Quarterly Report • Aug 21, 2012
Quarterly Report
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Report on the First Six Months of 2012
| Earnings Data | 1-6/2011 | 1-6/2012 | Chg. in % | Year-end 2011 | |
|---|---|---|---|---|---|
| Revenues | in € mill. | 985.7 | 1,036.1 | +5 | 2,023.7 |
| Operating EBITDA 1) | in € mill. | 123.4 | 104.1 | -16 | 258.6 |
| Operating EBIT 1) | in € mill. | 27.1 | 4.1 | -85 | 48.4 |
| Profit before tax | in € mill. | 45.8 | 28.9 | -37 | 49.5 |
| Profit after tax 2) | in € mill. | 37.5 | 24.1 | -36 | 40.8 |
| Earnings per share | in € | 0.18 | 0.08 | -56 | 0.08 |
| Free cash flow 3) | in € mill. | 18.2 | -29.3 | <-100 | 141.7 |
| Normal capex | in € mill. | 41.0 | 46.4 | +13 | 102.5 |
| Growth capex | in € mill. | 26.2 | 157.3 | >100 | 56.3 |
| Balance Sheet Data | 31.12.2011 | 30.6.2012 | Chg. in % | |
|---|---|---|---|---|
| Equity 4) | in € mill. | 2,459.9 | 2,487.0 | +1 |
| Net debt | in € mill. | 442.5 | 880.0 | +99 |
| Capital employed | in € mill. | 2,798.5 | 3,358.5 | +20 |
| Balance sheet total | in € mill. | 4,122.3 | 4,562.0 | +11 |
| Gearing | in % | 18.0 | 35.4 | +97 |
| Ø Employees | 12,818 | 13,086 | +2 |
| Stock Exchange Data | 1-12/2011 | 1-6/2012 | Chg. in % | |
|---|---|---|---|---|
| Share price high | in € | 16.56 | 7.42 | -55 |
| Share price low | in € | 6.66 | 6.90 | +4 |
| Share price at end of period | in € | 6.97 | 7.42 | +6 |
| Shares outstanding (weighted) 5) | in 1,000 | 116,758 | 115,054 | -1 |
| Market capitalization at end of period | in € mill. | 819.2 | 872.2 | +6 |
| 1-6/2012 in € mill. and % |
Central-East Europe Central-West Europe | North-West Europe | North America | Pipelife 6) | Investments and Other 7) |
||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | 256.4 | (-6%) | 198.7 | (-4%) | 384.9 | (-7%) | 76.3 | (+24%) | 80.4 (>100%) | 39.4 | (+41%) |
| Operating EBITDA 1) | 26.4 | (-41%) | 15.8 | (-10%) | 60.4 | (-15%) | 0.3 (>100%) | 8.0 (>100%) | -6.8 | (-74%) | |
| Operating EBIT 1) | -8.1 | (<-100%) | 2.6 | (+24%) | 27.3 | (-28%) | -11.0 | (+33%) | 5.2 (>100%) | -12.0 | (-31%) |
| Total investments | 15.3 | (-33%) | 13.3 | (-8%) | 12.5 | (-51%) | 9.9 (>100%) | 148.7 (>100%) | 4.0 (>100%) | ||
| Capital employed | 786.1 | (-9%) | 386.4 | (+4%) | 1,152.2 | (+3%) | 513.9 | (+11%) | 440.9 (>100%) | 79.0 | (-6%) |
| Ø Employees | 4,869 | (+15%) | 2,100 | (+4%) | 4,062 | (-3%) | 1,026 | (-10%) | 221 (>100%) | 808 | (+16%) |
1) Adjusted for non-recurring income and expenses
2) Before non-controlling interests and accrued hybrid coupon
5) Adjusted for treasury stock
6) Pipelife is currently shown as a separate segment. This presentation includes the company's results, respectively the average values beginning on the initial consolidation date. The total investment includes the net purchase price for the 50% stake and all investments made after the initial consolidation date. The number of employees totaled 2,656 as of June 30, 2012 and was included for one month on a proportionate basis.
7) Including Group eliminations and holding costs; 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.
| Chief Executive's Review | |
|---|---|
| Interim Management Report | 3 |
| Financial Review | 3 |
| Operating Segments | 6 |
| Interim Financial Statements (IFRS) | 11 |
| Income Statement | 11 |
| Statement of Comprehensive Income | 11 |
| Balance Sheet | 12 |
| Changes in Equity Statement | 12 |
| Cash Flow Statement | 13 |
| Operating Segments | 14 |
| Notes to the Interim Financial Statements | 15 |
| Statement by the Managing Board | 1 G |
Dear Shareholders,
The first half of 2012 was characterized by strong turbulences throughout the euro zone. High sovereign debt in a number of European countries and discussions over austerity programs as well as very restrictive lending policies by banks have intensified the crisis of confidence surrounding the euro in recent months. These events triggered in part significant declines on European residential housing and renovation markets.
The demand for building materials consequently weakened in previously stable markets such as Belgium, France, Great Britain and Poland and continued to decline further from an already low level in many Eastern European countries. In spite of weaker demand, we successfully implemented the necessary price adjustments to cover cost inflation in nearly all European countries and recorded a 4% year-on-year increase in average prices.
Sound performance was recorded by our activities in North America, Russia and India. The number of housing starts in the USA has risen moderately from a low level since the beginning of the year, with multi-story residential construction currently outpacing single family houses. The resulting higher demand for building materials led to volume growth for our American subsidiary as well as slightly better capacity utilization in our US plants. Even though the effects of the US presidential campaign on the market are unclear, we are optimistic that North America will close this year with slightly positive operating EBITDA. In Russia and India, we increased volumes in a dynamic market environment and significantly expanded market shares with our new products. Both countries made a positive contribution to revenues and earnings for the first half of 2012.
With the full takeover of the Pipelife Group, one of the largest European players in plastic pipe systems, we set a milestone in our efforts to reduce the Wienerberger Group's dependence on new residential construction. Business development at Pipelife was solid during the first halfyear compared with our clay building materials activities in Europe. Pipelife, which was included in the consolidation range of the Wienerberger Group as of May 31, 2012, increased revenues and earnings during the first half of 2012. Positive development was also recorded by our clay waste water pipe producer, Steinzeug-Keramo, which generated revenue and earnings growth for the first six months.
The Wienerberger Group recorded a 5% year-on-year increase in revenues for the first half of 2012, which was influenced by the initial consolidation of Pipelife. In contrast, operating EBITDA fell by 16% for the reporting period. This decline resulted, above all, from lower volumes in the European wall and roof tile business as well as weaker capacity utilization and subsequently higher production costs that were not fully offset by the above-mentioned 4% increase in average prices.
