wienerberger capital markets day · improvement ebitda lfl 2019 guidance in € mn outlook 2019...
TRANSCRIPT
September 2019Wienerberger Capital Markets Day
OUR KEY SUCCESS FACTOR HAS NOT CHANGED IN THE LAST 200 YEARS
OUR PEOPLE
OUR SUCCESS STORY BEGAN 1819 ON A HILL SOUTH OF VIENNA
… OR WHEN INTRODUCING SOCIAL BENEFITS AND BUILDING AFFORDABLE HOMES FOR OUR WORKERSWIENERBERGER IS BUILT ON STRONG FOUNDATIONS
BUILDING FOR PEOPLE
CREATING VALUE
SUSTAINABLE GROWTH
150 YEARS AS STOCK LISTED
COMPANY
DRIVING INNOVATION
TODAY WE FOCUS ON …
A CIRCULAR ECONOMY58.9
64.6 65.467.2
75.2
2014 2015 2016 2017 2018 2020
in k
g / t
on
Recycled material in plastic pipes85
© U
we
Stra
sser
WE FOCUS ON …
EMPLOYEE SAFETY
10
12
87
5 5
2013 2014 2015 2016 2017 2018
Accident frequency rate *
* Number of occupational accidents / number of hours worked x 1,000,000
WE FOCUS ON …WE FOCUS ON …
E4 HOUSING CONCEPT FOR ZERO ENERGY HOMES
WE FOCUS ON …
SECURITY OF SUPPLY USING SMART INFRASTRUCTURE
WE FOCUS ON …
RESEARCH & DEVELOPMENT FOR INNOVATIVE
SOLUTIONS AND SERVICES
24%25%
28%27%
30%29%
2013 2014 2015 2016 2017 2018
Share of revenues generated by innovative products
© U
we
Stra
sser
AND WE FOCUS ON …
THE DIGITALIZATION OFOUR VALUE CHAIN
© F
lori
an K
uett
ler
BECAUSE SINCE 1819 IT HAS BEEN OUR MISSION …
… TO IMPROVE PEOPLE’S QUALITY OF LIFE BY PROVIDING OUTSTANDING, SUSTAINABLE BUILDING MATERIAL
AND INFRASTRUCTURE SOLUTIONS.
TODAY WIENERBERGER IS A LEADING INTERNATIONAL SOLUTIONS PROVIDER FOR BUILDINGS AND INFRASTRUCTURE
DRIVING DIGITAL
CHANGE IN OUR
INDUSTRY
SOLUTION PROVIDER
STRONG PARTNERFOR OUR
CUSTOMERS
HIGHLY SKILLED
EMPLOYEES
INNOVATIONLEADER
FINANCIAL SUMMARY
© H
elen
e H
øyer
Mik
kels
en
13
Record H1 results highlight consistent implementation of value-enhancing growth strategyRevenues € 1,736 mn | +8%
EBITDA LFL € 287 mn | +33%
Net profit € 127 mn | >100%
Excellent progress on Fast Forward ProgramH1 earnings contribution € 25 mn
Cumulative program contribution € 45 mn
Confident in delivering our 2019 growth ambitionGiven strong H1 performance, guidance for EBITDA LFL has beennarrowed to € 570 – 580 mn (previously € 560 – 580 mn)
Record H1 19 resultsHighlights
Record H1 19 resultsHighlights
14
H1 trading environment broadly consistentwith expectations at the beginning of the year
Improved product mix and favorable pricing drive earnings improvement
Strong earnings contribution from bolt-on M&A
15
Wienerberger Building SolutionsExcellent performance in H1
WBS(in € mn) H1 2019 H1 2018 Chg. in %
External revenues 1,074.1 978.4 +10
EBITDA LFL 219.1 160.5 +37
EBITDA 221.7 156.8 +41
EBITDA LFL margin 20.7% 16.4% -
› Growth in almost all our core markets
› Early start to building season due to favorable weather conditions
› Normalization of demand in Q2 as expected & increased volatility in certain end markets
› Enhanced share of high added-value solutions supports pricing
› Strong earnings contribution from consistent implementation of Fast Forward Program
› Bolt-on acquisitions show highly satisfactory performance
Wienerberger Piping Solutions Significant earnings growth
WPS(in € mn) H1 2019 H1 2018 Chg. in %
External revenues 497.0 478.5 +4
EBITDA LFL 51.7 35.2 +47
EBITDA 51.1 20.7 >100
EBITDA LFL margin 10.3% 7.3% -
16
› Normalization of demand in-line with expectations after strong start to the year
› Strong growth in electro business
› Earnings increase in water management activities supported by improving demand in Eastern Europe
› Increasing project volumes in the energy sector drive growth with special pipes
› Improved product mix and proactive price policy support earnings growth
› Successful delivery on EBITDA enhancement from Fast Forward projects
17
North AmericaMixed developments in H1
› Sound demand for facade solutions in our relevant core markets
› Strong earnings contribution from acquired facing brick producer
› Stricter housing market regulation continued to weigh on our Canadian business
› US plastic pipe business could not match prior year’s record result due to weather related project delays
› Fast Forward optimization measures contributed to earnings improvement
North America(in € mn) H1 2019 H1 2018 Chg. in %
External revenues 164.9 149.3 +10
EBITDA LFL 15.8 19.3 -18
EBITDA 22.8 21.4 +7
EBITDA LFL margin 10.6% 12.9% -
18
in € mn H1 2019 H1 2018 Chg. in %
Revenues 1,736.4 1,606.9 +8
EBITDA LFL 286.6 214.9 +33
EBITDA LFL margin 16.8% 13.4% -
EBITDA 295.7 198.9 +49
EBIT 181.5 107.7 +69
Financial result -14.8 -21.1 +30
Profit before tax 166.7 86.6 +93
Income taxes -32.9 -27.1 -21
