HeidelbergCement AG

XETRA:HEI

Earnings Call Transcript 2017-Q4

[Operator]

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to today's preliminary overview Q4 and full year 2017 call. [Operator Instructions] I must advise you that this conference is being recorded today, Tuesday, the 20th of February 2018. I would now like to hand the conference over to your speaker today, Dr. Bernd Scheifele, CEO. Thank you, sir. Please go ahead.

[Bernd Scheifele]

Okay. Hello. Good afternoon to everybody. Thanks a lot for your great interest in our trading statement for the year 2017. I'm sitting here together with the CFO, the good Dr. Naeger.

[Lorenz Naeger]

Hi.

[Bernd Scheifele]

We have the easy job today because we discuss only results until operating income. So it's my job, and he will relax and he'll give you the details on the lines below when we publish our final results, second half of March. Okay. I start with Chart 3, overview. I think Heidelberg has delivered a solid set of figures in 2017, with EBITDA growth of about 6%, which is in line with our guidance, which we gave at the beginning of the year. We had a slow start. You'll recall Q1 and Q2 of the serious doubts, whether we would reach our targets. We had a good Q3, and we had also a strong finish in Q4 2017. I think if you lean back a little bit and say, "Hey, what was -- what are -- what were the highlights in 2017?" I think it is fair to say that the industry faced 2 major headwinds. One was the weather in U.S., which was not favorable. We had 2 events. We had, in the West Coast, the weather season in the first 6 months overall, which slowed down our volumes in the first 6 months significantly. And secondly, in the South, especially in the Texas, Florida, Houston area, we had 2 hurricanes, which has impacted our business significantly. This has overall resulted in a growth in the U.S. market, which was clearly below expectations. You have seen that also from publications from our peers a week ago. And the second point is that energy. Energy went up in 2017, especially in the second half in a very significant way. Just to give an idea, if you look to the various sources of energy for Heidelberg, we had an increase in 2017 compared to 2016 between 40% for coal, for example, in Europe. And if you look for diesel, fuel in U.S., our gas price went up by about 15%. So we had a significant headwind on energy, and that's what you have seen -- what you see in our figures as well as in our peers. We have reached the margin improvement, notwithstanding our significant cost inflation and market pressure in Indonesia, U.K. and Africa, and you see that the quality of our result comes to a very significant extent from our Italcementi synergies where we have over delivered and are 1 year ahead. Net debt will be, in our opinion, just below EUR 8.7 billion. Obviously, the strong U.S. dollar, yes, was not helpful at year's end. Now you see the cement margin is up. Aggregates margin is also up. Okay, there was a runoff in the U.S. If we look to Chart 4 and here, we have tried to lead you a little bit through for the full year, what was the price impact, volume impact and cost and synergies. On the price impact, it is clear that this is the net price impact. That includes also the negative price trend we have seen in Indonesia, Ghana and Thailand. And if I take all these 3 countries together, the negative price impact out of these 3 countries is at least around EUR 150 million. We come to Indonesia later. But also in Ghana and in Thailand, we had clear negative price impact. You see then cost inflation, EUR 348 million. And out of the cost inflation, about EUR 100 million is increase in energy price, yes, which comes mainly from coal and pet coke, yes? And then you see the synergies on EBITDA level, this EUR 295 million. Chart 5 shows you the development in the Q4. To your question, we can discuss, but I look more now for the full year. Chart 6 gives you the synergies. You see on EBITDA level, we have realized EUR 295 million, EUR 63 million come out of treasury and tax, and we have raised our target to about EUR 550 million, that means we will have another EUR 40 million to EUR 50 million to come in 2018. Main focus areas for us is on the one side, Egypt, where we still have some rationalization going on and also still some parts of Europe, where we will reduce the workforce, yes, and we are confident that we're going to deliver the EUR 550 million. If you look to the volumes on Chart 7, you see North America, 2% is I think very much in line with the market. If you look to Western and Southern Europe, you see 1%. That's obviously a mixed picture. U.K. for us was down about 3%. Germany was up 7%. Italy, plus 1.5%. Spain was also up. France, more or less flattish, yes? Asia Pacific, 1%. We had negative growth in Thailand. We are down about 8%. Due to the mourning period, the market was weak. I think we lost a little bit share. Market was down maybe minus 5%, minus 6%. Bangladesh for us was down 5%. Indonesia was up 5.5%. And India, we've