Capital/Financing Update • Mar 24, 2010
Capital/Financing Update
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Wienerberger AG (Vienna Stock Exchange: WIE, Thomson Reuters: WBSV.VI, Bloomberg: WIE AV) NOT FOR DIS TRIBUTION IN THE UNITED S TATES , CANADA, JAPAN OR AUS TRALIA.
Vienna, March 24, 2010 – Wienerberger AG, the world's largest producer of bricks and the number one in clay roof tiles in Europe, announced a tender offer for the 2005 bond as well as the issue of a new bond (subject to the approval of the prospectus by the responsible authorities) at today's press conference on results for the 2009 financial year. Asked about the reasons for this step, Chief Financial Officer Willy Van Riet responded, "Wienerberger has a strong capital structure with low refinancing requirements up to the end of 2011, but the € 400 million bond issued in 2005 is due for repayment in 2012. In order to reduce our mid-term refinancing requirements and further improve the term structure of our financial liabilities, we have decided to issue a new bond. The proceeds will be used to repurchase in part of the 2005 bond and repay other liabilities." Wienerberger has a low level of debt with a gearing of 16%, and does not expect the conclusion of both transactions will lead to an increase in financial liabilities. "We are not planning to add any additional debt, but to replace existing older financial liabilities for new ones", explained Willy Van Riet in conclusion.
Wienerberger is offering to repurchase the bond issued in April 2005 – which has a volume of € 400 million, a coupon of 3.875% and matures ending in April 2012 – up to a maximum volume of € 200 million before maturity. The company reserves the right to also designate a higher amount, depending of the success of the tender. The offer price equals 100% of the nominal value plus accrued interest, and the offer period runs from March 31 to April 9. The results of the tender will be announced on April 13, with settlement taking place on April 15.
Depending on the market situation, the company also plans to issue a new bond with a scheduled volume of up to € 200 million. This measure is subject to the approval of the prospectus by the Financial Market Authority, which is expected today. The offering is directed to institutional investors and Austrian private investors. The new bond will have a term of 4¼ years (ending on July 7, 2014), will be issued with a denomination of € 1,000 each and carry interest at a fixed coupon that is expected to equal 4.875%. The coupon could change during the issue process; it will be determined and announced immediately before the start of the subscription period, which will run from March 29 to 31, 2010.
Transactions will improve Wienerberger term structure
Tender to repurchase 2005 bond at 100%
New bond with 4¼ year term and expected coupon of 4.875%
Wienerberger has appointed Erste Group Bank AG and Raiffeisen Zentralbank Österreich AG to manage the buyback for the old and the placement of the new bond.
Wienerberger also confirmed the preliminary results for 2009 that were announced on February 12. In a difficult year that was influenced by the financial and economic crisis, revenues fell by 25% to € 1,816.9 million. Weak consumer confidence and, above all, a lack of financing triggered a sharp drop in new construction on all Wienerberger markets. Declining sales volumes and slightly lower average prices as well as the cost of extensive plant standstills to reduce inventories as part of the active working capital management program led, as expected, to weaker operating results in 2009: operating EBITDA (before restructuring costs) fell by 53% to € 208.6 million and operating EBIT by 92% to € 19.0 million. EBIT after special effects totaled € -258.1 million following the recognition of € 121.4 million in restructuring costs for optimization measures (including € 52.6 million of cash expenses), € 32.3 million of impairment charges to real estate and € 123.3 million of impairment charges to goodwill. After financial results totaling € -37.5 million and income tax credits of € 36.9 million, the loss after tax amounted to € 258.7 million. Earnings per share equaled € -3.17 in 2009 (adjusted earnings per share: € -0.34).
Despite the weak development of operating earnings, Wienerberger increased free cash flow by an impressive 28% to roughly € 251 million in a difficult market environment with strict cost savings and, above all, a significant reduction in working capital and investments.