Hybrid coupon and non-controlling interests -6.9 -6.3 -8
Net result 126.9 53.2 >100
EPS 1.11 0.46 >100
Income statementNet result more than doubled
Note- H1 19 EBITDA LFL includes an effect of € 21.3 mn from the implementation of IFRS 16 Leases- Rounding differences may arise from automatic processing of data
19
EBITDA adjustment (€ mn) H1 19 H1 18
EBITDA reported 2) 295.7 198.9
FX +1.4 -
Consolidation -8.0 -
Sale of assets 3) -3.2 -9.3
Structural adjustments +0.7 +25.3
Total adjustment -9.1 +16.0
EBITDA LFL 2) 286.6 214.9160
180
200
220
240
260
280
300
320
EBITDAreported
H1 18
Adjustment EBITDALFL basis
H1 18
EBITDAreported
H1 19
Adjustment EBITDALFL
H1 19
in €
mn
198.9
+16.0 214.9
286.6-9.1
295.7
1) H1 2018 EBITDA not adjusted for IFRS 162) Includes an effect of € 21.3 mn from the implementation of IFRS 163) Sale of non-strategic and non-operating assetsNote: Rounding differences may arise from automatic processing of data
1) 2) 2)
Operating performanceStrong growth of EBITDA LFL
20
H1 19 impact› Extension of the balance sheet
› Recognition of “Right of Use Asset” and “Lease Liability”
› Effects on income statement
› ↑ EBITDA: no rental / leasing expenses
› ↑ EBIT: Rental / lease cost is broken down into depreciation of “Right of Use Asset” and interest on the “Lease Liability”
› ↓ Interest result: interest on “Lease Liability”
› Change in accounting standard has no impact on underlying cash flows
€ 21.3 mn effect on EBITDA in H1 19
Income Statement in € mn
EBITDA +21.3
Depreciation -20.8
EBIT +0.6
Interest result -1.7
Net income -1.2
Balance sheet in € mn
Change of net debt +160.6
Accounting changeImpact of IFRS 16 implementation
Note: Rounding differences may arise from automatic processing of data
21
Income statementFinancial result
Improvement of interest expenses
› Realization of full interest savings from refinancing of corporate bond in July 2018
› Improvement despite negative impact of € 1.7 mn from implementation of IFRS 16 Leases
in € mn H1 2019 H1 2018 Chg. in %
Income from investments in associates and joint ventures 0.7 0.5 +47
Interest and similar income 1.5 2.7 -45
Interest and similar expenses -20.6 -21.6 -5
Other financial result 3.6 -2.7 <-100
Financial result -14.8 -21.1 -30
Note: Rounding differences may arise from automatic processing of data
in € mn H1 2019 H1 2018 Chg. in € mn Chg. in %
Gross cash flow 215.4 132.6 +82.8 +62
Change in working capital 1) -210.3 -193.5 -16.7 -9
Normal capex -68.5 -60.7 -7.9 -13
Divestments and other 2) -17.3 +74.2 -91.5 <-100
Free cash flow -80.7 -47.4 -33.3 -70
Growth capex 3) -47.2 -60.9 +13.7 +22
Dividend & share buyback 4) -60.4 -57.3 -3.1 -5
Hybrid coupon & buyback -20.6 -13.6 -7.0 -51
Net cash flow -208.9 -179.2 -29.7 -17
1) Adjusted for changes in the consolidation range2) Including lease payments of € 19.6 mn, which are reported in cash flow from financing activities upon the implementation of IFRS 163) Including the buyout of minorities4) Including dividends paid to non-controlling interestsNote: Rounding differences may arise from automatic processing of data 22
Cash flow developmentGross cash flow reflects strong earnings increase
in € mn 30/6/2018 31/12/2018 30/6/2019Chg. in % vs.
31/12/2018
Equity 1) 1,855.9 1,939.1 1,980.4 +2
Equity ratio 47% 52% 49% -
Net debt 778.7 631.6 982.3 +56
Net debt / EBITDA 2) 1.8 1.4 1.8 -
Gearing 42% 33% 50% -
23
1) Including non-controlling interest and hybrid capital (100% equity according to IFRS)2) Calculated based on 12-months EBITDANote: Rounding differences may arise from automatic processing of data
Balance sheetSound ratios despite IFRS 16 impact
OUTLOOK
25
400
450
500
550
600
EBITDA LFL 2018incl. FX
IFRS 16 EBITDA LFL 2018base
EBITDAimprovement
EBITDA LFL 2019guidance
in €
mn
Outlook 2019Confident in delivery – narrowed guidance range
+41
Note: Rounding differences may arise from automatic processing of data
462
503
570
580
+67
+77
26
Record H1 results highlight consistent implementation of value-enhancing growth strategy
Excellent progress on Fast Forward Program
Confident in delivering our 2019 growth ambition
Executive SummaryRecord H1 enables narrowing of guidance range
GOVERNANCE
Corporate governance at WienerbergerTwo-tier board system
28
SupervisoryBoard
Managing Board
Annual General Meeting
appoints, advises,supervises
reports to
Supervisory BoardShareholder representatives: group of experts
29
Regina Prehofer (Born 1956, Austria)Chairwoman of the Supervisory BoardIndependent, Member since 2011
Extensive leadership and supervisory Board experience. Career in banking and finance. Start-up investor and advisor.
