts in coal. I think -- so you don't buy typically spot, that's longer-term contracts. So that's not an unimportant market.

And secondly, I think there is a link with the alternative fuel rate push. You know that we have increased substantially our alternative fuel rate target. And especially in some markets that René was sharing with you, that has a significant impact on our total coal and pet coke bill -- so I think that will -- is 1 reason why we accelerate our agenda on alternative fuels in order to also reduce the exposure on fossil fuels.

[Tobias Woerner, analyst]

Right, so in essence, very little of your fossil fuel dollars is hedged.

[René Aldach, executive]

The hedged is as well for us. If we have a long-term contract in North America, that you can call a hedge because the pricing is fixed. So we have as well some other countries. But what you can't do, you can't do for all the countries, let's say, for all the deregulated markets, let's say, like in electricity, you can't do the same hedging policy or hedging process like you can do for electricity. That's clearly not possible.

[Dominik von Achten, executive]

But Tobias, I think, just to give you an indication, for 2022, around 60% are covered. So -- in your words hedged. So it's not like we sit here and spot book on coal. That's not the case.

[Christoph Beumelburg, executive]

Thank you. So we have 2 more questions, 1 from Yassine Touahri from On Field.

[Yassine Touahri, analyst]

So a couple of questions. My first question would be on the volume. I think in the first quarter of 2022, your volumes were up a couple of percent. Have you seen any change in the month of April -- is it around the same? Is it a bit better or a bit worse?

And then my second question also on volume. When you're guiding for a small like-for-like increase in EBITDA, what kind of volume contribution do you have in mind in your guidance?

[Dominik von Achten, executive]

We have -- do the second piece, I think we have been -- we didn't split this in volume and pricing because the guidance anyway, the guidance. It's difficult to do the exact split on volume and pricing. To answer your first question, -- on the volume side, the numbers have been disclosed for Q1. As I said, April is difficult to judge because you have to take out -- there is a lot of -- there is a big shift in working days between last year, April and this year, April. There is also the Ramadan shift. There is Easter moving around. So I think very careful with these numbers. But if you take -- if you try to do a like-for-like comparison, we are still confident that we are on the track that we target for the full year.

[Christoph Beumelburg, executive]

Lastly, Harry Goad from Berenberg. Harry?

[Harry Goad, analyst]

I've got 2 unrelated questions, please. So the first one is regarding I guess, the price inflation we're seeing in cement everywhere, I'm particularly focusing on emerging markets. Are you concerned at all that at some point, we might see some level of whether it's government or state intervention to put some form of price caps in place to contain to local build cost inflation in some of those emerging countries.

And then the second question unrelated is can you just give us an update on your thoughts on the buyback program? Because it looks -- I think from what you were saying this evening that the second tranche be finished by the end of August, -- so I guess the question is, will the final for be completed this year, please?

[Dominik von Achten, executive]

Harry, let me answer your 2 questions. One on the price inflation state intervention, that's not what we see at this point. And we very much watch also the cost development for other construction materials in each of the core markets. And although our price increases may seem high from a historical perspective, concerning our products compared to other products on the construction side, they are minimal. That's -- so we -- if there would be an intervention, clearly, we are not the first ones to do a target from our perspective that at least if you look at the facts, and that's also not what we've seen so far. -- there are broad state interventions on the pricing side.

And on the buyback, I understand you in patience, that's very much welcome. We are all impatient, but let's first do the second tranche again now we have some time. I think -- and then we'll take the decision as we go along. That's what we've done with the first one, and then we are a couple of months further down the road. So one step after the other and then we'll continue to move as we have concluded once we have concluded the second tranche.

[Christoph Beumelburg, executive]

That concludes our call just within the hour. Thank you very much for dialing in. May I remind you of the Capital Markets Day again, 24th of May for those who haven't registered, please do so for the virtual part, and there are still a couple of slots open for physical attendance. So in case you change your mind, I want to come to lovely Heidelberg. More than welcome here, see a in the Fortnite.

[Dominik von Achten, executive]

Thanks, everybody. Thanks for dialing in. Thank you.

[Operator]

Ladies and men, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.