Quarterly Report • Aug 27, 2010
Quarterly Report
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| Earnings Data | 1-6/2009 | 1-6/2010 | Chg. in % | Year-end 2009 | |
|---|---|---|---|---|---|
| Revenues | in € mill. | 898.1 | 825.6 | -8 | 1,816.9 |
| Operating EBITDA 1) | in € mill. | 100.6 | 78.3 | -22 | 208.6 |
| Operating EBIT 1) | in € mill. | 7.8 | -16.7 | <-100 | 19.0 |
| Profit before tax | in € mill. | -222.8 | -45.2 | +80 | -295.6 |
| Profit after tax 2) | in € mill. | -204.0 | -39.4 | +81 | -258.7 |
| Earnings per share | in € | -2.65 | -0.46 | +83 | -3.17 |
| Adjusted earnings per share 3) | in € | -0.17 | -0.46 | <-100 | -0.34 |
| Free cash flow 4) | in € mill. | 7.9 | -22.3 | <-100 | 250.8 |
| Maintenance capex | in € mill. | 30.7 | 21.6 | -30 | 62.7 |
| Growth investments | in € mill. | 60.3 | 18.9 | -69 | 71.4 |
| Balance Sheet Data | 31.12.2009 | 30.6.2010 | Chg. in % | |
|---|---|---|---|---|
| Equity 5) | in € mill. | 2,547.0 | 2,571.9 | +1 |
| Net debt | in € mill. | 408.0 | 484.8 | +19 |
| Capital employed | in € mill. | 2,816.8 | 2,916.8 | +4 |
| Balance sheet total | in € mill. | 4,087.4 | 4,126.0 | +1 |
| Gearing | in % | 16.0 | 18.8 | - |
| Employees 6) | 12,676 | 11,879 | -6 |
| Stock Exchange Data | 1-12/2009 | 1-6/2010 | Chg. in % | |
|---|---|---|---|---|
| Share price high | in € | 17.24 | 16.18 | -6 |
| Share price low | in € | 4.70 | 9.87 | >100 |
| Share price at end of period | in € | 12.78 | 10.06 | -21 |
| Shares outstanding (weighted) 7) | in 1,000 | 91,298 | 116,413 | +28 |
| Market capitalization at end of period | in € mill. | 1,502.0 | 1,181.7 | -21 |
| Operating Segments 1-6/2010 in € mill. and % |
Central-East Europe |
Central-West Europe |
North-West Europe |
North America |
Investments and Other 8) |
|||||
|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | 233.3 | (-15%) | 175.8 | (-4%) | 359.6 | (-5%) | 71.5 | (-6%) | -14.6 (+10%) | |
| Operating EBITDA 1) | 30.6 | (-37%) | 9.7 | (-15%) | 49.7 | (-19%) | -0.5 (+94%) | -11.2 (+13%) | ||
| Operating EBIT 1) | -1.4 (<-100%) | -6.6 | (-12%) | 17.5 | (-39%) | -12.2 (+36%) | -14.0 | (-6%) | ||
| Total investments | 11.1 | (-71%) | 8.8 (+11%) | 17.3 | (-39%) | 3.0 | (-64%) | 0.3 | (-96%) | |
| Capital employed | 791.9 | (-8%) | 362.1 | (-17%) | 1,159.7 | (-6%) | 552.9 | (+5%) | 50.2 | (-2%) |
| Employees 6) | 4,498 | (-17%) | 2,008 | (-8%) | 3,984 | (-4%) | 1,147 | (-1%) | 242 | (0%) |
1) Adjusted for non-recurring income and expenses
2) Before non-controlling interests and accrued hybrid coupon
3) Adjusted for non-recurring income and expenses; after accrued hybrid coupon
4) Cash flow from operating activities minus cash flow from investing activities plus growth investments
5) Equity including non-controlling interests and hybrid capital
6) Average number of employees for the year
7) Adjusted for treasury stock
8) Including Group eliminations and holding costs; negative revenues are due to the offset of inter-company sales in this segment
Note: In the table of the operating segment data, changes in % to the comparable prior year period are shown in brackets.
There are still no signs of the long-awaited recovery in new residential construction, and we were again confronted with a difficult economic environment in recent months. Against this backdrop, I am particularly pleased to report a significant improvement in earnings recorded by Wienerberger during the second quarter. The development of our business was influenced by a decline in construction activity across Central-East Europe due to heavy rainfalls and flooding in April and May as well as lower average prices, but we were nevertheless able to increase operating EBITDA by an impressive 20% to € 100.9 million in the second quarter. This clearly demonstrates the success of our restructuring measures and is fully in line with our earlier cost savings guidance.
The first half-year brought a decline of 8% in revenues to € 825.6 million and 22% in operating EBITDA to € 78.3 million. This is a direct result of our weak start to 2010, when the Group recorded a negative operating EBITDA of € 22.6 million for the first quarter – a consequence of the unusually long and harsh winter – as well as the fact that it is not possible to offset such an initial loss in only three months. However, we are definitely on the right track: in addition to the second quarter earnings improvement facilitated by our cost savings program, we have cut net debt to € 485 million since March.
The past months were characterized by further substantial weakness in the macroeconomic environment. The crisis in Greece shifted the focus of attention to the high level of sovereign debt in Europe and was followed by the implementation of extensive austerity measures in many EU member states. The subsequent rise in uncertainty and decline in consumer confidence, as well as the continuing high level of unemployment, had a negative effect on new residential construction. This climate led Euroconstruct to revise its 2010 forecasts for new residential construction in Europe downward from -2.2% to -4.0% at the end of June. For these reasons, I do not foresee any improvement in the market environment during the second half of this year. In Western Europe, I expect a slight positive trend on the new residential construction markets in Great Britain, France and Germany, but a further decline in the Netherlands. Construction activity in Central-East Europe remains very limited and I do not anticipate any recovery this year. Sales volumes in the USA should remain stable despite the expiration of a tax benefit for first-time buyers at the end of April this year.
