Annual results 2006
16 March 2007
Highlights 2006
Bekaert posts strong results in increasingly competitive global markets
1
-
5% sales growth
-
54% growth for steel cord China
-
Mature markets remain challenging
-
8.1% EBIT margin on sales before non-recurring items
-
7.3% EBIT margin on sales
-
Record EBITDA of € 262 million
-
EPS of € 6.62 compared with € 6.27 (continuing operations)
Annual results - 16 March 2007
Sales
In 2006, Bekaert posted a 5% increase in consolidated sales:
-
1% increase from organic growth
-
4% impact from net movement in acquisitions and divestments
in millions of €
3500
3085
3195
2711
3000
1171
2500
1185
969
2000
1500
1000
1742
1914
2010
2004
2005
2006
500
0
Consolidated
2
Annual results - 16 March 2007
Joint ventures and associates
Sales by business segment
Consolidated sales
Combined sales
in millions of €
variance
Advanced wire products
Advanced materials
Advanced coatings
Intersegment and others
1 724
156
136
-6
+5%
+11%
+3%
2 890
156
136
13
+5%
+11%
+3%
Total
2 010
+5%
3 195
+4%
advanced
materials
8%
advanced
coatings
7%
in millions of €
advanced
materials
5%
advanced
coatings
4%
advanced
wire products
91%
advanced
wire products
85%
Consolidated sales (*)
(*) excluding intersegment sales and others.
3
Annual results - 16 March 2007
variance
Combined sales (*)
Sales by geographical area
Consolidated sales
Combined sales
in millions of €
variance
977
597
32
369
35
+4%
-3%
-3%
+26%
-2%
1 006
637
1 113
386
53
-1%
-4%
+6%
+30%
-2%
2 010
+5%
3 195
+4%
Europe
North America
Latin America
Asia
Other regions
Total
in millions of €
variance
Other
Regions 2%
Other
regions 2%
Asia
12%
Asia
18%
Europe
31%
Latin
America
2%
Consolidated sales
North
America
30%
Europe
48%
Latin
America
35%
Combined sales
North
America
20%
4
Annual results - 16 March 2007
Advanced wire products: sales
in millions of €
3500
3000
2750
2413
2500
2890
+5%
1166
1110
2000
912
1500
1000
1501
1640
1724
2004
2005
2006
500
0
Consolidated
5
Annual results - 16 March 2007
Joint ventures and associates
Advanced wire products
Steel cord China: +54%, mainly for truck tire reinforcement
-
-
6
Bekaert strengthened its position, despite heightened competition:
in Q4, Bekaert was n°1 in China
Investment program (€ 100 million) for:
- expansion in Weihai (Shandong)
- two new plants in Jiangyin (Jiangsu) and Shenyang (Liaoning)
¾ leads to 200 000 tonnes annual production capacity
Maintained investment level in 2007 as Chinese market shows
sustained growth
Annual results - 16 March 2007
Advanced wire products
China: Shougang Concord Century Holdings Ltd
-
Bekaert takes minority stake of 19.59%
Company is listed on the Hong Kong Stock Exchange since 1992
Activities include increasing steel cord production
(30 000 Æ 60 000 tonnes)
Framework for closer cooperation (services & material supplies)
¾ Speed up joint market introduction of top-quality products
¾ Strengthen Bekaert’s position in China
7
Annual results - 16 March 2007
Advanced wire products
Steel cord others
-
8
Demand for steel cord in Europe and North America was lower
Acquisition of Delta Wire Corporation in Clarksdale (Mississippi):
bead wire for tire reinforcement
Strike at Goodyear severely impacted steel cord plants in the
United States
Decision to close Dyersburg (Tennessee) in anticipation of
sustained downturn trend in demand
Annual results - 16 March 2007
Advanced wire products
-
In mature markets in Western Europe and North America: weakening
demand for wire products
(especially in automotive industry)
-
Acquisition of Cold Drawn Products Limited, supplier of
specialized profile wires in Western Europe for offshore applications
-
Strong activities in building products in Europe and Asia
-
Other advanced wire products:
- full effect of acquisition of ECC Card Clothing
- closure of Huddersfield (United Kingdom)
- start up of plant in Wuxi (Jiangsu - China)
9
Annual results - 16 March 2007
Advanced wire products
-
Volatility of the raw-materials markets worldwide decreased in 2006
-
Wire rod prices generally remained high, driven by increasing global
demand of steel
-
Prices of other raw materials, such as zinc, rose sharply
-
Energy costs increased significantly
10
Annual results - 16 March 2007
Advanced wire products
Latin America:
-
Higher activity level
Increased competition from Asian imports and hence sustained
pressure on prices
Positive impact of currency movements, mostly Brazil and Chile
Russia:
-
11
Declaration of intent for the acquisition of Uralkord, steel cord
manufacturer supplying about 25% of the Russian market
Annual results - 16 March 2007
Advanced wire products: combined sales
12
Advanced wire products:
+5%
wire Europe
wire North America
wire Latin America
wire Asia
building products
steel cord China
steel cord others
other advanced wire products
+8%
-6%
+7%
+7%
+11%
+54%
-6%
+7%
Annual results - 16 March 2007
Advanced wire products: combined sales
other advanced
wire products
4%
wire Europe
13%
wire
North
America
8%
steel cord others
27%
Combined sales per
activity platform
steel cord China
8%
building
products
5%
13
Annual results - 16 March 2007
wire
Latin America
34%
wire Asia
1%
Advanced wire products: financials
in millions of €
2006
2005*
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 %
Consolidated sales
Combined sales
Share in the results of the joint ventures
2 890
2 750
51
57
* 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.
