Wienerberger Records Higher Losses
Group revenues declined by 3% to € 382.4m (2011: € 395.1m). Operating EBITDA reached € 2.1m (2011: € 11.8m). Net losses reach € 50.1m.
Wienerberger AG today announced results for the first quarter of 2012. The development of business at the start of the year was, as always, influenced by the weather. In contrast to the mild winter in the first three months of 2011, the reporting period was characterized by an extremely cold and snowy February throughout Europe that continued into March with frozen ground in many countries. Wienerberger was therefore faced with volume declines in all European segments during the first quarter of 2012. Conditions in the USA were different, where more favorable weather supported volume growth during the first three months of this year. Group revenues for the first quarter of 2012 fell by 3%, with lower volumes responsible for an 8% decline that was offset partly offset by a 5% year-on-year increase in average prices. In addition to the successful implementation of price increases, shifts in the mix to premium products had a positive effect on average prices. Since the calculated price effect is always highest at the beginning of the year and weakens successively as the year progresses, price adjustments of 2 to 3% are expected for the full year and should be sufficient to cover the expected cost inflation.
Heimo Scheuch, Chief Executive Officer of Wienerberger AG, explained: “Against the backdrop of the severe weather in February and the resulting sharp drop in construction activity, the first quarter demand for building materials was in line with our expectations. Longer plant standstills and higher energy costs due to the unusual frost led to a decline in operating EBITDA, which fell from € 11.8m in 2011 to € 2.1m for the reporting period. Operating EBIT amounted to € -47.8m for the first three months of 2012, compared with € -36.3m in the previous year. However, I would like to add that results for the first quarter have only a very limited influence on the entire year. I am very pleased that we were able to continue the positive price trend from the past year. This confirms the success of our market-oriented strategy with a clear focus on premium, innovative products for energy-efficient and sustainable construction.“
Wienerberger recorded a loss of € 50.1m for the reporting period after the deduction of taxes at a rate of 7.5% (2011: € -45.1m). Earnings per share equaled € -0.50, compared with € -0.45 in the previous year.
Cash flow from operating activities amounted to € -122.0m and reflected the decline in revenues and the seasonal increase in working capital. A total of € 23.0m was spent on normal capex (maintenance and technical upgrades for production processes). In January 2012 Wienerberger successfully placed a 5% bond with a 3.5-year term, whereby the volume equaled the maximum possible amount of € 200m. This issue led to an increase in long-term financial liabilities. Net debt rose by € 187.8m over the level on December 31, 2011 to € 630.3m due to the seasonal increase in working capital. However, gearing remained at a low 26% as of March 31, 2012.
First quarter developments in Central-East Europe were influenced by the extremely cold weather in February and a still difficult economic environment in many markets. These factors led to volume declines in the wall, facade and paver product groups. Volumes in the roofing business were higher due to the inclusion of Tondach Gleinstätten, which has been consolidated in this segment at 50% since June 30, 2011 (with parallel deconsolidation of the concrete roof tile producer Bramac). Average prices in the first quarter of 2012 were higher than the comparable prior year period because of price increases implemented at the beginning of the year and shifts in the mix to premium products. Earnings were negatively affected by extended plant standstills and higher energy costs in the production area that were caused by the long frost period. Segment revenues fell by 7% to € 82.4m and operating EBITDA from € 0.5m in 2011 to
Revenues in Central-West Europe declined 6% to € 73.9m, while operating EBITDA fell from € -2.8m in the first three months of 2011 to € -4.4m for the reporting period. Similar weather-related volume declines were reported in all countries. Average prices were higher due to price increases and shifts in the product mix, but the cold winter also led to lower volumes and additional production costs in this segment.
Revenues in North-West Europe declined 8% to € 175.8m for the first three months of 2012 (2011: € 190.5m) and operating EBITDA fell 11% to € 19.6m. The cold February also had a negative effect on segment volumes in all product groups. In addition, production costs were increased by lower capacity utilization and higher energy consumption. The measures implemented to increase average prices in North-West Europe were successful and will make an important contribution to offsetting cost inflation for the year.
North America benefited from milder weather and a slight year-on-year improvement in the market environment. These factors were reflected in top-line and earnings growth during the first quarter of 2012. Revenues rose by 25% to € 32.3m, while operating EBITDA improved from € -5.3m in the previous year to € -2.1m based on better capacity utilization and measures implemented in 2011 to reduce fixed costs.
Heimo Scheuch remains cautious concerning guidance for the full year: “Construction is in the first quarter for seasonal reasons always on low levels and due to the strong weather impact market trends are difficult to estimate. From the current point of view, I expect a continuation of the difficult market environment in Eastern Europe. Poland, our largest market in this region, should be relatively stable and Russia should continue the dynamic trend in new residential construction that has characterized recent years. Reliable forecasts for the other East European countries are impossible at the present time, and further declines from the current very low levels appear possible. In Western Europe, I expect moderate growth in Germany because of the backlog of building permits from 2011 as well as slight growth in Scandinavia and a stable market in Great Britain. Our expectations for the Netherlands are unfortunately becoming reality, with a continuing decline in construction activity.“ With respect to the USA, Wienerberger is cautiously optimistic concerning future business trends. Heimo Scheuch explains: “I assume US new residential construction has bottomed out and see stable to slightly positive development this year. However, I do not want to appear too euphoric despite the improvement in volumes during recent months because the effects of the mild weather on the demand for building materials in the USA are not clear. However, I would like to confirm our goal to bring the North American segment back to break-even at the EBITDA level in 2012. And if the recovery in single- and two-family housing construction in America is stronger than expected, our capacity reserves are flexible enough to cover a possible further increase in demand.“