Wagners Holding Company Limited Driving Innovation and Demand in Construction Materials

About Wagners Holding Company Limited

Wagners Holding Company Limited (Wagners, the Company, ASX: WGN) listed on the ASX in December 2017, and has been in business since 1896 when the Wagner family established a stone masonry business in Toowomba. The Company produces and sells construction materials and is the largest independently owned cement manufacturer and supplier in Southeast Queensland, supplying about one third of the market’s cement requirements.

2032 Olympics, the resources sector and population growth are driving cement demand

The robust civil infrastructure pipeline in Southeast Queensland, underpinned by the 2032 Olympics, and supported by strong population growth, are driving the demand for construction materials and related services.  In addition, Wagners also have exposure to the Queensland and Northern Territory resources sector which provides value and opportunity to the business.

Queensland’s growing population combined with the Brisbane 2032 Olympic and Paralympic Games will at some point require significant construction materials and services to deliver on the infrastructure requirements for the games. With this in mind Wagners are investing in new plants to service the expected ongoing demand. This anticipated product demand is in addition to the Company’s existing solid forward order book across all areas of the business that includes several contracts secured for the longer-term.

Product innovation is a key differentiator

In response to the widely held expectation to reduce construction costs, increase energy efficiency and improve sustainability, Wagners have developed Composite Fibre Technologies (CFT) products that are used as substitutes for other building materials such as aluminium, steel and timber.  These innovative products are used in infrastructure projects and other engineering applications that include marinas, boardwalks, bridges, walkways, and cross-arms and poles for electrical distribution networks. A utility pole made from Wagners Fibre Reinforced Polymer (FRP) meets all stiffness requirements and is inert, which means it does not react chemically with its surroundings and is resistant to corrosion caused by moisture, chemicals, and UV radiation.

FRP poles can withstand severe weather, including high winds, and have a long-life expectancy due to their incredible structural integrity, making them an extremely competitive option for the utility industry.

Wagners have acknowledged that the Composite Fibre Technologies business has had some challenges but is showing signs of being a significant earnings contributor going forward. Wagners also have some work ahead to strengthen the Composite Fibre Technologies business model. This business unit enjoyed some real successes in FY24 but also had some disappointing aspects on the way some projects were delivered. Wagners have stated that important lessons were learned during the past year that will make this a stronger business in the future.

The Future

Wagners has taken impairments on both the Earth Friendly Concrete business and the Wacol lease this year, which should put any negative sentiment regarding these two businesses behind them. Operations in the USA have been a challenge in FY24, and management are spending considerable time there getting an understanding of the market, the different culture, and the opportunities. The Wagners’ Board have confidence in their North American operations given their product is stronger and more advanced than any other pultrusion in that market. The Board consider the challenge is getting the market to understand what they have and what they can do with their technology.

The severe shortage of housing in Australia is why Wagners expect very little abatement in the demand for cement, concrete, steel, and quarry materials in their markets. The mining services business, through the Company’s bulk haulage, on-site concrete production and crushing operations is expecting another reasonable year. Although the Company sees some challenges in the mining sector, the investment in equipment and people should maintain competitiveness and enable the Company to deliver reliable products and services to its mining customers.

Wagners are determined to persist with the Earth Friendly Concrete (EFC) business which is an ultra-low carbon concrete and much more environmentally sustainable than traditional concrete. It reduces embodied carbon by around 70 percent, saving 250kg of carbon dioxide per cubic metre poured. It is made from a binder consisting of industrial waste products, ground granulated blast furnace slag and pulverised fly ash with no Portland Cement. This is an important difference as the built environment is considered emission heavy, with concrete and cement responsible for an estimated eight per cent of annual global emissions. Remarkably, though the engineering properties of EFC are the same as conventional concrete, while its advantages include improved durability, lower shrinkage, higher tensile strength, and increased fire resistance compared with ordinary concrete. Wagners have an unwavering confidence and a real commitment to the technology of its Earth Friendly Concrete and believe the market will positively support the Company’s carbon reduction technology.

Wagners remains confident in the medium-term outlook for the business and expects demand for the Company’s core products to remain strong, especially given the infrastructure requirements for the Olympic games and continuing strength of tie resources sector.