David Davies (Born 1955, England)Vice-Chairman of the Supervisory BoardIndependent, Member since 2017
Distinguished expert in finance, M&A and restructuring. Extensive international background.
Christian Jourquin (Born 1948, Belgium)Member of the Supervisory BoardIndependent, Member since 2014
Profound leadership experience from functions in listed companies. Distinguished track record in transformation management.
Caroline Grégoire Sainte Marie (Born 1957, France)Member of the Supervisory BoardIndependent, Member since 2015
Executive positions at various building materials and distribution companies. Distinguished background in distribution and finance.
Myriam Meyer (Born 1962, Switzerland)Member of the Supervisory BoardIndependent, Member since 2015
Strong background in engineering, automation and robotics as well as human resources and organizational development.
Oswald Schmid (Born 1959, Austria)Member of the Supervisory BoardIndependent, Member since 2019
Expert in mechanical engineering, procurement, sales and digitalization. Extensive leadership experience in various executive positions.
Peter Steiner (Born 1959, Germany)Vice-Chairman of the Supervisory BoardIndependent, Member since 2018
Experience as executive and non-executive director in the building materials industry and particular expertise in capital markets.
Peter Johnson (Born 1947, England)Member of the Supervisory BoardIndependent, Member since 2005
Industry expert with profound experience from numerous executive and non-executive positions in building material groups.
36%
64%
Female Male
Supervisory BoardExperienced, diverse, independent
30
Average age 59 Place of birth
Shareholder Representatives
EmployeeRepresentatives
Tenure 2)
1) All shareholder representatives are independent. // 2) Note: By law employee representatives are delegated by the Works Council and their membership is not subject to a time limit. The three employee representatives have been members of the Supervisory Board for 1, 13 and 17 years, respectively.
Board members
83
Gender Diversity
45%
55%
Austria Other
73%
27%
IndependentNot independent
Independence 1)
Elected by the Annual general meeting for a fixed term.
Delegated by the Works Council for an unlimited amount of time.
7
1
3
1-5 years 6-10 years >10 years
82%
18%
< 65 > 65
› The Supervisory Board supervises and advises on Wienerberger’s operationaland strategic development
› Wienerberger is managed on the basis of effective governance structures
› Wienerberger is led by highly professional and qualified teams of experts witha strong track record of generating value creating growth
› Current focus areas of the Supervisory Board
Strategic Development of the Group and analysis of M&A opportunities
Succession Management in the Supervisory Board
Succession Management in the Managing Board
Compensation and incentive structure for the Supervisory Board and the Managing Board
Corporate GovernanceExecutive Summary
31
Strong commitment to highest governance standards and continuous improvement
© Ju
ozas
Kam
ensk
as;
GROUP STRATEGY
Culture changeIn the early 2000s Wienerberger was focused on …
CAPACITY EXPANSION
LIMITED MARKET FOCUS
HIGHSHARE OF
COMMODITY PRODUCTS
EXTENSIVEM&A
AGGRESSIVE FINANCIAL
POLICY
Culture changeSince then we have fundamentally reshaped our Group
DIGITAL INNOVATION
BROAD PORTFOLIO OF
UNIQUE PRODUCTS
CUSTOMER PROXIMITY
ECOLOGICAL PERFORMANCE
STRONG FINANCIAL DISCIPLINE
OPERATIONAL EXCELLENCE
35
10-year performanceStrong track record
in € mn
EBITDA has more than tripled
Portfolio has been reshaped
Revenues have doubled
Net profit has been turned around
1,817
3,505
0
500
1000
1500
2000
2500
3000
3500
4000
2009 2019
158
583
2009 2019
-289
220
2009 2019
in € mn
in € mn
1)
1) 2019 figures are based on current company compiled consensus2) Revenue split
1) 1)
85%
5%
10%
60%
25%
15%
2009 2) 2019 1,2)
Residential Non-residential Infrastructure
Group StrategyFocused on value creation
36
Organic growth Operational Excellence
Growth projects &Portfolio optimization
Strong track record of consistently improving performance confirms success of
our growth strategy
Group StrategyDrivers of our success
37
Organic growth Operational Excellence
Growth projects &Portfolio optimization
How we enhance performance andprofitability in our existing businesses
Group StrategyDrivers of our success
38
Organic growth Operational Excellence
Growth projects &Portfolio optimization
COMPLEXITY OF BUILDING
PROJECTS
TIME OVERRUNS
CHANGING BUILDING
REGULATION
RISING BUILDING
COSTS
Organic GrowthOur customers face many challenges
TRANSFOR-MATIONOF OUR
PORTFOLIO
EXTENDING OUR SHARE OF
THE VALUE CHAIN
FOCUS ON INNOVATION
DIGITAL CUSTOMER
ENGAGEMENT
BIM READY HOUSING CONCEPTS SMART
SOLUTIONS
Organic GrowthWe provide solutions
Transformation of our business modelDriving customer proximity and value creation
We are progressing from a product manufacturer …
› We produce high performing pumping stations and plastic tanks
› Targeting professionals as well as end-customers
PROXIMITY TO CUSTOMER
>>
>>
PRODUCTSPIPES & FITTINGS
LEVEL OF VALUE CREATION
41
Transformation of our business modelDriving customer proximity and value creation
… to a provider of system solutions …
› Offer of assembled systems
› Support in project planning and calculation
› Provide tailor-made solutions
PROXIMITY TO CUSTOMER
PRODUCTSPIPES & FITTINGS
LEVEL OF VALUE CREATION
FULL SYSTEMSPREFABRICATED AND PLUG&PLAY SOLUTIONS
>>
>>
42
Transformation of our business modelDriving customer proximity and value creation
… to a smart long-term partner
› Offering network monitoring services
