Wienerberger reports record revenues and substantial profit growth
Wienerberger AG today published its results for 2015, a year of strong growth for the company. In a challenging environment, the Wienerberger Group was able to increase its revenues by 5% to € 3 billion and its operating EBITDA by 17% to € 370 million. Overall, the business year 2015 was marked by a very good development in the first half of the year, a slow-down of momentum in the third quarter, and a positive fourth quarter. “2015 was Wienerberger’s best year since the financial crisis. Our revenues reached yet another record, and the Group’s earnings increased significantly for the fifth consecutive year. Based on our strong operating performance, we succeeded in generating a profit after tax of € 70 million. We have clearly reached our goal of returning to the profit zone”, underlines Heimo Scheuch, CEO of Wienerberger AG.
Net debt reduced by 14% - debt repayment period brought down to 1.4 years
The Group’s net debt was reduced by 14% from € 622 million in 2014 to € 534 million in 2015. This was primarily due to a significantly higher cash flow from operating activities. The realization of non-core real estate generated liquidity in the amount of approx. € 28 million. The Group’s normal capital expenditure, which includes maintenance and investments in technological innovations as well as enhancements of the product range, amounted to a total of € 138 million. In addition, approx. € 10 million were spent on growth investments. Compared with the previous year, the gearing improved significantly, standing at 26% at the end of the year. The debt repayment period was 1.4 years, which is far below the self-imposed limit for financial discipline of 2.5 years.
Dividend for 2015
The Managing Board will propose to the Annual General Meeting on May 12, 2016 that a dividend of € 0.20 per share be paid out to the shareholders for the business year 2015. Referring to the reasons for this decision, Heimo Scheuch notes that “we are well on track, and the increase of the dividend by 33% is a distinct signal that we trust in our own strength”.
Clay Building Materials Europe: strong operating performance resulted in 12% increase of operating EBITDA to € 249 million
Residential construction in Europe was supported by mild weather conditions. It was generally stable to slightly positive, but marked by regional differences. Positive developments of the housing market were seen, above all, in Great Britain, the Netherlands, Romania, Bulgaria, Poland and Hungary. Belgium, Italy and Russia registered a decline in housing construction. A similar situation was seen in France, although the French market stabilized, as expected, toward the end of the year. In Germany and Switzerland, the construction of single- and two-family homes as well as renovation activities were slightly below the previous year’s level, a trend which was actively addressed through adjustments within Wienerberger`s production structures. In Austria, new housing starts remained at a stable level. Altogether, the Clay Building Materials Europe Division reported a 6% increase in revenues to € 1,643 million. Despite structural adjustment costs in the amount of € 11 million, operating EBITDA increased by 12% to € 249 million. This was due not only to the Division’s strong operating performance and the contribution from the consolidation of the Eastern European roof tile business in the first half of the year, but also to the reorganization of sales in certain markets, lower energy costs and continued measures aimed at enhancing efficiency and optimizing the Division’s cost structures.
Good development of plastic pipes activities results in earnings growth for Pipes & Pavers Division
Revenues generated by the Pipes & Pavers Europe Division remained stable at € 1,044 million, while operating EBITDA increased by 8% to € 108 million. This strong development was due, above all, to the European plastic pipe business. A year of record results in international project business had an extremely positive effect on the product mix and on profitability. Moreover, the Division succeeded in gaining market shares in its Nordic core markets and in further consolidating its market leadership in the region. One of the main reasons for this good development of earnings in the plastic pipes business was the success in managing raw material shortages and in counteracting the increase of plastic granulate prices. The concrete paver business benefited from its consistent positioning as a supplier of premium products and from continued programs aimed at optimizing the cost structure, an enhanced product mix and higher capacity utilization. This resulted in slightly increased revenues and distinctly higher earnings. Business with ceramic clay pipes generated slightly higher revenues, but operating earnings remained substantially below the previous year’s level. This was due, above all, to a distinct slowdown in public investments in Germany and Poland, which was not fully compensated by the activities in other markets.
North America Division generated revenues of € 278 million and operating EBITDA of € 32 million
The North America Division reported an increase of its revenues by 17% to € 278 million; its operating EBITDA improved significantly from € 11 million in 2014 to € 32 million in the reporting year. While the volume of brick sales in the USA remained at the previous year’s level, successful cost-cutting measures had a positive effect on earnings. Moreover, the Division benefited from proceeds of almost € 13 million from the sale of non-core real estate. Growing demand in Canada resulted in higher revenues and earnings, as was the case in the North American plastic pipe business. In general, the results of the Division were supported by advantageous foreign exchange effects.
Development of business in the fourth quarter of 2015
Compared with the fourth quarter of the previous year, the consolidated revenues of the Wienerberger Group remained stable at € 689 million. Despite the costs of structural adjustments in the brick and plastic pipe business, the Group’s EBITDA increased by 10% to € 76 million. The Clay Building Materials Europe Division registered a particularly strong fourth-quarter performance and was able to increase its revenues by 2% to € 393 million.
Operating EBITDA rose steeply by 26% to € 60 million. In the Pipes & Pavers Europe Division, revenues declined by 5% to € 227 million, and operating EBITDA dropped by 20% to € 16 million. Revenues in North America increased by 11% to € 67 million, while operating EBITDA grew by 35% to € 5.5 million.
Outlook and strategy
For 2016, Wienerberger expects to see a continuation of slight market growth in its brick, roof tile and plastic pipe business. As regards its ceramic sewage pipe business, the Group anticipates a slightly negative environment, given the fact that capital expenditure on public infrastructure is being held back in certain core markets. A stable development of demand for concrete pavers is expected. “We look to the future with optimism, as the Wienerberger Group has the potential for further substantial growth. Our target for 2016 is to increase our operating EBITDA to € 405 million, including profits in the amount of approx. € 15 million from the sale of non-core real estate. For 2020, we intend to achieve revenues of well above € 4 billion and an operating EBITDA of well above € 600 million. Our success is the result of a clear strategy and its consistent implementation. We shall continue our growth course”, underlines Heimo Scheuch.