Frequently asked questions

Wienerberger is the only multinational producer of bricks, roof tiles, concrete pavers and pipe systems with a total of 221 plants in 30 countries and four export markets, including one 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 hold leading positions in concrete pavers in Central-East Europe and pipe systems in Europe. Wienerberger had a market capitalisation of € 814.3 million at year-end 2012 and is listed on the Vienna Stock Exchange (WIE).

Wall: Clay blocks are used for load-bearing exterior and interior walls as well as for non-load-bearing partition walls or fill work. A wall made of clay blocks is normally not seen after completion because it is covered with plaster or paneling.

• Wienerberger's clay block business is run under the brand POROTHERM (POROTON in Germany)
• In FY 2012 it was responsible for 27% of Wienerberger's revenues.

Facade: Facing bricks are used in visible brick architecture: facades and interior walls are made from or covered with these bricks. The necessary functions of the load-bearing walls are provided by hollow bricks or other building materials such as concrete or calcium silicate blocks.

• Wienerberger's facing brick businessis run under the brand TERCA
• In FY 2012 it was responsible for 24% of Wienerberger's revenues.

Roof: Clay roof tiles are used primarily to cover pitched roofs. They not only provide sustainable protection for houses from the weather, but also represent an important design element for architects. Clay roof tiles are not only used in new construction, but also to a large extent in the renovation of existing buildings.

• Wienerberger's clay roof tile business is run under the brands KORAMIC and Tondach Gleinstätten (Wienerberger holds a 50 %-stake in Tondach Gleinstätten)
• In FY 2012 it was responsible for 18% of Wienerberger's revenues.

Surface: Pavers by Wienerberger are produced as clinkers made of clay or as concrete pavers and slabs. These materials are used by homeowners (for driveways, paths, terraces and garden design) as well as in public areas (sidewalks, open areas and pedestrian zones).

• Wienerberger's paving business is run under the brands TERCA (clay) and SEMMELROCK (concrete)
• In FY 2012 it was responsible for 5% of Wienerberger's revenues.

Pipe systems: Pipe systems marketed by Wienerberger comprise ceramic products (Steinzeug Group) that are made of loam, water and grog as well as plastic products (Pipelife). The fields of application of pipe systems are infrastructure (especially drinking water and waste water supply), residential and non-residential (industrial, office and public buildings) construction.

• Wienerberger's pipe system business is run under the brands Pipelife (plastic products) and Steinzeug (ceramic products).
• In FY 2012 pipes were responsible for 26% of Wienerberger's revenues.

With the full takeover of the plastic pipe producer Pipelife in 2012, Wienerberger completed its transformation into an inter national supplier of building material systems. Business activities are now aggregated in Bricks & Tiles and Pipes & Pavers.

The reporting segments are the following (including revenue information for FY 2012):

• Bricks & Tiles West Europe 48%
• Bricks & Tiles East Europe 13%
• Pipes & Pavers West Europe 17%
• Pipes & Pavers East Europe 14%
• North America 8%
• Holding & Others 0%

In recent years Wienerberger has experienced significant growth and since 1986 has evolved from a local brick maker to the Number 1 brick manufacturer in the world and Number 1 in clay roof tiles in Europe. Wienerberger also holds leading positions in concrete pavers in Central-East Europe and pipe systems in Europe. Since then, the number of production facilities has risen from 11 to 221 plants in 30 countries across Europe and the USA. In 1999, Wienerberger advanced expansion activity to become a global player through the acquisition of General Shale in the USA. 

For Wienerberger, the years since the crisis have been characterized, above all, by a difficult new residential construction market and an internal focus on cash generation. Extensive restructuring measures were implemented in 2009 as a reaction to the global financial crisis, which cut fixed costs by approx. € 200 million, substantially reduced working capital and gradually decreased the company’s debt. The conclusion of the restructuring phase was followed by a strategic reorientation from a primarily expansion-driven to a market-oriented company with a focus on organic growth. Our customers are the focal point of our actions – we want to create added value for them with innovative, high-quality and use-oriented system solutions. Comprehensive advising and service for our customers, starting with the project planning stage, are an important part of our improved sales activities. The strategy for our core business is designed to establish and extend leading positions in all markets in which we are present.

In order to reduce Wienerberger's dependence on new residential construction over the medium-term, we have been working for several years to expand the core business through a stronger concentration on renovation and infrastructure. Our activities in the area of pipe systems should be seen in this connection. We acquired Steinzeug-Keramo, the market leader for ceramic pipes in Europe, during 2010. In 2012 the Wienerberger Group completed its transformation to an international system provider of building materials with the full takeover of Pipelife, one of the leading European producers of plastic pipes. Both companies were acquired at comparatively low multiples and create substantial added value with a CFROI that clearly exceeds the internal hurdle rate of 11.5%. The expansion of the core business has reduced the dependence on cyclical new residential construction from approx. 70% to roughly 60% of revenues. It has also broadened Wienerberger’s strategic base to include new opportunities for sustainable growth over the medium- and long-term.

