Wienerberger AG (WBRBY) Q4 2024 Earnings Call Transcript

2025-02-28 17:44:02 ET

Wienerberger AG (WBRBY)

Q4 2024 Results Conference Call

February 26, 2025 2:00 AM ET

Company Participants

Therese Jander - SVP IR

Heimo Scheuch - CEO

Gerhard Hanke - CFO

Conference Call Participants

Brijesh Siya - HSBC

Axel Stasse - Morgan Stanley

Yassine Touahri - On Field Investment Research

Gregor Kuglitsch - UBS

Tobias Woerner - Stifel

Harry Goad - Berenberg

Presentation

Therese Jander

Good morning, ladies and gentlemen, and I hope you're all well. A warm welcome to the Wienerberger conference call. Our Board representative today is Mr. Heimo Scheuch, our CEO; and Gerhard Hanke, our CFO. And they will walk you through the presentation and are ready to take your questions afterwards.

So then I will hand over to Mr. Heimo Scheuch.

Heimo Scheuch

Thank you, and a warm welcome also from our side, Gerhard and myself. Today, we welcome you from Belgium from our biggest showroom in Wienerberger, north of Brussels, and glad to have you all on the phone. This time when we go through the presentation, I've put the shareholder letter in front, and it made me think that more than 10 years ago, I had the pleasure to sit with Warren Buffett in his office in the United States, and we discussed about the development of North America, especially the U.S. and about Europe. And I must say to all of you, it was very challenging, interesting and rewarding this more than an hour conversation because a lot of things that he actually said 10 years ago became true in this world. So it was fascinating. And he said one thing before I left, said he said to me, Heimo, always put the people in front and communicate well with them. So I thought we put the letter in front of this presentation. So to give you a good update and a detailed one about our group, our culture, our values and the people that are behind it.

And when you look through the performance of Wienerberger in 2024, it is a very remarkable performance because it comes actually in the light of a very volatile market and a market that -- or end markets that have been changing drastically throughout the year '24. And it's due to the enormous performance and the great performance of our more than 20,000 colleagues that we can achieve and say it's the third best year when you look at our operating EBITDA with EUR 760 million and the resilience of our business model. These people where we invest a lot in training, in sort of growing them throughout the company and making them great managers and also great people on the shop floor, we put a lot of effort in, and I'm glad to report that this is growing the momentum, and we put a lot of emphasis on HR development within Wienerberger.

When we talk about '24, let me just say a couple of words on the year itself. When we came together a year ago, and I explained to you how we see the year, we assumed that especially the new residential housing market, both in North America and in Europe would do much better. That's why I inserted this slide about the market development. We assumed that, obviously, not only rate cuts will take place and that the economy would do much better, especially in Europe, and there will be a stronger recovery in the new residential housing market in all of our markets.

However, this didn't materialize. We saw, obviously, after the second quarter that here, there's no momentum building. On the contrary that the new residential housing market is actually declining. This has to do with 3 major reasons when we look back to 2004. There were obviously high interest rates. There was also an increasing political instability due to the election year and elections in most of our major markets and a lot of sort of instability also when it came to financing, changing rules, regulations, bureaucratic burdens, et cetera. So there was not a very positive momentum nor in the U.S. nor in Europe when it comes to new residential housing, especially in the 1 and 2 family house new residential building.

So this obviously led us to a decreasing activity here, and this affected, obviously, our markets, end markets tremendously and substantially. That's why we revised the market outlook and adjusted our forecast accordingly. So I just wanted to make clear, when I give an expectation for a year, I base ourselves on a certain type of market development. That's the snapshot that we take at this time and our forecast that we do for the year. But obviously, when events like this happen throughout the year, you need to take them into consideration and obviously build it then in an actual forecast. So it's not a profit warning as such because that would be a different way forward. But if you say that you will, under certain conditions, achieve a certain result and the conditions that we put in place are not met due to the external events, then we need to adjust. Just this is a walk-through of the year 2004.

When you look at, as I said, the Wienerberger portfolio, and you remember very clearly that our major goal was over the next -- the last couple of years to have a stronger portfolio, a diverse portfolio and more resilient portfolio. That's why we put so much emphasis on renovation and on infrastructure. And you see that these 2 parts of our business, which are roughly more than 50% right now, perform much more stable, are resilient in such difficult market when it comes to interest rates, when it comes to political instability.

And the segment that obviously takes advantage the most if there's a positive sentiment, but also suffers the most when it's critical, it's the new residential housing market. And that's for the reasons that I mentioned already, why we had a rather difficult year in '24. And obviously, in markets like Germany, Austria and around certain parts of Europe, the market was really, really bad.

When we look at our response, it was a response that was drastic. It's very quick, fast as we always interfere in such situations when we go into the business, we cut production cost structures, streamlined our operations and reduced dramatically fixed cost savings.

You will see in the presentation of -- and the slides that Gerhard will walk you through how drastic we moved in the business and how we kept margins on a very satisfactory level in this year. And when you look at the roofing part, I can only say that here, we have gained momentum. We have also invested in the business in order to be here ready for further growth, especially in the U.K. and Eastern Europe when it comes to the new installations that we are currently under construction and in the U.K. already under operations. We have significantly upgraded our piping industrial network from the north to the western part with very high modern and performing plants. So here, again, ready for further growth in this division....

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