Full-year results 2023: Wienerberger outperforms its end markets and meets expectations
According to a press release from 21 February 2024, Wienerberger performed well in the challenging market environment in 2023, meeting its expectations. Apparently, the company generated an operative EBITDA of € 811 million and revenues of € 4.2 billion. This outcome was attributed primarily to increased activities in infrastructure (piping business for energy and water management applications) and in the renovation segment. However, the new build segment, particularly in Europe, recorded some sharp declines due to significantly higher interest and inflation rates. North America, on the other hand, proved to be more resilient and made a solid contribution to earnings.
“In 2023 Wienerberger once again outperformed its markets and successfully maintained its position generating an operating EBITDA of € 811 million, which is in line with our expectations. In terms of resilience, we have focused on a balanced portfolio by expanding the renovation and infrastructure segments. Also, our proactive cost management, innovation, and broad diversification in ecological new build, energy-efficient renovation as well as water and energy management are paying dividends. By enabling affordable housing, continuously improving people‘s quality of life and proactively responding to the challenges of climate change and its effects, Wienerberger is becoming part of the solution and even more sustainable and successful.” says Heimo Scheuch, CEO of Wienerberger.
Performance of the Segments
Europe West: In 2023, external revenues amounted to € 2.2 billion (2022: € 2.5 billion) and operating EBITDA came to € 378 million (2022: € 426 million).
The 2023 financial year was characterized by persistently high inflation and rising interest rates. Demand fell in the new build segment, especially in Germany, while France, Belgium and the Netherlands still recorded good demand in the first half of the year. In the infrastructure segment, there were inflation-related declines in public contracts in almost all countries. However, the increased share of the wastewater systems business and profitable growth in the renovation segment had a positive effect on the performance. With the acquisition of the Danish Strøjer Group in the second quarter and Komproment ApS in the first quarter, Wienerberger further expanded its sustainable range of innovative façade solutions and thus its market share in the Nordic countries. The acquisition of Wideco Sweden, which was also completed in the second quarter, expands energy and water management solutions in Scandinavia. All acquisitions made a favorable contribution to earnings in the second half of the year and will continue to do so into 2024.
Europe East: In 2023, external revenues amounted to € 1.2 billion (2022: € 1.5 billion) and operating EBITDA came to € 220 million (2022: € 372 million).
Eastern Europe saw signs of a decline in inflation and interest rates from the second half of the year onwards. The continued significant reduction in the real purchasing power of the public sector and private households had a negative impact on Wienerberger‘s end markets, with new build being particularly affected. The markets in south-eastern Europe were an exception, as both sales and earnings increased. Demand in the infrastructure sector was stable overall, although it was evident that the realization of projects continues to be delayed due to limited budgetary resources in the public sector.
North America: In 2023, external revenues amounted to € 838 million (2022: € 945 million) and operating EBITDA came to € 213 million (2022: € 223 million).
In a sluggish market environment, Wienerberger successfully increased market share and the operating EBITDA margin from 23.6% in 2022 to 25.5% in 2023 through proactive cost and price management. The long-term demand for residential space remains high level. Due to high level of interest rates, demand in 2023 was nevertheless subdued, especially in new build. In the infrastructure segment, the company recorded a significant increase in demand in the second half of 2023.
Sustainability as a strategic and operational focus for business development
According to the press release, Wienerberger has implemented a new three-year sustainability program for the years 2024 to 2026, extending the environmental and social topics. The aim is to leverage the sustainability targets to organic growth. It provides the right strategic and operational focus for sustainable business development complemented by the areas of revenue from products supporting net zero buildings, water and waste management as well as diversity and inclusion. By the end of 2026, Wienerberger wants to see 75% of its revenue to come from building products through the sale of products that support net zero buildings, such as integrated solutions for roofs, outer walls including façades, heating, cooling, and solar power generation.
Dividend and 2024 Outlook
Considering the strong results for 2023 and the company‘s dividend policy, the Managing Board will propose to the Annual General Meeting that a dividend of € 0.90 per share be distributed for 2023.
By acquiring Terreal, a successful European provider of innovative roof and solar solutions, Wienerberger will significantly expand its presence in the growing renovation segment and become the leading European expert for pitched roofs. In total, the transaction includes almost 3,000 employees, 28 production sites and expected annual sales of around € 740 million. The transaction was completed end of February 2024. With the preparatory measures already taken in 2023, the company has done everything necessary to ensure the swift and efficient integration of Terreal immediately after closing.
Assuming that the market development of the fourth quarter of 2023 will continue in 2024, particularly in the first half of the year, and that the earnings contributions from the Terreal deal will make a positive contribution from the second quarter of 2024 onwards, operating EBITDA of around € 860–890 million for 2024 is expected.
