2005-08-01



1 August 2005

Half year results 2005 - Excellent first half, but challenging second half ahead

 
  • Strong sales growth in all regions
  • Investment programme on schedule: € 77 million, compared to € 62 million
  • Result from operations: € 85 million, compared to € 71 million
  • Total net profit of € 130 million, compared to € 79 million:
           - net result from continuing operations of € 76 million, compared to € 64 million
           - net result from discontinued operations of € 54 million (capital gain), compared to € 15 million
  • Challenging second half year ahead, due to clear weakening of the economic environment

Bekaert achieved a substantial sales growth in the first half of 2005. Sales prices reflected the sharp increase in raw materials’ prices during the past year. 

To be able to take advantage of the market trends, Bekaert continued to invest in optimising its production capacity and to streamline its product portfolio. Early in 2005, Bekaert sold its shares in Bekaert Fencing NV, which means that the fencing systems Europe business segment is reported in 2004 as a discontinued operation.

Sales

In the first half of 2005, Bekaert realised combined sales of € 1 514 million and consolidated sales of € 971 million, an increase by 16% and 13% respectively. [1] [2] [3]

The consolidated sales’ increase was 14% from organic growth and 1% from the net movement in acquisitions and divestments, offset by adverse currency movements of 2%. 

 

Consolidated and combined sales by business segment

 

Consolidated sales

Combined sales

 

in millions of €

variance

in millions of €

variance

Advanced wire products

840

+11%

1 351

+15%

Advanced materials

63

+17%

63

+17%

Advanced coatings

67

-1%

67

-1%

Others/intersegment

1

 

33

 

Total

971

+13%

1 514

+16%

 

Consolidated and combined sales by geographical area

 

Consolidated sales

Combined sales

 

in millions of €

variance

in millions of €

variance

Europe

489

+12%

531

+12%

North America

323

+10%

344

+11%

Latin America

15

+11%

487

+22%

Asia

127

+23%

130

+23%

Rest of the world

17

+29%

22

+6%

Total

971

+13%

1 514

+16%


Advanced wire products

Key figures (in millions of €)

1 H 05

1 H 04
restated

 

 

 

 

Combined sales

1 351

1 177

 

 

 

 

 

Consolidated sales

840

759

 

EBIT (result from operations)

105

94

 

EBIT margin on sales

12.6%

12.4%

 

EBITDA (operational cash flow)

145

133

 

Combined sales of advanced wire products increased by 15%

(wire Europe: -2%, wire North America: -1%, wire Latin America: +24%, wire Asia: +12%, building products: -2%, steel cord China: +28%, steel cord others: +24%, other advanced wire products: +7%).

Bekaert performed very well in Latin America and also in Asia, more specifically in China. Demand for steel cord products to reinforce radial tires further increased worldwide and Bekaert bolstered its market positions with the help of the major investment programmes in the various regions. However, the company faces a clear weakening of the economic environment in most of the mature markets in Europe and North America.

In the other advanced wire products, Bekaert acquired the ECC Card Clothing division from Carclo plc in June 2005.

 

Advanced materials

Key figures (in millions of €)

1 H 05

1 H 04
restated

Consolidated sales

63

54

 

EBIT (result from operations)

5

5

 

EBIT margin on sales

8.5%

9.0%

 

EBITDA (operational cash flow)

8

8

 

Sales of advanced materials increased by 17%

(fibre technologies: +0%, combustion technologies: +42%, composites: +10%).

Bekaert achieved a major sales increase in combustion technologies, partly due to the acquisition of Solaronics Technologies, which was only included in the figures for three months during the first half of 2004.

Sales in composites rose but this business was faced with increased competition.

Sales in fibre technologies remained stable. Bekaert aims to reinforce its position in selected filtration applications based on metal fibres, partly through its recent acquisition of Southwest Screens & Filters SA.

Advanced coatings

Key figures (in millions of €)

1 H 05

1 H 04
restated

Consolidated sales

67

67

 

EBIT (result from operations)

-2

0

 

EBIT margin on sales

-3.3%

-0.1%

 

EBITDA (operational cash flow)

9

7

 

Sales for advanced coatings decreased by 1%
(industrial coatings: -2%, specialised films: -1%).

In industrial coatings, sales in the sputter products business, which is strongly project-driven, decreased. At the same time, Bekaert prepared for growth in diamond-like coatings, which are primarily applied on racing car engine components, through the entry into service of new production installations in the United States.

The market in the United States for specialised films remained stable, while new technological developments were recently introduced successfully into the market. Furthermore, business activities were extended, mainly in Asia. However, these effects were offset by adverse currency movements.

The result from operations was negatively influenced by € 5.5 million through a reallocation of the worldwide production capacity in sputtered films.

Profitability

In continuing operations, Bekaert achieved a consolidated result from operations (EBIT) of € 85 million, an increase by 20%. This represents an EBIT margin on sales of 8.8%. Non-recurring items had a negative impact of € 9 million.

