We're looking forward to the presentation, and with this, I'm handing over to the SVP IR, Claus Ehrenbeck.
Yeah, thank you very much, Mara. My name is Claus Ehrenbeck, and since the middle of September, I have the pleasure to head the Investor Relations Department at Wienerberger. Also, on behalf of the entire team, I welcome you to our conference call today on our Q3 and year-to-date financial numbers. The documents for this call have been released already at 7:00 A.M. this morning on the IR section of Wienerberger's website. Besides the Q2 numbers, you find there also the year-to-date numbers and the Q3 numbers are provided in full, so you've got there the entire set of numbers. The presenters in the conference call today are Gerhard Hanke, who has been yesterday confirmed as the CEO of Wienerberger, and Dagmar Steinert, the CFO of Wienerberger. With that, I would like to hand over to Gerhard to commence the presentation.
Thank you, Claus. A wonderful good morning, good afternoon, or even good evening from wherever you are dialing in. By now, as Claus just mentioned, you have seen in last night's announcement, the supervisory board has appointed me as the CEO, and I'm very honored to take on this role, and it also gives me great pleasure. I'm fully aware that this honor comes with a great piece of responsibility. Before we turn into the presentation mode, I would like to say a few words on the appointment. When the supervisory board asked me to step in as interim CEO, it was in the beginning of August, I took on the role with a clear goal, to take a cold eye review at where Wienerberger stands today. Take a look what is working and what needs to be changed.
Over the past three months, we have already taken important decisions and initiated already concrete action. The work is progressing well, and also at that time when the supervisory board asked me, for me, I was clear, speed is crucial, is important. Not wait, just move, as the time is so challenging, so speed is also something what is important. Today, we will give you a candid picture of where we stand and the first view of the direction where we are heading, and also an update on the strategic review. Having a short look on the environment, the market and the geopolitical environment remain challenging from a today's perspective. Residential new build is under pressure across most of our key markets, and we have seen that input costs are going up again.
At least, this is also what we have seen by the end of August, that driven by energy, costs are going up again. The good thing is that such a challenging environment brings also clarity. It shows where your strengths are, and more importantly even, I would say it shows you also directly where your weaknesses are actually. It requires you to set clear priorities and to act, and this is what we are doing currently. I strongly believe in our asset base and also in our strong market positions. I believe we have the right people to execute also through this challenging environment. For me, the question was never whether there is the potential. It was more the question how to unlock this potential and to bring back the success what we need as Wienerberger Group. For me, the priorities are clear.
First priority, I think no surprise, we have to reduce the leverage and strengthen our cash generation, structurally improve profitability, and ensure that we allocate the capital, the resources to businesses that generate attractive and sustainable returns for our shareholders. I think that's where we are focusing on. About the Q3 numbers, I will start with a short overview, then will hand over to Dagmar. Dagmar will walk us through the numbers before I take back and present you the first conclusions of our strategic review and what it means for Wienerberger going forward. Let me start with the presentations and also with the first slides. The quarterly figures, in line with expectations, I think that is important.
The market environment, respectively the trading conditions of the last quarter, both in Europe and in North America, were weaker than what we have seen in the first half of the year. The trading environment was slightly weaker also in Europe, in continental Europe, and you will see it also afterwards when Dagmar presents the numbers. It was not only the demand in the residential or in the new residential construction which has slowed down, but in general, we have seen a weaker market demand across all end markets, so also including the renovation and the infrastructure sector. On a positive note, I would like to highlight that pricing performance is strong. We have pricing up on a year-on-year base for the third quarter with 6%. I think year to date it is around about 3%, but we are on an increasing direction, let's call it that way.
The October results, what we see, are also in line with our expectations, so we confirm also our full-year guidance of EUR 640 million-EUR 650 million. For the full year, we expect a net debt position of maximum EUR 2.2 billion, which will correspond to a debt multiple of around about 3.3x-3.4x. Can only repeat once more, the reduction of debt is the key priority for us as management. As announced, lastly in our trading update, we started a strategic review in the beginning of September, as part also of the leadership transition. The strategic review focuses primarily on two areas next to the deleverage. It is firstly identifying measures to improve financial performance, and secondly, we are conducting a structured portfolio analysis. I will come back on, or I will provide you more information on the strategic review later in the presentation.
As mentioned, the third quarter results are in line with our expectations. Revenues, around about or approximately EUR 1.3 billion, operating EBITDA on 180, EBITDA margin of plus/minus 14%. These results, this set of results are reflecting also the current market reality where we are in. We have to be clear, what we see now is also what we expect, let's say, for the next months, as far as we have visibility. I think it goes without saying that we are not satisfied with this financial performance. We have already started to work on measures to unlock Wienerberger's full potential in this difficult market environment. Let me quickly also comment on the trading update, because it was also the first trading update what we announced of the half-year numbers on 6 October.
