Wienerberger AG · VIE:WIE
Wienerberger — Investor Day (November 2005)
59 slides from Wienerberger's investor day presentation, Nov 17, 2005
Slide 1: Capital Markets Day 2005
Capital Markets Day 2005 Vienna, November 17, 2005 Program November 17, 2005 14.00 Welcome and Lunch 15.00 Presentation on Results of the Third Quarter 2005 Wolfgang Reithofer (CEO), Hans Tschuden (CFO) 15.45 Update on Wienerberger Activities in CEE and Germany Johann Windisch (COO) 16.30 Break 17.0
Slide 2: Program November 18, 2005 and Wienerberger Participants
Program November 18, 2005 08.15/08.30 Transfer to Pinkafeld 09.45 Visit of Tondach Gleinstätten clay roof tile plant Pinkafeld 11.15 Transfer to Hennersdorf (Vienna) 12.30 Lunch 13.00 Visit of Wienerberger hollow brick plant Hennersdorf 14.00 Transfer to Vienna Airport or Hotel Sightseeing cancelled
Slide 3: Results of the Third Quarter 2005
Results of the Third Quarter 2005 More Reasons to Stay Relaxed: The Third Quarter Q3 Results 2005 Revenues: EBITDA op.: € 1,468.6 million € 332.4 million (04: 1,325.5 | +11%) (04: 317.9 | +5%) EBIT op.: PAT: € 218.3 million € 153.5 million (04: 217.7 | 0%) (04: 155.5 | -1%) 3
Slide 4: Q3 2005 Analysis
Q3 2005 Analysis Continued growth of results despite challenging conditions - Exceptionally strong prior year comparatives - Major decline in 3 key markets - Significant rise in energy costs EBITDA Development 1-9 / 2005 -30 -19 64 7% R: 2 CA G 21% C AGR: 318 332 258 216 157 -30 EBITDA 1-9 E BITDA 1
Slide 5: Change of EBITDA vs. 1-9/2004; Strategic Priorities in 2005
Change of EBITDA vs. 1-9/2004 Central-East Europe -13.5 million € Central-West Europe -8.7 million € North-West Europe +31.9 million € USA +5.2 million € Investments and Other -0.2 million € Wienerberger Group +14.5 million € Strategic Priorities in 2005 Optimization - focus on products and techno
Slide 6: Adjustment of Strategy
Adjustment of Strategy ÖImmediate reaction to changing market situation Facilitate consolidation process in Poland Closing of a total of 17 older and smaller plants - One fourth in part or on a temporary basis - Shifting production to newer, more efficient facilities - Regional focus on Poland,
Slide 7: Financial Statements for the First Nine Months 2005
Financial Statements for the First Nine Months 2005 Income Statement in € million 1-9/2004 1-9/2005 Chg. % Revenues 1.325,5 1.468,6 +11 EBITDA operating* 317,9 332,4 +5 EBITDA margin 24,0% 22,6% - EBIT operating* 217,7 218,3 +0 Financial result -14,9 -16,4 +10 Profit before tax 202,8 196,9 -3 Profit
Slide 8: Revenues and EBITDA 1-9/2005 by Segments
Revenues 1-9/2005 by Segments Investments & Other USA -1% 17% CE-Europe 26% € 1,468.6 million +11% NW- Europe CW-Europe 38% 20% EBITDA 1-9/2005 by Segments Investments & Other USA -3% 15% CE-Europe 31% € 332.4 million +5% NW- Europe CW-Europe 38% 19% 8
Slide 9: Analysis of Energy Costs
Analysis of Energy Costs 1-9/2004: € 146 million | 11.1% of revenues 1-9/2005: € 178 million | 12.1% of revenues = Increase: € 32 million thereof € 19 million price related Ö Spiking energy costs! Outlook Energy Costs Ca. € 30 million higher price-driven energy costs expected in 2005 Based on cu
Slide 10: Cash Flow Statement and Balance Sheet Ratios
Cash Flow Statement in € million 1-9/2004 1-9/2005 Chg. % Gross cash flow 252,6 258,6 +2 +/- Working c apital -95,7 -134,6 +41 +/- Other net c urrent assets 44,1 9,8 -78 +/- Non-cash items from FX translation -4,7 -34,6 N/M Cash flow from operating activities 196,3 99,2 -49 Offset: +/- Marketable se
