Trading update for the nine months to September 2022
Bekaert achieves robust sales growth in a turbulent environment
Bekaert delivered significant growth in the first nine months of 2022, despite the ongoing challenges from cost inflation, high energy costs, supply chain disruptions, Covid-19-lockdowns in China, and deteriorating demand in a number of key geographies.
In the first nine months of 2022 consolidated sales increased to € 4 336 million (€ +777 million or +21.8%) and combined sales to € 5 257 million (€ +931 million or +21.5%).
The Group achieved double-digit sales growth in all four business units despite lower volumes in most activity areas.
The strong price realization and the structural improvements of the Group’s business portfolio clearly demonstrate the progress made in delivering on strategic transformation priorities and becoming more resilient. We therefore remain confident about our ability to achieve the mid-term performance targets beyond the current economic turbulence.
Market developments in the three-month period July-September 2022
- Consolidated sales of € 1 477 million (+17.9%) and combined sales of € 1 801 million (+16.5%)
- Cost inflation impacting almost all input costs, with steel-based raw material prices starting to ease
- Continued good business conditions in North America, particularly driven by growth in energy & utility markets
- Sharp economic deterioration in Latin America, affecting demand from agriculture and construction markets
- Weakening demand in EMEA due to the contraction in industrial activity
- Modest rebound in China at the end of the quarter, driven by a pick-up in demand in the automotive industry
- Continued growth in other Asian markets
- Strong growth in renewable energy and concrete reinforcement markets globally
Priorities and actions
While the global macroeconomic turbulence is increasingly affecting demand in our markets, Bekaert remains focused on the execution of its transformation agenda, which will further strengthen the company’s foundations and will enable it to capitalize on future opportunities.
Our third quarter actions have been specifically geared towards:
- Further improving the product and business mix, in line with our strategy, particularly by strengthening our position in markets supporting the energy transition and overall decarbonization trends
- Pricing discipline and execution, significantly offsetting cost inflation
- Aligning our business priorities and actions with market developments, through:
- Agile supply chain management and strong commercial excellence to serve customers worldwide
- Investments supporting the technology transition toward renewable energy and decarbonization trends, both by an organic expansion of capacities and capabilities, and through partnerships, including investments in Pajarito Powder (green hydrogen) and TFI Marine (floating offshore wind)
- Specific and structural measures to contain costs as well as continue improving our manufacturing footprint
The Group expects the challenging demand environment to continue in most regions, particularly in Latin America and EMEA. Bekaert will remain agile to address these pressures, as it has done so far in 2022.
Whilst the outlook remains uncertain and fast changing, management currently anticipates for the full year 2022:
- Consolidated sales of approximately € 5.7 billion, an increase by € +900 million compared with last year resulting from decisive price management and structural mix improvements
- Around 150bps margin dilution from the impact of zero-margin cost inflation pass-through
- As a result, underlying EBIT is expected to be in the range of € 450-460 million
Our profitability ambitions for the medium term remain unchanged. We have significantly strengthened our business fundamentals and are confident in our ability to achieve our target performance beyond the current economic turbulence.