Ladies and gentlemen, thank you for standing by. I'm Natalie, your current call operator. Welcome, and thank you for joining the conference call on Wienerberger's results on the First Quarter, 2022. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. If you would like to ask a question, you may press star followed by one on your touchtone telephone. If any participant has difficulty hearing the conference, please press the star key followed by zero for operator assistance. I would now like to turn the conference over to Daniel Merl from Investor Relations. Please go ahead.
Thank you, operator. Ladies and gentlemen, I hope you're all well. A warm welcome to the Wienerberger Earnings Call on the Results for the First Quarter, 2022. Our Board Representatives today are our CEO, Mr. Heimo Scheuch , and our CFO, Mr. Gerhard Hanke. They will lead you through the presentation today discussing our performance in the first quarter. After the presentation, as always, we are ready to take your questions. I will now hand over to Mr. Scheuch for the presentation.
Thank you, Daniel. Also, a warm welcome from us here from Vienna. Thanks for being on the call. We would like to walk you through rather quickly through the first quarter and the results. Obviously, as already indicated in our trading update, exceptionally good results and the best results in the first quarter in the history of the company. Revenue is up by 45% to over EUR 1 billion. EBITDA more than 100% up from 106% last year to 228% this year. Really strong performance. Net result also above EUR 100 million, and the EBITDA margin nearly approaching 20% in the first quarter. All in all, a very satisfactory performance from our point of view, and this obviously in a very unstable, volatile, and geopolitically speaking, difficult environment.
We were able to manage cost inflation very well. We managed the volatile energy situation both on the availability side and on the cost side, and we dealt with rising mortgage rates around our businesses. I think when we look into this a little deeper in the first quarter, then we have seen a very satisfactory organic growth in volumes with about 6% for the whole group, so we have again outperformed significantly the GDP. Wienerberger shows that innovation and solution approach pays off, and we clearly put ourselves ahead of the pack here. Due to our reinforced local business model and local sourcing, we obviously ensured that we have the availability of all the raw materials, the input material for our products and solutions. We proactively dealt with the pricing situation in order to offset cost inflation...
We had a cost inflation in the first quarter of about 15%, and we offset it by price increases throughout the group on the average of 20%. You see here we established a strong pricing power in our markets, not only due to the fact that we have done so over the years, but also because we have improved our mix with respect to additional features and convenience that we offer our clients. Again, when we look at the sourcing of the raw material and especially energy due to our buying forward strategy, we have kept not only from the pricing perspective but also on the availability a very good level and therefore no instability was hurting us in this respect.
Obviously, and on top of it is very important that we focused on our costs, when it comes to the Performance Enhancement and Operational Excellence projects. Here again, very good contribution from this aspect. All in all, very good run. If I look, already a little bit ahead, I think when you look at our markets, we focus on the new build market in Central, Eastern Europe, in Western Europe, and in North America. Here we clearly had a milder winter compared to last year, but we had a very strong and sustained high demand of one and two family houses. I think here we not only made some market share gains, against the competition, direct and indirect, by the way, but also due to a good underlying momentum in this very specific market segment.
On the renovation front, all in all, especially roof and façade, very good performance and good growth rates. Obviously, the increased renovation exposure of Wienerberger pays off and again, makes Wienerberger more resilient. The infrastructure the same with very significant stimulus packages around Europe and North America. We took advantage of those and had a healthy demand level, especially in North America, the rest of Europe, and especially also Eastern Europe. Again, a very good development there. From the system approach, we improved our sales there as well, so we are slightly above 15% of our turnover right now with systems.
We will improve this to about 25% on a general turnover perspective. On the innovation front, we continue to bring new products and solution in the market and have now approached more than 30% of our turnover in innovative products. When you look at the Wienerberger performance as such, every year when we sell all of our products into the market, and again this year, our clients and customers will save with these energy efficient solutions more than 1.8 million tons of CO₂. So a very good contribution to the positive side when it comes to climate change. We as Wienerberger want to further reduce our energy consumption, and this is with clear targets that we have set for ourselves, 2023 -15% and 2030 -40% of CO₂ reduction.