been more or less flattish. North/East Europe is plus 2%. The biggest overall, this region did very well. You see that also on the RCO development, the -- on volume, we are down in Russia by about 9%. This was a considerate, conscious decision for us to go for profit and not for volume. We closed all of our wet kilns in Russia and are running only the very cost-efficient dry kilns, and that's why we lost about 400,000 tonnes volume in our plant close to the Ural in Sterlitamak. Norway, up 7%, Poland, up 7%, Romania, up 7%. Overall, we see a clear recovery in Eastern Europe driven by residential. Residential goes up, and also we see now the EU infrastructure money coming from the budget from the EU into these markets. Africa, Eastern, Mediterranean, 0. You would say disappointing. The main driver is Egypt. We told you during the year that in Egypt, our volumes were down by about 1.1 million tonnes, 13%. The market was down 5%, 6%, and we stopped for profit reasons, our production in the Helwan plant until middle of May because in Helwan, we were waiting that the plant in the city districts of Cairo. In middle of May, we started with the new coal mill. And Q2, the high gas price, it was not profit-wise. Interesting to run the plant with gas, and that's why we did not produce in Helwan in the first 6 months, and that's where we lost volume. The other African markets were pretty strong. Ghana was up 11%, Togo, 13%; Tanzania, 7%; and also Turkey had a strong second finish with clear growth of 2%, 3% after a slow start. I think that's a little bit on the volume side. And then you see that in the Q4. Overall, we had a good run in Q4. If we go now to the results per area, we start with North America. If you look to RCO for the full 12 months, you see we are up by about EUR 193 million. And if you want to split that up a little bit, then we have about EUR 80 million coming from that disposal gain of the Carroll Canyon. So we have about EUR 113 million left. And out of the EUR 113 million, about 50% is Italcementi synergies due to the Essroc integration. And then we still have operational improvement of about 65%, which is close to double digit like-for-like without synergies. RCO development, and if I look around, I think this is pretty much best of class for North America. This underlines the competitiveness of our business, our very strong regional footprint. And we were in a position to deliver again a good result in U.S. even with the headwinds from weather, especially in the region West and in the South in Texas. If we look to Western and Southern Europe, this is a very mixed picture. You see that operating income is up like-for-like by about 3.6%. It's about EUR 12 million. We had a significant hit on our results in the U.K. on -- of about EUR 50 million on RCO level, yes, due to market weakness in London and especially significant cost inflation, especially in the asphalt business due to weak currency and higher bitumen costs, yes. Whereas the other markets, we're okay. Germany was up by about EUR 10 million. Benelux was also up about EUR 7 million, EUR 8 million. Italy was up in total around EUR 25 million. France was up by about EUR 12 million. So meaning, all the other countries, we're doing very well, but it was to a very large extent eaten up by weak result in the U.K., which we realized mainly in the first 6 months. We improved in Q3 and improved again trend-wise in Q4. That's what you see also in the Q4 result. If you look to Northern and Eastern Europe, that's Chart 12. We are -- on RCO level, in total, we are up about EUR 72 million. We had a very strong run in that area. More or less, all countries are result-wise up. And if you look into the big buckets, EUR 35 million out of the 30 -- of EUR 72 million is Northern Europe. So Norway, Sweden, our aggregates business in Nebo. And then Poland was significantly up by about EUR 12 million. Russia, up EUR 9 million. Czech Republic, EUR 9 million. These are the big countries. Also Kazakhstan was up EUR 5 million, EUR 6 million. So we had a very strong run in North and Eastern Europe, and we expect also a solid year in 2018. Trouble spot was, as expected, Asia and yield 2 countries, Indonesia and Thailand. We had headwinds. Australia had a good year. Overall, a good market. Construction sector remains on a high level, especially in the greater Sydney area. We have seen market weakness in Brisbane, but strong -- relatively strong markets in Melbourne and even the region West, we had some projects in the mining sector, most of Perth. So overall, we had a good run in Australia. Pricing was good, and profits were up in a significant way. Indonesia, obviously the result is down by about EUR 100 million, a little bit more than EUR 100 million, and that is mainly 2 impacts. One is pricing. If you look to the numbers, then the pricing in Indonesia for bag and bulk is down versus last year by about 10%. So we talk now about for bulk price of about $43 per tonne and a bag price of about $47. So we lost about a total of $4.50 per tonne