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Good morning, ladies and gentlemen. I am the entity operator for this conference. Welcome to the Geberit Conference Call on the Half Year Results 2020. [Operator Instructions] And the conference is being recorded. [Operator Instructions] This call must not be recorded for publication or broadcast. At this time, I would like to turn the conference over to Mr. Christian Buhl, CEO, accompanied by Mr. Roland Iff, CFO; and Mr. Roman Sidler, Head of Corporate Communications and Investor Relations. Please go ahead.
Thank you for the introduction. Good morning, ladies and gentlemen, and welcome to our conference call on our Q2 results. Geberit has delivered very good results during the COVID-19 crisis in the second quarter. Let me start with the key statements. The EBITDA margin reached in the second quarter previous year’s level, despite a substantial decline in net sales of minus 16%. The resilience of the margin in the second quarter led to an increase of 70 basis points of the EBITDA margin in the first half of the year and reached 31.5%. The EBIT margin reached 26.3%, almost previous year's level. The net income margin decreased slightly by 1 percentage point in the first half of the year to 21.4% due to an increase in tax rates and a weaker financial result.Before we discuss the financial results of the first half year, let me briefly summarize our sales results, which we already communicated on July 6. Net sales in Swiss francs decreased in the first 6 months by minus 9.8%, driven by the COVID-19 crisis and a negative currency development. In local currencies, net sales decreased by 4.5% in the first half and by minus 10.7% in the second quarter. The negative COVID-19 impact on demand varied substantially by geography, depending on the degree of local lockdown. In markets where construction sites were closed, around 20% of our trade exposure, volumes declined substantially or in some cases even collapsed in the second quarter. These countries include Italy, France, Spain, the U.K., India and South Africa. The remaining countries were also impacted by lower construction activities imposed by COVID-19 restrictions, which led to a sales decline in Q2, however, much less pronounced.Let me now comment on the operating and financial results in the first half of the year. EBITDA decreased under-proportionally compared to net sales by minus 7.8% to CHF 462 million. The EBITDA margin reached 31.5%. Despite the net sales decrease of minus 10%, we were able to increase EBITDA margin by 70 basis points. The main drivers for this margin improvement were soft and targeted cost-containment measures, a high and even further increased flexibility in production and logistics to cope with the substantial decline in volume, lower raw material prices and increased sales prices. It is worth to mention that these results were achieved without restructuring, salary cuts or support from the public sector, for example, through short-time work. The public support from short-time work was minimal since we consciously decided to introduce short-time work only very selectively and for a very short period of time in France, U.K. and Italy, the countries, which were most hit by the lockdown.The negative currency effect of minus 5.3% of net sales in the first half of the year had only a minor impact on the EBITDA margin due to our strategy and our continuous efforts to achieve a natural currency hedge.EBIT decreased in the first 6 months by minus 10.5% to CHF 386 million, in line with net sales, leading to an EBIT margin of 26.3%, 20 basis points below previous year's level. The slightly weaker development of the EBIT margin versus the EBITDA margin was driven by higher depreciation costs from higher investments in previous years. Net income decreased by 13.9%, slightly disproportionately to EBIT, to CHF 315 million, due to a higher tax rate, driven by the new tax regime in Switzerland effective as of the year and the weaker financial results in 2020. Earnings per share decreased by minus 13.5% to CHF 8.77, positively affected by the share buyback program. In the first half of the year, 262,000 shares have been bought back under the program launched in June 2017, at an average share price of CHF 406. In total, 1,026,000 shares have been bought back since 2017, for a total consideration of CHF 440 million. The share buyback program has been finished in April this year, according to plan. Free cash flow decreased in the first half of the year by minus 32% to CHF 174 million. This over-proportional decrease was driven by 2 factors: first, a negative base effect with an extraordinary strong free cash flow in the previous year when free cash flow increased by 35%; and second, an increase in net working capital due to the strong sales dynamic within Q2, starting with a substantial decline in April and the recovery towards end of June.In order to leverage the low interest rate environment and the strong debt capacity of our balance sheet, we issued in April