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Wienerberger AG (0GIK)

  Print      Mail a friend       Annual reports

Wednesday 12 November, 2008

Wienerberger AG

Wienerberger has clear strategy for the weak ma...

Corporate news announcement processed and transmitted by Hugin AS.
The issuer is solely responsible for the content of this 

- Group revenues +2% to ¤ 1,926.8 million; EBITDA -14% to ¤ 364.7
- Major parts of optimization program already implemented
- Protection of liquidity and maximization of cash flows as most
important goals
- Financing secured up to end of 2010

Vienna, November 12, 2008 - The spread of the financial crisis to
Europe and a significant deterioration in the macroeconomic framework
triggered declines on the construction sectors of most West European
countries. In addition, the USA reported a drop in housing starts
that was much stronger than forecasted at the beginning of this year.
Positive reports from Eastern Europe contrasted this trend, with
construction activity showing sound development. Against this
backdrop the Wienerberger Group recorded a 2% increase in revenues to
¤ 1,926.8 million, but operating EBITDA before restructuring costs
fell 14% to ¤ 364.7 million for the reporting period.

Optimization program started this summer and now largely completed
"We were able to increase revenues during the first nine months in
this difficult operating environment, but earnings were negatively
affected by lower sales volumes, more flexible pricing and an
inflation-based increase in costs that we could not pass on in full
to the market as well as costs for idle capacity and the shutdown of
production facilities. Our analyses at the beginning of July
indicated a continuation of the economic downturn and we reacted
immediately by adapting our strategy to meet this shifting market
environment. As part of an extensive program, we have started to
optimize our plant network and adjust fixed costs to meet the change
in sales volumes," explained Wolfgang Reithofer, Chief Executive
Officer of Wienerberger AG.

Maximization of cash flows as top priority - financing secured up to
end of 2010
Liquidity and a healthy financial base are the most important goals
of the Wienerberger Group in this changing market environment. The
Managing Board of Wienerberger AG has adjusted the corporate
strategy, postponed growth projects and defined the maximization of
cash flows as the top priority. The most important task is to adjust
fixed costs as quickly as possible to match the current developments
in markets and sales volumes, and the extensive optimization of the
plant network represents a key element of this plan. Related measures
were introduced this past summer and have resulted in the shutdown of
16 plants. A total of 27 mostly older plants will be shut down or
mothballed this year and 11 production lines will be closed on a
temporary basis. An extensive cost reduction program was also started
to cut administrative and selling expenses. Nearly 1,400 Wienerberger
employees will be affected by this restructuring. The costs for plant
shutdowns have amounted to roughly ¤ 30 million so far, whereby ¤ 19
million represent restructuring costs and ¤ 11 million special
write-downs. Active working capital management will be strengthened
by widespread plant closings that have been scheduled for the coming
winter season. This year Wienerberger will spend ¤ 100 million on
maintenance and less than ¤ 450 million on growth. In 2009 a maximum
of ¤ 100 million will be spent to complete the growth projects
currently in progress and maintenance capex will be limited to ¤ 80
million. The goal is reduce net debt from the current level of ¤ 897
million. Wolfgang Reithofer indicated that "Liquidity is our top
priority in these uncertain times. Wienerberger had liquid funds
totaling ¤ 180 million as well as ¤ 290 million of undrawn committed
lines of credit at the end of September. This means our refinancing
requirements - which will equal approx. ¤ 475 million up to the end
of 2010 - are now secured."

