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Wienerberger AG (WBAG:WIE) Corporate news announcement processed and transmitted by Hugin ASA. The issuer is solely responsible for the content of this announcement. ---------------------------------------------------------------------- --------------
- Group revenues +3% to € 1,263.6 million; EBITDA -8% to € 235.6 million - Optimization program for best possible adjustment to market conditions - Selective continuation of investment program - Planned dividend for 2008 at or slightly below prior year level
Vienna, August 19, 2008 - Against the backdrop of sound development in Central-Eastern Europe and a significant downturn in the USA, Great Britain and Germany on the contrary, Wienerberger AG was able to increase revenues by 3% to € 1,263.6 million for the first half of 2008. A strong first quarter with revenue growth of 13% was followed by a second quarter decline of 4% below the record prior year level. Group EBITDA fell 8% to € 235.6 million and EBIT 18% to € 136.0 million for the first six months of 2008.
Wienerberger well-equipped to also meet harsher economic climate "Construction activity in Eastern Europe continued to accelerate during the first six months of 2008, but the relevant macroeconomic conditions on a number of key Wienerberger markets deteriorated substantially. Inflation and higher energy costs also triggered a steady rise in production costs, which we could not fully offset through price adjustments. Standstills and the costs of idle capacity had a negative effect on results for the first six months. Wienerberger is a highly cost-efficient company - we generate high cash flows and have a broad geographic portfolio, which allow us to moderate the effects of weakness on individual markets. We cannot disengage from the developments in these markets, but we are well-equipped to also maintain our position in difficult times", explained Wolfgang Reithofer, Chief Executive Officer of Wienerberger AG.
Optimization measures expected to reduce costs by € 30 million beginning in 2009 Wienerberger is adjusting its production, and thereby also its fixed cost basis, as best as possible to meet current conditions through accelerated optimization measures and active capacity management. In addition to restructuring in weak markets like Germany and Great Britain, mid-term optimization measures that were scheduled for the rest of the plant network will now be moved forward. Smaller and older factories will be closed and the production will be shifted to larger, more cost-efficient plants. These actions will involve the mothballing or shutdown of 25 plants. Up to seven plants will be closed in Germany and a total of 10 will be removed from the network in North-West Europe. As a reaction to the difficult market environment in the USA, the extensive capacity adjustments of the past two years were followed by the shutdown of two further plants. The resulting restructuring costs are estimated at approx. € 25 million in 2008 and will also include a further € 25 million of write-downs. These measures are expected to reduce costs by roughly € 30 million beginning in 2009.
Despite further weakness on European markets - Wienerberger expects one of the best years in 2008 Wienerberger expects the current climate of rising interest rates, higher inflation and credit shortages will trigger further weakness on European markets during the remainder of this year. For North-West Europe the Group forecasts a slight decline in earnings as a result of the market slump in Great Britain. In Central-West Europe and North America, the costs of idle capacity and standstills will have a negative effect on EBITDA. Continued growth in Poland, Romania, Bulgaria and Russia as well as the stable development of new residential construction in the Czech Republic and Slovakia should make it possible for Central-East Europe to match the prior year level of earnings, despite weaker residential construction activity in Hungary. In addition, the company is forecasting price-related increases of € 45 million in energy costs for the full year. "I expect a decline of up to 15% in operating EBITDA for 2008. However, this would still represent one of the best operating results in the history of Wienerberger. We plan to distribute an attractive dividend to shareholders, which will match or be slightly lower than 2007. The remaining cash flows will be invested selectively to continue our expansion strategy, above all in the growth regions of Eastern Europe and the emerging markets, in order to safeguard the sustainable development of Wienerberger over the long-term. We intend to adjust the pace of our investments to reflect economic developments. Our plans call for nearly € 450 million of growth projects this year and roughly € 200 million in 2009", summarized Wolfgang Reithofer.
Disappointing developments in the USA, Great Britain and Germany Disappointing developments on three of the Group's most important markets - the USA, Great Britain and Germany - were reflected in a decrease of € 36 million in EBITDA. In spite of a contribution from the initial consolidation of Arriscraft, revenues fell 28% to € 120.0 million and EBITDA 60% to € 7.5 million due to a stronger-than-expected drop in housing starts and the weak US dollar. Central-West Europe reported a 2% year-on-year decline in revenues to € 217.4 million. In contrast to expectations, residential construction in Germany continued to slow during the reporting period. This situation and the growing pressure on prices in a weakening Italian market cut EBITDA in half from the prior year level to € 17.9 million. In North-West Europe revenues for the first six months rose by 12% to € 494.1 million and EBITDA remained near the prior year level at € 89.7 million. The collapse of new residential construction in Great Britain beginning in mid-April following the spread of the financial crisis was offset by the consolidation of Baggeridge and Sandtoft as well as sound earnings growth in Belgium and France. After strong performance during the first three months of 2008, Central-East Europe was unable to duplicate the record prior year results in the second quarter. This segment recorded a 6% increase in revenues to € 454.7 million, which was supported by sound growth at a normalized level. EBITDA increased 7% to € 135.4 million. Revenues and earnings in Poland continued to grow during the reporting period after the boom in 2007. Significantly higher sales volumes were recorded in Bulgaria, Romania and Russia following the start-up of new capacity. The market in Hungary slowed substantially during the second quarter after a good start at the beginning of 2008, with this shift leading to a decline in the demand for bricks. Sales volumes in the Czech Republic and Slovakia were also lower, above all as a result of imports from Germany. In the Southeast European markets of Croatia, Slovenia, Bosnia and Serbia, the Group registered an increase in sales volumes.
