Half Year 2026 Wienerberger AG Earnings Call
Speaker #1: Mission-only mode, and the conference is being recorded. The presentation will be followed by a question-and-answer session. If you would like to ask a question, you may click on the "Raise Your Hand" button.
Speaker #1: If you are connected via phone, please press the star key 9 to enter the queue, and the star key 6 to unmute yourself afterwards. We are looking forward to the presentation and, with this, I hand over to the Senior Officer Investor Relations, Ifrido O. Sibilia.
Speaker #2: Thank you, Judith, and good morning, everyone. Welcome to the call. Just a couple of words from my side: I just recently joined the Investor Relations team.
Speaker #2: I've been with the company for a little over three and a half years, and I look forward to working with many of you on the call.
Speaker #2: Before we get into the results, I'll hand it over to the Chair of the Supervisory Board, Mr. Peter Steiner, for some opening remarks. Thank you.
Speaker #3: Thank you, Ifrido. And hello everyone. Good morning, good evening, good afternoon—wherever you are joining us from. I know this is not the usual format; the Chairman of the Supervisory Board does not typically open an analyst call, so let me explain why I'm here.
Speaker #3: Before Gerhard and Dagmar take you through the key developments and numbers, I want to address the announcement we made the day before yesterday, and Judith deserves to hear it from me personally.
Speaker #3: On Monday, we announced that our CEO, Heimo Scheuch, had asked the Supervisory Board to accept the early termination of his mandate, to allow him to fully focus on his personal health.
Speaker #3: The Supervisory Board accepted his decision, and we appointed Gerd Hanke, who was Deputy CEO of Wienerberger and will now act as interim CEO, with immediate effect.
Speaker #3: Heimo Scheuch took the helm of Wienerberger in 2009. Think about what the company looked like then: a traditional, quick manufacturer—solid, but narrow-scoped. What is Wienerberger today?
Speaker #3: A leading international group; a business spanning the entire building envelope and infrastructure; a company with a clear and credible sustainability agenda, present across markets that matter.
Speaker #3: That transformation is his achievement. Seventeen years as CEO—seventeen years of decisions, of resilience, of building something that lasts and is well-positioned to get to the next level.
Speaker #3: On behalf of the entire Supervisory Board, I want to express my profound gratitude for everything Heimo has built. We deeply respect his decision and sincerely hope that he can now dedicate all his energy to his health.
Speaker #3: So, where does that leave us? As the Supervisory Board, it is now our responsibility to ensure continuity, and we are in a very solid position to do so.
Speaker #3: Let me tell you why. With Gerd Hanke as interim CEO, we have exactly the right person to lead us through this transition until we have appointed a new permanent CEO.
Speaker #3: Gerd has been with Wienerberger for over 25 years. He knows the company; he knows the business from every angle—operationally, financially, and strategically. As he served as CFO from 2021 to 2025, many of you know him well.
Speaker #3: In March 2025, Gerd became COO Central & East, and in June 2026 he took on the role of Deputy Chairman of the Management Board.
Speaker #3: At the time, it reflected our commitment to strong operational leadership and the ongoing evolution of our management structure. As it turns out, that decision serves us very well today.
Speaker #3: The rest of the management board remains unchanged. Dagmar Steinert continues as CFO, and Harald Schwarzmayer continues as COO West. The leadership team around Gerd is experienced, stable, and aligned.
Speaker #3: We are now conducting a structured search for a permanent CEO successor and will communicate further in due course. So let me close with this: today's call is about performance, about results.
Speaker #3: More than 20,000 people across more than 200 sites around the world have delivered strong results in the second quarter of 2026. There is no doubt that some markets are currently facing very challenging conditions.
Speaker #3: At the same time, I want to emphasize that Wienerberger is a company with a clear strategy and a strong team—an organization that has pushed forward, evolved, and reinvented itself again and again.
Speaker #3: That does not change today. Thank you very much for your attention, and with that, I will hand over to Gerd and Dagmar. Thank you.
Speaker #2: Thank you, Peter, for your opening remarks and also for joining us today. Also, a lovely good afternoon from my side and the whole Wienerberger team.
Speaker #2: I'm glad to have you on the call today. First of all, let me also take a moment and wish Heimo a speedy recovery, and all the best for his future, also from my side.
Speaker #2: I would like to express my sincere gratitude for his vision and dedication, also for Wienerberger during the last almost 30 years. You have received our trading update a few weeks back.
Speaker #2: We sent out, on July 21st, a message where we informed you about the performance of the company. Over the next 30 minutes, Dagmar and myself will focus on the most essential points of the half-year numbers, respectively, of the second quarter numbers.
Speaker #2: So let's walk quickly through the half-year numbers and the second quarter results. In general, the first half of 2026 was more challenging than we expected at the beginning of the year.
Speaker #2: On the one hand, you heard that we had quite harsh weather conditions in January and February. We had a Middle East conflict, which started at the end of March, which led to overall cost inflation and also to higher financing costs.
Speaker #2: And we had market developments, especially in the US, UK, and Canada, in new residential housing, which were further declining. And all that resulted in the group's performance staying behind expectations.
Speaker #2: Let me walk you especially through the second quarter. I mentioned it — we had this year maybe a little bit of a different start.
Speaker #2: We had, on the one side, the harsh weather conditions in January and February. By the end of the first quarter, the Middle East conflict started, so we had this year, let’s say, a little bit later, a good Q.
Speaker #2: The markets, on the quality of the markets and the market conditions, basically where we are today. The market conditions are characterized, let's say, by significant regional differences.
Speaker #2: We see that the infrastructure and renovation markets remained resilient. They are according to our expectations. We see that the renovation market was supported by decarbonization projects on the old European housing stock.
Speaker #2: While in the piping segment, and respectively in the infrastructure market, we have seen solid demand driven by the European water resilience strategy and also by upgrades of the European power grids.
Speaker #2: The activities in continental Europe, we have seen a normalizing after the first two months. We see a bottoming out. Even if, across Europe—continental Europe—we have different dynamics, but overall we see that the markets, the activities in continental Europe, are bottoming out and coming back to a normalized level.
Speaker #2: In contrast, and as was also mentioned in our trading update, the residential housing markets in North America and the UK remained substantially below our expectations.
