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[November 2007]
Wienerberger Records High Earnings Growth For First Nine Months
Wienerberger AG (Vienna, Austria) continued its growth course during the third quarter of 2007. Group revenues for the first nine months rose by 14% to €1.889.3 billion, EBITDA by 21% to €424.1 million and EBIT by 25% to €284.3 million.
"As expected, growth rates normalised in comparison with the exceptional strong development recorded during the first half-year: Central-East Europe continued to report sound growth after a boom in the first six months - and results in North-West Europe were also good. On the other hand Germany and the USA remained weak, as expected," commented Wolfgang Reithofer, CEO of Wienerberger AG, on the results presented for the first three quarters. "We are anticipating a continuation of this trend until the end of the year. Based on our excellent results for the first six months and the sound development during the third quarter, I am expecting an increase of at least 15% in EBITDA and earnings per share for 2007. Group revenues for the third quarter rose by 3% and EBITDA by 8% over the very strong comparable period of the previous year.”
In addition to favourable weather at the beginning of the year, a high level of construction activity in large parts of Europe – especially in Central-East Europe, which again made a major contribution to earnings in the third quarter of 2007 – was the driver for this strong earnings development. The North-West Europe segment also recorded an improvement in revenues and earnings, with added consolidation effects from the acquisitions of Baggeridge and Korevaar. This positive development was contrasted by an earnings decline in Central-West Europe, which resulted primarily from growing weakness in residential construction in Germany. In North America revenues and earnings continued to decline because of the current weakness in the US market, despite the initial consolidation of Arriscraft. The 14% revenue growth recorded by the Wienerberger Group first nine months was comprised of a 4% increase in sales volumes and 10% of price effects.
Central-East Europe recorded an increase of 37% in revenues to €651.4 million and 89% in EBITDA to €209 million for the reporting period. This segment generated 34% of group revenues and 49% of EBITDA during the first nine months of 2007. A strong improvement in earnings was registered above all in Poland – despite a normalisation of the overheated market situation that characterised the first-half year – as a result of a shift in the product mix to premium brick and price adjustments. In Romania and Bulgaria demand remained strong. Exports and higher sales volumes of premium bricks supported revenue growth in Hungary, although new residential construction slowed beginning in August. In Central-West Europe the increasingly disappointing development of new residential construction and weakness in the renovation market in Germany had a negative effect on the development of revenues, which rose by only 1% for the first nine months to €346.3 million. EBITDA fell by 10% to €65.4 million.
The North-West Europe segment recorded an increase of 14% in revenues to €674.9 million and 10% in EBITDA to €143.2 million for the first three quarters. The sound development of revenues was supported by higher sales volumes in all product areas as well as moderate price increases. Positive impulses were also provided by the initial consolidation of Baggeridge Brick in Great Britain and Korevaar in the Netherlands. Growth slowed as expected in Belgium, but earnings remained at a high level. In France hollow bricks gained further market share and Wienerberger could increase its earnings.
The North America segment recorded a 5% decrease in revenues to €258.7 million and 41% drop in EBITDA to €28.8 million for the first nine months despite the initial consolidation of Arriscraft, as a result of the decline in new residential construction and the weak exchange rate of the US dollar. With regard to the ongoing market weakness in the USA, optimisation programmes were intensified and a number of production lines were temporarily shut down.
Wienerberger is continuing its successful growth programme with investments of approximately €500 million in 2007. The funds were used in part to acquire Arriscraft and Baggeridge and more than €260 million were and will be invested in bolt-on projects, among others in Poland, the Czech Republic, Russia, Romania and France. These growth projects are financed with the hybrid bond that was issued in February 2007. In order to accelerate its dynamic expansion over the coming years, Wienerberger carried out a capital increase in October 2007. The issue covered 9.8 million new shares and generated net proceeds of approximately €424 million. "The funds raised through this capital increase will allow us to accelerate our bolt-on program and also carry out strategic acquisitions while maintaining our investment grade rating. Our plans include the construction of 25 new brick plants in CEE and Russia over the next five years, which will nearly double our capacity in these growth markets. These steps will allow us to continue our profitable growth strategy and also create above-average value in the future," explained Mr Reithofer.
Group EBIT rose by 25% year-on-year to €284.3 million and profit before tax increased by 43% to €287.7 million. An additional positive effect was the improvement in financial results from -€20 million to +€3.4 million, which was related to a book gain of €10.1 million on the sale of securities during the first quarter as well as gains on foreign currency and interest rate hedges and higher income from the Pipelife and Tondach Gleinstätten associates. Profit after tax rose by 50% to €235.4 million, whereby the deductibility of the hybrid coupon for tax purposes also led to a reduction in the group's tax rate. Adjusted earnings per share increased 25% from €2.20 to €2.74.
ENDS