The beginning of October, it became clear that we would not be able to meet the guidance of 700, and that we had actually communicated during July. I think we have commented on that. The seasonal upturn in construction activity following the summer holiday period in September was less pronounced than anticipated. Next to that, actually, we have also seen that cost inflation were going up to an extent which only confirmed that we cannot basically confirm the former guidance. We were well aware what it meant to adjust the guidance once again, but it was important to provide clarity on an early stage and also to reset the guidance, which reflects also the current trading conditions. To be clear on that, we are committed to transparent and timely information. With that, let's move to the numbers and ask Dagmar to walk you through the figures.
Yeah. Thank you, Gerhard, and a warm welcome to everybody who joins the call from my side. Let me now turn to our financial performance in the third quarter as well as in the first nine months. As usual, I will focus on the development of revenue and operating EBITDA, the underlying price, volume, and cost dynamics, and our priorities for cash flow and leverage. Financial highlights. I'm really pleased to state that even in this weak trading conditions, we managed to expand our top line in both the third quarter and the nine-month period. These outcomes were driven by a decent job by our sales team, who managed to increase prices, as well as contributions from acquisitions. I will show you more details on that in a minute. As you already know, 2026 has been characterized by strong cost inflation and year-on-year weaker demand.
That is reflected in our operating EBITDA. The central message is clear. Revenue development remains resilient, but margin protection, cost efficiency, and financial discipline are immediate priorities. Having a short look at the development of crude oil and natural gas. In 2026, we've seen a major repricing of crude oil and natural gas upwards, driven primarily by geopolitical disruptions. After easing in June and July, crude oil prices almost doubled through the third quarter, increasing pressure on our raw materials and logistic costs. Natural gas prices also rose sharply from the levels seen in early summer. Gas has meanwhile shown modest reductions in November, but still remains at a high level. In response, Wienerberger has mitigated these challenges through effective hedging regarding our gas prices and proactive procurement measures. I'm coming now to our Q3 volume and price development.
Group volumes declined by -6% in the third quarter, reflecting continued subdued activities across geographies and end markets. The weakness was most pronounced in Europe West, which includes U.K. North America volumes were comparatively stable, although market conditions remain challenging. Looking at the prices, we are showing success at group level with up of 6%. Europe delivered strong price effects, while North America is down by -4%. Pricing therefore protected revenues, but could not fully compensate for inflation and low utilization. Coming now to the revenue bridge for Q3, that provides more details on the +8% growth year-on-year. Organic development was broadly stable, as effective price increases offset lower volumes. M&A delivered +8% or EUR 93 million growth, primarily that is Italcer. The next bridge for operating EBITDA. Operating EBITDA declined from EUR 202 million to EUR 180 million.
The EUR 39 million organic reduction reflects a gap between 8% cost inflation and 6% effective pricing, together with the cost of low production utilization. Cost of idle capacity impact in Q3 stand alone totaled an additional -EUR 10 million compared to the third quarter 2025. Going forward, we will address the cost of idle capacity with an optimization concept for more efficient utilization across our plant network. Our Q3 operating segments, this slide on the development in the operating segments is just for your reference. It contains more granular information by end markets and products. Across all segments, management attention is firmly on price quality, capacity utilization, and structural cost reduction. I will now move from Q3 performance to the development of the first nine months of 2026. For the first nine months, group volumes declined by -3%, while pricing contributed +3%.
By end markets, new residential construction is down -5% at group level. Europe achieved positive pricing across all end markets, and our exposure to renovation and infrastructure provides resilience, but does not fully offset the cyclical weakness in the new residential markets. The bridges for revenues and operating EBITDA in the first nine months paint a similar picture as we have seen earlier for the third quarter. In a nutshell, successful pricing and the scope contribution from our recent acquisitions drive our revenues and cushion the development of our operating EBITDA. Our portfolio structure reflects the strategic direction Wienerberger has taken in the recent years. Today, the exposure to renovation and infrastructure end markets represent close to 60% of our revenues. This gives us more stability through the cycle, mitigates the effect of weakness residential market. I am coming now to our one-off, the reconciliation.
Reported EBITDA was EUR 425 million for the first nine months. Adjustments of EUR 81 million result in operating EBITDA of EUR 506 million. EUR 47 million was the impact of the settlement of the antitrust litigation in the U.S. The P&L effect was already reflected in the half-year numbers, and cash out already took place in the third quarter. Restructuring and other measures amount to EUR 37 million that aim to improve profitability in the coming years through optimization of our industrial footprint. Working capital. The working capital at the end of September stood at EUR 1.4 billion. In the course of strengthening our working capital management, organic volume reduction released EUR 59 million. However, this reduction was more than offset by the impact of inflation and recent acquisitions. The organic direction is positive, but the absolute level remains too high.