a standard Swiss franc bond in the amount of CHF 300 million with a maturity of 2.5 years and a coupon of 35 basis points. With this, Geberit remains to be very solidly financed. At the end of June, we hold the cash position of CHF 350 million and an unused revolving credit facility of CHF 500 million.Let me now comment on our outlook for the remaining year. Let me start by saying that the ongoing uncertainties around the COVID-19 crisis make an outlook still very difficult and uncertain. Accordingly, our outlook is subject to uncertainties and based on the assumption of no lockdowns or material business restrictions driven by the COVID-19 pandemic.Let me start with the current business performance. In July, sales were slightly above previous year level, driven by stock rebuilding effect of wholesalers in countries, which were severely hit by the lockdown, for example, in Italy or in France. Under the assumption of no COVID-19 imposed lockdowns or material business restrictions, we expect in the second half of the year further normalization of the building construction industry. However, delayed or stopped projects, especially in the nonresidential segment and the temporary closure of customer showrooms in the second quarter might have an increasingly negative impact on demand during the second half of the year. Under these assumptions, we expect current adjusted net sales in the second half of the year to be slightly below the second half of 2019 and the EBITDA margin for the full year slightly below 2019 level. The weaker outlook for the EBITDA margin in the second half of the year compared to the margin increase we achieved in the first half of the year is driven by 3 factors: first, generally increase in costs again due to the normalization of the business after the sharp decline in Q2, for example, for marketing or the relief of the higher increase; second, raw material prices, which started to increase again since June and tougher comps from lower raw material prices in the second half of 2019; and thirdly, a higher wage inflation since several tariff increases this year become only effective as of the second half of the year.Let me close our introduction with a short summary. The last couple of months were marked by a historical business collapse in terms of speed and extent, however, Geberit delivered very good results. First, our supply chain was not materially affected by the COVID-19-imposed restrictions, and the availability of our product assortment was insured. The stability of our supply chain was largely driven by our strategy to pursue a high degree of vertical integration in manufacturing, decreasing the dependencies from suppliers and our strategy to source and to manufacture locally close to our customers in our end markets. Secondly, we were able to maintain our industry-leading profitability on previous year's level, despite the unprecedented collapse in volume in the second quarter, and this, without restructuring efforts or support for the public sector.Raw material prices helped, but were not the main driver. A main reason for the strong profitability were half and consequent crisis management based on short-decision-making processes and the lean organization; the continuous investments in further optimization and process flexibility over the past years; and finally, the flexibility and the high commitment of our employees based on good and trustful relationships between employees and management. An unprecedented crisis reveals the fundamental strength and resilience of our strategy, our business model, our stabilities and our strong company culture, key assets during times of crisis.Thank you for your attention. We are now ready to answer your questions.
[Operator Instructions] And the first question is from Andre Kukhnin, Crédit Suisse.
I wanted, firstly, to follow up on your raw materials comment with spot prices increasing and obviously the comps that we see from last year. Do you expect Q3 raw materials to be up, down or flat, year-on-year or sequentially?
Sequentially we expect increase in raw material prices now in the third quarter compared to the second quarter. But year-on-year, the level will be still below our previous year's level.
And the second follow-up I had is on your comments on July sales development. Would you say, you'd still be up year-on-year ex the restocking effect? If that's possible to quantify at all.
I don't know. I can't answer that because I can't quantify the restocking effect.
Okay. Fair enough. And the main question I have really is about emerging stronger. On the other hand, as you said, this is clearly a demonstration of resilience and we see your R&D flat year-on-year, your IT personnel is up year-on-year as you say in the statement. Could you maybe talk a bit more about what is in the pipeline? What are you working on? What is that we can expect from Geberit over the next 12 months in this kind of digital assets and new product introductions? And how you would expect that thing influence the performance?
