Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Wienerberger AG (WBRBY, Financial) reported half-year revenue of EUR2.2 billion, in line with expectations.
- Operating EBITDA stood at EUR400 million, with a strong EBITDA margin slightly above 18%.
- The acquisition of Terreal, the largest in the company's history, is contributing positively with strong synergies.
- Cost management initiatives resulted in approximately EUR30 million in savings, enhancing profitability.
- The company is shifting its focus towards renovation and infrastructure, which are performing better than new residential housing.
Negative Points
- The residential housing market in Western Europe and North America remains sluggish, impacting overall performance.
- Standstill costs amounted to EUR50 million in the first half, with low capacity utilization in ceramic Europe at 57%.
- Pricing pressure in Eastern Europe led to a strategic decision to reduce prices, impacting margins.
- The new residential housing segment now accounts for less than 50% of turnover, indicating a significant market shift.
- Political instability and high interest rates in Europe have delayed the expected recovery in new residential housing.
Q & A Highlights
Q: To start with the cost management side, so you had in Q2 cost management of EUR16 million and cost self-help of EUR12 million. What's the kind of run rate we should look for the second half in terms of cost management as well as for self-help?
A: For the self-help, we are striving for around EUR40 million to EUR45 million for the full year. We are now with cost management of around EUR30 million. I expect around EUR20 million in addition to the EUR30 million, with a bigger share contributing to 2025 results. (Gerhard Hanke, CFO)
Q: Is the 57% utilization rate calculated after mothballed plants or including those plants as well?
A: It includes the mothballed capacity. The operational capacity utilization is higher. This is really headroom capacity. (Gerhard Hanke, CFO)
Q: Regarding pricing in Eastern Europe, has your market share fallen or have you gained market share?
A: We have gained market share. (Heimo Scheuch, CEO)
Q: Can you provide more granularity on what to expect in the second half year regarding restructuring and asset disposals?
A: We have seen 90%-95% of the restructuring initiatives. We consciously sped it up to adjust our capacity network. There will be no big amount in the second half; the EUR150 million for the first half year will be more or less the amount for the full year. (Gerhard Hanke, CFO)
Q: Can you explain how Wienerberger has been able to outperform and deliver growth in the UK despite some peers struggling?
A: We are not cutting prices in the UK. Our UK operations consist of bricks, roof tiles, and piping activities, with strong performance in RMI and new build. We also bring products from the continent, which are priced higher. (Heimo Scheuch, CEO)
Q: Can you provide an update on profitability levels in the piping business and remind us of the profitability guidance provided?
A: We did not provide a specific profitability guidance but targeted EUR2 billion in sales. We are on track with smaller acquisitions and organic growth, aiming for EUR1.5 billion this year. (Gerhard Hanke, CFO)
Q: Has the increased leverage ratio changed your approach to M&A? What is the level of leverage where you still feel comfortable doing M&A?
A: We feel comfortable with a range of EUR1.5 billion to EUR2 billion. We will end the year at about 2 times EBITDA to net debt. We will continue with smaller, mid-sized M&A but are cautious with larger transactions. (Heimo Scheuch, CEO)
Q: What is your gas consumption for 2024 considering mothballed plants and production lines?
A: It will be slightly above 6 terawatts, around 6.3 terawatts. (Gerhard Hanke, CFO)
Q: Regarding the price cost spread, will it be similar to the first half?
A: We assume a slightly better price cost spread in the second half. The intentional price reductions in Eastern Europe will slow down, improving the price cost spread. (Gerhard Hanke, CFO)
Q: Are there specific opportunities to increase your market share within the roof tiles product in Europe?
A: After the Terreal acquisition, we have a good market position and will grow organically, including with accessories linked to the roof. (Heimo Scheuch, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
