Investor and Analyst Presentation Results Q1-3 2017
Disclaimer Cautionary note regarding forward-looking statements The information contained in this document has not been independently verified and no representation or warranty expressed or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of this information or opinions contained herein. Certain statements contained in this document may be statements of future expectations and other forward-looking statements that are based on management s current view and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. None of Wienerberger AG or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its content or otherwise arising in connection with this document. This document does not constitute an offer or invitation to purchase or subscribe for any securities and neither it nor any part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. 2
Highlights Q1-3 2017 Increase in revenues and EBITDA by 4% Successful implementation of growth projects in all areas of business On track to realize savings goal from Operational Excellence (Q1-3 17: 7 mn) Significant increase in net result by 38% 3
Revenue growth and stable EBITDA in Q3 2017 Increase in revenues by 3 % Clay Building Materials Europe Earnings increase in growth region Eastern Europe Diverging trends and earnings decline in Western Europe Pipes & Pavers Europe Increase in public tenders and earnings growth in Eastern Europe Solid market development in Nordics and the Netherlands Weak international project business and earnings decline in France North America Growth of pipe activities and the Canadian business US brick business burdened by wet weather Restrained development of business results in stable EBITDA Results development Q3 2017 in mn 810 832 800 600 400 200 124 125 0 Revenue EBITDA 2016 2017 4
Slight adjustment of growth target for 2017 Temporary weakness in individual regions and one-time effects burden earnings growth Deviations from our expectations for organic growth at the beginning of the year: Positive Strong growth of residential construction in Eastern Europe Healthy demand in UK brick business Pick-up in public tenders for infrastructure projects in Eastern Europe Negative Weak international project business in the course of the entire year Restrained demand and price pressure in French piping market Strong margin pressure due to cost increase for plastic granulates in H1 Gradual implementation of price increases in the course of Q3 Significant delays of construction in Belgium due to supply shortage and strong price increases for insulating materials No improvement in Q3 and Q4 Decline in demand in the German one- and two-family home segment Repercussions of wet weather on the US brick business in Q3 EBITDA target 2017 in mn 420 410 400 390 380 370 360 350 415 EBITDA target at the beginning of the year 405 EBITDA target 2017 5
Growth projects 2017
Growth Projects Value creating growth projects in 2017 FACING BRICK PLANT COLUMBUS BRICK CLAY BLOCK PLANT REETZ PREFLEX GROUP Contribution to Group results* Revenues ~ 90 mn EBITDA ~ 16 mn Ø EV/EBITDA Multiple ~ 6.5x * 12M revenues and earnings potential CLAY BLOCK PLANT BRENNER CLAY BLOCK PLANT BRIKSTON 7
Growth Projects Clay block plant Reetz Strategic rationale Geographic expansion of the existing plant network Further consolidation of German and Polish clay block markets Capacity extension for infilled clay blocks Fast integration into strong German country organization Reetz Key facts 45 employees Annual revenues of 12 mn Capacity of 190 MNF 100 km south-west of Berlin Plane ground blocks and infill blocks Small formats, lintels and accessories Traditional bricks for load-bearing and non-load bearing walls 8
Growth Projects Preflex Group Strategic rationale Broadening of product portfolio in growth market for prewired electro conduits Platform for future growth Synergies in procurement and production Key facts 50 employees Annual revenues of 33 mn Capacity of 100,000 km Production sites in BE and FR as well as strong export markets Prewired conduits for telecommunication, energy and lighting Empty conduits 9