The outlook for 2012 - which is confirmed by economic researchers and construction industry experts in their latest downward forecast revisions - points to a continuing difficult macroeconomic environment in Europe and, as a consequence, to further weakness in the demand for building materials. In order to prepare Wienerberger as best as possible to meet these new challenges, we prepared a bundle of measures to further optimize the structure of the clay
Heimo Scheuch, Chief Executive Officer of Wienerberger AG
Difficult market environment leads to volume declines for clay building materials in Europe; Improvement in US business since the start of the year
Pipelife acquisition reduces dependence on new residential construction
5% increase in revenues; 16% decline in operating EBITDA
Sustainable cost reduction measures for clay building materials business in Europe
building materials business in Europe that is focused on cost reduction to generate sustainable cash flows. Our goals include a sustainable reduction of € 40 million in costs by the end of 2013 through the further adjustment of capacity and corporate structures, a cutback in normal capex (including Pipelife capex) from the originally planned € 140 million to € 110 million by year-end and a decrease in working capital (excluding Pipelife) to the previous year level through destocking. We expect these measures will lead to non-recurring cash costs of € 15 million by the end of 2013.
The measures implemented in recent years have given us a strong balance sheet, a healthy capital structure and sufficient liquidity - all of which protect our strategic flexibility. Net debt increased to an annual high during the reporting period for seasonal reasons, but our bank indicators clearly meet the agreed covenants. After the inclusion of the purchase price for Pipelife and planned capex, the ratio of net debt to operating EBITDA will remain below our conservative target of 2.5 years at year-end. The strength of our business model lies in the generation of cash flows, also in difficult times, and we intend to utilize these funds in the best
Lack of visibility makes forecasts for 2012 difficult
way possible.
The lack of market visibility makes it extremely difficult to provide you with guidance on results for the full 2012 financial year. However, I can assure you that we will undertake all efforts to again generate a profit for the Wienerberger Group.
The weather-related weak first quarter of 2012 was followed by a deterioration in Europe's macroeconomic environment during the second quarter and a subsequent decline in construction activity on many West and East European markets. In contrast, sound development was recorded in the USA, Russia and India as well as by our clay pipe specialist Steinzeug-Keramo, which reported an improvement in revenues and earnings for the first half of 2012. After the acquisition of the remaining 50% stake in Pipelife at the end of May, the group was fully consolidated as of May 31, 2012 and is now shown in a separate segment (the previous 50% stake in Pipelife was reported at equity in the "Investments and Other" segment). Pipelife, one of the leading producers of plastic pipe systems in Europe, generates more than half of its revenues in North-West Europe. It recorded sound development during the first six months of 2012, with a year-on-year increase in revenues and earnings, whereby only one month's revenues and earnings were fully consolidated by Wienerberger.
Revenues recorded by the Wienerberger Group rose by 5% to € 1,036.1 million for the first half-year, with revenue growth of 8% attributable to the Pipelife acquisition, 2% to the consolidation of Tondach Gleinstätten and 4% to higher average prices. Accordingly, lower clay volumes were responsible for a revenue decline of 9%. Foreign exchange effects did not have a material influence on the development of revenues, since positive foreign exchange effects from the US dollar, British pound and Swiss franc were roughly offset by negative effects from the Polish zloty and the Hungarian forint. The weaker demand for clay building materials in Europe led to lower capacity utilization and, consequently, to higher unit costs. These factors reduced operating EBITDA by 16% to € 104.1 million and operating EBIT to € 4.1 million. Cost inflation amounted to roughly 3.5% for the first half-year and resulted primarily from higher energy prices. For the full 12 months of 2012, cost inflation is not expected to exceed 3.5% and should be covered by a corresponding year-on-year increase in average prices.
Financial results improved substantially over the comparable prior year period to € 24.8 million (2011: € -14.5 million). This development is explained, above all, by a non-recurring effect of € 42.3 million from the revaluation of the previous stake in the Pipelife Group as part of the full consolidation. This valuation effect was calculated as the difference between the purchase price for the newly acquired 50% stake, after adjustment for a control premium, and the carrying amount of the investment already held by Wienerberger. Income from associates includes Pipelife results at 50% for the first five months of 2012.
Profit before tax declined to € 28.9 million for the first half of 2012 (2011: € 45.8 million). The tax rate amounted to 16.4% for the reporting period, compared with 18.2% in the previous year. After the deduction of taxes, Wienerberger recorded net profit of € 24.1 million (2011: € 37.5 million). Earnings per share equaled € 0.08 (2011: € 0.18) and adjusted earnings per share € -0.29 (2011: € -0.10). The calculation of earnings per share includes an adjustment for the accrued hybrid coupon.
Cash Flow
Cash flow from operating activities was slightly positive at € 2.6 million, which reflected the decline in earnings as well as a lower seasonal increase in working capital. A total of € 46.4 million was spent on normal capex (maintenance and investments in technical upgrades for production processes) and € 157.3 million on growth capex. In the previous year, net cash inflows of € 43.4 million from the sale of the Bramac Group had a material effect on cash flow from investing activities. Cash flow from financing activities includes the proceeds from the € 200 million bond issued on February 1, 2012, the repayment of the 2005 bond of € 241 million and the € 32.5 million hybrid coupon payment. Financing cash flow also covers the € 13.8 million dividend distributed to Wienerberger shareholders and a € 10 million dividend received from Pipelife.
Group equity was increased by total comprehensive income after tax of € 74.5 million, whereby positive foreign exchange differences (primarily from the US dollar and the British pound) were responsible for more than half of this amount. Equity was reduced by the € 32.5 million hybrid coupon payment in February 2012 and the € 13.8 million dividend. Net debt rose by € 437.5 million over the level on December 31, 2011 to € 880.0 million due to the seasonal increase in working capital as well as the acquisition and initial consolidation of the Pipelife Group.
The initial full consolidation of the Pipelife Group was based on a preliminary fair value of € 259.9 million for the acquired net assets. In connection with the purchase price allocation, intangible assets related to the "Pipelife" umbrella brand and the customer base were identified and valued. The fair value of net assets is contrasted by a gross purchase price of € 162.0 million and a market value of € 140.9 million for the previously held stake. The preliminary goodwill of € 43.0 million was capitalized as of May 31, 2012. This purchase price allocation will be finalized by the end of this year.
