2006-03-16



16 March 2006

Annual results 2005 - Strong 2005 performance by Bekaert

 

    10% sales increase, mainly due to strong performance in the growth markets

–    Operating result before non-recurring items of € 168 million, compared with € 148 million

–    Operating result (EBIT) of € 136 million, compared with € 139 million, which represents an EBIT margin on sales of 7.1%

–    Exceptional gain of € 54 million on the sale of Bekaert Fencing NV

–    Net result of € 190 million, compared with € 168 million

–    A proposed gross dividend of € 3.00, composed of a basic amount of € 2.00 (an increase of 6.7%) and an exceptional payment of € 1.00

 

Sales

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

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%



 

Consolidated and combined sales by geographical area

 

2005

Consolidated sales

 

Combined sales

 

 

in millions of €

variance

 

in millions of €

variance

 

Europe

937

+6%

 

1 018

+6%

 

North America

619

+6%

 

662

+4%

 

Latin America

32

+13%

 

1 053

+25%

 

Asia

292

+38%

 

298

+37%

 

Rest of the world

34

+9%

 

54

+12%

 

Total

1 914

+10%

 

3 085

+14%

 



 

Advanced wire products

 

Key figures (in millions of €)

2005

2004

restated

 

 

 

Combined sales

2 750

2 413

 

 

 

Consolidated sales

1 640

1 501

EBIT (operating result)

171

181

EBIT margin on sales

10.4%

12.0%

EBITDA (operational cash flow)

256

259

 

Combined sales of advanced wire products were 14% higher

(wire Europe –7%, wire North America –4%, wire Latin America +26%, wire Asia +24%,
building products +12%, steel cord China +39%, steel cord others +15% and

other advanced wire products +19%).

After an extraordinary year in 2004, which saw unprecedented price rises for wire rod (the raw material for advanced wire products), in 2005 Bekaert continued to experience the significant impact of the volatility of raw materials markets worldwide. In contrast to 2004, when customers built up their inventories, because of difficulties in obtaining supplies, the company experienced just the opposite in 2005, with customers running down their stocks, which translated into a slow-down in customer demand in some markets. Both raw materials prices and selling prices were higher on average than in 2004. The application of the inventory valuation rules had a limited impact on the operating result in 2005 unlike 2004 when this change had a positive effect of € 35 million, due to significant raw materials price increases.

In the mature markets of Western Europe and North America, Bekaert saw demand for its advanced wire products weaken noticeably, especially in the automotive industry.

Bekaert continued to drop some of the less profitable products from its portfolio and concentrate on applications with a higher added value. Its production platforms were realigned in response to the shifts in market demand and the cost structure was modified at several plants, for which Bekaert recognized € 16 million non-recurring expenses.

With the acquisition of Conflandey Inc.’s activities and various items of machinery and equipment in early 2006, Bekaert aims to strengthen its position in industrial stapling wire and fine specialized wires on the North-American market. Bekaert also worked hard to improve its customer service. In the wake of the major natural disasters in North America, it was able to respond at very short notice to the demand created by the rebuilding programs, especially for energy supplies, telecommunications, construction and infrastructure work.

Bekaert will also continue to reinforce its position in Central and Eastern Europe, including in Russia. The company performed strongly in Latin America. Bekaert experienced significant growth in all its activities in Asia, particularly in China. Demand for steel cord products was strong. Bekaert 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 Wuxi Owl Textile Accessories Co. Ltd. joint venture in China, Bekaert embarked on worldwide expansion of its advanced wire products for the textile sector.

 

Advanced materials

 

Key figures (in millions of €)

2005

2004

restated

 

 

 

Combined sales

141

117

 

 

 

Consolidated sales

141

117

EBIT (operating result)

5

8

EBIT margin on sales

3.7%

6.5%

EBITDA (operational cash flow)

20

15

 

Combined sales of advanced materials recorded growth of 21%

(fiber technologies +23%, combustion technologies +26%, composites +2%).

Bekaert experienced a strong increase in sales in advanced materials, but operating result was negatively influenced by € 8 million due to impairment losses.

