31 July 2007
Half year results 2007 - Bekaert posts strong results
– Record sales in first half
– Steel cord China: +53%
– Difficult market conditions in North America
– 8.5% EBIT margin on sales before non-recurring items, compared with 7.9%
8.1% EBIT margin on sales, compared with 7.5%
– Earnings per share: € 3.60 compared with € 3.51 (continuing operations)
Sales
In the first half of 2007, Bekaert achieved consolidated sales of € 1.1 billion and combined sales of € 1.7 billion, an increase of 6% and 3% respectively.[1] [2]
The consolidated sales’ increase was 6% from organic growth and 2% from the net movement in acquisitions and divestments. Currency movements had a negative impact of 2%.
Consolidated and combined sales by business segment
1 H 07 |
Consolidated sales |
|
Combined sales |
|
in millions of € |
variance |
|
in millions of € |
variance |
Advanced wire products |
897 |
+5% |
|
1 508 |
+4% |
Advanced materials |
101 |
+15% |
|
101 |
+15% |
Advanced coatings |
64 |
-6% |
|
64 |
-6% |
Intersegment sales and others |
3 |
– |
|
-2 |
– |
Total |
1 065 |
+6% |
|
1 671 |
+3% |
Consolidated and combined sales by geographical area
1 H 07 |
Consolidated sales |
|
Combined sales |
|
in millions of € |
variance |
|
in millions of € |
variance |
Europe |
536 |
+12% |
|
541 |
+7% |
North America |
273 |
-18% |
|
292 |
-17% |
Latin America |
18 |
+17% |
|
587 |
+4% |
Asia |
217 |
+32% |
|
223 |
+29% |
Other regions |
21 |
+25% |
|
28 |
+9% |
Total |
1 065 |
+6% |
|
1 671 |
+3% |
Advanced wire products
Key figures (in millions of €) |
1 H 07 |
1 H 06 |
Consolidated sales |
897 |
852 |
Operating result (EBIT) before non-recurring items |
108 |
94 |
Operating result (EBIT) |
105 |
92 |
Depreciation and amortization |
50 |
48 |
EBITDA |
155 |
140 |
EBIT margin on sales |
11.7% |
10.8% |
EBITDA margin on sales |
17.2% |
16.4% |
Combined sales |
1 508 |
1 445 |
Share in result of the joint ventures |
23 |
28 |
Combined sales growth by activity platform
Wire Europe Wire North America Wire Latin America Wire Asia |
|
Building products Steel cord China Steel cord others Other advanced wire products |
+13% +53% -9% -2% |
In the first half of 2007 combined sales of advanced wire products were 4% higher.
The prices of wire rod, Bekaert’s most important raw material, remained generally high, driven by the strong global demand for steel. At the same time, Bekaert faced sustained price pressure for most of its advanced wire products. The company continues its efforts to constantly improve process and production efficiency.
In China, where car and truck tire production again saw rapid growth, Bekaert significantly reinforced its leadership position. In the first half of 2007, the company invested another € 50 million in expanding its production capacity and extending its product portfolio. Bekaert recorded a 53% sales growth in its steel cord China activity platform.
Bekaert maintained its position in Europe, but sales of steel cord products in North America were lower.
The effect of a higher level of activity in Latin America was offset by the impact of currency movements and increased price pressure. In Chile in particular, the company faced an increase in Asian imports.
Demand for Bekaert wire products for the automotive, construction and agricultural markets weakened in North America, while the company recorded sustained demand in Europe. 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.
Benefiting from the mild winter and spring, Bekaert maintained a strong performance for building products in Europe and Asia.
Advanced materials
Key figures (in millions of €) |
1 H 07 |
1 H 064 |
Sales |
101 |
87 |
Operating result (EBIT) before non-recurring items |
10 |
6 |
Operating result (EBIT) |
10 |
6 |
Depreciation and amortization |
4 |
5 |
EBITDA |
14 |
11 |
EBIT margin on sales |
9.7% |
7.0% |
EBITDA margin on sales |
13.5% |
12.2% |
Combined sales growth by activity platform
Stainless Fiber technologies |
|
Combustion technologies Composites |
+14% -19% |
In the first half of 2007 sales of advanced materials recorded growth of 15%.