› Remote management services
› Generating recurring service revenues
PROXIMITY TO CUSTOMER
PRODUCTSPIPES & FITTINGS
LEVEL OF VALUE CREATION
FULL SYSTEMSPREFABRICATED AND PLUG&PLAY SOLUTIONS
SMART SOLUTIONSMONITORING & CONTROL
>>
>>
43
Smart SolutionsSmart Pumping Stations
44
› Pipelife Finland is pioneering smart pumping stations for private households
› A high-performance pumping station is combined with software which
› Informs the customer about the system status at the click of a button
› Links to weather data to warn of potential overflows
› Facilitates preemptive maintenance
› Launched in fall 2018, today already more than 50% of all pumping stations sold are smart
Full service solution forour customers
› Revenue generated with smart pumping station can be multiplied over lifetime
› Depending on the model and target customer group by a factor of 4-7
Organic growthTransformation to service model
Potential of a smart pumping station
45
Product Product + Service
Service revenue Product revenue
4-7x product revenue
Significant opportunity to
drive profitability
46
Total construction costs € 300,000
Enhancing our share of the value chainAnalysis of the total value of a building envelope
Note: Figures depicted are only indicative
Total construction costs
Share of building envelope
€ 300,000
€ 100,000
Wall
Roof
€ 4,500
€ 1,800
Facade
Pavers
€ 4,500
€ 2,000
Current share of Wienerberger € 12,800 <5%
Enhancing our share of the value chainVision to claim 10% of the total value
Strong growth
potential
Enhancing our share in of value chainGrowth opportunities in adjacent & new products
48
Solution
New ProductsExisting Products
Service
Prefab Bricks & Dryfix
Accessories Roof solutions
All4Roof
Home4life New Website
Robotics
Adjacent Products
Mineral insulation
… and we are evaluating new opportunities
› Certified SoluForce pipe to transport green hydrogen produced by wind mills in the North Sea to companies in the Groningen region
› First time that flexible composite technology will be used for high-pressure hydrogen transportation
› Enables transportation of hydrogen generated directly at the source
New applications for proven technologiesGLOBAL FIRST – Certified for Hydrogen applications
PERMEATION-TIGHT
Aluminum barrier completely eliminates permeationof gaseous components allowing for safe transportation
CORROSION RESISTANT
Fully corrosion resistant even in high-pressure hydrogen applications enabling transport from the Sea
EASY TO TRANSPORT
With long-length and easy to handle coils, SoluForce drastically reduces transportation costs
1
2
3
New applications for proven technologiesContributing to the feasibility of green energy projects
energyeconomy environmentemotion
100 housesin 2019
Cooperation with construction companies, designers
Pre-designed single-family
homes
Partner for stakeholders from planning to executione4 house concept – From digital plan to dream home
e4
Added Value Services
Digital Process Improvement
Efficiency & Cost Savings
Digital Customer Engagement
Digital Business Models
Scalable Solutions
Digital AgendaDriver for organic growth
Distributors Contractors Developers Designers & Planners
Asset Owners
PAST
Distributors Contractors Developers Designers & Planners
Asset Owners
FUTU
RE
ONE DIGITAL BUILDING & INFRASTRUCTURE PLATFORM
OPEN BIM ECOSYSTEM
Digital AgendaDigitalization enhances organic growth
BIM: DRIVING THE INDUSTRY‘S DIGITAL TRANSFORMATION
BuildingInformation
Modeling (BIM) addresses challenges
facing the construction
industry
Increased productivity, resource and
energy efficiency
Wienerberger Solutions
WIENERBERGER BUILDING PLATFORM - BUILDING SYSTEMS & SOLUTIONS, SERVICES AND TOOLS
DigitalBuilding Libraries
BIM Model
Plugins fordesign software
and Tooling
Wienerberger Solutions
SPIDER – PREFABRICATED ELECTRICAL POWER SUPPLY
Reduces installation time from 16h to 3h
Facilitates smart homes – benefit
for installers and end customers
Wienerberger Solutions
Design
Pre-fabrication
Installation
Wienerberger Solutions
„ELECTRO SPIDER“ - END-TO-END SOLUTIONS
DIGITAL TOOLS FOR OUR PARTNERS - ALL4ROOF
Overview of materials and personalized quote with a
few clicks
Platform with tools & applications to make the life of roofers easier
Wienerberger Solutions
INNOVATIVE SOLUTIONS AGAINST FLOODING
Raineo system as a remedy against
floodingHighly resistant and
versatile in use
Wienerberger Solutions
REMOTE CONTROLLED WATER MANAGEMENT SOLUTIONS
Wienerberger Solutions
Solutions for municipalities,
regional governments
and utility companies
ADDED VALUE THROUGH SMART FITTINGS IN WATER NETWORKS
"Smart Fitting“Coupler equipped
with sensors
Added value for utility companies
Wienerberger Solutions
REMOTE CONTROLLED PUMPING STATIONS IN COMBINATION WITH WEATHER DATA
Responsive system solutions
for all devices
Monitoring, controlling & alerting
Wienerberger Solutions
In-house solution for end
customers
PREFABRICATION & ROBOTICS
Boosting efficiencyon the
construction site
Hadrian X Redbloc
Wienerberger Solutions
15.09.2019 64
WE DRIVE DIGITALIZATION FROM SINGLE FAMILY HOMES TO CITY DEVELOPMENTS FOR AN INTEGRATED BUILT ENVIRONMENT
We are building the future
›Our digital solutions are already up and running
›Designed for fast scalability across our strong commercial platforms in 30 countries
Digital AgendaDriver for organic growth
Organic growth
66
Enhance our share of the construction walletOUR VISION Double our share to approx. 10%
Drive the transformation toward service modelOUR VISION Substantially grow the share of recurring service revenues
Lead the digital transformation of our industryDigital Business Models | Digital Customer Engagement | Process Improvement
