2006-02-17



17 February 2006

Trading update fourth quarter 2005 - Bekaert achieves 10% sales growth in 2005

 

In the financial year 2005, Bekaert achieved consolidated sales of € 1.9 billion and combined sales of € 3.1 billion, an increase of 10% and 14% respectively.[1] [2] [3]

The consolidated sales’ increase was 8% from organic growth, 1% from the net movement in acquisitions and divestments and 1% from currency movements.

 

Consolidated and combined sales by business segment

2005

Consolidated sales

 

Combined sales

 

in millions of €

variance

 

in millions of €

variance

Advanced wire products

1 640

+9%

 

2 750

+14%

Advanced materials

141

+21%

 

141

+21%

Advanced coatings

133

+4%

 

133

+4%

Intersegment sales and others

0

-

 

61

-

                                            Total

1 914

+10%

 

3 085

+14%

 

Combined sales by activity platform

 

Advanced wire products:

+14%

 

Advanced materials

+21%

Wire Europe

-7%

 

Fibre technologies

+23%

Wire North America

-4%

 

Combustion technologies

+26%

Wire Latin America

+26%

 

Composites

+2%

Wire Asia

+24%

 

 

 

Building products

+12%

 

Advanced coatings

+4%

Steel cord China

+39%

 

Industrial coatings

-4%

Steel cord others

+15%

 

Specialized films

+11%

Other advanced wire products

+19%

 

 

 

 

After an extraordinary year in 2004, characterized by unheard-of increases in the prices for wire rod -the raw material for advanced wire products-, Bekaert experienced again in 2005 significant effects from the volatility in the raw materials markets worldwide. Both raw materials prices and sales prices were on average higher than in 2004. Whereas, in 2004, customers built up their stocks, because of the difficulty of getting supplies, in 2005 the company experienced just the opposite, a trend towards running down stocks, and therefore a slow down in customer demand in some markets.  

In the mature markets in Western Europe and North America, Bekaert saw demand for its advanced wire products weaken noticeably, especially in the automotive industry. Bekaert adjusted its cost structure in several plants and brought its production platforms into line with changing market demand.  The company will continue to reinforce its position in Central and Eastern Europe, including in Russia.

Bekaert further decided to drop some of the less profitable products from its portfolio and concentrate on applications with a higher added value. With the acquisition of Conflandey Inc.’s activities and the purchase of various machinery and equipments, early in 2006, Bekaert wants to strengthen its position in industrial stapling wire and fine specialized wires on the North American market.

Bekaert also worked to further improve its customer service. After the major natural disasters in North America it was able to respond at very short notice to customers' demands within the framework of the rebuilding programs, especially for energy supplies, telecommunications, construction and infrastructural work.

In Latin-America the company performed strongly. In Asia and in China, in particular, Bekaert experienced significant growth in all its activities. Not only did the company record substantial demand for steel cord products, it also developed new products, and announced an important new investment program in advanced wire products.

By taking over ECC Card Clothing, in June 2005, and setting up the joint venture Wuxi Owl Textile Accessories Co. Ltd., in China, Bekaert opted for worldwide expansion of its advanced wire products for the textile sector, as well.

Bekaert experienced a strong increase in sales in advanced materials. In fibre technologies, Bekaert registered an important breakthrough in the field of environment-friendly gas filtration and, in mid-2005, it also acquired Southwest Screens & Filters, one of the world players in industrial process filtration based on Bekaert metal fibres.

In combustion technologies, environment-friendly heating installations for the residential sector performed strongly. The same was true for the industrial applications, thanks, among other things, to the acquisition of Solaronics, which only showed up in the figures for nine months in 2004. By the end of 2005, with the takeover of Shell’s participation, Bekaert became 100% owner of the combustion technologies’ business segment. Now the company intends to implement its growth strategy for environment-friendly gas burners autonomously and to capitalize on the increasingly strict environmental regulations in Europe and the United States. 

In advanced coatings, Bekaert recorded limited growth. In industrial coatings, activity grew in the diamond-like coatings that are for instance applied to motor components for racing cars, whilst the strongly project driven activity in sputter products had a difficult year. In 2005, specialized films performed strongly, mainly thanks to substantial growth in Asia.

In November 2005, Bekaert officially opened its new plant for advanced materials and coatings in Suzhou (China), in order to considerably strengthen its position in the growing Asian markets.

Combined sales by geographical area                                                                                                                                                                           

2005

Combined sales

 

in millions of €

variance

Europe

1 018

+6%

North America

662

+4%

Latin America

1 053

+25%

Asia

298

+37%

Other regions

54

+12%

Total

3 085

+14%

Outlook

Despite the slowing down in Europe and North America in 2005, Bekaert intends to maintain its positions in all business segments and regions in 2006. The company will further invest in close cooperation with its customers, in research and development, as well as in the expansion of its production capacity for the various growth markets.

In 2006, Bekaert will continue to be proactive in anticipating a sharply changing economic environment around the world in order to realize its strategy of sustainable profitable growth.

Financial calendar

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

Third quarter trading update 2006                                                   10      November    2006

Fourth quarter trading update 2006                                                 16      February       2007

2006 results                                                                                         16         March        2007    


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

[2] The figures in this press release are provisional and unaudited. The full annual results will be published on 16 March 2006.

[3] All comparisons are made relative to the restated figures from ‘continuing operations’ for 2004. Following the divestment of Bekaert Fencing NV with effect as of 1 January 2005, the business segment fencing systems Europe is accounted for as a ‘discontinued operation’.     

[4]   Excluding ‘intersegment sales and others’.

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