CRH plc (CRH) Q3 2013 Earnings Report, Transcript and Summary

Good morning, everybody. This is Myles Lee, CRH Chief Executive, and you're very welcome to this call, which accompanies the release of our Interim Management Statement for the Third Quarter of 2013. I'm joined this morning by our Chief Executive Designate, Albert Manifold, takes over from me on the 1st of January; and also by our Finance Director, Maeve Carton. We have until about 8:45 a.m. to complete this call, and the bulk of the time available would be devoted to your questions. Before we get to these, however, I would just like to say a few words about trading through the first 9 months of 2013 and about the outlook for the year as a whole. And following some comments from myself on those items, Albert will update you on our cost savings progress and also on the portfolio review, which is referred to in this morning's release. To aid our few words, you will find a short PowerPoint presentation on our website at www.crh.com, to which Albert and I would speak, though I'm sure many of you probably have already downloaded that PowerPoint presentation. And the first slide on that, our presentation, is just to highlight the key points from this morning's statement. Firstly, we are pleased to report that group earnings before interest tax, depreciation and amortization for the quarter were approximately 3% ahead of the equivalent quarter in 2012. And we're also pleased to reiterate the guidance, which we provided to you when we announced our half year results in mid-August, when we indicated that the overall EBITDA for the second half of 2012 -- of 2013, would be in line with that delivered in the second half of 2012. We also indicate in the statement this morning that our cost savings program is continuing to run ahead of the targets we've set out for you at our Capital Markets Day in November of last year. And in addition, as you can see from the statement, we continue to be active on the development front with the total development activity over the first 9 months of just under EUR 700 million. And as we've mentioned and I've already referred to, and we also mentioned in the statement, that following significant cost-cutting over the last 5 years of some EUR 2 billion of asset disposals, we're undertaking a detailed portfolio review, which Albert will say a bit more about in a moment. Moving on to the next slide, which is headed of Improving Trends. You remember that the presentation accompanying our interim results in mid-August highlighted the improving like-for-like sales trends, being in May, June and indeed in the month of July as we moved into the second half of the year, which followed some very severe weather effects which we've seen in the first 4 months of 2013. So this slide just updates the like-for-like sales trends for the first half of 2013, partly seen in the third quarter and the cumulative position for the 9 months to end of September. And you see that on the slide for Europe, for the Americas and for the overall group. Looking at Europe, I asked you to remember that the 10% like-for-like sales decline that we experienced in the first half of the year, which is shown on this slide, comprised a 12% decline for the months of January to April followed by a 7% fall in May, June. The third quarter overall saw a much more stable picture across Europe with like-for-like sales just under 1% behind 2012, leaving the cumulative sales for the first 9 months down 7% on a like-for-like basis. Looking at the Americas, again, you'll remember that in the first half of the year, our materials operations in the United States were impacted by various seasonal weather patterns, which resulted in overall first half like-for-like sales for Americas operations being down 1%, despite an improving economy and particularly despite an improving residential construction market. The third quarter, as you will see on the slides our marked improvement, with an increase like-for-like of 4%, which leaves the 9-month total plus 1% ahead of the first 9 months of 2012 on the like-for-like basis. And overall for the group, third quarter sales were up 2% like-for-like, leaving the reduction on like-for-like sales at the end of September at 3%, which is a much improved position on the 6% like-for-like decline in sales that we reported for the first half of the year. Looking then at the EBITDA for Europe and for the Americas, the next slide shows the position for the expected full year EBITDA outcome for our European businesses. And you see there for our materials, for products and for distribution, the actual restated EBITDA numbers for 2012 and the expected percentage change for the full year 2013. Looking at materials. We had a 54% first half EBITDA decline, which is exacerbated by the absence of some one-off gains on pensions and CO2 in 2012. They were largely not affected in the first half of the year. We expect that Europe materials will show a much more stable second half performance and that will give rise to a decline in EBITDA of approximately 20% for the year as a whole, a substantial improvement on the first half decline. EBITDA in our Europe Products businesses fell about 40% in the first half. And with the benefits of our active restructuring program over recent years and which has continued very actively in 2013, we expect second half EBITDA to be close to last year's levels, resulting in a full year EBITDA decline for our Europe Products in the order of 25%. Looking at our distribution operations. These were down 31% in the first half of EBITDA level. And we are experienced continuing difficult trading conditions, particularly in our DIY operations, which are mainly located in The Netherlands, where a very weak consumer confidence has resulted in significant margin pressures in retail activities generally. Here, we expect though a better rate of decline for the year as a whole, with the decline -- expected decline of about 25% showing an improvement on the 31% in the first half. And overall, for our combined European operations, we expect full year EBITDA to show decline a little over 20%, which will be roughly half the level of decline experienced in the first half of 2013. Looking at the next slide, we show indications here again as we have for Europe of the EBITDA outlook for our operations in the Americas. And we've shown these in U.S. dollar terms, which strips out that translation effects. As I mentioned a moment ago, our materials operations in the U.S. had a very tough start to 2013. With unfavorable weather conditions, we saw sharp like-for-like first half volume declines and a decline of about 25% in U.S. dollar EBITDA from Americas Materials in the first half. As we mentioned to you in August, July and early August also saw seasonally wet conditions in the U.S. for -- which impacted our materials business. However, for mid-August to end September, the conditions were particularly favorable, little or no hurricane activity in the Eastern United States, and as a result, we had a good third quarter in our materials operations. And assuming normal weather patterns over the next 7.5 weeks or so, we expect full year EBITDA for Americas materials to be up to 5% ahead of last year in U.S. dollar terms. Americas Products, obviously, less weather dependent, had a very good first half with EBITDA of 20% in U.S. dollar terms as residential demand continue to grow. The second half has seen a continuation of these positive trends and we expect full year EBITDA to be up by almost 30% for Americas Products. Finally, in Americas distribution, strong first half here, EBITDA in dollars up 22%, helped by Exterior Products repair work in New York, New Jersey, in the aftermath of Hurricane Sandy, and strong demand in the Interior Product segment. We expect somewhat more muted second half EBITDA growth as the Sandy impact begins to wane. And also, we are seeing some margin pressures in Exterior Products, as a result, full year EBITDA for distribution is expected to grow by up to 10%. Moving on to the next slide to look at some of the other profit and loss captions and components. We provided on this slide the indications of the expected full year outturn for depreciation and amortization, profit on disposals, share of joint ventures and associates and finance costs. And we have shown here the depreciation and amortization, and share of JVs and associates indications are stated here before impairment charges. The only item I'd like to comment on here, particularly, is the much lower level of profit of disposals, which we anticipate for the current year. And just to remind you that 2012 benefited from some significant business disposals, particularly the sale of our stake in Secil and the sale of Magnetic Autocontrol in our Europe Products business. And both of those businesses combined generated profits and disposals, along with 1 or 2 other business disposals of about EUR 190 million. So I think you need to take that into account in just comparing the level of disposals profits between the 2 years. Finally, before I hand over to Albert, just to say brief words about development activity the days in 2013, which has been quite strong. Total transactions, as I mentioned a moment ago, just under EUR 700 million. The bulk of the expenditure, as you can see on this slide, was in our materials segment. This reflected cement additions in the Ukraine, China and in India and also includes the Cementos Lemona business in Northern Spain, which we received in exchange for our investment in Uniland. And the Uniland disposal is shown in disposals as well as in the first half of the year. We also, as you can see, had a good level of investment in our Americas Products segments. The acquisition of a major concrete products producer in Western Canada and indeed some good bolt-ons in our products business in the U.S. as markets recover there. So with that, I'll hand you over to Albert, who will talk to you on our progress on cost-reduction and will also talk to the portfolio review, which is underway, it's across the group, and which was referred to in this morning's release. Albert?

