Wienerberger Baustoff Ag

Good morning, everyone, and warm welcome to Vinneberg's half-year 2025 results update. Thank you for taking the time to join us today. My name is Therese Jander, and I'm pleased to be hosting this call today from London. And I'm joined here by Mr. Hermann Scheuch, our CEO and our CFO at Dagmar Steinert. We will begin with a brief presentation of the key developments in the financials, the first half year and afterwards we will open the line for questions. So with that, let me hand over to Mr. Josh.

Thank you very much and also a wonderful morning from my side. We have indeed a very satisfactory set of results for the first half year of 2025. In a, I would call it rather challenging market environment, we were able to increase our turnover by 6% and this shows the receipt So these two parts have contributed throughout our geographies very nicely to this growth in revenues. On the EBITDR front, we are in line with our expectations coming in a little higher than 380 million for the first half. And this shows here again that we were working hard on our cost structures and efficiency improvements that contributed nicely to these robust margins that we were able to achieve. On another note, obviously very satisfactory, we have improved our profit after tax about 100 million, so we're a little above 100 million when you look at the profit after tax for the first half, and the earnings per share have risen to about one euro per share, so also here a very, very satisfactory performance. But let's look a little bit into the different geographies. You remember that we said at the beginning of the year that we expect interest rates cuts. We expect a better underlying market development due to this fact. Unfortunately, we have to draw your attention to whether we're overstated in the North American market, especially in the U.S., there were no such changes in interest rates. So we have still very high mortgage rates at above 7% in the U.S., which are harming the new residential housing market. So we have seen here quite a substantial backdrop or drop in activity in the new residential housing segment affecting our deliveries. First half of the year in the here two aspects that have to some extent affected our deliveries and the volumes that are sold in the U.S. markets. On the other hand, the infrastructure was okay, so the the south of the U.S. On the pricing side, both aspects, meaning on the brick side, under pressure due, obviously, the fact that the market is down, and on the piping side, the prices are down, because raising prices, meaning less than regular prices, but also margins are still on a very satisfactory level in the U.S. Let's move a little bit to Europe. First, our preferred country, the U.K. and Ireland, have done well this first six months of the year. Underlying trends are positive. They are not as strong as originally anticipated, the pickup of new residential housing, but it is a slight pickup and a positive development that we see in both geographies. Therefore, a very satisfactory performance of Wiener Berge, especially in Ireland when Very executed by our management. And on the BRIC side in the UK, a very sort of strong trend when it comes to sales. So we have improved again our performance here with good trends. If I look at our competition locally, the companies are listed here. as our two colleagues listed on the stock exchange here in the UK. Also the infrastructure business of Wienerberg in the UK has done well, so we have improved our performance again in this segment. Continental Europe, a very different picture when you look at different countries and geographies. Let's start in the north. North has been rather stable. of differences to last year. Moving down further south, we have seen good trends in the new residential housing development in the Netherlands, a positive trend there. When it comes to brick operations, also the piping operations have done well due to the fact of the integration of grain plastics that has been acquired last year. So in the Netherlands, we see that the and renovation. Also, Belgium is now stabilizing on the level, and we see slight improvements there, especially in renovation, and then hopefully also new residential housing a little later this year. But the trains are encouraging. The French market, very important for us, and we are We've seen a very good performance of the French roofing business. The thing being about a good contribution, APTR-wise, profit margins are also very satisfactory. Market has somehow stabilized. We see also better trends now in new residential housing in France. So here I would say the market has bottomed out and will probably a little bit improve in the second half of the year. If we then move to, I would call it These two countries are really not turning the corner yet when it comes to especially new residential housing. If it's multi-residential housing or it's individual single-family housing, it's still on a very weak level in both countries. It has to do with financing, it has to do with affordability, it has to do with the banks granting loans, etc. So this is something which has a there where we want it to be. And I don't think that this will change during this year. So from a perspective of volumes and prices, Germany is still a sort of spot where we need to work hard in order to improve our efficiencies. And I don't see anything coming through from the incentives of the government that are Czech Republic, Hungary, Slovakia. Here we see some good encouraging trends in the new residential housing fund, so on a very low level a little gradual growth, but it helps. We gain some momentum there as well, so I think here, mixed with the efficiency improvement, mixed with our sort of focus on production and sales and improvement of the economical situations that certain cities are doing better than others and also regions are doing better than others and obviously the developed much better than we see it today. So, from my perspective, I think here we have seen an underlying market trend, as I called it at the beginning, as challenging. This will remain so for the rest of the year. We'll come to the outlook a little later. But I think when you look at B&B today with our exposure and the such situations. On the acquisition front, we have again completed some very important acquisitions. I spoke about Ireland with MFP, that's a local producer of pipes that has ceased production. We've integrated it in our own network in the UK and in Ireland and have successfully taking over 100% of the solar supplier in France, GSI, but we have now 100%. So we are continuing this growth path. I do see a lot of opportunities right now because it's more, I would call it a buyer's market right now in this area where a lot of certain volatility still remains. And for Wienerberger, a great opportunity to increase our footprint around especially Europe and also North America. With this note, I hand over to Daniela and she will run you through quickly the different financials. Thank you.

