MONIER GROUP: 2008 RESULTS NEGATIVELY AFFECTED BY MARKET ENVIRONMENT

Thursday 09, April 2009

• Consolidated revenues down by 7.3% to EUR 1,506 million

• Group EBITDA declined by EUR 65 million to EUR 191.6 million

• Structural adjustments and performance improvement programmes made some positive impact in 2008, positive impact expected to continue in 2009

• Very challenging market conditions expected to remain in 2009

• Safeguarding of liquidity remains top priority

Monier Group, the world’s leading provider of roofing materials and chimney systems, reported revenues and earnings for the financial year 2008. Due to the credit crisis, the results were negatively affected by the drastically worsening market conditions and the decline in residential construction activity. The economic developments also had a negative impact on the demand for building materials for pitched roofs in Monier’s major markets.

In the financial year 2008, Group revenues decreased by 7.3% to EUR 1,506 million compared to last year. Particularly the US, the Western European markets and South Africa were negatively impacted by the market environment. In the same period, EBITDA declined by EUR 65 million to EUR 191.6 million, mainly influenced by deteriorating earnings contributions from the Western European markets. By contrast, the Eastern European markets, together with Brazil, Malaysia, China and other smaller Asian markets, showed positive developments.

Commenting on these results, Pepyn Dinandt, CEO of the Monier Group, said: “Like many other industries, the construction sector was also negatively impacted by the financial crisis. Despite the increasingly tough markets, Monier was able to further improve its competitive position. As a market leader we responded rapidly and forceful to the developments and took decisive action by implementing comprehensive structural changes. These measures included putting in place a streamlined organisational structure with simplified reporting lines and, in particular, measures designed to optimise sales and marketing effectiveness, purchasing performance, excellence at our plants and supply chain management. While these measures have started to make a positive impact, they could only partly compensate for the negative trend in demand, the declining prices for roofing materials in most markets
(-3.7 % in concrete tiles compared to last year / clay tile prices remain stable), and the significant cost increases, particularly for energy and cement.”

Roofing Components segment

The Roofing Components segment also suffered from the overall weak pitched roof market. Due to the declining demand in key markets, revenues in this product segment decreased by 3.7% compared to last year. The value of system components sold per square metre of roofing tiles sold, however, showed a positive development, which is testimony to Monier’s leading position as a system provider covering all aspects of pitched roofs.

Chimney systems business

Revenues in the chimney systems business were down year-on-year (-2.2%). However, the positive development in prices (+6.4%) could offset much of the 8% volume decrease. This was primarily due to ongoing expansion of the product portfolio in high-growth areas.

Cash management optimisation

In the financial year 2008 Monier focused on improving its cash management, which allowed the Group to reduce inventories by EUR 56.2 million. This also led to an improvement in Monier’s liquidity position.

Capital expenditure was also adjusted to reflect the business situation and was substantially reduced compared to 2007. Sustaining Capex totalling EUR 46.6 million for the period was lower than previous year (reduced by EUR 11 million), investments in new plants and products decreased by more than 50% to EUR 49.2 million.

Structural adjustments had positive impact on earnings

The targeted structural measures and projects designed to improve operating performance, initiated in the second half of 2008, started to make a positive impact. Lower SG&A expenses, as well as reductions in fixed production costs, helped compensate for the weaker business activity to some extent.

Paul Kolowratnik, Chief Technology & Production Officer of the Monier Group, said: “Wherever plants were not operating at sufficient capacity, we reviewed our industrial network in 2008. As a consequence, we closed 11 of the older plants and opened three new state-of-the-art plants. These measures, that resulted in a total of 149 plants worldwide, helped us optimise capacities and set the course for higher productivity. In addition, we closed some individual plants temporarily. Depending on market developments we might have to take more such steps in the future. These measures are not only about optimising costs, but also about continuously improving the performance of our production processes. For this reason, we have launched a project designed to further improve excellence at our factories. The major aim of this project is to ensure that our customers are satisfied with the high quality of our products, while we at the same time expand our market share through better cost structures.”

Current business situation and outlook 2009

Due to a persistently difficult market environment and a prolonged period of bad weather, business activity did not meet expectations in the first two months of 2009. In March, however, initial signs of improving business activity were noted in a number of markets. Nevertheless, the Group’s key markets are still in recession, which means that Monier continues to see a very challenging market environment for the financial year 2009.
Dr. Jürgen Koch, CFO of the Monier Group, commented on the financial management issues on which the company will focus: “High liquidity, which will secure our operating business for the foreseeable future, will remain our top priority in 2009."

Pepyn Dinandt summarises the outlook as follows: “We will continue to systematically pursue our structural adjustment efforts in 2009. This also means that we will have to continue to take rapid action and cut fixed costs in areas hit by weaker developing markets. In doing so, our aim will be to make sure that the impact on our employees is as socially responsible as possible. In order to further expand the Monier Group's leading global position, the new management has also redefined the company’s strategic focus. In the future we will concentrate on two key areas: as well as focusing on our core business with roofing tiles for pitched roofs, roofing components and chimney systems, we aim to exploit further growth potential for Monier in the energy-efficient construction sector. This objective saw us release a number of promising innovations to the market in 2008. I am convinced that the measures we initiated have put us on track to adjust the cost structure to the current situation and to sustainably improve our earnings. This will allow us to get Monier back on the growth path in operating terms and to emerge stronger from the overall economic crisis.”

Business performance figures 2008

The Monier Group is the world’s leading provider of building materials for pitched roofs, as well as for innovative roofing and chimney systems, with operations in 46 countries on four continents. In 2008, 11,155 employees generated revenues totalling EUR 1.506 billion.

More information on: www.monier.com