Wienerberger Group
Strategy | Products | Markets
Heimo Scheuch, CEO
December 2, 2010
Contents
ƒ Introduction
ƒ Wienerberger Products & Strategy
ƒ Industrial Portfolio – Pipe Business
ƒ Industrial Portfolio – Joint Ventures Roofing
ƒ Wienerberger Key Markets
2
Introduction
3
Weak Market Environment in 2010
ƒ Q1: harsh winter
ƒ Q2: turnaround despite
ƒ Q3 in line with expectations
rainfalls/flooding in CEE
ƒ Central-East Europe: no signs of general recovery yet
- Poland: downturn in demand leveling off
- Czech Republic / Slovakia: further decline | dependency on Germany
- Hungary / Romania / Bulgaria: further weakness
ƒ Major Western European markets on low level, but
- UK / France / Germany: positive trend
- Belgium / Switzerland: stable
- Netherlands / Italy: further decline
ƒ Stabilization in North America
4
Action Plan Has Paid Off
ƒ Focus on cash-flow generation and debt reduction:
- Capex limited to a necessary minimum
- Cost savings program (capacity adjustments | significant staff reductions)
Î Total fixed cost savings of ~ € 200 mn vs 2008
(thereof € 35 mn in 2010)
Î Turnaround after Q1 2010: earning levels in Q2 and Q3 above 2009
Î Deleveraging (Gearing ~15% at year end)
5
Capacity Development 2007 – 2010
Spare
Mothballed Capacity
Closed
Clay blocks
8%
~30%
-13%
Roof tiles
0%
~30%
-2%
30%
~30%
-32%
0%
~20%
0%
Facing bricks1)
Pavers
1)
New
Capacity
change
CEE, France,
+23% Germany, India
+10%
12% Sandtoft
+10%
22% Baggeridge, CEE
-10%
50% Concrete pavers CEE
+50%
Data includes 2006 and 2007
Modern efficient plant network
Huge operational leverage from spare and mothballed capacity
Strong operational base in the right markets
6
Mid-term Targets
ƒ Top-line development above industry average
ƒ Continuous increase in earnings
ƒ EBITDA > € 500 mn
ƒ Keep strong balance sheet
ƒ Group CFROI > 12%
7
CFROI Development
20%
600
18%
500
16%
12,1%
12,9%
12,9%
12,6%
13,0%
14%
12%
10,0%
9,3%
300
200
4,3%
100
Mid-term target
400
Hurdle Rate
10%
8%
6%
4%
2%
0
0%
2002
2003
2004
2005
2006
Operating EBITDA
2007
2008
2009
CFROI
CFROI: since 2005 financial year calculation based on average historical capital employed
8
Core Elements of Wienerberger Strategy
ƒ Focus on value based (CFROI > 12 %) growth:
- Internal (innovative products | system solutions | operational leverage)
- External (strengthen and broaden position in core markets | strengthen
position in renovation segment)
ƒ Financial discipline
ƒ Returns used for investments and dividend payout
ƒ Remuneration of Top Management linked with short- and longterm performance goals (earnings, CFROI targets)
9
Wienerberger Products & Strategy
10
Wienerberger Product Groups
Clay blocks
(Wall)
Roof tiles
(Roof)
Facing bricks
(Facade)
Pavers
(Surface)
Pipe systems
No. 1 worldwide
No. 1 in Europe 1)
No. 1 in Europe, CoLeader in USA
Leading positions in
Europe
Leading positions in
Europe
ƒ Revenues: € 617mn
ƒ EBITDA: € 98mn
ƒ Revenues: € 455mn
ƒ EBITDA: € 78mn
ƒ Revenues: € 547mn
ƒ EBITDA: € 31mn
ƒ Revenues: € 198mn
ƒ EBITDA: € 24mn
ƒ Revenues: € 70mn
ƒ EBITDA: € 8mn
50% Pipelife at equity
Source: Company information; operating figures refer to FY2009 with the exception of Steinzeug-Keramo (FY2010e)
1) Concerning clay roof tiles
ƒ Revenues: € 350mn
ƒ EBITDA: € 30mn
11
Strategy – Product Group Wall
ƒ Further development and rollout of innovative products / system
solutions
- Plane ground blocks | Dryfix
- Earthquake blocks
- High thermal insulating blocks (infill blocks)
ƒ Further strengthen customer relationships
- Increase sales efforts
- Wienerberger as partner for housing concepts (developers, architects)
ƒ Benefit from spare capacity
ƒ Increase share of premium products from 20% to 40%
in the mid-term with focus on CEE markets
12
Wienerberger DRYFIX System
ƒ Started in 2007 in Austria
ƒ Strong growth despite economic crisis
ƒ 2010: introduction of Dryfix extra
- Higher strength – also for earthquake areas
- Longer durability
Czech Republic
Austria
+116%
+46%
+266%
+59%
2008
2009
2010e
2008
2009
2010e
Note: figures represent volume development of plane ground blocks with Dryfix
13
Wienerberger DRYFIX System:
Geographical Expansion and Market Potential
ƒ Successful introduction in Austria, Czech Republic,
Slovenia, Croatia, Slovakia, Hungary, Poland and France
ƒ Volume share in plane ground blocks:
Czech Rep.
