Wavin Group reports growth in first half year 2005
Zwolle – The Wavin Group has achieved solid revenue growth and margin improvement realising a substantial profit improvement in the first half year of 2005. The results of Hepworth Building Products, acquired in Q1, are fully consolidated in the Wavin Group from the second quarter 2005 onwards.
Transition to IFRS
In 2005 Wavin is reporting based on the international Financial Reporting Standards (IFRS). The impact of the transition of Dutch GAAP to IFRS on the balance sheet and results is limited.
Change in shareholder structure
On July 8, the shareholders of WMO Beheer (the province of Overijssel and 24 municipalities in and close to Overijssel) approved the sale of their 45.75% stake in Wavin. In the course of September Wavin will have a new shareholder structure. CVC (a 45.75% shareholder since it purchased shares from Shell in 1999) will own 80% of the Wavin-shares, Alpinvest 10% and 10% will be owned by a group of Wavin managers.
In connection with the change in shareholder structure, Wavin is negotiating a new EUR 850 million refinancing facility to fund the transaction. The new facility will replace all existing financial facilities. The company expects to finalise this process in the course of Q3 2005.
Philip Houben, President & CEO, comments:
â€œAfter the record performance in sales, operating- and net profit reported over 2004, we have managed to continue this positive trend in the first half year of 2005. Although market circumstances in the European construction industry still leave room for improvement, we were able to restore margins after the sharp increase of raw material prices we faced in 2004.
Much attention is given to the integration of Hepworth Building Products. Substantial synergies have been identified and we will unlock those in the coming years.
After an involvement of fifty years with the company, our founding shareholder WMO Beheer has announced to divest its 45.75% shareholding. We thank WMO Beheer for their large contribution to the development of our Company. At the same time we welcome the new shareholder Alpinvest and we see the enhanced participation of CVC as a vote of confidence for the future of this company and its strategy.â€
Although market conditions in the European construction markets are not buoyant, there still is some growth. Management therefore expects a continuation of the companyâ€™s positive operating performance with RMI (Repair, Maintenance and Improvement) as an important market driver.
Raw material prices, which had a major influence last year, levelled off somewhat in the second quarter of this year, but are recently showing upward movements again. This may lead to renewed margin pressure in the rest of the year.
The upcoming refinancing and one-off restructuring costs will have a substantial impact on the year end net profit. It is expected however, that sales and operating profit for the full year 2005 will be well ahead of the previous year.