Bekaert achieved consolidated sales of € 2.0 billion and combined sales of € 3.2 billion in 2006, an increase of 5% and 4%, respectively. [1] [2]
The consolidated sales’ increase was 1% from organic growth and 4% from the net movement in acquisitions and divestments.
Consolidated and combined sales by geographical area
2006 |
Consolidated sales |
|
Combined sales |
|
in millions of € |
variance |
|
in millions of € |
variance |
Europe |
977 |
+4% |
|
1 006 |
-1% |
North America |
597 |
-3% |
|
637 |
-4% |
Latin America |
32 |
-3% |
|
1 113 |
+6% |
Asia |
369 |
+26% |
|
386 |
+30% |
Other regions |
35 |
-2% |
|
53 |
-2% |
Total |
2 010 |
+5% |
|
3 195 |
+4% |
Advanced wire products
Key figures (in millions of €) |
2006 |
2005[1] |
Consolidated sales |
1 724 |
1 640 |
Operating result (EBIT) before non-recurring items |
192 |
198 |
Operating result (EBIT) |
180 |
182 |
Depreciation and amortization |
100 |
91 |
EBITDA |
281 |
273 |
EBIT margin on sales |
10.4% |
11.1% |
EBITDA margin on sales |
16.3% |
16.6% |
Combined sales |
2 890 |
2 750 |
Share in result of the joint ventures |
51 |
57 |
Combined sales of advanced wire products were 5% higher in 2006
(wire Europe +8%, wire North America -6%, wire Latin America +7%, wire Asia +7%,
building products +11%, steel cord China +54%, steel cord others -6 % and
other advanced wire products +7%).
Despite the heightened competition, Bekaert was able to advance its position in China significantly and posted a 54% sales growth in steel cord products, mainly for truck tire reinforcement. With an investment program of close to € 100 million Bekaert increased its production capacity in China, by extending the production plant in Weihai (Shandong province) and by building two new plants in very short order, in Jiangyin (Jiangsu province) and in Shenyang (Liaoning province). In 2007, Bekaert will maintain this level of investment as the Chinese market shows strong and sustained growth.
In the fall, Bekaert acquired a minority interest in Shougang Concord Century Holdings Ltd, a company which is listed on the Hong Kong Stock Exchange and whose activities include steel cord production. A framework was defined for closer cooperation in the provision of services and material supplies, which will further consolidate Bekaert’s position in China and speed up the joint introduction of top-quality products on this growing market.
In Europe, Bekaert recorded a lower demand for steel cord products. In North America, the company acquired Delta Wire Corporation, a major supplier of bead wire for tire reinforcement based in Clarksdale (Mississippi). The strike at Goodyear in the fourth quarter had a severe impact on the level of activity at the steel cord plants in the United States. In anticipation of a sustained downturn trend in demand on the North American market, Bekaert decided to close the plant in Dyersburg (Tennessee).
Demand for other wire products for the automotive sector weakened in the mature markets. Bekaert strengthened its position in wires for offshore applications with the acquisition of Cold Drawn Products Limited, a supplier of specialized profile wires in Western Europe. Bekaert also expanded its operations in Central Europe to consolidate its competitive position. In North America, there were clear signs of weakening of several economic sectors in which the company is active.
Helped by the mild winter, Bekaert was able to maintain a high level of activity in building products in Europe and Asia. In the other advanced wire products, the company expanded its carding business with the acquisition of ECC Card Clothing in 2005. The plant in Huddersfield (United Kingdom) was closed and manufacture of the short-staple products for textile machinery was integrated into the new plant in Wuxi (Jiangsu province, China).
Although volatility on raw material markets decreased in 2006, wire rod prices generally remained high, driven by the increasing global demand for steel. Prices of other raw materials, such as zinc, rose sharply. Higher energy costs also added to the pressure on margins.
The company recorded a higher level of activity in Latin America, but faced increasing competition from Asian imports and hence sustained pressure on prices. The performance benefited from a positive impact of currency movements, most notably in Brazil and Chile.
