Wienerberger with revenue and earnings growth in third quarter
Wienerberger AG today announced results for the third quarter of 2014. Group revenues rose by 3% to € 798.9 million for the period from July to September, compared with € 773.4 million in 2013. Operating EBITDA increased 8% to € 113.0 million, compared with € 104.2 million in the previous year. Heimo Scheuch, Chief Executive Officer of Wienerberger AG, explained: “This performance is very satisfactory considering the more challenging market conditions in the third quarter. There were no signs of recovery in Europe from July to September, above all in new residential construction. A number of markets, including France and the countries in Southern Europe, continued to weaken, and the German market cooled significantly. In contrast, new residential construction in Great Britain remained on a sound course. We reacted quickly to benefit from this situation and began to restart mothballed plants during the third quarter. Central-East Europe recorded generally favorable development for the reporting period in line with our expectations. On a positive note, the Ukraine crisis has not had any major negative direct effects on our business up to now. The third quarter earnings growth was supported, above all, by the scheduled cost savings, our efficiency improvement program and the earnings contribution from the Tondach Group.“
Clay Building Materials Europe: revenue and earnings growth in Q3
The Clay Building Materials Europe Division recorded an increase of 8% in revenues to € 446.8 million and 15% in operating EBITDA to € 77.8 million in the third quarter. The negative market developments, above all in Western Europe, were offset by the initial consolidation of Tondach Gleinstätten as well as € 6 million of savings from the cost reduction program and further optimization measures.
Pipes & Pavers Europe: 4% revenue decline and stable operating EBITDA
Revenues in the Pipes & Pavers Europe Division were 4% lower than the comparable prior year period at € 283.5 million in the third quarter of 2014. Operating EBITDA remained constant during this period and totaled € 34.7 million (Q3 2013: € 34.5 million). Volumes were stable in Eastern Europe, but slightly lower in Western Europe. Steinzeug-Keramo, the experts for ceramic wastewater systems, recorded a decline in revenues and earnings due to the weaker business climate in Germany, cutbacks in public sector infrastructure spending in France and Belgium and lower exports to the Middle East.
North America: continued recovery in US new residential construction
Revenues in the North America Division rose by 8% to € 67.3 million. The continuing recovery in US new residential construction led to higher revenues and earnings in the brick business, even though the price situation was less than satisfactory. Wienerberger also expanded its positions in the relevant markets
Conclusion of the Tondach Gleinstätten acquisition
An important strategic milestone in the third quarter was the takeover of Tondach Gleinstätten, of the leading producer of clay roof tiles in Central-East Europe. Tondach operates 14 plants in eight countries and is one of the market leader in this region. Heimo Scheuch is pleased with the positive conclusion of the takeover: “This major growth step will strengthen our profitable clay roof tile business in Europe and create further opportunities to expand our position on the renovation market. Tondach made a positive contribution to the Wienerberger Group in the third quarter, and I expect a contribution of roughly € 90 million to Group revenues and € 15 million to operating EBITDA in 2014.“
Business development from January to September 2014
The Wienerberger Group grew by 6% during the first nine months of 2014 and generated revenues of € 2,148.4 million. The initial consolidation of the Tondach Gleinstätten Group contributed € 47.3 million to Group revenues, which means 5% of the revenue increase was based on organic growth. Operating EBITDA rose by a significant 18% to € 248.1 million due to the positive development of key markets like Great Britain, Poland and Belgium, efficiency improvement measures and higher capacity utilization in the plants. Tondach Gleinstätten contributed € 10.0 million to operating earnings. The program to sell non-operating assets generated income of € 2.6 million (2013: € 6.4 million). Third party revenues in the Clay Building Materials Europe Division rose by 9% to € 1,166.4 million and operating EBITDA by 33% to € 174.9 million in the first nine months. The Pipes & Pavers Europe Division recorded stable third party revenues of € 801.6 million, compared with € 792.6 million in the previous year. EBITDA remained constant at € 80.5 million. The North America Division recorded a 3% increase in third party revenues to € 175.7 million. EBITDA fell from € 9.6 million in the previous year to € 7.2 million.
Increase in gross cash flow
Gross cash flow improved by € 35.5 million due to the substantial increase in operating earnings and totaled € 185.9 million for the reporting period. Expenditures for maintenance, technical upgrades for production processes and smaller growth projects amounted to € 77.5 million for the first nine months, compared with € 63.6 million in the previous year. Growth investments amounted to € 35.9 million (2013: € 0.5 million) and included the purchase price for the shares in Tondach Gleinstätten that were purchased at the beginning of July, less liquid funds recognized during the initial consolidation.
Outlook and Strategy
The current market trends in Europe and the USA are projected to continue during the remainder of this year. In the Clay Building Materials Europe Division, Wienerberger expects a stable environment in the European core markets with positive developments in Great Britain, Belgium and Poland as well as declines in France, Italy, the CzechRepublic and Hungary. Germany will be stable to slightly weaker from the current point of view. The consolidation of Tondach Gleinstätten will make a positive contribution to Group results. The pipe business should see continued healthy development in the Nordic markets and Eastern Europe as well as weaker markets in the Netherlands and France. An improvement in the international project business is expected during the fourth quarter. The concrete paver segment should record an improvement in earnings for the full year. Forecasts for the US market call for a further increase in new residential construction.
Managing Board confirms annual targets
“Our targets for the full year remain intact. The Wienerberger Group has emerged from an intensive and far-reaching reorientation period. Our portfolio is well-balanced, and we have reduced the dependence on new residential construction. Wienerberger has returned to the growth path, and we are increasingly outpacing our markets. I am therefore confident that we will meet our targets to generate operating EBITDA of € 315 million and complete our return to the profit zone in 2014“, explained Heimo Scheuch in conclusion.