Thank you, Heimo. Good morning from my side as well. So let's dig a little bit deeper into the numbers and our solid performance in the first half year of 2025. Our group revenues increased by 6% year-on-year, reaching 2.3 billion. And this growth was driven by volume improvements in Ceramics Europe and contributions from our recent acquisitions. Our operating EBITDA came in at 383 million, that's 4% lower than last year, but of course This decline reflects the burden of cost inflation, but I would like to draw your attention on our margin, which is very robust with 16.3%, and especially if you look at this difficult macroeconomic environment. Looking a little bit deeper into our volume growth of 2% for the whole group, that is clearly driven by European ceramics development and regionally Europe delivered plus 3%. I have already elaborated about the market and the increased demand in the UK, Netherlands and of course Eastern Europe. In Western Europe our main driver was the roofing business and in Eastern Europe the wall business. North America, however, a difficult market for us at the moment, saw a decline of 4%, and that was mainly due to weaker brick volumes. Pipe volumes remained strong during the period. And I just would like to somehow repeat, this volume development reflects really our strategic focus on renovation and infrastructure. Now, as you can see, on our ABD, on our revenue bridge, sorry, I missed it, on our ABDA bridge, that, yes, the 133 million increase in revenue is driven by a combination of organic growth and, of course, of our M&A business. And organic growth contributed 30 million plus. That was mainly supported by volume gains in, to repeat, ceramics Europe, but it was partially offset by pricing, especially in Germany and North America. Both difficult markets for us at the moment. Scope effects added 112 million, and that is primarily from the integration of terrarium. And again, this bridge illustrates our strengths of our M&A strategy and the value of our diverse portfolio. Now, coming to our operating EBITDA bridge, and there I would like to go a little bit deeper into our organic growth of minus 7%, what is impacted by the cost inflation, which was higher than originally expected. especially in rising costs of energy and personal expenses. The currency effect had a modest minus 2 million impact that was mostly from the weak US dollar and that is increasing month by month. Therefore, I'm sure we will see a higher negative impact of that in the full year. From our acquisitions, we got another 30 million plus compared with previous year. So that's quite nice performance. If you look a little bit deeper into our cost inflation, I already mentioned energy is up 15% year on year. and that was driven by global price trends and regional volatility. In some countries, we even saw an increase in energy by 30% or even more. Our personal cost, which amount for very high portion of our overall cost, increased by plus 5%. And that is reflecting, of course, wage adjustments and inflationary contracts and so on. And that is a little bit higher than we originally expected. On the raw material side, it's a little bit of a mixed picture. For ceramics, we saw an increase of plus 3%, while raw materials for the pipe business for the half year remained flat. You might remember in the first quarter, we still had there a slightly increase, and in the second quarter, we saw a decrease. To a certain extent, of course, we manage to give it, to pass it through these cost increases, but of course, we have ourselves given targets, we have our self-help measures, and we have a very, very strict cost discipline. Let me now look at the performance across our regions. So starting with Western Europe, we saw a strong 11% increase in revenues and revenues reached for the half year 1.4 billion. Operating EBTA rose plus 12% to 205 million and showing a margin of 14.9%. This growth was driven by higher volumes in renovation-focused products and roofing, of course, and the contribution from Terreal, which continues to integrate well. In Europe East, revenues grew plus 3%, but our EBITDA declined 8% to 1.3 million, but still showing a margin of 17.3%. We have seen in Eastern Europe quite a high cost inflation, particularly in energy and personnel, which we see over the whole group, but there it was a little bit stronger. North America faced the most pressure, with revenues down by minus 6%, and our EBITDA came in at 75 million, which is of course significant below previous year. But as we're here, I would like to draw your attention to our robust margin of 19.9%, and that's a very good level. As already mentioned, in North America, we've seen severe weather conditions and, of course, that has impacted construction activity and the overall negative market environment. Overall, these results reflect our strengths of our diversified regional portfolio. Turning now to our free cash flow. Free cash flow for the first half year was minus €51 million and that's in line with prior year. That of course reflects our typical seasonality of our business and we've seen a strong second quarter contribution of €124 million. The main driver for the negative figure of course, is our seasonality in building up working capital, and there we spent in the first half 244 million. In the previous year, it has been 230 million, a little bit lower, but we started with a lower level of inventories in the year 2025. Let's now turn to our balance sheet. We have a very solid balance sheet as you can see in our KPIs. We see a seasonal increase in our net debt that's absolutely normal to 2 billion. That's up 250 million roughly compared with year end. This increase is driven by working capital build up and of course our dividend payment where we paid out, including our share buyback, 136 million to our shareholders. Working capital rose to 1.3 billion and reflects, of course, our higher inventory levels and trade receivables. Growth capex was 49 million and our M&A spend was 24 million. Our net debt ABTA ratio remains within a comfortable range, and we continue to maintain strong access to liquidity. So with that, I would like to come slightly to our second quarter results. There you see a decline in revenues, but it's more or less on last year's level, while our operating EBITDA fell to 253 million. And that reflects just somehow the seasonality and different cost inflation and, of course, the seasonality and weak market development compared in the first quarter with the second quarter, but we feel very confident for our second half year that we will remain with a good performance, with a solid margin and that all will be underlined, underbuilt by a strong cost cutting measures and of course a better strong development in renovating, roofing business, what we've seen in the second quarter. And with that, I would like to hand over for the executive summary again to Heimo.