Advanced materials
Key figures (in millions of €) |
2006 |
20054 |
Sales |
156 |
141 |
Operating result (EBIT) before non-recurring items |
13 |
13 |
Operating result (EBIT) |
12 |
6 |
Depreciation and amortization |
6 |
14 |
EBITDA |
19 |
20 |
EBIT margin on sales |
7.7% |
3.9% |
EBITDA margin on sales |
12.3% |
14.1% |
Sales of advanced materials recorded growth of 11%
(fiber technologies +15%, combustion technologies +9%, composites +4%).
Bekaert achieved strong organic growth in fiber technologies. Performance also benefited from the acquisition in June 2005 of Southwest Screens & Filters SA (Belgium), which serves the industrial process filtration market.
In combustion technologies, Bekaert continued to advance its position in the market for environment-friendly burners for residential heating systems. The recent acquisition of the Dutch Aluheat B.V., which specializes in the latest technologies for condensing boilers, also contributed to growth, but 2006 was a difficult year for the project-based industrial burner system activities.
In composites, the company maintained its position in an extremely competitive environment.
4 The key figures for the business segments were restated following the introduction of a more refined method of allocating results to the various business segments. This did not affect the Group’s consolidated figures.
Advanced coatings
Key figures (in millions of €) |
2006 |
20054 |
Sales |
136 |
133 |
Operating result (EBIT) before non-recurring items |
3 |
3 |
Operating result (EBIT) |
1 |
-4 |
Depreciation and amortization |
11 |
18 |
EBITDA |
12 |
13 |
EBIT margin on sales |
0.6% |
-3.2% |
EBITDA margin on sales |
8.5% |
10.1% |
Sales of advanced coatings were up by 3% in 2006
(industrial coatings +1%, specialized films +4%).
After a difficult first half, the industrial coatings business picked up in the second half of the year. In specialized films, Bekaert’s performance was adversely affected by currency movements. By increasing its sales effort, however, the company recorded sustained growth, most notably in North America and Asia.
Other activities
As well as expanding its sales organizations, Bekaert also continued to invest heavily in research and development. In order to be able to offer its customers appropriate technological support as its business in Asia grows, Bekaert is further developing its technology center in Jiangyin (Jiangsu province, China) into an efficient, customer-focused research facility.
The engineering department, which is a major supplier of machinery for the company’s investment programs, maintained a high level of activity.
Bekaert sold its 50% share in the handling business, which had its origin in the Fencing Europe business segment and was no longer considered part of its core business.
4 The key figures for the business segments were restated following the introduction of a more refined method of allocating results to the various business segments. This did not affect the Group’s consolidated figures.
Profitability
Bekaert posted an operating result (EBIT) before non-recurring items of € 163 million, compared with € 168 million. EBIT margin on sales before non-recurring items was 8.1%. Including non-recurring items (€ 17 million, against € 32 million), the operating result (EBIT) amounted to € 146 million, compared with € 136 million. EBIT margin on sales was 7.3%.
Income taxes amounted to € 18 million, compared with € 30 million.
The companies accounted for using the equity method contributed € 51 million to the result for the period, compared with € 57 million.
The result for the period amounted to € 147 million, compared with € 202 million, which included the contribution of the divestment of Bekaert Fencing NV of € 54 million. The result for the period attributable to the Group amounted to € 142 million, compared with € 190 million.
Balance sheet
As at 31 December 2006, equity represented 51% of total assets. Net debt amounted to € 375 million and the gearing ratio (net debt to equity) was 33%.
Cash flow
EBITDA increased to € 262 million, compared with € 257 million. Cash flow
attributable to the Group (continuing operations) amounted to €
261 million, compared with € 257 million.
Cash from operating activities amounted to € 193 million. Depreciation and amortization was € 116 million. Operating working capital amounted to € 452 million.
Investments in respect of the consolidated companies represented a cash outflow of € 157 million. Purchase of property, plant and equipment totaled € 153 million, mainly due to the expansion of production capacity in China.
