Plastic pipe systems producer Wavin (Zwolle / The Netherlands; www.wavin.com) has reported a 44% year-on-year reduction in operating profit to EUR 83.3m in 2008 due to the slump in construction markets. Sales fell by 2% compared with 2007, to EUR 1.58 bn. Like-for-like revenue, adjusted for acquisitions and at constant currencies, declined by 7% over the full year and by 10% in the second half of the year as the recession took hold.

The company said that the operating result was impacted by lower volumes, higher raw material, energy and distribution costs and adverse currency effects. It included EUR 12.9m non-recurring costs related to restructuring programmes in the UK, Ireland and Denmark – see Plasteurope.com of 22.01.2009 – where a total of 650 employees were made redundant in 2008 with annualised savings of EUR 23m. Additional measures announced so far in 2009 will impact a further 450 employees against one off charges of EUR 17m, leading to EUR 17m annualised savings.

Revenues and earnings in north west Europe remained almost constant, at EUR 323m and EUR 26.5m respectively – the Netherlands market was stable while the German market remained flat at a low level. In South East Europe, revenue and earnings increased strongly in 2008, due mainly to the acquisition of Pilsa Plastic in Turkey – see Plasteurope.com of 29.11.2007. Revenue in the region increased by 57% year-on-year to EUR 254m and earnings by almost 50% to EUR 21.7m.

Revenue in the UK and Ireland fell by 29% compared with 2007 to EUR 312m and earnings by 69% to EUR 22.2m due to a severe contraction of the building industry. Housing starts in the UK fell by more than 30% compared with 2007. The market contraction in Ireland that began in 2007 accelerated in 2008 with a further 60% drop in housing starts.

Wavin CEO Philip Houben said: “The credit crunch not only severely impacted housing starts across Europe but increasingly affected consumer confidence as well. This led to a considerable weakness of the normally less-cyclical renovation sector.” In addition to market deterioration, the company had to deal with sharply rising raw material costs around mid-year, destocking in the supply chain and the negative effect of weakening currencies against the Euro, he added.