Leverage our strong operating platforms to scaleinnovative solutions and new business models
Group StrategyDrivers of our success
67
Organic growth Operational Excellence
Growth projects &Portfolio optimization
Operational ExcellenceSelf-help is a core performance driver
68
› Continuously striving for the improvement of internal processes is part of our Group’s culture
› In the period 2009 to 2017 we have optimized fixed costs by € 300 mn
› In 2018 we bundled all standing improvement initiatives into the Fast Forward 2020 program
› In six dedicated workstreams we are workinghard to realize a substantial EBITDA enhancement
EBITDA enhancement fromFast Forward 2020 of € 120 mn
between 2018 and 2020
69
Operational ExcellenceClear structure and performance goals
Manufacturing Excellence
Commercial Excellence
Procurement
Supply Chain Management
General & Administration
Turnaround cases
Expected programcontribution
30%
35%
15%
2%
3%
15%
€ 120 mn
Target EBITDA improvement
vs. 2017 baseline
70
Operational ExcellenceAll targets achieved successfully to date
€ 120 mn
On track
Already achieved
€ 75 mn
€ 45 mn
Manufacturing Excellence
Commercial Excellence
Procurement
Supply Chain Management
General & Administration
Turnaround cases
30%
35%
15%
2%
3%
15%
Expected programcontribution
vs. 2017 baseline
FAST FORWARD 2020: PERFORMANCE ENHANCEMENT PROGRAM
Operational Excellence
FAST FORWARD 2020 IS ACCELERATING OPERATIONAL EXCELLENCE
Organic Growth Growth projects
FAST FORWARD 2020 IS A STEP CHANGE IN HOW WE DO OPERATIONAL EXCELLENCE
Fast Forward 2020 delivers a sustainable EBITDA improvement vs. our baseline 2017
The program was set-up assuming stable volume developments between 2020 and 2017
All ongoing improvement initiatives bundled under the umbrella of Fast Forward 2020
Extra funds of € 50 mn for quick payback projects granted and tracked together with special CAPEX projects
Harmonized approach across 6 workstreams to track and steer initiatives
75
Fast Forward 2020Clear structure and performance goals
Manufacturing Excellence
Commercial Excellence
Procurement
Supply Chain Management
General & Administration
Turnaround cases
30%
35%
15%
2%
3%
15%
€ 120 mn
Target EBITDA improvement
vs. baseline 2017
76
Fast Forward 2020Clear structure and performance goals
Manufacturing Excellence30%
€ 120 mn
Target EBITDA improvement
vs. baseline 2017
We are operating at a solid level of capacity utilization: ~ 80% across the Group
Further optimization at already high level
Automation of production processes
Increase of process efficiency with dedicated plant diagnostics and lean manufacturing experts
Reduction of energy consumption by rolling out proven practices
STEP CHANGE IN LEAN MANUFACTURINGPLANT DIAGNOSTICS DRIVE EFFICIENCY & AUTOMATION INITIATIVES
Observation Opportunity Identification Prioritisation
10 % average saving potential
in energy, maintenance &
personnel
Rollout of best practices
STEP CHANGE IN PRODUCTION COSTSUSING ROBOTICS FOR HIGHER EFFICIENCY & FEWER SAFETY HAZARDS
Higher efficiency &
accuracy and fewer health & safety hazards
CAPEX € 360kEBITDA € 130k
STEP CHANGE IN ENERGY CONSUMPTIONGREATER ENERGY EFFICIENCY WITH NEW ROTARY FAN & FLOW GUIDES
Saving:€ 50k
per plant
Potential rollout to 40-50 block plants
28% less energy
consumption during drying
80
Fast Forward 2020Clear structure and performance goals
Commercial Excellence35%€ 120 mn
Target EBITDA improvement
vs. baseline 2017
Closer to the customer with new sales approaches
Dedicated teams for project salesoffering the whole building envelope
Shift from commodity products to higher value products supported by digital tools and services
Shift from product to system solutions
Manufacturing Excellence30%
STEP CHANGE IN PRODUCT PORTFOLIOSALES TRANSFORMATION IN SEMMELROCK POLAND
Positive mix-effect
of > € 1.5 mn
Comprehensive commercial
enhancement program
STEP CHANGE IN SALES APPROACHDEDICATED PROJECT TEAMS FOR MULTI STOREY BUILDINGS
Skyline project in Belgrade as
regional success story
Increasing market share in growing multi-storey segment
Project definition per
country
Set-up of project sales
teams
Standard CRM roll-out and
steering tools
83
Fast Forward 2020Clear structure and performance goals
Procurement15%
€ 120 mn
Target EBITDA improvement
vs. baseline 2017
New centrally-led organizational set-up
Optimizing input costs by leveraging group purchasing power
Enhancing strategic supplier relationship management (SRM)
Increasing focus on sustainability in SRM and purchasing of recycled materials
Implementation of an e-procurement platform
Manufacturing Excellence
Commercial Excellence
30%
35%
STEP CHANGE IN PACKAGING COSTS AND SUSTAINABILITYUK: 36% SAVINGS BY USING A THINNER STRETCH HOOD FOIL
Pilot project:€ 100k savings
21 tons less material
Successful strategic supplier relationship
management
STEP CHANGE IN PRODUCTION COSTS AND SUSTAINABILITYBOOSTING ENVIRONMENTAL PERFORMANCE AND COST EFFICIENCY
Target
Increase kg of recycled
material per ton produced by
25%
Vision
300 year pipe
Vision
Specific pipes made of 100%
recycled material
86
Fast Forward 2020Clear structure and performance goals
Manufacturing Excellence
Commercial Excellence
Procurement
Supply Chain Management & General Administration
30%
35%
15%
5%
€ 120 mn
Target EBITDA improvement
vs. baseline 2017
Digitalization of stockyard processes leading to higher efficiency
Optimized product flows along the value chain
Reduction of manual work
Harmonization and digitalization of administrative processes
STEP CHANGE IN DISTRIBUTION COSTSDIGITAL STOCKYARD
Pilot project:Fewer forklifts
