Wienerberger AG

Good morning, ladies and gentlemen, and I hope you're all well. A warm welcome to the Vinneberger conference call. Our board representatives today is Mr. Heimo Scheuch, our CEO, and Gerhard Hanke, our CFO. And they will walk you through the presentation and are ready to take your questions afterwards. So then I will hand over to Mr. Heimo Scheuch.

Thank you and a warm welcome also from our side, Gerhard and myself. Today we welcome you from Belgium, from our biggest showroom in Wienerberger, north of Brussels, and glad to have you all on the phone. This time when we go through the presentation, I've put the shareholder letter in front and it made me think that more than 10 years ago I had the pleasure to sit with Warren Buffett in his office in the United States and we discussed about the development of North America, especially the U.S., and about Europe. And I must say to all of you, it was very challenging, interesting, and rewarding, this more-than-an-hour conversation, because a lot of things that he actually said 10 years ago became true in this world. So it was fascinating. And he said one thing before I left. I said, He said to me, I'm always put the people in front and communicate well with them. So I thought we put the letter in front of this presentation. So to give you a good update in the detailed one about our group, our culture, our values and the people that are behind it. And when you look through the performance of Wiener Berger in 2024, it is a very remarkable performance because it comes actually in the light of a very volatile market or end markets that have been changing drastically throughout the year 2024. And it's due to the enormous performance and the great performance of our more than 20,000 colleagues that we can achieve and say it's the third best year when you look at our operating AVTR with 760 million and the resilience of our business model. These people where we invest a lot in training, in sort of growing them throughout the company and making them great managers and also great people on the shop floor. We put a lot of effort in and I'm glad to report that this is growing the momentum and we put a lot of emphasis on HR development within Wienerberger. When we talk about 24, let me just say a couple of words on the year itself. When we came together a year ago and I explained to you how we see the year, we assumed that especially the new residential housing market, both in North America and in Europe, would do much better. That's why I inserted this slide about the market development. We assumed that obviously not only rate cuts will take place and that the economy would do much better especially in Europe and there will be a stronger recovery in the new residential housing market in all of markets. However, this didn't materialize. We saw, obviously, after the second quarter of the year, there is no momentum building. On the contrary, the new residential housing market activity is actually declining. This has to do with three major reasons when we look back to 2004. There were obviously high interest rates. There was also an increasing political instability due to the election year and elections in most of our major markets, and a lot of sort of instability also when it came to financing, changing rules, regulations, bureaucratic burdens, et cetera. So there was not a very positive momentum, nor in the U.S., nor in Europe, when it comes to new residential housing, especially in the one and two family. house, new residential building. So this obviously led us to a decreasing activity here and this affected obviously our markets and markets tremendously and substantially. That's why we revised the market outlook and adjusted our forecast accordingly. So I just wanted to make clear, when I give an expectation for a year, I base ourselves on a certain type of market development. That's the the snapshot that we take at this time and our forecast that we do for the year but obviously when events like this happen throughout the year you make you need to take them into consideration and obviously build it then in an actual forecast. So it's not a profit warning as such because that would be a different way forward. But if you say that you will under certain conditions achieve a certain result and the conditions that we put in place are not met due to these external events, then we need to adjust. Just this as a walkthrough of the year 2004. When you look at, as I said, the Wienerberger portfolio, and you remember very clearly that our major goal was over the last couple of years to have a stronger portfolio, a diverse portfolio, a more resilient portfolio. That's why we put so much emphasis on renovation and on infrastructure. And you see that These two parts of our business, which are roughly more than 50% right now, before much more stable, resilient in such a difficult market when it comes to interest rates, when it comes to political instability. And the segment that obviously takes advantage the most if there's a positive sentiment, but also suffers the most when it's critical, it's the new residential housing market. And that's for the reasons that I mentioned already, why we had a rather difficult year in 24. And obviously, in markets like Germany, Austria, and around certain parts of Europe, the market was really weak. When we look at our response, it was a response that was drastic. very quick, fast, as we always interfere in such situations. When we go into the business, we cut production cost structures, streamlined our operations, and reduced dramatically fixed cost savings. You will see in the presentation and the slides that Gerhard will walk you through how drastic we moved in the business and how we kept margins on a very satisfactory level in this year. And when you look at the roofing part, I can only say that here we have gained momentum. We have also invested in the business in order to be here ready for further growth, especially in the UK and Eastern Europe when it comes to the new installations that we are currently under construction and in the UK already under operations. We have significantly upgraded our piping industrial network from the north to the western part with very high modern and performing plants. So here, again, ready for further growth in this division. By the way, and this is, I think, very important also for you to know that this segment is the fastest growing one. Piping is now more than 