Wienerberger also announced its intention to waive the dividend for 2009. "We did not take this decision lightly and held numerous advance discussions with our shareholders. They provided us with nearly € 320 million through the capital increase in September 2009, and we consider it an obligation to handle these funds carefully to create the best possible value on their behalf", explained Heimo Scheuch, Chief Executive Officer of Wienerberger AG.
The visibility over future market developments is still very limited at the present time, and Wienerberger is accordingly reserved with its forecasts for 2010. The USA seems to have reached the bottom, but is still not clear if and to what extent new residential construction will recover. Market visibility is the lowest in Central-East Europe: Poland appears to be the most stable country because of strong domestic demand, but further significant declines cannot be excluded in the Czech Republic, Slovakia and Hungary. Wienerberger intends to counter the rising competitive pressure in these countries with more flexible pricing policies and an increased focus on premium products. The Group is more optimistic when evaluating the markets in Western Europe: Great Britain and Germany should record a slight improvement in volumes; new residential construction in France should stabilize; and Belgium and Switzerland should be marked by moderate weakness. Further declines are expected in the Netherlands due to the lack of project S ignificant earnings decline in 2009
Strong 28% increase in free cash flow
Waiver of dividend for 2009
financing and government support. In Italy, the current pressure on prices will continue due to structural overcapacity in the brick sector.
The year 2009 was a period of restructuring for Wienerberger but, from the current point of view, no further measures are planned for 2010. The implementation of the action plan resulted in cost reductions of € 160 million during the past year, and a further € 35 million of savings and a price-related decline of roughly € 15 million in energy costs should be realized in 2010. Wienerberger therefore expects an improvement in earnings this year, in spite of the still limited market visibility. However, operating EBITDA will be negative in the first quarter because of the near halt to construction that was caused by the severe winter in Europe and the USA. Investments are forecasted to total € 120 million in 2010, with € 95 million planned for maintenance capex. Plans also call for further inventory cuts in order to reduce working capital to 25% of revenues over the mid-term.
At today's press conference Wienerberger also announced the publication of its first sustainability report. Sustainability has been defined as a key strategic goal because of its growing importance for the future development of Wienerberger. "We have been focusing on sustainability for some time, but the publication of this report transforms our commitment into an obligation", explained Heimo Scheuch. "I see sustainability as an integral part of our business, and thereby also as an important factor for the economic success of Wienerberger. Bricks have optimal properties for sustainable construction because of the natural raw materials from which they are made and their long service life – and we intend to utilize and expand these benefits in the future", emphasized Heimo Scheuch, CEO of the world's largest brick producer. "There is a lot of talk and even a few actions to reduce the CO2 emissions of buildings. However, I don't believe this discussion is moving in the right direction. The main focus is currently on adding more thermal insulation to existing buildings and constructing houses with special thermal insulating exterior walls to reduce the energy requirements for heating. But that only represents 10% (!) of the total energy requirements of a house – the remaining 90% are used for warm water, electricity, ventilation and other purposes. If we really want to address this subject seriously, we should talk about the total energy consumption of a building. The overriding goal must be to minimize the non-renewable primary energy consumed by buildings – above all heating with crude oil, natural gas etc. That is the only way to achieve a maximum reduction in CO2 emissions and reduce the resulting negative effects on the climate. The logical consequence of this thinking is the development of building solutions that include an energy-efficient system combining structural engineering, heating, warm water, electricity, ventilation etc. And this is exactly where I see the future of Wienerberger: as the preferred partner for sustainable, energy-efficient construction."