on price, and that multiplies by 17 million tonnes, gives you the idea of the pricing impact. So we had about EUR 70 million, EUR 75 million, EUR 80 million negative pricing impact. And the other big impact was from the coal price, and the coal price in Asia was up by close to USD 20. Newcastle went up to from about middle 50s to $78, $79. And we consume in Indonesia about 2.8 million tonnes of coal. And these 2 factors, negative energy price inflation and price development in cement explains the negative result development in Indonesia. India, overall, was okay. Volumes were weaker than expected. Result was slightly up. Pricing pressure in the South in the last quarter, overall, I would say, okay. Thailand result was down. Weak volumes, price recovery starting from Q2, yes. And also like in Indonesia, pet coke quite significantly up. So variable costs clearly up, which had a negative impact on the result. China had a very strong yield. We had very good volumes in our 2 positions in the South and the center. Pricing also in China is significantly up. So the Chinese results overall were up quite significantly. If you look to Asia Pacific, the result, operating income is down EUR 116 million. This is Indonesia and Thailand. That's what you see there. Now if we look, the Africa-Eastern Mediterranean basin, then what you see here, the result is like-for-like, down only 3%, yes. We had a clear negative developments in Ghana, result-wise. The market was strong. Results -- prices have stabilized in the second half, but result was still down by about EUR 20 million. Morocco was up. Burkina Faso was clearly up, better volumes better pricing. Egypt was up, yes. And the other one, Turkey, was -- the result was down due to significant cost inflation due to weak currency. Turkey is energy importer, energy is paid in dollars. The Turkish lira came down, and our price increase could only partially compensate the significant imported cost inflation in Turkey. Group services had another good year. Result is on EUR 27 million, 7.6% up. And I think the important point is here, that we see clinker prices going up. At the moment, in the Mediterranean and in the Europe, in the Mediterranean, we see clinker prices going up by between $4 and $5 per tonne. So at the moment, we're onboard. Prices are around about USD 35 per tonne, whereas a year ago it was about 31. Okay. Then if you look on the outlook to '18, now it's still early. In North America, we -- I would expect that we will see a strong year on the whole West Coast. BC will be very strong. I was there 2 weeks ago. We expect we'll have very good business in Seattle, but also in Portland. Infrastructure residential, but also commercial. California, we expect a very strong run. We see also infrastructure clearly improving due to their state infrastructure program, which provides additional $5 billion financing per year for the next 5 years to come. We expect also strong run in Texas. We're anyway bullish on Dallas. Northern Texas, we'll see another strong year. Infrastructure is strong. Commercial is strong, residential. We see Houston clearly improving. We expect for Houston a better yield, and the key creation is for us the region center or the region north. That's the whole Eastern coast of New York, Boston, Baltimore. That area, whether we will -- and then also Chicago, Illinois, Iowa, Ohio, whether here growth will really pick up. That area was weak. Last year, we had practically 0 growth. There was no infrastructure, yes, practically available. We expect or we are more confident for next year. At the moment, it's difficult to say because we have, the first time since 2 years, a very harsh winter in the U.S., yes. So volumes in January have been really down, and we have to see how this develops once spring sets in. Europe, recovery ongoing. We expect good volumes in France, 4%. Germany, 5%. Poland, I was there last week, I think 4% is a rather low number. Spain, up 10%. So Eastern Europe should be back, yes. Russia, we see also recovering. Egypt, we expect -- and then Africa overall, we would expect good growth development in Africa. Egypt should also become positive, yes.And then in Asia. India, we would expect a stronger year, and our election year is coming. Indonesia, we expect 6%. Last year, the growth was about 7.6%. We have elections now regional in Indonesia. January in Indonesia was very strong with plus 15%, yes. And in China, we would expect about a flattish market. So the core message is we expect cement growth to accelerate into '18 supported by strong macroeconomic indicator that applies to U.S., to Europe, but also to the emerging markets, especially in Asia. And I think the Chart 18 shows you a little bit the EBITDA development, and we talked about the big buckets, which were Indonesia, U.K., Ghana and Thailand. These were the 4 trouble spots, and then you see the other areas, which were quite nicely up. I think that's it from my side now. And obviously, we are happy now to answer you, any questions, which you might have. Okay.

