Wienerberger, the world’s biggest brick supplier, said today it expects its operating earnings to rise 74% year over year in the first half of this year to €530mln after a buoyant second quarter of trading.
In a trading statement today, the Vienna-listed building materials company raised its earnings guidance for 2022 to €900mln following “strong demand” in the past three months.
The new guidance is based on an optimistic outlook that assumes the continuous availability of energy, no overspill of the Russia-Ukraine conflict, and the absence of a recession in either Europe or North America this year.
“We expect during the second half of the year that demand levels will move towards normalised levels as we have seen them during the last couple of years,” said chief executive Heimo Scheuch.
Wienerberger expects continued demand for its products this year. Given it is the world's largest supplier of bricks, this is not overly optimistic.
The UK market suffered a building materials shortage in 2021, which continues to plague the industry as small construction businesses go bust amid high inflation and supply chain costs.
The Builders Merchants Federation said at the start of this year that domestic producers of bricks were operating at full capacity as homeowners ploughed ahead with renovations during the pandemic.
While the UK’s annual brick-making capacity is due to increase next year as more factories come online, the country is expected to meet existing demand this year by sourcing bricks from European manufacturers.
“In our new build segment we assume a solid level of building activity as we do not experience overbuilt markets and record inherent demand for new housing,” Scheuch said.
Wienerberger currently benefits from favourable natural gas hedges struck below spot prices, according to UBS analysts, which today recommended Wienerberger shares as a ‘buy’ on a price target of €30.
The infrastructure company said in April that despite the Russian gas supply freeze, production was unaffected at its European plants, where it said it bought 90% of the gas it required in advance and had “contingency plans” in place with various governments.
While restricted gas supplies led to shut-downs at some of its competitors, Wienerberger said it has shored up natural gas supplies in all of the markets it operates in and is working to convert some of its facilities to electricity, hydrogen, biogas or syngas.
It reported some potential uncertainty related to Austria or Germany, where the government might intervene to ration gas supplies further, but these markets account for less than 10% of its turnover.
Wienerberger’s shares were up 1.76% by 12:49 (UK time) today.