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Wienerberger AG (0GIK)

  Print      Mail a friend       Annual reports

Tuesday 17 March, 2009

Wienerberger AG

Wienerberger 2008 results affected by difficult...

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

Final results 2008:
- Group revenues -2% to ¤ 2,431.4 million, operating EBITDA -20% to ¤
440.1 million
- Adjusted earnings per share -51% to ¤ 1.69
- Suspension of dividend payout for 2008 to strenghten liquidity
Outlook 2009
- Difficult and challenging year 2009
- Liquidity and financing secured - remains top priority for the
current year
- Reduction of net debt by at least ¤ 100 million annually

Vienna, 17 March 2009 - The financial crisis and the negative
development of the world economy adversely affected the 2008 full
year results of Wienerberger AG, the world's largest brick producer
and Europe's No. 2 in clay roof tiles. Although the company was not
able to match its record performance of 2007, the year under review
nevertheless was the third most successful one in terms of operating
EBITDA in the history of Wienerberger. 2008 marked a clear turning
point, with the development of the construction industry slowing down
significantly under the impact of the financial crisis and its spread
to the real economy. Wienerberger felt the impact of a steep decline
in demand for building materials in a number of its key markets,
above all the United States and Great Britain.  The situation was
different in the majority of Eastern European countries, where
markets remained stable well into the autumn of 2008 and the downturn
only began in the fourth quarter. However, the overall effects of the
financial and economic crisis could not be offset by these markets.

Construction industry hit by the crisis - immediate response by
Wienerberger through strategy adjustment and restructuring measures
At today's press conference (live web cast starting at 10:00 a.m.: the Managing Board presents the 2008 annual
accounts. Group revenues dropped slightly by 2% to ¤ 2,431.4 million.
Operating EBITDA fell significantly by 20% to ¤ 440.1 million, while
operating EBIT contracted by 32% to ¤ 239.8 million. "The
construction industry was one of the first sectors to be affected by
the financial crisis. We reacted to this development already in June
by adjusting our strategy and implementing a broad range of measures
by the end of the year. Nevertheless, our results suffered on account
of declining sales volumes, cost inflation as well as expenses from
plant standstills and idle capacity", says Wolfgang Reithofer,
Chairman of the Board of Wienerberger AG, in his analysis of the past
fiscal year.

Operating EBITDA in Eastern Europe only slightly affected - while
other segments report significant decline
"In the United States, new housing construction fell significantly
short of expectations, which resulted in a 57% drop in operating
EBITDA to ¤ 15.1 million in the North American segment. The financial
and economic crisis, above all the sharp drop in housing starts in
Great Britain as of April last year, also had a negative impact on
business in North-West Europe, where operating EBITDA fell by 22% to
¤ 144 million. Central-West Europe reported a 44% decline in
operating EBITDA to ¤ 42.5 million, which was primarily due to weak
demand in Germany and the resulting low level of capacity
utilization. Operating EBITDA in Central-East Europe dropped only
slightly to ¤ 262.0 million, down by 7% from the record year 2007.
Except for Hungary, the markets of the region - especially Poland,
Bulgaria and Romania - performed well, with the downturn starting
only in the fourth quarter", comments CEO Reithofer on the figures
presented today.

Financial result ¤ -35.0 million; profit after tax ¤ 103.3 million
The financial result deteriorated from ¤ 5.3 million to ¤ -35.0
million; it needs to be taken into account, though, that the 2007
result included a non-recurring effect of ¤ 10.1 million from the
sale of securities. Overall, Wienerberger's profit after tax amounted
to ¤ 103.3 million in the year under review (year before: ¤ 295.8
million). Earnings per share fell to ¤ 0.81 (after hybrid coupon) and
adjusted earnings per share amounted to ¤ 1.69, compared with ¤ 3.46
the year before.