Speaker #2: We have seen even a further decline, and this was definitely not foreseen or expected at the beginning of the year. And this, in the end, translated into a second quarter performance, financially, where our revenues increased by 13% to €1.4 billion, which reflects 7% organic growth driven by volume and price.
Speaker #2: And 6% came from the scope of the acquisitions which we realized in the second quarter. Operating EBITDA declined by €230 million. We have seen a €30 million headwind from weaker residential housing markets, mainly, as mentioned, in the US, UK, and Canada.
Speaker #2: And we were also, at the result, heavily impacted by cost inflation, which was driven by logistics, energy, and also the rising costs.
Speaker #2: Let me say a few words on our strategic transformation, as we also took significant steps in the second quarter. The portfolio is continually transforming. We are moving further away from our cyclical residential new-build portfolio.
Speaker #2: To a more resilient renovation and infrastructure portfolio. We have today, after the last two acquisitions, around 60% of our group revenues coming from these end markets, meaning renovation and infrastructure.
Speaker #2: So we are today structurally much more diversified, less cyclical, and much better positioned also to navigate the delayed recovery in residential new-build markets.
Speaker #2: The last two acquisitions during the second quarter, especially Ital Chair but also News Group, are contributing significantly to this transformation, as I just explained.
Speaker #2: But let me give you once more some insights on the Ital Chair acquisition. As most of you most probably know, the deal was closed in April this year.
Speaker #2: We bought a major stake in Ital Chair, an Italian specialist for ceramic wall and floor tiles. And we bought a strong, scalable platform to further create value in this, complementing perfectly our strategic focus on the building. I also put here two pictures, which I think are very nicely reflecting where this company is also in. And it's not traditionally the floor tiles and the wall tiles you may have in mind from the kitchen and from the bathroom.
Speaker #2: No, it is a strong footprint also in the facade. And this is also what we see after the first few months of integration: that we see, especially in the markets—Italy, France, US—where we have a strong footprint, and also Ital Chair has a strong footprint, or let's say a strong commercial network, that we are realizing first commercial synergies by common customer basis.
Speaker #2: So we see that especially from investors, developers, but also construction companies, that we are able to benefit from our strong commercial network, but also from what Ital Chair is providing to the group.
Speaker #2: So we are happy with this acquisition. Things are moving; we see already a strong contribution in the second quarter to our group results, and we are expecting basically the same also for the second half of this year.
Speaker #2: The second one is a significantly smaller one, as we realized. We bought, in April, the News Group—a Swedish company located in Sweden—which has a turnover of plus/minus €20 million and EBITDA of roughly €3–4 million.
Speaker #2: So, different size, more specialized—more specialized in the sense of water recycling and sewage treatment. And it brings us, or provides us, a good footprint, also not only for Sweden, but in principle for the whole Nordic region.
Speaker #2: So these two acquisitions are contributing also to the transformation, where we are constantly working on. And let me also, just to complete, mention that we did a major step also in 2024, when we bought Terreal Group—a major investment in the roofing business, which has a strong footprint also there.
Speaker #2: I mean, it's about renovation activities around the building, especially in the residential building. We took a major step also here a few years back.
Speaker #2: The last slide before I hand over to Dagmar. For me, when Peter asked me—respectively, the Supervisory Board asked me—to take on, or to step into, this interim CEO role.
Speaker #2: It was clear for me—I do that with a strong sense of commitment, with a great responsibility, and with a lot of respect, because we are fully aware of where we are in.
Speaker #2: We just sent out the trading update where we had to adjust the guidance, so it's clear what is needed and what is expected from us as the Managing Board.
Speaker #2: We have, or we are basically facing, a headwind in our EBITDA of around about €100 million, as explained, due to the markets which I described before.
Speaker #2: When we did in the beginning our regular pricing measures yeah what was foreseen and then was confronted with the Middle East conflict by the end of by the end of March where basically the cost inflation started to increase which were which we have seen then mainly in the second quarter.
Speaker #2: It was clear we had to take a second step on the pricing measure. And we also see that we are realizing now, by the end of June, beginning of July, that our pricing level is almost 5% above the beginning of the year.
Speaker #2: And this is also needed for us to cover the cost inflation that we basically also have in our books. Secondly, it was clear that we have to improve and accelerate our program, our Fit for Growth program.
Speaker #2: We expect this year a contribution of around about €25 million—so roughly about €10 million in addition to what we communicated at the beginning of the year.
Speaker #2: Working capital management, there will be a strong focus in the second half here on the balance sheet. Part of it will be working capital management.
Speaker #2: Dagmar will say a little bit more about it, but we are expecting a €50 million organic reduction, and we will also reduce our capex program to the most necessary things that are needed for the company.
Speaker #2: Still, when we look to our balance sheet, I'm confident we have a robust balance sheet. We have a good and sound liquidity position, and we have stable financing costs, which is important.
Speaker #2: Top priority for the next months will be, or will remain, to proactively manage the performance, but also the leverage, and that means that things like capital allocation and working capital management, other cash conservancy measures, are basically on top of the list of managing boards.
Speaker #2: With that, I would like to hand over to Dagmar. Dagmar will provide you with much more detail, also on the numbers for the second quarter and the first half-year.
Speaker #1: Thank you Gerhard and a warm welcome from my side. I will guide you now through our numbers starting with the first quarter with the second quarter sorry then of course give you yeah the picture for the full half year.
Speaker #1: And more insights about our measures what actions we take to deliver. So let's start with the like with the overview. And what you see on chart number nine is Wienerberger really shows a resilience and that is the result of our transformation and what you see as well the second quarter has really strong growth.
Speaker #1: It's 13% above the previous year's quarter. Yes, 6% is related to scope, but 7% is organic growth—that's really a great number. Unfortunately, the operating EBITDA, as already mentioned, is below the previous year's quarter. You heard about the difficult market conditions, especially in new residential housing.
Speaker #1: In the UK, US, and Canada, that really is a burden on our numbers, but I can assure you we focus on the right topics to maintain our profitability.
Speaker #1: Looking slightly into working capital development, in absolute numbers, it's €1.4 billion, and compared with the previous year, it's 6% up. But of course, due to acquisitions, scope is included in that number, so organically we are below the previous year, even with quite a high inflation in the second quarter.
