2009-03-14



March 14, 2009 - Bekaert achieves strong result on record sales

–    Record sales of € 2 174 million (+8.2%)
–    Record EBITDA of € 299 million (+14%)
   8.6% EBIT margin on sales before non-recurring items, compared with 8.1% 8.0% EBIT margin on sales, compared with 7.3%
–    Earnings per share: € 7.63 compared with € 6.64 (+15%)
–    Gross dividend of € 2.76 per share compared with € 2.50 (+10.4%)

Sales

In 2007, Bekaert achieved consolidated sales of € 2.2 billion and combined sales of € 3.4 billion, an increase of 8.2% and 7.0% respectively. [1]   [2]

The consolidated sales’ increase was 8.0% from organic growth and 2.5% from the net movement in acquisitions and divestments. Currency movements had a negative impact of 2.3%.

Consolidated and combined sales by business segment

 

2007

Consolidated sales

 

Combined sales

 

in millions of €

variance

 

in millions of €

variance

Advanced wire products

1 844

+9.2%

 

3 095

+8.4%

Advanced materials

204

+10.4%

 

204

+10.4%

Advanced coatings

124

-8.9%

 

124

-8.9%

Intersegment sales and others

2

-

 

-4

-

Total

2 174

+8.2%

 

3 419

+7.0%

Consolidated and combined sales by geographical area

 

2007

Consolidated sales

 

Combined sales

 

in millions of €

variance

 

in millions of €

variance

Europe

1 051

+7.5%

 

1 057

+5.1%

North America

511

-14.5%

 

544

-14.6%

Latin America

71

+124%

 

1 248

+12.2%

Asia

506

+36.9%

 

517

+33.9%

Other regions

35

+3.9%

 

53

-0.5%

Total

2 174

+8.2%

 

3 419

+7.0%

Advanced wire products

Key figures (in millions of €)

2007

2006

Consolidated sales

1 844

1 689

Operating result (EBIT) before non-recurring items

215

189

Operating result (EBIT)

208

177

Depreciation and amortization

106

99

EBITDA

314

276

EBIT margin on sales

11.3%

10.5%

EBITDA margin on sales

17.0%

16.4%

Combined sales

3 095

2 854

Share in result of  the joint ventures

47

51

Combined sales growth by activity platform

Wire Europe

Wire North America

Wire Latin America

Wire Asia

+10%

   -2%

+12%

+14%

Building products

Steel cord China

Steel cord others

Other advanced wire products

+11%

+48%

   -6%

   -2%

                                      

In 2007 combined sales of advanced wire products were 8.4% higher.

Despite the sustained pressure on margins from the rising cost of energy, raw materials and consumables, Bekaert achieved substantial growth in advanced wire products. The operating result was up 17.8%, mainly due to higher volumes in China and a better product mix.

Bekaert posted increased sales in 2007 of products with higher added value, in which the company has secured a substantial position in recent years. The rapid growth in the submarine energy transmission, green energy, telecommunication, mining, and oil and gas production segments translated into strong demand for reinforcing wire for cables and flat and profiled wire for flexible pipes, wires for hoisting cables, sawing wire and tire cord for off the road heavy equipment. These market segments are expected to continue to grow in 2008.

Wire Europe strengthened its position with the successful market launch of Bezinal®2000 wire products, the unique selling proposition of which is their high corrosion resistance, and higher sales of nylon-coated wire. Bekaert held its position in industrial low-carbon wires throughout Europe and further expanded its production platform in Central Europe.

Wire North America sales were adversely affected by an 8% negative exchange effect. Market conditions remained difficult, which chiefly impacted on sales of products for the automotive, agricultural and construction sectors, but the weak dollar created export opportunities, especially for reinforcement wire for flexible pipes.

Wire Latin America posted good sales figures from our joint ventures in the Andina region (Venezuela, Colombia, Peru and Ecuador). Bekaert further reinforced its position in this region by the acquisition of 100% of Vicson, S.A., in Venezuela, and a majority interest in Productora de Alambres Colombianos S.A. in Colombia. The operations in Brazil and Chile faced higher energy costs and strong competition from growing Asian imports.

Wire Asia posted higher sales in the local Chinese market, but exports were lower due to the increase in export duties.

Growth in building products was mainly driven by further global market penetration of Dramix® steel fibers for concrete reinforcement, another Bekaert product with high added value.

