United Kingdom Market | Products | Strategy

United Kingdom Market | Products | Strategy

United Kingdom
Market | Products | Strategy | Outlook
Harald Schwarzmayr, Managing Director Wienerberger UK
December 2, 2010
Content
ƒ General UK market information
ƒ Wienerberger UK
ƒ Trends and Wienerberger product solutions
ƒ Conclusions
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1
Economic Data UK
Unit
Inhabitants
Real GDP
2007
2008
2009
2010
2011
2012
1,000
60,975
61,393
61,794
62,222
62,649
63,074
1,363
1,295
1,312
1,337
Source
Euroconstruct
06/2010
GBP bn
1,364
1,369
CPA Autumn 2010
GDP growth
%
2.7
-0.1
-4.9
1.3
1.9
2.4
CPA Autumn 2010
CPI
%
2.3
3.6
2.2
3.1
2.8
1.8
CPA Autumn 2010
Unemployment rate
%
5.4
5.7
7.6
8.2
8.0
7.0
Euroconstruct
06/2010
GBP mn
108,278
41,124
11,625
10,403
n.a.
n.a.
Bof E 08/2010
1,000
26,652
26,838
26,955
27,120
27,270
27,395
Euroconstruct
06/2010
Net change in volume
of mortgage loans
Housing stock
ƒ Public and consumer spending will remain low due to government measures
and tightening fiscal control
ƒ Mortgage availability is declining, despite of low interest rates; first-time
buyers are squeezed out of the housing market
Note: Figure in blue indicate that forecast is not available – replaced by Wienerberger estimates
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Average Growth of 6% in Housing Starts
Expected Until 2014
Housing starts in 1,000
250
Apartments
Others
200
150
CAGR 2010
114
114
110
100
68
98
101
93
65
98
83
85
89
43
45
46
48
53
2009
2010e
2011f
2012f
2013f
66
50
- 14: 6%
111
60
0
2005
2006
2007
2008
2014f
Data: CPA Summer 2010
ƒ Euroconstruct is more optimistic about 2011 and forecasts an increase of 18% in housing starts
ƒ We are more conservative and follow the Construction Product Association forecasts:
- flat housing market expected for 2011
- mid-term: 6% average growth rates expected until 2014
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2
Trend Toward Terraced Houses
60%
ƒ Reverse trend
50%
from apartments to
terraced houses
and semis
40%
30%
Î Brick/tile
consumption per
plot is increasing
20%
10%
0%
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
Detached Houses
Detached Bungalows
Semi-detached Houses
Terraced Houses
Attached Bungalows
Flats and Maisonettes
Source: NHBC
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UK Has the Lowest Number of Housing Starts
per 1,000 Residents in North-West Europe
10,0
Housing starts (residential) per 1,000 residents 1)
8,0
Western European average 2003-2008 = 5.95
6,0
4,0
2,0
5.2
5.0
3.9
3.2
1.8
Potential
0,0
F
2)
NL
BE
SCAN
UK
Î Significant pent-up demand for new homes
1) Source: Euroconstruct (June 2010), data for 2009
2) Housing completions
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3
Trends for the UK Construction Market
ƒ Short-term
- Flat housing market expected in 2011: reduction in number of flats and
increase in family housing
- Largest drops in the commercial and public sector
ƒ Long-term
- Public and commercial sector will remain at low levels
- New residential construction will be main driver for growth
- RMI market will further gain importance (improve energy efficiency of
buildings)
ƒ Key drivers for new built and RMI will be unemployment rate,
inflation and mortgage availability
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Wienerberger UK
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4
Wienerberger History in the UK
ƒ 2001
Market entry via acquisition of Optirock, pure trading player
ƒ 2004
Acquisition of tbb (the brick business), strong production
base in the North and the South of the UK – number 3 in
bricks in the market
ƒ 2007
Acquisition of Baggeridge Brick, strong player in the
Midlands, gaining a national footprint
ƒ 2008
Acquisition of Sandtoft Roof Tiles – number 3 in the market
overall and market leader in clay tiles in the UK
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UK is the Largest Facing Brick Market in Europe
Engineering
Bricks
Wirecut
Bricks
Handformatic
Bricks
Stock
Bricks
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5
Wienerberger Brick Plants and
Sales Locations
Operating brick plants
Mothballed brick plants
Distribution centers
ƒ 2010: production < sales
Glasgow
ƒ ~40% of capacity closed
Eldon
Todhills
Belfast
or mothballed
Hull
ƒ ~20% capacity reserve
Cheadle
Denton
Kingsbury
from plants in operation
Sandown
Ipswich
Sedgley
Waresley
Hartlebury 1/2
Warnham
Purfleet
Smeed Dean
Highbridge
Ewhurst
Steer Point
Rudgwick
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Structure of the Brick Market
Commercial
/Public
19%
ƒ RMI sector increased significantly
as a result of low housing starts
Residential
New Built
41%
ƒ Commercial/public sector will
decline further in the coming years
due to the cuts in public spending
ƒ New-built sector will be the growth
driver over the next years
Residential
RMI
40%
Estimates by Wienerberger
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6
Development Brick Market
Sales vs. Production vs. Stock
UK Brick Stock Levels vs. Production and Despatches
1.200
1.100
3.000
1.000
2.500
900
800
2.000
700
1.500
600
1.000
Jan.
97
Stock Quantity 000's
Production & Despatch Quantity 000's
3.500
!
