Wienerberger AG

VSE:WIE

Earnings Call Transcript 2022-Q1

[Operator]

Ladies and gentlemen, thank you for standing by. I'm Natalie, your Chorus Call operator. Welcome and thank you for joining the conference call on Wienerberger's Results on the First Quarter 2022. [Operator Instructions]

I would now like to turn the conference over to Daniel Merl from Investor Relations. Please go ahead.

[Daniel Merl, executive]

Thank you, operator. Ladies and gentlemen, hope you are 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, Heimo Scheuch; and our CFO, Mr. Gerhard Hanke. Heimo 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.

[Heimo Scheuch, executive]

Thank you, Daniel. Also a warm welcome from us here from Vienna. Thanks for being on the call. We would like you to walk -- 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 EUR 106 million last year to EUR 228 million this year. So really strong performance. Net result also above EUR 100 million and the EBITDA margin nearly approaching 20% in the first quarter.

So all in all, a very satisfactory performance from our standpoint of view. And this, obviously, in a very instable volatile and geopolitically speaking, difficult environment. We were able to manage cost inflation very well. We manage the volatile energy situation, both on the availability side and on the cost side. And we dealt with rising mortgage rates around our businesses.

So 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, it was 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. We -- 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%. So again, 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 [ specialty ] energy due to our buying forward strategy, we have kept not only from repricing 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, it is very important that we focused on our costs, costs when it comes to the performance enhancement on the operational excellence projects. Here, again, very good contribution from this aspect.

So all in all, a very good run, and 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 1 and 2 family houses.

So I think here, we not only made some market share gains against the competition direct -- in direct 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. And the infrastructure, the same with a very significant stimulus packages around Europe and North America. We took advantage of those and had a healthy demand level, especially in North America and the rest of Europe and especially also Eastern Europe. So 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, and we will improve this to about 25% on a general turnover perspective. On the innovation front, we continue to bring new products and solutions in the market and have now approached more than 30% of our turnover in innovative products.

Again, 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 this 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 at Wienerberger want to further reduce our energy consumption, and this is with clear targets that we have set for ourselves, '23, minus 15%, and 2030 minus 40% of CO2 reduction. So this will enable us to reduce more or less EUR 1 million again on CO2 emissions.

Keep in mind that Wienerberger on total emits today in the manufacturing process relating to [indiscernible] processes about a little bit above EUR 2 million. So already today, we are in a very good position to achieve our climate neutrality in a short period of time.

When I look obviously on the M&A front, we have done significant improvement 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. were still very important, and I would say, changing from a perspective in industrial landscape, Meridian Brick acquisition there. So again, Wienerberger is in 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 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. So we are open for new technologies and for new ways of production when it comes to our clay material business, meaning also the Building Solutions side of the business because the piping one with more than EUR 1 billion sales is not using gas but electricity already. And here, we have green electricity as the focus on.

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. And from a perspective of capital allocation, it's a lot cheaper than conventional technology. We have not only tested it. It runs now, and we have put it in current and existing infrastructure at one of our sites in Belgium. So 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 cost -- the increase in cost of energy, especially natural gas. But on the other hand, also, because it puts us on the forefront of the industry, it gives us an enormous competitive advantage.

So 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.

So 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.

And with this, I think I will hand over to Gerhard for the numbers.

[Gerhard Hanke, executive]

Thank you, Heimo. Ladies and gentlemen, an exceptional strong start as Heimo just mentioned in Q1, 2022 which was based on a consistently high demand business in all our product groups, in all our markets. And this is in an environment which was, I think, already described in the beginning, which was based on volatile supply market, high uncertainty. So despite that, a strong performance in the first 3 months, the growth consequently also then across all our 3 business units.

There's one business units, which extraordinary performed. I would say this is North America and from 2 perspectives, basically in the legacy business, which [ external ] well performed on the brick side and on the pipe side. But also the M&A contribution of our acquisition of Meridian also performed better than we originally expected. So this led to a strong revenue as well as an EBITDA increase in the first 3 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%. And this 30% revenue increase is consisting mainly out of a volume increase with -- more than 10% volume increase and also with a strong 20% price increase. And these 2 factors are basically mainly driving the revenue increase. And 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 3 months of around about 9%. So we were able to even outperform the 9% cost inflation with price increase of [ 20% ] in the first 3 months.

