Wienerberger AG (www.wienerberger.com) presented sound results for the first quarter of 2011. Favorable weather across Europe at the beginning of the year and a robust new residential construction sector in a number of West European countries, above all Germany, France, Belgium and Switzerland, supported strong volume growth in nearly all the Group’s markets. Revenues only declined in North America, where the still challenging operating environment was negatively affected by a severe winter.
41% increase in revenues to € 395.1 million
Wienerberger recorded a 41% increase in revenues to € 395.1 million for the first three months of 2011. Heimo Scheuch, CEO of Wienerberger AG, explained: “Growth was driven entirely by higher volumes, since the moderate negative price effect of -1% was offset by positive foreign exchange effects of 1%. In 2010, the price effect at the Group level was higher at -5% due to our proactive pricing policy in Eastern Europe. We were able to significantly limit this first-quarter price effect with a shift in the product mix to premium products. This confirms the success of our customer-oriented strategy with its clear focus on value-added and innovative products for energy-efficient and sustainable new housing construction,” commented Scheuch the presented numbers today. Operating EBITDA improved significantly from € -22.6 million to € 11.8 million due to higher capacity utilization and a related decline in standstill costs. This development was also reflected in the gross margin, which rose from 14% in the first quarter of 2010 to 25% in the first quarter of 2011.
Loss after tax was reduced from € -69.0 million in the comparable prior-year period to € -45.1 million based on a tax rate of 6.4%. Earnings per share equaled € -0.45, versus € -0.68 in the previous year.
The improvement in earnings led to a € 27.2 million rise in gross cash flow to € 8.1 million. Cash outflows for investments and acquisitions roughly matched the prior-year level at € 22.1 million, whereby € 20.9 million of this amount represented maintenance and replacement expenditures. Wienerberger still had comparatively low gearing of 22%, despite a seasonal increase in net debt from € 374.5 million on December 31, 2010 to € 529.9 million on March 31, 2011.
Segment Developments in the First Quarter of 2011
Central-East Europe recorded the strongest volume growth of the Wienerberger segments in the first quarter, with all product groups exceeding the market- and weather-related very low prior year level. In this region 52% more clay blocks, 60% more roof tiles and 54% more concrete pavers were sold than in the first quarter of 2010. This growth was driven by Poland, the Czech Republic, Hungary and Russia, while Slovakia and the Baltic States reported moderate volume improvements. In contrast, demand was restrained in Romania, Bulgaria and Southeast Europe. Revenues in this segment rose by 47% to € 88.2 million based on lower average prices, and operating EBITDA reached € 0.5 million (2010: € -12.8 million) due to better capacity utilization.
Germany and Switzerland as growth drivers in Central-West Europe
Revenues in Central-West Europe totaled € 78.6 million for the first three months of 2011 (2010: € 55.4 million). This represents a 42% increase over the comparable prior-year period as well as a clear improvement over the first quarter of 2009. Recovery on the new residential construction market in Germany and higher demand for building materials in Switzerland led to a substantial year-on-year increase in volumes of clay blocks and roof tiles. Italy remained weak, with revenues only slightly higher than the previous year. Operating EBITDA improved significantly to € -2.8 million (2010: € -5.7 million), but was still negatively influenced by standstill costs at the beginning of the year.
Operating EBITDA more than quadruples in North-West Europe
In North-West Europe revenues increased by 34% to € 190.5 million and operating EBITDA more than quadrupled over the first quarter of 2010 to € 21.9 million. This growth was driven by Belgium and France, where significantly higher volumes were recorded in all product groups. Favorable weather also supported double-digit volume growth in the Netherlands, Great Britain and Scandinavia. Slightly higher average prices on annual comparison, which resulted in part from a shift in the product mix to premium products and substantially lower standstill costs due to better capacity utilization, led to a significant earnings improvement in this segment.
USA remained weak
North America was the only segment to record a first quarter decline in revenues and earnings below the weak prior year level. In addition to the continuing unfavorable market environment, the main reason was another severe winter that allowed only limited construction activity in many regions. Revenues in this segment totaled € 25.8 million, or 7% less than the comparable prior-year value of € 27.8 million, and operating EBITDA fell to € -5.3 million based on stable average prices but against the backdrop of further standstill costs.
Revenues in Central-West and North-West Europe exceed Q1 2009
Another notable achievement is that segment revenues for the reporting period not only exceeded the weather-related difficult first quarter of 2010, but also topped the first quarter of 2009 in Central-West Europe and North-West Europe.
Strategy and Outlook
Business in the first quarter is heavily influenced by the weather, and the coming quarters will therefore not bring comparable growth. However, the Group sees an increase in volumes for 2011 as well as a year-on-year improvement in capacity utilization. Heimo Scheuch described the outlook as follows: “Our West European countries will serve as the driver for this growth. I expect rising demand for building materials in Germany, France, Belgium and Switzerland, which together generate more than one-third of our revenues. Visibility on the markets in Central-East Europe remains limited, with the exception of Poland. In this country, I am optimistic that new residential construction will continue to grow, and a slight recovery over the low prior-year level is also forecasted for the Czech Republic and Russia. In Romania, Bulgaria and Southeast Europe, I cannot exclude further volume declines because of the difficult market environment. Caution is currently the keyword for any assessment of the North American market. We are anticipating a slight decline in construction during the first half of 2011, but moderate recovery appears possible during the second six months.”
Clear improvement in operating EBITDA and positive net profit expected for 2011
For the full year, Scheuch expects a substantial improvement in operating EBITDA and positive net profit. He added: “We will continue to pursue our market- and customer-oriented strategy and our focus on energy-efficient and sustainable new housing construction – utilizing our strong operating base and our premium products – to realize operating growth above that of the building materials industry in all regions and to meet our earnings targets.“
Wienerbergstraße 11 I 1100 Wien I Austria
T +43 1 60 19 20 I F +43 16 0 19 24 73
email@example.com I www.wienerberger.com