This will enable us to reduce more or less EUR 1 million, again on CO₂ emissions. Keep in mind that Wienerberger in total emits today in the manufacturing process, interrelated processes about a little bit above EUR 2 million. Already today, we're in a very good position to achieve our climate neutrality, sorry, in a short period of time. When I look obviously on the M&A front, we have done significant improvement in the, in our portfolio of, activities, not only in Europe by adding here more in the renovation part with the acquisitions in the piping business in Ireland and the U.K., but also in, the U.S., which is still very important, and I would say changing from a perspective in the industrial landscape, Meridian Brick, the acquisition there.
Again, Wienerberger is on the growth step, and we are currently also working on quite a few very interesting and important transactions that will bring us further in the infrastructure and in the renovation business in Europe. When you look at the energy situation as such, and this has been a very hot topic, I would say, especially this year, due to the current geopolitical crisis in the Ukraine and with Russia. Wienerberger has a clear focus here. First of all, we focus on reducing our energy consumptions as such, investing by changing our technologies, et cetera. We are open for new technologies and for new ways of production when it comes to our clay material business, meaning also the building solution side of the business.
Because the piping one with more than EUR 1 billion sales is not using gas, but electricity already. Here, we have green electricity as the focus point. By obviously changing such technology, we can go to electrification of our kilns, use more Hydrogen or Biogas or Syngas, and we are doing so. We have just launched the first kiln that is completely carbon neutral in Belgium, a full factory for thin brick that has no CO₂ emissions. From a perspective of capital allocation, it's a lot cheaper than conventional technology. We have not only tested it runs now, and we have put it in current and existing infrastructure at one of our sites in Belgium. This is certainly something that Wienerberger can build on.
Build on not only because it's carbon neutral and it saves us obviously a lot of costs when it comes to the increasing cost of energy, especially natural gas. On the other hand, also because it puts us on the forefront of the industry and gives us an enormous competitive advantage. We will certainly push this transition further and focus also on other sustainable and highly efficient energy sources that are not emitting CO₂, and which will change the industry dramatically. Therefore, we will reduce CO₂ emissions and above all, become very independent from natural gas wherever it comes from. This is, I think, a very important message for you from a CapEx allocation front.
It doesn't consume that much CapEx more than we have already foreseen in our plans, but we will certainly allocate to this, change in technology more than we've originally planned, because here we see a very important, competitive advantage. With this, I think I will hand over to Gerhard with the numbers.
Thank you, Heimo. Ladies and gentlemen, an exceptionally strong start, as Heimo just mentioned, into 2022, which was based on a consistently high demand, basically in all our product groups, in all our markets. This in an environment which was, I think, already described in the beginning, which was based on volatile supply markets, high uncertainty. Despite that, a strong performance in the first three months, consequently also then across all our three business units. There's one business unit which extraordinarily performed. I would say this is North America, and from two perspectives, basically the legacy business which extraordinarily well performed on the brick side and on the pipe side. Also the M&A contribution of our Acquisition of Meridian also performed better than we originally expected.
This led to a strong revenue as well as an EBITDA increase in the first three months. Let me immediately move to the business units and when we look to the business unit of the Wienerberger Building Solutions, also there we see a strong revenue increase of almost 30%. This 30% revenue increase is consisting mainly out of a volume increase with a little more than 10% volume increase and also with a strong 20% price increase. These two factors are basically mainly driving the revenue increase. We have heard that we are confronted with quite some high inflation in the business unit, Wienerberger Building Solutions.
We had an inflation in the first three months of around 9%, so we were able to even outperform the 9% cost inflation with a price increase of 20% in the first three months. The strong demand led also in this business unit to high run rates, basically to our production facilities. This finally led also to high efficiencies next to our performance enhancements programs, which were finally contributing to the strong EBITDA development, which means almost doubling the EBITDA in the first three months of the Wienerberger Building Solutions. Moving further to the Piping Solutions, so the business unit of our piping segment. Also there, we were able to increase revenues drastically, looking to a strong organic growth also in revenue there.
Here, the revenue growth is mainly price driven. We see that, the volume more or less is even slightly below prior year. This also is related that we had last year still some volumes in our pipe business in Russia, which we exited, and therefore we are slightly on the volume side below last year. Revenue mainly driven with price, which is above 30%, year-on-year comparison. Also the inflation in this sector and, which is strongly driven by the plastic resins or the development of the plastic resins is with round about 30%. Also here we were able to outperform basically the cost inflation. This led also to the strong EBITDA margin, which is 11% after the first three months.