2008
2009
2010
2015
Start: 10%
35%
60%
80%
Start: 30%
50%
80%
25%
40%
80%
Start: 100%
100%
100%
Hungary
Austria
Start: 10%
Slovenia
ƒ Pending approval procedures in:
- Italy, Germany, Switzerland
Dryfix already sold
Pending approval procedures
14
Infill Blocks
ƒ Clay blocks filled with Perlite (volcanic material)
or mineral wool
ƒ Integrated insulation – no additional insulation
material needed
ƒ Example: volume development of plane ground
blocks in Germany
+17%
+25%
2008
2009
2010e
Note: figures represent volume development of plane ground blocks with thin-bed mortar
15
Strategy – Product Group Roof
ƒ Grow with the market (focus on regional markets)
ƒ Expand strong market positions in renovation market
ƒ Differentiate from competition through innovative products
ƒ System approach | benefit from new trading business opportunities
(KoraTech®)
16
Wienerberger as „One-stop Shop“ for Roofers
KoraTech® Technical Roof Accessories
KoraTech:
ƒ Enlargement of the
Wienerberger product portfolio
through technical fittings
ƒ Non-ceramic, technical
accessories for the roof
1
2
Ridge and hip roll
6
Ventilation system
3
Snow retention
7
Storm fixation
Solar system
8
Chimney connection
roll
4
Valley
9
Roof inspection
5
Underlay
10
11
Eave
Roof window
17
KoraTech® – Rationale and Potential
ƒ Started in 2006 in the Benelux |
meanwhile distributed in all clay roof tile
markets
+20%
ƒ Objectives:
+38%
- System approach – “one-stop shop”
for the roofer
- Create higher revenues per m2 roof
ƒ Currently about 4% of clay roof tile
2009
2010e
2011e
revenues
ƒ Offers growth potential of 10 % p.a.
in the mid-term
Note: figures represent revenue development of KoraTech®
18
Strategy – Product Group Facade
ƒ Improve profitability by
- optimization of plant network (clustering of plants)
- optimization of product range (streamlining | customizing)
- better capacity utilization
ƒ Capitalize on our USP as a full service provider to strengthen
market positions and expand market shares
- Full range of facade products (international product range for facade products)
- Focus on sales and distribution | customer relationship
- System solutions: twin wall system as technical solution for low energy houses
ƒ Benefit from market rebound in the USA
19
Semmelrock – Key Facts
ƒ Leading supplier of high-quality concrete paving
products in CEE
ƒ Modern and efficient plant network:
- 19 plants in 8 countries + 3 export markets
- 7 new plants within the last 2 years
ƒ Wienerberger held a 75% stake since
1996 – acquisition of the remaining 25% in
Oct. 2010
Peak EBITDA margin (2008)
17.6%
Key facts 2009
ƒ Revenues
€ 125 mn
ƒ EBITDA
€ 18 mn
ƒ EBITDA margin
ƒ # Employees
14.4%
984
Semmelrock plants
Semmelrock export markets
20
Semmelrock – Product Range
Pavers
Slabs
Accessories
Fences
55%
15%
25%
5%
ƒ Used for private
ƒ Used for patios, courts,
houses, public
squares, walkways,
driveways, roads and
commercial areas
arcades, public places,
walkways, pedestrian
zones and commercial
areas
ƒ Borders, slopes,
ƒ Used for private and
edging, steps, design
elements, etc.