Gearing rose to 35% at the end of the reporting period for seasonal reasons and, above all, due to the initial consolidation of Pipelife as of May 31, 2012. This increase reflects the fact that Pipelife's operating results are only included for one month, but the related liabilities and the € 162 million purchase price are reported on the Wienerberger Group balance sheet in full as of June 30, 2012. The bank covenants are only influenced to a limited extent by this procedure because the relevant indicators are based on results for the past 12 months (rolling) for both Wienerberger and Pipelife. The ratios as of June 30, 2012 show net debt / operating EBITDA of 2.9 years and operating EBITDA / interest result of 7.0, which are comfortably below, respectively above the agreed levels. We expect to reach our target of less than 2.5 years for net debt / operating EBITDA by the end of the year.
| Treasury Ratios | 30.6.2011 | 31.12.2011 | 30.6.2012 | Covenant level |
|---|---|---|---|---|
| Net debt / operating EBITDA 1) | 2.1 | 1.7 | 2.9 | <3.50 |
| Operating EBITDA 1) / interest result 2) | 6.8 | 6.8 | 7.0 | >3.75 |
1) Adjusted for non-recurring income and expenses; calculated on the basis of operating EBITDA for 12 months
2) Calculated on the basis of interest results for 12 months
Seasonal increase in working capital as well as acquisition of Pipelife leads to higher net debt
Purchase price allocation results at preliminary goodwill of € 43.0 million for Pipelife
Net debt / operating EBITDA of 2.9 years as of June 30, 2012
Growing uncertainty over the future of the euro and the sovereign debt crisis weakened construction activity throughout Europe, whereby nearly all Wienerberger markets were affected. In contrast, business development in the USA was sound with a steady improvement in new residential construction since the beginning of this year. Group revenues rose by 11% to € 653.7 million in the second quarter, supported by higher revenues from North America, India, the Steinzeug-Keramo Group and, above all, the revenue contribution from the Pipelife Group which was fully consolidated as of May 31, 2012. At the EBITDA level, the earnings contributions from Pipelife, North America, India and the Steinzeug-Keramo Group were unable to offset the higher unit costs that resulted from lower clay volumes in Europe. Operating EBITDA totaled € 102.0 million for the second quarter of 2012, which is 9% lower than the comparable prior year value. The Pipelife Group contributed € 80.4 million to Group revenues and € 8.0 million to EBITDA for the reporting period.
The development of business in Central-East Europe was significantly influenced by the slower momentum in Poland and the Czech Republic, the two largest regional markets. Together with a further decline from an already low level in Hungary and several South-East European markets, revenues fell by 6% and operating EBITDA by 28% to € 31.6 million year-on-year. In North-West Europe, construction activity weakened in Belgium, France and Great Britain, while the Netherlands continued the stronger downward trend that began earlier this year. Segment revenues fell by 7% to € 209.1 million and operating EBITDA by 16% to € 40.8 million. Market developments in Central-West Europe were stable, with revenues and operating EBITDA roughly matching the prior year. In the USA, the positive trend in new residential construction continued and brought revenue growth of 23% to € 44.0 million as well as a solid improvement in operating EBITDA to € 2.4 million.
| Revenues in € mill. | 4-6/2011 | 4-6/2012 | Chg. in % |
|---|---|---|---|
| Central-East Europe | 184.5 | 174.0 | -6 |
| Central-West Europe | 128.7 | 124.8 | -3 |
| North-West Europe | 225.5 | 209.1 | -7 |
| North America | 35.9 | 44.0 | +23 |
| Pipelife | 0.0 | 80.4 | >100 |
| Investments and Other 1) | 16.0 | 21.4 | +34 |
| Wienerberger Group | 590.6 | 653.7 | +11 |
| Operating EBITDA 2) in € mill. | 4-6/2011 | 4-6/2012 | Chg. in % |
|---|---|---|---|
| Central-East Europe | 43.9 | 31.6 | -28 |
| Central-West Europe | 20.3 | 20.2 | 0 |
| North-West Europe | 48.8 | 40.8 | -16 |
| North America | 0.0 | 2.4 | >100 |
| Pipelife | 0.0 | 8.0 | >100 |
| Investments and Other 1) | -1.4 | -1.0 | +29 |
| Wienerberger Group | 111.6 | 102.0 | -9 |
1) Including Group eliminations and holding company costs
2) Adjusted for non-recurring income and expenses
Volume-related EBITDA decline of 9% to € 102.0 million
The effects of the euro and sovereign debt crises on the real economy were felt by nearly all East European markets during the second quarter of 2012. The result has been growing uncertainty, declining consumer confidence and more restrictive lending by banks in recent months. This was reflected in reduced construction activity throughout the region and lower volumes of clay blocks, facing bricks and pavers. The volume increase in the roofing business was based on the initial proportional consolidation of the Tondach Gleinstätten Group in this segment as of June 30, 2011. Central-East Europe recorded revenues of € 256.4 million in the first half of 2012, or 6% less than in the comparable prior year period. Average prices in the region rose moderately during the first half-year. Lower volumes and the resulting higher unit costs were responsible for a 41% decline in operating EBITDA to € 26.4 million. This segment generated 25% each of Group revenues and operating EBITDA for the first six months of 2012.
| Central-East Europe | 1-6/2011 | 1-6/2012 | Chg. in % | |
|---|---|---|---|---|
| Revenues | in € mill. | 272.7 | 256.4 | -6 |
| Operating EBITDA 1) | in € mill. | 44.4 | 26.4 | -41 |
| Operating EBIT 1) | in € mill. | 12.7 | -8.1 | <-100 |
| Total investments | in € mill. | 22.7 | 15.3 | -33 |
| Capital employed | in € mill. | 862.0 | 786.1 | -9 |
| Ø Employees | 4,247 | 4,869 | +15 | |
| Sales volumes clay blocks | in mill. NF | 1,443 | 1,271 | -12 |
| Sales volumes pavers | in mill. m² | 6.17 | 5.53 | -10 |
| Sales volumes roof tiles 2) | in mill. m² | 6.17 | 7.80 | +26 |
1) Adjusted for non-recurring income and expenses
2) Sales volumes include clay and concrete roof tiles and are not proportional but reflect 100%; Bramac (concrete roof tiles) deconsolidated as of June 30, 2011; Tondach (clay roof tiles) proportionately consolidated since June 30, 2011
The two largest Wienerberger markets in this region, Poland and the Czech Republic, slowed noticeably in recent months. The Polish market reacted to a downturn in market sentiment during the first half-year with a double-digit decline in single- and two-family housing starts. Building permits in Hungary fell by a further 20% from an already low level during the first six months, while Romania and Bulgaria registered only moderate weakness and showed signs of possible floor-building in new residential construction at a very low level. Strategic measures to improve earnings were successful in these markets and included an increased focus on new premium products, above all high thermal insulating bricks, as well as deliveries to neighboring countries. The only dynamic development in this region was noted in Russia, where the demand for building materials rose substantially. Our Russian company recorded a strong improvement in revenues and earnings, which was supported by volume growth and higher average prices.
