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Bekaert reports 2% consolidated sales growth in the first 9 months of 2019
Sales, trends and actions
Despite deteriorating market conditions, Bekaert achieved 2% consolidated sales growth in the first nine months of 2019, driven equally by price-mix and favorable currency movements.
The key trends in the three-month period July-September 2019 were:
- Decreasing raw material prices reflecting lower demand for steel products globally
- Deterioration of market conditions in China and India
- Seasonality impact in line with expectations
Bekaert’s actions in the third quarter led to:
- Continued good growth in our construction and tire business
- Strong pricing and improved business mix at Bridon-Bekaert Ropes Group
- The execution of the restructuring program in Belgium
- Further cost savings and planning of additional footprint optimization actions
- A significant reduction in working capital and debt leverage
- The successful issue of a € 200 million retail bond with positive impact on debt maturity, gross debt and interest charges
The business conditions have trended lower in various sectors as a result of tighter markets and continued uncertainty. Our tire markets held up well in the first nine months of 2019 but are expected to slow down in the fourth quarter as a result of the normal seasonality and destocking actions throughout the supply chain in anticipation of a continued weak business climate. The steel wire solutions activities are projected to further contract in the last quarter, mainly because of the impact of the social protest actions in Latin America, trade tariffs, and further economic slowdown globally. We do not foresee a downturn in construction markets other than the usual seasonality impact and we expect the business environment of Bridon-Bekaert Ropes Group to remain challenging.
In this scenario of economic slowdown and year-end seasonality, Bekaert continues to implement actions to offset the external headwinds. These actions are focused on managing cost, pricing, mix and footprint and aim to deliver an improvement of the underlying business performance.
We are also further improving our working capital level and debt position and are well on track to bring our debt leverage below 2.5 by year-end. Despite our effective inventory reduction actions, we do project significant adverse non-cash adjustments to the year-end inventory valuation due to raw material prices decreasing more significantly than anticipated, driven by the overall economic downturn.