Inbox: Wienerberger: Erste Group remains cautious

Mailed from / found at: Erste Group Research

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From Erste Group’s Equity Weekly: Wienerberger had already published key data on sales (EUR 793 million / + 2% y / y) and EBITDA (EUR 106 million / -3% y / y) in the first quarter at the beginning of April. Surprisingly, there were value adjustments of around EUR 116 million, which reduced the quarterly result to EUR – 106 million. The majority of the valuation allowances (EUR 94 million) related to the full goodwill allowance in North America. However, various property, plant and equipment were also written down in European markets (EUR 22 million). Assuming that there will be no further lockdowns on the company’s markets and that the demand situation will quickly normalize, Wienerberger expects market declines of 15-20% this year. In this case, the adjusted EBITDA is expected at EUR 440-480 million.

Outlook. Due to the unexpected write-downs, the quarterly result was well below expectations. As already mentioned in our last post, we expect the full braking effect of the Corona crisis to break through in the second quarter (published on August 12). The new guidance for 2020 would mean a decrease in adjusted EBITDA of around 20% y / y, but is subject to rapid normalization. The company expects numerous government infrastructure programs to boost the economy. However, we remain cautious and confirm our recommendation to hold.


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