Wavin Group Trading Update

Dec 09, 2008

Wavin N.V., leading supplier of plastic pipe systems and solutions in Europe, today provides an update of its current trading performance.Construction markets under significant pressure 2008 revenue short of EUR 1.6 billion, approx. 2% below level of last year Ebitda margin around 10%, 3% below last year’s level Total restructuring charges 2008 around EUR 12 million Net debt expected to be below EUR 550 million

Markets
As expected, Wavin is faced with a rapidly declining business climate. The credit crisis has a significant impact on construction activity in Europe. Housing starts, commercial property investments and repair/maintenance activities are contracting in many countries. Government sponsored infrastructure projects maintain momentum. The recent unprecedented events in the financial markets have further negatively affected credit availability and consumer confidence. Furthermore the company sees considerable destocking action in the supply chain. The turmoil in the markets has been particularly strong in the UK, Ireland and Denmark. Activities in other Western European countries are also showing a slow-down. In Central- and Eastern Europe and Turkey healthy growth continues, albeit at a lower level than in recent years.

Focus on cash generation and cost control
After several years of robust growth, Wavin’s total revenue forecast for 2008 is approximately 2% below the 2007 level of EUR 1.62 billion. Adjusted for acquisitions and at constant currencies, like-for-like revenue is expected to be down approx. 7%. 2008 Ebitda is expected to drop approx. 25% to just below EUR 160 million, the Ebitda margin will be around 10% (2007: 13%).

In response to the adverse trading conditions, management has prioritised cash generation and cost control. Cash generation remains solid in spite of the dire market circumstances. Net debt will be down significantly from the peak of EUR 681 million that was reported in the mid-year results and is expected to be below EUR 550 million. Management expects that at year end the company will remain in compliance with its debt covenants.

As previously reported, management has initiated substantial cost reduction programmes. Headcount in the Western European operations of Wavin is currently 650 lower than a year ago, more than 10% of the employees in those countries. Specific redundancy programmes in the UK, Ireland and Denmark, led to some 300 job losses and will result in annualised cost savings of EUR 12.5 million. Reduction of flexible workforce across Western Europe impacted another 350 people and will bring annualised cost savings of approx. EUR 10 million. Total nonrecurring costs in 2008, mostly in relation to these programmes, will be approximately EUR 12 million.

Over the year, the company has been exposed to negative developments in currency exchange rates. The company hedges its transaction exposures to a large extent, but the high volatility will result in approx. EUR 5 million financial costs this year.

The consequences of the credit crisis are visible in many European countries. Management foresees that the building sector is likely to remain under significant pressure in 2009. The company is prepared for these challenges and will continue to prioritise cash generation and cost reduction. Capital expenditure and working capital will be tightly controlled. Further restructuring measures are under consideration; these could lead to annualised savings of EUR 10 to 15 million, against non-recurring charges in proportion thereto.

Long-term growth drivers such as urbanisation, smaller households, substitution towards plastics, energy efficiency in buildings and climate change will stay in favour of Wavin’s business. The company will continue to pursue further growth in Water Management, Surface Heating and Cooling and, geographically, in emerging European markets.

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, rainand storm water, distribution of drinking water and gas and telecom applications. Wavin is headquartered in Zwolle (the Netherlands) and has a presence in 28 European countries, with manufacturing sites in 17 of those. The company employs approximately 7,000 people and reported revenue of EUR 1.6 billion for 2007. Outside Europe, it has a global network of more than 120 agents, licensees and distributors. Wavin is listed on the NYSE Euronext Amsterdam stock exchange (WAVIN). More details about Wavin can be found at www.wavin.com.


Contact:
Wavin
Herbert van Zijl
PH.: +31 38 429 4209
Mobile: +31 6 51461442
E-Mail: Media@wavin.com
Internet: www.wavin.com

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