14
Annual results - 16 March 2007
Advanced materials: sales
in millions of €
180
160
%
+11
140
120
100
80
141
60
156
117
40
20
0
2004
2005
2006
Combined sales equal consolidated sales as the advanced materials segment has no joint ventures and associates
15
Annual results - 16 March 2007
Advanced materials
Fiber technologies:
- Strong organic growth
- Move up the value chain in industrial process filtration:
full effect of the acquisition of Southwest Screens & Filters SA
Combustion technologies:
- Growth strategy in environment-friendly burners for residential
heating systems, capitalizing on increasingly environmental
regulations
-
Acquisition of Aluheat B.V., specializing in the latest technologies
for condensing boilers
Project-based industrial burner system activities had a difficult year
Composites:
- Bekaert maintained its position in an extremely competitive
environment
16
Annual results - 16 March 2007
Advanced materials: sales
Advanced materials:
+11%
fiber technologies
combustion technologies
composites
+15%
+9%
+4%
Sales
per activity platform
composites
13%
fiber
technologies
46%
combustion
technologies
41%
17
Annual results - 16 March 2007
Advanced materials: financials
in millions of €
2006
2005*
156
141
Operating result (EBIT) before non-recurring items
13
13
Operating result (EBIT)
12
6
6
14
EBITDA
19
20
EBIT margin on sales
7.7 %
3.9 %
12.3 %
14.1 %
Sales
Depreciation and amortization
EBITDA margin on sales
* 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.
18
Annual results - 16 March 2007
Advanced coatings: sales
in millions of €
140
+3%
120
100
80
60
127
133
136
2004
2005
2006
40
20
0
Combined sales equal consolidated sales as the advanced materials segment has no joint ventures and associates
19
Annual results - 16 March 2007
Advanced coatings
Industrial coatings:
• Difficult first half, pick up in second half
Specialized films:
• Negative impact from currency movements
• Increased sales effort leads to sustained growth in North America
and Asia
20
Annual results - 16 March 2007
Advanced coatings: sales
Advanced coatings:
+3%
industrial coatings
specialized films
+1%
+4%
Sales per
activity platform
industrial
coatings
42%
21
Annual results - 16 March 2007
specialized
films
58%
Advanced coatings: financials
in millions of €
2006
2005*
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
* 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.