We have successfully utilized our strength in the current market environment in order to implement a more competitive pricing policy and have successfully strengthened our market shares in the Czech Republic, Slovakia and Hungary – and increased our positions in Romania and Bulgaria. More flexible pricing is also planned for Poland and Germany over the coming months as a reaction to rising competitive pressure. In the USA, we will respond to aggressive pricing by the competition at a local level. Overall, my personal expectation is that the negative price effect of 5% for the first six months will become more moderate by the end of the year.
During the reporting period, we also successfully positioned Wienerberger premium products such as the POROTHERM plane ground block and Dryfix® in Central-East Europe. In addition, we sustainably improved our position in the roofing market by expanding the KoraTech® product line. In the pavers segment, we held our solid positions in East European infrastructure markets with Semmelrock. The operational performance of Pipelife was satisfactory during the first half-year, and we intend to further develop this business together with our joint venture partner Solvay.
Even without any tailwind from our markets, I view the future of Wienerberger with optimism because I expect the positive second quarter trend will continue. It will not be possible to completely make up for the negative first quarter, but I do anticipate an improvement in earnings for the full year as a result of cost savings from the Action Plan 2009 as well as a pricerelated decline in energy costs.
Heimo Scheuch, Chief Executive Officer of Wienerberger AG
No signs of improvement in market environment during second half-year expected
Competitive pricing policy to increase market shares
Satisfactory development of operating business
Higher earnings expected for full year due to cost savings
Revenues and operating EBITDA as a % of 100
Operating EBITDA
As the result of a weather-related very weak first quarter, Wienerberger recorded an 8% yearon-year revenue decline to € 825.6 million for the first six months of 2010. This development comprised a decrease of 5% in volumes and 5% in average prices that was partly offset by 2% of positive foreign exchange effects, mainly from stronger East European currencies.
The decline in demand is explained above all by the weak state of new residential construction in Central-East Europe. Building activity in this region was limited during four of the six months in the reporting period by the severe winter followed by heavy rainfalls during April and May. Sales volumes in Western Europe were stable in comparison with the first half of 2009. Moderate growth in Great Britain, Germany, France and Belgium – above all during the second quarter – was able to offset declines in the Netherlands and Italy. In North America, the expected stabilization at a low level has materialized.
The 5% decline in average prices resulted primarily from our aggressive pricing policy in Eastern Europe. In this difficult operating climate, we are using our financial strength to maintain and/or expand our market positions. In Bulgaria and Romania we have substantially increased our market shares by successfully pushing back imports.
In spite of lower average prices and weak demand in Eastern Europe, we were able to increase operating EBITDA by 20% to € 100.9 million in the second quarter. This demonstrates the success of our restructuring measures through better capacity utilization and the resulting lower production costs as well as fixed cost savings in the first half-year. We started the year with operating EBITDA of € -22.6 million for the first quarter because of the bad weather – a loss that cannot be offset in three months. Results for the first six months therefore show operating EBITDA of € 78.3 million and operating EBIT of € -16.7 million.
The financial result was substantially less than the prior year, equaling € -28.6 million for the reporting period (2009: € -18.1 million). This development resulted chiefly from non-recurring expenses related to the premature repayment of loans and issue costs for the new bond placed in April as well as lower earnings contributions from associates (Tondach Gleinstätten and the Pipelife Group).
The absence of restructuring costs led to an improvement in profit after tax from € -204.0 million in the previous half-year to € -39.4 million for the reporting period at a tax rate of 13.0% (2009: 8.4%). Based on a 40% rise in the number of shares outstanding following last year's capital increase, earnings per share amounted to € -0.46 (2009: € -0.17) adjusted for restructuring effects and hybrid coupon.
Gross cash flow totaled € 63.7 million, and exceeded the comparable prior year level by € 13.9 million due to the absence of restructuring costs. Inventories rose slightly during the first half of 2010 for seasonal reasons and resulted in a year-on-year decline in cash flow from operating activities to € 11.9 million.
Cash outflows for investments and acquisitions equaled € 40.5 million and were significantly lower than the first half of 2009. Of this total, € 18.9 million were used to complete projects and € 21.6 million represented maintenance capex.
The proceeds from the bond issued in April 2010 and the repurchase of the 2005 bond are shown as a net amount under the change in long-term financial liabilities. A coupon of € 32.5 million was paid on the hybrid capital in February. The dividend for the 2009 financial year was waived to preserve cash.
Group equity was reduced by the payment of the € 32.5 million hybrid coupon in February 2010 and the after-tax loss recorded for the first half-year. These effects were more than offset by positive currency translation differences of € 123.6 million recognized directly in equity, which resulted primarily from the US dollar, the British pound and the Russian ruble. In total, Group equity rose slightly to € 2,571.9 million as of June 30, 2010. Net debt declined from € 584.8 million on March 31, 2010 to € 484.8 million, and reduced gearing to only 19%.
At the end of March, Wienerberger issued a new bond with a 4¼-year term and a volume of € 250 million. This reduced our mid-term refinancing requirements and further improved the term structure of our liabilities. The proceeds from the new bond were used in part to repurchase approx. € 140 million of the 2005 bond that is due in April 2012. Part of the remaining funds was also used to repay other financial liabilities. With a gearing of 19% at the end of the reporting period, we have a strong balance sheet. The ratio of net debt to LTM operating EBITDA equaled 2.6 and the tangible equity ratio (equity minus goodwill) / (total assets minus goodwill) amounted to 56% as of June 30, 2010; these indicators are therefore substantially below/above the covenant levels defined in the loan agreements respectively.
