Davy Research |
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Wienerberger
(WIE AV)
Preview of Q1 results: forecasting break-even at the EBITDA line
08 May 2012
Flor O'Donoghue
| Closing Price: | 860c | Rating: | Neutral | 12/09/11 | Previous: | Outperform | 22/02/11 |
FACTS: Wienerberger (WIE) will announce Q1 results on May 9th. We are forecasting Q1 revenues of €388m, down 2% year-on-year (yoy). EBITDA for the quarter is forecast at break-even, which would compare with EBITDA of €11.8m in Q1 2011.
ANALYSIS: Q1 is WIE's least important quarter. In 2011, for instance, it accounted for 19% of full year revenues but just 5% of EBITDA (and WIE was loss making at the EBITDA line in Q1 2010). Back when it announced 2011 results in mid Q1, WIE suggested that it had increased volumes in January but that February was negatively affected by the bad weather. The latter is likely to have depressed the Q1 result, lowering volumes with a knock-on effect on margins due to standstill costs.
By region, we are forecasting that WIE was loss making at the EBITDA line in Central-East Europe, Central-West Europe, North America and in Investments and Others for Q1. WIE's most important profit centre at present is North-West Europe (Benelux, France, UK) and in Q1 2011 its EBITDA was almost €22m. However, with the housing markets in these jurisdictions flat-to-weakening, along with the aforementioned weather impact, we expect its EBITDA fell sharply in Q1.
If we are correct and if WIE does report break-even EBITDA for Q1, it will leave the group with some work to do to make full year expectations. We are currently forecasting EBITDA of €261m for the year (up 1% on 2010). Break-even EBITDA for Q1 would require 6% yoy growth over the final three quarters of the year. The consensus expectation of circa €280m would imply yoy growth of 13% from Q2-Q4. While not impossible, already this is looking a demanding target as the eurozone edges towards recession (over 90% of the group's revenues are generated in Europe).
DAVY VIEW: Alongside the headlines numbers, areas of interest relating to the Q1 result and outlook for the remainder of the year will be how WIE is faring in price management (it has flagged operating cost inflation of 3-4% this year); management's view on end-markets; and any indication on the possible timing of the Pipelife deal.