In fiber technologies, Bekaert registered an important breakthrough in the field of environment-friendly gas filtration. In mid-2005, it also acquired Southwest Screens & Filters SA, a world player in industrial process filtration based on Bekaert metal fibers.

In combustion technologies, environment-friendly heating equipment for the residential sector performed strongly. The same was true for the industrial applications, partly due to the acquisition of Solaronics for which only nine months’ figures were included in 2004. By the end of 2005, with the acquisition of Shell’s interest, Bekaert owned 100% of the combustion technologies activity platform. The company now intends to implement its growth strategy for environment-friendly gas burners alone, capitalizing on the increasingly strict environmental regulations in Europe and the United States. 

 

Advanced coatings

 

Key figures (in millions of €)

2005

2004

restated

 

 

 

Combined sales

133

127

 

 

 

Consolidated sales

133

127

EBIT (operating result)

–4

–8

EBIT margin on sales

–3.2%

–6.1%

EBITDA (operational cash flow)

13

13

 

Combined sales of advanced coatings were up by 4%

(industrial coatings –4%, specialized films +11%).

Bekaert recorded modest growth in advanced coatings. In industrial coatings, there was growth in diamond-like coatings, which are used for example on engine components for racing cars, but sputter products, where demand is largely project-driven, had a difficult year. The reallocation of the worldwide production capacity in sputtered films necessitated € 7 million non-recurring expenses.

Specialized films performed strongly in 2005, mainly thanks to substantial growth in Asia.

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

 

Profitability

In continuing operations, Bekaert achieved a consolidated operating result (EBIT) before non-recurring items of € 168 million, compared with € 148 million in 2004. Including non-recurring items (€ 32 million, as against € 9 million), the consolidated operating result (EBIT) amounted to € 136 million, compared with € 139 million in 2004, representing an EBIT margin on sales of 7.1%.

The companies consolidated using the equity method contributed € 57 million to the result, as in 2004.

The consolidated net profit from continuing operations amounted to € 136 million compared with € 141 million. The consolidated net profit from discontinued operations was € 54 million, mostly in the form of the gain on the sale of Bekaert Fencing NV. The consolidated net result of the Group amounted to € 190 million, compared with € 168 million. 

Balance sheet

As at 31 December 2005, equity represented 51% of total assets. Net debt amounted to € 272 million, compared with € 369 million and the gearing ratio (net debt to equity) was 24%, compared with 38% as at year-end 2004.

Cash flow

EBITDA was € 257 million. Cash flow amounted to € 257 million.

Cash provided by operating activities amounted to € 179 million and depreciation, amortization and impairments totaled € 121 million. Operating working capital amounted to € 431 million, compared with € 453 million. The sale of the fencing systems Europe business segment reduced working capital by € 93 million, while the higher activity level and currency movements increased the working capital by € 72 million.

Cash used in investing activities of the consolidated companies totaled € 36 million. Cash proceeds from the sale of Bekaert Fencing NV amounted to € 86 million. Investments in property, plant and equipment totaled € 142 million, mainly due to the expansion of the production capacity in various growth markets, especially those in Asia.

Under the authority vested by the General Meeting of Shareholders in the Board of Directors, 585 000 Bekaert shares were purchased in 2005 at an average price of € 61.04, of which 576 550 were canceled.

NV Bekaert SA (statutory accounts)

The parent company's sales amounted to € 601 million. The profit was € 131 million, compared with € 58 million, mostly due to the extraordinary result on the sale of Bekaert Fencing NV.

Dividend

In the light of the company’s strong performance in 2005 and its confidence in the future, the Board of Directors will propose that the General Meeting of Shareholders approve the distribution of a gross dividend of € 3.00 per share. This gross dividend is composed of a basic amount of € 2.00 (an increase of 6.7 % from last year’s basic amount) and an exceptional payment of € 1.00 on account of the gain on the sale of Bekaert Fencing NV. If this proposal is accepted, it will result in a net dividend per share of € 2.25. In that case, the net dividend on shares with VVPR strip, giving entitlement to reduced withholding tax of 15%, will be € 2.55 per share. The dividend will be payable as from 17 May 2006.