Speaker #1: Coming now to the revenue bridge, and I would like to start with scope: these 6% or €77 million growth, because that is Italture—it's new school—and Gerhard explained how it fits into our strategy and how it opens up our opportunities for further growth for the whole group.
Speaker #1: As already mentioned, quite strong 7% organic growth in the second quarter, and despite these difficult market conditions for us. New residential housing remains under pressure and we've seen this weakness in our key markets.
Speaker #1: So, looking at this 7% a little bit deeper, it's like almost two-thirds volume and a bit more than one-third price. Why do we see just a bit more than one-third price in the second quarter? Because it's not on a full run rate, since the pricing effect in the second quarter is limited due to the lead times between announcement of a price increase and, of course, the effective date.
Speaker #1: There, we will see more in the second half of the year. Our growth—our organic growth and volume growth—is supported by a strong performance in renovation and infrastructure.
Speaker #1: And that shows as well our resilience. Coming to the operating EBITDA bridge, chart number 11. Scope gave us an 8% higher operating EBITDA in the second quarter, mainly driven of course by Italture and the News Group.
Speaker #1: We show a negative organic growth of minus 15% or minus 38 million. And this is mainly the reason because we are missing a lot of yeah contribution from our key markets in UK Canada and US in the residential new build sector and it's not only that the demand is weak of course as well due to lower volumes we see under utilization we have higher cost of idle capacity and that there we have not been able to offset that by a stable performance in a in a renovation and infrastructure which is in line with our original expectations.
Speaker #1: As already mentioned, our price increases in the second quarter are, of course, visible, but not in full effect. On the other hand, the inflation—which is, or higher inflation which was driven by the Middle East conflict—really showed up like a full effect in the second quarter.
Speaker #1: Therefore, overall, we still have a negative price-over-cost in the second quarter, and that's the reason why we show negative organic growth.
Speaker #1: Overall, we see an inflation of around minus 7% in the second quarter. The working capital bridge—to give you a little bit more insight into what we are doing regarding our working capital management and so on—as you can see, we see in absolute numbers an increase of 6%. But if we take out M&As, you'll see already minus €29 million, or between two and three percent organic working capital reduction.
Speaker #1: Despite higher inflation because there's quite a high inflation in plastic in raising prices in energy prices and logistics and all other yeah commodities. So we have a strict working capital management in place that is key priority and we want to see at least a net organic reduction by 50 million to support our net debt by the year end.
Speaker #1: Just a little bit of a view on our operating settlement across Europe West, Europe East, and North America for the second quarter. In Europe West, starting with Europe West—which includes the UK—the operating EBITDA is below the previous year's figure.
Speaker #1: On the other hand, our acquisition Italture is partly included in the region Europe West and partly included in the region Europe East. So, overall, looking at the performance and having in mind the difficult market environment regarding new build, we see a stable performance in Europe East.
Speaker #1: If you take into account the really double-digit negative development regarding the UK, you see a stable development in Western Europe and a significant decline in North America.
Speaker #1: And in North America, it's not only driven by the weakness in new residential housing, but as well, there is pressure on pricing for PVC products in the US.
Speaker #1: I will give you some more insights into the regions regarding the development of one or the other country, coming to our first half-year figures.
Speaker #1: Just to sum it up a little bit: regarding the inflation development in the first quarter of 2026, we've seen 2% inflation, which was brought in line with our expectations.
Speaker #1: We've seen a stable development of energy prices, and there was not any more impact of the Middle East conflict, which just started by the end of February, seen.
Speaker #1: In the second quarter, everything of course shows up. We've seen a rising market with shortages; plastic prices really increased. We've seen increases, especially in Europe, with rises between 60 to 70%. We've seen very high peaks regarding gas prices, and as you know, we always have a portion of unfixed volumes, and of course, higher oil prices impact everything—all other commodities.
Speaker #1: Overall, we have seen an inflation in our second quarter by 7%, and for the half year 2026, it sums up to 4%. I'm coming now to the development of our first half year, and I would like to start a little bit with our volume and price development. You see here a slightly different picture because we excluded UK and North America, and put the rest of Europe into one figure, because it's just easier to explain.
Speaker #1: So overall, you can see we have a really deep—there are strong declines in new residential housing in the UK and North America. Volume-wise, it's minus 12%.
Speaker #1: That, at the end, results in the group adding up to a figure that is minus 4%. The rest of Europe in new residential housing shows quite stable volume development of plus 1%.
Speaker #1: Renovation as well not as good in UK and North America as in the rest of Europe. Therefore, there we see a negative number of minus 7%, while positive continental Europe is plus 4%. So within the group, we see a positive figure of plus 2%.
Speaker #1: And infrastructure as well—UK and North America negative, but that's mainly North America. Looking at the price development, one number really pops up—that's minus 8% in infrastructure UK and North America, and I would like to make really clear that's only North America and it's not UK.
Speaker #1: And the number of negative price effects in North America is a double-digit number. Overall, in the group, we see a price effect of plus 2%.
Speaker #1: As well as in continental Europe, plus 2%. Coming now to the revenue and operating EBITDA bridge for the first half year. Starting with revenues, we've seen a weak first quarter affected by bad weather conditions. We've seen a strong second quarter on the top line, and overall, of course, we see plus 4% in our revenue bridge as an increase.
Speaker #1: It's more or less attributable to our acquisitions, to scope, and just a really moderate organic growth. Therefore, let me say, or put it in other words: the weak first quarter was compensated by the strong second quarter, and therefore, organically, it somehow developed—yeah, leveled out in the half year.
Speaker #1: Looking at our operating EBITDA, the picture is a little bit different because our operating EBITDA was, in the first quarter, below the previous year, and in the second quarter as well.
Speaker #1: Therefore, overall, for the first half we report minus 15% operating EBITDA and come out with a result of 326. Our negative organic growth sums up to minus 71, and that's driven by the weak volumes in the first quarter and the massive underperformance in new residential housing in our key markets—UK, US, Canada—and, of course, higher inflation.
Speaker #1: So these are the three reasons why we have this negative organic growth. Coming now to our operating segments, I would like to start with our region, European West, where you can see that we have an increase in our top line by 5% and a minus 8% operating EBITDA development.