For additional information contact: Barbara Braunöck, Investor and Public Relations T +43(1)60192-497 | [email protected] Negative operating EBITDA in Q1, but earnings improvem ent expected for full year
Sustainability as key contribution to financial success of Wienerberger
| Issuer: | Wienerberger AG |
|---|---|
| Purchase price: | 100% |
| Volume: | Up to € 200 million (increase possible) |
| Offering period: | March 31 to April 9, 2010 |
| Announcement of results: | April 13, 2010 |
| Settlement date: | April 15, 2010 |
| Dealer managers: | Erste Group Bank AG, Raiffeisen Zentralbank Österreich AG |
| Tender agent: | Citibank, N.A., London Branch |
| Clearing systems: | Euroclear, Clearstream |
| Issuer: | Wienerberger AG | ||||
|---|---|---|---|---|---|
| Type of issue: | Bond | ||||
| Issue volume: | Up to € 200 million | ||||
| Subscription period: | March 29 to 31, 2010 (earlier close possible) | ||||
| Use of funds: | General corporate financing | ||||
| Denomination: | € 1,000 | ||||
| Coupon: | Approx. 4.875% p. a.1) of nominal value | ||||
| Term: | 4¼ years | ||||
| Issue price: | Will be determined and announced immediately before the subscription period |
||||
| Redemption: | 100% at the end of the term (July 7, 2014) | ||||
| Listing: | Admitted to the "Official List" of the Luxembourg Securities Exchange |
||||
| Value date: | April 7, 2010 | ||||
| Payment office for Austria: | Erste Group Bank AG | ||||
| Invitation to subscription | Erste Group Bank AG and Raiffeisen Zentralbank Österreich AG as well as all other Austrian financial institutions |
1) The final coupon will be determined and announced immediately before the start of the subscription period. A public offer for this bond in Austria will only be possible after the publication of the basis prospectus for the issue program and the final terms for the bond. Any subscription orders received before this time will be rejected.
| Earnings Data | 2007 | 2008 | 2009 | Chg. in % | |
|---|---|---|---|---|---|
| Revenues | in € mill. | 2,477.3 | 2,431.4 | 1,816.9 | -25 |
| Operating EBITDA 1) | in € mill. | 551.2 | 440.1 | 208.6 | -53 |
| Operating EBIT 1) | in € mill. | 353.1 | 239.8 | 19.0 | -92 |
| Restructuring costs and impairment | in € mill. | ||||
| charges to property, plant and equipment |
0.0 | -55.0 | -153.7 | <-100 | |
| Impairment charges to goodwill | in € mill. | 0.0 | -16.7 | -123.3 | <-100 |
| Profit before tax | in € mill. | 358.4 | 123.1 | -295.6 | <-100 |
| Profit after tax | in € mill. | 295.8 | 103.3 | -258.7 | <-100 |
| Free cash flow 2) | in € mill. | 293.8 | 195.4 | 250.8 | +28 |
| Maintenance capex | in € mill. | 120.2 | 98.4 | 62.7 | -36 |
| Growth investments | in € mill. | 525.4 | 407.2 | 71.4 | -82 |
| ROCE 3) | in % | 10.1 | 6.2 | 0.2 | - |
| CFROI 4) | in % | 13.0 | 9.3 | 4.3 | - |
| Ø Employees | 14,785 | 15,162 | 12,676 | -16 | |
| Balance Sheet Data | 2007 | 2008 | 2009 | Chg. in % | |
| Equity (incl. hybrid capital) | in € mill. | 2,672.7 | 2,497.2 | 2,547.0 | +2 |
| Net debt | in € mill. | 566.8 | 890.2 | 408.0 | -54 |
| Capital employed | in € mill. | 3,060.2 | 3,252.2 | 2,816.8 | -13 |
| Balance sheet total | in € mill. | 4,329.9 | 4,383.9 | 4,087.4 | -7 |