Under the authority vested by the General Meeting of Shareholders in the Board of Directors, a total of 636 656 Bekaert shares were repurchased in 2006 at an average price of € 88.72 per share. Of these, 8 890 were transferred to the individuals who had exercised options under the SOP2 stock option plan and the remainder were cancelled, both to compensate for potential dilution due to the future exercise of 70 766 subscription rights granted under the current SOP 2005-2009 stock option plan and to further optimize the company’s debt structure. Bekaert purchased, at an average price of € 94.20 per share, and subsequently cancelled 546 779 shares in early 2007, as a consequence of which the company’s share capital of € 173 300 000 is represented as at 26 February 2007 by 20 400 000 shares.
NV Bekaert SA (statutory accounts)
Sales amounted to € 574 million. The result for the period was € 60 million, compared with € 131 million. The decrease mainly reflects the extraordinary profit generated in 2005 by the sale of Bekaert Fencing NV.
Dividend
In the light of the company’s strong performance in 2006 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 € 2.50 per share, which represents an increase of the basic amount by 25%. If this proposal is accepted, the net dividend per share will amount to € 1.875 and the net dividend on shares with VVPR strip, giving entitlement to reduced withholding tax of 15%, will be € 2.125 per share. The dividend will be payable as of 16 May 2007.
Outlook
Bekaert has made a good start in 2007, but expects raw material prices to become more volatile again this year. Bekaert will continue to step up the pace of investment in order to strengthen its market and technological leadership and to participate in the growth in the BRIC countries.
Financial calendar
2006 annual report available on the 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
Third quarter trading update 2007 9 November 2007
Fourth quarter trading update 2007 15 February 2008
2007 results 14 March 2008
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 IFRS as adopted by the European Union.
Annex 1: Press release 16 March 2007
Consolidated income statement
(in thousands of €) |
2006 |
2005 |
|
|
|
CONTINUING OPERATIONS |
|
|
Sales Cost of sales Gross profit |
2 009 587 -1 614 703 394 884 |
1 914 259 -1 521 969 392 290 |
|
|
|
Selling expenses Administrative expenses Research and development expenses Other operating revenues Other operating expenses Operating result (EBIT) before non-recurring items |
-96 697 -95 314 -49 562 23 279 -13 862 162 728 |
-92 445 -99 593 -44 975 28 080 -15 490 167 867 |
Non-recurring items Operating result (EBIT) |
-16 794 145 934 |
-31 601 136 266 |
|
|
|
Interest income
Interest expense Other financial income and expenses Result from continuing operations before taxes |
3 735 -28 867 -6 557 114 245 |
5 859 -32 791 11 661 120 995 |
|
|
|
Income taxes Result from continuing operations (consolidated companies) |
-18 125 96 120 |
-30 269 90 726 |
|
|
|
Share in the results of joint ventures and associates Result from continuing operations |
50 991 147 111 |
56 939 147 665 |
|
|
|
DISCONTINUED OPERATIONS |
|
|
Result from discontinued operations |
- |
54 187 |
|
|
|
RESULT FOR THE PERIOD |
147 111 |
201 852 |
Attributable to : - the Group - minority interests |
142 340 4 771 |
189 875 11 977 |
Annex 2 : Press release 16 March 2007
Consolidated balance sheet
(in thousands of €) |
31 Dec. 2006 |
31 Dec. 2005 |
Non-current assets |
1 302 581 |
1 239 214 |
Intangible assets Goodwill Property, plant and equipment Investments accounted for using the equity method Other non-current assets Deferred tax assets |
57 510 76 965 824 158 237 747 90 591 15 610 |
45 524 79 879 799 762 238 366 67 920 7 763 |
Current assets |
914 269 |
992 458 |