In North America, I mentioned it already in the beginning, yeah. We were able to really outperform, not only due to the Meridian acquisitions with this new strong market position, what we have now in the U.S. and in Canada, but also the legacy business. The legacy business, especially also the piping side, yeah. The piping production, also here we again were able to report a very strong performance after the first three months, which was also there, mainly price driven and less volume driven. Volumes are more or less slightly above last year when we look to our legacy business. Pricing is on both the brick as well as on the piping side, significantly above prior year.
Is by that contributing to the strong EBITDA increase of up to EUR 40 million for the first three months. To summarize on the group, Heimo mentioned it already, a strong revenue growth of +45%. The growth is strongly driven by pricing, which is up by 20% + after the first three months year-on-year comparison. A +6 on volume and the scope extension, meaning the M&A activities which we did in 2021 are contributing with around 15% the revenues in the first three months. This translates then as a consequence to a very strong EBITDA performance. EBITDA organically with around EUR 100 million up compared to last year.
This EUR 100 million in addition, organic EBITDA contribution is mainly driven by the strong price over cost performance that we have seen after the first three months, by additional efficiencies out of our self-help program. Also due to the extra volumes and the high run rates of our production facilities, which were contributing to this EUR 100 million additional organic EBITDA contributions. I just mentioned our self-help program, and I think, as it is an important pillar also of our organic growth strategy, again, it was contributing already after the first three months with around EUR 13 million to our EBITDA development. You know that we are aiming for the whole year an EBITDA contribution of EUR 45 million, and we are positive from today's perspective also.
To keep going, we have more than 1,400 initiatives in our systems which we are following basically. Many of them in the range of innovation and are paying on our top-line development with innovative products. On the other side, there is also a big part which is in efficiencies. Where we are investing in our industrial footprint and by that increasing efficiency, energy reduction, automation, et cetera, et cetera. This is an important pillar also of our organic growth strategy. When it's about energy, we mentioned already before, it's an important topic today. We feel comfortable with the situation as we are in the moment. We have for this year already fixed 90% in gas and basically also in electricity of our consumption, what we expect to at attractive costs.
This also brings us or helps us basically to know our costs, but also to be able to calculate and to have a pricing policy in place which is basically favorable to cover our cost inflation. For the next years, we feel comfortable with the gas and the electricity consumption respectively, fixing what we did so that we feel comfortable from today's perspective is the energy position as it is today. Let me summarize quickly the first quarter before I hand back to Heimo. We had a strong organic growth of about 30% in revenues. In volumes, we had about +6% in the first three months. We have significant earnings contributions in the first quarter out of our self-help program.
M&A's were contributing around EUR 16 million in the first three months. The additional contribution on earnings also translates in a high cash conversion. Cash conversion also there is above 90%. We decided to extend our share buyback program with another EUR 80 million, basically, respectively. We planning to increase our share from 3% to around 5.6% of our share capital. We decided and already distributed, paid, and dividend was EUR 0.75 per share, which is an increase of 25% compared to last year's. We updated our ROCE target for this year, and this I think is important to mention, from 10% to 12%. Our target, our new target for 2022 is a ROCE of 12% for this year.
With that, I would like to hand over back to Heimo.
Thank you, Gerd. Ladies and gentlemen, let's come to the outlook. We have obviously successfully passed the first quarter. We are into the second. If we look at the current trading of Wienerberger in its markets, it's a very positive one as well. We have no signs of any decline in the respective markets that we are operating in. I will address the markets in North America. New build, renovation, infrastructure are all on a very good and sustained demand level. No sort of indications of any drops or decreases for the second quarter. We are operating our plants at high utilization rates and delivering what we can to the market. This is true for the brick business or building solution business, and obviously also for the infrastructure business.
This is our current outlook for the second quarter, it's going to be a very satisfactory one as well. The European business divided into West, Central, Eastern, and Nordics. Here also in line with expectations in all three markets, renovation, infrastructure, and new build. No changes to our original and our base assumption for the year. I've been personally extensively traveling throughout Eastern Europe and have seen here also very good demand levels, even after the shockwave due to the war in the Ukraine. Here, especially the segments one and two family houses are performing very well and also the demand levels here are very strong. We see obviously in this field, no major changes for the moment, even if infrastructure is depending on the stimulus packages of the EU that are currently continuing. The individual housing very much dependent on mortgage rates.
