According to a press release from August 10 2023, the Wienerberger Group noted declining revenues in the first half of the year 2023. Generated consolidated revenues amounted to 2,203 million euro (H1 2022: 2,572 million euro), roughly 16,7 percent less. Persistently high inflation, rising interest rates and significantly reduced affordability led to declining demand in all of the group’s relevant end markets.
Commenting on this result, Heimo Scheuch, Chairman of the Managing Board of Wienerberger AG, says, “Although operating in a difficult market environment, Wienerberger successfully held its ground in the first half of 2023. Especially in view of the slowdown in renovation and infrastructure as well as a significant downward trend in new construction in Central-East Europe, led by Poland and Hungary with declines of more than 40 percent, followed by Germany. Our North American business also performed extremely well in a declining market environment.”
According to the press release, the company responded to the weakening demand already in the second half of 2022 with strict and ongoing cost management, resulting in 29 million euro savings in the first half of 2023. Among measures taken are shift reductions, mothballing of individual plants in combination with optimized capacity utilization at existing plants. A forward-looking procurement policy in the areas of raw materials and energy and proactive price management have made it possible to successfully cover the continued high-cost inflation in all regions. Based on these measures, Wienerberger generated operating EBITDA of 454 million euro in the first half of 2023 (H1 2022: 545 million euro).
Performance of the Regions
External revenues reported by Region Europe West decreased to 1,165.7 million euro compared to the previous year’s record result (H1 2022: 1,300.3 million euro). Operating EBITDA remained stable at 224.8 million euro (H1 2022: 225.5 million euro). The decline in demand was most evident in new build, particularly in the UK, Belgium, Germany, the Netherlands, and France. The Nordic countries saw a decline in housing starts, but Wienerberger benefited from the company’s enlarged presence in multi-family residential, commercial, and public buildings. The in-house pipe business followed the trend in new build and was similarly affected by an overall decline in demand. Demand for Wienerberger’s roofing solutions remained due to a growing volume of energy efficient renovation at a satisfactory level across all regions. In infrastructure, Wienerberger recorded declining public demand for infrastructure solutions in its plastic pipe business. At the same time, the company increased its share of the renovation market in the field of water management.
External revenues generated by Region Europe East in the first six months of the business year, compared to the record-breaking first half of 2022, dropped to 614.1 million euro (H1 2022: 800.2 million euro). Operating EBITDA amounted to 118.1 million euro in the first half of 2023 (H1 2022: 210.1 million euro). Surging interest rates and double-digit inflation significantly depressed the sales volumes in both private and public-sector business in all the company’s end markets. New residential construction, including Wienerberger’s in-house pipe business, was hit hardest by these developments. In the renovation segment, reduced affordability and the absence of government support programs led to a steep drop in demand from both private and public-sector customers. By contrast, business in the infrastructure segment remained stable, with consistently high demand for innovative irrigation systems.
In the first half of the year, Region North America recorded external revenues of 422.3 million euro (H1 2022: 470.6 million euro). At the same time, operating EBITDA increased from 109.8 million euro to 111.2 million euro. The brick business developed very favorably during the first half of the year with an increase in external revenues compared to the previous year, although demand in North American new residential construction was dampened by the persistently high interest rate level and the resultant reduced affordability. The southeastern US recorded high migration rates driving up the need for housing, while individual areas of Canada experienced seasonally warm weather and high demand. The successful integration of Meridian Brick contributed significantly to strong earnings growth in the North American façade business.
Persistently high inflation and ever-increasing financing costs, as well as more restrictive mortgage lending, dampened market developments more strongly than originally anticipated by Wienerberger, especially in Europe. By contrast, the end markets in North America performed as expected. Assuming that the market environment will remain challenging in the second half of 2023, Wienerberger is adjusting its projections of end-market developments in 2023 (cf. table).
Overall, Wienerberger’s end markets developed significantly weaker than initially assumed. For the 2023 financial year, the company nevertheless continues to expect a strong performance and will generate operating EBITDA of 800 - 820 million euro.