We did not make any compromises on our R&D pipeline. Therefore, we are on track with new product introductions, which will come to the market next year. But for obvious reasons, I do not want to go into detail about our innovations next year, but we will have important and significant innovations in all areas where we are active next year.
And if I may, anything kind of specific to kind of post-COVID? Are you working on introducing new products to address the kind of touchless, frictionless trends that we see emerging? Is that something that you can also look forward to at that stage?
Sorry, can you repeat the question? It was difficult to understand.
Sorry, I was asking specifically if you have products -- new products in the pipeline that respond directly to post-COVID trends that we see emerging, which is more touchless operations, more frictionless buildings. Is that something that is also in the pipeline?
Not only in the pipeline, we have it actually already in the assortment. We have already today touchless products, for example, the flush and toilet, but also in the area of faucet, electronic faucets, and we have seen a substantial increase in demand already over the last couple of weeks, months, driven by the COVID-19 crisis for the touchless products. And of course, also in the pipeline we have further products coming in the area of touchless activation.
The next question is from Martin Hüsler, Zürcher Kantonalbank.
I have a couple of questions. First of all, turning to Slide #10 on your presentations. I'm surprised by the strong positive effect of other costs, which was plus 0.7%. I think in the first quarter, it was a minus of 0.2% or 0.5%. What were the main drivers? You mentioned some on a high level, but maybe a bit more detail. And what should we expect for the second half of the year?
There are 2 main drivers for this good development of other costs was, number one, the fast and COVID-containment and cost-containment measures, for example, in marketing, for example, in administration, some of them were easy to achieve because we were not able to travel, for example, and others were conscious decision, which we took to adapt our organization very fast to the new market reality. That is the first bucket. And the second bucket is the flexibility may be of our personnel in plants and logistics. We achieved a high flexibility driven by temporary workers but also a flexibility of permanent staff in the plants, for example, by location planning or using the flexibility from flex-time models, which we have in place in the plants, the logistics. In some of the plants, we even increased the flexibility during the crisis in alignment with the employee representatives.
Okay. And then maybe adding to that. You were mentioning that in the second half, you envisaged wage inflation. I was just wondering whether there is no room to renegotiate with employees because of the economic environment and the pressure on wage inflation shouldn't be that high in this state of environment.
I'll give you 2 answers. The first answer is, no, there is no legal room because that is negotiated by the tariff vendor, with the company representatives. We do not have any influence. And by a certain coincidence, this year, mainly in Germany, the tariff increase is happening more in the second half of the year than in the first half of the year. My second answer is, even if we would have the flexibility, we would not start renegotiating our wages in the second half of the year if we have seen the results this organization and these employees delivered especially in the second quarter.
Okay. Well understood. And the very final question, the amortization of immaterial assets was a bit higher than I was expecting in the second quarter. Any one-offs there? Or is this now the run rate for the next couple of quarters?
No, there was a one-off of CHF 4 million in that line item, linked to a small impairment.
And the next question is from Charlie Fehrenbach, AWP.
Can you give us an idea of your expectations of the development of the demand in Germany and in Switzerland in the second half? And second question, has this corona situation nothing changed on the situation with the lack of capacity of installers in Germany? And last, is still planned a new share buyback program to start it in Q3 or Q4? Or you may have other ideas yet?
Regarding the demand in Switzerland and Germany, we are fundamentally positive for the second half of the year -- for the demand we need to account it. However, as I said before, also in these countries, we have seen that certain projects have been played or even postponed. In the second quarter, that might have a more negative impact in the course of the second half of the year. The second questions around the bottleneck of installers in Germany. The bottleneck came down in April quite substantially, as we already talked about in July and starting now to end to increase. In July, the order backlog came back again. It's actually at 11.8 weeks, still somewhat below previous year's level, but substantially higher than during the lockdown in April and May.Your third question around the share buyback program. We have announced that we'll launch a third program. It is prepared. It is mandated to a bank. And it's expected that the bank will start the share buyback program in the course of the second year -- in the second half of the year.
In the second half of the year. This still means Q3 or Q4?
Exactly.