It is still very low, even after a certain increase, especially in Eastern Europe and North America. When we look at the inflation that we have seen in the first quarter, Gerd has elaborated also on it. We've seen about 15% increases in the first quarter. We foresee for the rest of the year a certain leveling out. Obviously, this is I think very important to know. In this volatile environment, Wienerberger has gained momentum and is gaining momentum, and we have put our I call it our business model as such on a much more resilient base than in the past. Again, in this momentum, we built additional sales organically. We grow with our acquisitions, and I do foresee for the second quarter also very satisfactory result.
I don't see any shortages of energy supply around Europe, as we didn't have any in the first quarter. Due to the fact that this geopolitical situation, the macroeconomic situation, and a lot of indicators are difficult to track right now, and it is very volatile. A very precise guidance for the whole year is literally impossible at this stage. However, and I think this is the strong message that I would like to give today. We at Wienerberger say that our original guidance of EUR 750- 770 is what I call the base case. Base case in the sense that obviously the current situation with this instability is built in. What does it mean?
In other words, it means basically that if there are no major escalations, no further escalations with respect to this war, no spillover effects to Europe. If there's no increase in inflation or if there's no further important increases in interest rates, we will significantly outperform this guidance in the whole year. Because obviously the momentum, it will stay relatively strong also in the second half of the year because the order books and what we're getting is still very strong. What I can say from today's perspective to you as investors, we have obviously this base case out there and obviously if, and in the event, everything goes smoothly through the year, we substantially will outperform this guidance. On the ROCE perspective, you will see us also being in the range of about 12%.
You see here that we will have significantly improved our return on capital employed. Again, we as Wienerberger continue to focus on our Operational Excellence . Our program will contribute successfully to the EBITDA about EUR 45 million this year. All in all, we have done a major effort over the last couple of years and will do also next year in this field of further improving. All together, by the way, ladies and gentlemen, we have here made a strong contribution with EUR 245 million over the years from 2018 to 2023. A very important improvement from a Wienerberger perspective on the cost side, and we'll continue to work on that. These are investments, CapEx that we allocate to the business that has a payback of around four years.
This will ensure also the outperforming of the markets that we are operating in by about 2% compared to the GDP. You have seen also this year we have outperformed it, not only because there was a strong demand out there in the sense of probably forward buying or inflationary risk or so on. We have certainly gained momentum due to our strong focus on innovation and the system approach. We also continue to look carefully and with certain caution, but we are looking into M&A projects because they will bring us further. Further in the sense of developing our market presence, consolidating markets, therefore strong cost benefit, but also deepening our portfolio in certain areas. Infrastructure and renovation are here key attention points. We will certainly be disciplined with the maintenance CapEx.
This year about EUR 135 million goes into the business. Dividend has already been approved by U.S. shareholders and obviously due to the fact that we pay out a good dividend, I think, based on the current performance. When we look at the share buybacks that we pursue because this is the best investment that we can make right now because Wienerberger run rate is strong. Our share price is obviously depressed at this stage, but we believe that a strong momentum building with respect to our future growth. Here we invest in our own shares also with the extended share buyback frame program that Gerhard has explained.
All in all, I think from this perspective, and I summarize, Wienerberger strong focus on growth, organic growth especially, and this pursues us into the second quarter and for the whole year if no major sort of event, negative event hits us geopolitically or macroeconomically speaking. We'll have a very good year in front of us with a substantial potential to grow our EBITDA above the current guidance. We have obviously the momentum building for future M&A because obviously here the valuations have come down also with respect to this potential targets. If we do them at the right time and with the right price, as we see in the U.S., they can create enormous value for Wienerberger.
Last but not least, I see also some positive elements coming out from this unfortunate crisis that we all are living through, because it will put emphasis on our energy transition and to do it faster and more efficiently to put a major point of attention, competitive advantage towards our competition, not only in the brick and roof tile business competition, but also towards other potential substitution products. All in all, I think, it's from my perspective, in these times, a very positive outlook that we can provide you with. A very sort of clear vision and strategy how we want to grow Wienerberger further. I look forward, obviously, to your questions.
Thank you. Operator, we are now ready to take your questions.
Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. The first question is in the line of Michal Majerski from PTE Allianz . Please go ahead.
