Bekaert reports € 210 million underlying EBIT on higher sales
Highlights
Bekaert achieved +8.9% organic sales growth in 2018, reaching € 4.3 billion in consolidated revenue for the year. Part of this growth was offset by adverse currency movements (-2.5%) and divestments (-1.3%), resulting in a topline increase of +5.1%. Combined sales exceeded the € 5 billion mark for the first time in history and reflected an increase of +5.5% year-on-year.
The organic consolidated sales growth stemmed from +2.2% volume growth - driven by firm demand in global automotive markets but largely offset by a significant decline in sawing wire sales and a slowdown in industrial steel wire markets - and from the aggregate effect of passed-on wire rod price increases and price-mix, which added +6.6%.
Continued volatility of wire rod prices, trade tensions and policy changes, growing price pressure, higher than anticipated start-up costs related to various major expansion programs, and loss-generating sawing wire activities (€ -9 million) compared with a profitable business last year (€ +21 million), have all been weighing on our margin performance in 2018. In addition, along with the measures we have been implementing to close certain loss-making entities and to turn around the profitability of other weaker performing businesses, we have posted a series of provisions and write-offs in the financial statements of 2018. Some of these adjustments affected underlying EBIT (€ -15 million) while others have been recognized as one-off elements in the reported EBIT (€ -63 million).
Underlying EBIT reached € 210 million, representing a margin on sales of 4.9%. Underlying EBITDA totaled € 426 million, -14% down from last year and reflecting a margin of 9.9%. Reported EBIT was significantly impacted by the one-off adjustments and reached € 147 million at a margin of 3.4%.
We have been successful in implementing actions to reduce the net debt position. Net debt was € 1 153 million at year-end 2018, down € -186 million from 30 June 2018 and unchanged from year-end 2017. Net debt on underlying EBITDA improved from 3.1 (30 June 2018) to 2.7 at the close of the year.
- Consolidated sales of € 4.3 billion (+5.1%) and combined sales of € 5.1 billion (+5.5%)
- Underlying gross profit of € 585 million (13.6% margin) compared with € 704 million (17.2% margin) in 2017
- Underlying EBIT of € 210 million (4.9% margin) compared with € 301 million (7.3% margin)
- EBIT of € 147 million (3.4% margin) compared with € 318 million (7.8% margin)
- Underlying EBITDA of € 426 million (9.9% margin) compared with € 497 million (12.1% margin)
- Underlying ROCE of 8.0% compared with 11.2%
- € 198 million capital expenditure (PP&E) versus € 273 million in 2017
- Net debt of € 1 153 million. Net debt on underlying EBITDA was 2.7, higher than last year (2.3).
- Result for the period attributable to equity holders of Bekaert: € 40 million, down from € 185 million in 2017
- EPS (earnings per share): € 0.70 compared with € 3.26
The Board of Directors will propose to the Annual General Meeting of Shareholders of 8 May 2019, a gross dividend of 70 eurocent. In line with the company's dividend policy, the proposed temporary dividend cut is reflecting the lower earnings and high debt leverage of the company.