Group equity fell slightly by 7%
Consolidated equity including minority interests dropped by 7% to ¤
2,497.2 million (year before: ¤ 2,672.7 million). According to Willy
Van Riet, CFO of Wienerberger AG, "The main reasons are the 2007
dividend payout of ¤ 120.1 million, negative currency translation
differences after hedging of ¤ 113.3 million, and the payout for the
coupon of the hybrid bond of ¤ 32.5 million."

Net debt increased to ¤ 890.2 million
In line with its adjusted strategy, Wienerberger has reduced its
capital expenditure programme to a minimum. Originally, ¤ 500 million
had been earmarked for growth projects in 2008, but the amount was
cut by 19% to about ¤ 407 million. Maintenance capex was reduced by
18% from the year before to ¤ 98.4 million. As of 31 December 2008,
the company's net debt amounted to ¤ 890.2 million, up by 57% from
the previous year's ¤ 566.8 million. This resulted from positive
operating cash flows of ¤ 300.9 million and ¤ 505.6 million spent on
investment projects, distribution of a dividend and the hybrid coupon
(¤ 152.6 million). The gearing increased from 21.2% in 2007 to 35.6%
in 2008.

Liquidity takes top priority - no dividend payout planned for 2008
"On account of the growing economic uncertainty of recent weeks and
concerns about a further deterioration of markets, we propose to
suspend dividend payout for 2008. This has not been an easy decision
for us, but strengthening liquidity is a matter of absolute priority
in the current situation. Many of our shareholders expect this step
and signaled their agreement in numerous conversations we had with
them. For our owners - most of them interested in a long-term,
value-oriented partnership - securing the future development of the
company takes priority over a dividend payout", says CEO Reithofer,
explaining the change in dividend policy for 2008 from what had been
communicated earlier.

77% reduction of variable component in Managing Board remuneration
Management remuneration and stock options
"Against the backdrop of current discussions on managers' salaries, I
would like to note that the major remuneration component for the
Managing Board as well as the senior management of Wienerberger AG is
performance-based.  With the company's profit after tax down by 65%,
this means a reduction of the variable remuneration component for the
Managing Board by 77% compared with the previous year. Moreover, the
stock options granted to the management within the framework of the
2008 stock option plan have expired. No options are to be granted for
2009", notes the Chairman of the Board.

Difficult and challenging year 2009
"We expect 2009 to be an extremely difficult and challenging year.
The crisis has not bottomed out yet and there is a great deal of
uncertainty about the actual magnitude of its impact on the
individual national economies. Forecasts for the countries of Central
and Eastern Europe are particularly uncertain and need to be
differentiated on a country by country basis. The downturn may be
somewhat less dramatic in Poland, the Czech Republic, Slovakia,
Bulgaria and South-Eastern Europe, given the macro-economic data of
these countries, which in turn ought to help the construction
industry. Together with Bramac and Semmelrock, which also operate in
these markets, the Wienerberger Group generated about 45% of its
EBITDA in these markets. We expect a particularly difficult economic
environment in Hungary, Romania, Russia and Ukraine. As regards
Western Europe, we assume that shrinking markets will result in lower
earnings. Housing starts will continue to decline in the United
States as well. However, thanks to the comprehensive restructuring
measures taken in recent years, we stand ready to face this
challenge", says Wolfgang Reithofer in summarizing his outlook for
the markets of Wienerberger AG.

Results expected to decline in first quarter 2009
Compared with the record first quarter of 2008, Wienerberger expects
a significant downturn of its results for the first three months of
2009. On top of weak markets, declining sales, cost inflation as well
as standstill and idling costs, a hard winter - quite unlike the mild
climatic conditions of recent years - has made the first months of
this year even more difficult. However, due to seasonal fluctuations,
the first quarter tends to be relatively insignificant for the
full-year performance in the construction sector as a whole, both in
terms of its contribution to the results and as a forecasting basis
for the rest of the year. A more accurate preview of economic
developments in 2009 will be difficult before May this year.

