18.08.2010 News: Wienerberger achieves turnaround in second quarter of 2010
Wienerberger AG recorded a year-on-year increase of 2% in revenues to € 546.1 million and 20% in EBITDA to € 100.9 million for the second quarter in spite of the still difficult economic environment. This positive development was supported above all by the restructuring measures implemented in 2009 and the related cost savings. However, six-month earnings were influenced by a negative first quarter that resulted from heavy snowfalls and a long winter. Revenues for January to June 2010 totaled € 825.6 million (-8%) and EBITDA reached € 78.3 million (-22%). “The completion of restructuring measures has given us a stable and strong foundation, and we are ready to restart full speed as soon as the economy fully recovers,” explained Heimo Scheuch, Chief Executive Officer of Wienerberger AG.
Successful results of 2009 restructuring measures
To date, Wienerberger is the first company in the construction sector to have finalized its restructuring. “The successfully implemented measures have led to the expected cost reductions. We have completed our homework and can therefore fully focus on our products and our markets. We are utilizing our strengths to position Wienerberger for the future, through a competitive pricing policy that will help us to expand and bolster our market share. Additionally, we are demonstrating our expertise with premium products such as the plane brick and Dryfix as well as product lines like KoraTech. All these actions led to clearly positive results for the second quarter, despite the unfavorable operating environment. We are still unable to completely offset the negative first quarter, but we are definitely on the right track,” added Scheuch on the data presented today.
Central-East Europe: earnings improvement in spite lower revenues
The second quarter increase in earnings resulted above all from streamlined cost structures, i.e. reduced production costs, better capacity utilization and lower energy costs. In Central-East Europe construction declined substantially because of the bad weather, increased competition and triggered a 5% drop in revenues to € 173.5 million. However, better capacity utilization and lower production costs supported an 11% improvement in EBITDA to € 43.4 million. Revenues in Central-West Europe rose by 3% to € 119.9 million following modest recovery in new residential construction in the German market and stable volumes in Switzerland. However, EBITDA fell by 8% to € 15.6 million due to ongoing competition in Italy and rising pressure on prices in Germany.
Improvement in North-West Europe, turnaround in USA
All countries in North-West Europe, with the exception of the Netherlands, reported higher revenues and earnings, thereby largely offsetting the weather-related weakness seen in the first quarter. This supported an increase of 5% in revenues to € 218.4 million and 23% in EBITDA to € 44.5 million. A turning point was reached in the USA. The stabilization of new residential construction was reflected in revenue growth of 6% to € 43.7 million, while EBITDA was positive at € 3.3 million due to cost savings and optimized capacity utilization from the restructuring measures implemented in recent years.
Reduced refinancing requirements
“We have a strong balance sheet and a strong financial base. Our gearing of only 19% for the first half-year is very low,” commented Heimo Scheuch. Wienerberger reduced net debt from € 584.8 million as of March 31, 2010 to € 484.8 million. These figures include the bond issued at the end of March 2010. In addition, Scheuch emphasized, “The proceeds from the new bond allowed us to reduce our mid-term refinancing requirements and further improve the term structure of our liabilities. We repurchased approximately € 140 million of the 2005 bond that is due in April 2012 and used part of the remaining funds to repay other financial liabilities.”
Gross cash flow totals € 63.7 million
Gross cash flow totaled € 63.7 million, and exceeded the comparable prior year level by € 13.9 million due to the absence of restructuring costs. Inventories rose slightly during the first half of 2010 for seasonal reasons and resulted in a year-on-year decline in cash flow from operating activities to € 11.9 million.
Course set for future growth
In conclusion, Heimo Scheuch commented, “The market environment was difficult during the first months of this year. Uncertainty still prevails, consumer confidence is low and unemployment remains high in many of our markets – such factors have a negative influence on new residential construction. However, the second quarter developments should continue with a steady positive trend in most West European countries. I expect only very limited construction activity in Central-East Europe, but stable volumes in the USA. We have created the basis for future growth and sustainable success with our restructuring program. That is confirmed by the satisfactory development of business over the past three months. We intend to use this solid foundation and our proven track record to strengthen and further expand Wienerberger’s leading role in the building and construction sector. As soon as the economy gains momentum and construction activity resumes, Wienerberger will be one of the first companies to benefit.”
Wienerberger AG
Wienerbergstraße 11I 1100 WienI Austria
T +43 1 60 19 20 I F +43 16 0 19 24 73
office@wienerberger.com Iwww.wienerberger.com
