Maher Al-Haffar: And if I could add, Ben, also in the case of Mexico, I mean, we — as you saw, I mean, volumes were actually accelerating in the second half of the year. And we expect that to continue, particularly with the large projects in the southern part of the country and the demand for industrial in the northern part of the country. Also, bag cement turned positive in the second half of the year last year in the third quarter and continue to proceed. And with a deceleration in inflation and an expectation of interest rate cuts, we do expect some improvement in housing going into the year. So — and again, I mean, you also have to take a look at historically, the dynamics around elections also translate to positive kind of dynamics for our business as well.
So the outlook for Mexico in terms of volume should be fairly healthy. The market is pretty sold out. And so there should be also very interesting supply-demand dynamics as well and supporting recovery of inflation in our business in Mexico. Now as far as the U.S. is concerned, we’re quite optimistic about the U.S. Obviously, we’re coming from a very challenging year from a volume perspective in the U.S. volumes declined around 13%. A good portion of that — one-third of that was due to weather last year that we were not able to recover during the course of the year. Another piece of that is really slowdown in demand and completion of some projects that we have in our portfolio. And one-third of that was due to competitive dynamics because of pricing.
And as Lucy mentioned in her remarks, loss of market share that we expect to responsibly recover in the short-term. Now we’re guiding towards low single-digit increases in cement, and we’re pretty constructive about that. We think that we have been one of the biggest laggards in our business in the U.S. is the residential sector. And that is beginning to show some very strong signs of stabilization with some consecutive quarterly improvements, particularly in single-family residential starts and permits. And as inflation, again, continues to decelerate and the outlook for interest rates improves, we think there’s an enormous amount of pent-up demand in residential. So that should help a lot. Infrastructure continues to be half of our business.
And again, as mentioned in the remarks, there’s a lot of fiscal projects supporting that and that are accelerating, particularly in an election period as well. And if you take a look at construction put into place and infrastructure has been quite positive. And the area that their headwinds, I would say, is on the commercial side, which we’re seeing it pretty much everywhere. But it’s somewhat being offset by what’s happening on industrial. And that’s — most of industrial projects are being driven by supply chains, being reconfigured and redefined, energy issues, clean tech initiatives. So we are expecting after an important headwinds in volumes last year to be doing much, much better in terms of volumes coming into ’24. I don’t know if that answers your question, Ben.
Ben Theurer: It does very complete. Thanks, Fernando. Thanks, Maher.
Maher Al-Haffar: Thank you.
Lucy Rodriguez: Thanks, Ben. I think I would just add to what Maher said that we are seeing U.S. construction spending growing at the highest rate in decades, double-digit level and that is very much supported by rollout of infrastructure, streets and highways, and we’re also seeing very good turnaround in the residential sector when you look at single family in particular. So just to give you a little more back up to Maher’s comments. Moving on to the next question. It comes from Carlos Peyrelongue from Bank of America.
Carlos Peyrelongue: My question is related to your pricing strategy. The last two years, you’ve implemented an increase in prices in 2x during the year, beginning of the year and then in the summer. Should we expect something similar? Or will you be going back to increasing prices once a year? That’s primarily for Mexico and the U.S., the question.
Fernando Gonzalez: I think the pricing strategy that we are going to be displaying this year in essence, is the one that we defined in late ’21, early ’22 when we saw inflation going to much higher levels than whatever number of years before, meaning our pricing strategy should be designed or it is designed to recover input cost inflation, meaning protecting our margins. So what is it that you can expect in 2024, the same principle. Now ’22 and ’23 were very different and ’24 is going to be even more different. Meaning, in ’22, inflation started going up at a higher rate than what we thought and our prices did manage to recoup that inflation. The opposite happened in 2023 when our pricing strategy are already a tailwind, and we continue with the idea of recovery in input cost inflation thinking that inflation was not going to drop as fast as it did, meaning a very material drop of inflation in the second quarter of last year.