The next question is from Bernd Pomrehn, Vontobel.
Three questions, if I may. Firstly, can you share a little bit your view on some developing markets where you are active, like Middle East, South Africa and India? Obviously, a little bit more difficult usually to track for us. Then secondly, can you quantify the additional IT costs for your digitization initiative in the first half? And then finally, CapEx was just slightly down in the first half year. Is this also your guidance for the full year?
The development in the emerging countries is still quite challenging. So in India and in South Africa, it's visible that it's much more difficult that these companies are coming back to a normal level. As I said before, in July, we have seen quite good sales, again, in Italy and also in France, for example, driven by restocking effects. South Africa and India are still struggling much more. The second question, the additional investments for the digitalization efforts this year is CHF 15 million for the entire year, but I can't split it in the first half of the year and the second half of the year. I do not know the exact figure. And question number 3, Roland Iff will...
CapEx is always a little bit volatile between the quarters. The guidance for the full year is CHF 160 million.
And the next question is from John Revill, Reuters.
A couple of questions, if I may. You say that you expect the second half of the year to be slightly below last year's level? Can you give us any kind of quantification on that? I mean, any kind of numbers, by how much below you think they will be below, much to your second half? That's my first question. And then the second one is, you asked that you are seeing some kind of recovery in markets. And I was just wondering could you give us a bit more color to that, like, where were you seeing a kind of improvement and how much -- which were the countries that are coming back? And how much are they coming back with confidence?
I cannot quantify how much we believe that the sales level in the second half year will be below previous year's level. It is slightly below previous year's level by -- I will not quantify or not arrive at any figures because there's been too much uncertainties around this COVID-19 crisis.And the second question, also very difficult to give you a country-by-country view, but I think there's one observation, which we have seen over the last few months. It might be that it's also the case for the second half of the year that, in general, weaker economies, obviously, with weaker health systems are recovering much more slowly, more slower than other countries. As I gave before the example, Italy, France are coming out relatively fast; on the other hand, India and South Africa are still very much struggling; the U.K., somewhat in the middle.
And the next question is from Christian Arnold, MainFirst.
I have a follow-up question on the raw materials. You -- in your introduction comments, you said that you will -- you expect some higher material prices in the second half, which is one reason why EBITDA margin is going down in the second half according to your guidance. You then said that Q3 actually is sequentially increasing, but year-over-year, this still have a positive impact. So that implies that in Q4 you expect quite a harsh increase in material prices year-over-year? I mean, is that correct? And could you give us here some more flavors in terms of which material prices you expect to increase quite substantially in Q4?
In terms of materials, we expect a stronger increase especially from the industrial metals -- increase of spot prices for industrial metals, aluminum, copper, zinc. They are basically all back to the level of the beginning of the year. Obviously, we have not seen that yet in our purchasing prices because of certain delay. But also on the plastic side, we have seen increasing prices not as severe as we would also on the industrial metals side. And for Q4, we do not have a clear view on the Q4 raw material prices development, obviously. But don't forget that last year, in Q4, raw material prices were already stable again versus Q3.
Okay. Second question I have is on the personnel costs. Usually, Q3 shows quite favorable pattern when it comes to personnel costs versus sales. Do we expect a similar pattern, a normal pattern? Or do we expect something completely different, given the fact that you had-- yes, you asked for flexibility of your personnel in Q2?
I would expect a pattern, which is not too different from what we have seen in the past. But what you said is correct, some of the flexibility we used in Q2 will probably harm us in Q3. So the positive effect we have from taking vacation might be a little bit lower this year than in the past. But it's very difficult to assess right now.
And the next question is from Alessandro Foletti, Octavian.
I have one, again, a follow-up on raw materials. And I'm sorry, I have to go back to an issue related to the Q1. I looked up all my notes and I didn't find the answer. I remember in Q1, you mentioned that there was a one-off in the raw materials. And can you remind me what that was? And then particularly, if this one-off remained a one-off or is it continued in Q2? Just to understand a little bit better that element.
