Growing back to health.
Brick firm has positive cashflow, despite weak demand
Published: 15 January, 2010
VIENNA: Wienerberger AG, the world's largest producer of bricks, was hit by effects of the global economic and financial crisis during the first nine months of 2009.
The company recorded a 26% decrease in revenues to €1,416.7m and 51% lower operating income before interest and taxes and depreciation and amortisation of €177.5m. Earnings before interest and taxes was 83% at €36.7m.
"The year got off to a weak start in all our markets," said Heimo Scheuch, the company's chief executive officer.
"Sales volumes fell dramatically, especially in Central-East Europe and North America, and new residential construction continued to contract across Western Europe - above all in Great Britain, the Netherlands and France," he explained.
"Although volume declines were more moderate during the summer, September remained below expectations - especially in the US and Eastern Europe - and there are no signs that the downturn in the operating business will soon bottom out.
"The only improvement in volumes was reported by Great Britain, with a slight increase over the low prior year level in September. This still cannot be interpreted as a change in trend. For these reasons, cash preservation and reduction in fixed costs will remain our top priority," Mr Scheuch emphasised.
Wienerberger reacted to the sharp decline in demand during the first quarter with an extensive action plan. After removing 27 plants from the production network in 2008, the measures originally defined for 2009 involve the shutdown or mothballing of another 26 plants to match market conditions as well as active working capital management to reduce inventories by at least €100m, a decrease in fixed costs through restructuring in sales and administration, and a cutback in investments to a minimum.
Higher cash flows and earnings are expected in 2010.
"It is too early to speak of recovery from today's perspective because the economic environment is still difficult, but the measures we have implemented lead me to be more optimistic about 2010," Mr Scheuch stated. "Even if demand remains weak, I expect the coming year will bring considerable improvement in earnings and cashflow, due to the cost savings realised through our action plan and an improved utilisation of capacity in our plants."