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Wienerberger reports revenue and earnings growth in the first nine months

From January to September 2017, Wienerberger succeeded in generating revenues and earnings growth and in increasing its net profit

Wienerberger AG Q3 Results
Wienerberger AG Q3 Results
Revenues up by 4% to € 2,361.0 million (1-9/2016: € 2,279.7 million)
4% growth of EBITDA to € 315.0 million (1-9/2016: € 302.6 million)
Significant increase in net profit by 38% to € 94.7 million (1-9/2016: € 68.7 million)
Development of business of the Divisions
› Clay Building Materials Europe: strong growth in Eastern Europe; healthy development in large parts of Western Europe; challenging market situation in Belgium and Germany
› Pipes & Pavers Europe: positive infrastructure business in Eastern Europe and the Nordic core markets; no improvement of international project business and in France
› North America: satisfactory development of brick and plastic pipe activities in the USA and in Canada; third quarter construction activity in the USA affected by “hurricane seasons”
Growth target for 2017 slightly adjusted due to subdued market dynamics in the third quarter
Vienna, November 8, 2017 – From January to September 2017, Wienerberger succeeded in generating revenues and earnings growth and in increasing its net profit. Taking stock of the past nine months, Heimo Scheuch, Chief Executive Officer of Wienerberger AG, says:
“We are pursuing our overall strategy with good results. Numerous projects are currently being implemented in the fields of innovation and digitalization, and our Operational Excellence programs have resulted in sustainable savings – over € 7 million to date. Moreover, several successful steps toward further growth in the brick and pipe segments have been taken in recent weeks. Thus, we have prepared the ground for Wienerberger’s continued positive development.”
Through selective acquisitions, Wienerberger took several steps to optimize its positioning in certain markets and operating segments. The acquisitions are part of the Group’s path of profitable growth and its strategy to develop areas with a high potential for added value. In the pipe segment, Wienerberger took over the Belgian Preflex Group, thus positioning itself in the fast growing and profitable segment of prewired electro conduits. In the brick segment, Wienerberger broadened its geographic presence in Germany. The acquisition of Brenner in Austria is expected to be closed by the end of the year and the acquisition of Brikston in Romania is still subject to approval by the local competition authority. Wienerberger’s takeover of a brick producer in North America in the fourth quarter will open up new markets and enlarge the product range in the USA. These acquisitions all meet Wienerberger’s investment criteria and will result in positive contributions to earnings. They are financed from Wienerberger’s funds for growth for which an amount of € 85 million has been allocated for 2017.
During the first nine months of 2017, Wienerberger increased its revenues at Group level by 4% to € 2,361.0 million; foreign exchange effects diminished revenues by € 17.9 million. EBITDA increased by 4% from € 302.6 million in the previous period to € 315.0 million in the first three quarters of this year. While the sale of real estate contributed € 8.3 million to EBITDA, foreign exchange effects depressed EBITDA growth by € -4.3 million. Net profit increased substantially by 38% from € 68.7 million to € 94.7 million in the reporting period.
“We are observing a sustainable increase in the number of new housing starts as well as in infrastructure spending in our markets, which means that developments are fundamentally sound. This trend is already clearly visible in Eastern Europe. It benefits our brick and infrastructure operations, which recorded significant growth in the third quarter. Nevertheless, business performance overall was subdued during the past three months. On the one hand, in certain areas, such as the shortage of insulation material in Belgium, the recovery expected for the third quarter did not yet materialize. On the other hand, we saw unfavorable weather conditions in September. Tropical rainstorms in the eastern and southern USA had an immediate negative impact on construction activities in some of our North American core markets”, stated Heimo Scheuch.

Business development in the Divisions

Strong growth in Eastern European brick business
Residential construction activity in Europe showed a slight upward trend from January to September. While business was strong throughout Eastern Europe, the Western European markets were characterized by diverging trends. Construction activities grew in France, Great Britain and the Netherlands, but challenging market conditions were encountered in Belgium and Germany. The persistent shortage of insulating materials in Belgium led to further delays in the execution of building projects, which resulted in lower volumes of facing bricks and roof tiles sold. In Germany, a downward trend in the construction of single- and two-family homes has been observed since the second quarter. Moreover, there have been no signs of a recovery of the renovation market. Overall, market conditions in Europe allowed Wienerberger to increase its sales volumes and to obtain slightly higher average prices. Altogether, the Clay Building Materials Europe Division generated in increase in revenues by 5% to € 1,344.4 million and a significant rise in EBITDA by 12% to € 242.2 million.
Challenging conditions in Western European infrastructure business
Revenues of the Pipes & Pavers Europe Division remained stable during the reporting period, coming to a total of € 775.4 million. Healthy demand was seen in the majority of markets. As expected, public-sector tendering activity for infrastructure projects showed signs of recovery, especially in Eastern Europe. This had an increasingly positive impact on our business in concrete pavers and pipes in the region. However, the Division’s EBITDA dropped by 20% to € 66.2 million in the reporting period. This decline was primarily due to the Western European plastic pipe business. Although the impact of rising raw material costs was gradually offset by price increases in the course of the third quarter, the weak order intake in international project business and the difficult market environment in France continued to depress earnings. EBITDA growth recorded in all other fields of business was unfortunately not able to compensate for this trend.
Developments in North America overall positive
Residential construction activity in the USA showed a positive development from January to September. Wienerberger benefited from rising numbers of new housing starts in the single- and two-family home segment. However, this trend was temporarily halted by tropical rainstorms in the southern and eastern parts of the country, which slowed down the growth of facing brick sales in the reporting period. The North American plastic pipe business and the activities in Canada produced satisfactory results. Against this background, the North America Division recorded a 6% increase in revenues to € 234.0 million. EBITDA improved by 22% to € 21.4 million.

Outlook and strategy

Growth target for 2017 slightly adjusted to € 405 million
For the remaining three months of the year, Wienerberger expects to see a continuation of current market trends. In those markets where business activities do not meet expectations, Wienerberger will take proactive measures by the end of the year to improve performance. The resulting costs will have an impact on fourth quarter earnings. Given the developments observed in the third quarter, the target for the full year has been slightly modified. The Wienerberger Group expects to generate adjusted EBITDA at Group level of approx. € 405 million in 2017. Commenting on this outlook, Heimo Scheuch underlines,
“We look to the future with optimism: We are seeing a sustainable increase in the number of new housing starts and in infrastructure spending in our markets. Based on our strategy, we are excellently positioned to benefit from this trend. Next year already, the recently closed growth projects will make positive contributions to our results, and the planned structural measures will lead to improvements in performance.”

Further information

Karin Steinbichler, Head of Corporate Communications Wienerberger
t +43 1 601 92 - 10149 |
Klaus Ofner, Head of Investor Relations Wienerberger AG
t +43 1 601 92 - 10221 |
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