30% of our revenues within the Wienerberg. When you look in a nutshell very quickly over the results, 760 million is right in the guidance that we gave you last year and shows the resilience of our business model, cost discipline. We got a contribution of roughly around 100 million from cost savings and obviously contribute to the profitability of Wienerberg and the strong margins. I'm happy to report that we achieved nearly 420 million free cash flow out of the business by extremely watching our working capital and managing our capacity efficiently throughout the whole company. And so this is a very strong increase when we talk about the free cash flow and shows the capacity of our group to adjust very quickly and very efficiently to such extraordinary circumstances. When we talk about growth, here again you see that the Terreal acquisition was the right one at the right moment. The roofing segment is a very important one for Wiener Berger due to its strong exposure to renovations. The roofing as such has an EBTR margin above 20%. So you see, even in difficult times, we have here a strong margin and we can expand it through the aerial acquisitions with our efficiency programs running. And I'm also happy to report that the integration as such is moving much faster than originally. On the UK and Ireland front, where we've seen also a little bit of market development throughout the year, but even there, the new build and new residential housing market was under a little pressure. And even if there was a decline in the market about 10% compared to the previous year, due to our acquisitions and due to the fact that we are much more diversified there. It's more than 50% comes now from renovation and from infrastructure, our turnover in UK and Ireland. We have outperformed the market and obviously grow the business there. And North America, finally, how the turnaround actually can be looked at from a perspective in 2024, a difficult year when we talk about new build and new residential housing. Again, when you compare numbers, 2020 and 2024. We had an increase in EBITDA of an impressive 140% with the same parameters, so the same industrial base and no substantial scope expansion. So again, it shows the efficiency, how we deal with the business in different markets. Again, when you look M&A, we have done quite some very strategic and very focused transactions, both in piping and phasing, but also obviously in the roofing, a very strong one with Terrial. So this brings us in a very good position to grow the business further. And again, Our principles, our clearly defined targets with a five times EVTR after synergies are perfectly in line. And after 224, we can also say that this integration moves well and the performance of these businesses also. The biggest one, obviously, being Terrial, as I said, very well structured, integrated, and moves us in a completely different level when it comes to roofing in Europe. Not enough on the M&A front. We work also, as I said, very thoroughly, and this is important for all of you because our view is long-term. It's not only one semester or one quarter or one or two years. It's long-term. We are committed to our sustainability targets. We are committed to our long-term targets. And what we do, we actually upgrade our industrial portfolio very strategically by investing in strategic plants. reducing energy consumptions above all. You've seen that we have now operationally running the most modern brick factory in the whole world with a very high performing industrial setup. And obviously we have here only electricity that we use, so no CO2 emissions. Then we have invested in completely new concrete rooftop plants in the UK and in Hungary. Again, also highly efficient and not a very high utilization of energy. And we have improved our setup, for example, with a huge investment in the north of Europe when it comes to piping the most modern and highly performing plant there in the north. So you see that within our strategy, innovation and sustainability match and work together in order to improve, improve growth, state of the art plants. As I said, resource efficiency plays a very important role when it comes to the utilizations. not only clay, but also plastic, granulate, and other raw materials that we use, and which provides us with a very competitive setup around Europe. We will pay off over the years to come because, as I said, we at Wiener Berger invest long-term. And with these words, I hand over to Gerhard, who will walk you through the financials.

Thank you, Aymo. Ladies and gentlemen, good morning. Let me start with the last quarter, and I would like to summarize it in some few words, because the last quarter of the year was in line with our expectations, so no surprises there. We closed the year with an operating EBITDA of close to 160 million. We have seen volumes which are up for the first quarter, this plus 3%, so on a year-on-year comparison. We have seen prices also which slightly improved with minus two and we ended with an operating EBITDA margin of 14%. I will anyhow, I will dive in now in the results of 2024 and I will do a deep dive more on volume, price, et cetera. So as mentioned, quarter four and also price is in line with our expectations. So let's move to the financials, to the full year financials. You have heard already the numbers, the main numbers. Bahamo operating EBITDA 760 with a strong operating EBITDA margin with 17%, considering the environment where we are in. Terrial contributed slightly better with an 82 million and we closed the year with a net result with a profit after tax of plus 80 million euros considering also the substantial restructuring measures which we have put in place mainly in the second quarter of last year. Before we move into the details of volume and pricing, have a look on the regional developments. If I may start with Europe West, we mentioned that earlier that UK Island was one of the first markets considering that how they developed in the new residential housing, which recovered and this recovery continued during the whole year 2024. Where we have seen that the recovery is not materializing was more the countries in Central West. We're speaking here about France, Germany and Belgium, where in the second half, the bottoming out were still ongoing. And we have seen in the Western part of Europe that the infrastructure and the renovation markets, sorry, resilient and moved stable across