Our strategic focus will remain on financial discipline as well as the protection of a strong capital structure. In 2012 we held the ratio of net debt to operating EBITDA at 2.2 years – which is below our internal target of 2.5 – despite the Pipelife takeover. The issue of an additional bond in January 2012 with a volume of € 200 million increased our liquidity reserves and further optimized the term structure of liabilities. The maintenance and protection of a strong capital structure remains a central goal for Wienerberger, which we will continue to pursue through the proactive management of liquidity and the term structure of liabilities.

Wienerberger’s activities cover solutions for walls and roofs (clay blocks, facing bricks and clay roof tiles) as well as pipe systems & paver solutions (plastic pipes, ceramic pipes and concrete pavers). These businesses are managed by region based on the following divisions: Bricks & Tiles Europe, Pipes & Pavers Europe and North America. The Wienerberger Group has a medium- to long-term EBITDA potential of approx. € 600 million across all divisions, once the new residential

construction market recovers.

The Pipelife acquisition was responsible for an increase in total investments to € 268.7 million for the reporting year (2011: € 151.7 million). This figure includes € 163.4 million (2011: € 55.9 million) of growth investments, whereby € 146.6 million are related to the purchase of the remaining 50% stake in Pipelife. Normal capex, which includes maintenance as well as expenditures for technical upgrading and production equipment for premium products, amounted to € 105.3 million (2011: € 95.8 million) or 54% of depreciation for the year (2011: 52%). The investments made in 2012 were distributed among the divisions as follows: 24% in Bricks & Tiles Europe, 68% in Pipes & Pavers Europe, 6% in North America and 2% in Holding & Others.

The full takeover of Pipelife, one of the leading producers of plastic pipe systems in Europe, represents a milestone in our strategy to expand the core business. With this transaction, we – together with our subsidiary Steinzeug-Keramo, which holds leading positions in ceramic pipes – will become one of the most important European players in pipe systems. For Wienerberger, this not only means lower dependence on cyclical new residential construction, but also additional and sustainable growth potential. Plastic pipes continue to gain market shares over competing metal and concrete products, and this segment is therefore growing faster than the market. The integration of Pipelife will also allow us to expand our business, especially in building and electro installations. We intend to use the combined innovative power and strong market structures of Pipelife and Wienerberger to generate growth and further strengthen our market presence. This transaction reflects our sustainable growth strategy, and also creates immediate added value for our shareholders. Pipelife was previously included at equity, and full consolidation will increase Wienerberger Group revenues by approx. € 800 million or roughly one-third, and EBITDA by more than 20%, or approx. € 70 million, per year. The acquisition price for the remaining 50%-stake in Pipelife amounts to € 162 million.

Generally, the brick and roof tile industries are made up of local producers that serve regional markets. There are several regional manufacturers and only very few international producers.

The brick business requires high initial investment and relatively low subsequent replacement investments. It is a seasonal industry, with low levels of sales occurring during the winter months. The primary market segment of the Group’s products (approximately 70% of revenues) is the new residential housing construction. The choice of products typically depends on traditions and the availability of raw materials and climate. Commercial construction (e.g. office or public buildings) and renovation as well as infrastructure investments account for an increasing share of group revenues due to the renovation driven strength of the roof business, the contribution of the Steinzeug-Keramo Group as well as the future contributions of Pipelife.

For bricks, the competition consists of producers of brick substitute products like aerated concrete or limestone blocks and other brick manufacturers. For clay blocks, Wienerberger is the world’s largest producer and does not have any competing international industrial groups. Wienerberger’s brick competition arises mainly from family businesses and smaller emerging groups. For facing bricks, Wienerberger is number one in Europe and faces competitors such as CRH and Hanson (HeidelbergCement) and family businesses. In the USA, Wienerberger is a co-leader with Boral, and other competitors are ACME, CRH and Hanson (HeidelbergCement). The big five account for two thirds of the facing brick market share in the USA.

Within its roof tile activities, the Group competes with producers of substitute products for pitched roofing like metal covering, asphalt shingles or natural stone and with other clay and concrete roof tile manufacturers. In this product area, Wienerberger’s competitors in Europe are Monier and Etex (businesses of global and European scale) as well as Imerys and Terreal (both in France and surrounding countries). Consolidation in the roof tile industry is further advanced than in the brick industry.

Demand trends are best illustrated by the residential construction sector, which accounts for the vast majority of hollow brick and facing brick demand worldwide. The remainder represents commercial and public building demand and renovation for roof tiles. Brick sales are mainly driven by single and two-family housing starts. Due to its exposure to the residential construction sector, the brick industry is subject to typical macroeconomic drivers such as GDP, consumer confidence and to a lesser extent long-term interest rates (i.e. mortgage rates). In addition, weather is an important external factor affecting demand, as bad weather negatively impacts house builders ability to operate.

Above-average growth is expected over the coming years, above all, in the areas of rainwater and water management due to the renovation backlog in Western Europe and the planned increase in supply network coverage in Eastern Europe. The growing demand for electricity and broadband services will also lead to increased demand for cable and electrical installation pipes in the future. The market shares of plastic pipes are growing steadily in comparison with competing metal and concrete products and outpacing the market.