Inventories, receivables, and payables are therefore under close management, with cash conversion the key priority for the running quarter. Net debt. Reducing net debt is key priority. Net debt stood at EUR 2.4 billion at the end of September. The increase was driven mainly by the consolidation of Italcer, the inflation, and the litigation payment. We are closely monitoring the development of CapEx spend. Ongoing growth projects are under review, and the target until year-end is to reduce the net debt to EUR 2.2 billion. We will work further towards our target of two times leverage. Looking at the liquidity, our liquidity position remains solid, with a reserve of EUR 650 million at the end of the third quarter.
The maturity profile of our debt is well-balanced over the upcoming years, and our priorities are straightforward: deliver the 2026 guidance, reduce leverage, improve performance, and ensure that capital is allocated to the business with the strongest strategic fit and return potential. With that, I would like to hand over to Gerhard again for our strategic review and outlook.
Thank you, Dagmar. After the numbers, have a look on the strategic review where we are currently at, so what is ahead of us. Before we dive in, a few words once more on the guidance. I think it is, just to be clear, we confirm the guidance of 640 to 650. We expect a maximum debt position of EUR 2.2 billion, and this reduction, please consider also as a first step, and we work consequently on our debt reduction. One important thing, you know that in the first nine months numbers, and Dagmar just explained it, that we have already some one-off items, and we expect also, as we are starting the performance enhancement plan, we are also expecting some additional costs, one-off costs in the fourth quarter, which will impact our annual results.
With the leadership change in the executive board, respectively when I was nominated as interim CEO at the beginning of August, I took the decision to reassess our strategic direction and priorities. I think for me, it was somehow crystal clear, we have to do it now, and I think it was the right moment. Also looking back now, this two and a half months round about, I think the current debt level, the financial performance, the market environment led to the decision to take exactly this closer look on certain topics, take a fresh and objective perspective on what is working well and what we need to improve. There are three main areas where we are focusing on or which we have identified. It's first the deleverage, it's second our financial performance, which has to improve, and thirdly, the returns on our invested capital.
The work on our strategic review is progressing well. With the following slides, I will give you an overview where we are currently standing. Let me start with the most important one. It is again the deleveraging as a key priority, what we have on our agenda. We are currently working on a debt reduction plan for the years 2027 and 2028 with clear measures for a controlled debt reduction. We plan to announce the debt reduction plan together with our full-year guidance for 2027 in the beginning of March. We have now chosen the 4th of March, and I will come back on that date later in the presentation. Our target of approximately two times net debt to operating EBITDA remains unchanged and is here confirmed. By now, what we have already initiated, we have suspended immediately or paused new M&A activities going forward.
We have paused also our new growth CapEx. The ongoing CapEx projects are under review, and we have strengthened our working capital management. In addition to that, we are currently looking, as part of the strategic review, on our portfolio, how to optimize it, and we expect that also we will see some selective disposals out of the portfolio review. We are currently looking at the timing of deferred acquisition payments. Last but not least, it is about capital allocation, and here specifically, the dividend policy. The CapEx topic I already commented on. The next important topic which is on our agenda is the strategic review, respectively the portfolio review, the portfolio analysis. We are currently reviewing the group's entire portfolio without any exceptions. All business activities are under review following a structured process.
The aim is, on the one hand, to sharpen our strategic focus, and on the other hand, to improve our framework, how capital and resources are utilized. Next to that, our aim is to reduce complexity in our portfolio. In particular, we are subjecting our underperforming and peripheral businesses in a very disciplined review or structured approach. The ongoing portfolio, and I think this is important, builds on the current strategy of strengthening our renovation and our infrastructure business. We specifically assess the regional coverage of ceramic product groups serving the new-build housing market. Following an initial analysis and assessment, we can confirm that the two sectors, roofing and piping business, will continue to form an important pillar of our group strategy.
Products and solutions for the renovation of the whole building envelope, as well as providing products and solutions for the water and energy markets, remain our strategic priorities of the group. Once more, we are looking into facade and the masonry sector. These are the fields what we are examining specifically in terms of the regional coverage, respectively, the regional focus. We expect to complete the portfolio analysis by the beginning of next year and to share the relevant results latest on March 4th. As mentioned before, the second stream out of the strategic review is the performance enhancement program, which we have already started.
The aim is to achieve a sustainable improvement of our earnings of EUR 140 million by the end of 2028. It means to have the run rate ready by 2028, by the end of 2028, and that the savings will be fully effective from 2029 onwards.