Thanks, Myles, and good morning. Over the past 5 years, in response to weakening markets, we have focused on streamlining our operations, lowering overheads and improving the efficiencies in our businesses. As we stated on Slide 9 there, unfortunately, in 2013, we saw further weakening in European markets, and in response, we are increasing our program of cost savings for 2013. Specifically, we are increasing again our projected cost savings in 2013, this time to EUR 195 million, which is EUR 70 million ahead of the EUR 125 million savings we had targeted for 2013 at our capital Markets Day at the end of last year. This will bring our targeted cumulative cost savings to the end of 2015 to almost EUR 2.6 billion. And as you can see at the bottom of Slide 9, the cost to implement these savings is estimated to be approximately EUR 600 million by the end of the program. Turning to the next slide, and some of you may be familiar with this slide. In recent years, we have reported our cost savings group into 3 categories, mainly being structural, process and procurement. In 2012 at our Capital Markets Day, we said that our targeted cost savings at 2013 up EUR 125 million across these 3 spend categories. Now as we've already mentioned, in response to ongoing market challenges, and particularly in our European markets, we have increased our forecast cost savings for the current year to EUR 195 million, with the bulk of the increase savings being delivered to additional restructuring efforts in our European operations. I should add that more than 70% of the EUR 195 million cost savings were delivered by European businesses, and again, over 70% of the current cost reductions are permanent in nature. As always, in CRH, these plans are the result of a detailed coordinated bottom-up assessment made by management team and that gives us confidence in the delivery. We will, of course, continue to measure markets closely and we'll be ready to react with further actions if necessary. Moving on to the next slide. As you've just seen, our primary emphasis in recent years has been to adjust our cost base in response to declining markets. However, in recent years, we've also taken the opportunity to make adjustments to our portfolio. In fact, over the past 5 years, to business divestments and other asset disposals, we have generated proceeds of approximately EUR 2 billion. Now as you've read in our statement this morning, we have announced that we have commenced a detailed review of our portfolio. At CRH, our strategy is to focus our businesses with leading positions in growth markets, which can offer attractive future returns to our shareholders. The change in regional growth and our mix in the global economy offer new challenges and new opportunities. We believe it is now appropriate to want to take a detailed assessment of our current portfolio to identify and focus on the businesses which can optimize future returns to our shareholders. This exercise is also aimed at prioritizing future capital allocation across the group and is likely to result in disposals of non-core businesses. We'll update you in the market on the progress made with regards to the portfolio review at our preliminary results announcement in February of next year. Back to you, Myles.