the whole year of 2024. When you look to the numbers on the right side, you see that the revenues up by 7%. Yes, we know that there is the big part, especially in Western Europe. There is terrial in the scope expansion by terrials or a big part of terrial acquisition is considered due to Germany and France in our region west. And there is some smaller impact in the region east where we have considered the the results of the revenues of Italy. Let's continue with Europe East. We have seen that the Eastern European business developed in the first half, let's say, with more outspoken recovery than what we have seen in the second half of the year when it's about new residential housing. We also have seen in Europe East that, especially in the last four or five months, that also the roofing business, the renovation business is stronger again. So the main driver, I would say, in the operating EV day of Europe East, and you see it is more or less stable. that all the cost management measures, the restructuring measures which we have implemented mainly in 2023 are materializing and now contributing to respectable profitability in Europe East. North America, the new residential housing market continues to be challenging. What we have seen that we started with more or less a flat a new residential housing demand and the second half of 2024, the demand was weaker. We had also during the quarter three, these floodings in some parts of the US, which also put some pressure on the volumes. But as Heimo said in the beginning, the US was definitely in the second half of 2024 more difficult than what we have seen in the first six months. Revenues up with 7%. Let me guide you now through the details on volume and price. Volume-wise, as I said, minus 3% across the group. I think we can allocate clearly where the volume decline is coming from. Positive and also a good sign of where you see the diversification of the group is that the roof and the pipe volumes are stable. So the volume decline, what we see within the group, can be allocated solely to the, let's say, to the product segments which are exposed to the new residential housing markets. It's the wall and the facade. And here we see the minus five. And the minus five, again, we can allocate to the U.S., which is mainly driven by the second half of last year, and also the by Western European countries. Again, we speak about Germany, France, which we are still in a bottoming out phase. Pricing wise, also we choose for this presentation as we believe also there you can see that the price reductions which we realized we can allocate first of all, to the Eastern European New Residential Housing Product Group, so meaning Wahl and Facade again in the clay block business, where in the beginning already intentionally put some price decreases or price reductions in place to protect our market share. And as I mentioned, we have seen already in the last quarter of 2024 that pricing slightly improved. So I think also here we are right on track, well on track. We see a positive price development in the US with plus four. And we see in the piping business a minus five. And this has two reasons. First of all, we see that the pipe prices in the US are sequentially coming down. This is one of the reasons. And the second reason is also that we have seen resin prices, which were also declining throughout 2024. And as you know, the pricing on pipe is closely linked also to the development of the resin prices. Cost inflation, when it's about cost inflation, we see some major drivers, which we have seen in the first half year where we were developing even with a negative cost inflation, so meaning a deflation of minus one and a half percent. This turned around in the second half, mainly due to energy prices, which were increasing in the second half of last year. And also the resin prices were on a year-on-year comparison in the second half slightly higher. Combining first half and second half, we speak about a zero cost inflation. So we were able to freeze our cost inflation across the year and were able to compensate even an increase in personal costs of 5%, which was still in 2024 significant. We summarized here once more the price-cost ratio. a price-cost impact of 2024. It was around about 100 million. And just also to make clear where it is coming from, as we said, around about 60 million we can allocate to the wall and to the facade business. This is mainly the product groups which are exposed to new residential housing. And here we have the biggest impact out of of Europe East, what we explained before. There is some slight impact also from Germany, but the biggest impact, as we have communicated earlier, is Europe East. And the second impact we see from the piping business, and here we have on the one side, a step down in profitability in the U.S. piping, which is, I guess, also not a big surprise. And we have seen in the piping business in Eastern Europe, mainly two countries in Poland and in Hungary, due to limitations also for municipalities on their budgets, that we also have seen some small price pressure there, which also impacted the price cost spread. So all in all, 100 million, I think, which can be clearly allocated. And I think the more positive message here is also you see in the middle, the roofing segment, which is very stable and resilient. And we're moving through this difficult year with a plus minus zero on price costs. We summarized once more the EBITDA margins per product segment. As we believe, you see the 17% on operating EBITDA margin where we are breaking down per product group. And let me start with the wall and the facade product group, which is mainly exposed to the new residential housing. And you know that the new residential housing compared with 2021 was declining by almost 50%. And we are running at the moment also our production sites with around about 50% on utilization rates, considering that a 16% on operating EVTA margin is a very strong margin. And here, I think it is also clear to see that all our cost management measures, our cost cuts, our efficiency improvements are paying off and contributing to this strong EVTA margin. Roofing, the strongest segment in our portfolio with 23% operating EBITDA margin, and last but not least, 19% out of the piping segment. You see here also that even when we had to digest some of the the price declines and also resin declines in the US, we were able to keep our EBITDA margin in