2006-07-28



 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%

 
 

Advanced wire products

 

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

 

 

 

 

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