- Group revenues +21% to € 1,227.3 million
- EBITDA +30% to € 256.6 million
- At least 15% improvement in earnings expected for full year
Vienna, August 21, 2007 - In its final report on the first half of 2007, Wienerberger AG confirms the preliminary results that were announced on July 30, 2007 based on monthly reporting. After a successful start during the first quarter of 2007, Wienerberger continued its profitable growth course during the second quarter and generated outstanding results. Group revenues rose by 21% during the first six months to € 1,227.3 million, EBITDA by 30% to € 256.6 million and EBIT by 43% to € 166.6 million. The development of free cash flow was also excellent, rising from € 15 million in the first half of 2006 to € 76.0 million for the first six months of 2007.
Growth driven by favorable weather and strong construction activity in Europe as well as profitable growth strategy
The strong earnings for the first half of 2007 resulted from favorable weather at the beginning of the year as well as the high pace of construction activity throughout large parts of Europe, above all Central-East Europe. The increase in revenues for the first half-year splits in 13% of higher sales volume and 8% of price effects. In spite of continuing weakness on the US housing market and a decline in new residential construction in Germany, the Group was also able to report two-digit growth for the second quarter of 2007 because of significantly higher sales volumes in Central-East Europe and North-West Europe as well as higher prices. "These excellent results highlight the success of our profitable growth strategy and the strength of our geographic portfolio. We continued to pursue this approach during the first six months of 2007 with the realization of bolt-on projects as well as major acquisitions, in particular the takeover of the English brick company Baggeridge and the Canadian manufactured stone producer Arriscraft", explained Wolfgang Reithofer, Chief Executive Officer of Wienerberger AG. "As indicated three weeks ago, I expect Wienerberger will report strong earnings growth for the full year because of the excellent results recorded during the first two quarters and our optimistic outlook for the second half year."
Improvement in earnings, above all in Central-East Europe
The largest growth was recorded by Central-East Europe with an increase of 58% in revenues to € 427.6 million and 130% in EBITDA to € 126.8 million. The growing importance of this segment for Wienerberger is reflected in an increase to 35% of Group revenues and 49% of EBITDA. The Central-East Europe region profited from favorable weather at the beginning of the year as well as a booming construction market and increasing demand, above all in Poland, the Czech Republic, Hungary, Romania and Bulgaria. Revenues recorded in Central-West Europe rose by 14% to € 221.3 million, but EBITDA declined slightly by 2% to € 36.5 million. The growth in revenues was supported primarily by consolidation effects in Germany as well as sound development in the clay roof tile segment and higher exports. Earnings were negatively influenced in particular by higher freight costs. The North-West Europe segment reported an increase of 13% in revenues to € 440.8 million and 10% in EBITDA to € 89.5 million for the first half of this year. The sound development of revenues resulted from higher sales volumes in all product areas, above all in Belgium, France and the Netherlands, as well as moderate price adjustments, especially in Great Britain. Revenues recorded by the USA segment declined 3% to € 165.9 million and EBITDA fell by 41% to € 18.8 million because of the sharp decline in residential construction and the weakness of the US dollar, in spite of the initial consolidation of Robinson Brick.
Expansion in Great Britain and the USA, market entry in Canada
In addition to organic development, growth projects represent a key element of the Wienerberger expansion strategy and an investment volume of roughly € 500 million is planned for these projects in 2007. Part of the funds will be used to finance the acquisition of Baggeridge Brick PLC in Great Britain and Arriscraft in Canada, and more than € 250 million will be directed to bolt-on projects. As a result of synergies and high raw material reserves, Baggeridge will create substantial growth opportunities over the coming years in Great Britain, the largest facing brick market in Europe. With the acquisition of Arriscraft, which also marks the entry of Wienerberger on the Canadian market, the Group has taken another important expansion step with a potential for synergies through the use of the direct sales network in the USA and a potential for new bolt-on projects. Korevaar, the third largest producer of clay pavers in the Netherlands, will support the further expansion of capacity in this growth segment. These acquisitions will make a contribution to earnings during the second half of 2007. The bolt-on projects include investments in East European growth markets such as Poland, the Czech Republic, Romania and Russia as well as North-West Europe, for example in France.
Profit before tax + 65% to € 171.6 million
The strong growth in operating profit supported an increase of 65% in profit before tax to € 171.6 million. An added positive effect was the improvement in financial results from € -12.9 to +5.1 million, which was related to a book gain of € 10.1 million on the sale of securities and higher income from associates (Pipelife and Tondach Gleinstätten). Profit after tax rose by 73% to € 140.1 million, whereby the deductibility of the hybrid coupon for tax purposes also led to a reduction in the Group's tax rate. Adjusted earnings per share increased 44% from € 1.09 to € 1.57.
Operating cash flow increases from € 53.3 to 117.7 million
In addition to the highly positive development of free cash flow, gross cash flow totaled € 233.5 million for the first half of 2007 or 59% higher than in the previous year. Cash flow from operating activities increased significantly from € 53.3 to 117.7 million. Cash outflows for investments and acquisitions of € 150.5 million comprise € 55.2 million of maintenance, replacement and rationalization investments (maintenance capex) and € 95.3 million of new plant construction, capacity extensions and acquisitions (growth investments). A dividend of € 94.9 million was paid to the shareholders of Wienerberger AG during May.
Gearing of approx. 45% expected by year-end
The proceeds from the hybrid bond issued in February 2007 more than offset the seasonal increase in receivables as well as the dividend payment and investments, and resulted in a decrease of 22% in net debt to € 900.2 million. Group equity rose by 34% to € 2,129.2 million following the issue of the hybrid capital and high profit recorded for the period, in spite of the dividend payment and negative foreign exchange effects. Gearing fell sharply from 72.9% as of December 31, 2006 to 42.3% for the same reasons, and is expected to equal approximately 45% at the end of 2007.
Earnings target for full year raised from +10% to +15%
"I can only underscore the statement I made in connection with our announcement of preliminary results. The sound demand in Europe will support a continuation of the positive earnings trend, even if the development of residential construction in the USA and Germany is expected to remain weak. However, growth rates will not reach the levels recorded during the first six months. Based on the information available today as well as the outstanding results for the first two quarters and an optimistic outlook, I assume EBITDA and adjusted earnings per share will increase by at least 15% in 2007", summarized Wolfgang Reithofer.
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