ƒ Used for public roads,
public gardens, parks,
hotels, restaurants and
commercial areas
driveways, commercial
areas, parkways, public
places and gardening
Note: % = Share of total Semmelrock Group revenues 2009
21
Semmelrock – Areas of Application
Residential
40%
Market sectors
Areas of Application
Garden Landscaping
Private Individuals
Private Investors
Patios, winter garden,
courtyards, arcades
Non-Residential
60%
Public Driveways
Commercial
Investors
(Contractors, Tenders)
Parking lots, driveways,
roundabouts, borders
City Design
Public Authorities
(Cities, Communities)
Public squares,
walkways, pedestrian
zones, lanes
SME Projects
Driveways, entrance
areas, hotels,
restaurants, etc.
Commercial Projects
Entrance areas,
walkways, shopping
malls, airports, etc.
Public Institutions
Schools, museums,
parks, etc.
Note: % = Estimated share of Semmelrock Group sales volume 2009
22
Semmelrock – Mid-term Growth Strategy
ƒ Benefit from operational leverage (~70% capacity utilization in 2010 Î
20-25% spare capacity)
ƒ Double volumes of premium USP products by 2014 (currently 10% of revenues)
- Pavers with surface protection technology and surface design technologies
- Interlocking jointing system
- Customized product solutions for public paving
ƒ Use opportunities to further consolidate the market in CEE
ƒ Use Wienerberger network as platform for further growth with limited
investments
- Entry of new markets with focus on renovation projects
- Leverage in-house greenfield know-how
23
Industrial Portfolio – Pipe Business
24
Pipelife – Key Facts
ƒ One of the leading international suppliers of plastic
pipe systems
ƒ 27 plants in 19 countries (Europe, USA)
ƒ 50/50 joint venture with Belgian partner Solvay
ƒ At-equity consolidated – not included in
operating results
ƒ Active further development
10.5%
Peak EBITDA margin (2005/06)
Key facts 2009
ƒ Revenues
€ 699 mn
ƒ EBITDA
€ 59 mn
ƒ EBITDA margin
8.4%
ƒ # Employees
2.457
Pipelife plants
Note: withdrawal from Spain (production) and Portugal (sales) has been announced in October 2010 and will be completed by year-end
Pipelife sales offices
25
Pipelife – Product Range
Civils (34%)
ƒ Transportation of
surface and
domestic water
below the ground
ƒ Gravity pipe
systems with
compact and
structured wall
pipes
Utilities (30%)
ƒ Transportation of
sustainable
drinking water and
energy together
with telecommunication
systems
ƒ High-value
recycling solutions
for protection and
flow of water &
energy
Buildings (20%)
ƒ Solutions for
reliable flow and
evacuation of
water inside
buildings
ƒ Product range of
electro systems
serves the needs
of electricians in
the domestic,
commercial and
industrial sector
Agriculture (8%)
Specialties (8%)
ƒ Drainage systems
ƒ Special
for agricultural and
non-agricultural
applications
ƒ Irrigation systems
for agriculture,
gardens or sports
grounds
developments for
special usages
(i.e. long length
large diameter
pipes for marine
applications,
Soluforce pipes for
use in oil flow
lines, water
injection and gas
transport)
Note: figures in % of total revenues 2009
26
64% of Pipelife Products Used in Infrastructure
Specialties
Agriculture
8%
Buildings
8%
Electro Buildings
(Hot & Cold, Soil)
20%
Infrastructure
Civils
Utilities
64%
27
Pipelife – Strategy
ƒ Capacity adjustments completed
- Production in Romania and Croatia closed but sales presence strengthened
- Closure of Spain and Portugal currently being implemented
ƒ Ongoing optimization to improve margins
- PipeFit program to reduce fixed costs in production and administration
- Focus on working capital management
ƒ Selective growth projects
- New Balkan factory (built over the last two years) has been started up