[Operator]

[Operator Instructions] And your first question comes from the line of Phil Roseberg.

[Philip Anthony Roseberg, Senior Analyst]

Dr. Scheifele, Dr. Naeger, just a couple of questions. Thanks for disclosing the quarry sale figure of EUR 80 million. But can you tell us, so that we can compare with previous years, what are the total amount of quarry sales that you did in 2017, just to see how it fits in with the sort of the run rate that you normally do? My second question is basically about Italy. You've disclosed the Cementir deal, I guess the consolidation is ongoing. Is there anything that you can tell us already in terms of restructuring the network that you have existing and acquired? And also an update on the price increases that you expect in Italy for this year.

[Bernd Scheifele]

Okay, Mr. Rosenberg. Maybe I'll start, just obviously, Italy, that's purposely high on the agenda, yes. So we have closed the transaction. We are now in about to integrate the business, and we're going to close the Rome headquarter of Cementir in March. We expect synergies on the cost side of about EUR 25 million, of which we expect about to hit maybe EUR 8 million to EUR 9 million in 2018. And if you recall, the price for Cementir, I think we disclosed, that was about...

[Unknown Executive]

[indiscernible].

[Bernd Scheifele]

Yes, we -- No, no, no, the price we disclosed for Cementir.

[Unknown Executive]

EUR 300 million.

[Bernd Scheifele]

EUR 310 million. So you see also again the synergies, and we look to the purchase price that fits. We think the price was, for us, okay, yes. And on pricing, let's say, let's put it that way, the market in January in Italy will was okay, yes. And we expect -- we are out in the market with the price increase of EUR 10 per tonne starting 1st of March, yes. So since it's middle of February, I can tell you anything about that, but that's obviously the core -- the key issue in Italy, yes. And on the quarry sale, I would have to check that number again. I just give you an idea. We have typically a run rate on quarry sales of about, let's say, EUR 60 million to EUR 100 million, EUR 120 million on a yearly basis, yes. We have disclosed Carroll Canyon because this is for 1 year big shot. If you take it as a average over 2 or 3 years, it is the normal run rate, for example. Just to be clear, we had another relatively big real estate transaction in what was -- in Seattle, so-called [ Redmond Property Downtown ], which we were supposed to close in December, which did not happen, which would have brought us another $20 million or $25 million. This is now supposed to close in Q1 2018, yes? So you see that's a little bit the average. But Mr. Kacar can come back to you on the detailed numbers, I don't have the fuller overview yet. But that's the normal run rate, and you know that these are -- this is for us recurrent income because this is the end of the life cycle of the aggregates quarries, which we bought from the Hanson acquisition, yes. And we have other quite significant quarries, especially on the West Coast, which are to come. There's a big one in Portland, a very significant one, and there was another big one also in Seattle, both together would be even north, yes, clearly north of the number, which we mentioned for Carroll Canyon, yes. So that's why we see this as part of the aggregates on the aggregates income. And on Carroll Canyon, just to give a background, we sold the property, not fully sold, but we had already had the first preliminary planning [process], approved this. And then we went to the market and we said, we take our money and run and we do not go for another 3-, 4-year approval period. And then maybe the downturn is again in San Diego, and we have to wait another 7 or 8 years. That's why we said, we realize the money now and focus on the core business, okay?

[Operator]

Your next question comes from the line of Arnaud Lehmann of Bank of America.

