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- Group revenues +2% to € 1,926.8 million; EBITDA -14% to € 364.7 million - Major parts of optimization program already implemented - Protection of liquidity and maximization of cash flows as most important goals - Financing secured up to end of 2010
Vienna, November 12, 2008 - The spread of the financial crisis to Europe and a significant deterioration in the macroeconomic framework triggered declines on the construction sectors of most West European countries. In addition, the USA reported a drop in housing starts that was much stronger than forecasted at the beginning of this year. Positive reports from Eastern Europe contrasted this trend, with construction activity showing sound development. Against this backdrop the Wienerberger Group recorded a 2% increase in revenues to € 1,926.8 million, but operating EBITDA before restructuring costs fell 14% to € 364.7 million for the reporting period.
Optimization program started this summer and now largely completed "We were able to increase revenues during the first nine months in this difficult operating environment, but earnings were negatively affected by lower sales volumes, more flexible pricing and an inflation-based increase in costs that we could not pass on in full to the market as well as costs for idle capacity and the shutdown of production facilities. Our analyses at the beginning of July indicated a continuation of the economic downturn and we reacted immediately by adapting our strategy to meet this shifting market environment. As part of an extensive program, we have started to optimize our plant network and adjust fixed costs to meet the change in sales volumes," explained Wolfgang Reithofer, Chief Executive Officer of Wienerberger AG. Maximization of cash flows as top priority - financing secured up to end of 2010 Liquidity and a healthy financial base are the most important goals of the Wienerberger Group in this changing market environment. The Managing Board of Wienerberger AG has adjusted the corporate strategy, postponed growth projects and defined the maximization of cash flows as the top priority. The most important task is to adjust fixed costs as quickly as possible to match the current developments in markets and sales volumes, and the extensive optimization of the plant network represents a key element of this plan. Related measures were introduced this past summer and have resulted in the shutdown of 16 plants. A total of 27 mostly older plants will be shut down or mothballed this year and 11 production lines will be closed on a temporary basis. An extensive cost reduction program was also started to cut administrative and selling expenses. Nearly 1,400 Wienerberger employees will be affected by this restructuring. The costs for plant shutdowns have amounted to roughly € 30 million so far, whereby € 19 million represent restructuring costs and € 11 million special write-downs. Active working capital management will be strengthened by widespread plant closings that have been scheduled for the coming winter season. This year Wienerberger will spend € 100 million on maintenance and less than € 450 million on growth. In 2009 a maximum of € 100 million will be spent to complete the growth projects currently in progress and maintenance capex will be limited to € 80 million. The goal is reduce net debt from the current level of € 897 million. Wolfgang Reithofer indicated that "Liquidity is our top priority in these uncertain times. Wienerberger had liquid funds totaling € 180 million as well as € 290 million of undrawn committed lines of credit at the end of September. This means our refinancing requirements - which will equal approx. € 475 million up to the end of 2010 - are now secured."
Earnings negatively affected by economic downturn Results for the reporting period were influenced by the deteriorating economic climate on many markets. Central-East Europe remained at a sound level, serving as the primary driver for revenue growth in the Group and generating 57% of Group EBITDA. In this segment revenues rose 10% to € 716.1 million for the first nine months. EBITDA before restructuring costs roughly matched the comparable prior year level at € 209.2 million. Poland followed solid growth during the first half of this year with an increase in sales volumes for the third quarter. Bulgaria and Romania reported another substantial increase in sales volumes, while momentum on the Russian market began to slow. Hungary also remained weak during the third quarter, and this situation was reflected in a steady decline in the demand for bricks. In the Czech Republic and Slovakia, greater flexibility in the Group's pricing policy was successful in reducing imports from Germany. However, revenues and earnings in both countries were negatively influenced by an inflation-based rise in costs. Central-West Europe reported only a slight 2% year-on-year decrease in revenues to € 340.1 million. However, EBITDA fell by nearly half to € 36.3 million due to the disappointing development of residential construction in Germany and growing pressure on brick prices in Italy. In North-West Europe revenues rose 7% to € 720.4 million for the reporting period. The collapse of new residential construction on the British market was offset by the consolidation of Baggeridge and Sandtoft. The 13% decline in EBITDA to € 125.0 million resulted from a strong inflation-driven increase in costs as well as the lower utilization of capacity in Great Britain. Despite a positive contribution from the initial consolidation of Arriscraft, revenues in the North America segment fell by 29% to €183.4 million and EBITDA by 56% to € 12.8 million as a result of the further sharp drop in residential construction and the weak US dollar.
Group EBIT -36% to € 181.6 million As a consequence of the decline in operating earnings, Group EBIT fell by 36% to € 181.6 million. Earnings for the reporting period were negatively influenced by restructuring costs of € 30.8 million, which included € 19.6 million of cash expenses and € 11.2 million of special write-downs. Financial results totaled € -20.7 million for the first three quarters of 2008 in contrast to € 3.4 million for the comparable period of 2007 (which included a book gain of € 10 million on the sale of securities). Profit after tax decreased 44% to € 133.0 million. Adjusted earnings per share equaled € 1.65 compared with € 2.74 in the previous year.