Thanks, Albert. Just to summarize, before we move on to questions, on the 2013 EBITDA outlook we have this morning confirmed the indications which we provided to you in mid-August. We're also indicating in the statement that barring further acquisition expenditure, we expected the year-end net debt to EBITDA ratio to be approximately 2.2x. As you have seen, we have completed a good level of development spend in the first 9 months on businesses, which sit very well with our core activities. And as Albert has just mentioned, the group is embarking on a detailed review of this portfolio. So with that, we will open up to questions. We'd like you obviously to state the name of the institution you represent and your name when posing the question. So I'll hand you back to our moderator now, who will open up for questions and answers. So over to you, Reggie.

[Operator Instructions] Ian Osburn from Cantor Fitzgerald is now online with a question.

I guess, the first question is on the portfolio review. You made it clear you don't want to give all the details today, but can you perhaps, Albert, give us an indication of the size of the potential changes? Especially compared to the last round that you did when you sold insulation and some other businesses. It sounds like this could be much bigger. And then secondly, just a quick question on the U.K., how big for you has the Dublin acquisition turned out? Is it potential for you to be self-sufficient in cement in the U.K. now, and could that be a strategy that you'll rollout in other regions where you require cement?

Thanks, Ian. I think you have 2 questions there for Albert so I'll pass them to him.

And the review we're doing is a full group-wide review against the backdrop of changing market dynamics. We're going to look across all of our asset base. It could be a very comprehensive review, and really it's to assess how we're positioned for future growth against the backdrop of the changing growth dynamics and also our businesses. So we look at all our market positions. We're going to look at the future growth trends both -- and growth opportunities, both organic and inorganic, looking at not only trends in the end-user markets, but also construction within those markets in terms of new build, order, mining et cetera. And then of course, as always with CRH, it will be always about returns, the focus we have on that, about cash generation, profit improvement, profit returns through the cycle. So it would be a very comprehensive review. And I'd say we've commenced it about a month ago. And really, the best thing to say is we're getting all of it to work at the moment, and we'll update you more in February. With regards to the Dublin acquisition, the Dublin acquisition logistically, it's not possible for us to be self-supplied in cement and it doesn't comes in to a particular region part of the United Kingdom. And it's a bit messy, I should say, and our operations are regionally remote from that. So -- plus for instance, it is indifferent [ph] to our import into the Benelux region, particularly into the Netherlands and to Belgium where we do, of course, do have a significant amount of self-supply. With regards to the specific question on Dublin, no that would not have been a major driving force behind that acquisition. But where we can, we'll do self-supply, of course.

And I guess, just a quick follow-up question as well, just on the development of some of your key regions. I think you said The Netherlands was improving. We had quite a bullish statement from HeidelbergCement on Poland, have you seen similar there as well? Anything you can give us on some of your key regions in Netherlands, Switzerland and Poland?

Well, I think The Netherlands, Ian, continues to be a very challenging market. As we mentioned, consumer confidence particularly, is at a very low ebb. And there are quite a lot of pressures in retail activity generally, which continue to impact particularly on our DIY operations. New construction and housing, in particular, continues to be at a low ebb. The sense I suppose we would have got maybe over the last couple of months is that it has what appears to have reached a bottom in The Netherlands. But it's certainly -- we're not seeing any growth or any resurgence in activity in The Netherlands at the moment. With regard to Poland, we've given the volume indications there, and our own volume trends to the third quarter in Poland. We have seen a better backdrop there. I mean, Poland, our volumes in the quarter were 5% ahead of the third quarter of 2012. But -- and you remember we were down about 31% volume-wise in cement in the first half of the year. Now the fact that the comparison is easier in the second half of 2012 because a lot of the construction activity for the football championships was completed in the first half of 2012, and then the market began to fall away, so the comparisons are easier there. And it does appear that the Polish authorities are beginning to, if you like, regain the initiative on their infrastructure programs with new projects being less and stalled projects being re-tendered. But I suppose that the impact and the positive impact from that will probably be more manifest as we move into the latter part of 2014. So again, a more stable backdrop in Poland, and I think some positive outlook on infrastructure, but probably more latter half of 2014 and into 2015. I don't know, Albert, if you'd like to add to that, on Poland particularly.