Speaker #1: And just to remember, the UK is included in the region Europe West. So, I would now like to give you a little bit more detail about our markets in the different regions. In new residential housing, the market remains at low levels in the region Europe West, even if we see increases in planning permissions. But these are not translating into more housing stock.
Speaker #1: And this is especially true for markets like France and Germany. As I can’t mention it often enough, the UK is even worse. On the other hand, the housing stocks in Benelux are stable to positive, but we also see a swing towards more multifamily housing, and that is something we see especially in the Netherlands. That, of course, impacts our new build product as well.
Speaker #1: Renovation—our renovation-driven demand in Europe West remains solid. It's supported by energy transition initiatives, with the exception of Germany and the UK, where we see really a lack of consumer confidence and funding programs driving the impact on the markets. And that's really overall a stable development for us, as expected.
Speaker #1: Infrastructure is supported, of course, by raw material price increases, and we have seen stock building by one or the other customer. But underlying demand is still okay, and our price increases are working.
Speaker #1: I'm coming now to the region Europe East. And in Europe East, of course, as well we've seen a difficult first quarter, but looking now at the half-year figures, I would like to guide you through the markets.
Speaker #1: We've seen in new residential housing a positive trend in building permits in some eastern European countries I would like there to name especially like Poland and but that is almost offset by declines in in other eastern European countries Italy Croatia and the demand in single family houses is largely stable while growth is as in western Europe more in multi-store residential construction.
Speaker #1: Coming to renovation, in renovation our roofing business is okay, and we see there as well an increasing trend towards flat roofs in single-family homes, but the development is, as I said, quite balanced.
Speaker #1: The infrastructure business in Eastern Europe has been generally very stable in the first half of the year, and I would like to point out here, for instance, Poland, where the public sector is currently the most important driver for the growth.
Speaker #1: In North America, our most, yeah, difficult segment in the current year, we see, of course, these very high interest rates, market uncertainty, which is really bad for housing demand, and in new residential housing there's a double-digit decrease.
Speaker #1: And if you make the split between US and Canada, Canada is even worse compared with the US. Renovating or renovation is solid in North America, and infrastructure has a difficult development as well because prices are going down, and therefore, of course, that gives us as well a pressure on profitability and operating EBITDA.
Speaker #1: But overall looking at North America we have on the other high on the other hand a lot of initiatives to reduce costs and especially as G&E costs.
Speaker #1: I would like now—yeah, I would like to give you a little bit more insight about our reconciliation of EBITDA on group level to operating EBITDA.
Speaker #1: Because you see there, a significant number of €70 million one-offs, and, well, €7 million are related to acquisition costs—mainly Italcer. We see €17 million in restructuring measures that, of course, as in the past, are to improve profitability in the coming years through optimizing our industrial footprint.
Speaker #1: In that case, especially in the piping and facing brick business, we took out one or the other capacity, but that's, I would say, not a surprise.
Speaker #1: What was I guess for you a surprise is these minus 47 million US antitrust lawsuits. And that is something where we had a lawsuit in the US at our Jetstream subsidiary that Jetstream is in the piping business and we agreed to a settlement in these antitrust class actions and at the end we have to pay a total amount of 52 US dollar million US dollar or 47 million euro.
Speaker #1: Why have we not have we not been published that in our trading update we haven't been allowed you to legal restrictions. Therefore we want to apologize that you get it presented today and not earlier but it was not possible.
Speaker #1: Very important we didn't do anything wrong. The question is you are part of these lawsuit these action class in the US and with other companies and other companies started to make settlements and then the risks increases that no matter if you didn't do anything wrong that you might face a high number of yeah that you will you face a risk that you have to pay a really lots of million much more than 52 US dollars million US dollar.
Speaker #1: And therefore, the management decided to go for that settlement to take risk away from the company, to avoid the uncertainty, and, of course, to get out of that litigation.
Speaker #1: For us, we treat that amount as a one-off, but we will have to pay it in the current year; therefore, it will reduce our cash flow.
Speaker #1: This brings me to my next point: balance sheet management. Because, besides profitability—besides our operating EBITDA—it is most important to keep a robust balance sheet, to have actions and management, a plan in place to reduce our net debt.
Speaker #1: Because due to first we are missing 100 million operating EBITDA second we have an additional 50 million around 50 million outflow from these settlement in the US so we are missing 100 50 million cash flow roughly and that of course changed our net debt position by the year end 2026 and therefore we were going to give you here an outlook on our leverage where we expected to be by the end of this year unfortunately at 2.8 and there is a plan in place not only for the current year for the running year but as well how going forward like the next 18 months until the end of 2027 and the leverage 2.4 for us is the absolute minimum.
Speaker #1: Or maximum. The minimum target, but the maximum is where we want to come out. We want to show a lower number, of course.
Speaker #1: What are we doing? We have our, yeah, cost management and saving cost, of course. Fit for Growth, which we contribute up to €25 million in the current year, will save cash as well.
Speaker #1: We have strict working capital management. We are analyzing our inventories to see how we are able to decrease our inventories, our stock, to get a positive effect on the working capital.
Speaker #1: We have our departments, like purchasing, to even search more on the supplier side to optimize our procurement. We have a focus on capex—what do we need, when do we need it, and do we really have to spend it? Does it really have to be that much?
Speaker #1: And there are a lot of things in place to manage and to reduce our leverage. And I want again to repeat this 2.4 by the end of 2027 that number is the maximum and would like you to keep it like that.
Speaker #1: On the other hand, looking at our financing costs, the financing cost will increase by €10 million in the current year, and our interest rate is stable. It will be 4% in 2026 compared with 3.8% in 2025.
Speaker #1: And that's just the result of, yeah, financing the acquisition of Italia. And with that, I would like to hand over again to Gerhard to give you the outlook.
Speaker #1: Thank you. Dagmar ladies and gentlemen before we go to the outlook let me say some words on the assumptions which we took in the beginning of the year as certain things really drastically changed also when we started this year and where we are today and we tried to to summarize this on this one slide and in principle there are two major effect that would make the world differently than what we have assumed in the beginning of the year on the one side we have not considered or foreseen the impact the heavy impact of the Middle East crisis this was not reflected and this had also the consequence that we have seen quite some inflationary pressure in the second quarter and that we also will have some inflationary pressure also in the second half as a consequent consequence and also interest rates were going up financing costs are going up so this was definitely not foreseen in the beginning of the year.
