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UPDATE 2-Brickmaker Wienerberger warns of hard times in Europe
August 21, 2012 / 9:43 AM / 5 years ago

UPDATE 2-Brickmaker Wienerberger warns of hard times in Europe

* CEO says assumes 2012 profit, drops reference to sharp gains

* Q2 EBITDA falls to 102 mln euros vs Reuters poll avg 107 mln

* Cites impact of European debt crisis, harsh winter

* Shares fall as much as 5.3 percent

By Angelika Gruber

VIENNA, Aug 21 (Reuters) - Wienerberger, the world’s largest brickmaker, has dropped its forecast for a sharp rise in sales and core profits this year, warning that the economic malaise from the euro zone debt crisis is enveloping markets across Europe.

“We have to brace for hard times,” Chief Executive Heimo Scheuch told reporters in reporting slightly worse than expected second-quarter results, saying the decline had spread from Hungary, Romania and Bulgaria to the more significant markets of Poland, France, Belgium, the Netherlands and Britain.

Wienerberger’s shares fell as much as 5.3 percent to 6.39 euros, the lowest since late 2009, before regaining some ground to trade at 6.50 euros by 0915 GMT.

They were the worst performer by far in the Stoxx Europe 600 construction sector index, which was up 1 percent.

The company said the crisis of confidence spawned by the debt woes and resultant austerity had led to “significant weakness in the new residential construction and renovation markets in the group’s European core markets”.

However, Wienerberger’s small but growing businesses in Russia, India and the United States continued to prosper, the company said.

The group’s earnings before interest, tax, depreciation and amortisation (EBITDA) fell nearly 9 percent to 102 million euros ($126 million) in the second quarter, missing the average forecast of 107 million given in a Reuters poll of analysts.

Analysts polled by Reuters before the results had on average expected EBITDA for the full year to rise 15 percent to 298 million euros but had forecast a net loss of 3.6 million.

Despite the lowered expectations for the full year, Scheuch said: “I absolutely assume that Wienerberger will make a profit in 2012.”

Wienerberger’s main customers are in the private sector so it has less to lose from public-sector austerity campaigns as countries try to whip their finances back into shape.

Holcim, the world’s second-biggest cement maker, last week said it was cutting costs and raising prices to counter deteriorating demand in cash-strapped Europe and high energy costs.

Holcim and rivals Lafarge, HeidelbergCement and Cemex have been trying to pass on a surge in electricity, coal and oil costs to customers by raising the prices of their products.

Wienerberger also unveiled a plan on Tuesday to cut costs by 40 million euros by the end of 2013, with a one-off cash cost of 15 million euros.

The company had said in May it expected significant growth in revenue and EBITDA this year thanks to the full consolidation of plastic pipe maker Pipelife, in which it bought the half it did not already own in February.

The deal was aimed at reducing Wienerberger’s reliance on the residential construction market.

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