The companies accounted for under the equity method contributed € 28 million to the result, an increase by 7%.

The consolidated net profit from continuing operations amounted to € 76 million compared to € 64 million, an increase by 20%. The consolidated net profit from discontinued operations amounted to € 54 million, mostly related to the capital gain on the sale of Bekaert Fencing NV.

Therefore, the total net profit of the Group amounted to € 130 million, compared to € 79 million.  

Balance sheet

As at 30 June 2005, equity represented 48% of total assets, compared to 44% at 31 December 2004.

Net debt amounted to € 357 million, compared to € 409 million and the gearing ratio (net debt to equity) was 34%, compared to 43% at year-end 2004.

In line with the authorisation granted by the General Meeting of Shareholders to the Board of Directors, 550 000 Bekaert shares were purchased in the first half of 2005, at an average share price of € 60.68, and 541 910 of these shares will be cancelled early August 2005.

Cash flow

Operational cash flow (EBITDA) reached € 143 million. Cash flow amounted to € 188 million.

Investments in tangible fixed assets totalled € 77 million.

Cash provided by operating activities amounted to € 38 million and depreciation, amortisation and impairments totalled € 57 million. Working capital increased by € 102 million, reflecting the higher sales and the corresponding level of inventories. Cash provided by investing activities by the consolidated companies totalled € 12 million, mainly because of the cash proceeds (€ 88 million) from the sale of Bekaert Fencing NV.

 

NV Bekaert SA (Statutory Accounts)

Sales of the company amounted to € 327 million. The profit was € 127 million, mostly due to the extraordinary profit from the sale of Bekaert Fencing NV.

Outlook

The slowdown in incoming orders due to the weakening of the economic environment and the uncertainty in raw materials’ markets present challenges for the second half.

 

Accounting & reporting principles

 

These unaudited consolidated interim financial statements have been prepared 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.  The consolidated interim financial statements have been prepared using the same accounting policies and methods of computation as in the 31 December 2004 annual financial statements, except where new IFRSs and improved IASs have become applicable from 1 January 2005.  The new IFRSs and improved IASs which had a material effect on this interim publication, are IFRS 3 ‘Business Combinations’ and IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’. As a consequence of IFRS 3, goodwill is no longer amortised, but is reviewed for impairment at least annually; existing negative goodwill was derecognised against equity as at 1 January 2005 and negative goodwill relating to new business combinations will be recognised in the income statement.

As a consequence of IFRS 5, the divestment of the fencing systems Europe business segment was accounted for as a discontinued operation.  Consequently, the net result from discontinued operations is presented separately in the consolidated income statement of both 2004 and 2005. In addition, assets and liabilities associated with discontinued operations are presented separately in the consolidated balance sheet of 2005 only, as no restatement is required for 2004 comparatives in the balance sheet. Furthermore, in accordance with IAS 34 ‘Interim Financial Reporting’, the balance sheet presented in this half year financial report includes comparatives as of 31 December instead of 30 June of the immediately preceding financial year.

This interim financial report is in compliance with the requirements issued by the CBFA and by Euronext.

 

 

Financial calendar

Third quarter trading update 2005                                       14    November    2005

Fourth quarter trading update 2005                                     17    February     2006

2005 results                                                                     16    March         2006

2005 annual report available on Internet                              21    April            2006

First quarter trading update 2006                                       10    May             2006

General Meeting of Shareholders                                       10    May            2006

Dividend payable (coupon nr. 7)                                         17    May            2006

2006 half year results                                                       28    July             2006

 

 

                                            

Annex 1

Press release dd. 1 August 2005

Consolidated Income Statement

in thousands of €

1 H 05

1 H 04*

CONTINUING OPERATIONS

Sales
Cost of sales

970 584
-758 029

859 829
-658 749

Gross profit

212 555

201 080

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

-46 780
-49 594
-22 869
7 222
-15 267

-42 638
-51 045
-28 803
4 867
-12 275

Result from operations (EBIT)

85 267

71 186

Interest income & expenses
Non-operating income & expenses

-11 237
3 297

-7 961
422

Result from ordinary activities before taxes

77 327

63 647

Income taxes

-21 622

-18 559

Result from ordinary activities after taxes

55 705

45 088

Share in the result of joint ventures and associates

Amortisation goodwill on joint ventures and associated companies

Minority interests

27 715

-

-7 250

25 915

-1 951

-5 355

Consolidated net result of the Group from continuing operations

76 170

63 697

DISCONTINUED OPERATIONS

Consolidated net result of the Group from
discontinued operations

54 087

15 050

TOTAL CONSOLIDATED NET RESULT OF THE GROUP

130 257

78 747


Annex 2

Press release dd. 1 August 2005

Consolidated balance sheet  

in thousands of €

30 June 2005

31 Dec. 2004

 

