Zwolle, 24 August 2011 - Wavin N.V., leading supplier of plastic pipe systems and solutions in Europe, today announces its first half year 2011 results:

Summary H1

• Revenue increased 14.7% to EUR 681 million. Like-for-like increase 12.2%  

• Ebitda EUR 46.0 million (H1 2010: 47.9 million)  

• Raw material cost increase partly offset by volume growth and operational leverage 

• Ebitda margin 6.8% (2010: 8.1%) 

• Net profit EUR 4.3 million (H1 2010: EUR 0.2 million) 

• Net debt down EUR 31 million to EUR 332 million 

Summary Q2

• Revenue Q2 up 9.4% to EUR 381 million (2010: EUR 349 million) like-for-like 7.7% 

• Ebitda EUR 35.1 million (2010: EUR 39.6 million)  

• Q2 Ebitda margin 9.2% (2010: 11.4%) 

The figures included in this release are unaudited

All references to like-for-like reflect organic revenue at constant currencies

(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: "The solid revenue development seen at the start of the year continued in Q2, albeit at a lower pace. The performance in Central & Eastern Europe, the Nordic countries and Germany was strong. Results in the South West Europe region however were unsatisfactory due to the combination of challenging market circumstances and operational issues that have been corrected.

The sharp rise in raw material cost could not be fully offset. This put significant pressure on our margins, despite volume growth and price increases.

We integrated our Swedish acquisition and divested a small French business in agricultural irrigation. In July we completed the sale of EuroCeramic, our clay activities on the European continent."

Outlook

The macro-economic developments in recent weeks have made us more cautious as these may negatively impact construction market. Nevertheless, we are confident that overall revenue development will be positive throughout the year.

We expect margins to remain under pressure although raw material cost seem to have peaked. Strict cash and cost control will be maintained.

Revenue

Revenue in the first half year of 2011 increased 14.7% to EUR 681 million on the back of strong market development in several markets and favourable weather conditions in Q1. Adjusted for exchange rate impact and acquisitions, like-for-like growth was 12.2% in H1.

Revenue in the second quarter grew 9.4%; like-for-like revenue in Q2 was up 7.7% compared to last year.

Construction activities and revenue development differed across Europe in the first half year. The Nordic countries, Germany and the Central- and Eastern Europe region reported solid revenue growth in recovering construction markets. In contrast the Netherlands, Italy, the UK, Ireland and France were still facing challenging market circumstances.

Below Ground revenues showed 18% growth, benefitting from favourable winter conditions in the first quarter compared to 2010. Excluding acquisitions revenue growth in the segment was 14%. Above Ground business grew 7.5% with residential markets overall showing some cautious recovery.

Ebitda and Ebitda margin

In H1 Wavin faced a considerable rise in raw material costs. Compared to the beginning of the year, input costs have risen 15 to 20%, reaching their peak in May/June. We have announced several price increases. In the current economic climate with overcapacity in the industry, it is difficult to pass on price increases and implementation takes more time. In the UK and France we faced operational issues which were corrected in the first half year. Increased volumes partly compensated for the drop in Ebitda-margin.

H1 Ebitda came in at EUR 46.0 million (2010: EUR 47.9 million) with a second quarter Ebitda result of EUR 35.1 million (2010: EUR 39.6 million). The H1 Ebitda margin was 6.8% compared to 8.1% in 2010.

Operating result

The operating result including non-recurring income and expense, increased slightly to EUR 17.7 million from EUR 16.6 million in H1 2010. Recurring operating result was EUR 18 million, equal to last year.

Non-recurring items in operating result

Non-recurring items amounted to EUR 0.3 million versus EUR 1.3 million in H1 2010.

In H1 restructuring charges were taken for Turkey and Belgium. These were mostly offset by one off benefits.

Financing cost and income tax

Net financing costs were EUR 15.1 million compared to EUR 17.2 million last year. In 2010 the existing financing facility was renegotiated which resulted in reduced interest margin for the remaining period to April 2013. Interest costs depend on the leverage ratio, which is measured quarterly. In the first half year the interest margin above 3-month Euribor was 240bps. The Euribor exposure is largely hedged at 3.9%.

Income tax benefit was EUR 0.2 million versus an income tax expense of EUR 0.4 million in H1 2010. The reduction of the corporate income tax rate in the UK resulted in a release of EUR 2 million of deferred tax liabilities.

