2023-05-11 05:30:59
Vienna (OTS) –
Highlights
- Challenging macroeconomic environment, rising mortgage interest rates and high inflation lead to a weakening of the sales markets
- Sales development in line with expectations
- Stable group sales in Q1 2023 of €1,052 million (Q1 2022: €1,157 million)
- Strong Q1 EBITDA of €206m (Q1 2022: €228m) given market declines
Outlook 2023
- Market development in line with expectations
- Wienerberger confirms an EBITDA of > €800 million (excluding the results generated by the planned Terreal takeover)
The first quarter was characterized by challenging macroeconomic conditions. With sometimes sharp declines in the sales markets, Wienerberger was able to generate stable consolidated revenues of €1,052 million in the first quarter of 2023 (Q1 2022: €1,157 million) and a strong EBITDA of €206.3 million (Q1 2022: €228 €.3 million). Thanks to the positive development and the outperformance of the end markets, Wienerberger was once more able to grow in the face of declining sales markets. The basis for mastering the economic challenges is the successful transformation of Wienerberger into a provider of innovative and sustainable system solutions in the areas of ecological new construction and renovation as well as water management. The company intends to consistently maintain this continuous focus and thus continue to outperform its end markets in the future.
„In the first quarter of 2023, we impressively managed to grow organically once morest our declining end markets. Thanks to the combination of our excellent cost management and our efficient purchasing policy, we were able to successfully counter increased cost inflation and maintain profitability at a high level despite declining demand. This is an indicator that the Wienerberger Group is able to adapt successfully to changing market conditions and underpins the resilience of our business model
“, said Wienerberger CEO Heimo Scheuch.
Striving for continuous optimization, the Wienerberger Group decided to adapt its operational structure in Europe from a product-centric structure with Wienerberger Building Solutions and Wienerberger Piping Solutions to a regional structure – divided into Western Europe and Eastern Europe – from 2023. As a result, the European regions now also offer solutions for the entire building envelope as well as for water and energy management. Heimo Scheuch emphasizes: “Due to our increased focus on system solutions, the next logical step was to switch operational management to a total of three regions. The new structure will help promote synergies between the different business areas within the countries and regions.
“
performance in the regions
Increased mortgage interest rates lead to reduced activity in new construction, renovation and infrastructure. This development is reflected in the results of the regions.
In the Western Europe region External sales fell slightly by 7% year-on-year to €556.0 million (Q1 2022: €600.2 million). Operating EBITDA increased by 4% to €102.3 million (Q1 2022: €98.2 million).
The decline in new residential construction was particularly high in Germany and Great Britain, while it developed comparatively satisfactorily in France, Belgium and the Netherlands. Demand in the renovation segment, particularly for our roofing solutions, continued to be strong across regions. With the acquisition of the companies FloPlast and Cork Plastics in Great Britain and Ireland in 2021, Wienerberger was able to leverage significant synergies thanks to the transformation into a total solution provider in the roof area and also increased its share in the attractive renovation market.
In our plastic pipe business, we reported lower sales volumes in the first quarter of 2023 compared to the record results of 2022. In Northern Europe, the severe winter also hampered the implementation of infrastructure projects and the in-house area was impacted by a decline in new construction activity. In contrast, the plastic pipe business in the west of the Western Europe region, which is strongly driven by the in-house area, developed satisfactorily thanks to the growing solution portfolio.
Die Eastern Europe region recorded a decline in external sales of 14% to €300.9 million (Q1 2022: €348.6 million) in the first three months of the reporting period due to a sharp increase in mortgage interest rates in the double-digit range and a significant weakening of the economy. Operating EBITDA was -30% in the first quarter of 2023 at €59.0 million (Q1 2022: €84.8 million).
The high level of inflation and interest rates led to a massive drop in new construction activity. The renovation segment is also declining. In the area of pipe production, the increased financing costs had a negative impact on investment activity in the infrastructure area. However, by taking immediate measures such as adjusting plant capacities, Wienerberger was able to promptly reduce costs and counteract the developments.
