Building the future – Zoom in on innovative solutions
For us, innovation means creating solutions with added value. Such as the acquisition of Preflex, the Belgian pipe specialist. Its prewired electric conduits save our customers time and costs for electrical installations. And they help the Wienerberger Group fulfil its mission, which is to improve people’s quality of life through forward-looking solutions.
The illustration is a detail from the cover page. It symbolizes the innovative strength of Preflex as a contribution to the growth of the Wienerberger Group.
Work fast, be smart and think genius – this is Preflex’s motto. With the acquisition of the Belgian conduit manufacturer, Wienerberger is expanding its business in a rapidly growing segment. The company was established in 1993 and has become one of the largest manufacturers of pre-wired conduits for electrical installations in Europe. The advantages of these products are obvious: They are fast, easy, and safe to install, and the shorter installation times reduce the costs of construction projects.
Approximately 100,000 kilometers of conduits are produced every year at two sites in Belgium and France, with sales in more than ten European countries. This is more than 2.5 times the length of the equator. Preflex produces both empty as well as pre-wired flexible plastic conduits suitable for numerous applications, ranging from telecommunications to energy; this also includes lighting. In addition, customized solutions are also available.
We are using the changes our industry is undergoing as an opportunity to shape the market of the future and develop new lines of business. Innovations and targeted acquisitions play an important role in this regard. With the Belgian company Preflex, we are strengthening our business with pre-wired conduits for electrical installations. Moreover, we provide our customers with smart solutions with added value.
Heimo Scheuch, CEO of Wienerberger AG
Success Story #2 Columbus Brick – Core market North America
Building the future – Zoom in on new markets
North America is a pillar of our core business. Through the acquisition of Columbus Brick, a US producer of facing bricks, we gain access to another two US states, which strengthens Wienerberger’s position in the top ten brick markets. Moreover, new products have been added to our portfolio, such as genuine “papercut bricks” – each of them a unique piece of masonry.
The illustration is a detail from the cover page. The close-up symbolizes the acquisition of Columbus Brick as a building block for Wienerberger’s growth in the USA.
Growth steps strengthen our position in core markets
Columbus Brick – A brick professional with many years of experience
Deeper market penetration, new regions and a broader product portfolio: By taking over the Columbus Brick Company, Wienerberger strengthens its position in the US brick market. The family business is well established as a producer of facing bricks based in Columbus, Mississippi (USA). It has about 75 employees and manufactures up to 140 million units of brick per year. Established in 1890, Columbus Brick was managed by a direct successor of the founder of the company before it was taken over by Wienerberger.
The Columbus Brick product portfolio comprises about 40 types of facing bricks in many different colors and shapes, ranging from classic facing bricks for residential and commercial buildings to special high-end products, such as the “papercut brick”. Special facing brick formats are available for a variety of applications. Columbus Brick sells its products in more than eighteen US states, its main markets being Mississippi, Louisiana and Alabama.
We are focused on value-creating growth steps in existing markets. The acquisition of the Columbus Brick Company is an excellent opportunity for us to expand our US brick business. We are enlarging the market presence of General Shale, our subsidiary in the south of the country, by entering into the States of Mississippi and Louisiana, two markets with a high share of facing bricks.
Heimo Scheuch, CEO of Wienerberger AG
Success Story #3 Reetz & Brenner – Strengthening the portfolio
Building the future – Zoom in on a strong portfolio
Building materials have to meet ever more demanding criteria: they must be temperature-proof over a wide range, sustainable and energy-efficient. Wienerberger’s most recent generation of bricks filled with insulating material are an excellent example. New production sites, such as the Reetz clay block plant near Berlin, complement our portfolio in this future-oriented segment.
The illustration is a detail from the cover page. The close-up symbolizes the new production site at Reetz as a contribution to the Wienerberger Group’s growth.
Reetz & Brenner – High-performing brick plants for the region
Strategic growth steps: Reetz in Germany and Brenner in Austria are an excellent fit for our network of clay block production sites. The Reetz clay block plant near Berlin produces up to 190 million bricks per year. Its portfolio comprises innovative products with excellent thermal insulation properties, such as bricks filled with mineral wool. Thus, Wienerberger will benefit from the trend toward high-quality, energy-efficient single- and multi-family houses in Germany.
Brenner is a clay block producer based at St. Andrä in the Lavant Valley in Austria. Bricks have been produced there for 60 years. Currently, the plant has a production capacity of up to 98 million units of brick per year. By taking over this plant, Wienerberger is closing a gap in its regional market coverage, thus saving transport costs and positioning itself as a local supplier close to where its customers are.
We want to further develop those business areas where we see a high potential to create added value. The Reetz and Brenner clay block plants, which we recently acquired, are two modern, high-performing production sites with an attractive product portfolio. They strengthen our presence and our proximity to customers in the Berlin region, in Western Poland and in Southern Austria.
Willy Van Riet, CFO of Wienerberger AG
Natural high-tech products
Success Story #4 Brikston – Growth in Eastern Europe
Building the future – Zoom in on growth markets
Eastern Europe is an attractive market for the future. With strong companies, such as Brikston in Romania, the Wienerberger Group is poised for further growth. Modern plant and equipment as well as an attractive product portfolio are the perfect prerequisites for a successful future.
The illustration is a detail from the cover page. The close-up symbolizes the acquisition of Brikston as a step on Wienerberger’s growth course in Eastern Europe.
Eastern Europe is an important growth market for us
Brikston – A local supplier with a strong market position
A broad range of products and a valuable sales network: The acquisition of Brikston is an important step for Wienerberger, aimed at strengthening its presence in Romania and providing access to an attractive local market. This producer of clay blocks has about 200 employees and sells its products mainly in the north-east of the country. After the economic and financial crisis, Brikston repositioned itself and has since focused on sales in the Iasi region and exports to neighboring Ukraine and Moldova.