Slide 11: Update on Activities in CEE
Update on Activities in CEE Wienerberger CEE Markets Ö Traditional hollow brick markets Ö Population (excl. CIS): 126 mill. WB CEE markets WB CEE markets – roofing JVs only potential new markets 1 1 1 1 1 Market positions in 1 1 1 bricks and/or roofing 1 1 1 1 11
Slide 12: CEE – Economic Growth; Opportunities & Potential
CEE – Economic Growth 7% Real GDP Growth CEE-1 1* 6% EU-15 5,4% 5% 4,8% 4,1% 4,2% 4% 3% 2,3% 2,2% 1,9% 2% 1,0% 1% 0% 2003 2004 2005e 2006e Economic growth in CEE is forecast to stay well ahead of Western Europe – despite a pick-up in the EU-15 * Including Czech Republic, Estonia, Hungary, Latvia, Li
Slide 13: CEE Residential Market; Hollow Bricks in Eastern Europe
CEE Residential Market Housing starts / 1,000 inhabitants 2005e 8 7,2 6 5,5 Mature Growth 4,4 4 3,8 3,4 2,5 2,3 2 1,7 1,4 1,1 0 U SA EU-15 CZ HU N SK PL HR UA R OM BG Source: Euroconstruct June 2005, Wienerb erger estimates Hollow Bricks in Eastern Europe A Traditional Product Market share of bricks
Slide 14: Poland GDP Growth and Housing Starts
Poland GDP Growth 7% Real GDP Growth 6% Poland EU-1 5 5,3% 5% 4,4% 4% 3,8% 3,2% 3% 2,3% 2,2% 1,9% 2% 1,0% 1% 0% 2003 2004 2005e 2006e Source: Eurostat, Broker Research Poland Development of Housing Starts (in 000 units) 160 Flats 1/2 Family Homes 140 120 114,4 97,2 100,0 100 95,0 37,9 82,4 77,0 80 3
Slide 15: Poland Outlook 2005 & 2006; Czech Republic
Poland Current and Outlook 2005 & 2006 Current - Wall construction market, including bricks, declining 10% - Shift from single family homes to flats Outlook 2005 and 2006 - Prices expected to remain competitive - Volumes are expected to fall in 05 and stabilize in 06 Wienerberger strategy - Fa
Slide 16: Czech Republic Housing Starts and Outlook
Czech Republic Development of Housing Starts (in 000 units) Wienerberger estimate: 44,5 45 60 Fla ts 1/2 Fa mily Homes 50,0 50 44,5 39,1 40 36,5 33 ,7 24,0 21,0 29 ,1 30 15,7 18,1 16,4 12,6 20 23,5 26,0 10 20,8 21,0 16,5 17,3 0 200 1 200 2 2003 2004 2005 e 2006 e Housing starts in the Czech Republic
Slide 17: Hungary GDP Growth and Housing Completions
Hungary GDP Growth 7% Real GDP Growth 6% Hungary EU-15 5% 4,2% 3,9% 4% 3,7% 2,9% 3% 2,3% 2,2% 1,9% 2% 1,0% 1% 0% 2003 2004 2005e 2006e Source: Eurostat, Broker Research Hungary - Development of Housing Completions (in 000 units) 50 Fla ts 1/2 Fa mily Homes 43,9 40 38,0 38,0 35,5 31 ,5 23,2 30 28 ,1
Slide 18: Hungary Outlook 2005 & 2006; Slovakia
Hungary Current and Outlook 2005 & 2006 Current - Weaker market than expected but stabilizing by year-end - New plant in East Hungary, will shut down two old ones Outlook 2005 and 2006 - Stable volumes, potentially slight increases in H2 2006 - Spiking energy costs - Reduction of VAT from 25% to
Slide 19: Slovakia Housing Completions and Outlook
Slovakia – Development of Housing Completions (in 000 units) 20 Flats 1/2 Family Homes Wienerberger estimate: 14-15 15,5 15,0 15 14,2 14,0 12,6 5,1 6,5 7,0 10 ,3 6,4 4,0 10 3,0 5 9,1 8,6 8,5 8,5 7,3 7,6 0 2001 2002 2003 2004 2005 e 2006 e Housing completions in Slovakia are up in 2005, for 2006 we e
Slide 20: Segment Central-East Europe Revenues and EBITDA Development
