28 July 2006
Half year results 2006 - Bekaert performs robustly in volatile market conditions
– 38% growth in steel cord China, built on major investment program
– 16% growth in Latin America
– Mature markets remain challenging
– 4% total sales increase, after record growth in 2004 and 2005
– EBIT margin on sales of 7.5%
– Increased investments in sales organizations and R&D activities
– EPS of € 3.51 compared with € 3.49 (continuing operations)
Sales
Bekaert achieved consolidated sales of € 1.0 billion and combined sales of € 1.6 billion in the first half of 2006, an increase of 4% and 7% respectively.[1] [2] [3]
After its rapid growth in 2004 and 2005, Bekaert posted a further increase in consolidated sales in the first half of 2006. Currency movements had a positive impact of 2%, while targeted acquisitions within the various activity platforms contributed 4% to the growth. Sales in various markets were affected by lower selling prices, largely reflecting the trend in wire rod prices.
Consolidated and combined sales by business segment
|
1 H 06
|
Consolidated sales
|
|
Combined sales
|
|
|
in millions of €
|
variance
|
|
in millions of €
|
variance
|
|
Advanced wire products
|
870
|
+4%
|
|
1 463
|
+8%
|
|
Advanced materials
|
74
|
+17%
|
|
74
|
+17%
|
|
Advanced coatings
|
68
|
+2%
|
|
68
|
+2%
|
|
Intersegment sales and others
|
–3
|
–
|
|
20
|
–
|
|
Total
|
1 009
|
+4%
|
|
1 625
|
+7%
|
Consolidated and combined sales by geographical area
|
1 H 06
|
Consolidated sales
|
|
Combined sales
|
|
|
in millions of €
|
variance
|
|
in millions of €
|
variance
|
|
Europe
|
480
|
–2%
|
|
508
|
–4%
|
|
North America
|
347
|
+7%
|
|
368
|
+7%
|
|
Latin America
|
15
|
+6%
|
|
562
|
+16%
|
|
Asia
|
150
|
+18%
|
|
154
|
+18%
|
|
Rest of the world
|
17
|
+4%
|
|
33
|
+47%
|
|
Total
|
1 009
|
+4%
|
|
1 625
|
+7%
|
|
Key figures (in millions of €)
|
1 H 06
|
1 H 05
|
|
Consolidated sales
|
870
|
840
|
|
Operating result (EBIT) before non-recurring items
|
87
|
105
|
|
Operating result (EBIT)
|
85
|
105
|
|
Depreciation and amortization
|
45
|
39
|
|
EBITDA
|
130
|
145
|
|
EBIT margin on sales
|
9.8%
|
12.6%
|
|
EBITDA margin on sales
|
15.0%
|
17.3%
|
|
Combined sales
|
1 463
|
1 351
|
|
Share in the results of the joint ventures
|
28
|
28
|
Combined sales of advanced wire products were 8% higher
(wire Europe +0%, wire North America +1%, wire Latin America +21%, wire Asia +12%,
building products +2%, steel cord China +38%, steel cord others – 4% and
other advanced wire products +30%).
Sales benefited from positive impact of currency movements, most notably in Brazil and Chile.
Bekaert was faced with an increased pressure on prices in the mature markets in Europe and North America. At the same time, the company experienced rapidly rising costs of energy and certain raw materials such as zinc.
Demand for advanced wire products for the automotive sector remained weak in both Europe and North America. Bekaert faced more intense competition in the European steel cord market, especially in passenger tires. The company strengthened its position in North America with the acquisition of Delta Wire, a major supplier of bead wire for tire reinforcement. Bekaert is also investigating opportunities in Russia and is engaged in talks on exclusive cooperation with Uralkord.
Bekaert continued to streamline its product portfolio and optimize its production capacity. The wire plant in Muskegon (Michigan, USA) was closed. Through the acquisition of Conflandey Inc.’s business, Bekaert intends to consolidate its position in industrial staple wires and fine specialty wires on the North American market. Bekaert also acquired Cold Drawn Products Ltd., a supplier of specialized profile wires in Western Europe.
The company maintained a high level of activity in building products worldwide.
With 38% growth, Bekaert continued to advance its position on the Chinese steel cord market by building closer cooperative relationships with its customers, providing high-quality services and expanding its production capacity.