[Arnaud Lehmann]

My first question is regarding your EBITDA bridge and the contribution from Italcementi synergies, EUR 295 million is quite significant in 2017. You will still have some effect into 2018, but it's -- looks like it's kind of coming to an end, and that was a big factor last year to compensate for the cost inflation. So looking ahead into 2018, you highlighted there will be more cost inflation, but with lower level of synergies. Would you expect to have to do more cost cutting? Or are you disclosing 2018 cost-cutting target obviously on top of efforts on the pricing side, that's my first question. My second question is regarding Asia Pacific. There's been a lot of movements in -- especially in Indonesia. Could you give us a feel for the contribution of the main markets to your operating EBITDA or operating income? I'm assuming Australia is a significant part of it now and on the other hand, Indonesia is relatively small. So just to have a feel for the region going forward.

[Bernd Scheifele]

Yes. Okay. Also, on the market outlook for 2018, okay, I think you're right on the Italcementi synergies. It's now EUR 40 million to EUR 50 million, which we want to realize. Okay, you have to see, we also did overhead cost analysis in the group headquarter in Heidelberg where we will see synergies also coming into '18. And secondly, I would not expect that energy goes another 35% to 40% in 2018. But it's clear, if you look, it must be clear. If you look to the spot rates at the moment, yes, coal, especially in Asia, is about USD 100 per tonne, yes. It went up compared to November, another USD 20 per tonne. What's the reason? The reason is that the Chinese until the Chinese New Year, China have bought all kind of coal and pet coke, yes, and that has been driving the prices, especially in Asia. The key question is, now what happens after Chinese New Year? Will the Chinese start to reopen also their smaller or medium-sized coal mines and starting local production with the consequence that then the international coal price of Newcastle, Australia will drop again, yes, or whether they will continue to rely fully on imports? That's a very important question, what we will -- but we will see. Okay. And the second one was on Asia. I have to by heart, yes. I would tell you Indonesia, RCO, last year, EUR 125 million. Mr. Kacar is that the right number? By and large, I would say that is what I have to be careful, that's EBITDA. So EBITDA is about EUR 200 million, yes. And then the other big contributor obviously, Australia, was close to EUR 250 million and then India, around EUR 100 million. I think that's the big numbers, yes? And then also China close to about EUR 30 million. So let's say the importance of Indonesia has slowed down, and that really -- it's also to your first question because you're seeing, "Hey, Scheifele, can you lower again 6%, 7%, 8% or 9 or 10% next year?" If the synergies are lower, then I tell you I do not hope that I'd be losing another EUR 100 million in Indonesia, yes, because the bottom is the bottom. And our competitors are already below the water, yes. And normally, all submarines come up sooner or longer, meaning the price has to go up again. That's the point. So let's wait and see. And these senior markets, clear turnaround in Thailand. We would expect a better result in Thailand. We think also Egypt should do better. We have a turnaround pace also in Congo in Africa. So I think we have some, also some upside, okay?

[Operator]

Your next question comes from the line of Paul Roger of Exane BNP Paribas.

[Paul Barry Roger]

So just 2 questions. The first one is on the North American margin. I think Dr. Scheifele, you mentioned that profit in North America, if you split out synergies and the one-off gain, it was up around EUR 65 million. So that's around 150 basis points of underlying margin expansion. And the question is basically whether you can expect to repeat that again in 2018 or whether the latent margin expansion may moderate potentially to certain things like imports maybe coming this year? And the second one is just really a follow-up on, again, on Indonesia. Can you just clarify a bit more about your underlying assumptions regarding your target flat EBITDA, particularly in terms of the price cost dynamic and whether you're expecting any consolidation in that market this year?