- Successful integration of Swedish competitor Westpipe, acquired in Q2 2010
- Further value-creating bolt-on acquistions
28
Steinzeug-Keramo – Key Facts
ƒ Worldwide operating and Europe’s largest
producer of ceramic pipe systems
ƒ 3 plants (2 in Germany and 1 in Belgium)
ƒ Acquisition in October 2010 to strengthen
business segment pipe systems
ƒ Synergies with current business
Key facts 2010e
ƒ Revenues
€ 70 mn
ƒ EBITDA
€ 8 mn
ƒ EBITDA margin
11.4%
ƒ # Employees
418
Steinzeug-Keramo plants
Steinzeug-Keramo markets
29
Steinzeug-Keramo – Pipes for Sewage Systems
Clay Pipes
(for open trench)
Jacking Pipes
(for microtunneling)
Fittings
(for open trench)
Accessories &
Inspection Chambers
57%
18%
18%
7%
ƒ Standard application
for municipal waste
water
ƒ Pioneer product for
modern market
development
ƒ Application wherever
open trench is
impossible (below
railroads, rivers,
buildings, city centers)
ƒ
ƒ
ƒ
ƒ
Bends
Junctions
Adaptors
Special fittings
Note: figures in % of Steinzeug revenues 2009
30
Steinzeug is Well Positioned after
Restructuring…
ƒ Core markets in Western Europe
ƒ Capacity and fixed cost restructuring
done in 2009/10
- Capacity adjustments
- Reductions in headcount
ƒ Cost optimization programs in place
- Optimization of administration, sales &
Revenue Split 2010e
by Regions
Others
Central-East
Europe
distribution
- Streamlining of logistic process
(order Î delivery)
Central-West
Europe
17%
35%
24%
24%
North-West
Europe
31
… to Benefit from Market Potential in CEE in
the Mid-term
ƒ Benefit from operational leverage | 40% spare capacity
ƒ Increase margin due to improved cost structure
ƒ Strengthen position in Western Europe:
ƒ
- Increase share of renovation projects
- Strengthen sales and distribution (acquisition of Societa del Gres in Italy)
Expand business in CEE
- Benefit from pent-up demand in CEE
- € 35 bn investments necessary for improvement of sewage systems in CEE
(partly funded by the EC) based on EU criteria for utility supply to be met by
new EU members by 2014
- Build on good market positions in Poland and Czech Republic
- Develop activities in Hungary, Romania, Bulgaria, Slovakia
32
Industrial Portfolio – Joint Ventures Roofing
33
Current Position
ƒ Bramac 50:50 JV (proportionate consolidation)
- Concrete roof tile producer with 11 plants in 7 CEE countries
ƒ Tondach Gleinstätten (25% stake, at-equity consolidation)
- Clay roof tile producer with 19 plants in 9 CEE countries
Both companies implemented ongoing restructuring
measures to reflect weak market environment
34
Industrial Stakes under Review
ƒ Both companies are established players with leading market
positions in CEE
ƒ Well positioned brands in the roofing segment
To strengthen our position an integrated footprint is needed
35
Conclusion Product Portfolio
Strong exposure to new built and private sector:
New built
Clay blocks
Renovation
Roof
Facing bricks
Private sector
Public sector
Infrastructure
Clay blocks
Pavers
Pavers
Facing bricks
Pipes*)
Pipes*)
Roof
GROUP
(in % of revenues)
70%
30%
75%
25%
<10%
Source: Company information
*) Pipelife consolidated at equity
ƒ Strategic consideration:
- Selective bolt-on projects in all product groups (e.g. Rimmele in Germany)
- Enlarge exposure to renovation and public sector
36
Wienerberger Key Markets
37
CEE Still Offers Huge Market Potential for
Growth
ƒ Increasing number of housing starts until 2007
ƒ Hit by economic crisis end of 2008
ƒ Average # of housing starts per 1,000 residents in 2007 at 3.5
(Western European average above 5.0)
ƒ Pent-up demand still there
Î Big market potential over time
10,0
Housing starts (residential) per 1,000 residents
8,0
Western European average 2003-2008 = 5.95
6,0
4,0
2,0
3.8
3.8
3.6
3.2