Steel cord China reported again substantial growth. To meet the strong market demand, the company invested in significant capacity expansion at its plants in Jiangyin (Jiangsu province) and Shenyang (Liaoning province) in 2007. This raised the total capacity for steel cord for the reinforcement of car and truck tires to 250 000 tonnes by the end of the year. The workforce has also grown steadily, to over 5 000.

In the other regions, sales of steel cord were adversely affected by increased pressure on prices and exchange rate effects. In North America, there was also a decline in demand, which Bekaert had already anticipated by closing its steel cord plant in Dyersburg.                                                                                          

In Bekaert’s other advanced wire activities, carding products were impacted by the start-up of the Chinese production plant in Wuxi and the effects of the restructuring of the European plants.

Advanced materials

 

Key figures (in millions of €)

2007

2006

Sales

204

184

Operating result (EBIT) before non-recurring items

17

16

Operating result (EBIT)

17

15

Depreciation and amortization

8

9

EBITDA

26

24

EBIT margin on sales

8.5%

8.2%

EBITDA margin on sales

12.6%

13.1%

Combined sales growth by activity platform

Stainless[4]

Fiber technologies

  +21%

    +9%

Combustion technologies

Composites

+12%

   -4%

In 2007 sales of advanced materials recorded growth of 10.4%.

In advanced materials, Bekaert posted higher sales of fiber technology products for electrically conductive textiles and diesel particulate filters. Bekaert had a commercial breakthrough in this latter application in 2007, stimulated by more rigorous environmental regulations.

The increase in sales of stainless mainly reflected the higher nickel prices. Bekaert entered into a cooperation agreement with Indian steel company Mukand in 2007 to form a joint venture to set up a plant in Maharashtra (India) for the production of stainless steel wire.

In combustion technology, there was stronger demand for drying systems for the paper industry. Sales growth was boosted by the acquisition of Aluheat B.V. in the Netherlands, which specializes in the latest technologies for condensing boilers.

Bekaert achieved higher capacity utilization in composites in the second half of the year, but the market remained extremely competitive.

Advanced coatings 

Key figures (in millions of €)

2007

2006

Sales

124

136

Operating result (EBIT) before non-recurring items

3

3

Operating result (EBIT)

-1

1

Depreciation and amortization

12

11

EBITDA

11

12

EBIT margin on sales

-0.6%

0.6%

EBITDA margin on sales

9.0%

8.5%

Combined sales by activity platform

Industrial coatings

   -7%

Specialized films

-11%

                                    

In 2007 sales of advanced coatings were down by 8.9%.

Competition was  intense in the industrial coatings market. Bekaert’s sales of sputter hardware were maintained at the 2006 level, with a particularly strong second half. Sales of sputter targets were higher in Europe and Asia, but declined in North America.

Demand for specialized film coatings in North America remained weak, but this was offset to some extent by higher sales in Europe and Asia.

Other activities

Expenditure on research and development, one of the main pillars of Bekaert’s strategy, increased by 8.7% in 2007. The company set up the Bekaert Asia Research & Development Center in Jiangyin (Jiangsu province, China), a new innovation facility which enables Bekaert to attune its product development more accurately to the needs of its Chinese customers. The facility works closely with the Bekaert Technology Center in Belgium, which continues to direct the company’s research efforts and was extensively upgraded in 2007.

The engineering department maintained a high level of activity as a major supplier of sophisticated equipment for the internal investment programs.

Sustainability

Bekaert continued to work in 2007 on optimizing both its product portfolio and its production processes in the interests of people, the environment and the local community. Around € 3 million was spent on reducing energy consumption in the production of advanced wire products. Bekaert also invested in the development of environmentally-friendly products, some of which, such as metal fibers for diesel particulate filters, were successfully launched on the market in 2007. For its involvement in various socially and educationally inspired community projects, Bekaert received several international corporate social responsibility awards, amongst others in China.

Profitability

Bekaert posted an operating result (EBIT) before non-recurring income and expenses of € 186 million (2006: € 163 million). This equates to an EBIT margin on sales before non-recurring income and expenses of 8.6% (2006: 8.1%). The main drivers of this improvement in the results were the strong sales growth, particularly in China, and rising sales of products with high added value.

Non-recurring expenses amounted to € 11.7 million (2006: € 16.8 million), largely due to the cost of the restructuring programs in Europe and the United States for the carding products and steel cord activities. This translated into an operating result (EBIT) of € 175 million (2006: € 146 million), which equates to an EBIT margin on sales of 8.0% (2006: 7.3%).