[Bernd Scheifele]

Yes, Mr. Roger, as on North America, yes, you're right, we had a nice margin expansion in cement that was driven mainly by Essroc, bringing Essroc up to standards, yes. And you know that we had a lot of discussion with you in the Investor Day, whether the synergies and Italcementi group and whatever, but you see them very clearly in -- very clearly you see them in North America where our result really stands out, yes. I think our guys have done a good job, and that comes to a very large extent also from the synergies. And in aggregates, I think we have done a good job. You're right, the question it's what's the target for North America for next year. I had a long discussion with Jon Morrish over the weekend because we're just about finalizing the management targets for next year. And it is clear, the market is bullish. I watched to the consensus for our competitors. So the consensus is minimum double digit between 10% and 14%, yes. The point is, I am paid with my bonus clean, not what guidance I put out, but what I deliver. And you always have to look a little bit what the guidance is and what is the final result. So our target is clearly to do double digit in U.S., yes. That's going to be a challenge. But if the market is our friend, that's feasible. I think it is clear for the industry, the significant upside, as in 2017 and 2018 is again the North American market. And we believe that, for example, our footprint will be our friend because we think the West Coast, BC, Vancouver, Seattle, Portland, and then especially whole California will outperform the market. You see that in our guidance that we say West Coast, 6% growth. We are the big gorilla on that area. Texas, Dallas, Northern Texas is going to be strong. Houston should come back. So we are pretty bullish. Question mark, region northeast with McInnis and whatever, that's what I highlighted, but I think the footprint is okay. And we think in aggregates, our volumes, we would also expect volumes between 3% to 5%. Pricing in aggregates, up again 4% to 5%. And also in cement prices, we would expect again around $5.50, $6, depending on which area. So for U.S., target is clear, double digits, and let's sit together next year again whether we hit the target or not, yes. And Indonesia, now the point is in Indonesia, the aggressive target would be to keep RCOBD flat. Whether that's feasible, depends very much on the volume development. January was our friend. Volumes were very strong. February is a little bit slower. And then the key question is whether we're going to see a pricing recovery in the second half, maybe coupled with consolidation moves in the market. And another point, which is, at the moment, a little bit a headache is the bloody coal price. We talked about Newcastle that goes straight in coal. The spot price at the moment is again up, yes, more than $100. The key question whether that remains, and what we are doing and what we have done to a large extent already last year, otherwise the figures would have been even worse. We are switching to local coal with a lower quality, yes, with high sulfur and whatever in order to offset the significant increase in the international coal. And there, the price difference, just to give an idea, is about $40 to $50 per tonne. So that's a little bit the issue on Indonesia.

[Paul Barry Roger]

And just to clarify, Dr. Scheifele. So when you said double digit in the U.S. here, are you talking about like-for-like EBITDA?

[Bernd Scheifele]

Like-for-like always, like-for-like dollars.

[Operator]

And your next question comes from the line of Mike Betts, Data Based Analysis.

[Michael Betts]

Could I follow up on the increase in the spot price that you're talking about in the Mediterranean? And I guess 2-part question. Firstly, of the 25 million tonnes that you trade, how much of that is your own cement and therefore, you'll get the benefit of that? And then secondly, it'll pull import prices up to a number of countries, some I can think of like the U.S. But maybe you could outline more broadly, which of your markets you think that that could potentially have a beneficial impact on pricing.

[Bernd Scheifele]

Mr. Betts, you mean on the clinker? You better be -- it was -- the line was specific on the clinker.

[Michael Betts]

On the clinker, the $4 to $5 on the clinker spot price.

[Bernd Scheifele]

So on the clinker, the situation is so that we see a clear increase at the moment in -- of about USD 5 per tonne, which is very much requested, especially by the Turkish exporters, yes. They want to make more money, yes, and we have to see whether that stands firm for the full year. And on trading, I have to tell you, I know a lot of numbers, but we do the trade about, what, 25 million tonnes, out of which, maybe -- a half is cement and clinker. The rest is fuel and coal. And out of the clinker and cement of 12 million to 13 million tonnes, about 50% is our own or 2/3, yes. It is the main markets, our 4.1 million, 4.2 million tonnes in Africa, Africa West Coast. Another big business is, for us, Bangladesh, it's about 1.5 million tonnes. And U.S., that's my gut feeling at the moment. Maybe next year, 1.2 million tonnes, just to give you the big numbers. That's about 7 million, 7.5 million tonnes and the remaining 5 million tonnes is more or less third-party trading, yes. And our strategy in trading, Mr. Betts, is obviously is very much focused that the plans from Italcementi into Mediterranean that we go now for full production and we supply West Africa, but also Georgia or U.S. from these plants, from our plants in Athens or from our plants in Bulgaria and in Malaga in order to get the capacity utilization of the Italcementi plants up, and that's what's happening at the moment, okay?

