Press release Kortrijk (Belgium), 28 July 2006 Half year results 2006

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

Bekaert performs robustly in volatile market conditions

Sales
Bekaert achieved consolidated sales of € 1.0 billion and combined sales of € 1.6 billion in the first half of 2006, an increase of 4% and 7% respectively.(1)(2)(3)   

After its rapid growth in 2004 and 2005, Bekaert posted a further increase in consolidated sales in the first half of 2006. Currency movements had a positive impact of 2%, while targeted acquisitions within the various activity platforms contributed 4% to the growth. Sales in various markets were affected by lower selling prices, largely reflecting the trend in wire rod prices.

Combined sales of advanced wire products were 8% higher
(wire Europe +0%, wire North America +1%, wire Latin America +21%, wire Asia +12%,
building products +2%, steel cord China +38%, steel cord others – 4% and
other advanced wire products +30%).

Sales benefited from positive impact of currency movements, most notably in Brazil and Chile.

Bekaert was faced with an increased pressure on prices in the mature markets in Europe and North America. At the same time, the company experienced rapidly rising costs of energy and certain raw materials such as zinc.

Demand for advanced wire products for the automotive sector remained weak in both Europe and North America. Bekaert faced more intense competition in the European steel cord market, especially in passenger tires. The company strengthened its position in North America with the acquisition of Delta Wire, a major supplier of bead wire for tire reinforcement. Bekaert is also investigating opportunities in Russia and is engaged in talks on exclusive cooperation with Uralkord.

Bekaert continued to streamline its product portfolio and optimize its production capacity. The wire plant in Muskegon (Michigan, USA) was closed. Through the acquisition of Conflandey Inc.’s business, Bekaert intends to consolidate its position in industrial staple wires and fine specialty wires on the North American market. Bekaert also acquired Cold Drawn Products Ltd., a supplier of specialized profile wires in Western Europe.

The company maintained a high level of activity in building products worldwide.

With 38% growth, Bekaert continued to advance its position on the Chinese steel cord market by building closer cooperative relationships with its customers, providing high-quality services and expanding its production capacity.

Including the acquisition of ECC Card Clothing in 2005, Bekaert increased sales in other advanced wire products by 30%.


Sales of advanced materials recorded growth of 17%
(fiber technologies +34%, combustion technologies –4%, composites +34%).

Strong sales growth was reported in advanced materials. In fiber technologies, the company completed a large order for environment-friendly gas filtration. The acquisition of Southwest Screens & Filters SA also contributed to the higher sales. In combustion technologies, Bekaert completed fewer projects for the paper industry. The company recently acquired Aluheat in the Netherlands, which specializes in environment-friendly technologies used in condensing boilers for heating systems. In composites, the company boosted its sales significantly, despite the extremely competitive environment.

Sales of advanced coatings were up by 2%
(industrial coatings –13%, specialized films +13%).

Mainly due to the low level of project-driven activity in sputter products, sales in industrial coatings fell by 13%. Bekaert significantly strengthened its position in specialized films, both in the USA and Asia. Bekaert is focusing on the development of window films for buildings and vehicles and is withdrawing from ITO film for electronics applications.

Other activities
Besides the development of its sales organizations in growth markets, Bekaert has also enhanced its research and development internationally. As its level of activity in Asia expands, the company is committed to providing appropriate technological support for its customers. Working closely with government authorities, Bekaert is further developing its technology center in Jiangyin (Jiangsu province, China) enhancing its efficient, customer-oriented research unit.

As a major supplier of equipment for the company’s investment programs, the engineering department maintained a higher activity level.

Bekaert has sold its 50% share in the handling business, which has its origins in the Fencing Europe business segment and can no longer be considered part of the company’s core business.
 
Profitability
Bekaert achieved an operating result (EBIT) before non-recurring items of € 80 million, compared with € 94 million. EBIT margin on sales before non-recurring items was 7.9%.

Including non-recurring items (€ 4 million, as against € 9 million), the operating result (EBIT) amounted to € 76 million, compared with € 85 million. EBIT margin on sales was 7.5%.

The companies accounted for using the equity method contributed € 28 million to the result for the period as previous year.

The result for the period amounted to € 76 million, compared with € 138 million (including the contribution of the divestment of Bekaert Fencing NV of € 54 million). The result attributable to the Group amounted to € 75.5 million, compared with € 130 million.

Balance sheet
At 30 June 2006, equity represented 50% of total assets. Net debt amounted to € 345 million, and the gearing ratio (net debt to equity) was 31%.

Cash flow
EBITDA was € 132 million, compared with € 143 million. Cash flow attributable to the Group (continuing operations) amounted to € 132 million, compared with € 134 million.

Cash from operating activities amounted to € 63 million. Depreciation and amortization amounted to € 56 million. The change in operating working capital accounted for a cash outflow of € 62 million. Investing activities of the consolidated companies accounted for a cash outflow of € 81 million. Purchase of property, plant and equipment totaled € 68 million, mainly due to the expansion of the production capacity in China.

Under the authority vested by the General Meeting of Shareholders in the Board of Directors, 8 890 Bekaert shares were purchased in the first half of 2006 at an average price of € 76.16,  which afterwards were transferred to the individuals who had exercised their options under the SOP2 stock option plan. Under the current SOP 2005-2009 stock option plan, 70 766 subscription rights were granted. In order to compensate the potential dilution that may result from such issue, the Board of Directors has decided to purchase, during the remaining part of the year, 70 766 Bekaert shares at a maximum purchase price of € 97.41 per share.

NV Bekaert SA (statutory accounts)
Sales amounted to € 301 million. The result for the period was € 72 million, compared with € 127 million, the difference being mostly due to the extraordinary result on the sale of Bekaert Fencing NV in 2005.

Outlook
In what are expected to remain volatile market conditions, Bekaert will continue its robust drive to add value to its customers, in the pursuit of its strategy of sustainable profitable growth.