Net profit

Net profit in H1 was up EUR 4.1 million to EUR 4.3 million, resulting from a slightly higher operating result and lower financing cost.  

Cash flow and Net debt

Cash outflow from operations in H1 dropped EUR 53 million to EUR 39 million. Trade working capital was EUR 41 million lower at EUR 243 million compared to last year. Active cash management measures translated in lower trade receivables which, together with higher trade payables, offset the increase in inventory value as a result of higher raw material cost. Investments amounted to EUR 24 million (H1 2010: EUR 20 million). For the full year investments are expected to be in line with last year.

Net debt amounted to EUR 332 million, EUR 31 million below last year. The company operated well within the bank covenants.

Results per region

 (1) 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 Wavin's North West region rose 22.5% to EUR 244 million. Excluding the acquisition in Sweden, revenue improved 18%.

The Nordic countries showed strong double digit revenue growth in favourable construction markets and supported by mild weather in the first quarter. In Sweden we strengthened our market position with the acquisition of the PE water business of KWH, which has been successfully integrated. Market conditions in Belgium and Germany were positive but the markets remained very competitive. In the Netherlands limited revenue growth was recorded in difficult trading conditions.

Ebitda grew almost EUR 4 million to EUR 16.1 million. The Ebitda margin was 6.6%, slightly higher than last year.

South West Europe (United Kingdom, France, Ireland)

The first half year proved difficult for the South West region. In the UK, the construction markets remained challenging. The picture for publicly funded construction such as social housing, schools and other public buildings worsened as the government spending cuts started to take effect. The residential segment was stable at a low level. Overall revenue in the region was up 4.8% to EUR 193 million.

The gradual introduction of the next generation push-fit system on the UK market initially lead to sourcing issues as clients awaited the full range to be available. The issue is resolved and market acceptance is accelerating.

In France residential new build activity increased compared to last year whilst non-residential building was weak. In a price sensitive and competitive market the raw material cost increases had an immediate negative impact on the margins. Overall performance was disappointing as France was also confronted with some operational issues. These have been corrected.

The weak markets and operational issues in the region resulted in a disappointing H1 performance. Ebitda was down EUR 10 million to EUR 4.2 million. The Ebitda margin fell 540 bps to 2.2%

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

Revenue in Wavin's CEE region grew by a quarter (26.9%). The Polish construction and infrastructure market is strong. Revenue and results were satisfying. In Czechia the business is benefiting from the improved market position realised with the sales joint venture established last year.

Ebitda increased 12% to EUR 13.6 million. The Ebitda margin was 12.3% versus 13.9% in 2010.

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

In the South East region revenue amounted to EUR 103.4 million up 3% from last year. The Italian market remained depressed. Fierce local competition caused serious margin pressure. In a sound Turkish construction market Wavin performed well in the above ground segment. Export sales from Turkey were below expectations.

Revenue development in the other markets was encouraging.

Ebitda fell short of last year at EUR 5.2 million. Margin dropped 110 bps to 5.0%.

Business Unit Developments

In the first half of the year the Below Ground business grew 18%, ahead of the Above Ground business that was up 7.5%. The Below Ground business benefitted from favourable winter conditions in 2011, an acquisition in Sweden and a business combination in Czechia.

In the first half year Above Ground sales were 37% of revenue, compared to 39% last year.

Above Ground

Despite moderate market developments in residential construction across Europe, Hot & Cold revenue grew to EUR 140 million, up 9.2%. Growth was seen in all markets.

In the UK a next generation push-fit system was launched. Following a slow take off as a consequence of the phased introduction, sales of the new range is now accelerating. Sales of Surface Heating and Cooling systems, a key growth segment, grew 29.6%. Wavin is increasingly successful in getting these concepts specified in the project-business. Soil & Waste revenue was EUR 89 million, up 8.3%.

Below Ground

The Below Ground business had a strong start of the year. Mild winter conditions and some market recovery contributed to the strong revenue growth of 18% to EUR 412 million. Growth in Water Management, a key growth area in Below Ground was 17.5%, despite increasing competition. With the focus on a complete Water Management program, Wavin successfully offers integrated solutions to the professional building market.

Financial Calendar

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.

Appendix - Condensed Consolidated Interim Financial Statements

• Consolidated balance sheet  

• Consolidated income statement  

• Consolidated statement of comprehensive income  

• Consolidated statement of changes in equity  

• Consolidated statement of cash flows  

• Notes to the Condensed Consolidated Interim Financial Statements  

• Statement of responsibilities