3.0
Potential
1.0
0,0
SK
PL
CZ
HUN
ROM
BUL
Source: Euroconstruct 6/2010, data for 2009
38
Central-East Europe – Strategy
ƒ Strengthening / broadening our operations in CEE
ƒ No further pricing measures planned
ƒ Clay blocks:
- Further increase share of premium products
- Improve capacity utilization
ƒ Roof tiles:
- Roll-out of system approach (KoraTech®) to Eastern Europe
(example: launch of sturmFIX in Poland in 2010)
ƒ Pavers:
- Further increase share of premium products
- Improve capacity utilization
39
Poland – Strategy
7% of Group Revenues
ƒ Benefit from relatively well-performing Polish economy
ƒ Increase capacity utilization
ƒ No further price cuts planned
ƒ Gain market share in all product groups
- Clay blocks:
- Further expansion of premium products
- Roof tiles:
- Ongoing cost reduction
- Lauch of new products
40
Outlook on other CEE Markets for 2011
Limited visibility on all markets:
ƒ Hungary: recovery from low level possible | increase in revenue and
earnings expected
ƒ Czech Republic: stable development in housing market expected |
impact of planned government measures unclear
ƒ Slovakia: stable development in housing market expected |
unemployment might have negative impact
ƒ Romania: no recovery expected | high mid-term potential
ƒ Bulgaria: weak housing market on low level | high mid-term potential
41
Central-West Europe – Strategy
ƒ Clay blocks:
- Strengthening of sales & distribution
- Further increase share of premium products (e.g. infill block)
ƒ Roof tiles:
- System approach (insulation products, KoraTech® )
- Streamlining of product range
- Work alliance Î increase cross-border transactions
42
Germany – Strategy
14% of Group Revenues
ƒ 4% increase in building permits expected in 2011
ƒ Strengthening of sales & distribution to enforce stronger market
ƒ
ƒ
ƒ
ƒ
presence
Optimization by cross-border cooperation with Benelux and France
Clay bocks:
- Infill blocks with good sales performance Î further increase of market share
Roof tiles:
- Regionalization and streamlining of model policy
- Create “pull effect” by roofers with the advantages of a system provider
Facing bricks:
- Relaunch in core markets (North + North West) after closing factories and
reproducing product range
43
USA: Potential to Reach a Normalized Level
8% of Group Revenues
3.000
120,0%
Housing starts USA (in 1,000)
2.500
100,0%
2.000
80,0%
1.500
60,0%
Normalized level
1.000
40,0%
500
20,0%
Potential
Source: NAHB
0
1960
0,0%
1970
1980
1990
2000
2010
ƒ New residential construction at lowest level since World War II
ƒ Population growth of 1% per year (approx. 3 mn) | need for replacements
ƒ USA was never “overbuilt“ -> normalized level should equal 1.3 to 1.5 mn new
housing starts
ƒ Wienerberger capacity reserves:
- ~50% of available capacity is currently mothballed
- Additional ~50% of capacity reserves in plants on stream (vs 2009)
44
USA – Strategy
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
Most modern (mega) plant network | no further growth investments
Cost base and capacity adjusted to market demand
Budget 2011 based on 600,000 housing starts and stable pricing
Full-range supplier of premium facade products
Benefit from higher capacity utilization
Streamlining of distribution – reorganization of trading business
- Direct distribution: 39 sales outlets
- Trading business: 35% of revenues come from sale of brick-related products
(mortar, accessories, etc.)
- Objective: increase merchandise component of direct sales to improve fixed
cost coverage
45
Emerging Markets – Gaining Further Experience
46
Russia – Overview
ƒ 3 plants:
- Kiprevo 1+2: clay blocks / facing bricks
Murmansk
Finland
Tallinn
Kaliningrad
Riga
Lith.
Vilnius
Est.
Lat.