Profit before tax -31% to € 118.0 million As a consequence of the decline in operating earnings, profit before tax fell 31% to € 118.0 million. Earnings for the first half of 2008 were also negatively influenced by restructuring costs of € 5.8 million, whereby € 2.2 million represent cash expenses and € 3.6 million are write-downs. Financial results equaled € -12.2 million for the first six months of 2008 compared with € 5.1 million in the previous year, which include a book gain of € 10.1 million on the sale of securities. The tax rate decreased due to the deductibility of the hybrid coupon for tax purposes and the higher share of earnings recorded in Central-East Europe. Profit after tax totaled € 98.6 million, or 30% less than in the previous year, and adjusted earnings per share equaled € 1.04 compared with € 1.57 in 2007.
Cash flow from operations totals € 82.0 million Wienerberger generated gross cash flow of € 204.3 million and free cash flow of € 30.2 million during the first six months of 2008, whereby both figures are lower than the comparable prior year values because of the decline in earnings. Cash flow from operating activities fell from € 117.7 million in the first half of 2007 to € 82.0 million. Cash outflows of € 253.8 million for investments and acquisitions comprise € 49.9 million of maintenance, replacement and rationalization investments (maintenance capex) and € 203.9 million of new plant construction, capacity extensions and acquisitions (growth investments). A € 32.5 million coupon was paid on the hybrid bond in February and a dividend of € 120.1 million was distributed to shareholders in May.
Group equity equals € 2,618.4 million Group equity declined 2% to € 2,618.4 million following the payment of the dividend and hybrid coupon as well as lower net profit and the purchase of treasury stock. These same effects led to an increase in gearing, which rose from 21.2% as of December 31, 2007 to 33.3% (in accordance with IFRS, the hybrid bond is classified in full as equity).
Key Financial Data of Wienerberger AG
1-6/2007 1-6/2008 Chg. Year-end in % 2007 Revenues in € 1,227.3 1,263.6 +3 2,477.3 mill. EBITDA in € 256.6 235.6 -8 551.2 mill. EBIT in € 166.6 136.0 -18 353.1 mill. Profit after tax1) in € 140.1 98.6 -30 295.8 mill. Adjusted earnings per in € 1.57 1.04 -34 3.46 share2) Free cash flow3) in € 76.0 30.2 -60 293.8 mill. Maintenance capex in € 55.2 49.9 -10 120.2 mill. Growth investments in € 95.3 203.9 >100 525.4 mill. Ø Employees 15,583 +5 14,785
Segments 1-6/2008 in € mill. and %
Central-East Central-West North-West North Investments Europe Europe Europe America and Other Revenues 454.7 (+6) 217.4 (-2) 494.1 (+12) 120.0 (-28) -22.6 (+20) EBITDA 135.4 (+7) 17.9 (-51) 89.7 (0) 7.5 (-60) -14.9 (+1) Total 81.7 (+79) 18.2 (+26) 101.5 (>100) 23.0 (-43) 29.4 (>100) investments Ø Employees 5,845 (+10) 2,399 (-1) 4,917 (+24) 2,209 (-9) 213 (+25)
Segments 4-6/2008 in € mill
Revenues EBITDA 4-6/2007 4-6/2008 Chg. 4-6/2007 4-6/2008 Chg. in % in % Central-East 271.1 250.3 -8 87.3 74.7 -14 Europe Central-West 134.0 126.1 -6 29.8 19.1 -36 Europe North-West 241.4 259.2 +7 52.1 50.6 -3 Europe North 92.4 67.3 -27 12.1 6.8 -44 America Investments -18.9 -13.3 +30 -8.5 -7.9 +7 and Other Wienerberger 720.0 689.6 -4 172.8 143.3 -17 Group
1) Before minority interest and accrued hybrid coupon 2) Before amortization of goodwill and adjusted for non-recurring income and expenses; after hybrid coupon 3) Cash flow from operating activities minus cash flow from investing activities plus growth investments Note: in the table of segment data, changes in % to the comparable prior year period are shown in brackets.
Visit www.wienerberger.com to download the interim financial report with detailed information and view a live Internet transmission of the press conference at 10:00 a.m. CET.
For additional information contact: Karin Hofmann, Public Relations T +43(1)60192-463 | communication@wienerberger.com
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Wienerberger AG Wienerbergstraße 11 Vienna Austria
WKN: 83170; ISIN: AT0000831706; Index: WBI, ATX , ATX Prime; Listed: Prime Market in Wiener Boerse AG;
