2005-03-17



17 March 2005  Annual results 2004 - Record year 2004

  • 20% sales increase - strong organic growth in all business segments and regions 0
  • Result from operations: € 185 million, compared to € 112 million 
  • Net result: € 168 million, compared to € 87 million 
  • A proposed
  • gross dividend of € 2: € 1.875 per share, an increase of 7%, supplemented with a premium of € 0.125 to celebrate 125 years of Bekaert

Bekaert had a record year in 2004, a year of exceptional market conditions. Despite continuing volatility on the raw material markets, which translated into higher selling prices, Bekaert was able, through efficient internal organisation, to maintain uninterrupted supplies to its customers. Bekaert achieved substantial volume growth in most of its activities and strengthened its position in most of its markets.

Bekaert further streamlined its product portfolio to meet the changing demands of markets and customers more effectively but also invested in expanding its production capacity, chiefly in Europe and Asia. While continuing to give high priority to quality and cost control, Bekaert intensified its research and development (R&D) effort significantly in 2004.

Sales

In 2004, Bekaert generated consolidated and combined sales 1 of € 2.2 billion (+21%) and € 3.1 billion (+20%), respectively.

The consolidated sales’ increase was 22% from organic growth and 3% from the net movement in acquisitions and divestments, while adverse currency movements amounted to 4%.

Bekaert achieved strong organic sales growth in all business segments and all regions in 2004.

Consolidated and combined sales by business segment

 

Consolidated sales

Combined sales

 

in millions of €

variance

in millions of €

variance

Advanced wire products

1 500

+20.9%

2 411

+21.3%

Fencing systems Europe2

453

+18.4%

454

+18.6%

Advanced materials

117

+13.0%

117

+13.0%

Advanced coatings

127

+12.8%

127

+7.4%

Intersegment sales and others

-24

-

35

-

Total

2 173

+20.9%

3 144

+20.1%

 

Consolidated and combined sales by geographical area

 

 

Consolidated sales

Combined sales

 

in millions of €

variance

in millions of €

variance

Europe

1 273

+21.0%

1 350

+18.9%

North America

587

+21.4%

641

+16.8%

Latin America

31

+39.4%

847

+26.2%

Asia

242

+15.0%

249

+16.0%

Rest of the world

40

+40.6%

57

+20.5%

Total

2 173

+20.9%

3 144

+20.1%



Advanced wire products

   

Key figures (in millions of €)

2004

2003

 

 

 

 

Combined sales

2 411

1 988

 

 

 

 

 

Consolidated sales

1 500

1 241

 

EBIT (result from operations)

181

121

 

EBIT margin on sales

12.0%

9.8%

 

EBITDA (operational cash flow)

259

206

 

Combined sales of advanced wire products were 21% higher

(wire Europe +17%, wire North America +22%, wire Latin America +32%, wire Asia +49%, building products +20%, steel cord China +1%, steel cord others +21% and other advanced wire products +2%).

Despite the difficulties on the raw material markets, advanced wire products had a very good year. With the economy picking up in Europe and North America, Bekaert made significant progress in consolidating the market positions of the majority of its advanced wire products. Wire Asia achieved substantial growth and a strong performance was delivered in most Latin American countries, in a very good economic climate, mainly as a result of substantial volume growth. Worldwide demand for steel cord products for tire reinforcement was especially strong. Growth slowed temporarily in China, due to government measures, but the market improved a little by the end of the year. Bekaert expanded its sales organisation in China, thereby focusing on the needs of the various customer groups. Because the new Chinese production capacity is fully integrated into Bekaert’s global production platform for steel cord products, exports from China helped meet the high level of demand in other parts of the world, which also contributed to the vigorous growth of the activity platform steel cord others.

Consolidated sales of advanced wire products benefited from external growth with the acquisition of Bekaert Hlohovec, a.s. (Slovakia) and the purchase of the outstanding shares in Contours Ltd (USA), which were included in the 2003 consolidated figures for nine months and six months, respectively.

The result from operations reflected the strong growth in advanced wire products’ volume. In addition, the effect of applying the inventory valuation rules in the context of significant price increases for raw materials amounted to € 35 million.  

