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Global Credit Research - 07 May 2010
Approximately EUR 1 billion of long term debt instruments affected
Frankfurt, May 07, 2010 -- Moody's has today changed the outlook on Wienerberger's Ba1
corporate family rating, Ba1 long term senior unsecured and Ba3
hybrid ratings to negative from stable.
The rating action was prompted by the publication of very weak results
in the first quarter 2010. Moody's believes that, based
on these results, it might be more challenging than previously anticipated
for Wienerberger in the rest of the year to catch up from these weak results
in order to achieve cash flows that would be sufficient to maintain Wienerberger's
In the first quarter 2010 Wienerberger's EBITDA turned negative
and this also had a negative effect on funds from operations. In
addition, due to an increase in net working capital -- which
is due to the seasonality of the business -- the company's
net debt has increased by EUR 177 million and on an adjusted basis has
reached EUR 1.2 billion (per December 2009: EUR 1 billion).
Though the first quarter is always a weak period because of weather conditions,
the results were somewhat weaker than expected by the agency. "We,
however, take comfort from the fact that Wienerberger has maintained
a relatively high cash balance of close to EUR 300 million, which
will have increased further by the proceeds of the company's bond
issue in February 2010" said Matthias Hellstern, Moody's
lead analyst for Wienerberger.
On a last-twelve-months basis, Wienerberger's
gross adjusted debt/EBITDA reached 7.0x, but on a net debt
basis this was 5.6x. The RCF/net debt was 3.7%,
which positions Wienerberger very weakly in the current rating category.
However, Wienerberger's 2009 cash flow was influenced by significant
amount of one-off items, such as a EUR 53 million cash restructuring
charge. In addition in 2010 the cost cutting measures are expected
to feed through to the company's results together with a somewhat reduced
energy bill and reduced interest payments, which - assuming
all other factors remaining the same - should lead to an improvement
in EBITDA, FFO and hence an improvement in net debt/EBITDA.
The current rating continues to incorporate the expectation that (i) overall
volumes of Wienerberger's products will remain stable in 2010 as compared
to 2009, (ii) average prices will remain flat to slightly negative,
(iii) overall cash cost have been reduced to help improving the 2010 operating
EBITDA to at least EUR 200 milion, and (iv) free cash flow will
remain positive in 2010.
All these measures are expected to lead to an RCF/Net Debt ratio of above
15% in the current financial year, which is our threshold
outlined for Wienerberger to retain the Ba1 rating in 2010.
On the positive side, Moody's has taken into account Wienerberger's
good liquidity situation with very limited debt maturities over the next
2 years and sufficient headroom under the company's financial covenants.
Moody's notes that there is not much room for error for Wienerberger for
these metrics not to be achieved and any visibility that these cannot
be achieved in 2010 might lead to negative rating pressure, hence
the negative outlook.
..Issuer: Wienerberger AG
....Outlook, Changed To Negative From
The principal methodology used in rating Wienerberger AG was Moody's methodology
for the Global Building Materials industry, published in July 2009
and available on www.moodys.com in the Rating Methodologies
sub-directory under the Research & Ratings tab. Other
methodologies and factors that may have been considered in the process
of rating this issuer can also be found in the Rating Methodologies sub-directory
on Moody's website.
Moody's last rating action on Wienerberger was to change the outlook on
the Ba1 rating to stable on 17 September 2009.
Wienerberger AG is the world's largest brick manufacturer and Europe's
largest producer of clay roof tiles. The group generated revenues
of EUR 1.8 billion in 2009.
Eric de Bodard
Corporate Finance Group
Moody's France S.A.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's changes the outlook on Wienerberger's Ba1 rating to negative
Senior Vice President
Corporate Finance Group
Moody's Deutschland GmbH
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
No Related Data.
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