The strong demand led also in this business unit to a high -- to high run rates basically to our -- in our production facilities. And this finally led also to high efficiencies next to our performance enhancement programs, which were finally contributing to the strong EBITDA development, which means almost doubling the EBITDA in the first 3 months of the Wienerberger Building Solutions.

Moving further to the Piping Solutions -- business unit of our piping segment. Also there, we were able to increase revenues drastically looking to an 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 the last year.

So revenue mainly driven with price, which is above 30% year-on-year comparison. And also the inflation in this segment, which is strongly driven by the [plastic kilns] or the development of the plastic kilns is with around about 30%. Also here, we were able to outperform basically the cost inflation, and this led also to the strong EBITDA margin, which is 11% after the first 3 months.

In North America, I mentioned it already in the beginning, 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 and the legacy business, especially also on the piping side, the piping production also here, we again were able to report a very strong performance after the first 3 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, on the brick, as well as, on the piping side significantly above prior year and is, by that contributing from the strong EBITDA increase of up to EUR 40 million for the first 3 months.

So to summarize, on the group, Heimo mentioned it already a strong revenue growth of plus 45%. The growth is strongly driven by pricing, which is up by 20% plus after the first 3 months, year-on-year comparison, plus 6% on volume and the scope extension, meaning the M&A activities, which we did in 2021 were contributing with around about 15% the revenues in the first 3 months.

This translates then as a consequence to a very strong EBITDA performance. EBITDA organically with around about EUR 100 million up compared to last year. And this EUR 100 million, in addition, organic EBITDA contribution is mainly driven by the strong price over cost performance, what we have seen after the first 3 months by additional efficiencies out of our self-help program, but 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 the -- 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 3 months with around about EUR [ 30 ] 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. So this is an important pillar also of our organic growth strategy.

When it's about energy. We mentioned it already before it is 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 attractive costs. And 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 also favorable also to cover our cost inflation. Also 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 around about 30% in revenues. In volumes, we heard about plus 6% in the first 3 months. We have significant earning contributions in the first quarter out of our self-help program. M&As were contributing around about EUR 16 million in the first 3 months. Additionally, contribution on earnings also translates in a high cash conversion. So cash conversion also there is above 90%. We decided to extend our share buyback program with another EUR 80 million basically respectively, we're planning to increase our share from 3% to around about 5.6% of our share capital.

We decided and already distributed, [paid] and dividend with EUR 0.75 per share, which is an increase of 25% compared to last year. And 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.

And with that, I would like to hand over back to Heimo.

[Heimo Scheuch, executive]

Thank you, Gerhard. And 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 or 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 Solutions Business and obviously also for the infrastructure business. So this is our current outlook for the second quarter. So 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 3 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 shock wave due to the war in the Ukraine. Here, especially the segments 1 and 2 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 [ EU ] that are currently continuing. The individual housing very much dependent on mortgage rates that are still very low even after certain increase, especially in Eastern Europe and North America.

When we look at the inflation that we have seen in the first quarter and Gerhard 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, and this is, I think, very important to know, in this [instable] environment, 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 more -- much more resilient base than in the past.

So again, in this momentum, we built additional sales organically. We grow with our acquisitions, and I do foresee for the second quarter, also a 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 that is very volatile. So 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 million to EUR 770 million is what I call the base case, base case in the sense that obviously, the current situation with this instability is built in.

So 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, spillover effects through 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. So what I can say from today's perspective to U.S. 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%. So you see here that we will -- we 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. So all in all, we have done a major effort over the last couple of years, and we'll do also next year in dispute of further improving. Altogether, by the way, ladies and gentlemen, we have here made a strong contribution with EUR 245 million over the years from 2018 to 2023. So a very important improvement from Wienerberger perspective on the cost side, and we will continue to work on that.

These are investments, CapEx that we allocate to the business that has a payback of around 4 years. And this will ensure also the outperforming of the markets that we are operating in by about 2% compared to the GDP. And 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. So infrastructure and renovation are here key attention points.

And we will certainly be disciplined with the maintenance CapEx this year, about EUR 135 million that goes into the business. Dividend has already been approved by U.S. shareholders and obviously, to the fact that we pay out a good dividend, I think, based on the current performance. And also when we look at the share buyback 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 there's a strong momentum building with respect to our future growth. And here, we invest in our own shares also with the extended share buyback program that Gerhard has explained.