| Term structure of |
|---|
| liabilities further |
| improved |
Gearing of only 19%
| Treasury Ratios | 30.6.2009 | 30.6.2010 | Covenant level |
|---|---|---|---|
| Net debt / LTM operating EBITDA 1) | 3.2 | 2.6 | <3.75 4.0 2) |
| (Equity minus goodwill) / (Total Assets minus goodwill) | 46% | 56% | >35% |
1) Before restructuring costs and impairment charges to property, plant and equipment and goodwill
2) This ratio is permitted to rise to 4.0 on a maximum of two occasions
Operating EBITDA increased by 20% to € 100.9 million in the second quarter
Group revenues rose by 2% to € 546.1 million and operating EBITDA by 20% to € 100.9 million in the second quarter. The improvement in earnings was made possible above all by our streamlined cost structures, and underscores the success of the restructuring measures implemented in 2009. The cost savings realized to date, better capacity utilization and lower energy costs were the main factors for the reduction in production costs. Central-East Europe was the only region to report a year-on-year revenue decline of 5% for the second quarter. This development reflected the sharp, weather-related drop in construction activity, which triggered strong competition in the relevant countries. In spite of these unfavorable conditions, better capacity utilization and lower production costs supported an 11% increase in operating EBITDA to € 43.4 million for this region in the second quarter. Revenues in Central-West Europe rose by 3% to € 119.9 million following modest recovery in new residential construction in the German market and stable volumes in Switzerland. However, operating EBITDA fell by 8% to € 15.6 million due to ongoing competition in Italy and rising pressure on prices in Germany. All countries in North-West Europe, with the exception of the Netherlands, reported higher revenues and earnings, thereby largely offsetting the weather-related weak first quarter. Double-digit volume growth in Great Britain as well as stable volumes in Belgium and France supported an increase in revenues as well as a strong 23% improvement in operating EBITDA to € 44.5 million. North America reported an increase in revenues over the comparable prior-year period to € 43.7 million, which reflected the expected stabilization of US new residential construction. Cost savings from the restructuring measures as well as a significant improvement in capacity utilization allowed North America to again generate positive operating EBITDA at € 3.3 million.
| Revenues in € mill. | 4-6/2009 | 4-6/2010 | Chg. in % |
|---|---|---|---|
| Central-East Europe | 182.3 | 173.5 | -5 |
| Central-West Europe | 116.0 | 119.9 | +3 |
| North-West Europe | 207.8 | 218.4 | +5 |
| North America | 41.1 | 43.7 | +6 |
| Investments and Other 1) | -9.4 | -9.4 | 0 |
| Wienerberger Group | 537.8 | 546.1 | +2 |
| Operating EBITDA 2) in € mill. | 4-6/2009 | 4-6/2010 | Chg. in % |
|---|---|---|---|
| Central-East Europe | 39.1 | 43.4 | +11 |
| Central-West Europe | 16.9 | 15.6 | -8 |
| North-West Europe | 36.3 | 44.5 | +23 |
| North America | -2.1 | 3.3 | >100 |
| Investments and Other 1) | -5.8 | -5.9 | -2 |
| Wienerberger Group | 84.4 | 100.9 | +20 |
1) Including Group eliminations and holding costs; negative revenues due to the offset of inter-company sales in this segment
2) Before restructuring costs and impairment charges to property, plant and equipment and goodwill
Above all, the development of sales volumes in Central-East Europe during the first halfyear was influenced by the bad weather. The long severe winter in the early months and flooding across large parts of the region in April and May were responsible for a four-month construction stoppage, which, in part, led to significant declines in the demand for building markets on all markets. This situation resulted in a 15% drop in revenues to € 233.3 million (2009: € 275.5 million). Standstill and start-up costs as well as lower average prices were responsible for a 37% decline in operating EBITDA to € 30.6 million (2009: € 48.5 million). Central-East Europe generated 28% of Group revenues and 39% of operating EBITDA for the first six months of 2010.
Significant volume declines were recorded for clay blocks, facing bricks and clay roof tiles during the first six months. Our specialist for concrete pavers – Semmelrock – reported better development as the result of public sector infrastructure projects and was able to match prioryear earnings based on a slight increase in volumes.
In Poland, our largest market in the region, weaker construction activity was reflected in increasing competition. Statistics showed a rise in housing starts, but the demand for building materials fell during the first half of 2010. We see the reason for this development in the expiration of building permits granted in 2008, which led to the official registration but not the actual start of construction at numerous sites during recent months. The markets in Hungary, the Czech Republic and Slovakia remain difficult because of a lack of demand in a highly competitive environment. Despite a decline in demand, Romania and Bulgaria recorded higher volumes and a substantial gain in market share. We were able to use our strong position in Central-East Europe to strengthen and expand our market shares with selective price adjustments.
Construction activity in Central-East Europe remains very limited and there is no recovery in sight. We expect the demand for building materials in Poland to stabilize during the second half-year and plan to further expand our position through pricing measures and premium products. Hungary will remain the most difficult market in this region because of its macroeconomic problems. In Bulgaria and Romania, we are expecting a further increase in our market share. Our plans for the Czech Republic and Slovakia include targeted pricing measures and a focus on premium products to counter the continuing competitive pressure.
| Central-East Europe | 1-6/2009 | 1-6/2010 | Chg. in % | |
|---|---|---|---|---|
| Revenues | in € mill. | 275.5 | 233.3 | -15 |
| Operating EBITDA 1) | in € mill. | 48.5 | 30.6 | -37 |
| Operating EBIT 1) | in € mill. | 17.3 | -1.4 | <-100 |
| Total investments | in € mill. | 38.8 | 11.1 | -71 |
| Capital employed | in € mill. | 856.8 | 791.9 | -8 |
| Ø Employees | 5,391 | 4,498 | -17 | |
| Sales volumes clay blocks | in mill. NF | 1,468 | 1,225 | -17 |
| Sales volumes concrete pavers | in mill. m2 | 4.73 | 4.93 | +4 |
| Sales volumes concrete roof tiles 2) | in mill. m2 | 6.02 | 5.00 | -17 |
1) Before restructuring costs and impairment charges to property, plant and equipment and goodwill
2) Sales volumes are not proportional, but reflect 100%
Volume development impaired by bad weather
1 Central-East Europe: 39% 2 Central-West Europe: 12% 3 North-West Europe: 63% 4 North America: -1% 5 Investments and Other: -13%
Improvement in second quarter; higher volumes in Germany
Segment revenues of € 175.8 million (2009: € 182.4 million) were only 4% lower than in the comparable prior-year period. Standstill and start-up costs as well as steady pressure on prices in Italy had a negative effect on operating EBITDA, which fell by 15% to € 9.7 million (2009: € 11.4 million). Central-West Europe accounted for 21% of Group revenues and 12% of operating EBITDA for the reporting period.