the piping business with 19% on a very high level. It was already mentioned by Heimo in the beginning that we were, that out of all our cost measures which we implemented and big part was already implemented in 2023, that we realized cost savings of around about 60 million. And secondly, also our self-help program contributed with around about 40 million. So this adding up to 100 million, and this is strongly compensating also the headwinds, what we had out of volume and prices. During 2024, and I think this is also an important point, information as we have seen that in 2023, we were building up inventories in 2024, we were reducing inventories, we were focusing a lot on working capital. And therefore, I put this slide into the presentation as when you steer your business, especially your ceramic business in the sense of inventory management, you see that you have a positive impact on the one side if you have a lower production, meaning also less energy consumption. and less emissions. On the other side, you also have, due to the lower production, less efficiency and also a lower absorption of fixed costs. By the end, with the goal to optimize your working capital and with the goal to generate cash flow, and this can have an impact in 2024 negatively slightly, and this can also have an impact an impact in 2023 where we had a slightly positive impact, but it is an impact which is part of the working capital management respectively of the inventory steering what we did during the last years. To summarize the EVTA development, we moved from 811 to 760, and that just try really to concentrate on the three pockets. Sales impact was minus 120 million, which is a sales volume of minus 3%, but the bigger part here is the inefficiencies and the lower capacity utilization. of our production sites and the lowest production, the lowest utilization rates we had in the wall and in the facing segment. Price-cost we mentioned about minus 100 and this minus 100 was more or less compensated by our self-help and cost management measures of plus 100. The scope impact close to 80 and here the major driver here is material acquisition, and here is also the divestment of the Russian business considered. As we had in 2024, quite some one-off items, which I think important to put them in a very transparent and clear way also on one slide to consider them for normalization of the performance of 2024. Let me guide you quickly through all these one-offs. In principle, we speak about two things. We speak about the restructuring measures, which we have implemented mainly in the second quarter of 2024. And we speak about the sale of some assets, some non-core assets and real estate assets, but also the sale of our Russian business. And these two events, more or less, you find back in our P&L. And let me quickly walk you through where you find them back. We speak about an operating EBITDA of $760 million. As I mentioned before, we had some restructuring measures, structural adjustments, we call them, which is shown in the PLL and the other operating expense, which is close to 80 million. Then you see also between the operating and the reported EBITDA, the sale of non-coassets, respectively, the sale of Russian business, which adds up to close to 24 million, these two positions. And when you come to EBIT, also in relation to all the restructurings what we did, there was some write-offs, which especially was attributable to the restructuring measures what we implemented. This was 50.6 million. So you see already here that you have to put or you have to consider this one of the items to normalize the 2024 performance. And in the financial result, last but not least, there was the recycling of the FX reserve. So the ruble reserve, which if you exit a country or if you deconsolidate an asset, yes, you have to digest this FX reserve via the financial result. So that means that the financial result is with 42 million to high, or let's say, The recurring financial result is for 42 million lower, considering also looking forward to 2025 development. So I hope this slide also helps you to consider all these one of items in the normalization of the 2024 results. And we also have put a bridge in it where we have adjusted also our earnings per share. which is on a calculated or reported basis around about 70 cent and if you adjust all these one of items what i just explained you come to an adjusted earnings per share to two euros per share so sorry for being a little bit technically on that but i think it is important also that you understand and also understand where they are shown and presented in our financial statements I mentioned it in the beginning, we focused a lot on cash flow generation. We have, I think, a very strong cash flow, a free cash flow, and we tried also here to explain you from EVTA to walk you to the gross cash flow and to the free cash flow, and you see that by a very disciplined working capital management, we improved our free cash flow by more than 130 million, that we also contributed with the cost management and the self-help program with another 100 million to our free cash flow. And that finally, with the capex, with the maintenance capex, including also all the terrial sites for 10 months, that we also invested with the 135 million, I think a very moderate amount to keep all our industrial sites up and running. Net debt, this brings me to the net debt development. We ended the year with a net debt position of 1.7 billion. And you see here on the bridge on the development of the net debt development that it is, impacted or it is, you see that the M&A and the gross cutback which we put in place is more than 800 million. So this is the major impact why our net debt increased from 1.2 billion to 1.75 billion. And this, I think, brings me already to the next step we have based on the financial performance and also based on our balance sheet, what we have and what we see, we will have a strong proposal also to the AGM where we propose an increase of our dividend from 90 cents to 95%. And this is an increase of 5.6%. As I said, last year, we distributed a dividend of 90 cents. For this year, we propose a 95 cents per share. And we will, before the AGM, cancel 2% of our shares, which we bought back during the last six months. This will take place before the AGM. And this will be also one part, basically, of the increase of our share dividend proposal. With that, Raimo, I hand over back to you.