Thank you, Dagmar. From what you have heard from Dagmar, dear colleagues, you see that for the second half year as well. I mentioned at the beginning that obviously the markets show a certain positive trend in certain areas of Europe. This will continue. We feel that. We see that also in the summer months. Also from a pricing perspective, we have seen in the second quarter that we are turning the corner here on certain things when you look at overall pricing in different product groups compared to last year. So are now putting in the right direction. Cost inflation was a little higher than originally expected. That has to do with labor cost increases that have been negotiated with the unions and also with energy. Dagmar has referred to higher energy costs, especially in Eastern Europe. Keep in mind that in certain countries we cannot catch, and therefore we have been also obviously were affecting our results in the first half, but they will ease out in the second half. So we are confident when we look at our planning for the rest of the year that we will, considering our local currency, achieve this sort of more or less the 800 million. So it's something which we head for and we keep our guidance where it is. We work hard on the business, the cost efficiencies, will continue, we'll work on good deals in the pipeline, work on them, and you will see us move on the one or other target even this year. So this is, I think, in a nutshell what it is as such. As I resume, and I want to make this very clear, when we look at the beginning of the year, we were certainly, like all of us, more positive about potential interest rate cuts. We were more positive about underlying market trends when it comes to new residential housing. We had to see that these didn't materialize, especially when you look in North America and in certain parts of Europe. But, and that's the strength of our business model and of how we manage the business, we'll still come close to our 800 million target, considering these different developments from the originally planned ones. We are obviously happy to take them and available for you anytime. I hand over to the operator.

Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question from the webinar may click the Q&A button on the left side of the screen and then click the raise your hand button. If you are connected to your phone, please press star followed by 1 on the telephone keypad. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press the lower your hand button from the webinar or press star and tune on your telephone. Anyone who has a question may queue up now. And with the first question coming from the line of Markus Remes from OdoBHF. Please go ahead.

Good morning. Thank you for the presentation. I would like to start with a question related to the that you gave as an indication upon the Q1 release is 17.5% and on the same matter you were back then guiding for growth capex 150, maintenance 140. So can you confirm that these numbers are still intact?

