Wienerberger AG

Good morning and welcome to the Wiener Berge conference call on the 2024 Q3 results. My name is Therese Jander and you are always welcome to reach out to me and the IR team should you have any questions after the call. With me in the room I have our CEO Mr. Heimo Scheuch and our CFO Gerhard Hanke who will present the results and take you through the questions afterwards. And by that I hand over to Mr. Scheuch.

thank you very much and a lovely good morning to everybody from vienna i hope all of you are well and let's uh jump into our quarter call on the quarter three of 2024. um from our side the wienerberger side we have obviously a very exciting year um so far in the sense of growth we successfully integrated already. Terial, our biggest acquisition in the history of the company. We'll come back to this a little later because we move due to the subdued markets, especially in Germany and France, much quicker and faster on the integration as originally planned. On the other side, we have done a lot of great steps forward when it comes to modernizing our plant network. We'll speak about this also in a minute. And we continue our successful, I call it bold on M&A track, with smaller acquisitions in the northern part of Europe, where we create a fantastic water business that is highly integrated and adds value to our customers from a water management perspective, especially in Norway, Finland, and sweden and here we see continuous growth in the business by the way so we move here really towards a system provider with all the support from software to smaller accessories that are necessary to build the pumping station and all the necessary software that is used for this purpose on another note also in central eastern europe as we say we have a strong pipeline of smaller mid-sized bolt-ons. One of them was also in the Czech Republic where we moved forward in a very good segment for us where we're very active in the Czech market with concrete pavers and insulation material, rocks for sound insulation. So this is a nice add-on for our strong Czech operations. And as I said, we decarbonize continuously our sites throughout Europe, especially with two examples. One in Romania, where we have completely reshaped the factory in the eastern, northeastern part of Romania. and here again with a strong decrease in CO2 emissions, but not only in CO2 emissions, but obviously also in energy consumptions as such to make the whole production highly energy efficient and obviously from a perspective of performance even better than before. So a very good cost structure there in this new factory and it works perfectly well. It's a new technology that we have put in place for the drying of our bricks and which runs successfully. in this site. The other one is a world first, I would call it, because it's the first industrial kiln of this size where decarbonized bricks can be produced. It's in Austria. We are already now in the upstart and the running process of the kiln. It will be formally opened by the end of the month. So this is obviously a fantastic new innovation by Wiener Berger, by our engineering team, and that will go on stream this year and we will see how we can then roll it out through the company. But it's a 100% reduction in the kiln from a perspective of CO2 emissions. So a very, very important step in innovation for Wiener Berg on the technology side. I think when we summarize, we have successfully moved away from a single product producer to a multi-product and multi-solution business. We have now a very strong organization throughout all of the Wienerberger countries, which is geared towards growth, organic, and obviously also due to the fact that we have strong organizational footprints. that can integrate fast businesses. It's ready for M&A growth in the different regions. And I think when we look at our very disciplined capital allocation with a strong M&A record that we will continue to roll out in the future. but let's come now to the first nine months of the year i'm as you all know i'm very long in this industry and i've seen a lot of things in my life and if i look back on 2024 it was an exciting year by all means but also a surprising year i've never seen so many elections so many political changes in Europe and especially in North America. So many instabilities geopolitically speaking. So it was a year very difficult to predict, very difficult to feel and see the developments coming. But I think we steered the business very, very consciously and very quietly through these turbulent times. when you look at especially the new residential housing markets that are at very low levels in Europe due to this political turmoil, not only due to the interest rates but to a sort of lack of leadership in the political scene in Europe. We have also had some sort of activity drop in the US because of the elections and not sure what this election outcome would be. So you saw that builders didn't build so much before the elections. But I think now, obviously, as all of these things start to stabilize and that we have, especially on the North American front, a very clear picture, politically speaking, for the years to come, I'm very positive when it comes to the new residential housing market infrastructure and also renovation. In Europe also, when I look at the Commission and I followed very closely the first steps of the Commission with respect to new residential housing, I see also here a better attitude towards industry on one side when it comes to the whole aspect of energy management and the CO2 and the whole sort of regulatory framework for industry in Europe the Commission has a better attitude here and also to the new housing that things are coming. Very important is obviously to view and to monitor the German elections and must say here also outspoken from my side I'm happy that we have elections much before September of next year because I think that we will have in the first quarter of next year already also a clearer picture on Germany, which is important for us because it's an important market and is a driver for growth in the whole region. So this is things that I view very positively when we talk about new residential housing market for the months to come. For this year, it was obviously when we look at the activity, a very, very subdued and depressed market, because when you look at the level of new residential housing construction, it was below the lowest level that we have seen in recent years. So even when I look back in the crisis Lehman 2009 in some countries we were below those levels so we managed well as Wiener Berger we were able to cut costs very sharply very proactively you see also in the presentation of my colleague Gerhard that we managed very well a working capital and the inventory so I think with this strong focus on cash we managed very well this special situation, as I call it, in 2024. When you look at the results, I think from a revenue perspective, more or less flat compared to last year. And very important also when you look to ABTR, the ABTR margin especially, that was about 18%. We were performing here very well in this environment. Keep in mind when the capacity utilization of about 60, 65% in our ceramic business And especially in some parts of Europe, even below that, we had enormous standstill costs, but we managed this well on the self-help and the cost management side with about 84 million of better cost structure and savings. The territorial acquisition contributed very nicely with 56 million in the first nine months. Obviously a little lower than expected as I mentioned due to the German market and obviously the last couple of months also the French market being a little down. So these are, in a nutshell, the first couple of thoughts on 2023, and I would hand over to Gerhard for the Q3.