No, I think there's been quite a bit of variability in the volume report in quarter 3, in particular, coming from the various distant groups. It's probably driving your question. And I think, generally speaking, the trend we're seeing is -- it's quite regional, and we've had a good improvement at quarter 3. And I think that will continue for the remainder of the year for us. But overall, I think all building materials groups will be broadly in line with the overall market trend for this year. I think, as Myles has said, you're going to see an increased awarding and bidding of jobs and [indiscernible] installed, particularly on the infrastructure side, which is where the main action will be in Poland for 2014. I don't think that will start to slowly unwind from spring and should get good momentum there by the midyear and the second half of the year. And your other comment with regard to Switzerland -- your question with regard to Switzerland. We've seen good momentum this year in our Swiss businesses and Materials business there, in particular. We have benefited from region-specific projects, infrastructure projects. But again, the momentum is good and strong in Switzerland. We expect it to continue into next year.

Yassine Touahri from Exane is now online with a question.

Two questions. First regarding your portfolio. Would you rather consider small incremental changes, or could you consider transformational operations issue and IEC [ph] suggests that it is in the interest of the group? And my second one, my second question will be on margin. It looks like margin might be stable in the second part of 2013. Do you think that margins for the group have troughed, and do you see margin extension for next year with the stabilization in Europe and better trends into the U.S. or could the Western shutdown have an impact on your activity in 2014?

Thanks, Yassine. Maybe I'll just deal with the margin question and pass the portfolio question to Albert. I think as margins are, obviously in the U.S., have been improving since last year. Europe obviously faced a lot of pressures, particularly in the first half of the year. But I think you're right. I mean, I think we will see slight improvement in margins in the second half of this year. We would expect next year, obviously, to show a continuation of an improving trend in the U.S. The precise quantum of that is obviously very difficult to have a firm view on at the moment. Europe, I think, we do feel things have stabilized, but there's still pressures in Europe. Pricing has been particularly difficult this year in Europe with the poor weather start and with the generally subdued backdrop on the construction side of things. Hopefully, we'll have a more normal weather pattern in the early months of next year. But we await, actually with interest, the eurozone GDP numbers, which are coming out over the next day or so, to try and get a sense just of the direction for Europe. But I think it is a more -- it is a better margin picture overall in the second half of this year. And hopefully, the group would be able to build on that moving off into 2014. Albert, portfolio?

Yes, thank you, Myles. And as we said in the statement this morning, we're doing a detailed assessment of our businesses. This is a full, broad review of our businesses to assess the best growth opportunities going forward. It's more than just a small incremental review or a small tidying up around the edges. It's a very full comprehensive review, and we have to wait and see the results of that before we can comment further.

Will Morgan from Goldman Sachs is online with a question.

I just have 2 questions, please. The first one is relating to pricing -- well, pricing and profitability in the U.S. You mentioned, I think, that pricing is kind of in line with the first half in Americas Materials. Could you just elaborate on that? I mean, is it just fully first half trends continuing, or is there some slight movements between different products? And sort of related to margin, I notice you say in Americas distribution that despite growth in Exterior Products, you've actually got margins coming down there. I just wondered if you could talk a little bit about what's going on. And then the second question is, probably one for me, but if could you give us an idea of what the sort of expected EBITDA contribution is of acquired businesses or net of acquisitions and disposals in the second half, that would be very useful.