Visibility over the development of business in the final six months of 2012 is very low. Russia should generate continued strong growth, but we do not see a trend reversal during the next six months in the other regional markets and expect a further decline in the demand for building materials. We therefore plan to introduce adjusted shift models, plant clustering and to also mothball production facilities in this region in order to adjust capacity to reflect the market environment and reduce costs.
Weaker markets: lower volumes in Central-East Europe led to 6% decline in revenues and 41% in operating EBITDA for H1/12
Revenues in Central-West Europe declined 4% to € 198.7 million for the first half of 2012. This development resulted from lower volumes in all countries, above all Italy. Average prices were higher due to price adjustments and shifts in the product mix, but the cold winter also led to an increase in production costs in this segment. Consequently, operating EBITDA fell 10% year-on-year to € 15.8 million. This segment recorded 19% of Group revenues and 15% of operating EBITDA for the reporting period.
| Central-West Europe | 1-6/2011 | 1-6/2012 | Chg. in % | |
|---|---|---|---|---|
| Revenues | in € mill. | 207.3 | 198.7 | -4 |
| Operating EBITDA 1) | in € mill. | 17.5 | 15.8 | -10 |
| Operating EBIT 1) | in € mill. | 2.1 | 2.6 | +24 |
| Total investments | in € mill. | 14.5 | 13.3 | -8 |
| Capital employed | in € mill. | 370.3 | 386.4 | +4 |
| Ø Employees | 2,022 | 2,100 | +4 | |
| Sales volumes clay blocks | in mill. NF | 738 | 680 | -8 |
| Sales volumes facing bricks | in mill. WF | 62 | 53 | -15 |
| Sales volumes clay roof tiles 2) | in mill. m² | 4.01 | 3.40 | -15 |
1) Adjusted for non-recurring income and expenses
2) Sales volumes of clay roof tiles include accessories
In Germany, the overall development of new residential construction was slightly positive during the reporting period: multi-family housing construction increased, but Wienerberger's key single- and two-family housing segment weakened. Our experts saw a moderate decline in the demand for building materials during the first half-year, with new residential construction developing somewhat better than the renovation market. The cold winter at the beginning of the year delayed construction, and the catch-up effects were weaker than expected in the second quarter. As a result volumes remained below the prior year level in all product groups. Price increases within the scope of cost inflation and a shift in the product mix to premium products led to higher average revenues for the first six months of 2012. Revenues declined but Germany recorded an increase in earnings and an improvement in margins from a low level, in part due to the optimization measures implemented during the past year. Switzerland reported lower revenues and earnings based on a decline in volumes and stable average prices. A weather-related very weak start into the year was followed by the postponement of major pitched roof projects during April and May because of capacity shortages in the construction industry. This had a negative influence on Wienerberger's volumes and, in turn, on earnings. The Italian market disappointed with a further decline in construction activity from a very low level. The sovereign debt and financial crises in this country have increased consumer uncertainty in recent months and led to a weakening in new residential construction. However, revenues in Italy were only slightly lower than in the first half of 2011 because of higher average prices.
The outlook for Central-West Europe in the second half-year remains cautious. If the market does not deteriorate further, we expect earnings will reflect the prior year level based on slightly higher average prices.
West Europe
Revenues -4%, operating EBITDA -10% in Central-
Moderate growth in Germany expected for full year
Results expected at prior year level for Central-West Europe in 2012
Revenues in the North-West Europe segment declined 7% to € 384.9 million for the first six months of 2012 (2011: € 416.0 million). Lower volumes in all product groups as well as higher production costs due to reduced capacity utilization had a negative effect on operating EBITDA, which fell 15% below the prior year. Despite an increasingly difficult market environment across the region, this segment was also able to increase prices. North-West Europe was responsible for 37% of Group revenues and 58% of operating EBITDA in the first half of 2012.
| North-West Europe | 1-6/2011 | 1-6/2012 | Chg. in % | |
|---|---|---|---|---|
| Revenues | in € mill. | 416.0 | 384.9 | -7 |
| Operating EBITDA 1) | in € mill. | 70.7 | 60.4 | -15 |
| Operating EBIT 1) | in € mill. | 37.8 | 27.3 | -28 |
| Total investments | in € mill. | 25.6 | 12.5 | -51 |
| Capital employed | in € mill. | 1,115.2 | 1,152.2 | +3 |
| Ø Employees | 4,197 | 4,062 | -3 | |
| Sales volumes clay blocks | in mill. NF | 590 | 522 | -12 |
| Sales volumes facing bricks | in mill. WF | 631 | 529 | -16 |
| Sales volumes roof tiles 2) | in mill. m² | 8.57 | 7.80 | -9 |
1) Adjusted for non-recurring income and expenses
2) Sales volumes of clay roof tiles include accessories
The expected downturn in the construction activity materialized in the Netherlands. This development reflected the regulatory uncertainty connected with residential construction financing (shorter loan terms, tax deductibility of interest expense) as well as lower housing prices and government austerity programs. The result was a decline in revenues and earnings for this country during the first six months of 2012. In Belgium, volumes were reduced by bad weather at the beginning of the year and also fell below the comparable prior year period in the second quarter of 2012. New limits on renovation subsidies and growing consumer uncertainty were the main reasons for this decline. Earnings in Belgium were negatively affected by the drop in revenues and higher costs for idle capacity due to the cutback in production volumes.
New residential construction in France fell by roughly 10% during the first six months of 2012. Wienerberger continued to increase market shares in the wall segment with its clay blocks and also recorded sound results on the roofing market. In addition, cost inflation was offset by price adjustments. Revenues for the first six months were only slightly lower than the comparable prior year period, but the cost of extended plant standstills had a negative effect on earnings and led to a slight decline in operating EBITDA. In Great Britain, the recession brought about a further decline in construction during the second quarter. The demand for building materials was also slowed by the sharp drop in subsidized residential construction that resulted from government austerity measures. Wienerberger successfully held revenues near the prior year level in spite of this difficult environment due to higher average prices and positive foreign exchange effects. In addition, improved cost structures formed the basis for higher margins.
Since the construction industry weakness has now spread throughout the region, demand should be lower in all product groups for the entire year. Our forecast for North-West Europe shows an improvement in average prices, but a decline in revenues and earnings.