Developments in Germany were characterized by a positive trend in the demand for bricks beginning in March, which was slowed somewhat by weaker exports to Central-East Europe. Competition in this market also started to increase in recent months. Stability in the renovation sector allowed for an increase in volumes of clay roof tiles. Sales volumes in Switzerland roughly matched the prior-year and prices remained stable. The demand for bricks in Italy continued to decline with ongoing pressure on prices as a result of structural overcapacities.
For 2010, we expect a modest improvement in new residential construction in Germany, the most important market in this region. However, progress could be slowed by the government's austerity program and forecasts for the full year are therefore difficult. Switzerland should remain stable through the end of the year, and in Italy we are expecting a further decline in the building materials market.
| Central-West Europe | 1-6/2009 | 1-6/2010 | Chg. in % | |
|---|---|---|---|---|
| Revenues | in € mill. | 182.4 | 175.8 | -4 |
| Operating EBITDA 1) | in € mill. | 11.4 | 9.7 | -15 |
| Operating EBIT 1) | in € mill. | -5.9 | -6.6 | -12 |
| Total investments | in € mill. | 7.9 | 8.8 | +11 |
| Capital employed | in € mill. | 434.5 | 362.1 | -17 |
| Ø Employees | 2,180 | 2,008 | -8 | |
| Sales volumes clay blocks | in mill. NF | 619 | 617 | 0 |
| Sales volumes facing bricks | in mill. WF | 70 | 56 | -20 |
| Sales volumes clay roof tiles 2) | in mill. m2 | 3.37 | 3.50 | +4 |
1) Before restructuring costs and impairment charges to property, plant and equipment and goodwill
2) Sales volumes of clay roof tiles include accessories
All countries in North-West Europe, with the exception of the Netherlands, recorded higher revenues and earnings in the second quarter and thereby offset the major part of the declines registered in the weather-related weak first three months. Revenues for the first six months of 2010 totaled € 359.6 million (2009: € 380.2 million) and operating EBITDA € 49.7 million (2009: € 61.4 million). This segment was responsible for 44% of revenues and an impressive 63% of operating Group EBITDA.
Great Britain reported continued moderate volume growth during the second quarter. In total, more facing bricks and clay roof tiles were sold in the first half of 2010 than in the comparable period of 2009. The year-on-year decline in average prices in the British market reflected a temporary and above-average increase in sales of commodity products during the first months of this year.
Great Britain better than expected in first half-year
New residential construction in France developed better than expected, and demand in Belgium nearly reached the prior-year level. In the Netherlands, the lack of financing for residential construction projects and cost savings in the public sector continue to fuel the market downturn.
Even though these market trends are expected to continue, it will be difficult to completely offset the first quarter. For the full year we expect modest recovery in Great Britain and France, stable development in Belgium and a further decline in the demand for building materials in the Netherlands. Additionally, we are anticipating stable prices in the North-West Europe segment in the second half-year.
| North-West Europe | 1-6/2009 | 1-6/2010 | Chg. in % | |
|---|---|---|---|---|
| Revenues | in € mill. | 380.2 | 359.6 | -5 |
| Operating EBITDA 1) | in € mill. | 61.4 | 49.7 | -19 |
| Operating EBIT 1) | in € mill. | 28.6 | 17.5 | -39 |
| Total investments | in € mill. | 28.4 | 17.3 | -39 |
| Capital employed | in € mill. | 1,235.5 | 1,159.7 | -6 |
| Ø Employees | 4,137 | 3,984 | -4 | |
| Sales volumes clay blocks | in mill. NF | 490 | 493 | +1 |
| Sales volumes facing bricks | in mill. WF | 598 | 592 | -1 |
| Sales volumes clay roof tiles 2) | in mill. m2 | 6.22 | 6.09 | -2 |
1) Before restructuring costs and impairment charges to property, plant and equipment and goodwill
2) Sales volumes of clay roof tiles include accessories
After the long and severe winter, the expected stabilization took hold in North America during the past months. Volumes were 3% lower in the first half-year, but slightly higher than the 2009 level in the second quarter. Revenues fell slightly to € 71.5 million (2009: € 76.3 million), but operating EBITDA improved significantly from € -7.9 million to € -0.5 million due to higher capacity utilization and cost savings. This segment contributed 9% to Group revenues and -1% to operating EBITDA.
The tax benefits for first-time buyers expired at the end of April and, as expected, led to a significant decline in housing starts during May. Since the beginning of the year, the NAHB (National Association of Home Builders) has revised its forecasts for 2010 housing starts downward from 700,000 to 600,000 units, confirming our assumption at the start of this year.
We are expecting stable development in this segment during the second half of 2010. Operating EBITDA should be positive for the full year based on a strong increase in capacity utilization over the prior year to 40-50% as well as stable volumes, even if we have adjusted prices in selected local markets in reaction to aggressive pricing by the competition.
Stable development in new residential construction forecasted for second half-year
| North America | 1-6/2009 | 1-6/2010 | Chg. in % | |
|---|---|---|---|---|
| Revenues | in € mill. | 76.3 | 71.5 | -6 |
| Operating EBITDA 1) | in € mill. | -7.9 | -0.5 | +94 |
| Operating EBIT 1) | in € mill. | -19.0 | -12.2 | +36 |
| Total investments | in € mill. | 8.4 | 3.0 | -64 |
| Capital employed | in € mill. | 527.2 | 552.9 | +5 |
| Ø Employees | 1,153 | 1,147 | -1 | |
| Sales volumes facing bricks | in mill. WF | 146 | 142 | -3 |
1) Before restructuring costs and impairment charges to property, plant and equipment and goodwill
The Investments and Other segment comprises the corporate headquarters and related costs, the Wienerberger brick business in India and other investments held by the Group. In particular, these investments include the 50/50 Pipelife joint venture (consolidated at-equity, and therefore not included in operating results).
