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Report on the First Quarter 2001
Unchanged growth strategy
despite bad weather
– Consistent focus on building materials
– Tighter organizational structure and reorganization of business segments
– Bad weather lowers first quarter earnings, but has low predictive value
for 2001
– Successful takeover of Optiroc brick activities in North Europe
The first quarter of the year has low predictive value for the development of business
in the building materials industry, and earnings are dependent primarily on weather conditions in key markets. Extremely favorable weather during the first three months of 2000 led
to unusually high sales growth of 72%, but construction activity during the current year was
severely impaired by frequent and heavy rain. In addition, the German market deteriorated
further from its weak prior year level. Building materials sales therefore declined by 2% to
€ 302.2 million over the comparable prior year period. The 14% decrease in Group revenues
is a result of the divestment of Treibacher Industrie AG, which recorded sales of € 46.5 million
during the first quarter of 2000.
Unfavorable
weather for
construction
industry during
First Quarter
Operating EBIT decreased from € 17.1 to -11.3 million after adjustment for divested segments. This was due primarily to weather-related problems for the construction
industry and, in particular, to difficult market conditions in Germany, Austria, and
Switzerland. Moreover, energy costs are still high and therefore represent a drain on earnings. In spite of lower earnings during the first quarter, estimates for our different regional
markets and related industrial strategy remain unchanged. In addition, we will place increased emphasis on marketing, the development of technology, cost management, and
reorganization.
Lower earnings,
but no predictive
value for 2001
After successfully focusing the Company on building materials, the first quarter of this
year was used to implement a range of future-oriented measures such as new segmentation
for the business units and tighter organizational structure. This will provide shareholders
with a high degree of transparency. In addition, the publicly traded Wienerberger Baustoff-
Higher transparency
through new
segmentation
industrie AG will also serve as the operating lead company for the Group. This step will
permit the elimination of an entire decision level and further increase efficiency.
Division of
core business
into 3 regions
The new segmentation of the Group’s business areas is as follows: the previous Wall
and Ceiling Systems and Semmelrock concrete pavers have been combined into a “Brick”
unit and divided into three regional segments:
–
–
–
Independent
joint ventures
Bricks Central and Eastern Europe includes hollow bricks, related building materials,
and pavers for Austria and Eastern Europe
Bricks Western Europe includes hollow and facing bricks in Germany, France,
Switzerland, Italy, Benelux and Northern Europe
Bricks USA includes facing bricks, concrete blocks and arkalite in the USA.
Strategic building material investments in Pipelife plastic pipes (50%), Steinzeug
sewage disposal systems (50%), Bramac concrete tiles (50%) and Tondach Gleinstätten clay
tiles (25%) will operate as independent joint ventures and form the “Pipe and Roofing
Investments” segment. The business unit “Real Estate and Other” will include all remaining
real estate activities, non-core assets, stove tiles, and holding company costs.
Bricks Central and Eastern Europe
Long-term profitable growth
in East Europe
Sales of Bricks Central and Eastern Europe totaled € 45.7 million, or 10% less than in
the comparable prior year period. EBIT equaled € 0.9 after 3.7 million in the prior year.
Excess capacity on the Austrian brick market led to further prices declines. Temporary
weakness was noted in construction activity on the Polish market, but we expect lasting
improvement over the short-term. In total, building materials activities in Eastern Europe
are expected to show excellent development and generate above-average growth rates in
the future.
Bricks Western Europe
Difficult market
situation in
Germany
On April 10 the acquisition of the Optiroc brick activities in North Europe was successfully completed retroactively as of January 1, 2001. The integration of the plants is currently
in progress. High excess capacity on the German market led to further price declines. In
addition, bad weather led to a decrease in volume sales. Construction activity in Switzerland also remained below expectations due to the weather. We will use this difficult situation to further strengthen our market position through directed development. In spite of
heavy rain, brick sales generally remained stable in our other West European markets. Sales
in this segment decreased by 2% to € 106.5 million. The market situation in Germany had
a negative impact on EBIT, which fell from € 5.9 to -9.7 million.