Good afternoon, gentlemen. Congratulations for the good results. I'm wondering why the stock, despite these results, is falling like Bitcoin. You are talking a little about no shortages of energy, but I'm wondering what about the gas supply, for example? Have you considered the scenario of there is no gas in the system in Austria and other CEE countries? What do you think about it? Because I heard from my colleague who covers another Austrian industrial from the steel sector, and this issue was also answered on the call. What do you think about this?
First of all, thank you very much for this very important question. I think, from our perspective, I can only confirm what you are saying. The market, if I look at the reaction on the market, is probably, I would slightly put it this way, is seeing, something that we don't see right now. I would say from Wienerberger's perspective, we don't see a recession around the corner. The underlying demand that we have out there in the market, in renovation, in new build, and in infrastructure is a strong one. The order books are full. When we talk about the projects with our customers, our installers, all the people that work in this field, actually, they have all, full order books, and they are working full time around Europe and North America.
I would say there's today unfortunate for us a discrepancy between the financial community and a little bit the political community and the real market out there. Everybody wants to see on the financial community side a recession, a downturn, et cetera. Especially when it comes to us, the building material guys, they say, first of all, high dependency on energy, and I will come to this in a minute to address this, and the risk of recession. Therefore, obviously this momentum is building, and they are anticipating, I think something which we clearly don't see. What we have done in order to make you as investors life a little easier, we hope at Wienerberger, is the following. We have said we have done scenarios.
We've looked at certain potential impacts, and therefore we can sort of say, "Listen, EUR 750-770 is still something we are going to achieve even under these circumstances, potential sort of impacts from this war included. This is something we are going to achieve." If nothing material comes out of this war than what we have, more than what we've seen today or up till today, so that energy is delivered, that the interest rates are not going up, that there's no further inflation, as I said earlier, then I see a substantial improvement still possible above 770. I think this is what we from Wienerberger wanted to communicate to the market and what we are communicating to you. I think it's a strong message.
Now, to your second question is, yes, we make scenarios. Yes, we analyze the situation. It's very different from country to country. Please keep in mind that we are already in May, so in May, meaning, a month where less energy is used in households, et cetera. Industry gets more supply. We have not had any shortage so far. Wienerberger as such is a different animal, and I think this is probably. I may use this word with caution, but I do use it. The market has a little bit a misconception with respect to Wienerberger. Wienerberger 20, 15 years, or even 10 years back was different because we were focusing on bricks and roof tiles only.
Our exposure to the new build market was very high, and our exposure to energy, meaning natural gas, was very high compared to the turnover and the activity of whole Wienerberger. Take Wienerberger today. More than EUR 1 billion turnover coming from pipes. Nothing to do with exposure to gas. Increasing exposure also North America, not yet a billion, but close, getting closer. Again, no exposure to European gas supply. Then obviously also a strong business, Ireland, especially United Kingdom, northwestern Europe, starting with the North and going down obviously to France. No exposure to gas from Russia. Then we have certain countries, obviously in Eastern Europe, by the way, Poland also that have now an independent resource away from Russian gas.
I think this momentum is building, so the exposure to a potential risk of a complete shutdown has decreased for Wienerberger also dramatically, which their market, and we refer again to the market as you have done earlier, has not seen yet or is not seeing in the same way. By the way, I see also this potential for Wienerberger to move, when I said on the energy supply side, to create this momentum on energy transition faster and quicker than we probably originally thought, a year ago because obviously these risks that we currently discuss.
All in all, to make the long answer short, first of all, I think the momentum for a more resilient business model for Wienerberger has been achieved, and we have a completely different Wienerberger today than in the past. The exposure to energy is there, but it's managed well, and we have built it into our guidance to you.
Okay, thank you very much.
Thank you.
Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star followed by one on your telephone. The next question is from the line of Miro Zuzak from JMS. Please go ahead.
Yes. Hello. Can you hear me?
Yes, perfectly well.
Good afternoon. Thanks for taking my question. You seem to be a bit energetic with your message that, you know, momentum is very strong also in H1 and it's good to hear that you also see that in H2. You seem to be a bit disappointed by the reaction of the share price. I can assure you it's the same with me. But probably this is probably the case because you haven't increased the guidance. If you take the EUR 228 million of Q1, and then you see the increased momentum or the good momentum in Q2, you're already at, say, EUR 450 million. If you take the same result, typically there is a bit of seasonality. It should even be better, right?