The areas which we have targeted for the earnings improvement as a first step of mainly, let's say, cost-saving measures. Talking about SG&A costs, procurement efficiencies, operations efficiencies within the operations, also adjustments of the network. Within the SG&A, we are also partly right-sizing organizations as considering the market environment where we are in, we decided also to look into SG&A costs and also to right-size accordingly. We have so far not yet looked at possible improvements of the top line, this is also something what we have on our list that we are not speaking only about cost savings, but also about top-line improvements. Let me quickly comment also on the chart which we have provided. The run rate by the end of 2027 is expected to be around EUR 80 million, while the incremental EBT contribution in 2027 is expected to be at least 25.
We just had also before the discussion, and I think Dagmar and myself agree, the 25 million we see on the more conservative side, so there is definitely upside potential. But let's first deliver, and anyhow, we will have more details for you in the beginning of March when we come back with the final results. By the end of 2028, and I mentioned it before, we target on a run rate of 140 million, which is expected to take the full and sustainable effect in 2029. All measures which we have already been implemented as part of our Fit for Growth program, what you know from the past, will continue as planned and can be seen as complementing the new improvement, or let's say, the new performance enhancement program. We expect first one, of course, still this year, and I mentioned it just a few minutes back.
The focus of these measures is primarily on operations and on the further optimization of our plant network, especially here in Europe. You will see them back actually already in quarter four results. The one-off costs which are associated with the saving measures for these EUR 140 million will be communicated also beginning of March, latest, together with the guidance and also with the debt reduction plan. What are the next steps? Let us bring you on board about the next communication steps. We started the strategic review actually in the beginning of September, immediately after the leadership change. As already mentioned, this strategic review is mainly focusing on the improvement of our financial performance and also on a structured portfolio analysis to optimize our existing business portfolio.
Both streams, or the outcome and the implementation of both stream, will support our deleverage efforts. Our next communication event on the 17th of February in 2027 will focus primarily on the fourth quarter results and on the full year 2026 numbers. I think more important, and therefore we also put a separate meeting on that, will be 4th of March. We believe it is important to take some time and to walk you through all the updates and conclusions which we will have out of the strategic review. Latest on the 4th of March, we will give you an update on the strategic review, and we focus on the portfolio optimization. We will also provide you a clear and binding debt reduction plan, and we will also provide you the EBITDA guidance for 2027.
Let me close with three points that will guide everything actually we do at the moment. First, deleveraging. Reducing the debt is our key priority. Our target remains unchanged, net debt to be operating EBITDA, to bring it back on the level of two times. Secondly is our portfolio. We are reviewing every business in the group. We will optimize the portfolio, reduce complexity, and put our capital where it earns attractive and sustainable returns for you, for our shareholders. And third, it's the performance. I just mentioned it. We will deliver EUR 140 million sustainable EBITDA improvements. Execution has already started. Before we move to the Q&A, one remark which is important. I think we are fully aware, we are not yet where we want to be, and this is clear for us, yeah?
We are working hard and to move to get as much as possible on information to you. We promised you transparent and timely information. That's why we are proactively sharing our strategic direction with you today. Since the strategic review is still ongoing, we are not in the position to answer all questions you might have. I think what we can promise you is that we as management team have our full commitment to transform this company, and we will do what we said, and we will measure ourself against it. With that, thank you in the first hand, and we are now looking forward to taking your questions.
All right, Gerhard. Dagmar, thank you very much. With that, I would hand over to the moderator. Please take over for the Q&A session.
Yes, thank you so much. We will now begin the Q&A session. If you would like to ask your questions, you may click on the raise hand button, and if you are connected via phone, please press star key nine to enter the queue on your telephone keypad. With star key six, you can unmute yourself then. We have our first question today from the line of Anna Schumacher from BNP Paribas. You may unmute yourself now.
Hi, everyone, and thanks for taking my questions, and congratulations, Gerhard, on the appointment as CEO. I have two questions. Firstly, on the portfolio review, your commentary suggests potential divestments in facade and masonry. Are you talking about the potential exit of whole geographies or not just capacity reduction? Plus, would the proceeds from any divestment be used to entirely reduce debt, or could they be reinvested? Any color would be helpful. Secondly, on price cost next year, what level of raw material and energy inflation do you expect next year, and what level of pricing do you think you can achieve? Thank you.
I would hand over the second question to Dagmar, and if it's okay, Anna, I would start with the first one, with the portfolio review. When we're speaking about that, we specifically look on the regional coverage of our, let's say, facade and masonry businesses. We are thinking more on the peripheral or, let's say, subscale businesses. You know that we have strong facade markets, strong positions, especially in U.K., in U.S., in Belgium, in Netherlands, Northern France, Scandinavia. We are looking more on the peripheral markets to be sure, how the way forward looks like, on the facade business. It's too early.