and reduction of driven km
Increased customer
satisfaction
STEP CHANGE IN ADMINISTRATION EFFICIENCYORDER INTAKE USING ROBOTIC PROCESS AUTOMATION
40% timesaving &
fewer errors
Shifting resources to
value-creating operations
89
Fast Forward 2020Clear structure and performance goals
Manufacturing Excellence
Commercial Excellence
Procurement
30%
35%
15%
€ 120 mn
Target EBITDA improvement
vs. baseline 2017
Supply Chain Management & General Administration
5%
Turnaround cases15%
Plant network optimization
New organizational structures
Adapted market approach with new sales set-up
Product portfolio upgrade and exit from low margin commodity products
90
All targets achieved in 2018
Delivery on track in 2019
› Strong improvement of product mix
› Automation projects, efficiency improvements and energy savings
› New procurement organization and improved supplier relationship management
› First effects from overhead cost optimization
2020 Pipeline already well developed
Identification of further optimization potential continues beyond 2020
H1 2019Well on track to meet 2019 Fast Forward targets
On track
Already achieved
€ 75 mn
€ 45 mn
Target € 120 mn EBITDA improvement
vs. baseline 2017
91
2018
Note: Schematic visualization. Each bar represents an example for the timing of run-up costs and the start of EBITDA contributions. EBITDA improvements accumulated as projects successively become P&L effective, improvements combine gross margin expansion, process optimization and cost reductions.
Fast Forward 2020Clear project design, non-linear realization
€ +20 mn EBITDA
€ +25 mn EBITDA
2020€ 120 mn EBITDA
Investments, project costs Contribution to EBITDA
H1 19 FY 19 H1 20 FY 20
92
Fast Forward 2020Successful implementation is a Group effort
More than 900 initiatives in more than30 countries already successfully implemented,
>300 initiatives currently running
Steered & executed by >300 initiative ownersin all 3 Business Units
On track
Already achieved
€ 75 mn
€ 45 mn
Target € 120 mn EBITDA improvement
vs. baseline 2017
Group StrategyDrivers of our success
93
Organic growth Operational Excellence
Growth projects &Portfolio optimization
Enhancing our positionin strategic growth areas
and creating value through disciplined capital allocation
› Since 2017 we have executed bolt-on deals for an average weighted EV/EBITDA multiple of 6.8x pre synergies
› Post synergies the average weighted multiple declines to 5.2x
Growth projectsStrong track record of value-creating deals
Avg. EV/EBITDA multiples
94
High confidence in our ability to build on this strong M&A
track record
6.77.1
6.1
6.8
5.9
4.6 4.85.2
2017 2018 H1 19 2017 - H1 19
Stand-alone multiple in the acquisition year
Multiple post synergies in the third year after acquisition
95
Growth projects 2019Acquisition of BPD Group
› Important further step towards becoming an integrated supplier of full-range roofing and building envelope solutions
› Acquisition of BPD grows our addressableshare of the total value of the building envelope
› BPD is a producer of
› Construction membranes
› Roof underlays
› Roof and building ventilation
› Revenue 2018: GBP 30 mn
Manufacturing Presence
BPD Group
Specialist producer of accessories for roofing solutions and thebuilding envelope
BPD will become Wienerberger’s center of excellence for roof system solutions
Group StrategyStrong track record of consistent execution
96
Organic growth Operational Excellence
Growth projects &Portfolio optimization
Drive profitability improvement and free cash flow
FREE CASH FLOW GENERATION
© D
anie
l Hop
kins
on
Free cash flowClear drivers for free cash flow generation
98
Profitability enhancement Capex Portfolio optimization
Free cash flow generation
Free cash flowClear drivers for free cash flow generation
99
Profitability enhancement Capex Portfolio optimization
Free cash flow generation
100
Capital ExpendituresAnalyzing capex
› We are updating our capex reporting based on a thorough comparative analysis of our peer group
› Going forward we will differentiate between:
› Maintenance capex
› Special capex
› M&A
› Free cash flow will better represent the cash generation of our operations and the funds available for capital allocation
Clear differentiation between recurring capex needs and
discretionary investment projects
101
Capital ExpendituresUpdate to capex structure and terminology
€ 120 - 140 mnper year 1)
Annual guidance on investment plans Timely communication
Maintenance capex
› Recurring maintenanceinvestments
› Health & Safety
Special capex
› Fast Forward projects
› Organic growthinvestments incl. green-and brownfield investments and line extensions
› Digitalization, technological upgrades, R&D, roll-out ofinnovative products
M&A
› M&A transactions
1) In the current Group structure
102
Capital ExpendituresCapex bridge 2018
in € mn
166.3
158.9 M&A
Special capex
Maintenance capexNormal capex
Growth capex
Purchase of non-controlling interests
Total capex€ 325.1 mn
30.1
73.1
91.7
130.3
20182018
103
Capital ExpendituresUpdate to capex guidance for 2019
Recurring maintenance capex
Maintenance capex Special capex M&A
~ € 135 mn ~ € 120 mn H1 19 € 33.5 mnWe continue to work on a highly attractive deal pipeline and expect to move ahead on a number of M&A opportunities
Discretionary capex to drive future performance
Free cash flowClear drivers for free cash flow generation
104
Profitability enhancement Capex Portfolio optimization
Free cash flow generation
Portfolio OptimizationDriver for profitability and strategic development
105
Portfolio analysis
Core businesses
Further development of profitable core activities based on our growth strategy