Earnings negatively affected by economic downturn
Results for the reporting period were influenced by the deteriorating
economic climate on many markets. Central-East Europe remained at a
sound level, serving as the primary driver for revenue growth in the
Group and generating 57% of Group EBITDA. In this segment revenues
rose 10% to ¤ 716.1 million for the first nine months. EBITDA before
restructuring costs roughly matched the comparable prior year level
at ¤ 209.2 million. Poland followed solid growth during the first
half of this year with an increase in sales volumes for the third
quarter. Bulgaria and Romania reported another substantial increase
in sales volumes, while momentum on the Russian market began to slow.
Hungary also remained weak during the third quarter, and this
situation was reflected in a steady decline in the demand for bricks.
In the Czech Republic and Slovakia, greater flexibility in the
Group's pricing policy was successful in reducing imports from
Germany. However, revenues and earnings in both countries were
negatively influenced by an inflation-based rise in costs.
Central-West Europe reported only a slight 2% year-on-year decrease
in revenues to ¤ 340.1 million. However, EBITDA fell by nearly half
to ¤ 36.3 million due to the disappointing development of residential
construction in Germany and growing pressure on brick prices in
Italy. In North-West Europe revenues rose 7% to ¤ 720.4 million for
the reporting period. The collapse of new residential construction on
the British market was offset by the consolidation of Baggeridge and
Sandtoft. The 13% decline in EBITDA to ¤ 125.0 million resulted from
a strong inflation-driven increase in costs as well as the lower
utilization of capacity in Great Britain. Despite a positive
contribution from the initial consolidation of Arriscraft, revenues
in the North America segment fell by 29% to ¤183.4 million and EBITDA
by 56% to ¤ 12.8 million as a result of the further sharp drop in
residential construction and the weak US dollar.

Group EBIT -36% to ¤ 181.6 million
As a consequence of the decline in operating earnings, Group EBIT
fell by 36% to ¤ 181.6 million. Earnings for the reporting period
were negatively influenced by restructuring costs of ¤ 30.8 million,
which included ¤ 19.6 million of cash expenses and ¤ 11.2 million of
special write-downs. Financial results totaled ¤ -20.7 million for
the first three quarters of 2008 in contrast to ¤ 3.4 million for the
comparable period of 2007 (which included a book gain of ¤ 10 million
on the sale of securities). Profit after tax decreased 44% to ¤ 133.0
million. Adjusted earnings per share equaled ¤ 1.65 compared with ¤
2.74 in the previous year.

Cash flow from operating activities reaches ¤ 175.1 million
Gross cash flow equaled ¤ 305.0 million and free cash flow ¤ 122.2
million for the reporting period. Both indicators failed to match the
comparable prior year level because of restructuring costs and lower
earnings. Cash flow from operating activities fell from ¤ 281.9
million to ¤ 175.1 million due to an increase in inventories and
higher trade receivables. Cash outflows of ¤ 353.9 million for
investments and acquisitions comprised ¤ 71.7 million of maintenance,
replacement and rationalization investments (maintenance capex) and ¤
282.2 million of investments in new plant construction, capacity
extensions and acquisitions (growth investments). A hybrid coupon of
¤ 32.5 million was paid in February, and a dividend of ¤ 120.1
million was distributed to shareholders in May.

Group equity totals ¤ 2,669.1 million
Group equity remained near the level at the beginning of 2008,
equaling ¤ 2,669.1 million as of September 30, 2008. Net debt of ¤
871.0 million as of June 30, 2008 rose only slightly to ¤ 897.0
million at the end of the reporting period. The gearing ratio equaled
33.6% (the hybrid bond is treated as 100% equity under IFRS).