Thank you, Heimo. Good morning, ladies and gentlemen. Let me walk you through Q3 results. And, yeah, interesting time, as Heimo mentioned. third quarter was a challenging one revenue wise we are up with nine percent uh ebda wise with 202 slightly below uh last year we realized the net result of 47, which is also impacted not only by a lower activity, but also by a little bit higher financing result. But still, and as we said, we have the margin, the profitability in the focus, and which is with 17% in quarter three, considering also the standstill costs, what we had during the summer. on a high and solid level. Volume-wise, when we dive into the volumes of the third quarter, you see that the third quarter is impacted by lower volumes in the U.S. for several reasons, but mainly, and we also mentioned that already in the second quarter or respectively in the half year, that there are some uncertainties due to the, at that time, upcoming elections. Also consider that We had floodings in September, especially in the Carolinas where we also have our business located, which costs us also at that time some shipments, I would say some three, four shipment days. So this is something, yeah, what we see and there is no reason for the US that the US is kind of a weak market. We see there's a temporary, weakness in the US and we are positive, basically looking forward into 2025. In Europe, we are sequentially improving from quarter to quarter. We see that volumes are picking up. Heimo mentioned it. We see a confirmed demand in the UK. We see that Europe East is further improving. slightly at the lower pace, but still improving. And West also improving, but still on a lower level. Looking to the revenue bridge, we are up with 9% on revenues. Volume minus two in the third quarter and pricing is with minus three. during or let's say along the year 2024 stable. So we keep our pricing on a stable level. As we said, there is a high focus and attention on on pricing to keep the minor three what we have seen already in the first quarter we keep also during the year and we even expect also as we mentioned in the first half year results that pricing would slightly improve in the fourth quarter as it is mainly driven by some flexibility in Eastern Europe. This brings us to the EBDA bridge. As mentioned, we are moving from 211 to 202, impacted by lower utilization rates, mainly during the summer. We could compensate a big part of it by more intensified cost measures and efficiency measures so that we finally ended on an EBITDA of slightly above 200 million. Let me quickly walk you through the regions. Yes, the regions are impacted also by the Terrial acquisition, mainly by the Terrial acquisition. The results per quarter, as we said, you see basically the biggest impact, I would say, in North America and in Europe West. And Europe West, it is mainly that the two countries, France and Germany, are still bottoming out. We see that the Netherlands recovered already in the meanwhile, and we are positive also for the rest of the year for the Netherlands. So we are focusing at the moment mainly on Germany and France in the West. For the first nine months, we closed our books and you heard already the results from Heimer, so I will not repeat them. I think, keep in mind, there was quite some standstill costs in the first nine months in our P&L due to the low utilization rates and the 65%, what we have seen in the first nine months, yes, there is. some of the plants are even running at the lower pace. But this will basically improve and as soon as markets are picking up, we will also benefit there from the operating leverage of these kind of businesses. Let me walk you to the volumes quickly because minus five slightly improved for the first nine months. And basically, to see it from a more helicopter view, yes, when you look to the volume development for the first nine months, it is mainly continental Western Europe, which is lagging behind in the new-build sector, and it is the US, which is lagging behind, where we basically see a positive sentiment for the next year when it's about the new residential markets, what we said before. Revenue wise, we show a revenue which is on the level of 3.4 billion roundabout. I think volume we explained, pricing only can confirm once where we keep our prices stable. Pricing is in the focus. So the minus three, what we have seen during the last quarters will slightly improve in quarter four. Let me do a short deep dive on inflation because we see that inflation was basically in the first six months. We have seen a rather strong deflation. You remember in the first half year we had a deflation of our cost structure of around about 1.5%. This is moving more to minus 0.6. And this also what I expect for the whole year that we are moving more to a slight positive cost inflation, what we have to consume. The main drivers out of that is in the range of energy costs and granulates, which are compared to last year, see a slight increasing development compared to last year. As we mentioned before, we intensified our cost management measures and efficiency measures due that we have seen more headwinds during the second half of this year. So we expect for this year around about 100 million on countermeasures to support and to protect our profitability. divided between, let's say, 60 million out of cost initiatives, cost management measures, mainly driven due to cost cuttings in the production and in the overhead cost structure. And the rest is out of our self-help program where we expect the 40 million for the rest, for the whole year 2024. Please keep also in mind, in the first half year, we had major one-off items of around about 150 millions, which is impacting our P&L on different positions. I mentioned at that time already, yes, it is the major part we have seen on cost-cutting measures or on one-off items. Yes, it is, and you see that we only see slightly, I think it is a plus 5 million on one-off items, mainly on structural adjustments, which we implemented in quarter three, and also for quarter four, we do not expect major additional one-off items. And this brings me finally to the EBDA bridge for the group, and You see basically that this year results is impacted by volumes and standstill costs, which are the major driver basically for the EVDA development. We have implemented substantial initiatives to compensate and to protect profitability. And you see that with 50 million, around about Terrial and all the other acquisitions are contributing during the first nine months to the operating EBITDA of the group. Let me finalize and also summarize quickly the regions. Many things was already mentioned. In Europe West, we see that UK Island is recovering continuously, so we are positive there. We expect that France and Germany will bottom out in the next months. We are positive about the Netherlands, which is also a major market for us. And we see that also here in the Western European region that Terreal is positively contributing to our revenues and to our results. Europe East is continuously improving. We see that volumes are going up step by step and we also see for next year basically a more positive development when it's about new residential. North America we spoke also about was hit maybe a little bit harder in quarter three. As we said, we see it as a temporary impact. We are positive about the next year. There is a positive sentiment about North America. So this what we see here, this slight weakness of results for Quarter three is nothing what we see as a kind of continuous development also for the next month. So basically, we are positive also about the U.S. And with that, I give back to you about the outlook for this year or for the rest of the months.