Growth Projects Clay Block Plant Brenner Strategic rationale Geographic expansion of the existing plant network Significant step to improve customer proximity in Austrian home market Closing of the transaction expected for Q4 2017 Brenner Key facts 30 employees Annual revenues of 9 mn Capacity of 98 MNF Production site in St. Andrä im Lavanttal, Carinthia Plane ground block Special bricks High load bearing brick Brick ceiling 10
Growth Projects Clay Block Plant Brikston Strategic rationale Optimal geographic expansion of the existing plant network Takeover of a company with a strong brand, a broad product portfolio and a modern culture The completion of the transaction is subject to approval by the competition authority Key facts 200 employees Annual revenues of 16 mn Capacity of 200 MNF Production site in Iasi, Romania Clay blocks Bricks for interior walls Small formats Specialities 11
Growth Projects Facing Brick Plant Columbus Brick Strategic rationale Strengthening of our market positions in important US brick markets: Mississippi, Alabama and Louisiana Highly efficient facility represents perfect complement to our geographic plant network Strong brand and attractive portfolio of high quality products Key facts 75 employees Annual revenues of USD 23 mn Capacity of 140 MNF Production site in Columbus, MS Columbus Brick 12
Announced projects will contribute substantially to growth targets Agenda for growth projects completed for 2017 EBITDA contribution will amount to a low single digit million amount in the current business year Revenues and earnings potential on 12M basis Revenues ~ 90 mn EBITDA ~ 16 mn Ø EV/EBITDA multiple of 6.5x Structured evaluation of attractive pipeline of projects for 2018 Consistent execution on strategic growth goal 13
Key Figures
Revenue and earnings growth in Q1-3 2017 Revenues 2,361.0 mn (Q1-3 2016: 2,279.7 mn +4%) EBITDA 315.0 mn (Q1-3 2016: 302.6 mn +4%) LFL 1) : +4% LFL 2) : +4% Operating EBIT 174.2 mn (Q1-3 2016: 154.3 mn +13%) Net result 94.7 mn (Q1-3 2016: 68.7 mn +38%) 1) Adjusted for effects from consolidation and FX 2) Adjusted for effects from consolidation, FX, sale of non-core assets and portfolio optimization 15
Revenue growth in Q1-3 2017 2,500 2,400 +2% +0% 2,361.0 +2% -1% 2,300 2,279.7 in mn 2,200 2,100 2,000 Revenue Q1-3 2016 Sales volume Sales price Consolidation effect FX-effect Revenue Q1-3 2017 Note: Rounding differences may arise from automatic processing of data 16
Organic EBITDA development 320 315.0-3.0 312.0 310 302.6-2.7 in mn 300 299.9 290 280 EBITDA Q1-3 2016 reported 1) EBITDA Q1-3 2017 2) reported Adjustment EBITDA Q1-3 2016 basis Adjustment EBITDA Q1-3 2017 LFL 1) Earnings effects from the sale of non-core assets, consolidation and portfolio optimization 2) Earnings effects from the sale of non-core assets, consolidation and FX Note: Rounding differences may arise from automatic processing of data 17
Income statement in mn 1-9/2016 1-9/2017 Chg. in % Revenues 2,279.7 2,361.0 +4 EBITDA 302.6 315.0 +4 Depreciation and amortization -148.3-140.8 +5 Operating EBIT 154.3 174.2 +13 Reversal of impairment charges to assets Impairment charges to goodwill 0.0-6.0-100 EBIT 154.3 168.2 +9 Financial result -24.0-24.9-4 Profit before tax 130.3 143.3 +10 Income taxes -36.3-36.0 +1 Profit after tax 94.0 107.3 +14 thereof attributable to non-controlling interests 1.2 2.0 +66 thereof attributable to hybrid capital holders 24.1 10.6-56 Net result 68.7 94.7 +38 Note: Rounding differences may arise from automatic processing of data 18
Cash flow development in mn 1-9/2016 1-9/2017 Chg. in mn Chg. in % Gross cash flow 258.4 227.5-30.9-12 Change in working capital 1) -119.5-183.4-63.9-53 Normal capex -80.4-90.8-10.4-13 Divestments and other 10.7 21.7 +11.0 >100 Free cash flow 69.2-24.9-94.2 <-100 Growth capex -30.6-10.5 +20.1 +66 Dividend / hybrid coupon 2) -61.9-61.6 +0.3 +1 Net cash flow -23.2-97.0-73.8 <-100 1) Adjusted for changes in the consolidation range 2) Including dividends paid to and changes in non-controlling interests and buy-back of hybrid capital Note: Rounding differences may arise from automatic processing of data 19