Lower revenues and earnings in North-West Europe in H1/12
Sharp drop in building materials demand in the Netherlands; weakness in Belgium
Earnings in France negatively affected by extended plant standstills; margin improvements in Great Britain
Revenue and earnings decline in North-West Europe expected for full year
The development of revenues and earnings in the North America segment also remained sound during the second quarter of 2012. Continued signs of recovery in new construction and the mild weather supported an 18% plus in volumes for the first three months, which was followed by double-digit growth in the second quarter. Revenues rose by 24% to € 76.3 million and operating EBITDA to € 0.3 million (2011: € -5.3 million). Earnings were positively influenced by moderate price increases, higher volumes and better capacity utilization as well as the cost reduction measures implemented in 2011. The share of Group revenues recorded in North America increased from 6% in the first half of 2011 to 7% for the reporting period.
| North America | 1-6/2011 | 1-6/2012 | Chg. in % | |
|---|---|---|---|---|
| Revenues | in € mill. | 61.7 | 76.3 | +24 |
| Operating EBITDA 1) | in € mill. | -5.3 | 0.3 | >100 |
| Operating EBIT 1) | in € mill. | -16.3 | -11.0 | +33 |
| Total investments | in € mill. | 2.9 | 9.9 | >100 |
| Capital employed | in € mill. | 461.2 | 513.9 | +11 |
| Ø Employees | 1,143 | 1,026 | -10 | |
| Sales volumes facing bricks | in mill. WF | 126 | 143 | +13 |
1) Adjusted for non-recurring income and expenses
Although the development of business after the balance sheet date confirmed the second quarter momentum, our market outlook for the full year is cautiously optimistic - not least due to the upcoming presidential election. The supply of foreclosed homes currently owned by financial institutions is still high, and US economic momentum and consumer confidence cooled somewhat during the second quarter. We are therefore taking a cautious approach to the National Association of Home Builders forecast for a 19% increase in single- and two-family housing starts during 2012. However, our goal for this segment remains intact with a return to the profit zone for operating EBITDA this year.
Pipelife, which was initially consolidated as of May 31, 2012, is included in Wienerberger Group half-year results for only one month (revenues: € 80.4 million, operating EBITDA: € 8.0 million). In the first six months of 2012, Pipelife recorded a year-on-year increase of 7% in revenues to € 425.9 million and 20% in operating EBITDA to € 40.6 million. This development was supported primarily by higher volumes, which resulted especially from the acquisition of the French operations of Alphacan in 2011, as well as higher average prices. Pipelife also benefited from the sound development of business in its traditionally stronger markets Norway and Sweden as well as in the USA. The other European markets were characterized by growing weakness in the plastic pipe business, which will most likely continue during the second half of 2012. Against this backdrop, we expect a slight increase in revenues and earnings over the 2011 level.
North America continues revenue and earnings improvement in Q2/2012
Cautiously optimistic market forecasts for USA in 2012
Holding company costs, Indian brick activities and Steinzeug-Keramo Group in this segment
Steinzeug-Keramo with higher revenues and earnings in H1/12
The Investments and Other segment comprises the corporate headquarters and related costs, brick activities in India and the Steinzeug-Keramo Group. The full takeover of the Pipelife Group through the purchase of the remaining 50% stake was finalized in May 2012 after the approval of the transaction by the antitrust authorities. As of May 31, 2012, Pipelife is fully consolidated and reported separately.
Steinzeug-Keramo recorded a double-digit increase in revenues and EBITDA for the first half of 2012. The company not only benefited from organic growth, but also from acquisitionrelated growth due to the takeover of Euroceramic in May 2011. India reported double-digit growth in clay block sales as well as a substantial improvement in operating earnings due to better capacity utilization and higher average prices. Segment revenues rose by 22% to € 64.7 million, which represent 6% of Group revenues. Despite the higher earnings contributions by Steinzeug-Keramo and the Indian business, operating EBITDA declined from € -3.9 million in the first half of 2011 to € -6.8 million for the reporting period because of higher holding company costs. For the full year, we expect a year-on-year improvement in revenues and earnings for Steinzeug-Keramo and for our Indian company.
| Investments and Other 1) | 1-6/2011 | 1-6/2012 | Chg. in % | |
|---|---|---|---|---|
| Revenues | in € mill. | 53.1 | 64.7 | +22 |
| Operating EBITDA 2) | in € mill. | -3.9 | -6.8 | -74 |
| Operating EBIT 2) | in € mill. | -9.2 | -12.0 | -31 |
| Total investments | in € mill. | 1.5 | 4.0 | >100 |
| Capital employed | in € mill. | 84.1 | 79.0 | -6 |
| Ø Employees | 694 | 808 | +16 |
1) Revenues excluding Group eliminations, earnings including holding company costs
2) Adjusted for non-recurring income and expenses
| in TEUR | 4-6/2012 | 4-6/2011 | 1-6/2012 | 1-6/2011 |
|---|---|---|---|---|
| Revenues | 653,639 | 590,659 | 1,036,075 | 985,745 |
| Cost of goods sold | -430,887 | -374,404 | -718,605 | -670,335 |
| Gross profit | 222,752 | 216,255 | 317,470 | 315,410 |
| Selling expenses | -131,472 | -124,075 | -232,743 | -223,381 |
| Administrative expenses | -39,157 | -33,222 | -72,440 | -65,659 |
| Other operating expenses | -17,436 | -12,478 | -32,233 | -25,525 |
| Other operating income | 17,120 | 16,894 | 24,002 | 26,238 |
| Profit/loss before deconsolidation result | 51,807 | 63,374 | 4,056 | 27,083 |
| Deconsolidation result | 0 | 33,213 | 0 | 33,213 |
| Profit/loss after deconsolidation result | 51,807 | 96,587 | 4,056 | 60,296 |
| Income from investments in associates | 3,785 | 5,061 | 5,430 | 1,095 |
| Interest and similar income | 2,771 | 2,216 | 6,823 | 4,697 |
| Interest and similar expenses | -15,197 | -10,703 | -29,964 | -22,698 |
| Other financial results | 39,910 | 850 | 42,515 | 2,456 |
| Financial results | 31,269 | -2,576 | 24,804 | -14,450 |
| Profit/loss before tax | 83,076 | 94,011 | 28,860 | 45,846 |
| Income taxes | -8,828 | -11,416 | -4,737 | -8,328 |
| Profit/loss after tax | 74,248 | 82,595 | 24,123 | 37,518 |
| Thereof attributable to non-controlling interests | -122 | 210 | -863 | -287 |
| Thereof attributable to hybrid capital holders | 8,080 | 8,102 | 16,161 | 16,116 |
| Thereof attributable to equity holders | 66,290 | 74,283 | 8,825 | 21,689 |
| Earnings per share (in EUR) | 0.58 | 0.63 | 0.08 | 0.18 |
| Diluted earnings per share (in EUR) | 0.58 | 0.63 | 0.08 | 0.18 |
| 1-6/2012 | 1-6/2011 | |||||
|---|---|---|---|---|---|---|
| in TEUR | Group | Non-controlling interests |
Total | Group | Non-controlling interests |
Total |
| Profit/loss after tax | 24,986 | -863 | 24,123 | 37,805 | -287 | 37,518 |
| Foreign exchange adjustments | 37,464 | 2 | 37,466 | -48,070 | 6 | -48,064 |
| Foreign exchange adjustments to investments in associates |
8,265 | 0 | 8,265 | -877 | 0 | -877 |
| Changes in the fair value of available-for-sale financial instruments |
1,741 | 0 | 1,741 | 542 | 0 | 542 |
| Changes in hedging reserves | 2,075 | 0 | 2,075 | -3,784 | 0 | -3,784 |
| Other comprehensive income 1) | 49,545 | 2 | 49,547 | -52,189 | 6 | -52,183 |
| Total comprehensive income | 74,531 | -861 | 73,670 | -14,384 | -281 | -14,665 |
| Thereof share planned for hybrid capital holders | 16,161 | 16,116 | ||||
| Thereof comprehensive income attributable to equity holders |
58,370 | -30,500 |
1) The components of other comprehensive income are reported net of tax.
