Wienerberger with revenue and earnings growth in first nine months of 2015

Wienerberger AG announced results for the first nine months of 2015, with an increase in revenues and earnings during this period. From January to September this year, Group revenues rose by 6% to € 2283 million and operating EBITDA by 18% to € 293 million. Heimo Scheuch, Chief Executive Officer of Wienerberger AG, summarized the first nine months: “In view of the increasing market volatility during the past three months, we are satisfied with our performance. Sound growth in the first half-year was followed by a certain slowdown in dynamics during the third quarter. The countries that have been characterized by a weak demand level since the start of the year continued to have an unfavorable effect on our business. They include the German-speaking region Switzerland, Austria and Germany as well as France and Italy. We reacted to these developments promptly by increasing our focus on additional measures to optimize our cost structures and strengthen earnings. On the one hand, we are accelerating the integration of our East European clay roof tile business. On the other hand, we are putting a number of performance enhancing measures in certain markets in place. Such proactive measures will lead to costs in the third and fourth quarter.” He also added: “In addition to improving profitability and optimizing our free cash flow, our focus remains on financial discipline. This also includes the steady reduction of debt. We took a further step in this direction during August 2015 with the redemption of the € 200 million bond issued in 2012.“
Higher revenues and earnings for European brick business from January to September
The Clay Building Materials Europe Division recorded a year-on-year increase of 7% in revenues to € 1250 million and, despite the costs for the structural adjustments, an increase of 8% in operating EBITDA to € 189 million. Residential construction in Europe was stable to slightly positive with major regional differences during the first nine months. The favourable momentum in Great Britain, the Netherlands, Romania, Bulgaria, Hungary and Poland was contrasted by ongoing weak demand levels in the new residential construction and renovation market in France, Italy, Russia and the German-speaking countries. The price and volume trends from the first half-year continued during the third quarter. Higher average prices, leaner cost structures, efficiency improvement measures and declining energy prices supported growth in this segment.

Q1-Q3: Pipes & Pavers Europe with plus 14% in operating EBITDA
The Pipes & Pavers Europe Division reported a 2% increase in revenues to € 817 million and a sound 14% improvement in operating EBITDA to € 92 million. Additionally, our plastic pipe activities continued its satisfactory development, above all in the Nordic markets. Our international project business was characterized by a positive performance. The earnings improvement was supported by our successful measures to master the raw materials shortage and offset the rising prices for plastic granulate. In this area, the past months have brought a notable easing. Generally stable trends in Europe and higher volumes in the Middle East led to an increase in earnings for the ceramic wastewater pipes business. Semmelrock, our concrete paver activities were supported by steady positioning as a premium supplier and the ongoing cost optimization programs.

Significant improvement in revenues and earnings in North America in first nine months
In a slightly growing North American market, earnings were increased by higher average prices, cost savings, the sale of real estate during the first half-year and positive foreign exchange effects. We recorded volume and price growth in Canada based on stronger demand in our relevant markets which lead to increased revenues and earnings in this region. The North American plastic pipe business also saw a slight strengthening in demand. These developments led to double-digit growth of 20% in revenues to € 210 million and a significant improvement in operating EBITDA from € 7 million in the first nine months of 2014 to € 27 million in 2015.
Business Development from July to September 2015
The Wienerberger Group generated revenues of € 808 million in the third quarter of 2015, compared with € 799 million in the comparable prior year period. Group operating EBITDA remained nearly stable during this period at € 113 million. Business development reflected different regional trends in the individual markets. Earnings were negatively influenced by costs for the structural adjustments of roughly € 6 million.

Earnings, Asset and Financial Position
Operating EBIT (operating profit before interest and taxes) amounted to € 142 million for the first nine months of 2015, compared with € 89 million in the previous year. These results included proceeds of nearly € 16 million from the sale of non-core assets. After the deduction of financial results totaling € -45 million, profit before tax equaled € 87 million and represents a substantial improvement over the previous year (€ 70 million). Profit after tax amounted to € 48 million (2014: € 56 million). Earnings per share equaled € 0.20, compared with € 0.27 in the first nine months of 2014. The calculation of earnings per share includes a charge for the accrued hybrid coupon.
Improvement of € 50 million in gross cash flow
Gross cash flow rose by € 50 million based on the substantial improvement in operating earnings and totaled € 238 million for the reporting period. Investments totaled € 85 million (2014: € 113 million) and included, above all, maintenance, technical upgrades for production processes and smaller growth projects.

Bond repaid in August as planned
Net debt rose by € 26 million during the reporting period to € 647 million as of September 30, 2015. Gearing equaled 31% and net debt / operating EBITDA 1.8 years, which underscores Wienerberger’s strong capital structure. The € 200 million bond, which was issued in 2012 and matured in August of this year, was refinanced primarily with available bank lines.

Outlook and Strategy
Wienerberger expects a continuation of the different regional trends in the individual markets during the fourth quarter. The residential construction market in Europa should see stable to slightly stronger growth, and we expect that higher average prices, an improved product mix and the continued optimization of cost structures will support sound growth in revenues and earnings respectively for the full year. The Pipes & Pavers Division is expected to generate moderate earnings growth for the full year. Both, the European brick business as well as the European pipes and paver business will be negatively affected by necessary costs for structural adjustments. For the North American Division, a sound improvement in revenues and earnings is forecasted. “We are optimistic that we will generate operating EBITDA of € 375 million in 2015, before the deduction of € 20 million for structural adjustments. This target includes an earnings contribution of € 25 million from the sale of real estate. We are well aware that this target is ambitious, but we remain focused on its achievement“, added Heimo Scheuch in conclusion on the outlook for 2015.

Wienerberger AG


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