Okay, I'll ask Maeve to give you -- talk about the EBITDA contributions and acquisitions, and I'll deal with the pricing and the distribution margins. I think we indicated in the first half of the year that our average price for aggs was up about 2%, ready mix, up about 4%, and that we have seen a slight decline, about 1% decline, in our average price for asphalt as we passed through a portion of the lower input cost on the asphalt side of the business. Those average price levels we achieved in the first half continue to be valid for the first 9 months of the year. So in the order of 2% in aggs, 4% in the ready mix and slightly behind on average price in asphalt, but an overall improvement in the margin because of the lower input cost. So I hope that answered that question. Well, on the distribution side, strong first half in distribution. Obviously, a lot of -- in the Exterior Products side, some very significant workload of activity following -- and the cleanup in New York and New Jersey following Hurricane Sandy, that continues to be impacted and going to be quite as marked as in the first half of the year. And I think, generally, there has been the slowing of roofing, if you like, activity in the U.S., which put a bit of pressure into the marketplace. And I think you would have seen that referred to by some other comments from the Exterior Products segment earlier in the reporting season. But overall, I think our interior products particularly, which is the other side of our business, mainly wallboard, ceiling, tiles and panels, that has been very strong in the first half, continued strong through the second half. And we think these margin pressures on the reroofing in the exterior products either are probably temporary and will pass through as we move into 2014. So overall, I think Distribution performed well in 2012. I think there's another good performance in 2013 and should have an improvement in overall margin for the year, but just not quite as tightly at growth level in the second half as we saw in the first half of the year. Maeve, just on EBITDA contribution from acquisitions?

Yes, most of the growth in the EBITDA in the third quarter was from acquisitions. The organic improvement, or performance, was relatively similar to last year, and there was some headwind from exchange impacts also.

Is there -- are you able to give some idea of what you're expecting in the fourth quarter to come through? Or is it just going to be more in line with what was there in 3Q already?

I think, if not, maybe a bit lower, well, just from seasonal factors.

Robert Eason from Goodbody is now on line with a question.

Just in relation to your businesses, where you have a bit of a backlog, can you just give us a commentary on how that looks? And specifically, in relation to highways in the U.S., given that the current program kind of runs out in September of next year, what are your thoughts on that? And does that provide a potential headwind phase -- just phase uncertainty about future funding? And just 2 other questions, just CapEx, what is the projected CapEx expenditure this year and next year? And in the statement, you indicated that the restructuring cost for 2014 and '15 is EUR 70 million. Is that spread evenly between the 2 years? Or should we just bias it a bit to 2014?

Okay, Robert, a number of questions there. I'll maybe ask Maeve to address the CapEx and the restructuring cost phasing. Just on the backlog side of things, I mean, obviously, as we're moving in later in the year, so the backlogs begin to wind down, particularly in our Materials business. That being said, our aggregates backlogs would be ahead of this time last year, and our readymixed and blacktop backlogs would be broadly in line, just slightly ahead of this particular point last year. With -- in terms of the outlook for 2014, I mean, we have MAP-21, which has extended the previous temporary reauthorization of highways -- federal highway funding for 2 years out to September 2014. So we expect that for next year, the federal component of highway spending will be broadly on a similar level to the current year. We would hope that the states would perhaps -- given their improving financial position and giving more activity in state legislatures in terms of looking for new funding sources for highways, that we actually could potentially see maybe some slight increment in state component funding for next year, but it's still a bit early to get a full assessment of the likely highway backdrop for 2014.

Okay. I'll pick up the CapEx question, Robert. Last year, the adjusted CapEx, excluding JVs, was at EUR 544 million. And we expect this year's number to be kind of similar to that, probably of that order. And for the other question, yes, the timing of the cost, we would expect them to be a little bit biased towards 2014. The total savings of EUR 175 million over the next 2 years are also biased towards 2014, so the cost will also be.

Sorry, just on CapEx kind of estimates for next year, should we put in similar levels again?

It's very hard to tell you that at this stage, but I think we would -- it's likely -- it should be of the same order, probably trending up maybe slightly but of the same order.

There are no, I suppose, large individual CapEx projects underway at the moment across the group.

Yes.

Excuse me, Barry Dixon from Davy is now on line with a question.

It's Barry Dixon from Davy. Two questions, please, the first in terms of a portfolio review and -- I'm sorry to do this, on to debt, just to get a couple of issues, one, in terms of the impairment charge, are we going to be using a different methodology than the value one used -- one that you have been using up to now? Or is this -- or will the impairment charge be as a result of a more strategic review of all of the businesses? And what can we expect, Albert, in February, in terms -- will we have a definitive list of businesses which you hope to dispose of and an associated impairment charge around that? And I suppose another related, do you expect to be more Europe-focused or group-wide? The second question really relates to the Netherlands and maybe just to get some color in terms of what's going on in that market underlying. I mean, there seems to be some slight improvement mainly on the merchanting side, but the DIY side seems to be quite difficult, and maybe just your thoughts as to how and when that market really stabilizes or what the prospects are for 2014.

Maybe I'll ask Maeve to comment, first of all, just on the impairment exercise and then maybe Albert just on the -- your question about a definitive list at an early stage in 2014, and I'll just come back then on the Netherlands part.

