Wienerberger AG · VIE:WIE
Wienerberger — Investor Day (November 2007)
65 slides from Wienerberger's investor day presentation, Nov 15, 2007
Slide 1: Capital Markets Day 2007
Capital Markets Day 2007 Sofia, November 15 & 16, 2007 1 Wienerberger Participants Wolfgang Reithofer, CEO Willy Van Riet, CFO Johann Windisch, COO Central-East Europe, Italy, Switzerland and USA Karl Thaller, Cluster Manager CEE East Gernot Schöbitz and Milen Petrov, Managing Directors Bulgaria Tho
Slide 2: Program
Program Thursday, November 15 03.00 pm Welcome at Grand Hotel Sofia 03.30 pm Presentation on Results of the Third Quarter 2007 04.00 pm Wienerberger Group Strategy 04.30 pm Strategy CEE and Outlook on FY 2007/2008 05.00 pm Break 05.15 pm Strategy Southeast Europe with focus on Romania 05.45 pm Prese
Slide 3: On the one hand, a lot can still happen in the last three months
On the one hand, a lot can still happen in the last three months On the other hand, the first three quarters were pretty good 3
Slide 4: First Nine Months Results 2007
First Nine Months of 2007 Group revenues +14% EBITDA +21% CEE returns to normal growth levels in Q3 Germany and USA further down Target unchanged: ≥15% increase of earnings for 2007 7 First Nine Months Results 2007 Revenues: EBITDA: € 1,889.3 mill. € 424.1 mill. (1-9/06: 1,655.9 | +14%) (1-9/06: 351
Slide 5: Analysis of Group Revenues; Changes in EBITDA per Region
Analysis of Group Revenues 14% increase in revenues - 4% volume growth - 10% price effect Central-East Europe - Strong revenues growth due to better prices Central-West Europe - Disappointing German Housing market leads to earnings decline North-West Europe - Solid revenues growth due to volume incr
Slide 6: Analysis of Group EBITDA
Analysis of Group EBITDA Group EBITDA increased by 21% to € 424.1 mill.: Central-East Europe: improvement product mix, better prices and full utilization of capacity [+89% to € 209.0 mill.] North-West Europe: high earnings level and consolidation effects [+10% to € 143.2 mill] Central-West Europe: l
Slide 7: Results by Products
First Nine Months Results 2007 by Products Revenues: € 1,889.3 mill. | +14% EBITDA: € 424.1 mill. | +21% Surface Surface Other - 4% 8% 6% Roof Hollow bricks Roof 19% 36% 24% Hollow bricks 50% Facing bricks Facing Bricks 24% 37% 13 Financial Statements for the First Nine Months 2007 7
Slide 8: Q3/07 - Further Growth, but at Slower Pace
Q3/07 - Further Growth, but at Slower Pace Group revenues +3% compared to a very strong previous Q3 Driven by CEE countries SK, CZ, Russia and Bulgaria Consolidation effects in UK (Baggeridge) / NL (Korevaar) Slowdown in residential constrution in Germany and lower sales volumes in Switzerland Very
Slide 9: Income Statement and Balance Sheet
Income Statement in € mill. 1-9/2006 1-9/2007 Chg. in % Revenues 1,655.9 1,889.3 +14 EBITDA 351.6 424.1 +21 EBITDA margin 21.2% 22.5% +6 EBIT 228.1 284.3 +25 Financial results -20.0 3.4 >100 Profit after tax 1) 157.4 235.4 +50 Profit attributable to equity holders 2) 154.4 210.4 +36 Adjusted earning
Slide 10: Cash Flow and Capex 1-9/2007
Cash Flow in € mill. 1-9/2006 1-9/2007 Gross cash flow 288.3 359.8 Chg. in working capital -61.5 -78.0 Maintenance capex -69.3 -82.5 Divestments and others 4.8 7.7 Free cash flow 162.3 207.0 19 Capex 1-9/2007 in € mill. 1-9/2006 1-9/2007 Chg. in % Maintenance capex 69.3 82.5 +19 Bolt-on projects 190
Slide 11: Wienerberger Group Strategy: Profitable Product Groups