Including the acquisition of ECC Card Clothing in 2005, Bekaert increased sales in other advanced wire products by 30%.
Advanced materials
|
Key figures (in millions of €)
|
1 H 06
|
1 H 05
|
|
Sales
|
74
|
63
|
|
Operating result (EBIT) before non-recurring items
|
6
|
7
|
|
Operating result (EBIT)
|
6
|
5
|
|
Depreciation and amortization
|
3
|
3
|
|
EBITDA
|
9
|
8
|
|
EBIT margin on sales
|
7.7%
|
8.5%
|
|
EBITDA margin on sales
|
12.5%
|
12.7%
|
Sales of advanced materials recorded growth of 17%
(fiber technologies +34%, combustion technologies –4%, composites +34%).
Strong sales growth was reported in advanced materials. In fiber technologies, the company completed a large order for environment-friendly gas filtration. The acquisition of Southwest Screens & Filters SA also contributed to the higher sales. In combustion technologies, Bekaert completed fewer projects for the paper industry. The company recently acquired Aluheat in the Netherlands, which specializes in environment-friendly technologies used in condensing boilers for heating systems. In composites, the company boosted its sales significantly, despite the extremely competitive environment.
Advanced coatings
|
Key figures (in millions of €)
|
1 H 06
|
1 H 05
|
|
Sales
|
68
|
67
|
|
Operating result (EBIT) before non-recurring items
|
2
|
3
|
|
Operating result (EBIT)
|
1
|
–2
|
|
Depreciation and amortization
|
6
|
11
|
|
EBITDA
|
7
|
9
|
|
EBIT margin on sales
|
2.0%
|
–3.3%
|
|
EBITDA margin on sales
|
11.0%
|
13.3%
|
Sales of advanced coatings were up by 2%
(industrial coatings –13%, specialized films +13%).
Mainly due to the low level of project-driven activity in sputter products, sales in industrial coatings fell by 13%. Bekaert significantly strengthened its position in specialized films, both in the USA and Asia. Bekaert is focusing on the development of window films for buildings and vehicles and is withdrawing from ITO film for electronics applications.
Other activities
Besides the development of its sales organizations in growth markets, Bekaert has also enhanced its research and development internationally. As its level of activity in Asia expands, the company is committed to providing appropriate technological support for its customers. Working closely with government authorities, Bekaert is further developing its technology center in Jiangyin (Jiangsu province, China) enhancing its efficient, customer-oriented research unit.
As a major supplier of equipment for the company’s investment programs, the engineering department maintained a higher activity level.
Bekaert has sold its 50% share in the handling business, which has its origins in the Fencing Europe business segment and can no longer be considered part of the company’s core business.
Profitability
Bekaert achieved an operating result (EBIT) before non-recurring items of € 80 million, compared with € 94 million. EBIT margin on sales before non-recurring items was 7.9%.
Including non-recurring items (€ 4 million, as against € 9 million), the operating result (EBIT) amounted to € 76 million, compared with € 85 million. EBIT margin on sales was 7.5%.
The companies accounted for using the equity method contributed € 28 million to the result for the period as previous year.
The result for the period amounted to € 76 million, compared with € 138 million (including the contribution of the divestment of Bekaert Fencing NV of € 54 million). The result attributable to the Group amounted to € 75.5 million, compared with € 130 million.
Balance sheet
At 30 June 2006, equity represented 50% of total assets. Net debt amounted to € 345 million, and the gearing ratio (net debt to equity) was 31%.
Cash flow
EBITDA was € 132 million, compared with € 143 million. Cash flow attributable to the Group (continuing operations) amounted to € 132 million, compared with € 134 million.
Cash from operating activities amounted to € 63 million. Depreciation and amortization amounted to € 56 million. The change in operating working capital accounted for a cash outflow of € 62 million. Investing activities of the consolidated companies accounted for a cash outflow of € 81 million. Purchase of property, plant and equipment totaled € 68 million, mainly due to the expansion of the production capacity in China.
Under the authority vested by the General Meeting of Shareholders in the Board of Directors, 8 890 Bekaert shares were purchased in the first half of 2006 at an average price of € 76.16, which afterwards were transferred to the individuals who had exercised their options under the SOP2 stock option plan. Under the current SOP 2005-2009 stock option plan, 70 766 subscription rights were granted. In order to compensate the potential dilution that may result from such issue, the Board of Directors has decided to purchase, during the remaining part of the year, 70 766 Bekaert shares at a maximum purchase price of € 97.41 per share.