| Gearing | in % | 21.2 | 35.6 | 16.0 | - |
| Stock Exchange Data | 2007 | 2008 | 2009 | Chg. in % | |
| Earnings per share | in € | 3.46 | 0.81 | -3.17 | <-100 |
| Adjusted earnings per share 1) | in € | 3.46 | 1.69 | -0.34 | <-100 |
| Dividend per share | in € | 1.45 | 0.00 | 0.00 | 0 |
| Share price at year-end | in € | 37.93 | 11.90 | 12.78 | +7 |
| Shares outstanding (weighted) 5) | in | ||||
| 1,000. | 75,491 | 82,895 | 91,298 | +10 | |
| Shares outstanding at year-end | in 1,000 | 83,948 | 83,948 | 117,527 | +40 |
| Operating Segments 2009 in € mill. and % Revenues |
Central East Europe |
Central West Europe |
North West Europe |
North America | Investments and Other 6) |
|||||
|---|---|---|---|---|---|---|---|---|---|---|
| 582.7 | (-35%) | 391.1 | (-11%) | 729.2 | (-19%) | 149.0 | (-36%) | -35.1 | (+23%) | |
| Operating EBITDA 1) | 108.8 | (-58%) | 32.3 | (-24%) | 102.5 | (-29%) | -13.3 | (<-100%) | -21.7 | (+8%) |
| Operating EBIT 1) | 44.8 | (-77%) | -2.4 | (<-100%) | 37.1 | (-49%) | -35.4 | (<-100%) | -25.1 | (+8%) |
| CFROI in % 4) | 7.5 | 4.0 | 5.5 | -1.9 | -32.9 | |||||
| Total investments | 55.6 | (-75%) | 13.2 | (-65%) | 50.1 | (-72%) | 8.8 | (-81%) | 6.4 | (-65%) |
| Capital employed | 787.7 | (-8%) | 373.0 | (-23%) | 1,131.4 | (-13%) | 488.4 | (+16%) | 36.3 | (+2%) |
| Ø Employees | 5,174 | (-11%) | 2,143 | (-10%) | 4,076 | (-14%) | 1,043 | (-47%) | 240 | (+6%) |
1) Adjusted for non-recurring income and expenses
2) Cash flow from operating activities minus cash flow from investment activities plus growth investments
3) Calculation based on average capital employed
4) Calculation based on average historical capital employed
5) Adjusted for treasury stock
6) Including Group eliminations and holding costs; negative revenues are due to the offset of inter-company sales
Note: In the table of the operating segment data, changes in % to the comparable prior year period are shown in brackets.
THIS PRESS RELEASE, THE TENDER OFFER MEMORANDUM AND THE OFFER ARE NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA, THE "UNITED STATES"). THE OFFER REFERENCED HEREIN IS NOT BEING MADE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, OR BY USE OF THE MAILS, OR BY ANY MEANS OR INSTRUMENTALITY (INCLUDING, WITHOUT LIMITATION, E-MAIL, FACSIMILE TRANSMISSION, TELEPHONE AND THE INTERNET) OF INTERSTATE OR FOREIGN COMMERCE, OR OF ANY FACILITY OF A NATIONAL SECURITIES EXCHANGE OF THE UNITED STATES AND THE OFFER CANNOT BE ACCEPTED BY ANY SUCH USE, MEANS, INSTRUMENTALITY OR FACILITY OR FROM WITHIN THE UNITED STATES. THIS PRESS RELEASE, THE TENDER OFFER MEMORANDUM AND THE OFFER DO NOT CONSTITUTE OR FORM A PART OF ANY OFFER OR SOLICITATION TO PURCHASE OR SUBSCRIBE FOR SECURITIES IN THE UNITED STATES. THE SECURITIES MENTIONED HEREIN HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"). THE SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THERE WILL BE NO PUBLIC OFFER OF SECURITIES IN THE UNITED STATES."
THIS PRESS RELEASE, THE TENDER OFFER MEMORANDUM AND THE OFFER MAY ONLY BE COMMUNICATED TO PERSONS IN THE UNITED KINGDOM IN CIRCUMSTANCES WHERE SECTION 21(1) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 DOES NOT APPLY.