So you are right, we had a one-off effect on the raw material product in the first quarter. That was mainly driven by projects within production and logistics, growth determinization and process improvement, with a positive effect on the raw material product, which was only in Q1. Onetime effect does not have an effect in the rest of the year.
The next question is from Martin Flueckiger, Kepler Cheuvreux.
Just one actually because all the others have already been touched upon. I was just wondering what your impressions and observations particularly have been over the last couple of weeks with regards to wholesalers' order patterns. And with the indication or the guidance of showroom effects being expected for H2, I was just wondering what you have seen on the ground? And whether it's more Q3 or more Q4? When you expect those showroom effects to take place and in which countries, too?
The most important behavior of wholesalers impacting our business at the moment is obviously restocking effect that we have seen already in June in the countries, which were less affected, for example, Germany but also in Switzerland. And now, let's say, the delay in the countries, which were materially affected by the lockdown, in Italy and France, as I mentioned before, with a good sales development in July. With regards to the impact of the showroom closures, that's quite difficult. We do not have a clear view of some of clear indications from wholesaler, how big the impact could be and how fast or when it actually should come. But there's one agreement -- or that's what we hear from the wholesaler is that it is a negative impact and not obviously a positive impact. It's very difficult to quantify and very difficult to define the timing or refine the timing of the effect.
And the next question is from Kat Liu, Morgan Stanley.
Could you please give us a bit more details on the trade receivables, please? We see a large increase. Is that purely due to timing or COVID, sort of, lockdown and recovery? Or should I expect it to go back to normal level? Or is that the new norm?
No, that's not the new norm. It has to do with the seasonality within the second quarter. The recovery we have seen starting mid-May and until the end of the quarter. You can see that, in the EBITDA, that's already in the results, but you don't see it in the free cash flow, i.e., it's still sitting in the accounts receivables.
And the next question is from Cedar Ekblom, Morgan Stanley.
Two follow-up questions from me. On the raw materials, can you give us a little bit of an indication of how important industrial metals versus your plastics raw materials are in terms of the mix? Is the industrial metals 20% of the mix, 30%, maybe a broad guidance there would be helpful? And then just for my understanding, can you explain why showroom closures in Q2 can be an impact to wholesaler volumes in, say, the end of Q3 and into Q4? How does the order processing actually work? I would expect with the showrooms now open again, the wholesalers come back. Is this just the case of having a very long order book at wholesaler, so it takes time for this to filter through? That would be helpful.
The raw material split is around 40% metal-oriented, industrial metal-oriented; 25% of our raw materials are plastics, commodity plastics and special plastics; and about 35% is obviously the rest, packaging, electronics, components, rubber parts, et cetera, furniture.To the showroom question, first, it's important to mention that in many countries, where we are operating, the showrooms are operated by wholesalers. That is true for Germany, for Austria, for Switzerland. And secondly, there's a delay because you, as an end consumer, you choose your product in a showroom, and then you take some time until your project starts, maybe even the house building starts, and then a little bit later on, the sanitary equipment is required and that leads to a time lag to actually ordering as than the wholesalers -- and delivering from the wholesalers.
[Operator Instructions]And the next question is from Remo Rosenau, Helvetische Bank.
During tough times, the market leaders should actually be able to gain market share probably more quickly than usual. Do you have any indications yet that this is actually happening right now and also looking at the ceramics business, in particular?
First, I think it's still too early to talk about the market share gains. It's a couple of months now, but I feel quite comfortable that we are able to gain market share. And I think we have some indications because some of our competitors have not been able to keep open their plants. There were some delivery issues in tiling players but also in ceramics players, and we did not have, and we made use of that. So most probably, it doesn't mean that we are doing better at the moment than competitors.
Okay. So this might also be a marginally positive impact in the second half of the year and next year?
I think the closure of plants, the competition -- I would say, no, because these plants are open again, but I think now it comes more into play that we did not restructure, that we did not cut any R&D batches, that we did not reduce our sales force. For example, in Italy, our sales force was never in short-time work. So I think these more longer-term-oriented measures during the crisis will now help for the rest of the year and next year to emerge stronger than competitors from this crisis.