Segment Central-East Europe Revenues Development Revenues 1996 – 2005e in € mill. 600 Consenus CAGR 96 – 04 = 12% 490 ~ 490 500 CAGR 96 – 05e = 10% 455 397 400 340 345 311 271 300 249 205 200 100 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005e Segment Central-East Europe incl. Bricks CEE, Brick
Slide 21: Central-East Europe Summary of Results and Projects
Central-East Europe Summary of Results in € mill. 1-9/2004 1-9/2005 C hg. in % 2004 Revenues 381,5 379,8 -0 489,7 EBITDA operating* 116,8 103,3 -12 142,2 EBITDA margin 30,6% 27,2% - 29,0% EBIT operating* 87,6 67,3 -23 101,6 Total investments 93,3 75,3 -19 129,9 Capital employed 430,9 550,4 +28 468,1
Slide 22: Wienerberger Strengths in CEE; Business Outlook 2005
Wienerberger Strengths in CEE Market leader in all countries - Number 1 position in all markets with all products - Market shares on average > 30% High earnings power and growth – especially in bricks - Bricks CEE – EBITDA CAGR 96 – 04: 30% - Bricks CEE – EBITDA margins: > 30% Ö Wienerberger str
Slide 23: Market Expectations Central-East Europe 2006
Wienerberger Market Expectations Central-East Europe 2006 Market Outlook 2006 Poland Prices competitive, volume stabilizing Czech Rep. Stable to slightly increasing market Hungary Volumes stable, slight increases in H2 2006 Slovakia Market stable, potentially positive after elections Croatia Growth
Slide 24: Germany GDP Growth and Housing Completions
Germany GDP Growth 4% Real GDP Growth Ge rm any EU-15 3% 2,3% 2,2% 1,9% 2% 1,6% 1,2% 1,0% 1% 0,8% 0% 2003 2004 2005e 2006e -0,2% -1% Source: Eurostat, WBI estimates Germany - Development of Housing Completions (in 000 units) 35 0 Flats 1/2 Family Homes 30 0 28 6,0 Wienerberger estimate: 215 209 253,
Slide 25: Germany and Switzerland Outlook 2005 & 2006
Germany Current and Outlook 2005 & 2006 Current - Market deterioration - Earnings in Q3 better than Q1/Q2 Outlook 2005 and 2006 - Hollow bricks: Market declining in 2005, stable in 2006 - Roof tiles: competitive market expected - Further consolidation expected Wienerberger strategy - Price inc
Slide 26: Italy Outlook; Central-West Europe Summary of Results
Italy Current and Outlook 2005 & 2006 Current - Excellent results Outlook 2005 and 2006 - Small market growth in 2005, minor declines in profitability from the current high levels expected for 2006 - Potential capacity increase of competitors in 2006 Wienerberger strategy - Continuing high pri
Slide 27: Update on Activities in North-West Europe
Update on Activities in North-West Europe Wienerberger North-West European Markets # Market positions in hollow bricks and/or facing bricks 1 # Market positions in roofing 1 1 1/1 Wienerberger plants 2 Wienerberger export markets 3 1/1 1/1 1/4 27
Slide 28: North-West Europe – Opportunities & Potential
North-West Europe – Opportunities & Potential Belgium, Holland and UK: traditional brick markets - High market shares in facing bricks - Hollow blocks: strong market shares in Belgium, increasing in France - Increasing market share of pavers in Holland France and Belgium: strong renovation marke
Slide 29: Belgium Housing Starts and Outlook
Belgium Development of Housing Starts (in 000 units) 60 Flats Wienerberger estimate: 50 50 1/2 Family Homes 47,8 49,2 48,2 50 41 ,6 40,8 38,8 40 24,5 25,8 25,8 19,1 20,5 30 18,5 20 10 22,5 20,3 20,3 23,3 23,4 22,4 0 2001 2002 2003 2004 2005 e 2006 e The Belgian housing market is stable on a high lev