Businesses with unsatisfactory profitability and growth potential
Revenues € 350 mn
Avg. EBITDA-margin <10%
Portfolio OptimizationManagement of underperforming businesses
106
M&A as catalyst for repositioning
Evaluation of disposals
Repositioning within the
framework ofFast Forward
› M&A opportunities have been identified as catalysts for repositioning certain businesses and unlocking the growth potential
› Examples: German and Austrian WBS organizations
› Our Fast Forward program also is a platform for turning around businesses organically
› Examples: French plastic pipe business and Ceramic pipe business
› If our analysis suggests that a restructuring will not yield the expected returns we initiate a structured sales process
› Example: Semmelrock Austria
Sale of non-operating assets
107
Portfolio OptimizationTarget: € 150 mn value from disposals in 2018-2020
› These businesses commonly show several of the following characteristics
› Low growth and unsatisfactory profitability
› High degree of market fragmentation
› Limited strategic relevance for future development of Wienerberger Group
Distribution of carrying amounts as of 30/6/2019
€ 70 mn of value from disposals expected for H2 19-2020
› Structured sale processes
› Book value as of 30/6/2019: € 65 mn
Disposals of non-core businesses
WBS88%
WPS1%
North America
11%
Free cash flowClear drivers for free cash flow generation
108
Profitability enhancement Capex Portfolio optimization
Drive free cash flow generation
› Free cash flow will better represent the cash generation of our operations and the funds available for capital allocation
› Cash conversion consistently exceeds 70%
Free cash flowSignificant impact on free cash flow
Indicative impact on free cash flow 1)
109
Free cash flow on average increases
by 15% 1)
135
247
153
237
163
274
182
273
0
50
100
150
200
250
300
2015 2016 2017 2018
Free cash flow as reported Free cash flow NEW capex definition
1) Based on our analysis 20-25% of expansionary capex has historically been reported as Normal capex. Going forward this capex will be reported as Special capex. For indicative purposes 20% of Normal capex has been reallocated to Special capex for the period 2015-2017.
in € mn
CAPITAL ALLOCATION
Capital AllocationClear allocation priorities
111
Capital Allocation
Return of capital to shareholders Growth projectsBalance sheet
management
Capital AllocationClear allocation priorities
112
Capital Allocation
Return of capital to shareholders Growth projectsBalance sheet
management
› Our commitment to dividend payments reflecting the performance improvement of our businesses resulted in a significant increase of dividends per share
Return of capital to shareholdersStrong commitment to distributing capital
Strong increase of dividend per share 1)
113
Increase of dividend per share by 317%
since 20120.12 0.12
0.15
0.20
0.270.30
0.50
2012 2013 2014 2015 2016 2017 2018
in €
1) Dividend per share reported in the business year of the announcement.
0.50
0.40
0.30
0.20
0.00
0.50
0.10
› Our progressive dividendis complemented by selective share buybacks
› After buying back 2% of share capital in 2018, we retired 1% of shares in February 2019
› Between 2012 and 2018 we have on average paid out 14 % of free cash flow 1)
Return of capital to shareholdersSelective share buybacks complement dividend
Substantial increase of capital returned to shareholders
114
€ 275 mn of capital returned to our
shareholders since 201212 14 14
1823
3235
5745
25 3)
0
25
50
75
100
2012 2013 2014 2015 2016 2017 2018 2019
Share buybacks Dividend paid
1) Based on free cash flow using updated maintenance capex definition2) Dividends are reported in the year of the actual payout3) Indicative payout for share buyback of 1% of share capital
in € mn
80
2)
82
› New share buyback program commenced on September 10, 2019
› We are targeting to buy up to 1% of share capital until November 29, 2019
› After completing the buyback program we will retire the acquired shares
Key data
115
Buyback 2019 shares 1,163,514
Percentage ofshare capital 1%
Period10/09/2019 -
29/11/2019
Minimum share price € 1.00
Maximum share price € 44.12Share buyback of upto 1% of share capital
Return of capital to shareholdersInitiation of new share buyback
Return of capital to shareholdersUpdate to guidance for distribution of capital
116
Previous guidance
Progressive dividend payout of 10-30% offree cash flow after hybrid coupon
Dividends
ShareBuybacks
Distribution of 20-40% of free cash flow by
means of a progressive annual dividend and
share buybacksSelective share buybacks complement the annual dividend
Updated guidance
Capital AllocationClear allocation priorities
117
Capital Allocation
Return of capital to shareholders Growth projectsBalance sheet
management
› We are allocating free cash flow to reducing financial debt
› We remain committed to our target for financial discipline:Net debt / EBITDA < 2.5x at year-end
Strong equity ratio in-line with peers
118
Balance sheet managementDisciplined balance sheet management
Disciplined balance sheet managementand significant financial headroom
Wienerberger Peer Group Mean
45%(ex. hybrid
capital)
48%52%
Balance sheet managementBalanced and diversified funding
119
Diversified funding sources Balanced maturity profile (in € mn)
45%Senior bonds
22%Hybrid bond
11%Bankdebt
8%Moneymarket
7%Revolving
credit facility
7%Commercial
paper
0
100
200
300
400
500
600
2019 2020 2021 2022 2023 after 2023
Maturities Cash balance
First-Call Date Hybrid
Undrawn credit lines
Note: Term structure of gross debt excluding lease liabilities and cash position as of 30/6/2019.