Yes. Yes, we can confirm that these numbers are still intact. Okay, thank you very much.

Then I would turn to the topic of cost inflation and maybe to get a better understanding where the deviation compared to your initial expectations when it comes to energy and personal cost comes from. You could maybe provide a bit more granularity on the business lines and on the regions you mentioned. Eastern Europe, if I'm not mistaken, those parts that are unhatched are rather minor compared to those where you are able to buy forward. So more granularity would be appreciated, and especially then on energy, if you could

shed some light on the 2026 forward level so maybe an initial glance on your forward buying what it means in terms of year-on-year cost development on the on the energy front you have seen obviously a development of high energy especially in electricity also in europe you remember and you know well that we are not always 100 percent hatched throughout the whole business so obviously when you take the unhatched part then it the price increases. We also appreciate that when we talk about our buying forward strategy, obviously we have bought forward for 25 and 26 already at higher perspective that the prices are coming down when we now look in the future by 27 or so, that here we have substantial decreases again. So I would say that from an energy perspective, the highest price level that the group will see is 25, 26. Yeah, that's where we have to cope with those. You're right. in Eastern Europe are limited. However, keep in mind, I mean, Bulgaria, Serbia, and some other parts in Romania, where we cannot do this, they affect also the resultant immediately. that were being hit with this. But it's nothing to worry about, and as I said, we will work it off on the price side as well, but it will take a little longer than expected. So that would be my sort of contribution to your question on the energy front. The labor one, yes, we had these sort of issues, meaning labor costs are up. The tariffs and the discussion starting in January 1st so they are delayed sometimes and they obviously come a little later so this time we had some of these in Eastern Europe where we have substantial rises in salaries and for the workforce. But that's normal also in these circumstances and as I said these are volatile times where we have to deal with those things but I think generally speaking we handle this pretty effectively and predictably.

Can you maybe give the direction of the cost inflation that you expect for the second half, so after this four and a half, for H1?

Well, if you look at the main drivers, personal and energy costs, We expect it to stay on a high level, and we won't see there a big relief. But, of course, we are working against it with cost measurements and other cost savings to cover that, as well as, of course, as we expect one or the other gain on the pricing side.

All right. That's already the prelude to my last question in terms of cost-cutting. Can you kind of detail out where you're going to step up the savings measures? Does it also kind of comprise some capacity adjustments now thinking about those markets like Germany where there's still particular weakness?

Yeah, obviously, I think the major, as Dagmar and myself have mentioned, the major attention point in Europe is certainly the Germanic part, and Germany plays an important role there. But obviously, we review this currently, and there will be some sort of changes there.

Okay, I'll get back into the line. Thank you.

The next question comes from the line of Ibram Ravi from Citigroup. Please go ahead. Mr. Ravi, your line is open. Please also unmute yourself from the webinar.

Hello, can you hear me now?

Yes.

Yeah, thank you. Just a couple of questions. Firstly, on the personal cost measures that you mentioned, can you give some more color in terms of, are you looking at increasing volume and spreading that over a wider volume base? Is that how you are planning to reduce your kind of cost impact from personal cost or are there kind of headcount reductions or contract reductions kind of that are planned? And then on the products themselves, you know, from the notes, it looks like kind of pipes have had a fairly strong growth while or stable growth while roofs and roofs where most of the delta was in terms of positive and most of the the negative like-for-like delta was in facades. Is that sort of a fair characterization for the group as a whole, rather than just by geography? Thank you.

Yeah, that's obviously, but you're absolutely right. All products that are exposed to new residential housing, and especially when you talk now about facing in North America, where we have only facing bricks that are exposed to new residential volume-wise, they are down. And a positive trend in the Netherlands and in the UK cannot compensate, for example, the drop of volume in the US because the market is such and the volumes are that high. So this is a fair conclusion that you draw. Keep in mind also that clay blocks, that's clay blocks for new residential housing, they actually go with a very high percentage point, meaning about 80% or above of their sales goes into new residential housing. And again, here we have seen in certain countries lower activity, but as I said also, we see some brighter spots in Eastern Europe where we grow currently. So this is from a perspective So from this new residential housing market perspective, this is our exposure. On the infrastructure perspective, pipes, as you correctly pointed out, more resilience. That's what Dagmar and myself mentioned also when it comes to volumes and also pricing. The same goes for the roof, where we have seen very good price trends. also and from a sales perspective also a very good one because exposed with about 60% of our sales in roof coat to renovation so this is as I said from our perspective how the group has changed over the last years has proven to be the right way forward to make us more resilient in times when a certain weakness in the North American market. Yes, I come back to your first question. Sorry about that. Thank you. Obviously, any measures that we do will include also review of headcount, we will see EBITDA adjustment.