Wienerberger Group Strategy Wolfgang Reithofer, CEO Profitable Product Groups in Core Business Hollow Brick (Wall) Facing Brick (Facade) No. 1 worldwide No. 1 in Europe, Co-Leader in USA Revenues: 36% EBITDA: 50% EBITDA margin: 31% Revenues: 37% EBITDA: 24% EBITDA margin: 15% Roof Tiles (Roof) Paver
Slide 12: Explanation of Margins and Growth Strategy per Product
Explanation of Margins per Product Hollow Brick: EBITDA margin: 31% Facing Brick: EBITDA margin: 15% High margins due to: Low margins due to: Strong growing CEE-markets High proportion of trading revenue Strong market position Locally specific customer requirements Product gains market share (West E
Slide 13: Climate Change Discussion: Advantages of Bricks
Climate Change Discussion: Global Warming Hollow bricks: are the best product for thermal insulation (in winter) and heat protection (in summer) Clay roof tiles: energy generation by photo voltaic or solar Our products will benefit from regulations for energy efficiency of buildings 5 Climate Change
Slide 14: Thermal Insulation and Cooling Requirements
Thermal Insulation and Cooling Requirements Energy efficiency discussion: - Strong focus on thermal insulation - Protection against overheating in summer (cooling energy) dramatically underestimated - Cooling is much more energy intensive than heating Focus on both thermal insulation and cooling req
Slide 15: Hollow Brick Development and Solar Roofing
Hollow Brick Safeguard profitability through development - Products - Technology - Energy - Costs Rollout - Eastern Europe - Russia - Western Europe (Belgium – France – Netherlands – UK) - Emerging Markets (India) 9 Usability of Roof for Solar Energy Koramic: development of solar energy solutions fo
Slide 16: Wienerberger's Growth Model and Growth Criteria
Wienerberger’s Growth Model Wienerberger Wall, Façade, Roof, Surface strategic acquisitions Bolt-on projects and Free Cash Flow Growth Dividends Gearing / Rating Bolt-on projects Offer attractive Maintain healthy gearing dividend payments to ratios and balance sheet External projects/ investors Main
Slide 17: Historic Investments at Value Enhancing Returns
Historic Investments at Value Enhancing Returns Growth Investments (€ mill.) No. of Acquisitions(1) 15 17 14 17 >6 542 430 480 310 365 96 220 251 215 65 111 178 251 335 260 46 95 2002 2003 2004 2005 2006 2007e Bolt-on projects Strategic acquisitions Group ROCE (2) and WACC (%) 9.7 8.9 9.1 8.4 7.1 WA
Slide 18: Capex Forecast 2008+ and Project Pipeline
Capex Forecast 2008+ Bolt-on Projects / Growth Projects Acquisitions Expansion Eastern Europe Medium Acquisitions - 25 Brick Plants - Western & Eastern Europe, North America - 6 Paver Plants Development Traditional Markets Total Investment: ≥ € 100 mill. p.a. - Focus: Growth Hollow Bricks Western Eu
Slide 19: Wienerberger Strategy CEE
Wienerberger Strategy CEE Outlook on FY 2007 / 2008 Building Value Johann Windisch, COO Content Building Value Wienerberger growth into CEE Economic environment in CEE CEE Countries – A detailed view Semmelrock Outlook on CEE 2 1
Slide 20: Growth into CEE in Concentric Circles
Growth into CEE in Concentric Circles Building Value Hungary: ‘90 Czech Republic & Slovakia: ’92 & ‘93 Poland: ‘94 Croatia: ‘96 Slovenia: ‘99 Romania: ‘03 Estonia: Russia: ‘06 Bulgaria: ‘07 3 Strong Track Record in the Past Building Value Market entry # of plants Thereof brick with own production to
Slide 21: Hollow Bricks in Eastern Europe; Why Could We Grow So Fast?