And we have a follow-up question from Alessandro Foletti, Octavian.
May be going already a little bit in the direction that Revill was talking about before. But if we forget a little bit about COVID, we have been speaking about that for 6 months now and looking into more normalization and so on, what kind of growth rates would you expect or envisage in the next or maybe intuitively expect in the next months and maybe next year, say it? Because, of course, we also see building permits not growing so much anymore, but then again, economic activity will pick up. So if we try a mental exercise to sort of normalize business, what kind of organic expectations would you then envisage?
No, there are too many what-if -- too many assumptions in your question. I think it's still too early. Of course, the economy normalizing it has an impact on us as well. If not, there's too much uncertainties in this question. And obviously, I will not give you a positive figure. I think what we have on our label, we have, of course, different scenarios. We have different macro scenarios. When every scenario will happen, we do not change fundamentally our management division be it strategically, be it operationally. Therefore, we do not spend that much time on thinking about the different scenarios because we basically do anyway the same thing, and that is much more important.
The next question is from Manish Beria, Societe Generale.
Congratulations for a very good result. So my first question is on raw material. So how much the raw material price declined in Q2 as well as in the first half? The second question is, I mean, there you say there is a time lag between the raw material price development and the impact on your profit and loss statement. So can you just highlight, I mean, what is the general time lag between the raw material price development and the P&L impact? The third is, I wanted to know, you said you did CHF 160 million buyback in this quarter. So what was the average buyback price, I mean, for these buybacks? And also wanted to understand, because you are going to do third buyback program, so is there -- is this just an opportunity like you just do? Like, you have the cash flow and you do the buyback or you take a call on the fair price? I mean, if the valuation is right to do the buybacks, so what is the process behind? I mean, is it the cash flow availability or also, I mean, and consideration that the company [indiscernible] and things like that?
First question. Raw materials in the first 6 months were down by 3.5% compared to the first half of year 2019. If you compare the third quarter -- sorry, the second quarter this year with the first quarter, raw materials were down by 5%, sequentially. Your second question was -- can you repeat the second question briefly or...?
Yes. So you say there is a lag between the raw material price development in the market and the P&L impact. So how much is the lag?
That is very big mix within the raw material prices we are purchasing. We have some absorbers, which are relatively short term because we are not hedging. So we have a monthly complex for other materials. It's quarterly, even half year, so that we do not have an exact figure. A weighted average time lag figure, I can't provide you. So it's something between 1 month until 6 months, selectively, even yearly prices. And the third question about share buyback. The share buyback program, fundamentally, we want to have a mix of dividend payment and attractive payout policy; and also, secondly, giving back the money via share buybacks to the shareholders. It's not driven by the actual share price. It's always a delegated mandate to the bank, what we define is the volume and the time frame and nonoperational decisions. And I have to correct myself, sorry, the minus 5.1%, I mentioned before, in terms of raw material prices was Q2 2020 versus Q2 2019. So the sequential effect this year Q2 2020 versus Q1 2020 was only minus 2.4%. I'm sorry for that.
The next question is from Fabrizio Cattaneo, Pictet Asset Management.
Lots of questions on the short-term COVID impact this morning in the call. Maybe more on a long-term view, can you comment a bit on the lasting effect of the possible COVID world from a product perspective, where I think virtually all commercial bathroom in Europe will need to be renovated due to distancing rule? What are the feedback from the experts, from the developers and from the architects? And what are you doing on the product side?