The increase in interest charges was due to the higher market interest rates and the increase in net debt due to the high capital expenditures and the share buy-back program which continued in 2007.

Taxation on profit amounted to € 19 million (2006: € 18 million).

The share in the results of joint ventures and associated companies amounted to € 47 million (2006: € 51 million), reflecting the lower results posted by the joint ventures in the Mercosur region (Brazil and Chile) and the restructuring costs relating to the closure of the steel cord plant in Australia, a joint venture with OneSteel.

The result for the period therefore came out at € 162 million, compared with € 148 million in 2006. After third-party minority interests (€ 8.7 million as against € 4.8 million in 2006), the result for the period attributable to the Group was € 153 million (2006: € 143 million).

Bekaert ended the year with earnings per share of € 7.63 (2006: € 6.64), an increase of 15%.

EBITDA amounted to € 299 million, compared with € 262 million in 2006. The cash flow attributable to the Group was € 277 million (2006: € 262 million).

Balance sheet

As at 31 December 2007, shareholders’ equity represented 50% of total assets. Net debt increased to € 448 million (2006: € 375 million), mainly due to the share buy-back program and the capital expenditure program. The gearing ratio (net debt to equity) was 39%.

In order to increase shareholder value, Bekaert repurchased and cancelled 1 157 645 of its own shares in 2007. This reduced the total number of outstanding shares to 19 831 000 as at year-end 2007. On 5 March 2008 a further 161 000 shares were purchased and subsequently cancelled.

Cash flow

Net cash flow from operating activities amounted to 221 million (2006: € 193 million). Operating working capital increased by € 42 million to € 494 million, mainly reflecting organic growth and new acquisitions. Cash from investing activities amounted to € 152 million. Investments in property, plant and equipment totaled € 192 million, mainly due to the capital expenditure programs in China, Belgium and Slovakia. Bekaert plans a similar level of investment in 2008.

Acquisitions represented an investment of € 15 million. Dividends received from joint ventures amounted to € 55 million and the share buy-back program represented a cash outflow of € 111 million.  

NV Bekaert SA (statutory accounts) 

The company’s sales amounted to € 606 million, compared with € 574 million in 2006, an increase of 5.5%. The profit for the period amounted to € 87 million, compared with € 60 million in 2006.  

Dividends 

In the light of Bekaert’s strong performance in 2007 and confidence in its future, the Board of Directors will propose that the General Meeting of Shareholders on 14 May 2008 approves the distribution of a gross dividend of € 2.76 per share, which represents an increase of 10.4%. If this proposal is accepted, the net dividend per share will amount to € 2.07 and the net dividend on shares with VVPR strip, entitling the holder to reduced withholding tax of 15%, will be
€ 2.346. The dividend will be payable as from 21 May 2008. 

Outlook 

Bekaert expects continuous growth in its activities in 2008, supported by strong capital investment programs of € 200 million, mainly in China, India, Indonesia and Russia. Management will pay particular attention to the rising wire rod prices and procurement. Bekaert is committed to defend its leadership positions worldwide, while managing difficult market conditions in the mature markets.  

The company will continue its drive for global operational excellence and innovation. Additional investments are planned in the course of 2008 to support research and development, including the installation of a new test facility for wire products at the Bekaert Technology Center (Belgium) and further expansion in the number of research staff, in order to provide maximum support to our global customer base and to ensure sustainable profitable growth.  

Financial calendar

2007 annual report available on the Internet                                           18      April              2008

First quarter trading update 2008                                                          14      May              2008

General Meeting of Shareholders                                                         14      May              2008

Dividend payable (coupon n° 9)                                                            21      May              2008

2008 half year results                                                                           1      August          2008

Third quarter trading update 2008                                                           7      November      2008

Fourth quarter trading update 2008                                                       20      February        2009

2008 results                                                                                       13      March           2009

 

 

The statutory auditor has confirmed that his audit procedures, which have been substantially completed, have revealed no material adjustments that would have to be made to the accounting information included in this press release. The consolidated financial statements have been prepared in accordance with IFRS as adopted by the European Union and the same accounting policies and methods of computation as in the December 31, 2006 annual consolidated financial statements were used, except for an option foreseen in IAS 19 Employee Benefits and the first application of IFRS 7 Financial Instruments: Disclosures. Bekaert decided to elect for the IAS 19 option to recognize actuarial gains and losses on defined-benefit plans directly in equity. This decision resulted in a retroactive restatement of the financial statements and the obligation to present a ‘statement of comprehensive income’, encompassing all income and expenses recognized both in the income statement and in equity. The impact of the adoption of IFRS 7 has been to expand the disclosures provided in the financial statements regarding the Group’s financial and capital risk management.