Hollow Bricks in Eastern Europe a Traditional Product Building Value 100% Market share of bricks as % of walling materials 80% 80% 80% European 70% average: 60% 60% 60% 50% 50% 40% 40% 20% 0% Croatia Hungary Slovenia Czech Rep. Slovakia Romania Poland Source: Wienerberger rough estimates; Note: weig
Slide 22: The Economic Situation in CEE; GDP per Capita
The Economic Situation in CEE Building Value Good skilled and highly motivated people Investments are a key driver for growth / large share of FDI Improving labor market supports consumption and confidence Economies benefit from EU accessions 7 Current GDP/capita Levels in Eastern Europe Indicate Pe
Slide 23: Housing Start Levels and Mortgage Share in Eastern Europe
Current Housing Start Levels in Eastern Europe Offer Long-term Potential Building Value 8,0 Housing Starts per 1,000 residents, Forecast 2007 7,0 6,0 Ø Western Europe at 5.1 (excl. Spain and Ireland) 5,0 Growth potential 4,0 3,0 2,0 1,0 0,0 A CZ PL SK HUN ROM BUL CH I GER* F B SCAN NL* UK USA Centra
Slide 24: Growth Potential in CEE
Growth Potential in CEE Building Value Strong pent-up demand for housing Demand for developed brick products Good skilled and highly motivated people New technology Efficient local management 11 CEE Countries - a Detailed View Building Value 6
Slide 25: Hungary – One of the Most Mature Markets
Hungary – One of the Most Mature Markets Building Value Key data: - Area: 93,033 km2 - Population: 10.1 mill. - GDP p.c. (’06): 8,900 € - Housing starts 1) (’07): 3.48 1) Per 1,000 capita 13 Hungary Building Value Market entry 1990 Revenues in € mill. Wienerberger growth: - Strong brick market (mark
Slide 26: Hungary 2008+; Poland Key Data
Hungary 2008+ Building Value Market: - Slight recovery of domestic market - Shift in demand to value added products Wienerberger: investments in value added products - Market penetration with planed bricks (adjustment of 3 plants) - Uphold exports (to Bulgaria, Romania and Ukraine) 15 Poland – One o
Slide 27: Poland – Rebound in 2006; Poland 2008+
Poland – Rebound in 2006 Building Value Market entry 1994 Revenues in € mill. Wienerberger growth: - Growing housing market 152 - Establishing industrialized products 110 102 After a slump in 2005 strong 78 65 market growth in the last 2 years 54 Today: strong market position with further growth pot
Slide 28: Czech Republic and Slovakia
Czech Republic and Slovakia Building Value Key data CZ: - Area: 78,867 km2 - Population: 10.3 mill. - GDP p.c. (’06): 11,100 € - Housing starts 1) (’07): 4.46 Key data SK: - Area: 64,589 km2 - Population: 5.4 mill. - GDP p.c. (’06): 8,100 € - Housing starts 1) (’07): 3.86 1) Per 1,000 capita 19 Czec
Slide 29: Czech Republic and Slovakia 2008+; Russia
Czech Republic and Slovakia 2008+ Building Value Markets: - CZ: solid development of the housing market - SK: growth potential triggered by heavy FDI Wienerberger: investments in hollow bricks and value added products - Construction of hollow brick plant Hodonin at the CZ/SK border to serve regional
Slide 30: Large Market Potential in Russia
Large Market Potential in Russia Through Regional Areas and Migration to Cities Building Value Potential due to: Living space per capita in sqm - Growing middle class - Renewal | Renovation Russia 21 - Migration to cities European 40 average USA 66 23 Federal Program for Affordable Housing as Growth
Slide 31: Russia Is Not ONE Market; Russia 2008+