Speaker #1: The second thing is that we, in the beginning of the year, had assumed flat markets when it comes to residential housing in the UK and North America, and on the other side, we have seen—a one—we have seen a further decline actually. Considering these circumstances, this led to this €100 million headwind that Dagmar was mentioning before. I think what is important is that the measures which are in place are clear: it's about discipline, it's about execution. We expect, market-wise, not a different picture in the second half. We expect that infrastructure and renovation end-markets stay on that level where we are. Residential housing, independently if it is in continental Europe or if it is in the UK and North America, what we have seen in the second quarter, we believe, reflects also quite well what we expect for the second half. So it's about implementing, consequently, measures to secure the performance, and on the other side, also executing measures when it's about capital allocation and also securing and controlling the leverage.
Speaker #1: I mentioned it I just wanted to repeat once more one crucial point to to reach the 700 million on operating EBITDA is is the pricing is the pricing power and we are confident there as we are seeing already almost a 5% that this will cover our cost inflation what we expect for the second half support it will be this measure by extra efforts out of our cost saving program where we do an additional 10 million this year and on the other side we are focusing on our debt position to reach as Dagmar mentioned the 2.8 time till the end of the year by bringing working capital down and also reducing once more the the capex for the second half to the minimum level and this is a first step and the second step will follow then in 2027 and the midterm goal which we communicated already years before the two times is still valid respectively is a full commitment from the management board on on this net debt leverage.
Speaker #1: And with these words, I would also like to stop here, and I would like to hand over to you, ladies and gentlemen, and get your day started.
Speaker #1: Thank you.
Speaker #2: Thank you very much for your presentation. Ladies and gentlemen, we will now start the Q&A session. If you would like to ask a question, you may click on the "raise your hand" button, and if you are connected via phone, please press the star key 9 to enter the queue on your telephone keypad, and with star key 6 you can unmute yourself. We already have a few hands raised.
Speaker #2: Daniel Kayenuri from Morgan Stanley, the stage is yours.
Speaker #1: Daniel cannot hear you.
Speaker #2: Daniel.
Speaker #3: Hi. Can you hear me now?
Speaker #1: Yes.
Speaker #3: Perfect. Thank you. Thank you. First of all, thank you for taking my questions, and I do want to send best wishes to Heimo and his family given his recent health challenge.
Speaker #3: Just going back to my question on performance, it would be useful to start with the Q2 EBITDA bridge. It does look like you experienced quite a lot of cost inflation despite the hedging program.
Speaker #3: Is there anything in last year's comparison base distorting the year-on-year movement? Am I wrong to assume you are benefiting from CO2 credit sales last year, which were included in the operating EBITDA, and you are now missing that benefit?
Speaker #3: Am I wrong there?
Speaker #4: No, there are no material CO2 credits in last year's figures, and of course, there are none in the current year.
Speaker #3: Okay. Okay. Thank you. And just a question on the on the four-year guidance the update to the guidance. There's an implied pickup in H2 versus H1 and I know you walked through some of the the working assumptions on the slides already but it would just be useful to understand expectations around volumes and perhaps if you could talk to the updated phasing of the cost optimization program.
Speaker #3: I know you added some cost savings, so just the working assumptions behind the new budget and the phasing of the cost optimization would be useful.
Speaker #4: Well the working assumptions behind our H2 H2 in the running year is it's quite simple because we will see the full effect of our price increases which been just partly coming through or visible in the second quarter of the current year and therefore we are looking towards balanced price over cost number and we don't expect that the new residential housing market especially in UK US and Canada is going to yeah develop any better nor any worse and we see a performance as expected regarding in continental Europe regarding our yeah renovation and infrastructure business and inflation which yeah counted for minus 7% in the second quarter of course that will stay at a higher number in the second half of the year because 4% for the first half of the year is not a run rate because we haven't seen any inflation in the first quarter of the year.
Speaker #4: An additional contribution we will see through our Fit for Growth program—there, we have around €10 million contribution in the first half, and we expect a higher impact in the second half of 2026.
Speaker #3: Okay. Thank you.
Speaker #2: Thank you for your questions, Daniel, and we will move on to Isaac Ocho from Unfield Research. You may speak now.
Speaker #5: Hi, thanks for the presentation and best wishes to Heimo. First, I wanted to follow up on the Q2 EBITDA bridge, and I'm trying to break down the organic decline.
Speaker #5: So correct me if I'm wrong, but prices were kind of up 3% in Q2, so that would imply a €40 million positive impact. And with cost inflation of 7%, which implies maybe a €70 million hit, and then you've got currency and scope adding €16 million.
Speaker #5: So, putting these together, we get to an EBITDA decline of around maybe €14 million, excluding your volumes, and you had a positive volume impact.
Speaker #5: So we would have expected some offset from that, so we're kind of struggling to reconcile that against your $23 million decline. Could you maybe help us understand the gap?
Speaker #5: Is it that the volume impact was lower because of geographic mix? Could you give maybe some color on that? Or are there some additional costs beyond the 7% inflation you disclosed, or am I missing something?
Speaker #4: Well, we have the negative effect from new residential housing in the UK, Canada, and US, and that counts for more than €20 million. And of course, that includes as well underutilization in those areas.
Speaker #4: We have a positive volume effect in Continental Europe and a negative price-over-cost of, yeah, a figure in the mid-30s.
Speaker #5: Okay, thanks. And maybe, on volumes, have you seen any re-buying? And how is July tracking against Q2?
Speaker #4: Well, volumes—of course, there might be one or the other pre-buying, especially in the infrastructure piping business, because due to the really high increase of raw material prices, customers expected on our side increasing prices as well.
Speaker #4: But we can't, of course, identify what is pre-buying and what is not. Therefore, it's a little bit difficult to make any statement regarding that, and July is always not the strongest month in the summer.
Speaker #4: It's more or less holiday time everywhere, and...