Fencing systems Europe 4

 

 Key figures (in millions of €)

20004 

2003 

 

Combined sales

454

383

 

 

 

 

 

Consolidated sales

453

382

 

EBIT (result from operations)

52

27

 

EBIT margin on sales

11.4%

7.2%

 

EBITDA (operational cash flow)

67

45

 

Fencing systems Europe's strong performance reflected a good season, substantial volume growth in industrial fences, as well as further expansion of the project business. The impact of inventory valuation amounted to € 11 million.

Advanced materials

Key figures (in millions of €)

2004

2003

 

 

 

 

Combined sales

117

103

 

 

 

 

 

Consolidated sales

117

103

 

EBIT (result from operations)

8

8

 

EBIT margin on sales

6.5%

7.5%

 

EBITDA (operational cash flow)

15

14

 

Combined sales of advanced materials recorded growth of 13%

(fibre technologies +7%, combustion technologies +53%, composites –24%).

Bekaert achieved sustained organic growth in fibre technologies and combustion technologies. Significant additional growth in combustion technologies was gained from the acquisition of Solaronics, which was successfully integrated in the ensuing months and will make its full contribution to the result from 2005 onwards. Bekaert withdrew from its composite profiles activities at the end of 2003.

Advanced coatings

Key figures (in millions of €)

2004

2003

 

 

 

 

Combined sales

127

118

 

 

 

 

 

Consolidated sales

127

113

 

EBIT (result from operations)

-8

-2

 

EBIT margin on sales

-6.1%

-1.9%

 

EBITDA (operational cash flow)

13

12

 

Combined sales of advanced coatings were up by 7% (industrial coatings +15%, specialised films +2%).

Demand grew for industrial coatings generally and for diamond-like coatings in particular. In the autumn of 2004, an additional production facility was set up in Suzhou (China) which will specialise in applying those high-quality coatings to moulds used in various industrial applications. In the coming years, Bekaert is planning to add several more facilities worldwide. This will also enable the company to provide an even faster service to its customers.

In specialised films, the level of activity in the United States was stable. Thanks to the expansion of Bekaert’s sales organisations, important growth was achieved in Europe and Asia.

The growth in consolidated sales of advanced coatings was also due in part to the increase in Bekaert's interest in Sorevi S.A. (France) and Precision Surface Technology Pte Ltd (Singapore).

The intensification of the R&D effort and the further development of the sales organisations significantly impacted on the operating result. An impairment was applied to one of the niche applications of specialised films.

Profitability

Bekaert achieved a consolidated operating result (EBIT) of € 185.1 million compared with € 111.8 million (+66%), representing an EBIT margin on sales of 8.5% (6.2%). Non-recurring items, including various impairments had a negative impact of € 14.3 million. The result was also adversely affected by additional provisions for employee benefit obligations.

The consolidated net result amounted to € 167.6 million compared with € 86.7 million, an increase of 93%.

Non-operating income and expenses included an impairment of € 4.6 million on the handling activity and a positive result of € 3.6 million on financial instruments.

The companies accounted for under the equity method contributed € 56.8 million (€ 36.9 million 5 ) to the result.

Balance sheet

As at 31 December 2004, shareholders' equity represented 44% of total assets.

Cash flow

Operational cash flow (EBITDA) increased to € 316.7 million. Cash flow amounted to € 307.1 million, or € 14.04 per share. Cash provided by operating activities amounted to € 159.7 million and depreciation, amortisation and impairments totalled € 131.6 million. Working capital amounted to € 452.6 million (€ 354.0 million), reflecting the higher sales and the corresponding level of inventories.

Cash used in investing activities by the consolidated companies totalled € 159.7 million. Acquisitions of interests in other companies amounted to € 16.7 million. Investments in tangible assets totalled € 166.2 million, mainly in connection with expansion projects in Europe and Asia. Reflecting the ambitious expansion programme and the increase in working capital, net debt increased to € 409.3 million and the gearing ratio (net debt/shareholders' equity) was 43%.

NV Bekaert SA (Statutory Accounts)

The parent company's sales amounted to € 620.0 million and its profit to € 57.7 million.

Dividend

In the light of Bekaert's very strong performance in 2004 and its confidence in the future, the Board of Directors will invite the General Meeting of Shareholders to approve an increase in the gross dividend of 7%, to € 1.875 per share. To celebrate Bekaert's 125th anniversary in 2005, the Board of Directors will also propose an exceptional increase in the dividend of € 0.125 per share. If both proposals are accepted, a gross dividend of € 2 per share will be distributed, equivalent to a net dividend per share of € 1.5. The net dividend on shares with VVPR strip, giving entitlement to reduced withholding tax of 15%, will be € 1.7 per share in that case. The dividend will be payable as from 18 May 2005.

Events after balance sheet date

In early 2005, Bekaert sold the shares in Bekaert Fencing NV to Gilde, an investment company, for an enterprise value of € 281.5 million. In 2004, this business segment generated combined sales of € 454.0 million and an operating result of € 51.7 million. The capital gain on this transaction, which was completed on 1 March 2005 with effect as of 1 January 2005, is expected to amount to € 56 million.

Outlook

The sale of the European fencing division has been completed. In 2005, Bekaert will further develop its strategy of sustainable profitable growth. The company aims to continue to improve its performance structurally and to support growth in its different business segments in the various regions, with targeted R&D activities and investments.

After an exceptionally strong financial year in 2004, Bekaert made a good start in 2005.

(See annexes : Consolidated Income Statement, Consolidated Balance Sheet, Changes in Shareholders Equity, Consolidated cash flow statement, Key figures, Additional key figures, Profit and Loss Statement for NV Bekaert SA)

 

Financial calendar

2004 annual report available on internet                                     22    April           2005

First quarter trading update 2005                                                11    May           2005

General Meeting of Shareholders                                                11    May           2005

Dividend payable (coupon nr. 6)                                                  18    May           2005

2005 interim results                                                                    1    August       2005

Third quarter trading update 2005                                               14    November   2005

Fourth quarter trading update 2005                                             17    February    2006

2005 results                                                                             16    March        2006

 

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 accompanying consolidated accounts have been compiled in full conformity with the International Financial Reporting Standards ("IFRSs"), including International Accounting Standards ("IASs"), IFRIC and SIC interpretations issued by the International Accounting Standards Board ("IASB"), all of which have been approved by the European Union.

 

 


Annex 1

Press release dd. 17 March 2005

Consolidated Income Statement

in thousands of €

2004

   2003

Sales
Cost of sales

2 173 167
-1 682 369

1 796 987
-1 424 481

Gross profit

490 798

372 506

Distribution & selling expenses
General & administrative expenses
Research & development expenses
Other revenues
Other expenses

-111 666
-108 933
-53 867
19 559
-50 810

-111 496
-100 632
-35 928
20 135
-32 784

Result from operations (EBIT)

185 081

111 801

Interest income & expenses
Non-operating income & expenses

-26 595
-3 971

-32 305
-10 660

Result from ordinary activities before taxes

154 515

68 836

Income taxes

-28 113

-8 158

Result from ordinary activities after taxes

126 402

60 678

Share in the result of joint ventures and associates

Amortisation goodwill on joint ventures and associated companies

Minority interests

56 772

-3 220

-12 350

36 911*

-3 429

-7 486

CONSOLIDATED NET RESULT OF THE GROUP

167 604

86 674

 

 *  As most of the Latin American joint ventures have adopted IFRS, the figures for 2003 have been restated.


