Pipelife strengthens Q1 2013 results
Long, snowy winter leads to volume declines for Bricks & Tiles Europe
– Contribution from initial consolidation of Pipelife strengthens Group results
– North America profits from positive market trend despite unfavorable weather
– Group revenues: € 492 million (Q1/12 restated: € 367 million)
– Operating EBITDA: € 2 million (Q1/12 restated: € 4 million)
– Revenue and EBITDA growth expected for full year
Vienna, 29-5-2013 — /europawire.eu/ — Wienerberger AG today announced results for the first quarter of 2013. Traditionally, during the first three months of the year the building materials business is heavily influenced by weather conditions. This year the long, snowy winter that continued into April across many parts of Europe and the eastern regions of the USA brought construction to a near standstill in many markets. The Bricks & Tiles Europe Division was especially hard hit by the sharp drop in construction and recorded substantial volume declines. The Pipes & Pavers Europe Division reported sound revenue and earnings growth following the initial consolidation of Pipelife, which was acquired in May 2012. The North America Division held volumes constant at the prior year level in spite of the unfavorable weather and increased brick margins with the support of previously implemented cost saving measures. In a market environment made extremely difficult by the weather, the Wienerberger Group generated a 34% increase in revenues to € 492 million due to the initial consolidation of Pipelife. Operating EBITDA fell slightly below the prior year level to € 2 million for the reporting period. Pipelife contributed € 183 million to revenues and € 13 million to operating EBITDA for the first three months of this year. Organic growth was negative at 16%, primarily due to weather-related volume declines in bricks, roof tiles and concrete pavers. Average prices were slightly lower than the previous year, whereby there were differences between the various regions and product groups: the prices for clay blocks declined following short-term sales campaigns in Eastern Europe, while the prices for roof tiles and facing bricks remained largely stable.
Segment developments in the first quarter of 2013
The snowy winter had the strongest effect on the Bricks & Tiles Europe Division, where revenues fell roughly € 48 million below the first quarter of the prior year to € 247 million and operating EBITDA nearly € 15 million to € -3 million. Demand weakened on almost all European markets as a result of the weather, while earnings were also negatively affected by extended plant standstills. For the first time in several years, volumes rose from the previously very low levels in Bulgaria and Romania. Russia continued its sound development with an improvement in revenues and earnings for the reporting period. The development of prices in Western Europe was better than Eastern Europe because of short-term sales campaigns carried out in a number of East European countries.
Revenue and earnings growth for Pipes & Pavers Europe due to initial consolidation of Pipelife
In the Pipes & Pavers Europe Division, the initial consolidation of Pipelife led to a solid increase in revenues and earnings. Revenues rose by approx. € 159 million to € 197 million and operating EBITDA by nearly € 10 million to € 8 million. Pipelife recorded also a weather-related drop in pipe sales, e.g. in the sewage segment, but could largely offset this decline with growth in its industrial pipe business. Concrete paver volumes were substantially lower, but due to cost savings margins improved from the prior year level.
Positive EBITDA for North America in Q1
The positive trend in new residential construction continued in North America. Brick volumes therefore remained stable for the first three months in spite of the unfavorable weather. Margins were also higher due to the successful implementation of cost reduction measures. Supported by the initial consolidation of Pipelife’s North American activities, revenues in this division rose by 45% to € 47 million and operating EBITDA improved from € -2 million in the first quarter of 2012 to € 0.3 million. These results represent the first positive Q1 operating EBITDA for North America since 2008.
Outlook and strategy
Wienerberger’s goals for growth in 2013 remain intact despite the weak start of the year. Heimo Scheuch, Chief Executive Officer of Wienerberger, explained: “Whether we can reach our ambitious goals depends on recovering at least part of the ground lost during the first quarter. Of course, the development of our markets during the remainder of the year will also play an important role. Our assessment of Wienerberger’s key markets has not changed during the past three months. Since construction activity in Europe only normalized in mid-April, the visibility over our key markets remains limited. I expect a continuation of the difficult market conditions in the Netherlands, France, Poland and the Czech Republic, but a more stable development in Germany, Great Britain, Bulgaria and Romania. The Bricks & Tiles Europe Division could face further slight volume declines this year, but the previously implemented cost reduction measures should largely offset the resulting negative effect on earnings. The restructuring program announced in the second half of 2012 is being realized as planned and should bring the expected € 18 million of cost savings for the full year. I expect a contribution of approx. € 30 million to Group operating EBITDA from the initial consolidation of Pipelife for the first five months of 2013. In North America, the positive trend in US new residential construction should continue and lead to an increase in the demand for bricks. Based on the above, our goal to generate sound growth in revenues and earnings for the Wienerberger Group in 2013 therefore remains intact. Additional information will be provided in a trading update, which is scheduled for July 11, 2013.”
€ 300 million bond successfully placed with national and international investors in April
Wienerberger successfully issued a new bond in April 2013. As a result of the strong demand, the volume was increased from the originally planned € 250 to 300 million and the coupon was set at 4%. One particularly positive factor was the substantial interest from international investors. More than 75% of the bond was placed outside Austria and nearly half with institutional investors. The proceeds will be used to refinance the bond that will mature in April 2014 and to fund the operating business. Heimo Scheuch explained: “Financial discipline remains the underlying principle for our actions as well as our internal goal to hold the ratio of net debt to operating EBITDA below 2.5 at year-end. In 2013 we will also focus on the generation of strong cash flows, a greater concentration on premium building material solutions and the development of new products.“ The Group’s priorities for the further development of business include bolt-on projects in the core areas in order to utilize value-creating opportunities for the continued growth of the Wienerberger Group.
Wienerberger Group
Wienerberger is the world’s largest producer of bricks (Porotherm, Terca) as well as number one on the clay roof tile market (Koramic, Tondach) in Europe and on the concrete paver market (Semmelrock) in Central-East Europe. In pipe systems (Steinzeug-Keramo ceramic pipes and Pipelife plastic pipes), the company is one of the leading suppliers in Europe. With 221 plants, Wienerberger generated revenues of € 2,356 million and operating EBITDA of € 246 million in 2012. In May 2012 Wienerberger finalized the full takeover of Pipelife and set a further milestone in the expansion of the core business.
For additional information contact:
Barbara Braunöck, Head of Corporate Communications
T +43 1 601 92 – 10221 | communication@wienerberger.com
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