Russia Is Not ONE Market Building Value Not ONE market but several regional fast growing areas: - Moscow and surroundings: 17 mill. inhabitants - Rostov & Krasnodar: 9 mill. inhabitants - Tartastan & Barschkortostan: 9 mill. Inhabitants Regional areas are centers of economic development and growth 2
Slide 32: Ukraine – Challenging Environment
Ukraine – Challenging Environment Building Value Key data: - Area: 603,700 km2 - Population: 46.9 mill. - GDP p.c. (’06): 1,800 € - Housing starts 1) (’07): 1.9 Local organisation in place Market served via imports from PL, HUN and SK Construction of greenfield plant 1) Per 1,000 capita 27 Ukraine 2
Slide 33: Semmelrock – Strong Growth
Semmelrock Building Value Semmelrock – Strong Growth Building Value Revenues – CAGR: 22% EBITDA – CAGR: 32% 2001 2002 2003 2004 2005 2006 2007 2001 2002 2003 2004 2005 2006 2007 30 15
Slide 34: Semmelrock: Strongly Growing Company in CEE
Strongly Growing Company in CEE Founded by Wolfgang Semmelrock in 1958 Since 1996 a 75% subsidiary of Wienerberger AG Market leader for high-quality concrete pavers in CEE International presence with 14 plants … 2007 and the Future Building Value Goal is to increase position as the leading supplier
Slide 35: Strong Revenue Growth in Central-East Europe Segment
Outlook on CEE Building Value 33 Strong Revenue Growth in Central-East Europe Segment Building Value Revenues (€ mill.) CEE – CAGR: 16% Consensus 828 607 490 503 455 397 345 2001 2002 2003 2004 2005 2006 2007e 34 17
Slide 36: Even More Impressive EBITDA Growth; Outlook 2008+
… and Even More Impressive EBITDA Growth Building Value EBITDA (€ mill.) CEE – CAGR: 18% Consensus 223 158 142 137 127 108 82 2001 2002 2003 2004 2005 2006 2007e 35 Outlook on Building Material Markets 2008+ Building Value Mature markets with further potential - CZ, SK, HUN, SLO Strong long-term gro
Slide 37: Wienerberger CEE Strategy 2008; Planned Growth Investments
Wienerberger CEE Strategy 2008 Building Value Central-East Europe - Expansion of capacity mainly in Poland, Bulgaria, Romania and Baltics - Development of market position in Balkan states - Market entry into Ukraine Russia - Further capacity expansion through extension of existing and construction o
Slide 38: Strategy Southeast Europe with Focus on Romania
Strategy Southeast Europe with Focus on Romania Building Value Karl Thaller (Cluster Manager CEE East) Content Building Value Southeast Europe – Economic data Wienerberger Market Entry in Southeast Europe The Romanian Market Summary On Southeast Europe 2 1
Slide 39: Southeast Europe – Potential for the Future
Southeast Europe – Potential for the Future Building Value EU accession Positive effects for Romania and Bulgaria Slovenia: Frontrunner in EU accession (Euro as currency since 2007) Croatia: Accession negotiations on track Macedonia: EU candidate country as per end of 2005 Albania, Bosnia and Monten
Slide 40: Housing Start Levels in Southeast Europe
Current Housing Start Levels in Southeast Europe Offer Long-term Potential Building Value Housing Starts per 1,000 residents, 2007e 6,0 Ø Western Europe at 5.1 (excl. Spain and Ireland) 5,0 4,0 3,0 2,0 1,0 0,0 HR SLO Serbia BiH ROM BUL Source: Euroconstruct June 2007 | company information 5 Ideal Co
Slide 41: Further Growth in Southeast Europe; Slovenia
Further Growth for Wienerberger in Southeast Europe Building Value Slovenia: 1999 Existing market Croatia: 1996 Romania: 2003 Build-up markets Bulgaria: 2007 Serbia Bosnia Montenegro Potential future markets Albania Macedonia 7 Slovenia – Stable on High Level Building Value Area: 20,273 km2 Pop.: 2.
