Wienerberger: running into a brick wall

Wienerberger, the world’s largest brickmaker with extensive operations in eastern Europe, saw its share plunge by over 5 per cent on Tuesday after it warned of  hard times ahead, and abandoned earlier forecasts of strong sales and profits growth for 2012.

The group’s gloomy prediction confirms that the economic malaise is spreading from weaker economies such as Romania to stronger markets, including Poland and western Europe.

Announcing results for the first half of 2012, Weinerberger pointed the finger directly at the eurozone crisis:

The crisis of confidence surrounding the European currency has intensified in recent months due to the high sovereign debt in a number of countries and the resulting discussions over possible austerity programs. This, in turn, led to in part significant weakness on the new residential construction and renovation markets in the Group’s European core markets. In contrast, performance was sound in the USA, Russia and India.

In CEE, the picture was of growing gloom except in Russia:

The effects of the euro and sovereign debt crises on the real economy were felt increasingly by nearly all East European markets during the second quarter of 2012, and led to reduced construction activity throughout the region. In addition to Hungary, Bulgaria, Romania and Slovakia, this downturn also affected previously more stable markets like Poland and the Czech Republic. The only dynamic development in new residential construction was noted in Russia.

Earnings before interest, tax, depreciation and amortisation [Ebitda] fell 16 per cent in the six months to €104.1m, despite improvements in the second quarter, on a 5 per cent increase in revenues to €1.036bn.

Analysts polled by Reuters before the results had on average expected Ebitda for the full year to rise 15 per cent to €298m. But announcement is triggering downward revisions. The company said: “The lack of market visibility makes it extremely difficult to provide guidance on results for the full 2012 financial year.”

However, ceo  Heimo Scheuch told reporters that a drop into the red was not on the cards: “I absolutely assume that Wienerberger will make a profit in 2012.”

Source Financial Times