Outlook

Bekaert has started 2006 well, but is experiencing more intense competition around the world and higher costs for both raw materials and energy.

Bekaert will continue to pursue its strategy of sustainable profitable growth in 2006 in all business segments and regions. In the mature markets, especially in Europe, Bekaert is witnessing a slight weakening of demand for some products. In the growth markets, Bekaert aims to continue strengthening its position and will make further substantial investments in expanding its production capacity.

Financial calendar

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

 

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 IFRSs as adopted by the European Union.

 

Profile

Bekaert (www.bekaert.com) seeks sustainable profitable growth based on its two core competences: advanced metal transformation and advanced materials and coatings.

Bekaert aims to consolidate its position as both market and technological leader around the world. With its broad range of high technological products, systems and services, Bekaert offers high added value for its customers.

Bekaert (Euronext Brussels: BEKB) is an European based company, headquartered in Belgium, employing 17 000 people. Bekaert, present in 120 countries, generates sales of € 3 billion.

 


Annex 1

Press release 16 March 2006

Consolidated income statement

 


(in thousands of €)

2005

2004[4]

 

 

 

CONTINUING OPERATIONS

 

 

Sales
Cost of sales

Gross profit

1 914 259

–1 522 156

392 103

1 741 909

–1 343 225

398 684

 

 

 

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

Operating result (EBIT)

–92 445

–100 407

–44 975

29 443

–47 453

136 266

–85 989
–94 906
–53 599
23 985
–49 169

139 006

 

 

 

Interest income and expenses
Non-operating income and expenses

Result from ordinary activities before taxes

–26 932

11 661

120 995

–15 643
–4 901

118 462

 

 

 

Income taxes

Result from ordinary activities after taxes

–30 269

90 726

–18 392

100 070

 

 

 

Share in the results of joint ventures and associates

Amortization goodwill on joint ventures and associates

Minority interests

Result from continuing operations of the Group

56 939

–11 977

135 688

56 682

–3 213

–12 275

141 264

 

 

 

DISCONTINUED OPERATIONS

 

 

Result from discontinued operations of the Group

54 187

26 340

 

 

 

CONSOLIDATED NET RESULT OF THE GROUP

189 875

167 604

 


Annex 2

Press release 16 March 2006

Consolidated balance sheet

 


(in thousands of €)

31 Dec. 2005

31 Dec. 20044

 

 

 

Non-current assets

1 239 214

1 241 096

Intangible assets

Goodwill and negative goodwill

Property, plant and equipment

Investments accounted for using the equity method

Other financial assets

Deferred tax assets

45 524

79 879

799 762

238 366

67 920

7 763

42 438

75 982

791 620

219 707

93 196

18 153

Current assets

992 458

948 251

Inventories

Trade receivables

Other receivables

Financial assets

Cash and cash equivalents

Deferred charges and accrued revenues

Assets classified as held for sale

348 330

354 225

54 544

90 788

132 248

8 521

3 802

419 300

385 176

36 531

45 457

57 059

4 728

TOTAL ASSETS

2 231 672

2 189 347

 

 

 

Equity

1 130 278

958 539

Share capital

Reserves and retained earnings and others

Minority interests

172 900

906 315

51 063

171 000

738 708

48 831

Non-current liabilities

542 972

526 596

Employee benefit obligations and provisions

Financial liabilities

Other amounts payable

Deferred tax liabilities

184 416

297 692

3 013

57 851

216 440

246 477

255

63 424

Current liabilities

558 422

704 212

Financial liabilities

Trade payables

Other current liabilities

Accrued charges and deferred revenues

Liabilities associated with assets classified as held for sale

246 670

187 369

111 543

12 840

314 370

250 798

131 890

7 154

TOTAL EQUITY AND LIABILITIES

2 231 672

2 189 347

 


Annex 3

Press release 16 March 2006

Changes in Shareholders Equity

 


(in thousands of €)