We have the next question coming from line of Ethan Cunningham from Unveiled Investment Research. Please go ahead.

Hi, good morning. Thank you for taking my question. So your guidance of around 800 million for the EBITDA implies around a 30 or 40 million euro uplift in H2 versus H1. What are the key drivers of this uplift? Is it potential volume recovery or is it cost improvement or a mixture of both?

I think you need to see it as a mixture of both. As I addressed earlier, I see some positive developments in some markets that should continue into the second half of the year. The measures that we took in the first half of the year will play out nicely in the second half. year. So this is, I think, the things that we see. As I said, from a pricing perspective, also to have a little bit of a positive trend that we see over the summer going into the second half will help us here.

Okay, thank you very much. And can you update us on the restocking and destocking trends and any of the CO2 sales and any of the accounting items that might affect your recurring cash generation for year 25? I don't see any like that.

No, I don't see any as well.

Okay, thanks very much. And it looks like you couldn't fully offset the cost inflation for the price increases in 24 and 25. When do you expect the cost inflation pressure to ease? And in 2026, how do you see the planned price increases versus the bottom inflation?

2026 is too early to tell. We will see, as I said, from an energy perspective, and that was the major point we referred to, that the highest prices we will see this year and next year in the energy front. So we will manage with more efficiencies, better running rates and cost measurements.

to tackle this issue but i think from from our perspective we have this well under control okay thank you very much and just finally um what four year scope and fx impact should we be expecting at the ebitda level and how much will this come from uh cost cutting

Well, our FX effect on EVTA level, what we show in our numbers, that's from translation, not transactions. And of course, it's mainly the weak US dollar. It has been minus 2 million overall in the first half year. It was more or less nothing in the first quarter. So the number is increasing now month by month. and I personally expect a higher single-digit million number for the full year. Well, scope, what we show now is mainly from Terrial, our acquisition in 2024, and the impact from our acquisitions now in 2025 will not be that big as Terrial.

Basically, to answer your question, scope is done in the first half. Okay.

Thank you very much indeed for your answers. Thank you. Thank you. Thank you.

The next question comes from the line of Gregor Koppensteiner from Raiffeisenbank International. Please go ahead.

Yeah, good morning also from my side and thank you for considering my question. I have only one question left as the other ones already been clarified. Also about the US, the latest macroeconomic data points suggest that the long awaited interest cuts could now be underway and my question is when do you expect to see here a positive impact on your North American business and what segment could there be benefiting first? Thank you.

The segment that will be the facing brick segments or brick corporations in North America. So this is clearly the answer to your second part of the question. The first one is a little bit more complex. First of all, the interest rate cut must be significant to really move the needle. Why? Because half a percentage point or a couple of sort of minor movements don't help. We have a rather high mortgage interest rate, about 7%. It needs to come down below 6%. I can tell you that. Secondly, if we have some, and it looks, as you correctly pointed out, it looks like in September the Fed will move a little bit the interest rates down. But if it's only a small one, as I said, then it would not immediately affect the real estate market, first of all. If it moves down, it will take also some time to get settled. So really major input in 2020. 5, I don't see it coming. I think this is then more for 26.

I hope I have addressed your question. Yeah, thank you very much.

Thank you. As a reminder, for questions from the webinar, please click the Q&A button on the left side of the screen and then click the raise your hand button. If you are connected to your phone, please press star 4 by 1 on the telephone keypad. There are no more questions at this time. I would now like to turn the conference back over to Therese Jander for any closing remarks.

Thank you very much. Thank you everyone for joining us and for all your questions today. We truly appreciate your interest and your engagement with us. And we look forward to staying in close contact as usual. We would also hope to welcome you back to our next results call in November. November the 13th for our quarter three results call. And until then, take good care and goodbye from all of us here at Winnebago. Thank you.

Thank you.