Third quarter trading update 2016
Bekaert lifts full-year REBIT margin estimate to top-end of 2016 target range
We project continued strong demand from automotive and construction markets in the last quarter of the year and anticipate a moderate pick-up in demand from solar markets after the Q3 decline. A reduction in feed-in tariffs is expected in China in April 2017 and demand is projected to strengthen ahead of that change. Oil and gas markets will remain weak.
As anticipated in our previous outlook, we are beginning to see adverse market conditions in several sectors: the uncertainty in the European market has been felt over the last couple of months in terms of order intake across many applications and, combined with normal seasonality, we believe this will continue into the first quarter of 2017. In Latin America, despite the success we have had in offsetting slow markets over the last few quarters, the impact of cost and pricing actions will become more limited, particularly as currencies strengthen. In North America, we expect normal seasonality impacts in Q4, and believe there will be more positive growth into 2017 as infrastructure spend and 'made in America' begin to impact. In Asia we anticipate the current strength to continue in Q4 and into 2017, particularly in the automotive sector.
We remain confident we will continue to outperform the market environment. Bekaert's actions to drive value creation are gaining impact in implementation scope and speed. The manufacturing excellence program aimed at gaining competitiveness by optimizing the company's safety, quality, delivery performance and productivity is accelerating globally. The recently launched customer excellence program aimed at driving growth and margin performance has begun to show its potential through successful pilot programs.
We believe that our transformational excellence programs will continue to underpin our move towards a sustainable higher level performance. Confident of their impact, we are revising our previous target range (between 7% and 8% REBIT) for full year 2016 and believe we will achieve between 7.5% and 8% REBIT margin on sales.