EUR 500 million. There is not much left to the EUR 750 million. It reads a bit like you still think that a scenario of EUR 750 million is realistic, right? That would mean that for Q3 and Q4, you see the same profits like for H2, like you had seen more or less for one quarter, maybe for Q2. Why haven't you increased your guidance then? I mean, you elaborated on how this guidance is meant as a basic floor, you know. Basically, the world has to collapse, and then you still think you can make the EUR 750 million. That's not how guidances typically are given.
You give a range, and then you have a midpoint, and you have a lower range and an upper range, and you haven't increased the upper range as well, right? Can you elaborate on this, please?
Absolutely. Again, thank you very much for this question. Obviously, if I say disappointed, it's probably the wrong word, and I try to put my case now in front of you. We have updated, and we have increased our guidance. I probably think there's a little misconception because we are saying that EUR 750 million- 770 million is to be achieved even in difficult scenarios and in these unstable times. We say, however, that if there's no further escalation to this crisis, we will do substantially better. Now, you say guidances are given with the range. You're absolutely right. Wienerberger gave an absolute guidance at the beginning of this year with EUR 750 million- 770 million.
We gave a traditional guidance, which is obviously always given in the past. However, since then, the world has changed. With the war, with a lot of spillover effects, with a lot of instability. We actually said to everybody, even with this instability there out there, and we actually don't know, nobody knows what's going to happen. We think, and we're of the opinion, that's a strong message that we can achieve this number. Independently of what is happening. If we say today to you, obviously, if nothing more is happening, what's happening today, there's no bomb is going down in Romania or in Poland, and nothing is escalating further on the inflation side or whatever, then we will do substantially better. I would say then we have substantially increased our guidance. We've not given you a number. That's true.
I take this, and I fully appreciate your thought on this. Giving a number these days is very difficult because you have a lot of scenarios on your table, what can happen, but it is substantially higher. I think we have given the market, and probably this is the little bit of the misconception that we have here between us communicating and the market receiving, that we have given an update, and we have increased our guidance, actually, because we have made it stronger. Stronger, saying independent of the events that might happen, we will realize EUR 750-EUR 770. I think this is the strong message that Wienerberger gives and that the market probably has not appreciated in the way we wanted to say it.
Okay. Just one question from me regarding seasonality. I'm explicitly asking you for your view as of today. You know, there are different scenarios that you've just elaborated. Typically your first quarter is clearly the worst one in the year weather-wise and so on. Then Q2 and Q3 are significantly better than the first one, and then Q4 is basically then again a bit lower, but still better than Q1. Would you see the same from today's perspective with the order books that you have, with the volumes that you see for Q2 and H2 from today's perspective? Do you think that this seasonality can still be achievable in 2022?
Yes.
You know I'm not asking you for a number, obviously, right?
No. I hear you.
I'm trying to gauge the upper end of your real guidance, you know?
No, that's right. Yes, you're right. I mean, from
The experience that the first quarter is the, the w as the weakest, t hen obviously the stronger ones are quarter two and especially quarter three. Quarter four is obviously strongly dependent again, not only on the macro and micro, but also especially on the weather because the winter months in certain parts where we operate in. This is absolutely correct. As I say, momentum is good and quarter two will be a good quarter, very satisfactory quarter. I would say also quarter three will be, if there's nothing additional happening in the marketplace, as I pointed towards, that I think it will be a very satisfactory quarter as well.
That's why I'm saying if this happens, what we assume right now, that means there's the war stays within its borders and where it has no spillover effect, and as I said, no further inflation, no further interest rate hikes, then I think we will be substantially above the EUR 750 million- 770 million. You're absolutely right.
Thank you.
Thank you.
Congratulations again.
Thank you. That's very kind of you. Thank you.
We have a follow-up question from Michal Majerski from PTE Allianz. Please go ahead.
Yes. Another question from my side about Wienerberger Piping Solutions, because I remember from the previous calls, you have signaled that there is some problem with the supply of the raw materials. I don't know if it's polyethylene or polypropylene, about availability and the prices. I was positively surprised with the improved profitability of this segment. Could you explain, is the worst behind you or what's the situation on this raw materials market currently? What should we expect in coming quarters?