NOTHING IN THIS PRESS RELEASE CONSTITUTES AN OFFER TO BUY OR THE SOLICITATION OF AN OFFER TO SELL SECURITIES IN THE REPUBLIC OF ITALY, BELGIUM (OTHER THAN TO QUALIFIED INVESTORS ACTING FOR THEIR OWN ACCOUNT), THE REPUBLIC OF FRANCE (OTHER THAN TO PROVIDERS OF INVESTMENTS SERVICES RELATING TO THIRD PARTY PORTFOLIO MANAGEMENT AND QUALIFIED INVESTORS (INVESTISSEURS QUALIFIÉS) OTHER THAN INDIVIDUALS) OR ANY OTHER JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.
THE DISTRIBUTION OF THE TENDER OFFER MEMORANDUM IN CERTAIN JURISDICTIONS MAY BE RESTRICTED BY LAW. PERSONS INTO WHOSE POSSESSION THE TENDER OFFER MEMORANDUM COMES ARE REQUIRED BY THE COMPANY, THE DEALER MANAGERS AND THE TENDER AGENT TO INFORM THEMSELVES ABOUT, AND TO OBSERVE, ANY SUCH RESTRICTIONS.
THE OFFER IS MADE ONLY PURSUANT TO THE TERMS OF THE PUBLISHED TENDER OFFER MEMORANDUM. THE TENDER OFFER MEMORANDUM IS AVAILABLE WITHOUT CHARGE AT ERSTE GROUP BANK AG, 1010 WIEN, BÖRSEGASSE 14, AT RAIFFEISEN ZENTRALBANK ÖSTERREICH AG, 1030 WIEN, AM STADTPARK 9, AS WELL AS AT CITIBANK, N.A., UNITED KINGDOM, LONDON E14 5 LB, CANADA SQUARE, CANARY WHARF.
THIS PRESS RELEASE IS FOR ADVERTISEMENT PURPOSES ONLY AND NOTHING IN THIS PRESS RELEASE CONSTITUTES AN OFFER TO BUY OR THE SOLICITATION OF AN OFFER TO SELL SECURITIES. A PUBLIC OFFER IN AUSTRIA WILL ONLY BE POSSIBLE AFTER PUBLICATION OF THE BASE PROSPECTUS FOR THE ISSUANCE PROGRAMME OF WIENERBERGER AG (THE "PROSPECTUS") AND THE FINAL TERMS OF ANY PROSPECTIVE NOTES (THE "FINAL TERMS"). ANY SUBSCRIPTION ORDERS MADE PRIOR TO SUCH PUBLICATIONS WILL BE REJECTED. THE PROSPECTUS IS EXPECTED TO BE APPROVED BY THE COMMISSION DE SURVEILLANCE DU SECTEUR FINANCIER ("CSSF") ON 24 MARCH 2010, AND IS EXPECTED TO BE NOTIFIED TO THE AUSTRIAN FINANCIAL MARKETS AUTHORITY (FINANZMARKTAUFSICHT - "FMA") ON THE SAME DAY. THE PROSPECTUS WILL THEN BE AVAILABLE AT WIENERBERGER AG, WIENERBERGSTRASSE 11, 1100 WIEN, AND AT ERSTE GROUP BANK AG, 1010 WIEN, BÖRSEGASSE 14, AS WELL AS AT RAIFFEISEN ZENTRALBANK ÖSTERREICH AG, 1030 WIEN, AM STADTPARK 9, DURING REGULAR BUSINESS HOURS AND FREE OF CHARGE. THE FINAL TERMS ARE EXPECTED TO BE DEPOSITED WITH THE CSSF AND PUBLISHED ON OR AROUND 26 MARCH 2010 AND WILL THEN BE AVAILABLE FREE OF COST AT THE AFOREMENTIONED PLACES.
IN RELATION TO A PROSPECTIVE OFFER OF NOTES BY THE ISSUER, ONLY THE INFORMATION IN THE PROSPECTUS IN CONNECTION WITH THE FINAL TERMS WILL BE BINDING. ANY INFORMATION IN THIS PRESS RELEASE IS NOT BINDING.
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