Thanks, Barry. The impairment methodologies that we apply for -- are set out in detail in the annual report. In the countries that the review -- the ongoing portfolio review, that review and the potential to dispose of business as a result of that review adds a different dimension to the impairment exercise, and therefore, that perspective will be factored into the impairment calculation for the end of the year.

Barry, with regards to what to expect in February, I mean, it's a large body of work, but I think it would be fair to say that by the end of February, we should have identified those businesses which we think it is likely that we will be exiting. And of course, by definition of exiting, we're also identifying those businesses which will likely remain. But there's more work to be done here because it's not just about deciding what we want to exit and -- because they don't offer us the right growth opportunities. It's also about identifying those businesses that we're going to stay in but also where we want to grow and how we want to grow. And that's going to take a little bit more work. It's not going to drag on throughout all of 2014. We'll get to it as quickly as we can and probably get it to sort of early summer before we come back with sort of definitive U.S. or -- what, strategy the group is going for, but we'll get a fairly good indication of that in February. And also, I should say it's not just based in Europe. This is a group-wide review of all of our operations, looking at the growth opportunities to take the group forward for the next 10 years or so. We feel it's appropriate. Now is the time to do this. So it's not just focused on one division or one region. It's across the group.

And Barry, just to address your question on the Netherlands, I think as I mentioned, our sense is that things on the, if you like, construction demand-side of the economy, do seem to be bouncing along the bottom at the moment. Things do appear to have stabilized. The retail side, though, continues to be very weak, austerity, falling employment that's easing into disposable incomes and households are struggling to pay down their debt loads. So there's a very defensive attitude on the part of the consumer there. GDP growth forecast for the Netherlands for 2014 are in and around 0.5%, which are -- at some of the economy with very good underlying fundamentals and a particularly good sort of debt level, one of the lowest in Europe. It's, in my view, unduly low, but I think it is that lack of public confidence, lack of positive consumer sentiment is continuing to weigh on the economy. And we'd be very reluctant really to the -- saying the things were improving because they're not at the moment. It really is running along the bottom. Hopefully, as we move into next year, we may see those consumer confidence figures beginning to bounce up, but they are still pretty weak. And I think it's going to be a somewhat slow recovery there.

Robert Muir from Berenberg is now on line with a question.

My first question, just -- you mentioned states looking for alternative sources of funding in the U.S., and I wondered, is there anything, in addition to TIFIA, that maybe they're looking at? Then my second question was just on the construction margin in the U.S. Materials business. You mentioned that was improving at the half year. I wondered if you could give us an update on where that's going at the moment.

Thanks, Rob. I think on the construction margin, we would expect that for the year as a whole, we'll be seeing some modest improvement in construction margin. But obviously, it has been falling since 2007, has come down quite significantly. So we have a good way to go in terms of rebuilding margin in the construction activities. But I think an overall strengthening on the private side of the economy is helping in reducing some of the margin pressures on the construction side. TIFIA, I think we have commented on TIFIA in previous calls such as this. We've always said that it's helpful at the margins, but we didn't see it as being the game changer for 2013 and 2014 to the extent that some of our peers did in their commentary on the year. I think we'll have seen them become a bit more, if you like, cautious on their comments on the benefit of TIFIA in some of their more recent statements. I think when I referred to the stateside, it's more short-term initiatives that we see moving through legislators or legislators' assemblies at various states in terms of looking for new funding sources, seeking to see, can they raise the state gas tax? Can some additional bonds be shouldered? Are there some additional sales taxes that can be implemented that then can be channeled into infrastructure? So those are the initiatives. We're seeing quite a number of that type of initiatives working their way through the legislative bodies in the individual states. I wouldn't want to get very excited about it, but I think it's just helpful and shows the recognition at ground level of the need to find additional funding for U.S. infrastructure.

Were there any particular states looking at the gas -- their own state gas tax?

There have been a number of states that have implemented the gas tax. I think Wyoming is one such state that has introduced a tax in recent times, and there are other initiatives going on around at various state levels.

Will Jones from Redburn is now on line with a question.

A couple, please, from me. Just firstly, back at the half year, you were quite helpfully specific around your view of the weather impact negatively in the first half. Do you have anything what might have come back your way in the third quarter? I think you referred to kind of EUR 80 million EBITDA impacting in the first half. And as you kind of filter that through, are you broadly expecting in the full -- or to your like-for-like sales are similar to the 2% growth you reported in Q3? And then just back in the business in terms of Americas Products, obviously, a decent pickup in profitability second half and first in terms of the run rate. I've seen that's more the like-for-like sales stepping than anything else, but as you think about pricing in the next couple of years, having had a good couple of years of volume growth under your belt and utilization rates improving, is -- are you feeling more confident potentially about the pricing outlook in that division, midterm?

