Wienerberger increases free cash flow by 28% despite crisis
(Thomson Reuters ONE) - Wienerberger AG / Wienerberger increases free cash flow by 28% despite crisis processed and transmitted by Hugin AS. The issuer is solely responsible for the content of this announcement. Preliminary results for 2009: * Revenues -25% to EUR 1,815.9 million, operating EBITDA -53% to EUR 208.6 million * Restructuring generates approximately EUR 160 million of cost savings in reporting year * Free cash flow of around EUR 250 million exceeds prior year level by 28% * Net debt reduced from EUR 890 million to roughly EUR 410 millionOutlook on 2010: * Forecasts indicate stabilization in some Western European markets, floor-building in US * Low visibility in Central-East European markets * Cost reductions expected to improve earnings in 2010Vienna, February 11, 2010 - Wienerberger AG, the world's largest producer ofbricks and the number one in clay roof tiles in Europe, is reporting a 25%year-on-year drop in revenues for the difficult 2009 financial year. Shakenconsumer confidence and, above all, a lack of financing triggered a majorcontraction in new construction in all Wienerberger markets. Declining salesvolumes and slightly lower average prices, as well as the cost of extensiveplant standstills to reduce inventories as part of the active working capitalmanagement program, led, as expected, to weaker operating results forWienerberger in 2009: preliminary operating EBITDA (before restructuring costs)fell by 53% to EUR 208.6 million and preliminary operating EBIT by 92% toEUR 19.0 million. Preliminary EBIT after one-off effects totaled EUR -258.1 millionfollowing the recognition of EUR 121.4 million in restructuring costs foroptimization measures (including EUR 52.6 million of cash expenses), EUR 32.3million of impairment charges to real estate and EUR 123.3 million of impairmentcharges to goodwill. The deduction of the preliminary financial result of EUR37.5 million and the addition of preliminary tax benefits of EUR 36.9 millionresulted in a loss after tax of EUR 258.7 million and preliminary earnings pershare of EUR -3.17 (adjusted earnings per share: EUR -0.34). The decisiveimplementation of the cost reduction program and, above all, the significantreduction of working capital and investments allowed Wienerberger to increasefree cash flow by an impressive 28% to around EUR 250 million for the reportingyear despite weaker operating results in a difficult market environment.2009 marked by restructuring"2009 was an extremely challenging year that was also marked by extensiverestructuring", explained Heimo Scheuch, Chief Executive Officer of WienerbergerAG, on the results presented today. "We were faced with significantly lowerdemand for building materials in all our markets. The biggest disappointment wasNorth America, which has remained on a downward spiral since 2006 and fellsubstantially below expectations in 2009 with a further 36% drop in revenues toEUR 149.0 million. Operating EBITDA in this segment was negative at EUR -13.3million as a result of costs incurred to cut capacity to a low level of 20% inorder to reduce inventories. On a positive note, we were successful in holdingprices constant in spite of the difficult US market climate." In Central-EastEurope, which was first impacted by the economic crisis in early 2009,Wienerberger also recorded a substantial decline in earnings from the good 2008level. Revenues in this region fell by 35% to EUR 579.4 million. Negative foreignexchange effects and a 10% decrease in average local currency prices had anegative impact on operating EBITDA, which fell 59% below the prior year toEUR 108.8 million. New residential construction in Western Europe dropped sharplyduring the first six months of 2009, but recovered slightly in the secondhalf-year. The demand for building materials has stabilized in recent months,above all in Great Britain and Germany. Revenues in North-West Europe were EUR713.4 million, or 19% less than in the previous year, while operating EBITDAdeclined by 29% to EUR 102.5 million. Central-West Europe reported a 10% decreasein revenues to EUR 373.2 million and 24% lower operating EBITDA of EUR 32.3 million.Fourth quarter results 2009Group revenues fell by 21% to EUR 399.3 million and operating EBITDA by 59% to EUR31.1 million during the last three months of 2009. Operating EBIT was negativeat EUR -17.7 million due to extended winter standstills and the resulting costs ofidle capacity. However, developments in the four Wienerberger regions differedduring this period. In Central-West Europe, where Germany represents roughly70% of the segment, revenues nearly matched the prior year at EUR 86.3 million. InNorth-West Europe, the decline was more moderate than in earlier quarters withan 11% fall in revenues and a 10% reduction in EBITDA. These results