This trading update precedes the H1 2008 results announcement, including detailed analysis per region and business unit, to be published on Friday 29 August 2008 before start of trading.
Zwolle, 20 June 2008 - Wavin N.V., Europe’s leading supplier of plastic pipe systems and solutions, expects revenues in the first half year of 2008 to grow approximately 1% to around EUR 835 million (H1 2007: EUR 824 million). On a like for like basis, excluding the effects of acquisitions and currencies, revenues will be down approximately 3%. The Ebitda(1) margin over the first six months is forecast at around 11%, compared to 13% in the very strong first half of 2007.
In the light of deteriorating conditions in the UK and Irish market, the company has previously announced a restructuring of the organisation in Ireland. In the UK, in order to contain costs, Wavin has now decided to accelerate the last phase of the Hepworth acquisition plan, the integration of the commercial organisations.
Both restructuring measures will lead to non-recurring costs of around EUR 9 million total that will be taken in the net results of H1 2008. The projects are in an advanced stage and will be completed in the coming months. The benefits of these measures will come through in 2009 and onwards.
Management will continue to take appropriate action to adjust to the slowdown in the construction cycle, when and where needed.
Philip Houben, Wavin CEO: "It is obvious that the credit crunch is having an increasing impact on the building sector in a number of Western European economies. In the UK/Ireland region housing starts have meanwhile dropped more than 25%. Declining house prices and higher mortgage costs, which lead to reduced consumer confidence and less home transactions, are also affecting the important Repair and Maintenance sector in this region. In addition, the substantial depreciation of the UK pound has a negative impact on consolidated accounts.
Other Western European construction markets show a varying picture. Activities in the Benelux remain at a reasonable level, whilst the weak German market shows some signs of bottoming out. In the Nordic markets, Denmark sees a notable decline in both the residential and non-residential segment whereas the other Scandinavian markets are holding. The French market is stable but softening, whilst the Italian construction sector is under pressure.
The emerging markets of Europe continue to outperform Western Europe, albeit at a considerably lower pace than the exceptional growth record last year. In some of these countries we are experiencing margin pressure from dollar-denominated competition. In Turkey, Wavin's recent acquisition Pilsa Plastic is delivering revenue and margin levels ahead of expectations."
Management remains cautious on its outlook for the rest of the year. Most European statistics indicate that construction markets will remain challenging in the immediate period ahead. However, long term developments such as urbanisation, climate change, smaller households, energy efficiency of buildings and substitution of traditional materials by plastics are in favour of the industry. As market leader in Europe, Wavin will continue to benefit from these trends.
(1) All references to Ebitda reflect operating result before depreciation, amortisation and non-recurring items
Financial Calendar 2008 (Subject to change) 29 August Publication of H1 figures 2008 (before start of trading)
1 September Ex-dividend date interim dividend
3 September Record date for interim dividend entitlement
18 September End of dividend choice (cash or stock) period
24 September Announcement of stock dividend conversion ratio
26 September Payment interim dividend
19 December Trading update
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