Yeah. I think what is important, we have secured availability. We had last year, especially in the second quarter, we were struggling because suppliers, there were some suppliers which announced force majeure, so there was less material available last year compared to this year. There is this year more raw material available. We have secured the raw materials, so we feel comfortable with the supply of PE, PP and PVC, so for all three plastic grains, basically, for the rest of the year. Here we feel fine. We see that there is a continuing cost inflation.
We expect from today's perspective the peak more in May and June, and that for the second half we assume that there will be more of a flattening of the cost development also in the plastic market for the second half of the year.
That's clear. Thank you.
Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your telephone. We have another follow-up question from Miro Rosak. Please go ahead.
Yes, thanks again for taking my follow-up. Could you please remind me about the tailwind you have this year on an EBITDA level from the strong US dollar?
I think I only know that the total figure is EUR 2 million on total EBITDA level. I think this is a combination of a strong US dollar, British pound and also the Czech crown, basically.
How many million? Sorry. Excuse me, I couldn't hear it, sorry. Can you repeat?
Two.
EUR 2 million?
Yeah. This is a complete.
Can you repeat?
Too is a total of the Czech crown of the British pound and also for the US dollar. Don't forget there was a further devaluation of the Turkish lira. As I mentioned, I only have in mind the total currency effect, what we have basically, after the first three months on EBITDA level.
On the first three months. For the full year? What we would see. I mean, look, if you assume the 1.04, which is the rate since today, and just to give you an idea, we're talking about the rate, which is roughly 14% higher compared to last year. You're running a $1 billion business this year, almost in North America. Must be way more than $2 million, you know?
Yeah. It was on EBITDA. You are speaking now about basically on the revenue in-
There's a translation effect.
There is more. If you want to have the really detailed number, we can forward you a number from what is the impact of the dollar on revenues and also on EBITDA and an assumption, because finally it is an assumption which what could be the impact on revenues, basically, assuming a revenue of round about $1 billion, basically, which could be the revenue outlook for the North American business for this year.
Absolutely. Okay. Yes. I'd appreciate that. If you send it to me.
Yep.
Another question.
Yeah.
I mean, this year there is a bit of distortion because you are basically increasing the prices, if I understood this correctly, that you increased by 20%, the cost increase was 15%, which is like an underlying 5% increase in margin. We can see that in your gross margin, right? I mean, that's one to one reflected there. Can you give an idea into 2023 from all what you can see today, will there be? Is there like a one-off positive effect in 2022, and in 2023 we will most probably see an abating of these effects and a decline in EBITDA?
From today's perspective, is there no special effect like rolling over into 2023 apart from the FX tailwind which you are going to have just because of the move that we have seen in the first 5 months of this year? Which will be still positive, right, in 2023 from the dollar, if nothing happens in the meantime. Are there other effects?
No, I think.
Gas price, for example.
Yeah, yeah. I understand what you mean. I think we have a big pile already for 2023. We also have bought on gas and electricity, so basically we know our cost structure very well, so we know also which pricing we need also for 2023 to cover cost inflation. Assuming that we will bring forward basically our price positioning, what we have today, and we did already a kind of a second step in pricing in some countries and some markets and products already in the beginning of Q2 to secure basically the outperformance also of our cost inflation and also to cover cost inflation consequently also for the rest of the year. I don't see and I don't expect a negative impact.
I think it is more how much we can take with us into 2023 out of this extraordinary margin, what we see today, and we have to be clear that the profitability, what we have seen in the first quarter, is definitely exceptionally high when it's about volume and price. Second quarter will also be good, also no doubt about that because we see, as Heimo mentioned, strong demand. Order books are full. But you know, the last year, the second quarter of 2021 was already different, was already much stronger than the first quarter of 2021. It will look differently. It will look very positive, but differently, what we have seen in quarter one.
Okay. Thank you very much. Again, all the best.
Thank you.
Thanks.
There are no further questions at this time, and I would like to hand back to Daniel Merl for closing comments.
Thank you very much, operator. Ladies and gentlemen, thank you very much for taking the time and dialing in today. The next conference call will be on the 10th of August for our results in the first half year of 2022. For today, I can only wish you a nice remaining afternoon. Stay safe and goodbye.
Ladies and gentlemen, this concludes the Wienerberger conference call. Thank you for joining, and have a pleasant day. Goodbye.