Brickmaker Wienerberger's core profit misses forecast

Third-quarter core profit at Wienerberger, the world's biggest brickmaker, fell short of expectations on Thursday as the firm reported weakness in key European markets and announced charges for "structural adjustments" including plant closures.

Poor demand in countries including Germany, France and Russia prompted the firm to make those adjustments, which would have a 20 million euro ($21.4 million) impact on core earnings, mostly in the fourth quarter, its chief executive said.

Wienerberger shares fell as much as 9.5 percent in early trading after the results were announced. At 1014 GMT they were down 6.2 percent at 15.11 euros.

"Sound growth in the first half-year was followed by a certain slowdown in dynamics during the third quarter," the company said in a statement.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) edged down to 112.5 million euros ($120.8 million) in the three months ended September from 113.0 million euros in the same period last year.

The figure, adjusted for non-recurring items, was less than the lowest estimate in a Reuters poll of analysts, in which the average forecast was 123 million euros.

When asked why the structural adjustments were not excluded from adjusted EBITDA, Chief Executive Heimo Scheuch told reporters it was because those costs were too high.

"It is a question of size," he said.

Wienerberger said the 20 million euros would have to be taken off its full-year adjusted EBITDA target of 375 million.

The 20 million includes 6 million booked in the third quarter for items including the closure of a plant in Germany and another in Switzerland, Scheuch said. The remaining 14 million euros were expected in the fourth quarter, he added.

Scheuch said the adjustments included an array of items such as the accelerated integration of units and cost-cutting measures, many of them aimed at improving performance in markets where demand had been poor.

"The countries that have been characterised by a weak demand level since the start of the year continued to have an unfavourable effect on our business," Wienerberger said.

Those countries included Germany, France, Italy, Switzerland and its home market, Austria. Scheuch also said the situation in Russia had worsened on the residential and infrastructure sides.

($1 = 0.9329 euros) (Reporting by Francois Murphy; Editing by Mark Potter)

Source Reuters