Slide 42: Croatia – Room for Improvement
Croatia – Room for Improvement Building Value Area: 56,594 km2 Pop.: 4.4 mill. GDP p.c. (’06): TEUR 7.7 Housing starts 1) (’07): 5.0 1) Per 1,000 capita 9 Market Entry in Year 1996 Building Value Fragmented market Growth potential in new residential construction for next year Present with 2 brick pl
Slide 43: Serbia; Focus on Romania
Serbia Building Value Area: 102,713 km2 Pop.: 7.4 mill. GDP p.c. (’06): TEUR 3.4 Dissolution of Ex-Yugoslavia 1991 - Civil wars + instability of the country Privatization delayed Market entry - Imports from Croatia and Hungary - Acquisition if available and value creating 11 Focus on Romania Buildin
Slide 44: Growth Market Romania
Growth Market Romania Building Value Area: 238,391 km2 Pop.: 21.6 mill. GDP p.c. (’06): TEUR 4.5 Housing starts 1) (’07): 1.7 1) Per 1,000 capita 13 Romania‘s Potential Building Value Housing starts 1.7 up to 2.5 per 1,000 capita in 2008 expected: EU accession at the beginning of 2007 as a sign of i
Slide 45: Romania at the Very First Beginning; Steps into Romania
Romania at the Very First Beginning Building Value Brick as traditional product, but under communistic government aerated concrete gained market share from bricks due to governmental subventions Local brick producers offer poor quality No value creating acquisition opportunities Wienerberger started
Slide 46: Romania – Wienerberger Group Today
Romania – Wienerberger Group Today Building Value 3 brick plants - Gura Ocnitei - Sibiu - Triteni (start-up phase) 2 roof tile plants in Sibiu - Bramac & Tondach 1 concrete paver plants - Bolintin-Vale Clay roof tile Concrete roof tile Concrete paver 17 Next Steps in Romania Building Value Capacity
Slide 47: Expectations 2008; Summary on Southeast Europe
Expectations 2008 Building Value Strong demand for bricks Increase own production by >50% Higher margins Further opportunities due to imports from Hungary 19 Summary on Southeast Europe Building Value 10
Slide 48: Opportunities in Southeast Europe; Strengths and Key Success Factors
Opportunities in Southeast Europe Building Value Population ca. 50 mill. Economic growth Brick = traditional product Need for better / more housing / better quality Potential acquisitions Roll-out 21 Our Strenghts and Key Factors for Success Building Value Geographical coverage with our plant networ
Slide 49: Last, But Not Least … Bulgaria
Last, But Not Least … Building Value Bulgaria 23 12
Slide 50: Bulgaria - a Short Overview
Presentation on the Bulgarian Market Building Value Gernot Schöbitz, Managing Director Bulgaria Bulgaria - a Short Overview Building Value Size 111.000 km2 Population 7,7 mill. GDP growth 2007e 6.2% GDP per capita € 3.732 Inflation rate 2007e 7.4% Unemployment rate 2007e 7.3% EU member since 01.01.2
Slide 51: Bulgaria - Macroeconomic Development
Bulgaria - Macroeconomic Development Building Value Real GDP and construction work in Bulgaria (in %) 18,0 Real GDP 15.4 16,0 14.9 Bulgarian construction 14.1 14,0 market shows a Construction and assembly steady growth output change p.a. 12,0 Estimated value of construction market in 10,0 Bulgar
Slide 52: Bulgarian Brick Market - Overview
Bulgaria - Macroeconomic Development Building Value Construction and residential construction output 2007 - 2009 20% 19% 19% 18% 18% 17% 17% 17% 17% 16% Forecast for construction output 15% in Bulgaria 1) 15% Forecast residential construction Construction and output in Bulgaria (y-o-y) 1) resident
Slide 53: Bulgarian Brick Market – Regional Split; Competitors
Bulgarian Brick Market – Regional Split Building Value Main brick markets in Bulgaria - Sofia and other bigger cities - Black sea coast (summer tourism) - South west Bulgaria (winter tourism) Main products - Local 3.85NF (25x12x25cm) - Local 1NF (25x12x6,5cm) - Imported products (small formats,
Slide 54: Bulgarian Brick Market - Local and Imported Products