 

Annex 1: Press release March 14, 2008

Consolidated income statement

 

(in thousands of €)

2007

2006

Restated

 

 

 

CONTINUING OPERATIONS

 

 

Sales

Cost of sales

Gross profit

2 173 598

-1 739 669

433 929

2 009 587

-1 614 703

394 884

  

 

Selling expenses

Administrative expenses

Research and development expenses

Other operating revenues

Other operating expenses

Operating result (EBIT) before non-recurring items 

-98 239

-96 582

-56 700

14 597

-10 665

186 340

-96 697

-95 314

-49 562

23 279

-13 862

162 728

Non-recurring items

Operating result (EBIT)

-11 738

174 602

-16 794

145 934

 

 

 

Interest income
Interest expense
1

Other financial income and expenses

Result from continuing operations before taxes

2 517

-35 017

-8 482

133 620

3 735

-28 171

-6 557

114 941

 

 

 

Income taxes1

Result from continuing operations (consolidated companies)

-19 095

114 525

-18 370

96 571

 

 

 

Share in the results of joint ventures and associates

Result from continuing operations

47 100

161 625

50 991

147 562

 

 

 

DISCONTINUED OPERATIONS

 

 

Result from discontinued operations

-

-

 

 

 

RESULT FOR THE PERIOD

161 625

147 562

Attributable to :

the Group

minority interests

 

152 890

8 735

 

142 791

4 771


 

Annex 2: Press release March 14, 2008

Consolidated statement of comprehensive income

(in thousands of €)

2007

2006

Restated

Result for the period

161 625

147 562

Other comprehensive income

Exchange differences1

Cash flow hedges

Remeasurement of net assets held prior to acquiring control

Available-for-sale investements

Actuarial gains and losses (-) on defined-benefit plans1

Share of other comprehensive income of joint ventures and associates

Other

Deferred taxes relating to other comprehensive income1

Ohter comprehensive income for the period, net of tax

 

5 748

-4 168

9 140

8 139

26 255

1 349

94

-3 809

42 748

 

-30 948

-2 625

-

-462

11 760

829

-882

-2 253

-24 581

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

204 373

122 981

Attributable to:

the Group

minority interests    

 

196 008

8 365

 

119 983

2 998


Annex 3: Press release March 14, 2008

Consolidated balance sheet

(in thousands of €)

31 Dec 2007

31 Dec 2006

Restated

Non-current assets

1 335 478

1 305 560

Intangible assets

Goodwill

Property, plant and equipment

Investments accounted for using the equity method

Other non-current assets

Deferred tax assets1

51 887

70 118

917 617

215 560

74 851

5 445

57 510

76 965

824 158

237 747

90 591

18 589

Current assets

977 079

914 269

Inventories

Trade receivables

Other receivables

Short-term deposits

Cash and cash equivalents

Other current assets

Assets classified as held for sale

385 443

437 743

52 694

15 179

58 063

20 395

7 562

368 764

398 928

53 814

29 019

52 139

9 918

1 687

TOTAL ASSETS

2 312 557

2 219 829

 

 

 

Equity

1 146 586

1 108 978

Share capital

Retained earnings1

Other reserves1

Equity attributable to the Group

Minority interests

173 663

995 481

-70 990

1 098 154

48 432

173 300

1 004 780

-117 952

1 060 128

48 850

Non-current liabilities

525 507

516 354

Employee benefit obligations1

Provisions

Interest-bearing debt

Other non-current liabilities

Deferred tax liabilities1

120 796

25 151

322 495

2 055

55 010

151 042

26 664

274 373

3 845

60 430

Current liabilities

640 464

594 497

Interest-bearing debt

Trade payables

Employee benefit obligations

Provisions

Income taxes payable

Other current liabilities

Liabilities associated with assets classified as held for sale

252 953

231 745

83 381

12 434

12 642

44 434

2 875

217 952

227 827

76 042

13 379

16 270

43 027

-

TOTAL EQUITY AND LIABILITIES

2 312 557

2 219 829


 

Annex 4 : Press release March 14, 2008

Consolidated statement of changes in equity

 

(in thousands of €)