Wienerberger is taking over state-of-the-art capacities in a region where its presence to date has been very limited. The Brikston plant has the capacity to produce up to 200 million units of brick per year. It offers a broad range of products in over 40 clay block formats. Apart from its core business in large-format bricks, Brikston also holds a strong position in the niche segment of small-format bricks.
For us, Eastern Europe is an attractive market for the future. The region offers opportunities for cyclical as well as structural growth. Brikston ideally complements our presence in Romania and strengthens our local business. The company operates in a market where our coverage has been very limited to date.
Heimo Scheuch, CEO of Wienerberger AG
Chief Executive’s Review
2017 was a particular strong demonstration of our business plan execution, as we strengthened our industrial platform, accelerated our growth and delivered on a number of our commitments.
Ladies and Gentlemen,
2017 was a good year marked by notable milestones: We generated record revenues of over € 3.1 billion – the highest ever in the history of the Group. Our dedication to improving operations continues to deliver result, as we succeeded to increase our EBITDA for the fifth consecutive year, reaching € 415 million. Below the line, this translated into a significantly higher net profit of € 123 million, the highest in the last ten years.
We used the past year to strengthen our industrial platform and accelerate the pace of growth. In 2017, we acquired several companies: By taking over the Belgian Preflex Group, we strengthened our position in the fast-growing, profitable segment of prewired electric conduits. Acquisitions in Germany, Austria, Romania and North America broadened the geographic scope of our brick business in these markets. These newly acquired companies fit seamlessly with our existing operations, both geographically and strategically, and will create additional opportunities for growth in the coming years.
We will continue this course in 2018. Our goal is to maximize our long-term growth potential and create value for our shareholders.
2017 was a particular strong demonstration of our business plan execution, as we delivered on a number of our commitments. Despite our growth steps, we were able to reduce our net debt by 10%. A net debt/EBITDA of 1.4 years gives us the necessary flexibility for further growth. Highly satisfactory developed the ongoing cost optimization program. In 2017 alone, we achieved savings in a total amount of € 11 million. Our working capital management has been equally successful: Even after the integration of our most recent acquisitions, working capital stands at less than 20% of revenues.
Finally, we can also report substantial progress in the implementation of our Sustainability Roadmap 2020, ranging from the reduction of energy consumption to a clear commitment and substantially enhanced efforts on the part of all Business Units to reach the shared target of zero accidents. These examples show that our sustainable management approach is an important factor contributing to the long-term increase in the value of the enterprise. We are determined to continue working along these lines in the future.
Taken together, this shows that 2017 was a year of highly positive development for our Group. We will continue to pursue this course throughout 2018. Our objective is to maximize our long-term growth potential and create value for you, our shareholders. We are following a clear course and will remain focused on our three strategic priorities: organic growth, operational excellence and growth projects.
Today we are better positioned than ever to benefit from future development opportunities and the expansion of our platforms.
Our strong industrial portfolio and the continuous development of innovative products, services and system solutions constitute a solid foundation for the organic growth of the Wienerberger Group and are the essential pillars of our success.
We are constantly improving the way our organization works through initiatives aimed at enhancing efficiency, cutting costs and optimizing our processes. Relevant measures were initiated in the fourth quarter of 2017, starting with our plastic pipes business in France and continuing with our ceramic pipe activities at the beginning of 2018. In the area of clay building materials, we are restructuring our operational companies in Germany and Austria in order make them fit for the future. This will entail costs of approx. € 30 million. Nevertheless, in combination with our continuous cost optimization program, we expect to generate savings in a total amount of € 15 million in 2018.
Moreover, we will continue to strengthen our platform through the acquisition of growth-oriented companies generating high margins. We analyze potential takeover candidates for the added value and technical simplicity of their products, relevance in the local market, and reliability as partners for our customers. We are interested in companies that can be swiftly integrated into the existing industrial network and that perfectly complement our business. Currently, we see numerous attractive opportunities and have therefore earmarked at least € 200 million for growth investments in 2018.
Our organization has undergone an intensive process of transformation in recent years. Nevertheless, we are continuously reviewing all our business areas for their strategic orientation. If we identify individual assets that do not meet our criteria for future growth, we initiate a divestment process. From today’s perspective, we expect to generate proceeds of up to € 100 million from asset sales in the coming 24 months.
All in all, we are better positioned than ever to take advantage of future development opportunities and the expansion of our platforms. We have a strong balance sheet that enables us to reach our growth targets. Our experienced local management teams are capable of supporting and implementing our strategy of accelerated growth. And above all, we have a strong industrial base in all our business areas – infrastructure, new residential construction and renovation – both in Europe and in North America.
Overall, we expect to generate organic consolidated EBITDA of between € 450 and € 470 million in 2018. In view of our strategy and the measures we intend to implement, we are confident of meeting our ambitious targets. Strengthened by your trust and confidence, we look forward to continuing on this course together with you.
We generated record revenues of over € 3.1 billion – the highest ever in the history of the Group. Our dedication to improving operations continues to deliver result, as we succeeded to increase our EBITDA for the fifth consecutive year, reaching € 415 million. Moreover, we used the past year to strengthen our industrial platform by realizing growth projects. Below the line, this translated into a significantly higher net profit of € 123 million, the highest in the last ten years.
We want to be the most highly regarded producer of building materials and infrastructure solutions and the preferred employer in our markets. We share our values, our knowledge, our experience and our success.
We improve people’s quality of life by providing outstanding, sustainable building material and infrastructure solutions.
The primary goal of our entrepreneurial activities is to achieve a sustainable increase in the value of the company in accordance with ecological, social and economic principles.