500
Jan.
98
Jan.
99
Jan.
00
Jan.
01
Jan.
02
Rolling 12 Month Production
Jan.
03
Jan.
04
Jan.
05
Jan.
06
Jan.
07
Rolling 12 Month Despatches
Jan.
08
Jan.
09
Jan.
10
Monthly Stock
Source: BDA
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Summary Brick Market 2010
ƒ For 2010 ~ 15% growth of the brick market is expected, driven by
- increase in new built (peaked in Q2 2010)
- move to detached houses from apartments
ƒ Trend that big customers are starting to consolidate their supply
base
ƒ Creation of national footprint pays off
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7
Product Portfolio Roof Tiles
Clay
Tiles
Concrete
Tiles
Recycled
Slates
Roofing
Accessories
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Wienerberger Roof Tile Plants
and Sales Locations
ƒ Local North-Eastern player
in roof tiles
Roof tile plants
Distribution centres
ƒ Use stocking facilities of
brick business to get a
national footprint
Broomfleet
Heckmondwike
Goxhill
Sandtoft
Waresley
Ewhurst
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8
Structure of the Roof Tile Market
ƒ RMI sector increased
Commercial
5%
New Built
45%
significantly as a result of the low
number of housing starts but will
remain strong due to the need of
reroofing
ƒ Commercial/public sector is
RMI
50%
small due to the building type
(flat roof)
ƒ New-build sector will grow in line
with increase in housing starts
Estimates by Wienerberger
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Summary Tiles Market 2010
ƒ The market is growing by ~15% in 2010
ƒ Market remains competitive
ƒ Clay tiles are outperforming concrete tiles in 2010
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9
Trends and Wienerberger Product Solutions
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Requirements for the Future
Create individual added value for each sales channel
ƒ Developer
- Being able to scale the speed of construction and to deskill it
- Complying with building regulations
ƒ Specified/smaller builder
- Aesthetics (shape, color, texture)
ƒ Merchant
- Enhance their supply chain
- Use the merchant’s logistical power
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10
Wienerberger Solution: Added Value - Developer
Large format clay roof tiles pass almost all planning requirements
and are easy and quick to install
21
Cost Savings per Installed m2
Traditional Roof Covering
Sandtoft Alternative
Clay Plain Tiles
20/20
Interlocking natural
clay plain tile
Potential Saving
40-50%
Concrete Plain Tiles
Thin leading edge
large format clay tile
>50%
Natural Slate
CASSIUS
Fibre Cement
RIVIUS
Riven edged large
format clay tile
45%
Pantiles (clay/concrete)
OLYMPUS
Clay double pantile
(large format)
30%
Clay double roman
ROMULUS
Clay double roman
(large format)
30%
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11
Guarantees for the Entire Roof
We guarantee the roof if all components are purchased from
Sandtoft (incl. non-ceramic accessories) => social housing
23
Testing Clay Blocks in the UK
ƒ Promote the cavity wall concept with facing bricks
ƒ Focus on large organizations in the housing and construction
industry, main USP’s are
- Speed of construction => cost savings
- Quality of the build work (thermal mass, compressive strength)
ƒ Strategic goal to win projects in the commercial and housing
sector
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12
Projects POROTHERM – Accreditation/Manual
ƒ NHBC have accepted in writing POROTHERM for
use as the inner leaf of a cavity wall following the
issue of the CERAM Research report
ƒ Acceptance for outer wall and monolithic was
granted as well in September 2010
ƒ POROTHERM complies with BS EN 771-1:2003 and
carries a CE mark
Note: NHBC = National House-Building Council is the standard setting body and leading home construction warranty and insurance provider for new and newly-built
housing in the UK
25
Test Sites in the North-East:
POROTHERM vs. Concrete Blocks
Focus on large clients from the
construction and housing industry
26
13
Prefabrication Facade
Next to the already launched ARGETON cladding solution, we
added our CORIUM solutions to our product portfolio
27
Added Value Merchants – Recycling Concrete
Roof Tiles in Partnership with Roofing Merchants
Return to Sandtoft, grinding and reuse
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14
Conclusions
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Main Findings on the UK Market
ƒ Housing starts have bottomed out in 2010
ƒ Mortgage availability continues to be key for further growth
ƒ New-built market will be the driver for future growth
ƒ Building systems will become more interesting to large developers
once the market returns to levels seen before 2008
ƒ Roof tiles RMI market will benefit from trend to insulate and/or put
solar onto private homes
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15
Outlook 2011
ƒ Stable volumes and revenues expected, based on
- flat housing market
- stable RMI market
ƒ Improvement of EBITDA margin expected, mainly driven by
- better capacity utilization (2010: production < sales)
- shift in product mix
- price adjustments in line with cost inflation
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Mid-term Strategy UK 2011+
ƒ Benefit from the recovery of the British housing market
ƒ Revenue growth mainly driven by
- recovery in new residential construction
- stronger RMI market
- large format clay roof tiles will gain further market share
- accelerated growth in the more profitable merchant channel due to our
national footprint
ƒ Earnings and margin growth mainly driven by
- operational leverage (spare and mothballed capacity)
- higher average prices due to system sales approach and an increasing
product offering of high value products
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Wienerberger Investor Relations
Wienerberger AG, A-1100 Vienna, Wienerbergstrasse 11
Tel +43 1 60192 - 471, Fax +43 1 60192 - 466
[email protected] | www.wienerberger.com
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