Helsinki
(Moscow area)
- Kazan: clay blocks
Kiprevo (1 clay block |
1 facing bricks)
Kareliya
Petrozavodsk
St.Peterburg
Arkhangelsk
Pskov
Novgorod
(Tatarstan area)
Nar’yan-Mar
ƒ Test market
Minsk
Belarussia
Tver’
Vologda
Kazan Komi
(1 clay block)
Smolensk
Syktyvkar
Moscow Yaroslavl’
Kostroma
Bryansk Kaluga
Ivanovo
Kiev
Vladimir
Tula
Kirov
Kursk Orel
Ryazan’ NizhniyLipetsk
Novgorod Yoshkar-Ola
Belgorod
TambovSaransk Cheboksary
Perm’
Izhevsk
Ukraine
Kazan
Voronezh
Penza
Tatarstan
Yekaterinburg
Ul’yanovsk
Samara
Ufa
Saratov
RostovTyumen’
Chelyabinsk
Volgograd
on-Don
Bashkortostan
Krasnodar
Kurgan
Orenburg
Omsk
Elista
Stavropol’
Astrakhan’
- Clay blocks (premium segment) well accepted
- Competition in facing bricks business
ƒ Very weak market environment since end
2008
ƒ Market has recovered over the last months
Road Distances:
Novosibirsk
Moscow ¨ Saint-Petersburg 765 km
Moscow ¨Kazan 818 km
Saint-Petersburg ¨Kazan 1606 km
47
Kremlin Plans to Concentrate on 20 Agglomerations
(20 Agglomerations instead of 83 Regions)
Murmansk
Finland
Tallinn
Kaliningrad
Riga
Lith.
Vilnius
Lat.
Est.
Helsinki
Kareliya
Petrozavodsk
St.Peterburg
Pskov
Novgorod
Kiprevo (1 clay block |
1 facing bricks)
Arkhangelsk
Nar’yan-Mar
Minsk
KazanKomi
(1 clay block)
Tver’
Vologda
Smolensk
Syktyvkar
Moscow Yaroslavl’
Kostroma
Bryansk Kaluga
Ivanovo
Kiev
Vladimir
Tula
Orel
Kirov
Kursk
Ryazan’ NizhniyLipetsk
Novgorod Yoshkar-Ola
Belgorod
TambovSaransk Cheboksary
Perm’
Izhevsk
Ukraine
Kazan
Voronezh
Penza
Tatarstan
Yekaterinburg
Ul’yanovsk
Samara
Ufa
Saratov
RostovTyumen’
Chelyabinsk
Volgograd
on-Don
Bashkortostan
Krasnodar
Kurgan
Orenburg
Omsk
Elista
Stavropol’
Astrakhan’
Belarussia
Wienerberger is operating in
two of these agglomerations!
Novosibirsk
Planned agglomerations
Wienerberger plants
48
Russia – Strategy
ƒ Clay blocks:
- Short-term: increase market penetration of Porotherm blocks
- Long-term: upgrade of product portfolio with plane ground blocks
- Sales through merchants only
ƒ Facing bricks:
- Cooperation with designers and architects
- Introduction of new forms, surfaces and colors
- Intensify marketing efforts
ƒ Expansion through bolt-on activities
49
India – Key Facts and Strategy
ƒ Current position
- Test market: one clay block plant in the Bangalore area
- Our products are well received
ƒ Challenging
-
Cost mangement / production
Optimization of kiln and dryers
Frequent power cuts
Fine-tuning of products to local needs
ƒ Strategy: main focus on “natural” market of Bangalore
- Focus on institutional sales and large housing projects |
expand retail sales
- Emphazise contact to major builders
- Increase brand awareness
ƒ Explore new growth opportunities via bolt-on projects
50
Conclusions for Wienerberger
Emerging markets portfolio reviewed and strategy confirmed
ƒ Lessons learned
ƒ Strong management team in place
ƒ Further exploitation of market potential
Î Further development of our businesses in India and Russia
51
Wienerberger Investor Relations
Wienerberger AG, A-1100 Vienna, Wienerbergstrasse 11
Tel +43 1 60192 - 471, Fax +43 1 60192 - 466
[email protected] | www.wienerberger.com
52