[Operator]

Your next question comes from the line of Robert Gardiner of Davy.

[Robert Gardiner, Industrials Analyst]

Just 2 for me. One, maybe if you could update on your outlook for the U.K. in 2018. So obviously, 2017 was difficult. Is it similar to Indonesia and that just start with a stable EBITDA in 2018? And two, I don't know if Dr. Naeger at this stage maybe could give us some indication of the FX headwind to 2018 at spot and maybe the scope impact, so that the deals in, the deals out, maybe what the impact that might be on 2018.

[Bernd Scheifele]

On the U.K., as of -- our budget assumption for the U.K. is not a recession. That's for sure. So meaning is the fighting target is to keep the whole RCOBD more or less flattish, yes. That looks challenging, but we have taken measures on management level and whatever. And if we look to January, what we see, volumes overall in the U.K., okay. London continues to be weak, but the big project, especially Hinkley Power Plant, the nuclear power plant, is now coming. We have other big projects, the Suez lots project in London and whatever. So the infrastructure keeps in. So overall, we are still okay. But that's obviously very high on the agenda. So next week, I'll be full week in Asia. The week after, I go to U.K. because U.K. is obviously hot spot for us. And what happened last year should not happen this year again. That's a clear message, not only externally, but also internally within HeidelbergCement. Okay. And then, Dr. Naeger, on the ForEx?

[Lorenz Naeger]

Yes, okay, on the ForEx, you see high double digit in the range of [ EUR 30 million ]. FX headwind, full year of 2018, expected compared to 2017 actual, mainly driven by weak U.S. dollar, much weaker than on average we saw in 2017. If we look to the steel impact, that's difficult to say. We have Cementir, which is added to that. It was a very low contribution. We had price in Australia, asphalt business with significant low double-digit million figure. But on the upside, we sell white cement. We have cargo, which goes out, and we have the deconsolidation of some plants from a EUR 2 million transaction, which go out. So overall, this should be more or less flattish. It will to all consolidation impact.

[Bernd Scheifele]

Yes, what we assumed in our operating plan, it's just that the -- what comes in and out is the washout, yes. And that's a rough estimate, yes, but that's what we -- then we will see. And then we will see what happens during the year.

[Operator]

Your next question comes from the line of John Fraser-Andrews of HSBC.

[John Fraser-Andrews]

Dr. Scheifele, the first question. Is the U.S. infrastructure volumes. You're alluding to earlier the increase you expect, particularly in the Northeast. I mean, I understand California has got a big, big much higher budget, but what's this anticipation based on? Is it order books? Is it conversations with customers? What actually is giving you that confidence to say that in the U.S.? And if the volumes do come through in America, of your 13.5 million tonnes capacity, how much domestic headwind have you've got to that capacity? And then the second question is ongoing cost savings. To what extent did the client project -- for aggregates and the ready-mix concrete improvement program, to what extent did they contribute in 2017? And what do you expect moving forward in 2018? And are there any additional cost saving programs you've got to boost profitability?

[Bernd Scheifele]