were mainlysupported by a slight rise in the demand for building materials from a very lowlevel in Great Britain as well as more constant sales volumes in Belgium. InNorth America and Central-East Europe, the past months have failed to bring anyimprovement in the downward trend. Revenues in North America dropped 40% and,due to lower capacity utilization and extended winter standstills, resulted innegative operating EBITDA of EUR -4.3 million. Central-East Europe reported a 34%decline in revenues and 59% lower EBITDA compared with the sound fourth quarterof 2008.Cost savings through extensive action plan in 2009In 2009 Wienerberger implemented an extensive action plan to adjust itsstructures to meet lower demand. This program included the adjustment ofproduction capacity to reflect the current state of the market, active workingcapital management to reduce inventories and a decrease in administrative andsales costs as well as a cutback in investments to the minimum necessary. Atotal of 31 plants were shut down or mothballed, and extensive standstills wereimplemented throughout the production network to reduce inventories. The companyalso halted its growth program and only funded the completion of projectsalready in progress. Investments were limited to approximately EUR 134 million in2009, of which about EUR 63 million represented maintenance expenditures.Wienerberger was able to reduce maintenance programs to a one-off low levelwithout impairing the performance capability of its plants, and realized areduction of nearly 40% in comparison with the previous year. Heimo Scheuchexpressed his satisfaction with the results of the action plan by commenting,"We not only met, but exceeded the goals we set at the beginning of 2009. Fastand decisive action allowed us to realize cost savings of EUR 160 million in 2009as well as to trim inventories by EUR 168 million and subsequently reduce net debtto roughly EUR 410 million by the end of the year. We now have lean coststructures and a solid balance sheet and - thanks to the capital increase - arein a stronger position than ever before. "Outlook and StrategyWienerberger remains cautious for 2010 because of the still limited marketvisibility. "I am an optimistic person and assume the worst is now over in mostof our markets. But just when and to what extent recovery will take hold issomething I would not want to predict at this time", said Heimo Scheuch. "Forexample, take the USA: the NAHB (National Association of Home Builders) isforecasting an increase of more than 20% in housing starts this year. I would bemore than happy if they were right, but I have my doubts because of the steadyrise in unemployment and high number of foreclosures. In my opinion, the demandfor building materials in the USA will most likely remain constant at a lowlevel during the first half of 2010. Developments on the Central-East Europeanmarkets are also difficult to estimate. Poland is the only country in the regionwhere I am more confident about 2010 because of the strong domestic demand.Visibility is so limited in the other countries that I refuse to make anypredictions and cannot exclude a further decline in demand. In Western Europe, Iexpect 2010 sales volumes should match the prior year level. Demand should riseat least slightly in Great Britain and Germany, with Belgium and Franceremaining stable and Switzerland declining slightly. In the Netherlands, Ianticipate another double-digit drop in new residential construction this yearbecause financing is still tight and business in this sector is heavilydependent on project developers", explained Heimo Scheuch. Asked about adividend for 2009, Scheuch replied that this decision will be made within thenext couple of weeks.Significant earnings improvement expected in 2010 due to cost reductionsHeimo Scheuch excludes further plant shutdowns in 2010, based on the currentoutlook. "We have adjusted our capacity to reflect market conditions, and Itherefore consider the restructuring process to be completed. Wienerberger hasefficient structures, and we will now turn our full attention to the operatingbusiness. For me, this means a greater focus on our high-quality products inexisting markets and their launch into new markets, as well as the furtherexpansion of sales activities. In spite of the limited visibility, I view 2010with optimism. Our first quarter results will be noteably influenced by thesevere winter weather, but I expect stable volumes as well as a significantimprovement in earnings for the full year based on further cost savings of EUR 35million and increased capacity utilization at our plants", added Heimo Scheuchin conclusion. The final results for 2009 will be announced at a press conference on March24, 2010.Download the press release from www.wienerberger.com
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