We try to do it really in a structured way, from a capital, or let's say from an invested capital perspective, considering all the, let's say, the market environment, considering also all the efforts, what we still have to go, to bring this part of the business on the level that we are earning clearly above also our cost of capital. Secondly, on the wall business, you know that we have a strong wall business in Eastern Europe with strong positions, also having a strong wall business in Western Europe. Our positions in Western Europe are definitely more challenging. Therefore, in East, we feel comfortable. In the West, we look more carefully after it.
We are not at the moment, and we are still work in progress, considering a total step-out more that we really carefully look market by market, what are the right tools, what is our position, what is the competitive environment, and then come to conclusions and inform you then latest, March 4. I think Dagmar and myself, we agreed, we tried to work as quick and careful as possible, but this is the date what we took latest basically to keep you informed. For the second question, I think price cost for next year, I will ask Dagmar to comment on that.
Yes. Well, I would start with the rising costs, and rising costs, of course, depend on the crude oil development. There, the pricing development is quite uncertain. We have seen a strong increase. Now it is coming down a little bit again. We measure ourself always against the market, against the index. There, we managed not only in the running year 2026 quite good savings against the index, and we will, of course, proceed our same task in the next years. Therefore, I am really convinced that we will stay below market price. Looking at the gas prices, as you know, we have our hedging strategy, and 80% of our volume for 2027 is already fixed. With that, we are compared with 2026 with our prices or pricing for gas.
We will see an inflation because the level in 2027 is above 2026, but we stay significantly below market prices.
On that, the hedging inflation, can I ask what that inflation would be? So the hedging in 2027 versus what you have had in 2026?
Well, in 2026, the year is nearly over, and we are hedged on a level, and for the fourth quarter, roughly, I would say 95%, or even maybe a little bit more. Therefore, the year 2026 is a tick in a box.
Okay. Thank you.
Thank you so much. We have another question by Daniel Khajenouri from Morgan Stanley. Please go ahead.
Hi. Hi, Gerhard, Dagmar, Claus. Gerhard, congrats on the appointment. I have a number of questions, but I'll just ask two on the balance sheet and get back in the queue. The first question is on the cash generation and net debt guide for the full year. Q3, there was limited cash generation. There was a working capital headwind, EUR 70 million of CapEx, and EUR 2.4 billion of net debt. But could you walk us through the building blocks to get to the EUR 2.2 billion guide for the end of year? How much savings can we expect to come from the working capital management and the CapEx control exactly? And then my second part of that first question is on the recurring operating EBITDA uplift. You spoke to on the call, you talked to a number of one-offs.
How much can we expect in Q4 and into early 2027, and how much of this is cash?
Well, I will start with the building blocks for our net debt development towards year-end. The main portion, of course, will result from reducing working capital. You might know that our cash flow generation is in the second half of the year always stronger compared with the first half of the year. Usually, we have the strongest contribution of cash flow in the last quarter, in quarter four. Looking at our cash flow in the first nine months, of course, it is not satisfying, but as already mentioned, we had several negative effects. We had two profit warnings where we are missing earnings. We have the payment for the antitrust litigation. We have higher inflation. Of course, we have our spending for M&A. We already reduced our CapEx spending, and we will see even a little bit more in the fourth quarter.
But as already mentioned, the working capital swing, of course, has the biggest impact. Overall, we will stay in 2026 regarding CapEx below the 2025 number.
Okay. That is clear. Just to the second part of my first question on the one-offs we can expect in Q4 and maybe into early 2027, and how much of that is cash?
Well, as of today, we expect one-offs in the fourth quarter between EUR 70 million to EUR 80 million, and there will be no cash out of that in the running year. Maybe half of it will be cash out in the first half of 2027.
Okay. Is that related to restructuring costs or impairments of Yeah, what is that related to exactly?
Well, the cash out, of course, is related to restructuring, and the non-cash items, it is write-offs for. Some, yeah, impairments or-
Okay
restructuring and closing of plants.
Okay. That is clear. My second question on the deleveraging path, you have talked to CapEx, working capital, dividend review, call option review, and the portfolio. I do understand you are in a position now where it is quite difficult to talk about it. Let us say, looking at CapEx into 2027, as well, working capital release, are you in a position to sort of guide us on how to think about this into next year? Is roughly half CapEx quite an aggressive assumption or?
Well, as Gerhard already mentioned, we stop our growth CapEx. We are reviewing ongoing growth CapEx projects. Of course, we will finish the projects which are ongoing, nearly finished. Therefore, we will see a portion of growth CapEx next year as well, but we won't start any new projects. Regarding maintenance CapEx, it's our clear target to spend less.
Okay, that's very clear. Thank you.