And 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 macro-economically speaking. So we will 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. And 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.

And 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 the emphasis on our energy transition and to do it fast 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.

So 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. And I look forward, obviously, to your questions.

[Daniel Merl, executive]

Thank you, operator. We are now ready to take your questions.

[Operator]

[Operator Instructions] And the first question is from the line of Michal Majerski from PTE Allianz.

[Michal Majerski, analyst]

Congratulation for the good results. But 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 -- because I heard from my colleague who covers another industrial from the steel sector and this issue was also answered on the call. What do you think about this?

[Heimo Scheuch, executive]

First of all, thank you very much for these very important questions. And 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, seeing something that we don't see right now. And 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 the field, actually, they have all full order books, and they are working full time around Europe and North America.

I would say this today, unfortunate for us a discrepancy between the financial community and with the political community and the real market out there. And everybody wants to see on the financial community side, a recession or downturn, et cetera. And 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. And therefore, obviously, this momentum is building and they're anticipating, I think, something which we clearly don't see. What we have done in order to make U.S. 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 impact. And therefore, we can sort of say, "Listen, EUR 750 million to EUR 770 million is still something we are going to achieve even under this circumstances, potential sort of impacts on -- from this war included.

So this is something we are going to achieve. If nothing material comes out of this war than what we -- more than what we have seen today or up till today, so that energy is delivered that the interest rates are not going up, there's no further inflation, as I said earlier, then last see a substantial improvement still possible above EUR 770 million. So I think this is what we from Wienerberger wanted to communicate to the market and what we are communicating to you. So I think it's a strong message.

Now to your second question. Yes, we have -- we make scenarios, yes, we analyze the situation. It's very different from country-to-country. And please keep in mind that we are already in May. So in May, meaning months were less energy is used in households, et cetera. So industry gets more supply. We have not had any shortage so far. Wienerberger, as such, is a different animal than 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. So 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 full Wienerberger. Take Wienerberger today, more than EUR 1 billion turnover coming from pipes, nothing to do with exposure to gas. Increasing exposure also in North America, not yet EUR 1 billion but close -- getting closer. So again, no exposure to European gas supply. And then obviously, also a strong business, Ireland, especially the United Kingdom, Northwestern Europe starting with the North and going down, obviously to France, no exposure to gas from Russia. And then we have certain countries, obviously, Eastern Europe, by the way, Polish also that have now an independent resource away from Russian gas.

So -- and I think this momentum is building. So the exposure to 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. And 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.

So 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.

[Operator]

[Operator Instructions] The next question is from the line of Miro Zuzak from JMS.

[Miro Zuzak, analyst]

You seem to be a bit energetic with your message that momentum is very strong also 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. So if you see the -- 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, say, EUR 500 million.

So there is not much left to the EUR 750 million -- and 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 have seen more or less for 1 quarter, maybe for Q2. Why haven't you increased your guidance then? I mean, you just -- I mean, you elaborated on how this guidance is meant as a basic flow, basically the world has to collapse and then you still think you can make the EUR 750 million. But that's not how guidance is typically are given you -- give a range and then you have a midpoint and you have a lower range and an up range and you haven't increased the up range as well, right? So can you elaborate on this, please?

[Heimo Scheuch, executive]

Absolutely. And again, thank you very much for this question. And obviously, I'm -- 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 and EUR 770 million is to be achieved even in difficult scenarios in this instable times. We say, however, that if there is no further escalation to this crisis, we will do substantially better. Now, you say guidances are given with the range. You're absolutely right. And Wienerberger gave an absolute guidance at the beginning of this year with EUR 750 million to EUR 770 million.

So we gave a traditional guidance, which is obviously always given in the past. However, since then, the world has changed with a war, with a lot of spillover effect, with a lot of instability. And we actually said to everybody, even with this instability that are 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 and independently of what is happening.

If we say today to you, obviously, if nothing more is happening what's happening today, there's no bump 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, and I take this, and I fully appreciate your thought on this. But 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.

So 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 million to EUR 770 million. And I think this is the strong message that Wienerberger gives and that the market probably has not appreciated in the way we wanted to sell it.