Okay, Mr. Andrews. The U.S. infrastructure, that's really the key issue with what happens in the region Northeast. So these forgotten states of Mr. -- of the President, yes, which haven't seen any infrastructure money in 2017. And so what we have not factored in any impacts from the Trump administration, new infrastructure program because we have seen the figure, $1.3 trillion, which is nice, but the federal government provides only EUR 200 billion, if I understood that and the rest should be financed by the states and by private money. So we're a little bit careful on how this will happen, yes, but we see project pipeline in, let's say, in Pennsylvania, in Ohio, in Illinois. We see an improving trend compared to last year. You know what I mean? Because in infrastructure, it is always, you've got a big project that it goes up, then there is a stencil for 1 or 2 years and then it comes in again. So we are more confident in that respect in 2018 than what happened in 2017. But this is obviously -- that's the clear question. Now with the domestic headwind, I think you refer to McInnis, not fully understood whether you look to pricing or whether the question was whether we have enough domestic capacity. And no, we still have enough capacity to fill the demand. By how? I would stay we still have -- because we have invested in grinding units in our plant into [indiscernible] in L.A., which gives us about 400,000 tonnes. We have also invested in a new mill in Edmonton, which gives us another 500,000, 600,000 tonnes. We have the Ketton facility at select grinding and cement grinding mill in Philadelphia, which has only a capacity utilization of 50%. So we still have about 4 million tonne internal capacity where which we can meet the demand, so that should be not a problem. On the climb, I would have to check the numbers. Just to give on the ready-mix, I know the numbers better. The P&L impact of ready-mix last year was about EUR 20 million, yes, in 2017, and the target for this year is about EUR 44 million, yes. So what you see is the target goes up. And in aggregates, we have in an improvement target on aggregates. See, I have about EUR 65 million, which is again the last year figure, I don't know what EUR 40 million, EUR 45 million, I would have to check. But these programs continue. They are built bottom up yes. They go by plant, country area on group level, and this program obviously continuing. They are part of the management remuneration scheme, not only on board level, but also on local level down to plant level.

[John Fraser-Andrews]

And just to be clear on those, Dr. Scheifele, there's no double counting with the Italcementi synergies on...

[Bernd Scheifele]

No, no, no, the separate bonus scheme. You know what I mean, separate bonus scheme. We believe in bonus, you know what I mean. So no, no, it separate scheme, no problem. Okay, that makes -- money makes the world go round, okay? Fine.

[Operator]

And your next question comes from the line of Gregor Kuglitsch of UBS.

[Gregor Kuglitsch]

I've got one on just pricing. Can you give us a sense where you see pricing improving relative to last year? I think you gave some numbers on the U.S. but I'd be particularly interested for your outlook in Europe where we're obviously seeing good volumes, but I think pricing is a little bit mixed. And the second question is, so last year you ended up doing 5% like-for-like EBITDA growth. Obviously, you've had some big headwinds from a couple of markets, as you said, and you had the synergies. I know it's a bit early for this year. But as you stand here today, do you think -- are you comfortable with going 4%, 5% to 10% organic EBITDA growth again? Or is it a bit too early to tell?

[Bernd Scheifele]

It's too early to tell, you know what I mean? So I'm normally on skiing vacation with my family. I surely have to stop that due to the Supervisory Board meeting and the call with you guys. No, it's too early to say. We're going to keep that open for the next meeting. And on pricing, I'm just looking, I'm a little bit lost in my papers here. On pricing, I told you about the numbers for U.S., which vary a lot. And U.S., for example, on the West Coast, we go rather for $10 also in BC and in California. We are more careful in New York due to McInnis on the East Coast with maybe $2, yes. In Europe, we would expect overall pricing. Italy, I mentioned. Germany, we go for $2 -- EUR 2.50. Bene, Belgium, Netherlands is about EUR 3 per tonne. We want to keep prices at least flat in France. We go out for a price increase of about EUR 1.50. We see very significant price increases in Eastern Europe. So Poland, we hope to get about at least PLN 10 to PLN 12 -- PLN 10 to PLN 15. We see a price increase. Czech Republic, EUR 1.50. We want to push in the Russia prices by another 10%, which is about RUB 300. So the average price in Russia at the moment is 3,200. We want to push it to 3,500, 3,500, 3,600, that's about -- divided by 70, it's about EUR 4.50. Kazakhstan, we'll see another 10%, 12%. So we are on our way. So we obviously, we have very much a focus on pricing, especially in Europe where prices have to go up now to higher capacity utilization and also stronger market consolidation. The key question mark on pricing is obviously Indonesia. As I told you, Thailand, we are positive. Australia should also work. India, we are positive, but Australia and also Thailand remain question mark. That's the situation very similar to the Philippines. Okay.I think, that's it. Thanks a lot for your interest, and we're glad to see you and talk to you in March again. Thanks a lot. Bye bye.

[Operator]

Thank you, ladies and gentlemen. That does conclude our conference for today. Thank you all for participating. You may now disconnect.