Development of net debt 800 700 631.6 +114.7 681.6 600 +101.3 500 +61.6 in mn 400-227.5 300 200 100 0 1) 31/12/2016 Gross cash flow Dividend / hybrid coupon Total investments Working capital & Others 30/9/2017 1) Including dividends paid to and changes in non-controlling interests Note: Rounding differences may arise from automatic processing of data 20
Development of balance sheet ratios in mn 30/9/2016 31/12/2016 30/9/2017 Chg. in % vs. 31/12/2016 Equity 1) 2,048.4 1,849.0 1,875.4 +1 Equity ratio 55% 51% 51% - Net debt 550.0 631.6 681.6 +8 Net debt / EBITDA 2) 1.5 1.6 1.6 - Gearing 27% 34% 36% - Net debt / EBITDA is only slightly above the prior year level despite the reclassification and refinancing of the hybrid bond 2007 with a volume of 222 mn 1) Including non-controlling interest and hybrid capital (100% equity according to IFRS) 2) Calculation based on 12-months EBITDA Note: Rounding differences may arise from automatic processing of data 21
Strong liquidity and balanced financing structure Cash 30/9/2017: 111 mn Credit lines: 400 mn Thereof drawn 30/9/2017: 88 mn Term structure: 400 300 in mn 200 Undrawn credit lines First-Call Date Hybrid 100 0 2017 2018 2019 2020 2021 after 2021 Maturities Drawn credit lines Cash balance Note: Term structure of gross debt, cash position and financial liabilities as of 30/9/2017 22
Segment results
Results by Segment Revenues: 2,361.0 mn +4% EBITDA: 315.0 mn +4% Clay Building Materials Europe Pipes & Pavers Europe North America Holding & Others +4% +4% +9% +26% -3% -35% +5% +6% +6% +22% 1,000 924 800 in mn 600 400 200 0-200 144 CBM Western Europe 421 435 98 CBM Eastern Europe P&P Western Europe 340 234 34 32 21 P&P Eastern Europe North America 6-15 Holding & Others External revenues EBITDA CBM Clay Building Materials P&P Pipes & Pavers 24
Results Q1-3 2017 by Product group EBITDA margin of 13.3% (Q1-3 2016: 13.3%) 16% 21% 15% 11% 8% EBITDA margin 744 700 547 574 500 407 in mn 300 100 88 86 88 88 9 60 0-100 Wall Roof Facade Pavers Pipes Holding & Others -16 Revenues EBITDA 25
Clay Building Materials Western Europe Results 1-9/2017 CBM Western Europe (in mn) 1-9/2016 1-9/2017 Chg. in % External revenues 1-9/2017 External revenues 890.6 923.8 +4 EBITDA 139.4 144.4 +4 EBITDA margin 15.7% 15.6% - 39% Market growth and revenue increase in the UK, France and the Netherlands Significant delays in building construction in Belgium Price increases compensate volume decline Shortage of supply and increase in prices for PUR/PIR insulating materials unexpectedly continued in Q3 Declining demand in German one- and two-family housing segment Successful completion of a takeover of a clay block plant in the Berlin area 26
Clay Building Materials Eastern Europe Results 1-9/2017 CBM Eastern Europe (in mn) 1-9/2016 1-9/2017 Chg. in % External revenues 387.3 420.7 +9 EBITDA 77.5 97.8 +26 EBITDA margin 20.0% 23.3% - External revenues 1-9/2017 Positive development of residential construction of one- and two-family homes in Czech Republic, Poland, Hungary, Bulgaria, Slovakia and Croatia Healthy economic development in the region and government subsidies in several countries support building activity Stable development in Austria Takeover of a clay block plant to improve customer proximity in the South of the country will be completed by year-end Market decline in Russia 18% 27
Pipes & Pavers Western Europe Results 1-9/2017 P&P Western Europe (in mn) 1-9/2016 1-9/2017 Chg. in % External revenues 449.0 435.4-3 EBITDA 53.0 34.3-35 EBITDA margin 11.8% 7.9% - External revenues 1-9/2017 18% Plastic pipes Healthy market environment and revenue growth in Nordic core markets and the Netherlands Very weak order book in the international project business and unsatisfactory development of results in challenging French market burden results Gradual price increases in Q3 to compensate for strong cost increases of raw materials Ceramic pipes Improvement of average prices as well as cost optimization measures compensate significant volume decline resulting from missing exports to the Middle East 28