Die Region North America recorded external sales of €195.2 million (Q1 2022: €207.5 million). By contrast, operating EBITDA increased by 11% from €42.5 million to €47.4 million.
The rise in mortgage interest rates as a result of the high level of inflation continued in the first quarter of 2023 and had a dampening effect on new construction activity in the USA and Canada. In the western United States, with Texas leading the way, new residential construction declined following several very strong years. In comparison, continued high migration rates in the US Southeast have resulted in strong demand. The company also recorded stable demand in Canada. Thanks to excellent management, the rapid integration of Meridian Brick and the associated synergy effects exceeded expectations. Overall, Meridian Brick made a significant contribution to the strong increase in earnings in the North American facade business.
In the plastic pipe business, the decline in demand in the fourth quarter of 2022 continued as expected in the reporting period. After peaking in the summer months, the price of plastic granules showed a downward trend during the fourth quarter of 2022 and stabilized in the first quarter of 2023. Thanks to the generally high price discipline and proactive margin management, the Wienerberger Group managed to maintain the high level of profitability and to generate a very pleasing contribution to earnings.
Outlook 2023
At the beginning of the financial year, we published our assessment of the expected development in our new construction, renovation and infrastructure end markets as a scenario for 2023. The developments in the first quarter fell short of these expectations. In the subsequent quarters of 2023, however, we expect the markets to improve slightly and continue to expect the following developments for 2023 as a whole:
Europe North America
New build -15% -20%
Renovation -3% -3%
Infrastructure -5 % -5 %
For the 2023 financial year, Wienerberger expects high inflation rates across the Group and a continuation of the financing costs that had already risen in the previous year. In new construction, it is expected that more expensive mortgage loans will lead to a further decline in building permits. High energy prices are once once more making building renovation – and thus roof renovation in particular – the center of attention. Public funding programs (EU Green Deal and national initiatives) have a supporting effect, as do stricter regulations to increase energy efficiency. Therefore, in the field of renovation, a continuation of the high level of activity and an overall stable market development can be expected. In the area of infrastructure, it can be assumed that the increased financing costs will have a dampening effect on demand and lead to shifts in project business.
The proven forward buying strategy in the energy sector will be continued throughout the group. 93% of the required gas volumes have already been secured for the current financial year. Wienerberger expects a contribution to earnings of €45 million in 2023 from the ongoing self-help program to increase earnings and efficiency. An expected cost inflation of < 9% in the current year is to be covered by strict cost and proactive margin management – despite declining markets and increased competition.
In December 2022, the Wienerberger Group announced its intention to acquire significant parts of the Terreal Group, a successful European provider of innovative roofing and solar solutions. Closing is expected to occur in the second half of 2023 as planned and is subject to the approval of competition authorities and the satisfaction of other conditions typical of a transaction of this type.
For the 2023 financial year, the company expects a strong performance and confirms that it will generate an EBITDA of > €800 million. The results generated by the planned takeover of Terreal are not taken into account in the earnings expectations.
For the full first quarter 2023 report, go to https://www.wienerberger.com/de.
Wienerberger Group
The Wienerberger Group is a leading international provider of smart solutions for the entire building envelope and infrastructure. Wienerberger is the world’s largest producer of bricks (Porotherm, Terca) and the market leader in clay roof tiles (Koramic, Tondach) in Europe and in concrete pavers (Semmelrock) in Eastern Europe. When it comes to pipe systems (stoneware pipes from the Steinzeug-Keramo brand and plastic pipes from the Pipelife brand), the company is one of the leading suppliers in Europe. With the acquisition of Meridian Brick, Wienerberger has further expanded its position as a leading supplier of facade products in North America. With more than 200 production sites across the group, Wienerberger generated sales of around €5.0 billion and an EBITDA of €1 billion in 2022.
Questions & contact:
Claudia Hajdinyak, Head of Corporate Communications Wienerberger AG
t +43 664 828 31 83 | claudia.hajdinyak@wienerberger.com
Daniel Merl, Head of Investor Relations Wienerberger AG
t +43 1 601 92 – 10221 | investor@wienerberger.com
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