Thanks a lot. Our next question is by Mr. Julian Radlinger from UBS Limited. Please, go ahead.
Yeah. Thanks very much, guys. Appreciate you letting us ask these questions. First of all, two for me. First of all, on the Q4 moving parts, can I just check, is it fair to say that Q4, the EBITDA bridge should basically look quite similar to Q3 in terms of price, cost, and volumes? Are you baking in another volume decline, like we saw in Q3, or any of these moving parts changing in a big way? Then, my second question is, I'm curious, how would you describe your stock levels in volume terms, that is, in Europe overall? We know that in the U.K., for instance, brick stock industry, brick stock levels are very high right now. We've heard from some of your competitors there that, they're de-stocking a little bit. They may expect to do more next year.
How would you describe for your European business overall, your stock levels? Thank you very much.
Well, first of all, the EBITDA bridge for the fourth quarter will not be that similar or identical, regarding the third quarter, because we don't expect such a volume decline in the fourth quarter. Anyhow, the fourth quarter 2025 was not the strongest one. Regarding our inventories, it's in Europe, it's a mixed picture because it strongly depends on the utilization of our local plants, and therefore, it's difficult to give you an average number or a flavor from country to country.
I think there is no total overload or something like that. I don't know if you assume this or if you would expect that we are having quite a strict working capital management in place to secure that there is no slow movers or old stock on our stockyard. Yes, during the strategic review, as we believe we can even do better, but that does not mean that the current stock level is on a too high level. I would not see that. We are balancing every year or every quarter actually, the level of production output, demand, or let's say demand planning, production output, and inventory levels quite carefully. Yes. I think, as you were referring to U.K. stock-listed companies, no, we don't see that there is maybe a risk on the balance sheet.
I don't know if this was the question, if your question was heading in this direction, let's say that way.
Yeah. Not risk to the balance sheet, just to understand a little bit the situation because, in Q3, you had a net working capital headwind when normally you should have a tailwind. I understand the explanation with regards to scope and inflation, but normally if you acquire net working capital, you also acquire EBITDA, so the free cash flow impact should kind of be neutral. I am just wondering if there is something else that I am missing here. But, I understand the answer.
I think keep one thing in mind, there is Italcer, which has a different seasonality also than our traditional business. So I think it is maybe what, when you compare it to last year's seasonality, which is different as the seasonality curve of the tile business is a different one.
And maybe to add, when we acquired Italcer and consolidated it is within our group since end of April, and we refinanced the net debt of Italcer in July, August, and Italcer faced interest rates, a double-digit figure. Therefore, regarding cash, of course, there was a little bit of a burn on the cash flow from Italcer regarding the interest.
Got it. Okay. Thank you very much.
Thank you very much. We now have a question from Glynis Johnson from Jefferies International. Please go ahead.
Thank you. Morning. I have three questions, if I may. The first one is to Dagmar, and it is a follow-up from one of previous. In terms of that gas hedging, can you maybe help us understand the EBIT step-up that you will see in terms of cost 2027 compared to 2026? I just want to clarify that 80% hedge, is that based on volumes more similar to 2026 or second half 2026? I am just wondering if that 80% ends up perhaps being higher just because of lower requirements. Second of all, in terms of just seasonality, but in terms of that net debt, normally you would see a seasonal pickup in working capital investment through particularly the first quarter. I just want to understand if there is any pressure on liquidity as you go through February, March time. Then last one, Italcer.
Can you update us in terms of how that integration is going? Is there any interruption to that because of the strategic review? The scope to push back potentially that second tranche or buying the remainder, how much flex is there in terms of the cash-out for that, and how might that also impact how you integrate?
Well, regarding your first question, our gas hedging, we hedge for 2027 the volumes which we, of course, expect in the year 2027. We do not see recovery of the markets in 2027, or not a strong recovery, and therefore, the levels or the volumes are quite similar towards the volumes 2026. The impact on higher energy prices or higher gas prices on the EBITDA is roughly, it is a single-digit percentage and a higher single-digit percentage, but it is not such a big impact. Regarding our liquidity, we have no pressure at all on our liquidity. We have enough headroom, and we have as well enough headroom not only for the first quarter 2027, but for the full year 2027. We already extended and shifted some credit lines in the maturity, and we will have additional lines.
Therefore, there is more than enough headroom, and in that respect, we are very conservative.
If I may, I take the last one, the Italcer question. As I mentioned before, Glynis, we are doing a portfolio analysis without any exemptions. We are just checking all options what we have. On the second installment, I think, yeah, also here, we try how to optimize, I think, as management, our liquidity and also the cash-out for the second half. There would be a cash-out foreseen for Italcer for the second installment in the beginning of the year, and yes, we try to postpone that. This is what we are working on, and therefore, why it is also mentioned in the presentation.