Speaker #3: I think the pre-buying effects, what you have seen or what we have seen, we have seen more or less in March and April when the Middle East crisis started and it was clear that we would be hit by some cost inflation. Therefore, we have seen some of them—as Dagmar mentioned. July and August are rather, let's say, months which are maybe what you anyhow have to combine and what you have to add up, as you have always, within Europe and also North America, some shifts between July and August.
Speaker #3: But we do not expect any pre-buying, nor do we actually see any pre-buying now in July. So, so far we see a normalization according to expectations for the July results.
Speaker #5: Okay, thank you very much. And maybe, finally, last question—sorry, but you had, yeah, so 3% pricing in Q2. So what would be your exit rate in Q3 and maybe H2, and could we get to a 5% pricing in the back half?
Speaker #4: Well, just looking at Q3 and Q4, it's not a number which is totally out of range. And, maybe to your former question, I would just like to add we've seen, of course, in July, very hot temperatures—a very extreme summer—and that might even impact one or the other building activity.
Speaker #5: Okay. Thank you so much.
Speaker #2: Thank you, Isaac. And we will move on to Michael Marshallinger from Erste Group. Michael, please.
Speaker #1: Yes, good morning. Thanks for taking my questions. Also, all the best to Mr. Scheuch and a speedy recovery. I have three questions. Firstly, given the scale of the profit warning and the much weaker than expected residential new build markets in North America, how should we think about the midterm targets you presented just a couple of months ago at your CMD? Are these targets still valid, or are they delayed or in need of reassessment?
Speaker #3: Maybe if I may start with the first one yeah the the the scale or let's say the delay in the recovery yes we confirm the billion it is linked to the to the recovery of of of new housing in Europe and in in in the US mainly.
Speaker #3: Keep in mind we are running our production sites today with a capacity utilization of plus or minus 60–65%. Bringing this back on a normalized level to 80–85%—and this is also what we have communicated in the past.
Speaker #3: This will give already quite a leverage. In addition to that, you remember all the initiatives that we have taken, yeah, on restructuring costs, taking costs out.
Speaker #3: So, I strongly believe we will emerge stronger if housing comes back than we were—than we are before—than we basically where we were before.
Speaker #3: So yes, this midterm target is confirmed.
Speaker #1: Okay, thank you. Then could you please comment on any further possible one-offs in H2, either from structural adjustments or a sale of non-core assets?
Speaker #4: Well, of course, we intend to sell one or the other non-core property, as already announced, and we will see there one or the other in the second half.
Speaker #4: Major restructuring costs are not.
Speaker #3: We will see smaller things across the portfolio. We see some smaller things in the East; also, we have some smaller things in the West. We just discussed yesterday about the US, the plant network in the US. So, I would say yes, we will see some of the one-offs, but I would say maximum to a €10 million one-off of restructuring.
Speaker #1: Okay, thanks. And then my last question. We've net debt to operating EBITDA now guided to 2.8 times at year-end, and if you take reported numbers maybe above 3 even. Does this higher leverage, in your view, affect the timing or likelihood of exercising the call option for the remaining Itala shares in H1 ’27?
Speaker #4: No, we will continue, because buying Itala shares in two steps was to, like, make it a little bit easier for our net debt. And Itala shares fit perfectly into our strategy, and therefore, no, that doesn't differ from that.
Speaker #4: And in in the on the chart 22 you see these 100 roughly 180 million amount which is outstanding for acquisitions to buy first like minorities of Itala share which will be a number of 160 and the 20 million are other yeah purchase price liabilities we have to pay.
Speaker #4: So that's all included.
Speaker #1: Okay. Thanks a lot.
Speaker #2: Thank you very much, Michael. And we will move on to Julian Radlinger from UBM.
Speaker #5: Yeah, thanks very much, guys. Appreciate it. So, two from me. First of all, if we could dig in a little bit on that neutral price/cost assumption you're making in H2.
Speaker #5: So you you sound on this part you sound quite confident and I just wanted to double check is that is that based on an assumption of oil and gas and as a result of oil obviously plastic resin input staying at the current levels or are you assuming a little bit of a drop off or something over the course of the second half of the year?
Speaker #5: Thank you.
Speaker #4: Well, the assumption is, of course, that it is neutral or balanced only, but for renovation and infrastructure and the like, negative price-over-cost we see in new build in the UK, US, and Canada is, of course, part of the €100 million we are missing.
Speaker #3: But maybe, if I may add here, yes, we have—considering the hedging levels that we have on the energy and what is open positions.
Speaker #3: We this is why I think we feel comfortable to show a balanced price cost spread in the second half yeah we we we have basically a clear understanding based on the long-term contracts and also on the hedging levels what we have for the second half.
Speaker #5: Okay. And then my second question is: so, in Eastern Europe, your sales were up 29% year on year, all in. I think you said that Itala share is sort of partly in Eastern and partly in Western Europe.
Speaker #5: So if I split it down the middle, I'm left with double-digit organic growth in Eastern Europe in Q2, and based on what you're saying about pricing, I guess the bigger part of that will be volume.
Speaker #5: So my my question here is first of all is is that correct? Did you did you have double digit volume growth in Eastern Europe which would be I mean really strong obviously in in Q2 and I know what you said about customer stocking and maybe you had some here and there it's hard to say but are you you know are you factoring any kind of a reversal of that into the guidance?
Speaker #5: Are you seeing any reversal of that? Has that continued so far? I would love to understand that a bit better. Thank you.
Speaker #3: The volume growth in Eastern Europe is not double-digit. Yeah, it is a high single-digit volume growth. The rest is pricing in Eastern Europe, yeah.
Speaker #5: So you had.
Speaker #3: In the second part of the question, you said, 'If we reverse?'
Speaker #5: The question was—I think it was asked already before—basically, whether you're assuming any kind of reversal from what might be stock building in the second half.
Speaker #5: In the second quarter, basically. If you're factoring any of that into the guidance.
Speaker #3: No. No no.
Speaker #5: Okay. Thank you.
Speaker #2: Thank you for your questions, Julian. We will now move on to Markus Remies, who is currently on the phone for this call. Yes, you are already unmuted.
Speaker #2: Welcome Markus Remies from Odoo.
Speaker #6: Yeah. Hi, good afternoon, all. The first question relates to the investment volume that you have baked into your net debt target for the full year.