NV Bekaert SA (statutory accounts)
Sales amounted to € 301 million. The result for the period was € 72 million, compared with € 127 million, the difference being mostly due to the extraordinary result on the sale of Bekaert Fencing NV in 2005.
Outlook
In what are expected to remain volatile market conditions, Bekaert will continue its robust drive to add value to its customers, in the pursuit of its strategy of sustainable profitable growth.
Financial calendar
Third quarter trading update 2006
10 November 2006
Fourth quarter trading update 2006
16 February 2007
2006 results
16 March 2007
2006 annual report available on internet
24 April 2007
First quarter trading update 2007
9 May 2007
General Meeting of Shareholders
9 May 2007
Dividend payable (coupon nr. 8)
16 May 2007
2007 half year results
31 July 2007
These unaudited consolidated interim financial statements have been prepared in accordance with the recognition and measurement criteria of IFRSs as adopted 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 2005 annual consolidated financial statements.
This interim financial report is in compliance with the requirements issued by the CBFA and by Euronext .
Annex 1: Press release 28 July 2006
Consolidated income statement
|
(in thousands of €)
|
1 H 06
|
1 H 05
|
|
|
|
|
|
CONTINUING OPERATIONS
|
|
|
|
Sales
Cost of sales
Gross profit
|
1 009 398
– 811 151
198 247
|
970 584
– 757 874
212 710
|
|
|
|
|
|
Selling expenses
Administrative expenses
Research and development expenses
Other operating revenues
Other operating expenses
Operating result (EBIT) before non-recurring items
|
– 50 428
– 49 354
– 25 521
12 355
– 5 325
79 974
|
– 46 780
– 49 493
– 22 869
6 882
– 6 654
93 796
|
|
Non-recurring items
Operating result (EBIT)
|
– 4 000
75 974
|
– 8 529
85 267
|
|
|
|
|
|
Interest income and expenses
Other financial income and expenses
Financial result
Result from continuing operations before taxes
|
– 13 563
1 324
– 12 239
63 735
|
– 11 237
3 297
– 7 940
77 327
|
|
|
|
|
|
Income taxes
Result from continuing operations (consolidated companies)
|
– 15 537
48 198
|
– 21 622
55 705
|
|
|
|
|
|
Share in the results of joint ventures and associates
Result from continuing operations
|
27 820
76 018
|
27 715
83 420
|
|
|
|
|
|
DISCONTINUED OPERATIONS
|
|
|
|
Result from discontinued operations
|
-
|
54 087
|
|
|
|
|
|
RESULT FOR THE PERIOD
|
76 018
|
137 507
|
|
Attributable to :
- the Group
- minority interests
|
75 511
507
|
130 257
7 250
|
Annex 2 : Press release 28 July 2006
Consolidated balance sheet
|
(in thousands of €)
|
30 June 2006
|
31 Dec. 2005
|
|
Non-current assets
|
1 259 773
|
1 239 214
|
|
Intangible assets
Goodwill
Property, plant and equipment
Investments accounted for using the equity method
Other non-current assets
Deferred tax assets
|
56 722
77 850
794 452
251 258
74 367
5 124
|
45 524
79 879
799 762
238 366
67 920
7 763
|
|
Current assets
|
973 802
|
992 458
|
|
Inventories
Trade receivables
Other receivables
Short term deposits
Cash and cash equivalents
Other current assets
Assets classified as held for sale
|
380 393
393 533
40 530
65 335
79 670
10 539
3 802
|
348 330
354 225
54 401
90 453
132 248
8 999
3 802
|
|
TOTAL ASSETS
|
2 233 575
|
2 231 672
|
|
|
|
|
|
Equity
|
1 107 533
|
1 130 278
|
|
Share capital
Share premium
Hedging and revaluation reserves
Retained earnings
Cumulative translation adjustments
Equity attributable to the Group
Minority interests
|
172 900
9 271
1 381
991 911
– 113 158
1 062 305
45 228
|
172 900
9 271
1 582
976 141
– 80 679
1 079 215
51 063
|
|
Non-current liabilities
|
459 692
|
542 972
|
|
Employee benefit obligations
Provisions
Interest-bearing debt