Further weakening of real economy expected by year-end
Wienerberger expects the effects of the financial crisis on the real
economy will grow even stronger and the resulting loss of jobs will
have a negative influence on all sectors of business. This, in turn,
will lead to a further deterioration in the market climate for
Wienerberger, whereby the consequences will not be limited to Western
Europe: the eastern regions of the continent have already shown the
first signs of approaching economic weakness. Wienerberger is
forecasting moderate revenue growth for Central-East Europe up to the
end of 2008, which will be supported by higher sales volumes in
Poland, Bulgaria and Romania that should offset lower sales volumes
in Hungary, the Czech Republic and Slovakia. However, earnings in
this region are expected to decline slightly from the previous high
level because of the inflationary impact on production costs. In
Central-West Europe, market weakness and the costs for shutdowns and
idle capacity will bring about a significant year-on-year decline in
earnings. For the North-West Europe segment, the company expects a
slight improvement in revenues but lower earnings. A continuation of
the negative trend in sales volumes is forecasted for North America.
"For the full year I expect a decrease of ca. 15% in operating
EBITDA. However, the decline could also be slightly higher - but no
more than 20% - if the market downturn is stronger than expected.
Depending on the development of the economic environment, we plan to
pay a dividend for this financial year. The remaining funds will be
used to strengthen our capital base and provide liquidity for our
business operations", summarized Wolfgang Reithofer.

Key Financial Data of Wienerberger AG

                                1-9/2007   1-9/2008   Chg.   Year-end
                                                      in %       2007
Revenues                 in ¤    1,889.3    1,926.8     +2    2,477.3
EBITDA 1)                in ¤      424.1      364.7    -14      551.2
EBIT                     in ¤      284.3      181.6    -36      353.1
Profit after tax 2)      in ¤      235.4      133.0    -44      295.8
Adjusted earnings per    in ¤       2.74       1.65    -40       3.46
share 3)
Free cash flow 4)        in ¤      207.0      122.2    -41      293.8
Maintenance capex        in ¤       82.5       71.7    -13      120.2
Growth investments       in ¤      415.5      282.2    -32      525.4
Ø Employees                                  15,448            14,785

Segments 1-9/2008 in ¤ mill. and %

            Central-East Central-West North-West  North       Investments
            Europe       Europe       Europe      America     and Other
Revenues     716.1 (+10)  340.1  (-2) 720.4  (+7) 183.4 (-29) -33.2  (+21)
EBITDA 1)    209.2   (0)   36.3 (-44) 125.0 (-13)  12.8 (-56) -18.6  (+17)
Total        137.2 (+65)   26.4 (+26) 139.5 (-46)  33.9 (-74)  16.9 (>100)
Ø Employees  5,871  (+9)  2,404  (-1) 4,861 (+18) 2,092 (-17)   220  (+29)

Segments 7-9/2008 in ¤ mill.

                        Revenues                    EBITDA 1)
                7-9/2007   7-9/2008   Chg   7-9/2007   7-9/2008   Chg
                                      in                          in
                                      %                           %
Central-East       223.8      261.4   +17       82.2       73.8   -10
Central-West       125.0      122.7    -2       28.9       18.4   -36
North-West         234.1      226.3    -3       53.7       35.3   -34
North America       92.8       63.4   -32       10.0        5.3   -47
Investments        -13.7      -10.6   +23       -7.3       -3.7   +49
and Other
Wienerberger       662.0      663.2     0      167.5      129.1   -23

1) Before restructuring costs and special write-downs
2) Before minority interests and accrued hybrid coupon
3) Before amortization of goodwill, adjusted for non-recurring income
and expenses, and after hybrid coupon
4) Cash flow from operating activities minus cash flow from investing
activities plus growth investments

Note: In the table of segment date, changes in % to the comparable
prior period are shown in brackets.

Visit to download the report on the first three
quarters with detailed information and view a live Internet
transmission of the telephone  conference with analysts at 2:00 pm

For additional information contact:
Karin Hofmann, Public Relations
T +43(1)60192-463  |  [email protected]

Barbara Braunöck, Investor Relations
T +43(1)60192-463  |  [email protected]

If you do not wish to receive the Wienerberger newsletter any longer,
send an e-mail with subject: "unsubscribe newsletter" to
[email protected]

--- End of Message ---

Wienerberger AG
Wienerbergstraße 11 Vienna Austria

WKN: 83170; 
ISIN: AT0000831706; Index: WBI, ATX , ATX Prime;
Listed: Prime Market in Wiener Boerse AG;


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