Speaker #6: Can you give us an update here and, related to that, I see €130 million out for Itala share. If I'm not mistaken, the equity value was €160 million mentioned at the Capital Markets Day.
Speaker #6: So, is there still $30 million then coming in in the third quarter?
Speaker #4: No, it's what you see, like in the cash flow statement—it's €160 million minus €30 million net cash enhanced on Itala share. So the purchase price for the 50% plus one was €160 million.
Speaker #4: There's nothing more to come in, in the second half of the year.
Speaker #6: Okay, very clear. And on the capex figure for 2026, can you give us an update?
Speaker #4: Well, on the capex figure for 2026, we are working on it. We have a program initiated and in place to reduce it. We have strict control of every capex, not only gross capex but maintenance capex as well, and you will see a lower number than originally communicated.
Speaker #6: Okay. Staying on the on the net debt figure you had quite a a positive contribution from factoring at the end of last year. What's kind of the level you're you're currently running also at the end of the first half and is the cash inflow that you guided from working capital is that is there also a share of rising factoring?
Speaker #4: Well, working capital management is, of course, what we do. We focus on inventory—reducing inventory to have the real cash effects. Regarding factoring, of course, we do factoring.
Speaker #4: We increased factoring in 2025 because we, yeah, integrated Terrial into our factoring programs. We integrated one or the other country, and yes, there's a level of factoring in the half-year figures, of course, as well, but less because we are changing a partner regarding factoring. Therefore, there's less factoring in June 2026, and on the other hand, of course, the strong increase in receivables is due to the strong growth we've seen in sales, especially in May and June.
Speaker #6: Okay. And the 2.8 times net debt target, just to make it clear, does it include an increase at year-end versus the 2025 level?
Speaker #4: In factoring, no, not really, because the level will more or less be the same.
Speaker #6: Okay. Thank you very much. Can I then turn to the to the equity sorry to the to the energy topic. Again and ask for an indication on the on the level of forward buying into 2027 and maybe you can give some preliminary kind of assessment what it would do to your cost base if energy prices natural gas prices would stay at the levels where they currently are.
Speaker #4: Well that's a that's a difficult question because I'm I'm sure you're aware of our fixing or hedging strategy regarding energy prices. And we have there always like a further it is a way as less volume be secure.
Speaker #4: Therefore, there's a higher open position, which we close as we come closer, and therefore it's too early to make a prediction about our '27 energy prices in total and what impact that might have.
Speaker #6: Okay. Can you can you share which which percentage is is is already hedged at this stage?
Speaker #4: Well, at that stage, we are talking about 60 to 80% in some countries. Overall, on average, it's about—yeah—between 60 and 70%.
Speaker #6: 60 to 70%. Okay. Thank you very much. And one more question. Regarding the the jet stream cartel accusation can you maybe shed some light on the on the on the reason for for that?
Speaker #6: Is it like price fixing or is it other other related collusion? And and give my ignorance but you were saying you made the settlement despite no wrongdoing and and I understood it was more like a a pressure because the others have have made settlements.
Speaker #7: I think I think there's nothing I think and and we tried to to explain it. We we we did nothing wrong here and also yeah to move and I don't know how deep you are in the US legislation and how such a civil legal procedure works.
Speaker #7: But it was in our case yeah a clear rational decision to secure the business yeah because these kind of settlements yeah what you have can go could create quite an a big impact financial impact on the on the company.
Speaker #7: So it was a a from a business rationale it was a clear decision which was taken between the supervisory board and the managing board to to go that way even if it is clear that we have nothing that there was no any wrongdoing from our side and it would take too much time to explain you all the details yeah but it is something which was really a business decision where we said we take this 50 million and and close with that the whole thing of of this legal case.
Speaker #6: Okay, but the origin wasn't like price fixing or anything?
Speaker #7: It was basically providing price data to an independent portal, and this was basically the trigger point in the US, which was used by every resin producer and also piping producers. Yeah, there are also the big ones—the West Lakes and the Otterdales.
Speaker #7: I don't know how, how, how good you know all these names, but basically it was driven around this portal, which was installed under a Safe Harbor regulation of the DOJ. Yeah, so it is something that would need more time to understand, but for us, it was clear to go for a settlement, where we can take this risk off our balance sheet.
Speaker #6: Okay, thank you very much. And the last question is more about understanding the market headwind—how you came up with this €100 million coming from the new residential field market.
Speaker #6: Is that essentially the volume, having downside deviation times a contribution margin, or how is the $100 million?
Speaker #7: No. It is a it's a combination yeah. If market are dropping and take look at the US yeah where we are actually on a a level on the market level like we have seen last time in in the years 2009 and 10 where we had housing stats clearly I think around 1 million and this is a combination then yeah you have to adjust your capacity you are running your plans on 60% 65 70 maybe but yeah you're you're you're your fixed cost coverage is simply poor at the moment.
Speaker #7: So then the consequence is some overcapacity on the market, and then you get price pressure. So, I would say you simply get pressure on your margin and on your fixed cost coverage, yeah.
Speaker #7: So it is, you know, our business long enough, it is a heavy asset business, and therefore, yeah, if you're not running the plants, you get hit by the fixed costs. And what we immediately have done is to bring down the shift pattern.
Speaker #7: We have taken out as much as possible on fixed costs. We took out capacity. We went into more, spalling. All these measures are what we normally do when we see that there is really a cut in the market.
Speaker #7: And this we have really heavily re materialized or we have seen in in in the first half year in the especially in the US yeah.
Speaker #6: All right. Understood. Thank you very much.
Speaker #1: Thank you, Marcus, for your questions. We will now move on to the person with the phone number ending in 2809. You should be able to unmute yourself now.
Speaker #1: And please tell us your name and your institution.
Speaker #6: Yes, this is Miro Zusak from JMS. Can you hear me?
Speaker #1: Yes.
Speaker #7: Yes we can hear you.
Speaker #6: Thank you. Just two quick ones. The first one was already touched on before: the split of the Ital chair sales into the three segments. Can you please help us there?
Speaker #6: It's like it was mentioned 50/50 before, but maybe you can provide us with the actual figures.
Speaker #7: What are you interested in regarding the revenue numbers between the regions? Is it the region East and the region West? How much revenue goes into East and West, or what exactly is the question?
Speaker #6: Yes. Yes.