Slide 30: The Netherlands GDP Growth and Housing Completions
The Netherlands GDP Growth 4% Real GDP Growth Ne therlands 3% EU-1 5 2,3% 2,2% 2,0% 1,9% 2% 1,7% 1,0% 1,0% 1% 0% -0,1% 2003 2004 2005e 2006e -1% Source: Eurostat The Netherlands - Development of Housing Completions (in 000 units) 100 Flats Wienerberger estimate: 68 70 1/2 Family Homes 80 72,9 72,5 7
Slide 31: The Netherlands Outlook; Commercial Organisation
The Netherlands Current and Outlook 2005 & 2006 Current - Volume stable on a low level - Price increases across all products - Satisfactory sales and earnings development Outlook 2005 and 2006 - Stable volumes - Further price increases to offset energy costs - Stable/slightly positive earnings i
Slide 32: France GDP Growth and Housing Starts
France GDP Growth 4% Real GDP Growth Fra nce EU-1 5 3% 2,3% 2,3% 2,2% 2,2% 2,0% 2% 1,9% 1,0% 1% 0,8% 0% 2003 2004 2005e 2006e Source: Eurostat France Development of Housing Starts (in 000 units) Wienerberger estimate: 370 370 400 Flats 375,0 363,0 3 55,0 1/2 Family Homes 350 303,0 303,0 31 4,0 300 1
Slide 33: France Outlook 2005 & 2006; United Kingdom
France Current and Outlook 2005 & 2006 Current - Excellent in hollow bricks and clay roof tiles - Substantial increase in sales and profits Outlook 2005 and 2006 - Price increases - Further earnings growth in 06 Wienerberger strategy - Clearing up product portfolio - Regional focus on Lille, I
Slide 34: United Kingdom Housing Starts and Outlook
United Kingdom Development of Housing Starts (in 000 units) 250 Flats 1/2 Family Homes 214,0 204,0 2 06,0 19 3,6 200 179,9 180,9 89,9 46,8 69,7 91,8 92,7 150 54,3 100 133,1 126,6 123,9 124,1 50 112,2 113,3 0 2001 2002 20 03 2004 200 5e 2006e Housing starts were disappointing in 2005, for 2006 the ou
Slide 35: North-West Europe Summary of Results and Projects
North-West Europe Summary of Results in € mill. 1-9/2004 1-9/2005 C hg. in % 2004 Revenues 456,1 562,1 +23 633,3 EBITDA operating* 94,6 126,5 +34 134,5 EBITDA margin 20,7% 22,5% - 21,2% EBIT operating* 60,1 85,6 +42 83,2 Total investments 228,3 81,0 -65 399,8 Capital employed 757,5 956,4 +26 885,4 E
Slide 36: Wienerberger Strengths in North-West Europe
Wienerberger Strengths in North- West Europe Market leader in most countries - Strong number 1 positions in Belgium and the Netherlands - Market leader in north-east of France, growing share in hollow bricks - Number 3 position in UK in highly consolidated market Stable cash flow generation Ö No
Slide 37: Outlook 2006 North-West Europe
Outlook 2006 North-West Europe Further increase over high 2005 levels projected for 2006, if market environment is positive Strong focus on distribution strategy (pre-sales) Price increases to offset rising energy costs Ö Further increase in earnings over high 2005 levels Market Expectations 2
Slide 38: Update on Activities in the US
Update on Activities in the US Wienerberger USA North-East 5% USA total: No. 2 5 3 1 West Midwest 3 2% 3 17% 2 2 3 1 1 Mississippi 1 1 1 1 South-West 4 6 4 1 23% 3 # Market positions in facing bricks South-East 53% Note: figures with region = brick consumption within USA 38
Slide 39: US Strategy
US Strategy Growth of Existing Business Acquisition of Brick Plants Realization Mega Plant Concept & Automation Expansion Direct Distribution - Acquisition of Distributors Expansion Direct Distributions Rationale - Direct access to customers - Additional margin - Better control of the market
