Zwolle, 2 March 2011 - Wavin, Europe's leading supplier of plastic pipe systems and solutions, today announces its Second Half Year and Full Year 2010 results.

Full Year 2010

• Solid revenue development, first signs of stabilisation in construction markets
• Revenue EUR 1.23 billion, up 6.2%; 3.1% on a like-for-like basis 
• Margin pressure from rising raw material prices partly offset by lower cost base 
• Ebitda EUR 104.1 million, down 5.7%; Ebitda margin 8.5% (2009: 9.5%) 
• Net profit of EUR 7.1 million (2009: EUR 1.8 million) 

• Net debt EUR 256 million (EUR 237 million in 2009); leverage ratio 2.3 

H2 2010

• Second half year performance ahead of H1 
• Revenue EUR 637.3 million, up 8.5%, or 5.3% on like-for-like basis 
• Ebitda EUR 56.2 million (H2 2009: EUR 64.9 million); H2 Ebitda margin 8.8% (11.0% in H2 2009) 

All full year figures are audited

(1) All references to Ebitda reflect operating result before depreciation, amortisation and non-recurring items

(2) All references to operating result include non-recurring items

Henk ten Hove, Wavin CEO commented: "For Wavin, 2010 can be seen as a transition year. After a two year stretch of managing through the credit crisis, we saw an encouraging increase in revenue. At the same time, we faced strong winter conditions at both the beginning and at the end of the year, heavy price competition as well as substantial raw material price increases. Our margins came under pressure, despite tight cost control."

"In October, we presented the 'Wavin 2015' strategy, the roadmap to sustainable growth and profitability, with local market leadership as the key driver. We have meanwhile set first steps through an acquisition in Sweden and a sales joint venture in Czechia. We streamlined the organisation with fewer regions and stronger ties between sales, business development and innovation. This will enable us to accelerate the roll out of our innovative solutions for water management and energy efficiency of buildings on a European scale. In sustainability further progress was made by reducing CO2 emissions and increasing the usage of recycled material."

Outlook

We remain cautious about the outlook for 2011. The European construction market shows signs of stabilisation, but recovery will differ per country. We anticipate raw material costs to increase and we are fully focussed on passing these on. Revenue in 2011 is expected to develop ahead of the European construction market supported by our growth in innovative solutions and our presence in Europe's emerging markets.

Markets

In Europe construction output declined for the third consecutive year, but the speed of the decline levelled off and the first signs of stabilisation were seen. Residential construction activity in the Euro-zone declined further, with new residential construction accounting fully for this drop, whilst residential Repair, Maintenance and Improvement (RMI) were stable. The non-residential markets remained weak throughout the year. The civil engineering market was positive, supported by infrastructure investments in some Eastern European countries. However, they were influenced by the announcement of cutbacks in governmental spending throughout Europe in the second half of the year.

Wavin in 2010

In these market conditions Wavin showed solid revenue recovery. Double-digit growth was recorded in Scandinavia and the UK, as well as in some larger emerging markets, like Poland and Turkey. Developments in the Netherlands, Italy and some smaller Eastern European countries were disappointing.

Below ground activities picked up well following a slow start due to heavy winter conditions. Above ground building performance was less affected by these climate conditions, showing a good recovery from 2009.

Revenue

Revenue grew 6.2% to EUR 1.231 billion, despite serious winter conditions. As Wavin recorded 59% of revenue outside the Euro-zone, the appreciation of non-Euro currencies had a positive effect of 2.8% on reported revenue. On a like-for-like basis, revenue growth was 3.1%. Revenue development improved in the course of the year; H2 revenue was up 8.5% (5.3% on a like-for-like basis).

Gross profit

Gross profit came in at EUR 292.3, 1.5% below 2009. Growth in lower margin countries had a negative impact on the gross profit margin, which dropped 190 bps to 23.7%. The general economic climate and overcapacity in the industry caused delays in passing on raw material price increases to the market. Price competition was clearly fiercer in the more generic product ranges and in markets lacking clear market leadership. Production costs were contained by complexity reduction and manufacturing footprint optimisation, partly compensating for the margin pressure in the year.

Ebitda

The operating result before depreciation and amortisation and non-recurring items (Ebitda) decreased by 5.7% to EUR 104.1 million, from EUR 110.4 million in 2009. Rationalising back office functions translated into lower selling and distribution costs as well as general and administrative costs. Despite effective cost control, the steady increase of raw material prices caused a drop in the Ebitda margin to 8.5%, from 9.5% in 2009. H2 Ebitda margin came in at 8.8% (2009: 11.0%)

Non-recurring items in operating result

Non-recurring items in the operating result amounted to EUR 6.4 million (2009: EUR 14.6 million). Non-recurring costs of EUR 7.3 million, largely related to restructuring measures, resulting in further structural cost reductions. Non-recurring income of EUR 0.9 million was recorded on divestments of assets.