Okay. Thank you, Will. I'll ask Albert maybe to deal with the pricing outlook for the U.S. Just on the weather effect, as we mentioned -- as you mentioned, we estimated that weather impact was at the order of EUR 80 million or so negative in the first half of the year, hard to say what has come back, more -- easier probably to quantify what's last [ph] when you do have severe conditions. We probably have got some little bit of rebound, particularly on the Europe Materials side, and that's probably reflective in the Polish volumes and the Ukrainian volumes being ahead in the third quarter. In the U.S., I'm not so sure. We really clawed back a whole lot of the first half weather impact because in the third quarter, we did have quite unseasonal operating conditions from -- through July and into mid-August, quite a lot unseasonal rainfall, but then that was balanced out by a very benign operating environment from mid-August right through end-September. So I would say that probably canceled things out, and maybe there was probably a little bit of a pickup on the aggregates side from some of the first half weather impacts, but I wouldn't say a whole lot on the asphalt side in the third quarter, hard -- difficult to quantify. I wouldn't want to put a number. With regard to pricing outlook for U.S. Products, in particular, Albert?

Thanks, Myles. Will, we've always said in CRH that pricing is linked very much so to capacity utilization within the industry. And as you've seen volumes pick up in the United States in 2011 and 2012, we've seen some pricing coming through in 2012. We saw very little in 2011. We saw more come through in -- at the current year, and we again expect more to come through next year. So as the volumes recover, it's easy get price increases, too, and you can feel that momentum in the industry. So I think it will be quite good in most of our businesses in the United States and the Products business we've been talking about. Of course, within Europe, I think we've not seen that volume momentum yet, and I still think that pricing environment will remain challenging for the foreseeable future until we see volumes impact.

Great. I'm sorry, just to come back on the assumed fourth quarter and like-for-like sales that you've broadly baked into the guidance. I know that weather will be a big determinant, but are you hopeful you can hold that 2% growth rate or margin...

I think probably that may be a bit difficult to hold in the fourth quarter. December last year was relatively benign, weather-wise. We're looking at some of the current weather patterns. It does seem to be chilling down in the U.S., but that could be a temporary phenomenon. So at the moment, I think we'd probably see flattish like-for-like, probably, in the fourth quarter.

Tom Holmes from Investec is now on line with a question. Tom Holmes - Investec Securities (UK), Research Division: Just 2 from me, please. In the U.S., you've spoken about more normalized weather and continued strength in residential construction markets, but could you talk a little bit about what you're seeing in the nonresidential factor? And also, in Americas Materials -- or Distribution, apologies, I assume the normalized weather and reduced storm activity would impact negatively on Distribution volumes in 2014. Could you give us your thoughts on that and how significant it might be?

Okay. Thanks, Tom. On the Distribution side, I guess certainly with the developments [ph] from Sandy in the first half of the year and what that is waiting, so it probably won't be there in '14. But again, I suppose when we have to see much strong orders, strong activity, comes along in the U.S., for the meantime, now is that time to have substantial boost from the -- from individual storm activity in particular locations, be it in the mountain areas or in the Northern Plains. So as we look at this moment, yes. Some of that Sandy impetus won't be there for 2014. But the overall market, I think, particularly on the interior products side, continues to be strong. And reroofing activity has been surprisingly, if you like, somewhat damp in the second half of this year. There does seem to be a slight slowing of RMI activity in the housing sector in the U.S. It's not quite clear why that is, but again, I think, with an improving economy, we'd expect that to be picking up some momentum again. On the non-res side of things, again, as we've said on previous calls, we have not yet seen a comprehensive start of non-res recovery coming through in our businesses. We have seen segments of non-res which have been showing improvement. The utility segment, our glass business, which depends quite a bit on small-scale and non-res refurbishment in retail storefronts and the like, again, that has been quite good; obviously, in the warehousing sector, showing some strength. But the broader non-res segment has not been showing the sort of pickup spreads [ph] that we've seen in those segments. The ABI indicators have been flagging positive trends now for the last -- I think, for 13 to the last 14 months. So we would expect, as we move out into 2014, that we will see an improving backlog in non-res more generally.

John Fraser-Andrews from HSBC is now on line with a question.

My questions, firstly, America -- the first one, America Materials, you expect seeing quite a sharp improvement in profitability when your Q3 volumes, aggregates aside, were flat. So I'm just wondering, are you expecting the absence of the headwind from Hurricane Sandy and last year's November and perhaps your backlogs to continue to season a bit longer to generate that improvement in America Materials? And then the second question is in the same division. Have you seen any impact from a government shutdown on highway spending? And I missed that comment on the Highway Bill. What's the mood music like in terms of preparation for a new bill as things stand?