Active further development of Pipelife, a key support for Wienerberger
The Pipelife Group – a joint venture with our Belgian partner Solvay – is one of the largest international suppliers of plastic pipe systems with over 2,800 employees in 28 countries (Europe and the USA). The company's products are used in residential construction (water and heating) as well as in the public sector (water supply, sewage, gas, etc). We view Pipelife as an important part of our business, not least because of its close connection to our industry and markets, and we intend to actively further the development of this company together with Solvay. Pipelife has also started to implement extensive restructuring measures last year and will continue to adjust its structures to reflect the weaker market environment.
| Investments and Other 1) | 1-6/2009 | 1-6/2010 | Chg. in % | |
|---|---|---|---|---|
| Revenues | in € mill. | 5.9 | 5.3 | -10 |
| Operating EBITDA 2) | in € mill. | -12.8 | -11.2 | +13 |
| Operating EBIT 2) | in € mill. | -13.2 | -14.0 | -6 |
| Capital employed | in € mill. | 51.0 | 50.2 | -2 |
| Ø Employees | 243 | 242 | 0 |
1) Revenues excluding Group eliminations, earnings including holding company costs
2) Before restructuring costs and impairment charges to property, plant and equipment and goodwill
| in TEUR | 4-6/2010 | 4-6/2009 | 1-6/2010 | 1-6/2009 |
|---|---|---|---|---|
| Revenues | 546,051 | 537,840 | 825,567 | 898,125 |
| Cost of goods sold | -359,627 | -369,563 | -599,008 | -638,761 |
| Gross profit | 186,424 | 168,277 | 226,559 | 259,364 |
| Selling expenses | -109,010 | -104,232 | -191,024 | -195,182 |
| Administrative expenses | -31,738 | -31,265 | -60,638 | -63,798 |
| Other operating expenses | -11,109 | -11,020 | -21,695 | -20,936 |
| Other operating income | 18,238 | 15,046 | 30,128 | 28,362 |
| Profit/loss before restructuring costs and impairment charges to property, plant and equipment and goodwill |
52,805 | 36,806 | -16,670 | 7,810 |
| Restructuring costs and impairment charges to property, plant and equipment | 0 | -44,585 | 0 | -87,174 |
| Impairment charges to goodwill | 0 | -125,390 | 0 | -125,390 |
| Profit/loss after restructuring costs and impairment charges to property, plant and equipment and goodwill |
52,805 | -133,169 | -16,670 | -204,754 |
| Income from investments in associates | -600 | 3,562 | -1,484 | 148 |
| Interest and similar income | 5,423 | 4,278 | 8,512 | 9,649 |
| Interest and similar expenses | -20,171 | -13,751 | -32,104 | -27,962 |
| Other financial results | -3,568 | -10,658 | -3,485 | 98 |
| Financial results | -18,916 | -16,569 | -28,561 | -18,067 |
| Profit/loss before tax | 33,889 | -149,738 | -45,231 | -222,821 |
| Income taxes | -4,211 | 6,732 | 5,871 | 18,791 |
| Profit/loss after tax | 29,678 | -143,006 | -39,360 | -204,030 |
| Thereof attributable to non-controlling interests | 964 | 440 | -1,440 | -815 |
| Thereof attributable to hybrid capital holders | 8,102 | 8,102 | 16,116 | 16,116 |
| Thereof attributable to equity holders | 20,612 | -151,548 | -54,036 | -219,331 |
| Adjusted earnings per share (in EUR) | 0.18 | 0.22 | -0.46 | -0.17 |
| Earnings per share (in EUR) | 0.18 | -1.83 | -0.46 | -2.65 |
| Diluted earnings per share (in EUR) | 0.18 | -1.83 | -0.46 | -2.65 |
| 1-6/2010 | 1-6/2009 | |||||
|---|---|---|---|---|---|---|
| in TEUR | Group | Non-controlling interests |
Total | Group | Non-controlling interests |
Total |
| Profit/loss after tax | -37,920 | -1,440 | -39,360 | -203,215 | -815 | -204,030 |
| Foreign exchange adjustments | 121,070 | -131 | 120,939 | 1,287 | -592 | 695 |
| Foreign exchange adjustments to investments in associates |
2,672 | 0 | 2,672 | -950 | 0 | -950 |
| Changes in hedging reserves | -26,767 | 0 | -26,767 | -2,302 | 0 | -2,302 |
| Other 1) | -113 | 0 | -113 | 44 | 0 | 44 |
| Other comprehensive income 2) | 96,862 | -131 | 96,731 | -1,921 | -592 | -2,513 |
| Total comprehensive income | 58,942 | -1,571 | 57,371 | -205,136 | -1,407 | -206,543 |
| Thereof share planned for hybrid capital holders | 16,116 | 16,116 | ||||
| Thereof comprehensive income attributable to equity holders |
42,826 | -221,252 |
1) Changes in the fair value of available-for-sale financial instruments, which were recognized to the statement of comprehensive income, are included under "Other".
2) The components of other comprehensive income are reported net of tax.