We have already an assortment, which is fixed, let's say, to the new COVID environment, as I said before, some example, touchless products, hygiene products, and obviously, that is not only since COVID-19, an important element in our innovation portfolio and for our development guys. Just to give you an example, also the new bathroom series, which we introduced last year, to get rid one bathroom, which basically is also addressing not only but also hygienic topics. Obviously, shower toilets fundamentally address hygienic topics and between off-topic terms of development of shower toilets or new products for shower toilets, of course. Therefore, I think we have good opportunities on the long run to benefit from the more demand for hygienic solutions in public bathrooms but I would also think that private bathrooms, driven by the COVID-19 crisis. But you did not have to invest tactically or short term our innovation pipeline because there was anyways one of the important areas for innovation even before COVID-19.
Okay. Are you expect -- I mean, one can expect a stronger demand on the -- especially from the commercial side, I think for this instance, say, you need the state that you need in the bathroom. I mean, all the [indiscernible] and shopping malls, they need to restructure their bathrooms?
Absolutely. We already see that. The growth, for example, we have an activated plate for WC flushing, which is electronically. I don't have the figure exactly in mind, but it's a high double-digit growth rate of this product, which is basically only going to commercial bathrooms, public bathrooms.
And the next question is from Fabian Haecki, UBS.
Just a short question. Are there any potential defaults, which of -- maybe you are expecting or following, which might have an impact on your business in regard of suppliers, wholesalers, let's say -- yes, the whole bunch of end markets and supplier, which you are dependent on?
We have not seen any defaults neither on the supply side nor on customer side, and we also do not expect any defaults in the future.
And we have a follow-up question from Andre Kukhnin of Crédit Suisse.
I just wanted to come back to the bathroom stores closure impact. Given what you said in Germany -- about Germany with the backlog extending for plumbers, would it be right to think that this is not an issue for Germany, the closure of bathroom stores?
I don't understand the question.
So in your outlook, you said that one of the concerning factors is this effect from bathroom stores being closed for a few weeks and depleting the backlog, given that the Germans plumbers backlog is now rising up, again, in nearly 3 months, are we right to think that this bathroom stores closure impact is not going to be the case in Germany?
Yes. Might be, yes. I do not spend that much on thinking about this question, to be honest.
So which are the countries that we should worry about in terms of this impact from bathroom stores being closed for a few weeks?
No, there are no specific countries we are worried. I think the most worrying, as we said, of course, before is, are there any material restrictions coming up again from this COVID-19 pandemic. That is worrying us to a certain extent. But looking at different views of development per country is not really helpful. It doesn't change our strategy, our operational positions. Therefore, that is not really relevant for us.
Got it. And if I may, just last one. Is this situation yielding any acquisition opportunities? Are you looking potentially at more companies?
No. We -- also to that extent, we did -- we do not change our strategy. Our strategy is that we are growing organically. We always look at bolt-on acquisition possibilities. We have always a small list. But on a small list or, let's say, ideas, nothing changed due to COVID-19, which would now make an M&A transaction a small one, more profitable.
And the next question is from Martin Flueckiger of Kepler Cheuvreux.
Just coming back to the raw material price quotes you gave a couple of minutes ago, Mr. Buhl. I'm a little bit confused looking at my notes from the last conference call. If I remember correctly, at that time, back in July, you were saying that raw material prices have declined by 2.4% in Q1. And that my understanding then that -- was that this was a year-on-year development, Q1 '20 versus Q1 '19. So is that correct since you are talking about 2.4% again for Q2? Or is that a misunderstanding? Because at that time, you were also mentioning that raw material prices had been down by 3.3% in the 5 months, January through May. It looked like it was going to -- like, it was a -- or an acceleration of the decline in Q2. Now the numbers you are mentioning speak of a deceleration. What am I missing here?
So it's a coincidence. These 2 figures are coincidently the same, I repeat. In the first quarter '20, compared to the first quarter '19, raw material prices were down 2.4%. Then in the second quarter, raw material prices were down 5.1% versus Q2 '19. That adds up together to H1 minus 3.5% versus H1 '19. And by coincidence, in the second quarter, raw material prices were also sequentially 2.4% down versus Q1 '20.
And there are no further questions at this point. So I hand back to the speakers for closing remarks.
So thank you for your participation. We wish you all a great day. Thank you. Bye-bye.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect now.