Thanks, John, a number of questions there on Americas Materials. I think really, the mood music, there isn't any at the moment in D.C. because in relation to highway spending, look, they are obviously consumed with budget debates and debt ceilings and the fact that we face another, if you like, deadline on the overall U.S. budget situation in February. So our expectation always has been that the dialogue on the extension or a new federal Highway Bill particularly in -- and the kind of [ph] start of funding expires at the end of September 2014, but really, debate on that would not engage until the early months of next year, and that has been our expectation which stays throughout this year, and that continues to be the case. So really, the industry is focusing on its marshaling its arguments and comparing its campaign, but it's not yet time to engage actively with the politicians when their heads are in other spaces. With regard to the sort of the Americas Materials business, we would be, at the end of September, running slightly ahead of the first 9 months of 2012 in terms of profitability in EBITDA. The -- last year, the disruption from Sandy was most marked in our Distribution business. Our Materials business picked up reasonably quickly after a week's disruption and then had a quite favorable operating condition through year end. So we just have to see how things work out in the final quarter for Americas Materials. The shutdown has not -- as to your other question, I think we have not seen any significant impact from the shutdown on our Materials activities.

We have Howard Seymour from Numis Securities now on line with the final question.

It's just a general question actually, Myles, and probably a difficult one to answer, but just your thoughts on Europe and, I suppose, it has sort of implications for the portfolio review as well because what we have sensed is it's been better. But do you see -- fundamentally, would you be more positive re the European outlook going forward from where you were before? Because I say -- I think there's a sort of short-term trading aspect. And then clearly, as you go into portfolio review, your sort of medium-term views on Europe plan. Obviously, it's going to be quite important given a lot of people are focused on that this morning. That's an area that potentially might come up on the review, specifically.

I might ask Albert maybe to deal with that, but I'll maybe -- just as a comment, I suppose, before I hand over to Albert on Europe. I mean, we saw some pickup in GDP in the second quarter in Europe, but we weren't inclined to get too excited about that. I think there's very mixed indicators, very variable conditions across the various countries. I think the Eurozone GDP figure that's coming out in the next 48 hours or so will be interesting to see, but there's not a lot of momentum there in Europe at the moment. And I think it might -- it would be -- it's going to continue to have its challenges as we move out into 2014. Albert?

Thanks, Myles. Howard, I mean, [indiscernible] Europe are largely what you see yourself, and a lot of the future of Europe is governed by politicians in terms of how to deal with the current economic challenges going forward. And what we have seen in our businesses in late 2012 and late 2013 is a slowdown in the rates of decline and a stabilization, broadly speaking, at low levels. Of course, there are regional differences across Europe, but generally speaking, across the Eurozone, we seem to have stabilized now at a particular level and we seem to be bumping along the bottom. That seems to be where we're going at the short term, but that has implication in terms for -- of regional growth in terms of where you are placed in some parts of Europe and on this, and also implications in terms of end use. New construction is going to be very challenged in some parts of Europe, whereas oil and mine, perhaps, might offer opportunities for growth going forward. Again, these are aspects that we would take on board when we look at our overall portfolio review, and it's clear that what our market needs in Europe was all done -- most people in the sector have done a lot of really good work in terms of cutting our cloth to suit our needs. We're taking our pulse back, reduce our operations in line with demand. What we need now is volume increases and pricing increases coming through. But we watch the macro as much as everybody else, and what we're trying to do is to make sure that we position ourselves to the rest of that as that macro position changes as we go forward.

Thanks, Howard. Thanks, Albert. We will wrap up at this stage. For any of you who have been waiting to ask questions, I'm afraid we've run out of time. But do feel free to contact us through Investor Relations, and we'll be happy to get back to you and have a dialogue with you. We'd like to thank you, all, for joining our call this morning. As you know, I'll be handing over as Chief Executive to Albert at the end of the year, and that makes this my last result or IMS call. And I'd just like to express appreciation to those of you who have been regular participants in these calls and, indeed, at our investor presentations. I very much enjoyed the engagement and dialogue on these occasions over many years. And as Albert will lead CRH's next presentation to you, all, I'd just like to wish him every success for the future as Chief Executive and ask him to bring today's proceedings to a close.

Yes. Thanks, Myles. And on behalf of all of us here in CRH, many thanks to you for all of your hard work and endeavors over the past 32 years here with the group. I just want to close the call by reminding you that CRH's preliminary full year results for 2013 will be released on Tuesday, February 25, 2014. And we look forward at that stage to updating you on the actual outturn for the year. So thank you again for joining us this morning.

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect.