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.
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.
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).
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.
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.
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.
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.
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.