BondsCoupon
(in %)Volume
(€ mn)Redemption /
First Call
Bond 2013 4.00% 300 17/4/2020
Hybrid bond 2014 5.00% 272 9/2/2021
Bond 2018 2.00% 250 2/5/2024
120
Balance sheet managementFurther optimization of financing costs
1) Annualized improvement potential at assumed refinancing rate of 1.5%
› We have a significant potential to further optimize financing costs
› The corporate bond maturing in 2020 and the first call date of the hybrid bond in 2021 present attractive opportunities to substantially reduce financing costs
› Current rates for refinancing are in the range of 1% to 2%
› Strong free cash flow and debt instruments with most attractive terms will be used to management refinancing requirements
Up to € 17 mn of improvement potential in all-debt refinancing 1)
Pro-forma impactof hybrid call 1)
2018incl. hybrid
in equity
2018excl. hybrid from equity
Equity ratio 49% 42%
Net debt / EBITDA 1.7 2.3
121
Balance sheet managementIntention to exercise first call option for hybrid
1) 2018 year-end figures account for a € 40 mn impact on reported EBITDA and a € 200 mn impact on reported net debt and total assets to reflect the implementation of IFRS 16 Leases as of 1/1/2019 on a pro-forma basis.
› We intend to exercise the first call option for the hybrid bond in 2021
› Call of outstanding volume at 100%
› Strong balance sheet can easily accommodate refinancing of equity instrument with debt and cash
› We are active in the open market to retire the hybrid bond (at break-even price or better)
› Since 2016 we have bought back€ 12.9 mn of the hybrid bond
Most significant opportunity to optimize financing costs and
financing structure
Capital AllocationClear allocation priorities
122
Capital Allocation
Return of capital to shareholders Growth projectsBalance sheet
management
› Successful track record of value creating bolt-on acquisitions
› Structured and disciplined approach to evaluation of transaction targets
› Financial headroom to move decisively on value-creating opportunities
Strict capital discipline
Growth projectsFocus on value creation and strategic development
123
2.5x
We are evaluating a promising deal pipeline and are looking to move
beyond our focus on bolt-on acquisitions of recent years
2013 2014 2015 2016 2017 2018
Net debt / EBITDA
Internal threshold
1.7x
1) Net Debt / EBITDA on a pro-forma basis including an adjustment of € 200 mn to reported Net debt and of € 40 mn to reported EBITDA to reflect the implementation of IFRS 16 Leases as of 1/1/2019.
Financial headroom
2.5
2.0
1.5
1.0
0.0
3.0
0.5
1)
124
Growth projectsSteady pipeline of bolt-on acquisitions
› Steady pipeline of bolt-on acquisitions, eachwith an enterprise value of below € 50 mn
› Strategic focus on core regions and products to drive
› Market consolidation
› Improvement of market positions
› Further development of our product portfolio
› Seamless integration into our strong operating platforms and full realization of expected synergies
Discretionary bolt-ons financed from free cash flow
Bolt-on acquisitions
125
Growth projectsAttractive opportunities to step beyond bolt-ons
› More sizeable transactions in core businesses need to
› Show strong strategic and cultural fit with manageable integration risk
› Represent fundamental extensions to existing platformsor constitute the establishment of new platforms
› Evaluation of opportunities to expand our portfolio beyond existing core businesses and to grow our share in the value chain
› Disciplined use of financial headroom
Attractive opportunities
Discretionary mid-sized acquisitions
EXECUTIVE SUMMARY
127
Excellent progress on Fast Forward ProgramConfident in delivery of € 120 mn EBITDA enhancement
Strict spending disciplineMaintenance capex of € 120 - 140 mn
Performance
Strong M&A track record below Group multipleEV/EBITDA multiple post synergies of ~5x
Value creation
128
Sustainable value creation for our shareholdersDistribution of 20-40% of free cash flow
Strong commitment to disciplined financial policy
Focus on free cash flow
Growth
129
Attractive deal-pipeline for discretionary bolt-on andmid-sized acquisitions
Significant potential to drive organic growth through innovation and digital transformation
Wienerberger Investor RelationsWienerbergstrasse 111100 Vienna, AustriaT: +43 1 60 192 10221investor@ Wienerberger.com