Speaker #7: I'm afraid we have to provide you with this in a second step. Yeah, I think we do not have it now. If you don't mind, if you send us a short message, we would provide you with this number by email after the call.
Speaker #6: Okay, thank you. And the second one would also be on Italchair. So you consolidated 50.1% for two months, and I didn't see any minorities there.
Speaker #6: So you consolidated the profits and the revenues, but the minorities were still zero. Can you explain this—why are there no minorities?
Speaker #7: Yes, these are minorities. Yes, these are minorities in our equity and, of course, these are minorities in the P&L, like in the report in the financial report for the first half of the year. Hold on.
Speaker #6: Okay. I'm on page 18 of the report. It's a German report. There is zero. Is this a mistake in the report, or is it?
Speaker #7: Well well from Ital chair we have these in the presentation our contribution of operating EBITDA then you have to take into account that Ital chair is a business which was highly financed by private equity and they had net debt with double digit interest rates and therefore of course the result after after tax is not really visible.
Speaker #7: On the other hand, we refinanced the whole net debt, or the whole debt, but to be precise, the whole debt of Italchair already. Therefore, we will see in the second half of the year a positive—yeah—a positive figure for earnings after tax. The earnings after tax within the first two months of our consolidation have been around, below €1 million, but positive.
Speaker #7: You will find a number in the second half Miroslav yeah it is plus minus serial as Dagmar just explained. So you will find the number back in the second half because then you will see a larger impact let's say that way of eight months of of Ital chair.
Speaker #6: Very clear. Thank you.
Speaker #7: Okay. Appreciate it.
Speaker #1: Thank you very much for your questions. Miro from JMS Invest, and we will move on to Daniel Kayinuri again with some follow-ups. Daniel, please.
Speaker #8: Hi hi. Thank you for taking your third question. I do appreciate it. Just on the the ETS news and the broader carbon framework developments are there any changes to your business planning it'd just be useful if you could update us on your inventory of the carbon credits and your planned around your plans around selling or buying and and when that may take place.
Speaker #8: Thank you.
Speaker #7: In principle, you know that there are negotiations ongoing on the ETS scheme. So far, we are positive and happy with the developments which are coming from Brussels. We also sent out, I think last week, a short press release on that topic. There's one topic pending: that's the ETS allocation for clay blocks, where we do our necessary lobbying work in Brussels, and we're also confident there that we will keep the allocation that we get today also for the next years. It's just too early to give you a better update now, but we will keep you informed.
Speaker #8: Okay. Thank you.
Speaker #1: Thank you, Daniel. And we will close now with a follow-up question from Julian Hartlinger. Please, Julian.
Speaker #7: Julian we cannot hear you.
Speaker #6: Can you hear me now?
Speaker #7: Yes now it works.
Speaker #6: Okay, sorry. Thank you for taking another question for me as well—I appreciate it. I just want to get back to the H2 price/cost one more time.
Speaker #6: I know we're over-laboring this topic a little bit, maybe, but I think it's really important for investors to understand this new guidance.
Speaker #6: So my question is this: the 4.5% pricing and the sort of 5% that you've talked to, that's just Europe, and you've got negative pricing in the US.
Speaker #6: So so the first part of my question would be are you thinking about five-ish or let's just call it mid single digit pricing for the group in the second half of the year or just for Europe and on a group basis it's going to be a little bit lower than that maybe three three and a half something like that.
Speaker #6: Am I reading that correctly?
Speaker #7: These are Daniel I can or Julian I can already exclude yeah this is the impact what you're mentioning about Jetstream yeah because I think Dagmar mentioned it yeah the negative price impact what you see in the US is mainly out of of the piping business yeah and it is not so not so so big an impactful that you would basically create a one two three price notches down yeah so it is it will have an impact the 5% what we mentioned before is on on Europe level we will see for the whole year in the US or in North America still a slightly negative price impact but this will not harm let's say the total number of the group as simply the business itself the the piping business itself is too small yeah
Speaker #6: Okay, but North America is negative as a segment, even though it's just coming from piping there. Is that right?
Speaker #7: Yes, in pricing, in the talking about the first half, the second quarter, what do you want to...
Speaker #6: Yeah, yeah, well, both—both as well as what you're assuming for H2.
Speaker #7: Let's move Julian on the slide 16 yeah because I think this is what you refer to where we have the pricing effects on your residential housing UK North America which is slightly positive yeah renovation is small you know in the US and as we as Dagmar explained the minus eight what you see is mainly out of the piping business in the US also not in the UK yeah and this is what Dagmar said it is double digit it does not mean that we erode the margin because also resin prices went down in the first half year yeah so we not we are not expecting yeah that this impact that this negative impact is harming let's say the the full year forecast on on pricing for the second half of the year.
Speaker #6: Okay okay that's clear. And then my my ultimate question then is so if if we're going to have let again something around 5% or so in the second half of the year and you're talking about neutral price cost unless my numbers are wrong to get to neutral price cost with four and a half or 5% price means that you have less inflation than the 7% in Q2.
Speaker #6: You have more like something like 5%. And so, again, just to understand—that is, is that what you're implying? And if so, why, or is there...?
Speaker #7: It is what we only can confirm what you calculated yeah it is it's maybe a little bit the 5% I expect that the five maybe will be five and a half and the the the the five what you mentioned on the cost inflation maybe is more in the direction of six but yes we are talking about about the same numbers yeah
Speaker #6: Okay, and why is that lower than in Q2?
Speaker #7: As we have seen this significant impact out of the of the Middle East crisis yeah there was simply a spike which is already now disappeared yeah in the in the in the piping business.
Speaker #7: The level of resin prices today is below the level of resin prices that you have seen in Q2.
Speaker #6: Okay, all right. That's really clear, and I really appreciate it. Thank you very much.
Speaker #7: Thank you.
Speaker #1: Thank you very much, and thank you all for the extra time you've put in. I would now like to turn the conference back to Dagmar Steinert for any closing remarks.
Speaker #5: Yeah, thank you very much to all of you for your valuable questions. And yeah, looking forward to our next call, and I’m sure we made it quite clear: we are resilient, our business model works, and we have a plan for how to move forward.
Speaker #5: Thank you very much.
Speaker #7: Bye.