So starting 2024, our pricing strategy is designed to recover the levels of inflation that we are estimating to have during the year. Things might change, scenarios might change, and we are prepared to make a number of additional increases if that’s what it takes for us to cope with inflation. So the strategy is not defining how many price increases we’re going to have in a year, but how are we doing with the objective of recovering cost inflation. We are guiding for our cost, particularly energy to decrease by mid-single digit. So you can expect a much lower inflation in our input cost structure. And because of that, a lower level of price increases. And again, if needed, we will do a number of price increases in different markets to assure that we at least maintain the margins we already recovered during 2023.
Lucy Rodriguez: The next question comes from the webcast from Paul Roger from Exane BNP Paribas. What drove the sequential price increase in EMEA? And could this become a trend, including in Europe where CO2 costs are down quite materially? Fernando, do you want me to take this? Okay. We did have a slight decline sequentially in Europe, Middle East and Africa prices. I think what’s important to remember here is that the bulk of EBITDA, the weight of Europe is very, very high. It’s about 65% to 70% of EMEA. And what we saw happening was a decline in prices due to geographic mix, specifically Europe, which has the highest prices had a much larger decline in volume than EMEA, Asia, Middle East and Africa experienced in cement. So this is the geographic mix issue.
If you look at the disclosure, European prices were fairly stable from — moving from third to fourth quarter. So we do not believe that CO2 prices and the decline in prices that we’ve seen in the CO2 markets are contributing to any type of price deterioration because we aren’t experiencing it in Europe, okay? Thank you very much. And the next question comes from Alejandra Obregon from Morgan Stanley.
Alejandra Obregon: Congratulations on the record numbers. I have a question on your strategic CapEx. It’s going up a little bit in your guidance. So if you could perhaps elaborate a little bit on whether this CapEx is already earmarked, meaning if you have already identified the projects in which you will invest, and if you could elaborate a little bit on what spaces will be more interesting for you during the year? And what timing should we think of for these CapEx outflows for the year? That would be very helpful.
Maher Al-Haffar: Yes. The process of our growth investments has been — it’s like a fine-tuned machine that has been kind of started for now the last two or three years. So the stream of projects that have been identified and earmarked are quite developed. All of these projects are quite clearly defined. And we feel very comfortable that the timing should be fairly even throughout the year. And — however, I mean, I have to tell you that in some of the instances, you do have timing, very specific tactical execution timing for some of these projects being made. But we feel very, very reasonable that we would be able to execute on the guidance that we’re giving, the strategic CapEx of $600 million, which is a big increase compared to last year.
Last year, we wanted to do a little bit more. We underperformed our guidance, and we wanted to do a little bit more primarily because of some delays that took place because of supply chains because of negotiations or whatever. So we do feel fairly strong that we should be able to execute that amount. And the additional contribution from our growth portfolio should be quite healthy. I mean, we’re expecting a similar contribution to this year. This year, the growth portfolio was close to about $86 million, $84 million. We’re expecting a similar amount. And we did say that the total contribution of our growth portfolio to EBITDA last year in ’23 was around $325 million. So if you add the incremental amount, you’re talking about close to $400 million of contribution going into this year, which is a big percentage now of our total consolidated EBITDA.
Now the investments are split into a number of types of activities, climate action, cement expansion and so forth and so on. So it’s very well balanced, and it addresses key opportunities in our markets. Aggregates replenishment is another area that we are very focused on as well. I don’t know if that answers all of your — the question.
Alejandra Obregon: Yes, yes, that’s very clear.
Lucy Rodriguez: And the next question comes from Francisco Suarez from Scotiabank.
Francisco Suarez: Thanks for the call. It is actually a follow-up question on Alejandra’s question. The question I had on your strategic CapEx. I mean, it seems that you have reached a point guys, in which you are flexible enough to provide more strategic CapEx, return money to investors, which is great. But can you walk us a little bit more on the rationale on how your dividend policy will evolve further? How — what to expect on that? I mean much more on the dividend policy as such. And also, if you can elaborate a little bit more on your strategic CapEx on how to allocate across Urban Solutions or if it’s much more focused towards aggregates, if you can give us a little bit of granularity what to expect across regions and the rationale behind it, that would be very helpful. Thank you for that.
