Full Year Results 2016
Watch the webcast on the 2016 results Shareholders' guide
Bekaert delivers strong profit growth as it moves into higher gear
8.2% Underlying EBIT, up 32% to € 305 million - Underlying EBITDA +18%, exceeding half a billion euro
Highlights1
Bekaert achieved strong margin and volume growth throughout 2016. An overall stronger business portfolio and the growing impact from the various global transformation programs boosted the company’s profit performance and cash generation. The underlying EBIT2 increased by 32% to € 305 million, representing a margin on sales of 8.2%. Our underlying EBITDA totaled € 513 million, up 18% from last year and reflecting a margin of 13.8%. We achieved an improvement in ROCE (from 9.1 to 11.8% underlying) which resulted in ROIC (8.3) exceeding the WACC (8.0), allowing us to return to a value creative position.
- Consolidated sales of € 3.7 billion (+1%) and combined sales of € 4.4 billion (-1%)
- Currency impact: € -65 million (-2%) on consolidated sales; € -96 million (-2%) on combined sales
- Gross profit of € 690 million (18.6% margin) compared with € 598 million (16.3% margin) in 2015
- Underlying EBIT of € 305 million (8.2% margin) compared with € 231 million (6.3% margin)
- EBIT of € 260 million (7.0% margin) compared with € 219 million (6.0% margin)
- Underlying EBITDA of € 513 million (13.8% margin) compared with € 436 million (11.9% margin)
- Underlying ROCE of 11.8% compared with 9.1%
- Net debt of € 1 068 million, including € 279 million acquisition impact of the Bridon merger deal. Net debt on underlying EBITDA was 2.1, slightly higher than last year (1.9). Excluding the Bridon impact, net debt on underlying EBITDA dropped to 1.5, reflecting the strong cash generation of Bekaert in 2016
- EPS: € 1.87 compared with € 1.82
1 All comparisons are made relative to the financial year 2015.
2 Definitions of financial parameters: Annex 9, page 22.
Outlook
Firm demand from automotive markets has been a consistent driver of value creating growth throughout 2016. Despite growing uncertainty in Europe and in global markets driven by recent political events, we project automotive markets to continue to perform well in the first half of 2017. We expect demand from oil and gas markets to remain weak due to the continuing low planned investment activity in extraction projects. We expect a strong start to the year in solar markets, ahead of changes to feed-in tariffs in China which will create major volatility in demand later in the year.
In 2016 we have made great progress on our transformation journey towards unlocking Bekaert’s full potential. Despite some tough economic headwinds, especially from oil and gas markets and in Latin America, our transformation programs have been impactful.
- Bekaert has made a clear prioritization of where to grow and how to improve the business portfolio. We have narrowed our focus on those parts of the business where we can leverage our strengths and drive value creating growth.
- The global transformational programs supporting the company’s vision and strategies are expected to gain further ground over the coming years. They include a manufacturing excellence program aimed at gaining competitiveness by improving the company’s safety, quality, delivery performance and productivity; a customer excellence program to drive growth and margin performance; and a supply chain excellence program to improve our planning and inventory management capability. These programs are expected to increasingly underpin our move towards a sustainable higher level performance.
The results of 2016 are a reflection of what we are capable of and have made us more confident and more ambitious about our future. We believe we will broadly repeat in 2017 our current strong underlying EBIT level as we expect our transformation programs will compensate for the adverse effects of changes to our consolidation scope, among which the full-year integration of the Bridon-Bekaert Ropes Group at still lower than average margins.
We want to build from what we have been achieving. Our current performance encourages us to extend our transformation programs and take more significant steps going forward. While there will be cycles, and provided there will be no exceptional, unforeseeable circumstances, the improvements we are making within our business will move our underlying EBIT margin trend towards 10% over the next 5 years.
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