22
Annual results - 16 March 2007
Other activities
-
Expanding sales organizations
-
Continued high investments in R&D and technological support to
the customers
-
Further developing of efficient, customer-oriented research in
Jiangyin (Jiangsu province, China)
-
Higher activity level in engineering:
major supplier of equipment for investment programs
-
Divestment of 50% share in handling business in Europe
23
Annual results - 16 March 2007
Operating result (EBIT)
in millions of €
in millions of €
200
200
175
175
150
150
125
125
100
100
75
75
139
136
146
50
50
25
25
0
0
2004
2005
EBIT
24
Annual results - 16 March 2007
2006
148
2004
168
163
2005
2006
EBIT before non-recurring
EBIT margin on sales
in %
in %
12
12
10
10
8.5
8.0
8
7.1
7.3
6
4
4
2
2
0
0
2005
EBIT on sales
25
Annual results - 16 March 2007
2006
8.1
8
6
2004
8.8
2004
2005
2006
EBIT on sales before non-recurring
Share in the result of joint ventures and associates
in millions of €
100
75
50
25
57
57
2004
2005
51
0
26
Annual results - 16 March 2007
2006
Result from continuing and discontinued operations
in millions of €
225
202
200
180
175
27
54
147
150
125
100
75
153
148
147
2004
2005
2006
50
25
0
from continuing operations
27
Annual results - 16 March 2007
from discontinued operations
Result for the period
in millions of €
225
202
200
180
175
12
12
147
150
5
125
100
75
168
190
142
50
25
0
2004
Attributable to the Group
28
Annual results - 16 March 2007
2005
2006
Attributable to minority interests
Equity to total assets
in millions of €
in %
100
3000
90
2500
2189
2232
2217
80
70
2000
60
50
1500
50.6
50.6
43.8
1000
40
30
20
500
10
0
0
2004
Total assets
29
Annual results - 16 March 2007
2005
2006
Equity to total assets
Net debt to equity (gearing)
in %
100
90
80
70
60
50
40
38.5
33.4
24.0
30
20
10
0
2004
30
Annual results - 16 March 2007
2005
2006
Capital expenditures
in millions of €
225
200
196
175
30
195
194
53
41
142
153
2005
2006
150
125
100
166
75
50
25
0
2004
Consolidated
31
Annual results - 16 March 2007
Joint ventures and associates
Depreciation and amortization
in millions of €
200
175
154
160
156
150
39
40
117
121
116
2004
2005
2006
37
125
100
75
50
25
0
Consolidated
32
Annual results - 16 March 2007
Joint ventures and associates
Operating working capital
in millions of €
in %
25
750
22.0
650
20.6
18.6
20
550
450
350
15
453
431
452
10
250
150
5
50
-50
2004
Working capital
33
Annual results - 16 March 2007
2005
2006
Average working capital on sales
0
Return on capital employed and asset rotation
in %
2
20
1.7
15
14.3
1.5
2005
2006
1,5
10.7
10.5
10
1
5
0,5
0
0
2004
34
1.5
2005
Annual results - 16 March 2007
2006
2004
Return on equity
in %
25
20.1
20
19.3
15
13.1
10
5
0
2004
35
Annual results - 16 March 2007
2005
2006
Earnings per share
in €
10
5
6.44
6.27
6.62
2004
2005
2006
0
36
Annual results - 16 March 2007
Share buy back
Bekaert purchased a total of 636 656 own shares in 2006 of which
8 890 were delivered and 627 766 cancelled.
In early 2007, Bekaert purchased and subsequently cancelled
546 779 shares.
The share capital is now represented by 20 400 000 shares
reduction of number of shares aimed at further
optimizing Bekaert’s debt structure
37
Annual results - 16 March 2007
Cash flow attributable to the Group
in millions of €
300
250
200
150
266
257
262
2004
2005
2006
100
50
0
38
Annual results - 16 March 2007
EBITDA
in millions of €
300
250
200
150
256
257
262
2004
2005
2006
100
50
0
39
Annual results - 16 March 2007
EBITDA margin on sales
in %
20
14.7
15
13.4
13.0
2005
2006
10
5
0
2004
40
Annual results - 16 March 2007
Dividend
Strong performance in 2006 and confidence in the future
Æ Proposed gross dividend of € 2.50 per share,
an increase of the basic amount by 25%
in €
4
Exceptional payment
for gain on the sale of
Bekaert Fencing NV
3
Exceptional payment
for Bekaert’s
125th anniversary
2
+0.125
2
3
+1.000
+25%
+7%
2.500
2.000
1.875
1
0
2004
41
Annual results - 16 March 2007
2005
2006
Dividend yield
As at 31.12
in €
94.70
100
78.95
80
100
60
40
40
20
20
0
0
2004
2005
81.99
80
50.50
60
Average
in €
65.13
50.06
2004
2006
in %
in %
10
10
8
8
4
3.4
6
3.8
2.6
2
0
0
2004
2005
Yield
Annual results - 16 March 2007
2006
4.0
4.6
3.0
4
2
42
2006
Share price
Share price
6
2005
2004
2005
Yield
2006
Outlook
Bekaert has made a good start in 2007
Raw material prices are expected to become more volatile again
this year
Maintained high investment level to participate in the growth in the
BRIC countries
Market and technological leadership for sustainable profitable growth
43
Annual results - 16 March 2007
better together
www.bekaert.com
44
Annual results - 16 March 2007