2005

20044

Opening balance

Consolidated net result of the Group

Result attributable to minority interest

Cumulative translation adjustments and others

Acquisition of own shares

Dividends to parent shareholders

Closing balance

958 539

189 875

11 977

57 382

–35 190

–52 305

1 130 278

834 178

167 604

12 350

–377

–9 924

–45 292

958 539


Annex 4

Press release 16 March 2006

Consolidated cash flow statement

 


(in thousands of €)

2005

20044

Operating result (EBIT)

Non-cash items

Income taxes

136 266

105 815

–25 516

185 081

131 042

–32 865

Gross cash from operating activities

216 565

283 258

Changes in operating working capital

Others

–32 283

–5 479

–112 585

–10 937

Cash from operating activities

178 803

159 736

New portfolio investments

Dividends received

Others

–21 190

43 590

86 479

–16 686

22 772

566

Cash portfolio-related investing activities

108 879

6 652

Capital expenditure intangibles

Capital expenditure (PP&E)

Others

–9 730

–141 886

6 472

–6 629

–166 236

6 557

Cash from other investing activities

–145 144

–166 308

Interests received/(paid)

Dividends

Others

–14 767

–52 196

–3 717

–16 003

–45 314

68 632

Cash from financing activities

–70 680

7 315

Net increase/(decrease) in cash and cash equivalents

71 858

7 395  

 


 

 

Annex 5

Press release 16 March 2006

Additional key figures

 

 


(in € per share)

2005

20044

Number of existing shares at 31 December

Book value

Share price at 31 December

 

Consolidated net result of the Group from continuing and discontinued operations (basic)

Consolidated net result of the Group from continuing and discontinued operations (diluted figures)

Consolidated net result of the Group from continuing operations (basic)

Consolidated net result of the Group from
continuing operations (diluted figures)

21 530 195

52.50

78.95

 

 

8.78

 

 

8.75

 

6.27

 

6.25

21 873 705

43.82

58.75

 

 

7.65

 

 

7.63

 

6.44

 

6.43

 

 

 

(in thousands of €)                                                                             

 

Cash flow

EBITDA

Depreciation and amortization

Capital employed

Operating working capital

Net debt

EBIT on sales

EBITDA on sales

Gearing

Average working capital on sales

256 857

257 434

121 168

1 359 941

430 975

271 692

7.1%

13.4%

24.0%

20.6%

265 644

255 580

116 574

1 362 664

452 624

368 728

8.0%

14.7%

38.5%

18.6%

 

 

 

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

Transfer to deferred taxes

Income taxes

Result

600 542

21 507

56 674

78 181

54 581

132 762

–1 296

131 466

619 965

35 858

50 593

86 451

–26 047

60 404

–1 857

–870

57 677

 

 



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

[2] All comparisons are made relative to 2004 figures. Consolidated income statement figures of 2004 are restated following the divestment of Bekaert Fencing NV, while balance sheet figures are not. Some ratios, relating consolidated income statement to balance sheet items, or ratios based on an average in comparison with 2004, are indicative.

[3]  Excluding ‘intersegment sales and others’.

[4]  Consolidated income statement figures of 2004 are restated following the divestment of Bekaert Fencing NV, while balance sheet figures are not. Some ratios, relating consolidated income statement to balance sheet items, or ratios based on an average in comparison with 2004, are indicative.

4  Consolidated income statement figures of 2004 are restated following the divestment of Bekaert Fencing NV, while balance sheet figures are not. Some ratios, relating consolidated income statement to balance sheet items, or ratios based on an average in comparison with 2004, are indicative.

4  Consolidated income statement figures of 2004 are restated following the divestment of Bekaert Fencing NV, while balance sheet figures are not. Some ratios, relating consolidated income statement to balance sheet items, or ratios based on an average in comparison with 2004, are indicative.

4 Consolidated income statement figures of 2004 are restated following the divestment of Bekaert Fencing NV, while balance sheet figures are not. Some ratios, relating consolidated income statement to balance sheet items, or ratios based on an average in comparison with 2004, are indicative.

4  Consolidated income statement figures of 2004 are restated following the divestment of Bekaert Fencing NV, while balance sheet figures are not. Some ratios, relating consolidated income statement to balance sheet items, or ratios based on an average in comparison with 2004, are indicative.

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