| in TEUR | 30.6.2012 | 31.12.2011 |
|---|---|---|
| Assets | ||
| Intangible assets and goodwill | 907,746 | 680,039 |
| Property, plant and equipment | 1,995,665 | 1,836,198 |
| Investment property | 72,151 | 67,559 |
| Investments in associates | 3,603 | 98,476 |
| Other financial assets | 4,912 | 5,440 |
| Deferred tax assets | 43,860 | 41,571 |
| Non-current assets | 3,027,937 | 2,729,283 |
| Inventories | 808,109 | 608,299 |
| Trade receivables | 333,025 | 113,489 |
| Other current receivables | 118,324 | 87,669 |
| Securities and other financial assets | 73,509 | 79,209 |
| Cash and cash equivalents | 201,079 | 504,383 |
| Current assets | 1,534,046 | 1,393,049 |
| Total Assets | 4,561,983 | 4,122,332 |
| Equity and Liabilities | ||
| Issued capital | 117,527 | 117,527 |
| Share premium | 1,083,987 | 1,084,180 |
| Hybrid capital | 492,896 | 492,896 |
| Retained earnings | 919,761 | 941,083 |
| Other reserves | -105,329 | -154,874 |
| Treasury stock | -24,434 | -24,434 |
| Controlling interests | 2,484,408 | 2,456,378 |
| Non-controlling interests | 2,628 | 3,546 |
| Equity | 2,487,036 | 2,459,924 |
| Employee-related provisions | 87,111 | 69,329 |
| Deferred taxes | 139,808 | 88,544 |
| Other non-current provisions | 68,319 | 60,199 |
| Long-term financial liabilities | 954,379 | 566,633 |
| Other non-current liabilities | 17,239 | 13,885 |
| Non-current provisions and liabilities | 1,266,856 | 798,590 |
| Other current provisions | 59,060 | 53,777 |
| Short-term financial liabilities | 200,184 | 459,425 |
| Trade payables | 308,175 | 193,119 |
| Other current liabilities | 240,672 | 157,497 |
| Current provisions and liabilities | 808,091 | 863,818 |
| Total Equity and Liabilities | 4,561,983 | 4,122,332 |
| 2012 | 2011 | |||||
|---|---|---|---|---|---|---|
| in TEUR | Group | Non-controlling interests |
Total | Group | Non-controlling interests |
Total |
| Balance on 1.1. | 2,456,378 | 3,546 | 2,459,924 | 2,520,552 | 5,123 | 2,525,675 |
| Total comprehensive income | 74,531 | -861 | 73,670 | -14,384 | -281 | -14,665 |
| Dividend payments/hybrid coupon | -46,308 | 0 | -46,308 | -44,241 | 0 | -44,241 |
| Capital increase/decrease | 0 | 0 | 0 | 0 | 0 | 0 |
| Increase/decrease in non-controlling interests | -193 | -57 | -250 | 0 | 0 | 0 |
| Increase/decrease in treasury stock | 0 | 0 | 0 | 0 | 0 | 0 |
| Balance on 30.6. | 2,484,408 | 2,628 | 2,487,036 | 2,461,927 | 4,842 | 2,466,769 |
| in TEUR | 1-6/2012 | 1-6/2011 |
|---|---|---|
| Profit/loss before tax | 28,860 | 45,846 |
| Depreciation and amortization | 100,012 | 96,325 |
| Impairment of assets | 0 | 0 |
| Write-ups of fixed and financial assets | 0 | -2 |
| Increase/decrease in long-term provisions | -1,930 | 4,898 |
| Income from investments in associates | -5,430 | -1,095 |
| Gain/loss from the disposal of fixed and financial assets | -44,609 | -35,552 |
| Interest results | 23,141 | 18,001 |
| Interest paid | -15,569 | -17,279 |
| Interest received | 5,370 | 4,168 |
| Income taxes paid | -4,732 | -7,700 |
| Gross cash flow | 85,113 | 107,610 |
| Increase/decrease in inventories | -27,356 | -2,664 |
| Increase/decrease in trade receivables | -81,296 | -124,133 |
| Increase/decrease in trade payables | 10,932 | 7,491 |
| Increase/decrease in other net current assets | 6,651 | 11,938 |
| Changes in non-cash items resulting from foreign exchange translation | 8,550 | -11,031 |
| Cash flow from operating activities | 2,594 | -10,789 |
| Proceeds from the sale of assets (including financial assets) | 4,054 | 3,892 |
| Purchase of property, plant and equipment and intangible assets | -56,889 | -48,313 |
| Payments made for investments in financial assets | 0 | -328 |
| Increase/decrease in securities and other financial assets | 10,440 | 22,719 |
| Net payments made for the acquisition of companies | -146,786 | -18,600 |
| Net proceeds from the sale of companies | 0 | 43,428 |
| Cash flow from investing activities | -189,181 | 2,798 |
| Increase/decrease in long-term financial liabilities | 251,809 | -334,694 |
| Increase/decrease in short-term financial liabilities | -332,471 | 299,315 |
| Dividends paid by Wienerberger AG | -13,808 | -11,741 |
| Hybrid coupon paid | -32,500 | -32,500 |
| Dividend payments from associates | 10,000 | 0 |
| Cash flow from financing activities | -116,970 | -79,620 |
| Change in cash and cash equivalents | -303,557 | -87,611 |
| Effects of exchange rate fluctuations on cash held | 253 | -437 |
| Cash and cash equivalents at the beginning of the year | 504,383 | 453,403 |
| Cash and cash equivalents at the end of the year | 201,079 | 365,355 |
| 1-6/2012 in TEUR |
Central-East Europe |
Central-West Europe |
North-West Europe |
North America |
Pipelife 2) | Investments and Other 3) |
Reconciliation 4) |
Wienerberger Group |
|---|---|---|---|---|---|---|---|---|
| Third party revenues | 254,596 | 188,053 | 378,154 | 76,274 | 80,392 | 58,132 | 1,035,601 | |
| Inter-company revenues | 1,798 | 10,681 | 6,772 | 0 | 0 | 6,551 | -25,328 | 474 |
| Total revenues | 256,394 | 198,734 | 384,926 | 76,274 | 80,392 | 64,683 | -25,328 | 1,036,075 |
| Operating EBITDA | 26,429 | 15,752 | 60,375 | 330 | 8,011 | -6,829 | 104,068 | |
| Operating EBIT | -8,094 | 2,604 | 27,307 | -10,972 | 5,234 | -12,023 | 4,056 | |
| Total investments | 15,343 | 13,331 | 12,522 | 9,857 | 148,733 | 3,889 | 203,675 | |
| Capital employed | 786,122 | 386,374 | 1,152,222 | 513,875 | 440,867 | 79,036 | 3,358,496 | |
| Ø Employees | 4,869 | 2,100 | 4,062 | 1,026 | 221 | 808 | 13,086 | |
| 1-6/2011 | ||||||||