[Miro Zuzak, analyst]

Okay. Just one question from me regarding seasonality. So I'm explicitly asking you for your view as of today. There are different scenarios that you've just elaborated. So 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 book 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. I'm not asking you for a number, obviously, right?

[Heimo Scheuch, executive]

No, you're trying to gauge the upper end of your real guidance.

[Miro Zuzak, analyst]

That's right.

[Heimo Scheuch, executive]

But yes, you're right. I mean, from the experience that the first quarter is the most weakest then obviously, the stronger ones are quarter 2 and especially quarter 3 and quarter 4 is obviously strongly dependent again, not only on the macro and micro, but also especially on the weather, because of the winter months in certain parts where we operate in. So this is absolutely correct. And as I say, momentum is good and quarter 2 will be a good quarter, very satisfactory quarter. And I would say also quarter 3 will be if there's nothing additional happening in the marketplace, as I pointed towards, I think it will be a very satisfactory quarter as well. So that's why I'm saying, if this happens, what we assume right now, that means that the war stays within its borders and where, and has no spillover effect and as I said, no further inflation or further interest rate hikes, then I think then we will be substantially above the EUR 750 million to EUR 770 million. You're absolutely right.

[Operator]

We have a follow-up question from Michal Majerski from PTE Allianz.

[Michal Majerski, analyst]

Yes, another question from my side about Wienerberger Piping Solutions, because I remember from the previous calls, you have signalized that there is some problem with the supply of the raw materials. I don't know it's polyethylene or polypropylene about availability and the prices. So I was positively surprised with the improved profitability of this segment. So could you explain is the worst behind you? Or what's the situation on these raw materials market currently? What should we expect in coming quarters?

[Heimo Scheuch, executive]

I think what is important, we have secured availability. We have -- 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. So 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 3 plastic grains, basically for the rest of the year. So here, we feel find. 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 a flattening of the cost development also in the plastic market for the second half of the year.

[Operator]

[Operator Instructions]. We have another follow up question from Miro Zuzak.

[Miro Zuzak, analyst]

Could you please remind me about the tailwind you have this year on an EBITDA level from the strong U.S. dollar?

[Heimo Scheuch, executive]

I think it is -- I only know that the total figure is EUR 2 million on total on EBITDA level, I think, and this is a combination of a stronger U.S. dollar, British pound and also the Czech crown basically what...

[Miro Zuzak, analyst]

How many millions -- sorry, I couldn't hear it. Can you repeat?

[Heimo Scheuch, executive]

EUR 2 million. But this is a total of the jack ground of the British pound and also for the U.S. dollar. And also don't forget there was a further devaluation of the Turkish lira. So as I mentioned, I only have in mind the total currency effect, what we have basically after the first 3 months on EBITDA level.

[Miro Zuzak, analyst]

Okay, on the first 3 months. And for the full year? I mean, look, if you assume the EUR 104 million, 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 EUR 1 billion business this year almost in North America. Must be way more than EUR 2 million?

[Heimo Scheuch, executive]

This was on EBITDA. You are speaking now about basically on the revenue...

[Miro Zuzak, analyst]

The translation effect.

[Heimo Scheuch, executive]

But if you want to have the -- really the 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 around about small EUR 1 billion basically, which could be the revenue outlook for the North American business for this year.

[Miro Zuzak, analyst]

Yes, I'd appreciate that if you could give -- if you [indiscernible] -- then another question. 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 the gross margin, right? I mean, that 1:1 reflected there. Can you give an idea into 2023 from all what you can see today, will be there -- is there like a one-off positive effect in 2022 and in 2023, we will most probably see then an abating of these effects and a decline in EBITDA? Or from today's perspective, is there no special effects 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 now in the first 5 months of this year, which will be still positive for us in 2023 from the dollar, if not [indiscernible] mid time. But are there other effects, gas price for example.

[Gerhard Hanke, executive]

Yes, I understand what you mean. I think we have a big part 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 '23 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 the last year -- the second quarter of 2021 was already different, was already much stronger than the first quarter of 2021. So it will look differently. It will look very positive, but differently like what we have seen in quarter 1.

[Operator]

So there are no further questions at this time. I would like to hand back to Daniel Merl for closing comments.

[Daniel Merl, executive]

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.

[Operator]

Ladies and gentlemen, this concludes the Wienerberger conference call. Thank you for joining, and have a pleasant day. Goodbye.