Thank you.
Thanks a lot. Our next question is from Michael Marschallinger from Erste Group Research. Please go ahead.
Yes, good afternoon. Thanks for taking my questions. I have two left. You already mentioned during the presentation, I think that there is further restructuring costs coming up now in the fourth quarter. I believe we can assume it will be higher than in the third quarter, this EUR 10 million. Could you give us some sort of indication what could be booked in the fourth quarter? Can it be as high as in the second quarter, the EUR 65 million, or, some indication would be good.
Well, our one-offs in the fourth quarter will be something between EUR 70 million to EUR 80 million, and that all is restructuring.
Okay, understood. Thank you. My second question, when you refer to the potential divestments, do you mean a sale of business and assets, or could this review also result in mothballing of underutilized plants, similar what you did in previous years?
I think when we speak about the mothballing, we really look at our verticals and our businesses which we are in and try, as we mentioned before, to take complexity out. Therefore, we are looking carefully on all the peripheral or subscale businesses where we are in. We are also looking, when we look at verticals, as mentioned before, like the ceramic business or let's say the clay block business, from a regional perspective on it, can be then also that we say it is mothballing or it is closures. We simply try to optimize things, what we have experienced during the last years, especially since the market, the new build market is down. I think it is a normal process, what you do when you look at your invested capital and you are aware that your invested capital is actually underperforming at the moment.
I think this is clear. We know where our return on invested capital is. We know our cost of capital, so we have to work on it. I think that is very clear, and it is a normal process, I would say. Let me come back once more on the restructurings. We speak, in that case, what we are considering in the P&L this year, this plant network optimization. We are taking and mothballing in the first step, left and right, certain capacity in Europe. Important is, there will be a recovery. There will be a recovery in new residential housing, maybe not in 2026, but we expect later there will be one, so we will be ready also. We will be also ready for a Ukraine peace deal, just to be clear that we are not moving in a very negative mode.
I think we have to simply optimize the cost structures. I think it is not a secret that we are I was even at that time, I think, still CFO when I, together with Heimo, forecasted the recovery of the new build in 2024. We are now in 2026, 2027. We know that there will be no real major recovery on the new build side. We see again increasing interest rates. So, I think we are doing our homework. We are just adjusting the capacity. Does not mean that if there is a recovery, that we are not be able to serve the market again. Independently if there is a market recovery or maybe even an extra boost from the market when there is a Ukraine peace deal.
All these options we secure, but at the moment, costs have to go out, and I think this is how you should see it.
Okay, very clear. Thank you very much.
Thanks a lot. We have a follow-up question by Daniel Khajenouri from Morgan Stanley. Please go ahead.
Hi. Thank you for taking another question. I do appreciate it. Maybe just stepping back and ask more of a long-term strategic question for you, Gerhard, given the confirmed appointment. I understand there are some immediate priorities for Wienerberger. However, I know you mentioned on the masonry side, you could be cleaning up the portfolio here. On the Western and Central European side, is there a roll-up opportunity here long term? I mean, I assume there are lots of small to mid-size potential businesses that could be cleaned up, which could offer a nice top-line driver, but also a pricing power opportunity. It is a very long-term question, but I would be interested to get your thoughts. Thank you.
No, it is. I think what you are mentioning is spot on. At the moment, these are the most challenging markets. The masonry markets in Central Europe, and let us be clear, we know how difficult the German market is from a masonry perspective, and I am including also our colleagues from H+H, also from Xella, and we are also in. It is difficult ones, and it is a question also on which building materials on the long run in Western Europe will basically win the battle. There are quite some variables what we are considering. We know that there is a decarbonization challenge ahead of us. All these things has to be considered at the moment when we try to come to conclusions, how to allocate our capital, our resources, what we have. We want to be much more strict and clear on the things.
At the end, to bring up the ROCE again, you know it that the ROCE is round about 7%, 8%, which is much too low by having a back of a cost of capital of around 10%. This is the exercise, really walk through countries, or let us say, walk through all the verticals in the relevant countries. Yes, Central Western Europe is a major focus area, where we are looking it from a masonry perspective.
Okay, that's very interesting. Thank you.
Thanks a lot. We have another question by Markus Remis from ODDO BHF Securities. Please go ahead. Markus, can you hear us? I can see you're unmuted.
I think what we heard, Markus, I think is apparently a little bit sick, but I hope the voice is not that bad that we cannot hear you, Markus. Markus, can you-
I can see that you are unmuted, but we cannot hear you.
Otherwise, Markus, if you have difficulties to speak due to the cold, just send us your questions, always available.
Perfect. Thank you. We have another question. Maybe we can figure this out, Markus, later. By Miro Zuzak. Please go ahead.
Yes, hello. Can you hear me?