Target for 2009: reducing net debt
"A secure financial basis and a sufficient level of liquidity have
become top priorities for all market participants. Owing to a high
degree of indebtedness, numerous companies of the building materials
industry had to resort to capital increases in the first months of
2009 in order to raise the necessary liquidity. Wienerberger is in a
position to meet its refinancing needs of ¤ 429 million from its net
cash holdings and from undrawn committed lines until the end of 2011.
The company has a sound financial base and a strong balance sheet
structure. Nevertheless, we thoroughly analyzed and discussed the
possibility of capital measures. Based on these analyses and our
assessment of the market, we do not think that a capital increase is
necessary at this point in time. Even in the event of a persistent
worldwide economic crisis, we are confident to be able to reduce our
debts by at least ¤ 100 million annually over the coming years by
maximizing free cash flow and implementing comprehensive
restructuring programmes. Unlike other building materials producers,
we are able to take advantage of our decentralized Group structure
and our comprehensive network of over 200 plants to react fast and
flexibly to changes in national markets without jeopardizing our
supply capacity. To adjust our overheads to the current market and
order situation as quickly as possible, we already shut down 27 older
plants and discontinued 11 production lines in 2008. In addition, we
have reduced our administrative and distribution costs. These
measures result in cost savings of ¤ 90 million per year.
Winter-related standstill periods in almost all countries and plants
were part of our active working capital management policy. The
restructuring programme is to be continued throughout 2009. We expect
to save another ¤ 40 million by shutting down or mothballing about 20
plants and by further reducing our overheads. Besides cutting costs,
we are making a particular effort to achieve a significant reduction
in working capital and to lower our capital expenditure. By limiting
maintenance capex to ¤ 80 million, we will be saving ¤ 40 million. No
more than ¤ 100 million have been earmarked for the completion of
projects already started. The suspension of dividend payout for 2008
serves to retain another ¤ 30 million in the company, calculated on
the basis of a 45% payout ratio. Through these measures, we are
confident we can reduce our net debt by at least ¤ 100 million and we
will be in a strong position to master the economic crisis",
concludes CEO Reithofer.

Earnings Data of Wienerberger AG

                               2006      2007      2008      Chg. in
Revenues            in ¤       2,225.0   2,477.3   2,431.4   -2
Operating EBITDA    in ¤       471.9     551.2     440.1     -20
1)                  mill.
Operating EBIT 1)   in ¤       303.1     353.1     239.8     -32
Profit after tax    in ¤       218.3     295.8     103.3     -65
Free cash flow 2)   in ¤       272.1     293.8     195.4     -33
Maintenance capex   in ¤       100.2     120.2     98.4      -18
Growth              in ¤       430.2     525.4     407.2     -22
investments         mill.
Ø Employees                    13,639    14,785    15,162    +3
Earnings per        in ¤       2.95      3.46      0.81      -77
Dividend per        in ¤       1.30      1.45      0.00      <-100
Revenues            in ¤       2,225.0   2,477.3   2,431.4   -2

Segments 2008 in ¤ mill. and %

            Central-East Central-West North-West   North        Investments
            Europe       Europe       Europe       America      and Other
Revenues    899.3 (+6%)  430.1 (-3%)  908.8 (+0%)  234.3 (-29%) 14.9  (+19%)
Operating   262.0 (-7%)  42.5  (-44%) 144.0 (-22%) 15.1  (-57%) -23.5 (+13%)
Total       226.0 (+61%) 37.6  (-39%) 176.7 (-39%) 47.1  (-68%) 18.2  (>100%)
Ø Employees 5,832 (+7%)  2,366 (-2%)  4,769 (+12%) 1,969 (-22%) 226   (+31%)

1) Adjusted for non-recurring income and expenses
2) 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.

Online Annual Report 2008:
Internet Live Web cast of the Press Conference at 10:00 a.m.:

For questions, please 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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