| in TEUR | 30.6.2010 | 31.12.2009 |
|---|---|---|
| Assets | ||
| Intangible assets and goodwill | 675,801 | 641,109 |
| Property, plant and equipment | 1,921,521 | 1,905,437 |
| Investment property | 48,027 | 41,272 |
| Investments in associates | 120,165 | 118,977 |
| Other financial assets | 19,802 | 19,250 |
| Deferred tax assets | 45,938 | 37,636 |
| Non-current assets | 2,831,254 | 2,763,681 |
| Inventories | 564,696 | 552,352 |
| Trade receivables | 192,691 | 110,312 |
| Other current receivables | 114,878 | 118,694 |
| Securities and other financial assets | 93,369 | 92,766 |
| Cash and cash equivalents | 329,133 | 449,612 |
| Current assets | 1,294,767 | 1,323,736 |
| Total assets | 4,126,021 | 4,087,417 |
| Equity and Liabilities | ||
| Issued capital | 117,527 | 117,527 |
| Total Equity and Liabilities | 4,126,021 | 4,087,417 |
|---|---|---|
| Current provisions and liabilities | 421,341 | 414,568 |
| Other current liabilities | 147,370 | 128,841 |
| Trade payables | 179,830 | 156,000 |
| Short-term financial liabilities | 37,627 | 69,851 |
| Other current provisions | 56,514 | 59,876 |
| Non-current provisions and liabilities | 1,132,777 | 1,125,817 |
| Other non-current liabilities | 30,668 | 28,044 |
| Long-term financial liabilities | 869,725 | 880,507 |
| Other non-current provisions | 69,292 | 66,307 |
| Deferred taxes | 98,720 | 89,164 |
| Employee-related provisions | 64,372 | 61,795 |
| Equity | 2,571,903 | 2,547,032 |
| Non-controlling interests | 22,845 | 24,416 |
| Treasury stock | -40,697 | -40,697 |
| Other reserves | -76,986 | -173,848 |
| Retained earnings | 940,422 | 1,010,842 |
| Hybrid capital | 492,896 | 492,896 |
| Share premium | 1,115,896 | 1,115,896 |
| 2010 | 2009 | ||||||
|---|---|---|---|---|---|---|---|
| in TEUR | Group | Non-controlling interests |
Total | Group | Non-controlling interests |
Total | |
| Balance on 1.1. | 2,522,616 | 24,416 | 2,547,032 | 2,473,776 | 23,415 | 2,497,191 | |
| Total comprehensive income | 58,942 | -1,571 | 57,371 | -205,136 | -1,407 | -206,543 | |
| Dividend payments/hybrid coupon | -32,500 | 0 | -32,500 | -32,500 | -224 | -32,724 | |
| Capital increase/decrease | 0 | 0 | 0 | 0 | 0 | 0 | |
| Increase/decrease in non-controlling interests | 0 | 0 | 0 | 0 | 2,443 | 2,443 | |
| Increase/decrease in treasury stock | 0 | 0 | 0 | 0 | 0 | 0 | |
| Expenses from stock option plans | 0 | 0 | 0 | 234 | 0 | 234 | |
| Balance on 30.6. | 2,549,058 | 22,845 | 2,571,903 | 2,236,374 | 24,227 | 2,260,601 |
| in TEUR | 1-6/2010 | 1-6/2009 |
|---|---|---|
| Profit/loss before tax | -45,231 | -222,821 |
| Depreciation and amortization | 95,005 | 92,756 |
| Impairment charges to goodwill | 0 | 125,390 |
| Impairment of assets | 0 | 68,472 |
| Write-ups of fixed and financial assets | 0 | -844 |
| Increase/decrease in long-term provisions | 12,932 | -15,377 |
| Income from associates | 1,484 | -148 |
| Income/loss from the disposal of fixed and financial assets | -4,011 | -10,326 |
| Interest results | 23,592 | 18,313 |
| Interest paid | -32,360 | -27,771 |
| Interest received | 6,007 | 8,537 |
| Income taxes paid | 6,269 | 13,651 |
| Gross cash flow | 63,687 | 49,832 |
| Increase/decrease in inventories | -11,166 | 58,066 |
| Increase/decrease in trade receivables | -81,873 | -82,292 |
| Increase/decrease in trade payables | 23,025 | -12,370 |
| Increase/decrease in other net current assets | 12,323 | 12,171 |
| Changes in non-cash items resulting from foreign exchange translation | 5,951 | -2,720 |
| Cash flow from operating activities | 11,947 | 22,687 |
| Proceeds from the sale of assets (including financial assets) | 5,188 | 13,523 |
| Purchase of property, plant and equipment and intangible assets | -37,584 | -87,788 |
| Payments made for investments in financial assets | -313 | -11 |
| Increase/decrease in securities and other financial assets | -17,820 | 2,396 |
| Net payments made for the acquisition of companies | -2,650 | -3,186 |
| Net proceeds from the sale of companies | 0 | 0 |
| Cash flow from investing activities | -53,179 | -75,066 |
| Increase/decrease in long-term financial liabilities | -20,282 | 65,751 |
| Increase/decrease in short-term financial liabilities | -29,463 | 12,059 |
| Dividends paid by Wienerberger AG | 0 | 0 |
| Hybrid coupon paid | -32,500 | -32,500 |
| Dividends paid to and other changes in non-controlling interests | 0 | -224 |
| Dividend payments from associates | 0 | 58 |
| Capital increase Wienerberger AG | 0 | 0 |
| Cash flow from financing activities | -82,245 | 45,144 |
| Change in cash and cash equivalents | -123,477 | -7,235 |
| Effects of exchange rate fluctuations on cash held | 2,998 | 211 |
| Cash and cash equivalents at the beginning of the year | 449,612 | 206,835 |
| Cash and cash equivalents at the end of the year | 329,133 | 199,811 |
| 1-6/2010 in TEUR |
Central-East Europe |
Central-West Europe |
North-West Europe |
North America |
Investments and Other 2) |
Reconciliation 3) | Wienerberger Group |
|---|---|---|---|---|---|---|---|
| Third party revenues | 232,164 | 166,939 | 353,683 | 71,535 | 833 | 0 | 825,154 |
| Inter-company revenues | 1,107 | 8,815 | 5,966 | 0 | 4,513 | -19,988 | 413 |
| Total revenues | 233,271 | 175,754 | 359,649 | 71,535 | 5,346 | -19,988 | 825,567 |
| Operating EBITDA 1) | 30,612 | 9,709 | 49,753 | -533 | -11,206 | 0 | 78,335 |
| Operating EBIT 1) | -1,384 | -6,617 | 17,497 | -12,223 | -13,943 | 0 | -16,670 |
| Restructuring costs and impairment charges to property, |
|||||||
| plant and equipment | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Impairment charges to goodwill | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total investments | 11,112 | 8,807 | 17,322 | 2,961 | 345 | 0 | 40,547 |
| Capital employed | 791,870 | 362,092 | 1,159,715 | 552,876 | 50,232 | 0 | 2,916,785 |
| Ø Employees | 4,498 | 2,008 | 3,984 | 1,147 | 242 | 0 | 11,879 |
| 1-6/2009 | |||||||
| Third party revenues | 274,084 | 174,163 | 372,855 | 76,287 | 328 | 0 | 897,717 |
| Inter-company revenues | 1,368 | 8,282 | 7,304 | 0 | 5,609 | -22,155 | 408 |
| Total revenues | 275,452 | 182,445 | 380,159 | 76,287 | 5,937 | -22,155 | 898,125 |
| Operating EBITDA 1) | 48,474 | 11,400 | 61,409 | -7,896 | -12,821 | 0 | 100,566 |
| Operating EBIT 1) | 17,283 | -5,863 | 28,577 | -19,017 | -13,170 | 0 | 7,810 |
| Restructuring costs and impairment charges to property, plant and equipment |
-32,614 | -9,343 | -37,735 | -6,875 | -607 | 0 | -87,174 |
| Impairment charges to goodwill | -12,014 | -29,433 | -33,528 | -50,415 | 0 | 0 | -125,390 |
| Total investments | 38,843 | 7,877 | 28,415 | 8,394 | 7,445 | 0 | 90,974 |
| Capital employed | 856,848 | 434,461 | 1,235,447 | 527,153 | 51,063 | 0 | 3,104,972 |
| Ø Employees | 5,391 | 2,180 | 4,137 | 1,153 | 243 | 0 | 13,104 |
1) Before restructuring costs and impairment charges to property, plant and equipment and goodwill
2) The Investments and Other segment includes holding costs and brick activities in India.
