Wienerberger with lower profit in first six months of 2012
In the first half year of 2012, the revenue of the Wienerberger Group was 5% above the prior-year value. Revenue development was also supported by a 4-% increase in average prices. Volume declines of 9% led to lower capacity utilization. These factors reduced the operating EBITDA by 16% to € 104.1 mill. and the operating EBIT to € 4.1 mill. After the deduction of taxes, Wienerberger recorded a net profit of € 24.1 mill., compared to € 37.5 mill. for the first half of 2011. Cash flow from operating activities stood at € 2.6 mill. For maintenance, investments in technical upgrades for production processes and product innovations, approx. € 46 mill. were spent.
Segments
In nearly all Central-East European markets, construction activity was reduced throughout the region. In addition to Hungary, Bulgaria, Romania and Slovakia, this downturn also affected previously more stable markets like Poland and the Czech Republic. The only dynamic development in new residential construction was noted in Russia. Central-East Europe generated revenues of € 256.4 mill. in the first half of 2012, or 6% less than in the comparable prior-year period. Average prices in this region rose moderately during the first half-year. The operating EBITDA declined by 41% to € 26.4 mill. in the first six months of 2012.
Revenues in Central-West Europe fell by 4% to € 198.7 mill. for the first half of 2012. This development resulted from lower volumes in all countries, above all Italy. In Germany, the largest market in the region, Wienerberger noted a slight decline in the demand for building materials. Consequently, the operating EBITDA fell 10% year-on-year to € 15.8 mill.
Revenues in the North-West Europe segment declined 7% to € 384.9 mill. for the first six months of 2012 (2011: € 416.0 mill.). Lower volumes in all product groups as well as higher production costs had a negative effect on the operating EBITDA, which fell 15% below the prior year. Volumes in the Netherlands fell sharply as expected, but construction activity also weakened in Belgium, France and Great Britain. Despite the difficult market environment across the region, this segment was also able to increase prices.
In the USA, the upward trend in housing starts continued from the first six months into the second quarter. Volume growth of 13% supported a 24-% increase in revenues to € 76.3 mill. for the first half-year in North America. The segment completed the turnaround in the first six months of 2012, following operating EBITDA of € -5.3 mill. in 2011 with € 0.3 mill. for the reporting period.
Outlook and strategy
Higher revenues and earnings are also forecasted for India, Russia and the USA. Heimo Scheuch, CEO at Wienerberger AG, expects continued decline in European housing construction. For North America he expects that the announced turnaround on EBITDA level will be achieved over the full year. The outlook for Central-West Europe remains cautiously optimistic. Scheuch hopes to be able to reach the earnings level of the year 2011 in this segment. The big challenge are the segments of Central-East Europe and North West Europe, where further revenues and earnings declines are assumed for the year overall.
Package of cost reduction measures
The Managing Board has compiled a package of cost reduction measures for the clay building materials business in Europe. With appropriate adjustment of capacity and corporate structures, costs are to be reduced sustainably by € 40 mill. by the end of 2013, the normal investments are to be cut back from the originally planned € 140 mill. to € 110 mill. by year-end. Wienerberger expects these measures will lead to non-recurring cash costs of € 15 mill. by the end of 2013.