Slide 40: Direct Distribution vs. Distributor; USA GDP Growth
Direct Distribution vs. Distributor Revenues Distributor Direct 32% 68% USA GDP Growth 7% Real GDP Growth 6% US EU-1 5 5% 4,2% 4% 3,7% 3,5% 3% 2,7% 2,3% 2,2% 1,9% 2% 1,0% 1% 0% 2003 2004 2005e 2006e Source: NAHB 40
Slide 41: USA Housing Starts and Stock of New Housing
USA Development of Housing Starts (in 000 units) Multifa mily 2.014 Single -family 1.956 1.903 2000 1.848 1.70 5 351 345 340 1.603 349 1500 346 329 1000 1.611 1.663 1.563 1.499 1.273 1.359 500 0 2001 2002 2 003 2004 2005e 2 006e A potential slow-down in 2006 is not expected to negatively effect our
Slide 42: USA Outlook 2005 & 2006; Projects
USA Current and Outlook 2005 & 2006 Current - Strong housing market - Strong demand for bricks Outlook 2005 and 2006 - Volumes expected to increase slightly in 2005, stable in 2006 - Prices are forecast to further increase in 2006 Wienerberger strategy - Increase market share in all 3 regions
Slide 43: USA Cost Leadership | Coal Firing
USA Cost Leadership | Coal Firing Major cost advantage for General Shale - Only major US producer using solid fuel - Core competence for 35 years 65% of fuel used is soild fuel (coal and sawdust) USA Summary of Results in € mill. 1-9/2004 1-9/2005 C hg. in % 2004 Revenues 216,2 251,5 +16 284,4 E
Slide 44: Wienerberger & the US Market
Wienerberger & the US Market Long-term growth market due to - Strong demographic development - Favourable economic outlook - Potential for increase in market share of bricks Structured and profitable market Portfolio diversification and risk spreading Platform for growth through bolt-on acqu
Slide 45: Key Impacts 2005; Performance in 2005
Key Impacts 2005 Price driven increase in energy costs of ca. € 30 million expected Robust development thanks to geographic portfolio Profitable growth strategy continued - Accelerated bolt-on program in 2005 (~€ 250 mill.) - Larger acquisitions if available and value creating - Our acquisitio
Slide 46: Outlook 2006; Group Targets Remain Unchanged
Outlook 2006 Reserved optimistic outlook for key markets Continuation of expansion course Energy costs forecasted to exceed 2005 level by €45 mill, based on current price levels - Major part of that increase is planned to be passed on through price increases Wienerberger Group Targets Remain U
Slide 47: The Wienerberger Growth Strategy
Wienerberger: One who never sleeps. The Wienerberger Growth Strategy Wienerberger The Growth Company Focus on bricks and roof tiles Presence in 24 markets (+ 6 export markets) Wienerberger is the industry consolidator - Many options for profitable bolt-on projects (green- field, capacity expan
Slide 48: Core Products Competitive Structure; Low Maintenance Capex
Core Products Competitive Structure Hollow Bricks - No competing international groups - Mainly family businesses / smaller groups emerging Facing Bricks - Europe: family businesses, CRH and Hanson (UK) - USA: 5 major players totaling ~ 60% market share (Boral, Wienerberger, ACME, Hanson and CRH)
Slide 49: Integrated Growth Model
Integrated Growth Model Wienerberger Core business bricks and tiles Bolt-on and external projects Free Cash Flow FCF = Cash flow after interest, taxes, changes in WC 2005e: ~€ 250 million and maintenance capex 2/3 of FCF 1/3 of FCF Dividend Growth Gearing policy: 45% pay-out Building Value Through G