3) The reconciliation comprises only the elimination of intra-group income and expenses between group companies.
The interim report as of June 30, 2010 was prepared in accordance with the principles set forth in International Financial Reporting Standards, Guidelines for Interim Reporting (IAS 34). The accounting and valuation methods in effect on December 31, 2009 remain unchanged. For additional information on the accounting and valuation principles, see the financial statements as of December 31, 2009, which form the basis for these interim financial statements. Wienerberger manages its business on a regional basis, which gives local operating management responsibility for all products within a country. Segment reporting reflects the regional focus of the Wienerberger Group.
The consolidated financial statements include all major Austrian and foreign companies in which Wienerberger AG has management control or directly or indirectly owns the majority of shares. Joint venture companies of the Schlagmann and Bramac Groups are consolidated on a proportionate basis at 50%. Briqueterie Rouffach SAS in France, which was acquired at the end of December, was initially consolidated as of January 1, 2010 based on preliminary values; this acquisition did not result in any material goodwill. The consolidated financial statements no longer include VVT Vermögensverwaltung GmbH, which was sold as of September 30, 2009.
The comparable prior year period from January 1, 2009 to June 30, 2009 did not include Semmelrock Ebenseer GmbH & Co KG, which resulted from the combination of concrete paver activities in Austria as of May 1, 2009, or Lusit KG and Lusit GmbH.
Changes in the consolidation range increased revenues by TEUR 7,436 and reduced EBITDA by TEUR 2,539 for the period from January 1, 2010 to June 30, 2010.
The sales volumes recorded by Wienerberger during the first and last months are lower than at mid-year due to the negative impact of the weather on construction activity. These seasonal fluctuations are demonstrated by data from the first or fourth quarters of the year, which generally lie below results for the second and third quarters.
The TEUR 500,000 hybrid capital is reported as a component of equity, while the coupon payment is shown as part of the use of earnings on the changes in equity statement. The issue costs and the discount were deducted from retained earnings. Wienerberger AG paid a coupon of TEUR 32,500 on February 9, 2010. The proportionate share of the accrued coupon interest for the first six months of 2010 equaled TEUR 16,116; this amount was reflected in the calculation of earnings per share and led to a reduction of EUR 0.14 in this ratio.
Group revenues fell 8% below the comparable prior year period to TEUR 825,567 for the first six months of 2010. Operating EBITDA before impairment charges and restructuring costs totaled TEUR 78,335, which is TEUR 22,231 less than the TEUR 100,566 recorded in the first half of 2009.
The loss after restructuring costs and impairment charges to property, plant and equipment and goodwill amounted to TEUR 16,670, compared with a loss of TEUR 204,754 in the prior year. The number of shares outstanding as of June 30, 2010 was 117,526,764.
Wienerberger held 1,113,603 treasury shares as of the balance sheet date, which were deducted in the calculation of earnings per share. The weighted average number of shares outstanding from January 1, 2010 to June 30, 2010 was 116,413,161.
Positive foreign exchange adjustments of TEUR 123,611 in the first six months of 2010 resulted above all from the US dollar, the British pound and the Russian ruble and were offset only in part by negative effects from the Hungarian forint. The hedging reserve fell by TEUR 26,767 after tax during the reporting period, primarily because of a change in the fair value of net investment hedge. Changes in the fair value of available-for-sale securities totaled TEUR -113. Expenses of TEUR 661 were recognized to the income statement during the reporting period to reflect the settlement at maturity of gas forwards (cash flow hedges) for which the respective changes in fair value were previously recorded under equity. The after-tax loss for the first six months reduced equity by TEUR 39,360. Total comprehensive income after tax increased equity by TEUR 57,371 for the reporting period.
Cash flow of TEUR 11,947 from operating activities was lower than the comparable prior year period (2009: TEUR 22,687) because of the weak first quarter. Cash outflows of TEUR 40,547 for investments in non-current assets (incl. financial assets) and acquisitions included TEUR 21,653 of maintenance, replacement and rationalization investments (maintenance capex) and TEUR 18,894 for acquisitions and the construction or expansion of plants (growth investments). Growth investments also include the acquisition of assets belonging to the insolvent brick producer Rimmele in Southern Germany during January 2010.
Maintenance capex and growth investments for the first six months of 2010 increased non-current assets by TEUR 37,584. Net debt rose by TEUR 76,869 over the level at December 12, 2009 to TEUR 484,849 for seasonal reasons and, above all, due to the payment of the TEUR 32,500 hybrid coupon in February and investments made during the reporting period.