Pipes & Pavers Eastern Europe Results 1-9/2017 P&P Eastern Europe (in mn) 1-9/2016 1-9/2017 Vdg. in % External revenues 323.8 340.0 +5 EBITDA 30.2 31.9 +6 EBITDA margin 9.3% 9.4% - External revenues 1-9/2017 14% Positive impact on revenues and earnings from pick-up of tendering activity for EU-subsidised infrastructure projects Plastic pipes Volume growth results in increase of revenues and earnings Concrete pavers Significant earnings growth in Croatia, Czech Republic, Slovakia and Poland Improved profitability through the selective restructuring of our sales organization and cost optimization measures 29
North America Results 1-9/2017 North America (in mn) 1-9/2016 1-9/2017 Vdg. in % External revenues 220.3 234.0 +6 EBITDA 17.5 21.4 +22 EBITDA margin 8.0% 9.2% - External revenues 1-9/2017 10% Continued growth in US residential construction of one- and two-family homes Storms and wet weather in Q3 result in slow down of volume growth in Q1-3 Average prices improve compared to prior year s level Canadian business records volume growth and improved pricing Pick-up of activity compared to weather related weak Q2 Significant volume growth results in strong earnings improvement in the plastic pipe business 30
Outlook
Outlook 2017 Clay Building Materials Europe Diverging market developments in Western Europe Construction activity slightly above level of previous year in UK and NL Increase in new housing construction in FR Decline in demand in single- and two-family home segment in Germany Delays in construction due to supply shortage for insulating materials in Belgium Continuation of positive market trends in Eastern Europe Market growth > 2% Stable development Market decline < -2% Positive development of demand New construction and renovation measures supported by government subsidies in a number of markets Note: Estimates refer to developments in our relevant new construction and renovation markets for the clay block, facing brick and roof tile business. Source: Management estimate 32
Outlook 2017 Pipes & Pavers Europe Plastic pipes Healthy demand in Nordic core markets and the Netherlands Increase in EU-subsidised infrastructure projects and positive development of demand in Eastern Europe Order intake in the international project business below previous year s level Challenging market environment in France Ceramic pipes Stable development of demand in Europe Concrete pavers Improvement of market momentum as a result of increasing public demand Market growth > 2% Stable development Market decline < -2% Note: Estimates refer to developments in our relevant markets and applications in the pipe business. Source: Management estimates 33
Outlook 2017 North America New construction of single- and twofamily homes in our relevant markets above previous year s level Significant growth in sales volumes Mountain Region Midwest Mid-Atlantic Southeast Note: Estimates refer to developments in our relevant new construction and renovation markets for the facing brick business. Source: Management estimate 34
EBITDA growth in 2017 Organic development includes Increase in sales volumes and prices Savings from Operational Excellence of ~ 10 mn Not included are impacts from Foreign exchange effects Consolidation Sale of non-core assets Portfolio optimization For 2017 we expect negative foreign exchange effects and costs from portfolio optimization as well as a positive earnings contribution from the sale of non-core assets and from changes in the scope of consolidation EBITDA development in mn 420 410 400 390 382 380 370 360 405 Adjustment of the growth target for 2017 to 405 mn 350 EBITDA 2016 basis 1) Organic development EBITDA 2017 LFL 1) Adjusted for effects from the sale of non-core assets, consolidation and portfolio optimization 35
Outlook 2017 EBITDA LFL Depreciation & Amortization Net interest result WC in % of revenues Normal capex Growth capex 405 mn +6% ~ 190 mn ~ -35 mn ~ 20% at year-end ~ 145 mn ~ 85 mn 36
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