30 June 2005

31 Dec. 2004

Non-current assets

1 233 551

1 222 943

Equity

1 060 374

958 539

Intangible assets

39 695

42 438

Share capital

171 000

171 000

Goodwill and negative goodwill

81 924

75 982

Reserves, retained earnings and others

840 107

738 708

Property, plant & equipment

772 557

791 620

Minority interests

49 267

48 831

Investments accounted for under the equity method

254 105

219 707

Non-current liabilities

537 424

463 172

Financial assets & others

85 270

93 196

Employee benefit obligations and provisions

192 190

216 440

Current assets

957 334

948 251

Financial liabilities

342 588

246 477

Inventories

361 907

419 300

Other amounts payable

2 646

255

Trade receivables

391 391

385 176

 

Current liabilities

545 363

704 212

Other receivables

31 575

36 531

Financial liabilities

225 147

314 370

Financial assets

54 513

45 457

Trade payables

179 971

250 798

Cash and cash equivalents

109 068

57 059

Other current liabilities

128 021

131 890

Deferred charges and accrued income

8 880

4 728

Accrued charges and deferred income

12 224

7 154

Non-current assets classified as held for sale

 

 

Liabilities associated with non-current assets classified as held for sale

 

 

Deferred tax assets

9 254

18 153

Deferred tax liabilities

56 978

63 424

TOTAL ASSETS

2 200 139

2 189 347

TOTAL EQUITY AND LIABILITIES

2 200 139

2 189 347



 

Annex 3

 Press release dd. 1 August 2005

 

 

 

Changes in shareholders’ equity
(in thousands of € )                                                                                Changes in Shareholders’ equity    (in thousands of €)
1 H 05
1 H 04
Opening balance
Consolidated net result of the Group
Result attributable to minority interest

Cumulative translation adjustments and others

Purchase of shares

Dividends to parent shareholders
Dividends to minority interests

Closing balance

958 539

130 257

7 250

49 556

 

-33 218

-43 747

-8 263

1 060 374

834 178

78 747

5 481

5 418

 

-9 958

-38 579

-6 877

868 410

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

- operating activities

- investing activities

·    cash proceeds from         discontinued operations

·    other

- financing activities

 

37 640

12 099

87 786

 

-75 687

268

 

78 935

-68 930

-

 

-68 930

11 580

Net increase in cash and cash equivalents

50 007

21 585

 Key figures (in € per share)

Number of existing shares
Book value
Share price at 30 June
Basic figures

- weighted average number of shares
- EBITDA from continuing operations
- EBIT from continuing operations
- EPS from continuing operations
- EPS from continuing and discontinued
  operations

- Cash flow from continuing and
  discontinued operations
Diluted figures

- weighted average number of shares

- EPS from continuing operations
- EPS from continuing and discontinued
  operations

21 323 705

49.73

62.10

 

21 823 491

6.53

3.91

3.49

5.97

 

8.61

 

 

21 942 191

3.47

5.94

22 070 300
39.35
47.35

 

21 991 324
5.76
3.24
2.90
3.58

6.83


22 011 607
2.89
3.58


 

Annex 3 (continued)

 Press release dd. 1 August 2005

 

 

                                                                                          Changes in Shareholders’ equity    (in thousands of €)
1 H 05
1 H 04
Additional key figures (in thousands of €)

Cash flow from continuing and discontinued

operations

Operational cash flow (EBITDA) from continuing operations

Depreciation and amortisation

Amortisation of goodwill from continuing operations

Capital employed

Working capital

Net debt

EBIT on sales

EBITDA on sales

Gearing

Average working capital on sales

187 849

 

142 536

 

57 269

-

 

1 380 279

486 103

357 452

8.8%

14.7%

33.7%

21.8%

150 272

 

126 694*

 

52 124*

3 384*

 

1 376 494

457 754

417 512

8.3%*

14.7%*

48.1%

18.5%

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

Sales

Operating expenses

Operating result

Financial result

Profit from ordinary activities

Extraordinary results

Profit before income taxes

Income taxes

Profit for the year

326.8

305.9

20.9

43.6

64.5

67.4

131.9

-4.5

127.4

319.2

-300.7

18.5

20.4

38.9

2.3

41.2

-4.6

36.6

 

 


[1] The figures in this press release are unaudited.

[2]           Combined sales are sales generated by consolidated companies, joint ventures and associates.

[4] Excluding ‘intersegment sales and others’.

* Figures for 2004 were restated in accordance with IFRS accounting standards regarding reporting on continuing respectively discontinued operations (see ‘accounting & reporting policies’ on p.6 of this press release).

* Figures for 2004 were restated in accordance with IFRS accounting standards regarding reporting on continuing respectively discontinued operations (see ‘accounting & reporting policies’ on p.6 of this press release).

 

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