Bulgarian Brick Market - Local Products Building Value 9 Bulgarian Brick Market - Imported Products Building Value 10 5
Slide 55: Wienerberger Bulgaria - Business Development & Expansion
Wienerberger Bulgaria - Business Development & Expansion Building Value 2004 Foundation of Wienerberger EOOD . Imports ex Hungary and Romania 2005 Exploration of acquisition possibilities POROTHERM bricks . Acquisition of brick plant Lukovit have become well 2006 known and accepted on Star
Slide 56: Wienerberger Bulgaria - Project Lukovit
Wienerberger Bulgaria - Project Lukovit Building Value once … and now … 13 Wienerberger Bulgaria - Project Lukovit Building Value Launch of press 07.08.2007 First kiln car 31.08.2007 14 7
Slide 57: Wienerberger Bulgaria - Project Lukovit Launch
Wienerberger Bulgaria - Strategy and Next Steps Building Value Ramping up local production in Lukovit - Efforts on achieving high plant utilization as quick as possible - Constant development / enlargement of distribution network - Implementation of Wienerberger bricks “made in Bulgaria” all over
Slide 58: Wienerberger Bulgaria - Strategy and Next Steps
Outlook on 2007 and 2008 European Market Environment 2007 Eastern Europe: Outstanding development in Eastern Europe - Poland: Booming demand in H1, normalized growth in H2 - CZ, Slovakia, Romania, Bulgaria: Strong building activity and demand - Hungary: Domestic market stable, growth through exports
Slide 59: Outlook on 2007 and 2008: European Market Environment
Outlook on Building Material Markets in Europe 2008 – Eastern Europe Poland, Romania and Bulgaria: Growth due to pent-up demand for quality housing Czech Republic, Slovakia: Expected to show (slight) growth of housing market Hungary: Stable, expected to compensate possible housing decline with incre
Slide 60: Outlook on Building Material Markets – Eastern and Western Europe
Market Environment USA Continuing market weakness Industry has added capacity in the last three years Sharp drop in new residential construction since April 2006: - NAHB forecast 2007 downward to 1.363 million units: -25% y-o-y Increasing pressure on prices but average price 1-9/07 on previous year
Slide 61: Market Environment USA
Outlook on Building Material Markets USA 2007 and 2008 Continuing weak housing market Timing of recovery uncertain, currently expected for H2 2008 Long-term growth market due to demographics and high renovation demand - Population growth: 3 mill. more people p.a. = 1.1 mill. housing starts p.a. (at
Slide 62: Outlook on Building Material Markets USA; Strategy to Cope with US Housing Slump
Expectations for 2007 EBITDA & EPS growth at least 15% Growth investments ~ € 500 mill. - Bolt-on program: ≥ € 260 mill. - Strategic acquisitions: € 220 mill. 9 Our Goals 2008+ Above-average long-term growth in EBITDA & EPS 1) (ca. 10% p.a.) Growth investments - Bolt-on program 2008: € 400 mill. 200
Slide 63: Expectations for 2007; Our Goals 2008+
Appendix: The Wienerberger Group Today Wienerberger Brick Markets in Europe 1 1 Europe (total): Nr. 1 1 1 1 1 Hollow bricks: 1 2 - No competing international groups 1 - Mainly family businesses (local producers) - Wienerberger as only multinational player 33 1 1 11 1 Facing bricks: 1 1 1 1 - Family
Slide 64: Appendix: Wienerberger Brick Markets in Europe
Wienerberger Roofing Markets in Europe Europe (total): Nr. 2 in clay roof tiles Large competitors: Lafarge Roofing, Etex, Imerys, Terreal Some privately owned mid-size competitors in Germany Wienerberger plants Wienerberger export markets JVs Bramac (50%) and/ or Tondach Gleinstätten (25%) # Market
Slide 65: Wienerberger Roofing Markets; Brick Markets in North America
Wienerberger Shareholder Structure by Region by Style Others Others France 5% Hedge Funds 7% 4% 4% North Europe Value 5% USA Retail 31% 31% Switzerland 8% 6% Index Germany 9% 8% Austria Canada 15% 9% GARP 16% UK & Ireland Growth 17% 25% Status: September 2007 | 83.9 mill. shares outstanding 15 8