Wienerberger AG placed a new TEUR 250,000 bond at the end of March, with the recognition of this instrument as a financial liability taking place on April 7, 2010. The new bond has a term of 4¼ years (due on July 7, 2014), a denomination of EUR 1,000 and a fixed coupon of 4.875%. The proceeds were used in part to repurchase the bond issued during 2005. The repurchase price equaled 100% of the nominal value of the bond plus accrued interest up to the date of repurchase. Individual certificates with a total volume of TEUR 140,000 were repurchased by the end of the subscription period on April 9, 2010 from the bond issued during 2005.
Wienerberger focuses on the early identification and active management of risks in its operating environment within the context of the principles defined by the Managing Board. The major risks identified by the Group during the first six months of 2010 were further weakness in the construction industry on nearly all markets as well as high inventory levels and the resulting pressure on prices. Wienerberger regularly monitors the risks in its operating environment as part of its corporate risk management program and takes appropriate actions to counter these risks. In particular, measures were implemented throughout the Group to optimize working capital and thereby manage the risks associated with high inventories. The development of the construction industry and major indicators of the demand for building materials are watched closely to permit the timely adjustment of capacity in the plant network to reflect changing market conditions. The price levels on local markets are also monitored regularly, and pricing strategies are adjusted if necessary. The risks expected by Wienerberger during the second half of this year are linked to uncertainty over the further development of the construction industry, continuing pressure on prices in most of the East European markets, Germany and a number of states in the USA as well as negative foreign exchange effects.
Especially in an economic environment that has been negatively influenced by the global economic crisis, Wienerberger continues to focus on cash preservation and the protection of its healthy financial base. In keeping with this strategy, the Group increased its financial strength with the issue of a new bond and the waiver of a dividend for the 2009 financial year by shareholders. The focus remains on the maximization of free cash flow and the reduction of net debt through cost savings, on a decrease in working capital and a cutback in investments to a minimum. The risks associated with rising energy costs are reduced by hedging the prices for the various types of energy used by the Group.
Wienerberger is exposed to legal risks in connection with increasingly strict environmental, health and safety regulations, whereby the Group could become liable for penalties or claims to compensation for damages in the event of non-compliance. In Italy the authorities have launched an investigation into possible environmental pollution at the Wienerberger locations, which has not produced any results to date.
Wienerberger is also exposed to legal risks from an impending antitrust penalty in Germany, for which a provision of TEUR 10,000 was recognized as of December 31, 2008. However, the related proceedings are not expected to start before 2011. It should be noted that price-fixing agreements are not part of Wienerberger business policies; internal guidelines prohibit such practices and call for sanctions in the event of violations.
The following companies and persons are considered to be related parties: the members of the Supervisory and Managing Boards, associated companies, joint ventures and non-consolidated subsidiaries of Wienerberger AG as well as the ANC Privatstiftung and its subsidiaries. As of June 30, 2010 Wienerberger AG and its subsidiaries held participation rights of TEUR 13,707 in the ANC Privatstiftung (2009: TEUR 13,707) as well as a receivable of TEUR 14,784 (2009: TEUR 16,586).
Wienerberger AG and its subsidiaries finance joint ventures, associated companies and non-consolidated subsidiaries through loans granted at ordinary market conditions. The outstanding receivables due from associates amounted to TEUR 7,743 as of June 30, 2010 (2009: TEUR 7,556). The comparable amounts for non-consolidated subsidiaries and joint ventures were TEUR 7,751 (2009: TEUR 9,554) and TEUR 4,742 (2009: TEUR 4,597), respectively.
This interim report by Wienerberger AG was neither audited nor reviewed by a certified public accountant.
We confirm to the best of our knowledge that the interim financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the group as required by the applicable accounting standards. Furthermore, the group management report gives a true and fair view of the assets, liabilities, financial position and profit or loss of the group regarding important events that have occurred during the first six months of the financial year and their impact on the interim financial statements, on the principal risks and uncertainties for the remaining six months of the financial year and of the major related party transactions to be disclosed.
The Managing Board of Wienerberger AG Vienna, August 17, 2010
Heimo Scheuch
Willy Van Riet CEO CFO COO
Johann Windisch
Wienerberger is the only multinational producer of bricks and roof tiles, with a total of 227 plants in 27 countries and five export markets, including the recently opened new plant in India. We are concentrating on our core expertise and continuously expanding our geographical portfolio. Our focus is placed on the development and expansion of strong positions in the markets in which we are present.
| August 17, 2010 | Results for the First Six Months of 2010 | |
|---|---|---|
| Press and Analysts Conference in Vienna | ||
| August 18, 2010 | Analysts Conference in London | |
| October 11, 2010 | Start of the quiet period | |
| November 3, 2010 | Third Quarter Results for 2010 | |
| December 2/3, 2010 | Capital Markets Day 2010 in Great Britain | |
| February 1, 2011 | Start of the quiet period | |
| February 22, 2011 | Results for 2010 Press and Analysts Conference in Vienna |
|
| February 23, 2011 | Analysts Conference in London | |
| March 31, 2011 | Publication of 2010 Annual Report on the Wienerberger website | |
| April 19, 2011 | Start of the quiet period | |
| May 10, 2011 | First Quarter Results for 2011 | |
| May 13, 2011 | 142nd Annual General Meeting in the Austria Center Vienna | |
| July 27, 2011 | Start of the quiet period | |
| August 17, 2011 | Results for the First Six Months of 2011 Press and Analysts Conference in Vienna |
|
| August 18, 2011 | Analysts Conference in London | |
| October 19, 2011 | Start of the quiet period | |
| November 9, 2011 | Third Quarter Results for 2011 |
| Investor Relations Officer | Barbara Braunöck |
|---|---|
| Shareholders' Telephone | +43 (1) 601 92-467 |
| [email protected] | |
| Internet | www.wienerberger.com |
| Vienna Stock Exchange | WIE |
| Thomson Reuters | WBSV.VI; WIE-VI |
| Bloomberg | WIE AV |
| Datastream | O: WNBA |
| ADR Level 1 | WBRBY |
| ISIN | AT0000831706 |
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