The stainless activities were substantially affected by the unprecedented rise in the prices of nickel-based wire rod in the first half of the year. In fiber technologies, Bekaert posted a strong sales growth, helped by a substantial single order in industrial process filtration.
Bekaert continued to advance its position in combustion technologies with its environment-friendly burners for domestic heating systems. The acquisition in 2006 of Aluheat B.V. in the Netherlands, which specializes in the latest technologies for condensing boilers also contributed to this growth. Less projects were registered for industrial burner systems.
In composites, Bekaert remains confronted with an extremely competitive market environment.
4 Following the internal repositioning of its advanced materials’ activities, Bekaert is reporting on its activities in stainless as a
separate activity platform within the advanced materials business segment as from 1 January 2007. Previously, stainless was
part of wire Europe. The figures for 2006 have been restated accordingly.
Advanced coatings
Key figures (in millions of €) |
1 H 07 |
1 H 06 |
Sales |
64 |
68 |
Operating result (EBIT) before non-recurring items |
-1 |
2 |
Operating result (EBIT) |
-1 |
1 |
Depreciation and amortization |
5 |
6 |
EBITDA |
4 |
7 |
EBIT margin on sales |
-1.1% |
2.1% |
EBITDA margin on sales |
6.9% |
11.0% |
Combined sales growth by activity platform
In the first half of 2007 sales of advanced coatings were down by 6%.
Sales in industrial coatings were higher for both sputtered products and diamond-like coatings. The weak construction and automotive sectors in North America adversely impacted sales in specialized films. Additionally currency movements had a negative impact. Due to sustained sales efforts, the company generated a sales growth in Europe and Asia.
Other activities
As well as further optimizing its sales organizations, Bekaert also continued to invest heavily in research and development. The company is also further developing its technology center in Jiangyin (Jiangsu province, China) into a state-of-the-art, customer-focused research facility, in support of its growing Asian business.
The engineering department, which is a major supplier of machinery for the company’s investment programs, maintained a high level of activity.
The divestment in 2006 of the 50% share in the handling business, had an impact of -2% on the combined sales of the company.
Profitability
Bekaert posted an operating result (EBIT) before non-recurring items of € 90 million, compared with € 80 million. EBIT margin on sales before non-recurring items was 8.5%, compared with 7.9%. Including non-recurring items of € 4 million, the operating result (EBIT) totaled € 87 million, compared with € 76 million. EBIT margin on sales was 8.1%, compared with 7.5%.
Income taxes were € 15 million, compared with € 16 million.
The share in the result of the joint ventures and associates amounted to € 23 million, compared with € 28 million.
The result for the period was € 78 million, compared with € 76 million. Taking into account the result attributable to minority interests (€ 6 million compared with € 1 million), the result for the period attributable to the Group totaled € 73 million, compared with € 76 million.
Balance sheet
At 30 June 2007, equity represented 46% of total assets. Net debt amounted to € 493 million and the gearing ratio (net debt to equity) was 47%.
Cash flow
EBITDA increased to € 145 million, compared with € 132 million. Cash flow attributable to the Group (continuing operations) amounted to € 131 million, compared with € 132 million.
Cash from operating activities amounted to € 76 million. Depreciation and amortization was € 58 million. Operating working capital increased to € 504 million.
Investments in respect of the consolidated companies represented a cash outflow of € 48 million. Purchase of property, plant and equipment totaled € 73 million, mainly due to the expansion of production capacity in China, while received dividends amounted to € 27 million.
To further optimize the company’s balance structure, Bekaert purchased 1 110 660 shares, of which 546 779 were cancelled in the first half of 2007.
On 4 July 2007, Bekaert cancelled the remaining 563 881 shares. Together with the issue of
40 507 new shares, following the exercise of subscription rights, the number of outstanding shares of the company totals 19 876 626.
NV Bekaert SA (statutory accounts)
Sales amounted to € 315 million, compared with € 301 million. The result for the period was € 72 million, equal to the same period in 2006.
Outlook
Worldwide Bekaert expects raw material prices to stay high, yet with some regional variances.