Yes, hello.
Hello. Yeah, thank you for taking my question. I was wondering, when I saw the minorities number, I think, Dagmar, you just elaborated that the refinancing was done in July and August. However, the bridge from EUR 100 million EBITDA on an annualized basis. Now we have two quarters in, right? Or almost two full quarters in. The minorities are calculated on the net profit. I am aware of that. There is the interest rate cost between EBITDA and the net profit. There is, of course, also depreciation, amortization. But please help me make the bridge from an annualized EUR 100 million EBITDA run rate of Italcer to EUR 2 million minorities for five months.
Minorities two or five. Sorry, I am a little bit lost.
Well, these EUR 100 million run rate Italcer, where are these numbers? Just can you comment once more quickly on some of the numbers that we. Just to be sure that we can answer your questions correctly.
Sure. So you bought Italcer with estimated sales of roughly EUR 500 million on an annualized basis, with roughly EUR 100 million in EBITDA. These are the numbers which were basically, if not clearly communicated, was asked basically the implicit numbers from the information you had provided at the time of acquisition. Last quarter, there were zero minorities. I asked the question already at that point in time. Then you said, "Okay, that is zero because there was no net profit because of the high interest cost." Now the refinancing was done. Now we have a minorities number of EUR 2 million only in Q3. That should be half the profit of Italcer, right? Half the net profit if you own 51%. It is a very low number. I would have expected Italcer to be much more profitable than EUR 4 million in five months, right? On a net profit basis.
You explained the refinancing. You explained before, you had mentioned the number of more than EUR 10 million of interest cost before the refinancing. I just want the target to have more clarity on the performance of Italcer and the P&L of Italcer and what we have to expect going forward if basically the assumptions that you made during the acquisitions are still okay, or even if you have there some risk of impairment or so. Because it seems like the performance is really low of Italcer in the first five months.
Well, first of all, looking at operating EBITDA out of acquisitions, out of scope, we added EUR 33 million in the first nine months. That reflects Italcer from May until end of September, as well as a portion of NEWS Group. With that, of course, the EUR 100 million for Italcer we communicated as a potential
Post-merger
post-merger, well, assumption in a couple of years, but neither for 2026 or 2027, something like that. Of course, Italcer is profitable, has a nice EBITDA margin, but of course, is asset-intensive business as well. Therefore, of course, there are depreciation and amortization. Looking then at EBIT, there have been really high interest rate payments, and it's been more than EUR 10 million. Of course, we see effects out of the purchase price allocation.
I think these are major points what you maybe underestimate. It's because you're looking from the bottom line. This is what I understand. You try to develop and to reconcile basically the minority share. I think the PPA, yes, you identify things like customer base and brands and et cetera, which are basically also impacting your recurring depreciation. We had for a certain period of months, you have financing costs in. But let us agree that together with Claus, that we prepare that in a proper way, that we give you more transparency really on the standalone Italcer case, just to avoid any misunderstandings on this case. Yeah. Yeah, Miro, we will come back to you on this point.
Thank you.
Thanks a lot. We just received the question from Mr. Markus Remis in our chat box. He says, "Apologies for the technical hiccup. Can you share whether a dividend omission is a possible option in the attempt to reduce the leverage? Many thanks.
Let me answer it differently. We are evaluating it, and therefore we also put it in the slide deck. We are checking all options, what we have to optimize our leverage, our debt position. Yes, when we speak about capital allocation, we speak about CapEx projects, we speak about M&A. We have commented on these two things. Yes, dividend, especially our dividend policy, we are also looking at that. We are also checking all options what we have, understanding the impact, understanding the impact also in the direction of our shareholders. So let us investigate that carefully, and we will come back early enough with a proposal how we believe we should move forward.
Perfect. Thank you so much. Our last follow-up is by Mr. Julian Radlinger again. Please go ahead.
Hey. Thanks so much for taking another question. This is a really easy and technical one, but I just thought I might ask it here. So you formed, for that U.S. lawsuit, you formed a provision, EUR 47 million in Q2. Did you have the cash out for that already? Did you pay that?
Yes, we paid it in the third quarter. It is all gone.
In the third quarter. Understood. Okay. Thank you very much, guys.
Thanks a lot, Mr. Radlinger. As we have not received any more risen hands or questions in our chat box, I would say we would come to the end of today's earnings conference call. I would like to turn the conference back to Claus Ehrenbeck for any closing remarks.
Yeah, thank you very much. Again, also on behalf of the team, I would like to thank you for your attention, for your participation, for the very good questions. If you might have further questions after the call, of course, the investor relations team, including me, we are available for you, and we really look forward to continuing our dialogue. With that, I want to say goodbye for the entire team and look forward to speaking with you again. Bye-bye.