Operating result

The operating result was EUR 37.9 million in 2010, an increase of EUR 5.0 million or 15.2% compared to 2009. The positive development was a result of lower non-recurring costs and depreciation charges.

Depreciation decreased to EUR 47.1 million (2009: EUR 50.1 million) because of lower investment levels in the past two years. Amortisation costs were EUR 12.8 million, equal to 2009.

Financing costs and tax

Net finance costs decreased to EUR 34.1 million in 2010, from EUR 35.4 million in 2009.

Interest costs were EUR 34.8 million compared to EUR 34.4 million in 2009. Lower debt throughout the year, following the 2009 refinancing, largely compensated for the higher cost of financing. In 2010 the average interest rate paid was 7.4% compared to 6.3% the previous year. In the fourth quarter the interest mark up of the syndicated loan facility was lowered, reducing interest costs with EUR 3.5 million annually.

The company booked an income tax benefit of EUR 1.1 million slightly lower than the tax benefit of EUR 1.2 million in 2009. The tax income was positively affected by one-off benefits and the retroactive application of a fiscal facility in the Netherlands for tax reduction to stimulate R&D activities.

Associates

The 40% stake in a joint venture that specialises in pressure fittings for gas and water applications contributed EUR 2.2 million to the results, EUR 0.9 million below last year.

Net profit

Net profit rose from EUR 1.8 million in 2009 to EUR 7.1 million in 2010. Adjusted for one-off charges and benefits, recurring net profit amounted to EUR 8.9 million (2009: EUR 11.7 million). Profits attributable to shareholders increased from EUR 0.2 million in 2009 to EUR 5.8 million in 2010. Earnings per share were EUR 0.11, compared to break-even in 2009.

Dividend

The Boards of Wavin have decided to add the 2010 profit attributable to shareholders to the reserves. Under the terms of its credit facility, Wavin is restricted in its ability to pay cash dividends until December 2011.

Cash flow

Working capital increased by EUR 29.1 million to EUR 119.9 million. Inventories were negatively affected by the higher input costs, while account receivables were higher because of revenue growth in emerging markets, where payment terms are substantially longer than in mature markets.

Largely due to the working capital outflow, cash flow from operating activities was limited to EUR 59.3 million (2009: EUR 86.8 million). Depreciation and amortisation decreased slightly to EUR 60.0 million, well ahead of the net investment level. Capital expenditure was limited to EUR 37.6 million, at a similar level as 2009.

Net debt

Net debt increased by EUR 19.3 million, to EUR 256.1 million at year-end 2010. The increase was largely related to the working capital cash outflow. Wavin's main source of funding is a syndicated loan facility of EUR 500 million, which will expire in October 2011 and will be replaced with a EUR 475 million syndicated loan facility expiring in April 2013. The interest margins on both facilities were amended in the last quarter of 2010, resulting in an interest margin reduction of 75 bps to 125 bps, depending on the leverage ratio.

The company operated well within the agreed set of bank covenants. At year-end the leverage ratio (net debt/last twelve months Ebitda) was 2.3, well below the threshold of 3.7. The interest coverage ratio (Ebitda/net interest expense) was 3.7 against a minimum of 2.3.

Employees

Year end 2010, the Wavin Group had a workforce of 6,448 employees, compared to 6,238 the previous year. Workforce increases were recorded in countries where double digit growth was achieved like Poland and Turkey.

Developments per Business Unit

In 2010 the strategic business units Building & Installation and Civils & Infrastructure were combined with Wavin Technology & Innovation, the corporate research & development centre, into the new Marketing & Technology department.

Above Ground*

The Above Ground business performed better than last year, although residential markets remained uninspiring.

* Former Building & Installation business

Hot & Cold

In the Hot & Cold segment (systems and solutions for hot and cold tap water, radiator connections and surface heating and cooling), revenue grew by 9.3% to EUR 272.1 million, a strong recovery but still significantly under the pre-recession level. The segment displayed a strong rebound in the UK and solid growth in Turkey. One of the highlights in the fourth quarter was the launch in the UK of a new generation of the successful Hep2O fitting range.

Sales in the Surface Heating & Cooling segment developed favourably. The market for energy efficient heating and cooling solutions grew in 2010, stimulated by subsidies and tax benefits from local authorities. A key market introduction was Flexius, a flexible pipe installed in under floor heating systems that reduces total installation costs.