Cash flow from operating activities reaches € 175.1 million Gross cash flow equaled € 305.0 million and free cash flow € 122.2 million for the reporting period. Both indicators failed to match the comparable prior year level because of restructuring costs and lower earnings. Cash flow from operating activities fell from € 281.9 million to € 175.1 million due to an increase in inventories and higher trade receivables. Cash outflows of € 353.9 million for investments and acquisitions comprised € 71.7 million of maintenance, replacement and rationalization investments (maintenance capex) and € 282.2 million of investments in new plant construction, capacity extensions and acquisitions (growth investments). A hybrid coupon of € 32.5 million was paid in February, and a dividend of € 120.1 million was distributed to shareholders in May.
Group equity totals € 2,669.1 million Group equity remained near the level at the beginning of 2008, equaling € 2,669.1 million as of September 30, 2008. Net debt of € 871.0 million as of June 30, 2008 rose only slightly to € 897.0 million at the end of the reporting period. The gearing ratio equaled 33.6% (the hybrid bond is treated as 100% equity under IFRS).
Further weakening of real economy expected by year-end Wienerberger expects the effects of the financial crisis on the real economy will grow even stronger and the resulting loss of jobs will have a negative influence on all sectors of business. This, in turn, will lead to a further deterioration in the market climate for Wienerberger, whereby the consequences will not be limited to Western Europe: the eastern regions of the continent have already shown the first signs of approaching economic weakness. Wienerberger is forecasting moderate revenue growth for Central-East Europe up to the end of 2008, which will be supported by higher sales volumes in Poland, Bulgaria and Romania that should offset lower sales volumes in Hungary, the Czech Republic and Slovakia. However, earnings in this region are expected to decline slightly from the previous high level because of the inflationary impact on production costs. In Central-West Europe, market weakness and the costs for shutdowns and idle capacity will bring about a significant year-on-year decline in earnings. For the North-West Europe segment, the company expects a slight improvement in revenues but lower earnings. A continuation of the negative trend in sales volumes is forecasted for North America. "For the full year I expect a decrease of ca. 15% in operating EBITDA. However, the decline could also be slightly higher - but no more than 20% - if the market downturn is stronger than expected. Depending on the development of the economic environment, we plan to pay a dividend for this financial year. The remaining funds will be used to strengthen our capital base and provide liquidity for our business operations", summarized Wolfgang Reithofer.
Key Financial Data of Wienerberger AG
1-9/2007 1-9/2008 Chg. Year-end in % 2007 Revenues in € 1,889.3 1,926.8 +2 2,477.3 mill. EBITDA 1) in € 424.1 364.7 -14 551.2 mill. EBIT in € 284.3 181.6 -36 353.1 mill. Profit after tax 2) in € 235.4 133.0 -44 295.8 mill. Adjusted earnings per in € 2.74 1.65 -40 3.46 share 3) Free cash flow 4) in € 207.0 122.2 -41 293.8 mill. Maintenance capex in € 82.5 71.7 -13 120.2 mill. Growth investments in € 415.5 282.2 -32 525.4 mill. Ø Employees 15,448 14,785
Segments 1-9/2008 in € mill. and %
Central-East Central-West North-West North Investments Europe Europe Europe America and Other Revenues 716.1 (+10) 340.1 (-2) 720.4 (+7) 183.4 (-29) -33.2 (+21) EBITDA 1) 209.2 (0) 36.3 (-44) 125.0 (-13) 12.8 (-56) -18.6 (+17) Total 137.2 (+65) 26.4 (+26) 139.5 (-46) 33.9 (-74) 16.9 (>100) investments Ø Employees 5,871 (+9) 2,404 (-1) 4,861 (+18) 2,092 (-17) 220 (+29)
Segments 7-9/2008 in € mill.
Revenues EBITDA 1) 7-9/2007 7-9/2008 Chg 7-9/2007 7-9/2008 Chg in in % % Central-East 223.8 261.4 +17 82.2 73.8 -10 Europe Central-West 125.0 122.7 -2 28.9 18.4 -36 Europe North-West 234.1 226.3 -3 53.7 35.3 -34 Europe North America 92.8 63.4 -32 10.0 5.3 -47 Investments -13.7 -10.6 +23 -7.3 -3.7 +49 and Other Wienerberger 662.0 663.2 0 167.5 129.1 -23 Group
1) Before restructuring costs and special write-downs 2) Before minority interests and accrued hybrid coupon 3) Before amortization of goodwill, adjusted for non-recurring income and expenses, and after hybrid coupon 4) Cash flow from operating activities minus cash flow from investing activities plus growth investments
Note: In the table of segment date, changes in % to the comparable prior period are shown in brackets.
Visit www.wienerberger.com to download the report on the first three quarters with detailed information and view a live Internet transmission of the telephone conference with analysts at 2:00 pm CET.
For additional information contact: Karin Hofmann, Public Relations T +43(1)60192-463 | communication@wienerberger.com
Barbara Braunöck, Investor Relations T +43(1)60192-463 | investor@wienerberger.com
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Wienerberger AG Wienerbergstraße 11 Vienna Austria
WKN: 83170; ISIN: AT0000831706; Index: WBI, ATX , ATX Prime; Listed: Prime Market in Wiener Boerse AG;
