The listed building materials group Wienerberger felt the effects of the real estate and construction crisis in the first half of this year and barely made any profits. Earnings after taxes fell from EUR 223.5 million to EUR 0.5 million compared to the same period last year, as shown in the current half-year report. Sales remained stable at EUR 2.2 billion.
“This year is a difficult year, especially in the new construction segment,” said CEO Heimo Scheuch in a telephone conference with analysts. In Germany and France, the markets have literally collapsed.
Wienerberger reacted quickly with “optimized cost structures” and, where necessary, with further restructuring measures. The ongoing “self-help program” aimed at increasing earnings and increasing efficiency, which made a profit contribution of 46 million euros last year, will also be continued, the company announced.
“This year we have intervened very heavily in the plant network, we have reduced costs because demand for new construction has fallen sharply, not only in Austria, but above all in Germany, the Benelux countries and France, and also in North America,” Scheuch explained in the Ö1 “Mittagsjournal” broadcast by ORF radio. “We have therefore had to reduce capacity, lay off people and make individual write-offs,” he added. The bottom line is that Wienerberger 20,485 employees in the reporting period (previous year period: 19,195).
These “extraordinary, one-off effects” also include “a very large effect from the sale of the Russian business that we made this year.” The result of the Wienerberger would be – if that were taken into account – “a good 150 million better”.
The world’s largest brick manufacturer described the level of sales revenue as a “solid half-year performance against the backdrop of global political uncertainties that are curbing the propensity to invest due to the upcoming elections in several important countries in 2024.”
Image: APA/HERBERT PFARRHOFER
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Image: APA/HERBERT PFARRHOFER
While new residential construction is weakening, the renovation and infrastructure (water and energy management) segments are developing relatively stably or well, according to the information. “For the first time, new residential construction contributed less than 50 percent to group sales,” reported the CEO.
Interest rates would fall more slowly than Wienerberger expected. This also dampens demand for credit. New construction activity is weak. Demand for single-family homes in particular is falling short of expectations. Wienerberger back.
In view of the challenging environment, the group is implementing a massive savings program – capacities are being cut where necessary and plants are being shut down. For example, cuts have also been made in the German roofing sector and, to a lesser extent, in France. According to its own statements, the company is “continuing to focus on effective cost management.”
The first half of the year also saw the completion of the takeover of the French roofing specialist Terreal, which offers products for roof repair and renovation. This is “the largest acquisition in the company’s history,” stressed Scheuch. The integration of Terreal into the group is in full swing.
The main factor that has been depressing profits this year is the collapse in new construction activity in North America and Western Europe. “The markets have gone down sharply, especially in Germany,” explained Scheuch. But there have also been significant declines in residential construction in France and Austria. “That is what we now have to digest in these markets,” explained the CEO. Scheuch described the decline in Canada and on the US market as “temporary.”
In Eastern Europe, where the decline in demand began earlier, the CEO sees further signs of recovery for the rest of the year. “We have now seen the low point in Eastern Europe, and we are now moving out of these low figures,” said Scheuch. “In the second quarter, we saw the first positive impulses, especially in Eastern Europe,” confirmed CFO Gerhard Hanke.
In Western Europe – on the Wienerberger In the important markets of Austria, Germany, France, Belgium and the Netherlands, this will probably take a little longer – according to Scheuch, “until 2025”. “It will take another six months, starting with the Netherlands,” said the CEO. In Germany, it will not be that far yet. But the recovery in the other markets, which will begin earlier, will “not yet reach the level of 2021”.
According to the CEO, a “complete” market recovery and cost savings should be seen in 2025, and the usual market levels should not return until 2026 – with an operating EBITDA expected to be more than 1.2 billion euros.
