Half year results 2004

Strong performance in first half year

Strong organic sales growth and reinforced market positions Structural improvement in operational performances Major efforts to manage the volatility of raw materials markets Result from operations of €103 million, compared to €68 million Net result of €79 million, compared with €44 million

In the first half of 2004, Bekaert achieved significant volume increases in most of its activities. In a generally improved economic context, the company reinforced its leadership position in many of its markets.

Combined sales of advanced wire products increased by 16% (wire Europe: +13%, wire North America: +16%, wire Latin America: +18%, wire Asia: +96%, building products: +41%, steel cord China: +1%, steel cord others: +17%, other wire products: -4%).

The increase is partly due to a better economic environment in Europe and North America, with the exception of wires for the textile and automotive sector. The rise is also due to customers bringing forward orders in anticipation of expected further price increases. Activities in Latin America performed very well. Demand for steel cord products for tyre manufacturing was high worldwide; only growth in China proved to be slower than originally expected. However Bekaert is monitoring market developments closely and continues to pursue its investment program.  

Consolidated sales of advanced wire products were also affected by external growth with the acquisition of Bekaert Hlohovec, a.s. (Slovak Republic) and of the remaining shareholding of Contours Ltd (U.S.).

 

Fencing systems Europe

Combined sales of fencing systems Europe rose by 9%, due to a major volume increase thanks to a strong season and the further development of project activities in the fencing business. 

An impairment of €5.6 million was recorded for the handling business, which represents circa 10% of the segment’s combined sales; this business is being closely monitored.

 

Advanced materials

Combined sales of advanced materials increased by 4%.  In fibre technologies, sales rose by 11%. In combustion technologies, Bekaert achieved an increase of 40%, principally due to the acquisition of Solaronics Technologies. Composites experienced a decrease in sales of 44%, mainly due to the exit from composite profiles at the end of 2003.

 

Advanced coatings

Combined sales for advanced coatings rose by 16%. In industrial coatings sales went up by 25% due to rising demand for coatings on glass and diamond-like coatings on moulds. Sales of specialised films increased by 10%, principally in Europe and Asia thanks to reinforced sales organisations.

Consolidated sales of advanced coatings also rose as a result of the increased stake in Sorevi S.A. (France) and in Precision Surface Technology Pte Ltd (Singapore). 

The result from operations was significantly influenced in the first half by a one off expenditure of €4.1 million in R&D. 

 

Profitability

Bekaert achieved a consolidated result from operations (EBIT) of €103 million, an increase of 51%.  This result represents a margin of 9.4% on sales.  At constant currencies, the result from operations would have been €116 million. Non-recurring items amounted to -€4 million.
The consolidated net result of the Group amounted to €79 million. Amortization of goodwill amounted to €5 million. The share in the result of the companies accounted for under the equity method amounted to €26 million.

 

Balance sheet

At the end of June 2004, shareholders’ equity accounted for 40% of total assets. Net debt amounted to €418 million and the gearing ratio, defined as net debt on equity, to 48%.  Working capital amounted to €458 million or 19% on sales. 

In line with the stock option plan, 220 300 shares have been purchased in the first half of 2004 at an average share price of 46.28 euro.

 

Cash flow

The operational cash flow (EBITDA) reached €167 million. The cash flow amounted to €150 million, or a cash flow per share of €6.8 for the first half year. Capital expenditure for the consolidated companies was €62 million.

 

NV Bekaert SA (Statutory Accounts)

Sales of the company amounted to €319 million and the profit was €37 million.

 

Outlook

Bekaert expects that raw materials markets will remain a major challenge and may affect order intake in the second half. Despite a slow down in growth in China, the outlook for the group is favourable.  

 

Half year statements are unaudited.

These unaudited consolidated interim financial statements have been prepared in full conformity with the International Financial Reporting Standards (“IFRS”), formerly named International Accounting Standards (“IAS”) issued by the International Accounting Standards Board (“IASB”) and the interpretations issued by the Standing Interpretation Committee of the IASB, both of which have been approved by the European Commission.  The consolidated interim financial statements have been prepared using the same accounting policies and methods of computation as in the 31 December 2003 annual financial statements.  This interim financial report is in compliance with IAS 34, Interim Financial Reporting.