Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Wienerberger AG (WBRBF, Financial) successfully integrated Terreal, its largest acquisition, ahead of schedule, enhancing its growth strategy.
- The company has made significant strides in modernizing its plant network, including a world-first industrial kiln in Austria that produces decarbonized bricks.
- Wienerberger AG has maintained a strong focus on cash management, resulting in a nearly EUR 200 million improvement in free cash flow compared to the previous year.
- The company has diversified its portfolio, with more than half of its turnover now coming from renovation and infrastructure, providing stability amid market fluctuations.
- Wienerberger AG is optimistic about future growth, with plans to increase prices in 2025 to offset expected cost inflation.
Negative Points
- The company faced challenges in Q3 2024, with lower volumes in the US due to election uncertainties and weather-related disruptions.
- Wienerberger AG experienced a subdued market for new residential housing in Europe, with activity levels below those seen during the 2009 crisis.
- The integration of Terreal contributed less than expected to EBITDA due to weak markets in Germany and France.
- The company faced inefficiencies and standstill costs due to restructuring and low utilization rates, particularly in Western Europe.
- Pricing pressure in Eastern Europe led to a negative price-cost spread, impacting overall profitability.
Q & A Highlights
Q: How do you see the pricing situation developing, especially in Western Europe, and what impact did the weather have on your US operations?
A: The weather significantly affected our US operations, particularly in the southern regions, which account for over 50% of our turnover. This impact will likely spill over into next year. Regarding pricing, we are managing it tightly and expect a slight improvement in Q4. We are preparing for potential price increases in 2025 to offset expected cost inflation.
Q: Can you provide an estimate of Terreal's contribution to EBITDA next year, and what are your expectations for 2025?
A: Terreal is expected to contribute around EUR100 million to EBITDA next year, up from EUR70 million this year. For 2025, we anticipate being well above EUR800 million in EBITDA, driven by improved capacity utilization and operational leverage.
Q: What is your stance on pricing for next year, and how do you plan to address standstill costs?
A: We aim to cover cost inflation with price increases next year. Standstill costs are primarily due to low utilization rates, and as volumes recover, these costs will be absorbed. We expect some inefficiencies from restructuring to disappear next year, contributing positively to EBITDA.
Q: Can you quantify the pricing elements per region and elaborate on your cost-saving plans for 2025?
A: Pricing is down 5% in Eastern Europe, stable in Western Europe, and up 1% in North America. We expect a 2-3% price increase next year to offset a 3-3.5% cost inflation. Cost-saving measures will continue as part of our ongoing business optimization.
Q: How do you plan to manage inventory levels and production inefficiencies moving forward?
A: We have adjusted inventory levels to align with market demand, which involved temporary plant shutdowns and mothballing. As demand stabilizes, production levels will increase, improving fixed cost absorption. We are satisfied with our current inventory levels and do not foresee further reductions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