| Third party revenues | 271,118 | 195,800 | 410,430 | 61,650 | 0 | 45,785 | 984,783 | |
| Inter-company revenues | 1,595 | 11,506 | 5,605 | 0 | 0 | 7,351 | -25,095 | 962 |
| Total revenues | 272,713 | 207,306 | 416,035 | 61,650 | 0 | 53,136 | -25,095 | 985,745 |
| Operating EBITDA 1) | 44,406 | 17,483 | 70,730 | -5,263 | 0 | -3,948 | 123,408 | |
| Operating EBIT 1) | 12,655 | 2,085 | 37,794 | -16,255 | 0 | -9,196 | 27,083 | |
| Deconsolidation result | 0 | 0 | 0 | 0 | 0 | 33,213 | 33,213 | |
| Total investments | 22,679 | 14,497 | 25,610 | 2,894 | 0 | 1,561 | 67,241 | |
| Capital employed | 862,001 | 370,277 | 1,115,175 | 461,172 | 0 | 84,135 | 2,892,760 | |
| Ø Employees | 4,247 | 2,022 | 4,197 | 1,143 | 0 | 694 | 12,303 |
1) 2011 values adjusted for deconsolidation results.
2) Pipelife is currently shown as a separate segment. This presentation includes the company's results, respectively the average values beginning on the initial consolidation date. The total investment includes the net purchase price for the 50% stake and all investments made after the initial consolidation date. The number of employees totaled 2,656 as of June 30, 2012 and was included for one month on a proportionate basis.
3) The Investments and Other segment includes holding company costs as well as brick activities in India and pipe systems.
4) "Reconciliation" only includes the elimination of intra-group income and expenses.
The interim report as of June 30, 2012 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, 2011 remain unchanged. For additional information on the accounting and valuation principles, see the financial statements as of December 31, 2011, 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.
Following the complete takeover of Pipelife at the end of May 2012, this plastic pipe producer is presented as a separate segment in the second quarter report as a first step. The size of the company and the resulting new organizational structures will lead to the restructuring of the Wienerberger Group's reporting segments. This new segmentation will take effect as of July 1, 2012 and therefore apply to reporting beginning with the third quarter of 2012. The Wienerberger Group will then report in two new main segments: "clay building material solutions", which will comprise clay block, facing brick and clay roof tile activities, and "pipe and paver solutions", which will cover the activities of the plastic pipe producer Pipelife, the clay pipe producer Steinzeug-Keramo and the concrete paver producer Semmelrock. In accordance with its regional organization and the respective responsibilities, Wienerberger will report on the following regions in both segments: Eastern Europe, Western Europe and Overseas (USA, Canada and India). The holding company activities will still be presented separately.
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. The Tondach Group and Schlagmann Group joint ventures are consolidated on a proportionate basis at 50%.
Société du Terril d'Hulluch (STF) SNC, which was previously included under other investments, was initially consolidated as of June 1, 2012.
On February 15, 2012 Wienerberger announced the acquisition of the 50% stake in Pipelife from the joint venture partner Solvay for TEUR 162,000. Pipelife, an international producer of plastic pipes, pipe systems and high-quality plastic fittings, operates 27 plants in Europe and USA and has 2,650 employees in 27 countries. This acquisition will expand the core business of the Wienerberger Group and thereby reduce the dependence on new residential construction. Following the approval of the transaction by the antitrust authorities at the end of May 2012, the Pipelife Group was initially consolidated as of May 31, 2012 on the basis of preliminary values. The Pipelife acquisition increased the consolidation range of the Wienerberger Group by four Austrian and 36 foreign companies. In the presentation of segment data, the Pipelife Group is temporarily shown as an independent segment.
Wienerberger's equity investment in the Pipelife Group had a fair value of TEUR 140,870 up to the acquisition date. The change in the consolidation method applied to the Pipelife Group resulted in a valuation effect of TEUR 42,303 to the previous at-equity investment, which was subsequently reported under other financial results. This valuation effect is presented net of the realization of foreign exchange differences previously recorded under other comprehensive income. The related transaction costs of TEUR 367 were included under administrative expenses.
The following table shows the preliminary reconciliation of the acquired and assumed Pipelife carrying amounts to the respective Group amounts as of the acquisition date on May 31, 2012:
| in TEUR | Carrying amount Adjustments | Total | |
|---|---|---|---|
| Non-current assets | 218,403 | 141,573 | 359,976 |
| Current assets | 353,926 | -2,636 | 351,290 |
| Non-current provisions and liabilities | 150,624 | 65,323 | 215,947 |
| Current provisions and liabilities | 239,352 | -3,908 | 235,444 |
| Net assets | 182,353 | 77,522 | 259,875 |
| Goodwill | 42,995 | ||
| Cash and cash equivalents | -15,363 | ||
| Fair value previously held interest in associates | -140,870 | ||
| Net payments made for the acquisition of companies | 146,637 |
The reconciliation of non-current assets primarily involve identified intangible assets like the customer base and the Pipelife brand. The adjustments to non-current provisions and liabilities consist chiefly of deferred tax liabilities and are related to the adjustments to non-current assets.
