Key figures (in millions of €) |
2007 |
2008 |
Sales |
124 |
121 |
Operating result (EBIT) before non-recurring items Operating result (EBIT) |
3 -1 |
4 3 |
Depreciation and amortization |
12 |
8 |
EBITDA |
11 |
11 |
EBITDA margin on sales |
9.0% |
9.2% |
Combined sales by activity platform
Industrial coatings |
|
|
-0.1% |
Share in combined sales by activity platform
Both in terms of sales and results, the advanced coatings segment showed comparable year-on-year figures in the aggregate. Industrial coatings was particularly impacted by the economic downturn in the last months of the year, while the nominal growth of specialized film coatings (+6%) was canceled out entirely by exchange rate movements. Solid growth in industrial film applications compensated for the declining demand from residential and car film markets.
Other activities
Bekaert further increased its investments in research and development, totaling € 68.5 million in 2008 (+21%). These R&D expenses applied to the activities of the technology centers in Deerlijk (Belgium) and in Jiangyin (China). The engineering department, which is the main supplier of proprietary machinery for the company's investment programs, operated at a high activity level during the first nine months of the year, and adjusted to changing market circumstances and the subsequent investment spread from the fourth quarter onwards.
Financial Review
Continuing strong dividend
In the light of Bekaert’s strong performance in 2008 and confidence in its future, the Board of Directors will propose that the General Meeting of Shareholders on 13 May 2009 approve the distribution of a gross dividend of € 2.80 per share, compared with € 2.76 last year. If this proposal is accepted, the net dividend per share will amount to € 2.10 and the net dividend on shares with VVPR strip, entitling the holder to reduced withholding tax of 15%, will be € 2.38. The dividend will be payable as from 20 May 2009.
Non-recurring items
Non-recurring expenses totaled € 83.7 million and included provisions for the restructuring of the Belgian manufacturing operations of advanced wire products (€ 42.5 million); for production platform moves within Europe; for environmental liabilities; and for several asset impairments, including those related to carding solutions (other advanced wire products: € 10 million) and several activities within the advanced materials segment (€ 18.8 million), applying mainly to stainless and combustion technologies.
Excellent financial results
Bekaert achieved a record operating result (EBIT) before non-recurring income and expenses of € 294 million, compared with € 186 million for the financial year 2007 (+58%). This equates to an EBIT margin on sales before non-recurring income and expenses of 11.1%, compared with 8.6% last year. Including non-recurring items, EBIT was € 210 million (2007: € 175 million), representing an EBIT margin on sales of 7.9% compared with 8.0%.
EBITDA reached a record high € 412 million, compared with € 299 million in 2007 (+38%).
The increase in interest charges was due to the net debt position incurred to finance major capital expenditures and an increased working capital level in line with growth. Taxation on profit amounted to € 25 million compared with € 19 million in 2007.
Notwithstanding the transfer of Vicson and Proalco to the consolidated perimeter, the share in the results of joint ventures and associated companies totaled € 56 million (2007: € 47 million). This increase, reflecting the higher results posted by joint ventures, was mainly driven by the operations
in Brazil.
The result for the period therefore attained € 192 million, compared with € 162 million in 2007. After third-party minority interests (€ 17.7 million as against € 8.7 million), the result for the period attributable to the Group was € 174 million, compared with € 153 million last year.
Bekaert ended the year with earnings per share of € 8.83 (2007: € 7.63), an increase of 16%.
Before non-recurring costs the earnings per share amounted to € 13.08 compared with € 8.22
a year ago, a significant increase of 59%.
Cash flow attributable to the Group totaled € 376 million as against € 277 million in 2007.
Strong balance sheet
As at 31 December 2008, shareholders’ equity represented 44% of total assets. Net debt increased to € 627 million (2007: € 448 million), mainly due to capital expenditure programs and increased working capital in line with growth. The gearing ratio (net debt to equity) was 53.5%.
Bekaert repurchased 238 800 of its own shares in 2008. The company canceled 161 000 shares, kept 55 000 in portfolio, and delivered 22 800 to option holders. This reduced the total number of outstanding shares to 19 783 625 as at year-end 2008.
Cash flow statement
Net cash flow from operating activities amounted to € 222 million (2007: € 221 million). Operating working capital increased by € 162 million to € 653 million, mainly reflecting organic growth. Cash flows from investing activities amounted to € 243 million, of which € 239 million from expansions in Asia, Slovakia and Belgium.
Acquisitions represented an investment of € 44 million (mainly the acquisition of the remaining 50% of the shares in Beksa Celik Kord Sanayi ve Ticaret AS, Turkey). Dividends received from joint ventures amounted to € 46 million.
The share buy-back program represented a cash outflow of € 20 million.
NV Bekaert SA (statutory accounts)
The Belgium based entity’s sales amounted to € 608 million, compared with € 606 million in 2007. Operating profit for the period was € 0.6 million, compared with € 46.3 million last year. Increased energy and labor costs, rising raw materials and consumables prices, along with asset impairments and provisions for environmental liabilities and restructuring plans explained the strong decline in profit.
Outlook
Consolidated sales from January onwards will include the revenues of Ideal Alambrec (Ecuador) and Prodac (Peru), as the regional holding company covering the businesses in Ecuador, Peru, Venezuela and Colombia came into effect on 1 January 2009. Bekaert holds 80% of the shares in this holding company. Consequently, all respective entities will be included in the consolidated perimeter as of the start of 2009.
Short-term visibility on market developments is extremely limited. However, Bekaert does not expect the current activity slowdown to last on a company-wide scale. The company's proven resilience now shows in its flexibility to optimally manage production capacity and capital spending in line with demand and to limit working capital and cost levels accordingly.
Notwithstanding the economic circumstances, Bekaert is confident that its broad geographical coverage with a strong presence in emerging markets, as well as its growing portfolio of product innovations and strong balance sheet, will be of strategic importance. Bekaert will closely monitor market developments and customer requirements, so advantage can be taken of opportunities the moment they arise.
Financial calendar
2008 annual report available on Internet 17 April 2009
First quarter trading update 2009 13 May 2009
General Meeting of Shareholders 13 May 2009
Dividend payable (coupon n° 10) 20 May 2009
2009 half-year results 31 July 2009
Third quarter trading update 2009 13 November 2009
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 and the same accounting policies and methods of computation as in the December 31, 2007 annual consolidated financial statements were used.