Soil & Waste

The Soil & Waste segment (in-house systems for the transport of waste water from kitchens and bathrooms to sewer systems) saw revenue increase with 6.7% to EUR 159.8 million, benefiting from market recovery in several key countries. Wavin's low-noise soil & waste systems are now available in most European markets.

Other Building systems

Products in this segment (such as roof gutters and electrical conduit pipes) complete the above ground offering in some of Wavin's European markets. Revenue in this segment shrank 8.7% to EUR 49.4 million.

Below Ground*

The Below Ground business was impacted by the winter conditions in the first and last quarter, but did well during the rest of the year.

* Former Civils & Infrastructure business

Foul Water Systems

Revenue in Foul Water Systems increased 6.8% to EUR 372.8 million, with growth realised in key emerging markets. The Tegra range of manholes and inspection chambers was extended.

Good progress was made with sustainable manufacturing. Wavin nearly doubled the production of multi-layer pipes with recycled material in the core, reducing virgin material use. Greater flexibility, lower installation costs and durability support the long-term trend of substituting traditional materials with plastics in Foul Water Systems.

Water Management

Water Management offers intelligent solutions for managing rainwater runoff from hard surfaces like roofs and roads to groundwater. Revenue in the segment grew by 6.8% to EUR 142.1 million compared to 2009. Recent examples of flooding following intensive rainfall in various European countries have unfortunately again proven the need to have solutions in place in both the residential and non-residential sectors to manage the increasingly severe rainfall. The Wavin Intesio water management concept is now available in seven countries. Recent introductions to complete the Intesio offering included flow controls and hydrodynamic separators to remove impurities from rain water before infiltration or discharge.

Cable Ducting

Cable Ducting, including fibre to the home systems, was impacted by a weak new residential market and postponement of large projects. The second half showed some recovery, with the launch of various large projects. Revenue was EUR 53.3 million, down 2.6% on 2009.

Water & Gas

Water & Gas reported turnover of EUR 156.2 million, 6.0% up compared to 2009. Growth stemmed primarily from emerging markets.

Results per region

Wavin's regional structure now consists of four regions rather than six, to benefit from scale and to realise synergies.

The Nordic (excluding the Baltic states) and the North West Europe region (the Netherlands, Germany and Belgium) merged to form the new North West Europe region. The UK/Ireland and South West Europe (France) regions have been combined into the new South West Europe region.

In the emerging markets, the Baltic countries (Lithuania, Estonia and Latvia) were transferred from the Nordic to the Central & Eastern Europe region. The South East Europe region remained unchanged.

* Comparative figures have been adjusted to reflect changes in the regional structure

**All references to Ebitda reflect operating result before depreciation, amortisation and non-recurring items

North West Europe (the Netherlands, Germany, Belgium, Denmark, Norway, Sweden, Finland)

Revenue in the North West region fell by 1.0% to EUR 405.8 million. The Ebitda margin dropped to 7.6%, from 8.1% in 2009.

In the Netherlands, the construction market faced a considerable downturn. The residential market suffered particularly. Dutch consumer and producer confidence remained low.

The German building sector picked up. High stock levels held by competitors early in the year pushed prices lower. In the infrastructure sector, local government cost cutting programmes had a negative impact on revenue development. Wavin Germany maintained market positions.

In Belgium, the residential sector was stimulated by the government through tax advantages, both for new build and renovation projects. Demand in the non-residential segment was still relatively low, as companies postponed investments. The infrastructure sector benefited from government investments in sewer networks.

Denmark recuperated after several years of decline. Wavin Denmark has a leading market position in below ground activities, such as in the growing water management segment. With a strong product range, intensive customer support and flexible supply chain services it is gaining ground in under floor heating. Wavin offers education and training in water management solutions in its Wavin Solutions Centre that was opened by the Danish Minister of Environment.

In Sweden Wavin improved its position and has become a full range local supplier through the acquisition of the drinking water business of KWH, whose products will also be available in Norway.

In Norway, Wavin showed a strong performance. In Finland, Wavin further developed its niche position in tanks and separators.

South West Europe (United Kingdom, Ireland and France)

In the South West region, revenue increased by 8.2% to EUR 370.1 million. The Ebitda margin was 6.9%, up from 6.5% in 2009, driven mainly by volume increase in the UK, which more than compensated for the margin pressure in France.

The UK construction market showed some signs of improvement, with total output rising by 3% compared to 2009, although recovery was mixed across sectors. Spending on new housing increased by double digits, while spending on Repair Maintenance and Improvement rose marginally.

