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Half year results 2005
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Excellent first half, but challenging second half ahead |
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Bekaert achieved a substantial sales growth in the first half of 2005. Sales prices reflected the sharp increase in raw materials’ prices during the past year.
To be able to take advantage of the market trends, Bekaert continued to invest in optimising its production capacity and to streamline its product portfolio. Early in 2005, Bekaert sold its shares in Bekaert Fencing NV, which means that the fencing systems Europe business segment is reported in 2004 as a discontinued operation.
In the first half of 2005, Bekaert realised combined sales of € 1 514 million and consolidated sales of € 971 million, an increase by 16% and 13% respectively. (1-2-3)
The consolidated sales’ increase was 14% from organic growth and 1% from the net movement in acquisitions and divestments, offset by adverse currency movements of 2%.
[1] The figures in this press release are unaudited.
[2] Combined sales are sales generated by consolidated companies, joint ventures and associates.
[3] All comparisons regarding sales and results are made relative to the restated figures for ‘continuing operations’ in the first half of 2004. Following the divestment of Bekaert Fencing NV with effect as of 1 January 2005, the business segment fencing systems Europe is accounted for as a ‘discontinued operation’
(see ‘accounting & reporting policies’ on p.6 of this press release).
[4] Excluding ‘intersegment sales and others’.
Combined sales of advanced wire products increased by 15%
(wire Europe: -2%, wire North America: -1%, wire Latin America: +24%, wire Asia: +12%, building products: -2%, steel cord China: +28%, steel cord others: +24%, other advanced wire products: +7%).
Bekaert performed very well in Latin America and also in Asia, more specifically in China. Demand for steel cord products to reinforce radial tires further increased worldwide and Bekaert bolstered its market positions with the help of the major investment programmes in the various regions. However, the company faces a clear weakening of the economic environment in most of the mature markets in Europe and North America.
In the other advanced wire products, Bekaert acquired the ECC Card Clothing division from Carclo plc in June 2005.
Sales of advanced materials increased by 17%
(fibre technologies: +0%, combustion technologies: +42%, composites: +10%).
Bekaert achieved a major sales increase in combustion technologies, partly due to the acquisition of Solaronics Technologies, which was only included in the figures for three months during the first half of 2004.
Sales in composites rose but this business was faced with increased competition.
Sales in fibre technologies remained stable. Bekaert aims to reinforce its position in selected filtration applications based on metal fibres, partly through its recent acquisition of Southwest Screens & Filters SA.
Sales for advanced coatings decreased by 1%
(industrial coatings: -2%, specialised films: -1%).
In industrial coatings, sales in the sputter products business, which is strongly project-driven, decreased. At the same time, Bekaert prepared for growth in diamond-like coatings, which are primarily applied on racing car engine components, through the entry into service of new production installations in the United States.
The market in the United States for specialised films remained stable, while new technological developments were recently introduced successfully into the market. Furthermore, business activities were extended, mainly in Asia. However, these effects were offset by adverse currency movements.
The result from operations was negatively influenced by € 5.5 million through a reallocation of the worldwide production capacity in sputtered films.
In continuing operations, Bekaert achieved a consolidated result from operations (EBIT) of € 85 million, an increase by 20%. This represents an EBIT margin on sales of 8.8%. Non-recurring items had a negative impact of € 9 million.
The companies accounted for under the equity method contributed € 28 million to the result, an increase by 7%.
The consolidated net profit from continuing operations amounted to € 76 million compared to € 64 million, an increase by 20%. The consolidated net profit from discontinued operations amounted to € 54 million, mostly related to the capital gain on the sale of Bekaert Fencing NV.
Therefore, the total net profit of the Group amounted to € 130 million, compared to € 79 million.
As at 30 June 2005, equity represented 48% of total assets, compared to 44% at 31 December 2004.
Net debt amounted to € 357 million, compared to € 409 million and the gearing ratio (net debt to equity) was 34%, compared to 43% at year-end 2004.
In line with the authorisation granted by the General Meeting of Shareholders to the Board of Directors, 550 000 Bekaert shares were purchased in the first half of 2005, at an average share price of € 60.68, and 541 910 of these shares will be cancelled early August 2005.
Operational cash flow (EBITDA) reached € 143 million. Cash flow amounted to € 188 million.
Investments in tangible fixed assets totalled € 77 million.
Cash provided by operating activities amounted to € 38 million and depreciation, amortisation and impairments totalled € 57 million. Working capital increased by € 102 million, reflecting the higher sales and the corresponding level of inventories. Cash provided by investing activities by the consolidated companies totalled € 12 million, mainly because of the cash proceeds (€ 88 million) from the sale of Bekaert Fencing NV.
Sales of the company amounted to € 327 million. The profit was € 127 million, mostly due to the extraordinary profit from the sale of Bekaert Fencing NV.
The slowdown in incoming orders due to the weakening of the economic environment and the uncertainty in raw materials’ markets present challenges for the second half.
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Accounting & reporting principles These unaudited consolidated interim financial statements have been prepared in full conformity with the International Financial Reporting Standards (‘IFRSs’), including International Accounting Standards (‘IASs’), IFRIC and SIC interpretations issued by the International Accounting Standards Board (‘IASB’), all of which have been approved by the European Union. The consolidated interim financial statements have been prepared using the same accounting policies and methods of computation as in the 31 December 2004 annual financial statements, except where new IFRSs and improved IASs have become applicable from 1 January 2005. The new IFRSs and improved IASs which had a material effect on this interim publication, are IFRS 3 ‘Business Combinations’ and IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’. As a consequence of IFRS 3, goodwill is no longer amortised, but is reviewed for impairment at least annually; existing negative goodwill was derecognised against equity as at 1 January 2005 and negative goodwill relating to new business combinations will be recognised in the income statement. |
* Figures for 2004 were restated in accordance with IFRS accounting standards regarding reporting on continuing respectively discontinued operations (see ‘accounting & reporting policies’ on p.6 of this press release).
* Figures for 2004 were restated in accordance with IFRS accounting standards regarding reporting on continuing respectively discontinued operations (see ‘accounting & reporting policies’ on p.6 of this press release).