Inventories Trade receivables Other receivables Short-term deposits Cash and cash equivalents Other current assets Assets classified as held for sale |
368 764 398 928 53 814 29 019 52 139 9 918 1 687 |
348 330 354 225 54 401 90 453 132 248 8 999 3 802 |
TOTAL ASSETS |
2 216 850 |
2 231 672 |
|
|
|
Equity |
1 121 347 |
1 130 278 |
Share capital Share premium Hedging and revaluation reserves Retained earnings Cumulative translation adjustments Equity attributable to the Group Minority interests |
173 300 11 032 -1 553 1 000 473 -110 755 1 072 497 48 850 |
172 900 9 271 1 582 976 141 -80 679 1 079 215 51 063 |
Non-current liabilities |
501 006 |
533 558 |
Employee benefit obligations Provisions Interest-bearing debt Other non-current liabilities Deferred tax liabilities |
135 589 26 664 274 373 3 845 60 535 |
139 848 35 154 288 293 12 412 57 851 |
Current liabilities |
594 497 |
567 836 |
Interest-bearing debt Trade payables Employee benefit obligations Provisions Income taxes payable Other current liabilities Liabilities associated with assets classified as held for sale |
217 952 227 827 76 042 13 379 16 270 43 027 - |
245 588 187 369 73 475 9 414 10 182 41 808 - |
TOTAL EQUITY AND LIABILITIES |
2 216 850 |
2 231 672 |
Annex 3 : Press release 16 March 2006
Changes in Equity
(in thousands of €) |
2006 |
2005 |
Opening balance Result for the period as reported Result recognized directly in equity Creation of new shares Acquisitions of own shares Dividends to shareholders of NV Bekaert SA Dividends to minority interests Other Closing balance |
1 130 278 147 111 -32 323 2 161 -56 078 -64 591 -7 613 2 402 1 121 347 |
958 539 201 852 61 719 10 922 -35 190 -43 747 -8 558 -15 259 1 130 278 |
Annex 4 : Press release 16 March 2007
Consolidated cash flow statement
(in thousands of €) |
2006 |
2005 |
Operating result (EBIT) Non-cash and investing items included in operating result Income taxes paid |
145 934 103 934 -16 822 |
136 266 105 815 -25 516 |
Gross cash from operating activities |
233 046 |
216 565 |
Change in operating working capital Other operating cash flows |
-31 947 -8 429 |
-32 283 -5 479 |
Cash from operating activities |
192 670 |
178 803 |
New portfolio investments Proceeds from disposals of investments Dividends received from joint ventures and associates Purchase of intangible assets Purchase of property, plant and equipment Other investing cash flows |
-42 725 - 35 171 -8 555 -152 781 11 429 |
-21 190 86 456 43 590 -9 730 -141 886 6 495 |
Cash from investing activities |
-157 461 |
-36 265 |
Interest received Interest paid Gross dividend paid Other financing cash flows |
3 735 -25 773 -74 140 -16 992 |
5 859 -20 626 -52 196 -3 717 |
Cash from financing activities |
-113 170 |
-70 680 |
Net increase or decrease (-) in cash and cash equivalents |
-77 961 |
71 858 |
Cash and cash equivalents at the beginning of the period |
132 248 |
57 059 |
Effect of exchange rate fluctuations |
-2 148 |
3 331 |
Cash and cash equivalents at the end of the period |
52 139 |
132 248 |
Annex 5 : Press release 16 March 2007
Additional key figures
(in € per share) |
2006 |
2005 |
Number of existing shares at 31 December Book value Share price at 31 December 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 |
20 946 779 53.53 94.70 21 491 565 21 596 843 6.62 6.59 6.62 6.59 12.18 12.12 |
21 530 195 52.50 78.95 21 633 346 21 707 875 8.78 8.75 6.27 6.25 11.87 11.83 |
|
(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 |
261 855 262 156 116 222 1 411 968 451 647 374 744 8.1% 7.3% 13.0% 50.6% 33.4% 22.0% |
256 857 257 434 121 168 1 359 941 430 975 271 692 8.8% 7.1% 13.4% 50.6% 24.0% 20.6% |
|
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 Income taxes Result for the period |
574 078 47 695 63 429 111 124 -48 643 62 481 -2 313 60 168 |
600 542 21 507 56 674 78 181 54 581 132 762 -1 296 131 466 |
|
|
|
|