Bricks USA
Continuing high
level of housing
construction
in USA
In the USA prices remained high, even though bad weather led to a decline in the sale of
facing bricks. Exchange rate movements led to a 2% increase in sales to a level of € 60.4 million. However temporary plant standstills and higher energy costs exerted downward pressure
on EBIT, which declined from € 8.3 to 1.5 million. Significant earnings growth is expected
following improvement in the weather since new housing construction remains unchanged
at the high level of roughly 1.7 million units, and this is expected to generate strong demand
for facing bricks. In spite of these optimistic forecasts, major investment projects in the USA
have been postponed while we await further economic developments.
Pipe and Roofing Investments
Sales in the Pipe and Roofing Investments segment increased by 1% to € 89.6 million
following the initial consolidation of the Pipelife Jet Stream plastic pipe plant in the USA.
The concrete tile producer Bramac recorded good development. In contrast, low infrastructure investments in the key German market led to a decline in prices and volume sales
for Steinzeug Abwassersysteme GmbH. EBIT in this segment decreased from € 16.0 to -1.8
million, chiefly due to the book gain of € 15.2 million on the sale of Wiekor in 2000.
Solid development
of Bramac
Real Estate and Other
Revenues in this segment declined significantly from € 48.7 to 2.5 million following
the sale of Treibacher Industrie AG, which recorded sales of € 46.5 million for the comparable
prior year period. EBIT for the first quarter of 2000 included € 3.4 million from Treibacher.
Outlook
The 2000 Business Year was positively influenced by non-recurring gains of € 95.6 million on the sale of Treibacher, Wipark and Wiekor. This year, we will focus on the lasting
improvement of earning power for our building materials activities. Maximizing Total
Shareholder Return has absolute priority over the mid- to long-term.
Maximizing Total
Shareholder Return
In Eastern Europe we expect higher earnings in 2001 and continued profitable growth
over the long-term. We will invest the high cash flows generated by stable West European
markets to expand our activities in growth regions. In the turnaround markets of Germany,
Austria and Switzerland, Wienerberger must use our role as market leader to actively work
toward the restructuring of brick markets in order to trigger an adjustment of capacity and
bring prices back to a normal level. We view the USA as a growth market with high sales
potential for facing bricks over the mid- to long-term.
Growth and
turnaround
potentials
Wienerberger Baustoffindustrie AG
The Managing Board
Vienna, May 3, 2001
E. Schaschl
W. Reithofer
For additional information contact:
Thomas Melzer, Corporate Communications / Investor Relations
Tel.: +43 (1) 60192-463, Fax: +43 (1) 60192-473
[email protected] | www.wienerberger.com
P. Tanos
First Quarter Results 2001
Sales
Bricks Central and Eastern Europe
Bricks Western Europe
Bricks USA
Bricks
Pipe and Roofing Investments
Building Materials
Real Estate and Other
1) incl. € 46.5 million in sales
from the divested
Treibacher Industrie AG
1– 3 / 2001
Change
in € mill.
in € mill.
in %
50.8
45.7
-10
108.5
106.5
-2
59.4
60.4
+2
218.7
212.6
-3
88.3
89.6
+1
307.0
302.2
-2
2.5
-95
48.7 1)
Wienerberger Group
355.7
304.7
-14
Wienerberger Group excluding divested units
309.2
304.7
-1
1– 3 / 2000
1– 3 / 2001
Vdg.
in € mill.
in € mill.
in %
EBIT
1) incl. € 15.2 million gain on
sale of the Wiekor Group
2) incl. € 3.4 million in operating
EBIT from the divested
Treibacher Industrie AG
1– 3 / 2000
Bricks Central and Eastern Europe
3.7
0.9
-76
Bricks Western Europe
5.9
-9.7
>100
Bricks USA
8.3
1.5
-82
Bricks
17.9
-7.3
>100
Pipe and Roofing Investments
16.0 1)
-1.8
>100
Building Materials
33.9
-9.1
>100
-2.2
>100
Real Estate and Other
1.8 2)
Wienerberger Group
35.7
-11.3
>100
Wienerberger Group excluding divested units
17.1
-11.3
>100