2007

2006

Restated

Opening balance

Effect of changes in accounting policies1

Total comprehensive income for the period

Creation of new shares

Acquisition of own shares

Dividends to shareholders of NV Bekaert SA

Dividends to minority interests

Other

Closing balance

1 108 978

-

204 373

1 841

-110 950

-49 590

-7 591

-475

1 146 586

1 130 278

-21 677

122 981

2 161

-56 078

-64 591

-7 613

3 517

1 108 978


Annex 5: Press release March 14, 2008

Consolidated cash flow statement

 

(in thousands of €)

2007

2006

Operating result (EBIT)

Non-cash and investing items included in operating result

Income taxes paid

174 602

115 100

-24 874

145 934

103 934

-16 822

Gross cash from operating activities

264 828

233 046

Change in operating working capital

Other operating cash flows

-41 933

-1 484

-31 947

-8 429

Cash from operating activities

221 411

192 670

New business combinations

Proceeds from disposals of investments

Dividends received

Purchase of intangible assets

Purchase of property, plant and equipment

Other investing cash flows

-14 736

4 210

54 715

-7 393

-192 415

3 744

-42 725

-

35 171

-8 555

-152 781

11 429

Cash from investing activities

-151 875

-157 461

Interest received

Interest paid

Gross dividend paid

Other financing cash flows

2 517

-33 340

-57 213

25 450

3 735

-25 773

-74 140

-16 992

Cash from financing activities

-62 586

-113 170

Net increase or decrease (-) in cash and cash equivalents

6 950

-77 961

Cash and cash equivalents at the beginning of the period

52 139

132 248

Effect of exchange rate fluctuations

-1 026

-2 148

Cash and cash equivalents at the end of the period

58 063

52 139


 

Annex 6: Press release March 14, 2008

Additional key figures

 

(in € per share)

2007

2006

Restated

Number of existing shares at 31 December

Book value1

Share price at 31 December

Weighted average number of shares

Basic

Diluted

Result for the period attributable to the Group

Basic1

Diluted1

Cash flow attributable to the Group

Basic1

Diluted1

19 831 000

57.82

92.00

 

20 039 098

20 169 889

 

7.63

7.58

 

13.82

13.73

20 946 779

52.94

94.70

 

21 491 565

21 596 843

 

6.64

6.61

 

12.21

12.15

 

(in thousands of €)                                                                             

Cash flow attributable to the Group (continuing operations)1

EBITDA

Depreciation and amortization

Capital employed

Operating working capital

Net debt

EBIT on sales before non-recurring items

EBIT on sales

EBITDA on sales

Equity on total assets1

Gearing (net debt on equity) 1

Average working capital on sales

276 866

298 579

123 977

1 533 704

494 083

448 084

8.6%

8.0%

13.7%

49.6%

39.1%

21.8%

262 306

262 156

116 222

1 410 281

451 647

374 744

8.1%

7.3%

13.0%

50.0%

33.8%

22.0%

 

NV Bekaert SA – Statutory Profit and Loss Statement (in thousands of €)

Sales

Operating result

Financial result

Profit from ordinary activities

Extraordinary results

Profit before income taxes

Income taxes

Result for the period

605 707

46 260

62 929

109 189

-24 204

84 985

1 783

86 768

574 078

47 695

63 429

111 124

-48 643

62 481

-2 313

60 168

 



[1] Combined sales are sales generated by consolidated companies plus 100% of sales of joint ventures and associates after

   intercompany elimination.

[2] All comparisons are made relative to the figures of the financial year 2006.

[3] Excluding ‘intersegment sales and others’.

[4] Following the internal repositioning of its advanced materials’ activities, Bekaert is reporting on its activities in stainless as a
  separate activity platform within the advanced materials business segment as from 1 January 2007. Previously, stainless was
  part of wire Europe. The figures for 2006 have been restated accordingly.

 

1 The restatement relates to the election for the IAS 19 option to recognize actuarial gains and losses on defined-benefit plans directly in equity.

1 The restatement relates to the election for the IAS 19 option to recognize actuarial gains and losses on defined-benefit plans directly in equity.

1 The change in accounting policies relates to the election for the IAS 19 option to recognize actuarial gains and losses on

defined-benefit plans directly in equity

1 The restatement relates to the election for the IAS 19 option to recognize actuarial gains and losses on defined-benefit plans directly in equity.

 

 

 

We use cookies in order to let you fully experience this website. Cookies are small files we put in your browser to mainly track usage or remember your settings of our site but they don’t tell us who you are. Want to know more about how we use these Cookies please read our Cookie policy and Data privacy policy.
Close