Press release Kortrijk (Belgium), 17 February 2006   Trading update fourth quarter 2005

Press contacts Françoise Vanthemsche Tel. +32 56 23 05 71 Investor Relations Jacques Anckaert Tel. +32 56 23 05 72

Bekaert achieves 10% sales growth in 2005

In the financial year 2005, Bekaert achieved consolidated sales of € 1.9 billion and combined sales of € 3.1 billion, an increase of 10% and 14% respectively.    

The consolidated sales’ increase was 8% from organic growth, 1% from the net movement in acquisitions and divestments and 1% from currency movements.

Consolidated and combined sales by business segment

Combined sales by activity platform

After an extraordinary year in 2004, characterized by unheard-of increases in the prices for wire rod -the raw material for advanced wire products-, Bekaert experienced again in 2005 significant effects from the volatility in the raw materials markets worldwide. Both raw materials prices and sales prices were on average higher than in 2004. Whereas, in 2004, customers built up their stocks, because of the difficulty of getting supplies, in 2005 the company experienced just the opposite, a trend towards running down stocks, and therefore a slow down in customer demand in some markets. 

In the mature markets in Western Europe and North America, Bekaert saw demand for its advanced wire products weaken noticeably, especially in the automotive industry. Bekaert adjusted its cost structure in several plants and brought its production platforms into line with changing market demand.  The company will continue to reinforce its position in Central and Eastern Europe, including in Russia.

Bekaert further decided to drop some of the less profitable products from its portfolio and concentrate on applications with a higher added value. With the acquisition of Conflandey Inc.’s activities and the purchase of various machinery and equipments, early in 2006, Bekaert wants to strengthen its position in industrial stapling wire and fine specialized wires on the North American market.

Bekaert also worked to further improve its customer service. After the major natural disasters in North America it was able to respond at very short notice to customers' demands within the framework of the rebuilding programs, especially for energy supplies, telecommunications, construction and infrastructural work.

In Latin-America the company performed strongly. In Asia and in China, in particular, Bekaert experienced significant growth in all its activities. Not only did the company record substantial demand for steel cord products, it also developed new products, and announced an important new investment program in advanced wire products.

By taking over ECC Card Clothing, in June 2005, and setting up the joint venture Wuxi Owl Textile Accessories Co. Ltd., in China, Bekaert opted for worldwide expansion of its advanced wire products for the textile sector, as well.

Bekaert experienced a strong increase in sales in advanced materials. In fibre technologies, Bekaert registered an important breakthrough in the field of environment-friendly gas filtration and, in mid-2005, it also acquired Southwest Screens & Filters, one of the world players in industrial process filtration based on Bekaert metal fibres.
In combustion technologies, environment-friendly heating installations for the residential sector performed strongly. The same was true for the industrial applications, thanks, among other things, to the acquisition of Solaronics, which only showed up in the figures for nine months in 2004. By the end of 2005, with the takeover of Shell’s participation, Bekaert became 100% owner of the combustion technologies’ business segment. Now the company intends to implement its growth strategy for environment-friendly gas burners autonomously and to capitalize on the increasingly strict environmental regulations in Europe and the United States. 

In advanced coatings, Bekaert recorded limited growth. In industrial coatings, activity grew in the diamond-like coatings that are for instance applied to motor components for racing cars, whilst the strongly project driven activity in sputter products had a difficult year. In 2005, specialized films performed strongly, mainly thanks to substantial growth in Asia.

In November 2005, Bekaert officially opened its new plant for advanced materials and coatings in Suzhou (China), in order to considerably strengthen its position in the growing Asian markets.