Pipelife generated revenues of TEUR 425,880 and operating EBITDA of TEUR 40,589 during the period from January 1, 2012 to June 30, 2012.
The Bramac Group was deconsolidated as of June 30, 2011 and is no longer included in the consolidated financial statements.
Changes in the consolidation range increased revenues by TEUR 102,162 and operating EBITDA by TEUR 8,943 during the period from January 1, 2012 to June 30, 2012.
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, 2012. The proportionate share of the accrued coupon interest for the first six months of 2012 equaled TEUR 16,161; 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 rose by 5% over the comparable prior year period to TEUR 1,036,075 for the first six months of 2012 (2011: TEUR 985,745). Operating EBITDA amounted to TEUR 104,068, which is TEUR 19,340 lower than the TEUR 123,408 recorded in the first half of 2011.
Operating profit equaled TEUR 4,056 for the reporting period, compared with TEUR 27,083 in 2011. The valuation effect from the change in the consolidation method applied to the Pipelife Group amounted to TEUR 42,303 and is included under other financial results. The number of shares outstanding as of June 30, 2012 remained unchanged at 117,526,764.
Wienerberger held 2,472,706 treasury shares as of June 30, 2012, which were deducted for the calculation of earnings per share. The weighted number of shares outstanding from January 1, 2012 to June 30, 2012 was 115,054,058.
Positive foreign exchange adjustments of TEUR 45,731 (2011: TEUR -48,941) recognized in other comprehensive income during the first six months of 2012 resulted above all from the US dollar, the British pound and the Polish zloty. The hedging reserve increased equity by TEUR 2,075 after tax during the reporting period (2011: TEUR -3,784). Changes in the fair value of available-for-sale securities totaled TEUR 1,741 (2011: TEUR 542). Profit after tax increased equity by TEUR 24,123 for the first six months (2011: TEUR 37,518). Total comprehensive income after tax increased equity by TEUR 73,670 (2011: TEUR -14,665).
Gross cash flow was lower than the comparable prior year level at TEUR 85,113 (2011: TEUR 107,610) due to a slight decline in volumes. Cash outflows of TEUR 203,675 (2011: TEUR 67,241) for investments in non-current assets (incl. financial assets) and acquisitions included TEUR 46,403 (2011: TEUR 41,043) of maintenance and investments in technical upgrades (normal capex) as well as TEUR 157,272 (2011: TEUR 26,198) of growth capex for acquisitions, plant expansion and environmental investments.
Normal and growth capex for the first six months of 2012 increased non-current assets by TEUR 56,889 (2011: TEUR 48,313). Net debt rose by TEUR 437,509 over the level at December 31, 2011 to TEUR 879,975 due to a seasonal increase in working capital and the Pipelife acquisition. The new TEUR 200,000 bond with a term of three and one-half years (due on August 1, 2015) was recognized as of February 1, 2012. It has a denomination of TEUR 1,000 and a fixed coupon of 5%.
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 2012 were higher input costs as well as reserved recovery of the construction industry in individual markets 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 whenever necessary. 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. Wienerberger counters the risk of rising input costs by establishing fixed procurement prices at an early point in time and by concluding long-term supply contracts. The risks associated with higher energy costs are reduced through the Group's hedging strategy. The risks expected by Wienerberger during the remaining six months of this year are linked to higher input costs, uncertainty over further developments in the construction industry and continued pressure on prices in individual markets.
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; the related proceedings are not expected to start before the end of 2012. In addition, the EU Commission recently ordered a search of the offices of plastic pipe and fitting producers in connection with an investigation of alleged anti-competitive agreements; this search also included Pipelife International GmbH. The responsible authorities have not yet provided any information on the progress or results of this search. Price-fixing agreements are principally not part of Wienerberger's 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 private foundation and its subsidiaries.
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 associated companies amounted to TEUR 5,792 as of June 30, 2012 (2011: TEUR 8,152). The comparable amounts for non-consolidated subsidiaries and joint ventures were TEUR 5,417 (2011: TEUR 5,886) and TEUR 7,426 (2011: TEUR 6,251), respectively. Transactions between companies included in the consolidated financial statements and companies controlled by a member of the Supervisory Board of Wienerberger AG are related primarily to clay deliveries of TEUR 13 (2011: TEUR 107), rentals of TEUR 1,442 (2011: TEUR 1,289) and license payments of TEUR 2,846 (2011: TEUR 2,755) for the use of brand names.
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 (interim reporting under IFRS) and that the Group management report gives a true and fair view of important events that occurred during the first six months of the financial year and their impact on the interim financial statements, of 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 21, 2012
Heimo Scheuch Willy Van Riet Johann Windisch Chief Executive Officer Chief Financial Officer Chief Operating Officer
Wienerberger is the only multinational producer of bricks, roof tiles, concrete pavers and pipe systems with a total of 230 plants in 30 countries and four export markets, including the plant in India. We are the world's largest producer of bricks and number one on the clay roof tile market in Europe. Furthermore we also hold leading positions in concrete pavers in Central-East Europe and pipe systems in Europe.
Hungary
| August 21, 2012 | Results for the First Six Months of 2012 Press and Analysts Conference in Vienna |
|---|---|
| August 22, 2012 | Analysts Conference in London |
| September 6/7, 2012 | Capital Markets Day 2012 in Vienna |
| October 23, 2012 | Start of the quiet period |
| November 13, 2012 | Third Quarter Results for 2012 |
| January 29, 2013 | Start of the quiet period |
| February 26, 2013 | Results for 2012 Press and Analysts Conference in Vienna |
| February 27, 2013 | Analysts Conference in London |
| March 29, 2013 | Publication of the 2012 Annual Report on the Wienerberger website |
| April 16, 2013 | Start of the quiet period |
| May 8, 2013 | First Quarter Results for 2013 |
| May 14, 2013 | 144nd Annual General Meeting in the Austria Center Vienna |
| July 23, 2013 | Start of the quiet period |
| August 20, 2013 | Results for the First Six Months of 2013 Press and Analysts Conference in Vienna |
| August 21, 2013 | Analysts Conference in London |
| October 22, 2013 | Start of the quiet period |
| November 13, 2013 | Third Quarter Results for 2013 |
| November 2013 | Capital Markets Day 2013 in Vienna |
| Head of Corporate Communications | Barbara Braunöck |
|---|---|
| Shareholders' Telephone | +43 1 601 92 471 |
| [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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