In Ireland the economy continued to suffer. Construction output fell, almost 30% compared to the already low level of 2009. Because of overcapacity, there was downward pressure on pricing.

France saw stabilisation of the residential construction market, but there was a severe drop in the non-residential market. In the below ground market, contraction in public infrastructure spending resulted in an overall market decline. Sales prices came under pressure, particularly at the low end of the business

Central & Eastern Europe (Poland, Czechia, Russia, Slovakia, Ukraine, Lithuania, Estonia, Latvia)

Despite adverse weather conditions in the first months and the last month of the year right across the region, revenue grew by 11.0% from EUR 179.3 million to EUR 199.0 million in 2010. The Ebitda margin dropped to 14.5%.  

Although the market in Poland was fiercely competitive, Wavin managed to grow its volume share and enhanced its leadership position in non-residential segments. Wavin Poland further increased sales of its Surface Heating & Cooling business. Wavin is involved in stadium projects for the EURO 2012 football tournament.

Czechia was still in recession. However, after a weak start of the year, both the domestic market as well as the Russian export market showed some improvement. In the fourth quarter, the commercial activities of Wavin in Czechia were merged with those of OSMA plastu in a sales joint venture, in which Wavin has a 65% controlling stake. The sales joint venture offers customers a full product range and holds a leading position in the Czech market.

In Russia it proved to be a difficult year, with numerous residential and non-residential projects cancelled or postponed.

South East Europe (Italy, Hungary, Romania, Turkey, Croatia, Bulgaria, Serbia)

Revenue in the South East Europe region increased 7.3% to EUR 197.8 million. The margin was down 220 bps to 4.6%.

Italy witnessed ongoing decline in the construction sector. Given the overcapacity in the very fragmented Italian market and the lack of a clear overall market leader, it was difficult to pass on the increases in resin prices. The specification of the Tigris K1 press-fit plumbing system for the first phase of the prestigious CityLife development in Milan was one of the highlights.

The difficult economic climate in Hungary caused the construction sector to slow down for the fifth year in a row. Wavin Hungary maintained its market leadership in both the above and below ground sectors. A major project was the Mercedes Benz factory, for which Wavin designed and supplied a full range of water management and foul water systems. Local production in Romania started in January 2010, and we saw double-digit revenue growth there despite a declining market.

The construction market in Turkey grew another 10% in 2010. Wavin recorded strong revenue growth and gained market share in both above and below ground activities. In this very competitive market margins were weak. The export business of Hot & Cold products to Eastern Europe recorded modest growth.

Overseas and Other

The Wavin Group also comprises entities not part of the regional structure, such as Wavin Overseas, Wavin China and Group holding companies. Wavin Overseas is responsible for all commercial activities outside Europe, and sells Wavin products and technologies worldwide through a network of 120 agents and licensees. Wavin China activities include production, sales and sourcing in Foshan. Wavin Overseas benefited from the recovery of overseas markets, revenues and licensee income increased.

Financial Calendar 2011

About Wavin

Wavin is the leading supplier of plastic pipe systems and solutions in Europe. The company provides essentials: plastic pipe systems and solutions for tap water, surface heating and cooling, soil and waste, rain- and storm water, distribution of drinking water and gas and telecom applications. Wavin is headquartered in Zwolle (The Netherlands) and has a presence in 26 European countries, with manufacturing sites in 18 of those and one in China. The company employs approximately 6,400 people and reported revenue of more than EUR 1.2 billion for 2010. Outside Europe, it has a global network of agents, licensees and distributors. Wavin is listed on the NYSE Amsterdam stock exchange (WAVIN). More details about Wavin can be found at www.wavin.com

For further information:

Cautionary note regarding forward-looking statements

This announcement contains forward-looking statements. Forward-looking statements are statements that are not based on historical fact, including statements about our beliefs and expectations. Any statement in this announcement that expresses or implies our intentions, beliefs, expectations or predictions (and the assumptions underlying them) is a forward-looking statement. Such statements are based on plans, estimates and projections as currently available to the management of Wavin. Forward-looking statements therefore speak only as of the date they are made and we assume no obligation to publicly update any of them in the light of new information or future events.

 Annexes:

• Consolidated income statement 
• Consolidated balance sheet 
• Consolidated statement of cash flows 
• Consolidated statement of changes in equity 
• Key figures last three years 
• Revenue and Ebitda breakdown per region, revenue breakdown per Business Unit 
• Revenue and Ebitda breakdown previous segmentation