Slide 50: How Wienerberger Values Growth Projects
How Wienerberger Values Growth Projects Discounted cash flow analysis - Analyze various scenarios - Experience in estimating achievable synergies Multiples - Target: approx. 4.5x (bolt-on) to 6.0x (external projects) - Consider EBITDA upside potential over next 3 years - Review previous transact
Slide 51: Integration Strategy
Integration Strategy (I) Upgrade of technology - Optimization of production process (energy consumption, workforce) - (Limited) capex for capacity increase Marketing and branding - Optimize product range - Focus on core products Simplify administration - State of the art Group IT and reporting
Slide 52: Overview of Bolt-on Projects
Overview of Bolt-on Projects Investment at very attractive multiples - Limited competition and risk due to small scale of projects - High synergies achieved through integration and optimization - Positive market development as precondition We have recalculated profitability of projects from 00-0
Slide 53: Case Study: Acquisition of Koramic Roofing
Wienerberger: One who never sleeps. Case Study: Acquisition of Koramic Roofing Strategic Rationale Development of 2nd core business clay roof tiles Excellent strategic fit with bricks - Synergies in engineering, sales, administration and marketing Strong geographic complement with existing roo
Slide 54: Roofing Markets; Koramic Transaction Multiples
Wienerberger Roofing Markets 2003 Europe Koramic Export Koramic Wienerberger Switzerland JVs Bramac (50%) and Tondach Gleinstätten (25%) Koramic Transaction Multiples € mill. 2003 2004 2005e Acquisition of 50% 212 Acquisition of 50%* 212 Total investment 212 423 423 EBITDA incl. synergies 62 68 EBIT
Slide 55: Case Study: Acquisition of thebrickbusiness
Case Study: Acquisition of “thebrickbusiness“ Strategic Rationale for TBB Industrial entry into largest European facing brick market - Entry into the UK, expansion of geographic portfolio Relevant size of TBB for market entry in UK - Wienerberger becomes Number 3 in the UK with approx. 17% marke
Slide 56: Overview of Transaction
Overview of Transaction Acquisition of TBB for GBP 90.3 mill. (incl. debt) EBITDA (excl. non-recurring effects): GBP 16.5 mill. Purchase of Ewhurst for GBP 8.6 mill. - Plant closed at time of acquisition - Large raw material reserves - Planned reconstruction in wire-cut plant for GBP 4 mill. -
Slide 57: Sustainable Wienerberger Strategy
Sustainable Wienerberger Strategy Strategy (focus & growth) pays off >100 growth projects realized over recent 15 years - Strong experience in take-overs and integration Opportunities arise in difficult environment - Use weakness of others through high energy cost and price pressure - Consolid
Slide 58: Wienerberger Expansion Focus
Wienerberger Expansion Focus Mature markets - Participate in consolidation process in Germany, Netherlands, Denmark, Hungary, Croatia, Czech Republic - Increase brick penetration in France, UK, Netherlands Roofing - Consolidation in Germany - Exporting to North- and North-West Europe - Acquisiti
Slide 59: Sleep well: Invest in bricks.
Strengths of Wienerberger Stock Solid Basis - Profitability / TSR - Profitable Growth - Sustainability / Stability (sound geographic portfolio) Sleep well: Invest in bricks. Wienerberger Investor Relations Wienerberger AG, A-1100 Vienna, Wienerbergstrasse 11 T +43 1 60192 - 463, F +43 1 60192 - 466