In North America, market conditions remain challenging, notably in the automotive, construction and agricultural sectors. In Latin America, the company will continue its efforts in order to maintain its leadership positions.
Bekaert will further sustain its investment programs, mainly in Asia and will remain focused on worldwide operational excellence and innovation for maximum support of the company’s growth.
Financial calendar
Third quarter trading update 2007 9 November 2007
Fourth quarter trading update 2007 15 February 2008
2007 results 14 March 2008
2007 annual report available on the Internet 24 April 2008
First quarter trading update 2008 14 May 2008
General Meeting of Shareholders 14 May 2008
Dividend payable (coupon nr. 9) 21 May 2008
2008 half year results 1 August 2008
These unaudited consolidated interim financial statements have been prepared in accordance with the recognition and measurement criteria of IFRS 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 2006 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 31 July 2007
Consolidated income statement
(in thousands of €) |
1 H 07 |
1 H 06 |
|
|
|
CONTINUING OPERATIONS |
|
|
Sales Cost of sales Gross profit |
1 065 105 -851 093 214 012 |
1 009 398 -811 151 198 247 |
|
|
|
Selling expenses Administrative expenses Research and development expenses Other operating revenues Other operating expenses Operating result (EBIT) before non-recurring items |
-48 858 -47 255 -30 562 8 409 -5 422 90 324 |
-50 428 -49 354 -25 521 12 355 -5 325 79 974 |
Non-recurring items Operating result (EBIT) |
-3 777 86 547 |
-4 000 75 974 |
|
|
|
Interest income
Interest expense Other financial income and expenses Result from continuing operations before taxes |
891 -17 633 80 69 885 |
2 147 -15 710 1 324 63 735 |
|
|
|
Income taxes Result from continuing operations (consolidated companies) |
-14 864 55 021 |
-15 537 48 198 |
|
|
|
Share in the results of joint ventures and associates Result from continuing operations |
23 401 78 422 |
27 820 76 018 |
|
|
|
DISCONTINUED OPERATIONS |
|
|
Result from discontinued operations |
- |
- |
|
|
|
RESULT FOR THE PERIOD |
78 422 |
76 018 |
Attributable to : - the Group - minority interests |
72 640 5 782 |
75 511 507 |
Annex 2 : Press release 31 July 2007
Consolidated balance sheet
(in thousands of €) |
30 June 2007 |
31 Dec. 2006 |
Non-current assets |
1 300 969 |
1 302 581 |
Intangible assets Goodwill Property, plant and equipment Investments accounted for using the equity method Other non-current assets Deferred tax assets |
56 391 75 848 841 701 246 633 63 425 16 971 |
57 510 76 965 824 158 237 747 90 591 15 610 |
Current assets |
1 009 465 |
914 269 |
Inventories Trade receivables Other receivables Short-term deposits Cash and cash equivalents Other current assets Assets classified as held for sale |
422 743 424 371 50 355 10 516 71 846 27 989 1 645 |
368 764 398 928 53 814 29 019 52 139 9 918 1 687 |
TOTAL ASSETS |
2 310 434 |
2 216 850 |
|
|
|
Equity |
1 056 893 |
1 121 347 |
Share capital Share premium Hedging and revaluation reserves Retained earnings Cumulative translation adjustments Equity attributable to the Group Minority interests |
173 300 11 032 4 097 919 095 -96 171 1 011 353 45 540 |
173 300 11 032 -1 553 1 000 473 -110 755 1 072 497 48 850 |
Non-current liabilities |
538 691 |
501 006 |
Employee benefit obligations Provisions Interest-bearing debt Other non-current liabilities Deferred tax liabilities |
134 895 25 667 317 177 4 099 56 853 |
135 589 26 664 274 373 3 845 60 535 |
Current liabilities |
714 850 |
594 497 |
Interest-bearing debt Trade payables Employee benefit obligations Provisions Income taxes payable Other current liabilities Liabilities associated with assets classified as held for sale |
295 870 251 847 83 213 11 926 21 891 50 103 - |
217 952 227 827 76 042 13 379 16 270 43 027 - |
TOTAL EQUITY AND LIABILITIES |
2 310 434 |
2 216 850 |