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[March 2007]
2006 Proves Year of Growth for Wienerberger
Wienerberger AG (Vienna, Austria) said this week that it had been able to meet its ambitious growth and earnings targets for 2006 in full. All earnings indicators rose by at least 10% and growth investments of €430 million were also realised.However, added the company, the year was characterised by a wide range of contrary effects, with a weak start followed by outstanding development in the second half-year. Positive factors included higher demand in Europe and the favourable effects of growth projects realised in previous years as well as the mild weather during the fourth quarter and resulting additional support for a strong increase in sales volumes. These factors were able to more than offset negative effects such as the severe winter at the beginning of the year, higher costs for plant start-ups and inventory reduction, a slump in new residential construction in the USA and higher energy prices.
Group revenues rose by 14% to €2.225 billion and operating EBITDA increased 10% to €471.9 million. Operating EBIT increased 11% to €299.6 million in spite of the high level of investment activity in the previous year. "Wienerberger was able to meet all its earnings goals for 2006 because of its strong geographic portfolio and numerous profitable growth projects," commented Wolfgang Reithofer, CEO of Wienerberger AG.
He continued: "The development of earnings was influenced by a number of different factors in 2006: support was provided by strong demand in Europe, and in particular by recovery in the German new residential construction market and sound development in Poland, Romania, Switzerland, Belgium and France. In contrast, a decline of 13% in US housing starts and significantly higher energy prices had a negative effect". Mr Reithofer said he considered it a clear confirmation of the group's strategy that Wienerberger was able to utilise the good demand in Europe to substantially increase sales volumes and implement necessary price adjustments and thereby more than offset an EBITDA decline of 5% in the USA as well as an additional charge of €47 million from higher energy prices.
Wienerberger recorded an 11% increase in profit after tax to €218.3 million and earnings per share to €2.95, which resulted mainly from the improvement in operating earnings. Higher interest expense and lower income from investments, which were positively influenced by non-recurring effects in the previous year, led to a 10% deterioration in financial results to -€20.2 million. The tax rate declined slightly to 21.3% (2005: 21.8%). Non-recurring expenses from the shutdown of plants in the USA and Czech Republic were almost offset by income from the sale of a non-operating property in the south of Vienna.
"We also want our shareholders to benefit directly from this development, and the Managing Board will therefore recommend that the Annual General Meeting approve a 10% increase in the dividend to €1.30 per share," announced Mr Reithofer. That represents a yield of 3.4% on the average share price for 2006 and a pay-out ratio equal to roughly 45% of net profit. "We also want to offer our shareholders an attractive minimum return on their invested capital in the future in the form of appropriate dividends," he added.
Looking forward, Mr Reithofer said: "We expect continued growth in 2007 based on the favorable development of markets in Europe, which should help us to offset potential market declines in the USA. Our forecasts call for an increase of €30 million in energy costs, but we should be in a position to pass on the major part of these higher expenses through an adjustment to our selling prices, provided there are no significant declines on individual markets.
"The mild winter in large parts of Europe during the first quarter of 2007 is certainly helpful. However, it cannot be interpreted as an indication for the development of earnings in 2007 because of the low significance of this period for the full business year - experience shows that we generate only around 15% of our annual revenues during the first quarter."
For 2007 Wienerberger expects continued growth in Central-East Europe and strong demand for bricks, especially in Poland, Romania and Bulgaria. In Russia construction has commenced on a second plant 800km east of Moscow and the group's first plant near this city entered the start-up phase last October. "The signs are also good in Western Europe. Rising consumer confidence in Germany, stronger new residential construction in Belgium and France, and growth in the Netherlands and Great Britain from the current moderate level will provide support for the development of business this year," observed Mr Reithofer. "We also intend to use the continued optimization of our plants as well as the full-year consolidation of Robinson Brick to generate earnings growth in the USA during 2007.
"Based on our strong geographic portfolio, I am confident that we will be able to meet our goal and again record an above-average increase in earnings during 2007. For this year we expect a total investment volume of €500 million, whereby €120 million will be directed to maintenance capex and at least €250 million to bolt-on projects - in particular the construction of new plants and extension of capacity. Approximately €130 million will be added to this amount if the UK competition commission approves the acquisition of Baggeridge Brick."
www.wienerberger.com
ENDS