Other non-current liabilities
Deferred tax liabilities
|
139 134
41 705
212 145
5 666
61 042
|
139 848
44 568
288 293
12 412
57 851
|
|
Current liabilities
|
666 350
|
558 422
|
|
Interest-bearing debt
Trade payables
Employee benefit obligations
Income taxes payable
Other current liabilities
Liabilities associated with assets classified as held for sale
|
309 459
201 803
88 352
13 638
53 098
-
|
245 588
187 369
73 475
10 182
41 808
-
|
|
TOTAL EQUITY AND LIABILITIES
|
2 233 575
|
2 231 672
|
Annex 3 : Press release 28 July 2006
Changes in Equity
|
(in thousands of €)
|
1 H 06
|
1 H 05
|
|
Opening balance
Result for the period attributable to the Group
Result for the period attributable to minority interests
Cumulative translation adjustments and others
Acquisitions of own shares
Dividends to shareholders of NV Bekaert SA
Dividends to minority interests
Other
Closing balance
|
1 130 278
75 511
507
– 32 479
– 270
– 64 591
– 7 613
6 190
1 107 533
|
958 539
130 257
7 250
62 560
– 33 218
– 43 747
– 8 263
– 13 004
1 060 374
|
Annex 4 : Press release 28 July 2006
Consolidated cash flow statement
|
(in thousands of €)
|
1 H 06
|
1 H 05
|
|
Operating result (EBIT)
Non-cash and investing items included in operating result
Income taxes
|
75 974
52 481
– 9 683
|
85 267
54 836
– 19 704
|
|
Gross cash from operating activities
|
118 772
|
120 399
|
|
Changes in operating working capital
Other operating cash flows
|
– 61 681
6 158
|
– 102 098
19 339
|
|
Cash from operating activities
|
63 249
|
37 640
|
|
New portfolio investments
Proceeds from disposals of investments
Dividends received from companies accounted for using the equity method
Purchase of intangible assets
Purchase of property, plant and equipment
Other investing cash flows
|
– 22 547
– 46
13 232
– 5 779
– 67 761
2 076
|
– 11 459
87 786
15 460
– 3 188
– 77 377
877
|
|
Cash from investing activities
|
– 80 825
|
12 099
|
|
Interests received/(paid)
Gross dividend paid
Other financing cash flows
|
– 12 990
– 55 205
34 841
|
– 5 125
– 43 969
49 362
|
|
Cash from financing activities
|
– 33 354
|
268
|
|
Net increase/(decrease) in cash and cash equivalents
|
– 50 930
|
50 007
|
|
Cash and cash equivalents at the beginning of the period
|
132 248
|
57 059
|
|
Effect of exchange rate fluctuations
|
– 1 648
|
2 001
|
|
Cash and cash equivalents at the end of the period
|
79 670
|
109 067
|
Annex 5 : Press release 28 July 2006
Additional key figures
|
(in € per share)
|
1 H 06
|
1 H 05
|
|
Number of existing shares at 30 June
Book value
Share price at 30 June
Weighted average number of shares
Basic
Diluted
Result for the period attributable to the Group
Continuing and discontinued operations
Basic
Diluted
Continuing operations only
Basic
Diluted
Cash flow attributable to the Group
Continuing operations only
Basic
Diluted
|
21 530 195
51.44
75.10
21 530 195
21 653 925
3.51
3.49
3.51
3.49
6.13
6.09
|
21 323 705
49.73
62.10
21 823 491
21 942 191
5.97
5.94
3.49
3.47
6.13
6.10
|
|
|
|
(in thousands of €)
|
|
Cash flow attributable to the Group (continuing operations)
EBITDA
Depreciation and amortization
Capital employed
Operating working capital
Net debt
EBIT on sales before non-recurring items
EBIT on sales
EBITDA on sales
Equity on total assets
Gearing (net debt on equity)
Average working capital on sales
|
131 965
132 428
56 454
1 413 755
480 929
345 147
7.9%
7.5%
13.1%
49.6%
31.2%
22.6%
|
133 764
142 537
57 269
1 380 279
486 103
327 973
9.7%
8.8%
14.7%
48.2%
30.9%
21.8%
|
|
|
|
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
Income taxes
Result for the period
|
300 613
17 472
52 261
69 733
1 072
70 805
724
71 529
|
326 775
20 916
43 579
64 495
67 424
131 919
– 4 524
127 395
|