Annex 2

Press release dd. 17 March 2005

Consolidated balance sheet at 31 December

in thousands of €

2004

2003

 

2004

2003

Non-current assets

1 222 943

1 165 644

Equity

909 708

790 834

Intangible assets

42 438

48 542

Share capital

171 000

170 000

Goodwill and negative goodwill

75 982

70 917

Reserves, retained earnings and others

738 708

620 834*

Property, plant & equipment

791 620

757 564

Minority interests

48 831

43 344

Investments accounted for under the equity method

219 707

201 006*         

Non-current liabilities

463 172

539 270

Financial assets & others

93 196

87 615

Employee benefit obligations and provisions

216 440

215 239

Current assets

948 251

756 936

Financial liabilities

246 477

322 169

Inventories

419 300

322 642

Other amounts payable

255

1 862

Trade receivables

385 176

307 740

Current liabilities

704 212

499 516

Other receivables

36 531

30 848

Financial liabilities

314 370

177 343

Financial assets

45 457

32 571

Trade payables

250 798

191 417

Cash and cash equivalents

57 059

50 468

Other current liabilities

131 890

123 109

Deferred charges and accrued income

4 728

12 667

Accrued charges and deferred income

7 154

7 647

Deferred tax assets

18 153

15 064

Deferred tax liabilities

63 424

64 680

TOTAL ASSETS

2 189 347

1 937 644

TOTAL EQUITY AND LIABILITIES

2 189 347

1 937 644

 

* As most of the Latin American joint ventures have adopted IFRS, the figures for 2003 have been restated.

Annex 3

 Press release dd. 17 March 2005

 

Changes in Shareholders Equity    (in thousands of €)
2004
2003
Opening balance
Net result of the Group

Foreign exchange translation differences and others

Own shares acquired

Dividends to shareholders

Closing balance

790 834

167 604

-227

 

-9 924

-38 579

909 708

759 068

86 674

-15 559

 

-2 185

-37 164

790 834

Consolidated cash flow statement (in thousands of €)
Cash provided by (used in)

- operating activities

- investing activities

- financing activities

 

159 736

-159 656

7 315

 

150 133

-116 009

-32 803

Net increase in cash and cash equivalents

7 395

1 321

 Key figures (per share)

EBITDA

EBIT

EPS (Earnings per share)

EPS after dilution

EPS before goodwill

Cash flow

Turnover

Book value

Gross dividend

Net dividend

Net dividend with VVPR strip

Share price per 31 December

Number of shares

14.48

8.46

7.65

7.63

8.06

14.04

99.35

43.82

2.00

1.50

1.70

58.75

21 873 705

10.83

5.07

3.92

3.92

4.39

10.14

81.42

37.80

1.7480

1.3110

1.4858

50.50

22 070 300

Additional key figures (in thousands of €)

Cash flow

Operational cash flow (EBITDA)

Depreciation and amortisation

Amortisation of goodwill

Capital employed

Working capital

Net debt

EBIT/sales

Gearing

Average working capital/sales

307 051

316 714

131 632

5 777

1 362 664

452 624

409 328

8.5%

42.7%

18.6%

223 693

239 108

127 307

6 984

1 230 973

353 950

363 509

6.2%

43.6%

19.6%

NV BEKAERT SA – STATUTORY - Profit and Loss Statement (in thousands of €)

Sales

Operating expenses

Operating result

Financial result

Profit from ordinary activities

Extraordinary results

Profit before income taxes

Income taxes

Profit for the year

619 965

-584 107

35 858

50 593

86 451

-26 047

60 404

‑2 727

57 677

496 492

-485 799

10 693

151 822

162 515

-45 946

116 569

0

116 569

 


0 All comparisons are made relative to 2003.

 

1 Combined sales are sales generated by consolidated companies, joint ventures and associated companies.

2 The business segment fencing systems Europe consists of the companies involved in the sales transaction completed on 1 March 2005, i.e. Bekaert Fencing NV and its subsidiaries. The handling activity, formerly reported in this segment, is now reported in ‘intersegment sales and others’.  The comparisons are based on the restated 2003 figures.

3 Excluding ‘intersegment sales and others’.

4 The business segment fencing systems Europe consists of the companies involved in the sales transaction completed on 1 March 2005, i.e. Bekaert Fencing NV and its subsidiaries. The handling activity, formerly reported in this segment, is now reported in ‘intersegment sales and others’.  The comparisons are based on the restated 2003 figures.

 

5 As most of the Latin American joint ventures have adopted IFRS, the figures for 2003 have been restated.

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