Bekaert Investor presentation

Transcription

1 Bekaert Investor presentation Most recent announcement: third quarter 2018 Version 20/11/2018

2 Content BEKAERT IN BRIEF Fact Sheet Market and Technology Leader Global Presence INVESTMENT CASE Financial KPI Debt Management Taking part in Growth Ambitions STRATEGY UPDATE Our Journey Blue Slide Business Portfolio Changes ANNEXES Financial Performance Q H BUSINESS UPDATE Segment Reports Business Climate Segment Performance & Outlook SECTORS Sector Exposure Bekaert Product Offering Our Markets 2 Investor presentation - Bekaert

3 Content BEKAERT IN BRIEF Fact Sheet Market and Technology Leader Global Presence INVESTMENT CASE Financial KPI Debt Management Taking part in Growth Ambitions STRATEGY UPDATE Our Journey Blue Slide Business Portfolio Changes ANNEXES Financial Performance Q H BUSINESS UPDATE Segment Reports Business Climate Segment Performance & Outlook SECTORS Sector Exposure Bekaert Product Offering Our Markets 3 Investor presentation - Bekaert

4 Bekaert in brief Founded in 1880 by Leo Leander Bekaert Serving customers from a very wide range of industry sectors in 120 countries and operating a global manufacturing platform with employees worldwide Combined sales of 4.8 billion and consolidated sales of 4.1 billion (2017) Listed on Euronext Brussels 4 Investor presentation - Bekaert

5 Often hidden or unknown but always there About 30% of all tires around the world are reinforced with Bekaert tire cord Every year over 1 billion bottles of sparkling wines are opened via the muselet made of Bekaert steel wire Bekaert s customers annually use 3.5 million kilometer of bookbinding wire Every year, 8 million m³ of concrete is being reinforced with Dramix steel fibers invented by Bekaert 5 Investor presentation - Bekaert

6 Bekaert technological leadership 63 million in-house R&D in 2017 International R&D teams in Belgium China India About 1650 patent rights Co-creation with customers and suppliers Outward orientation internationalization of technologists cooperation with internationally renowned research centers & universities venture capital and R&D partnerships Intellectual property protection 6 Investor presentation - Bekaert

7 Bekaert core competencies steel wire transformation from wire rod 6.5 mm drawing, bunching, cabling, profiling, welding, knitting, weaving to metal fibers 1 µm coating technologies from traditional coatings adhesion corrosion resistance wear resistance anti-fouling to advanced coatings 7 Investor presentation - Bekaert

8 Bekaert market leadership in diverse sectors COMBINED SALES % Automotive 22% Construction 10% Energy & utilities 7% Agriculture 6% 6% Consumer goods Basic materials 6% Equipment Bekaert has a strong presence in diverse sectors. This makes Bekaert less sensitive to sectorspecific trends and it also benefits our customers, because solutions we develop for customers in one sector often form the basis of innovations in others. 8 Investor presentation - Bekaert

9 Bekaert global presence 9 Investor presentation - Bekaert

10 Content BEKAERT IN BRIEF Fact Sheet Market and Technology Leader Global Presence INVESTMENT CASE Financial KPI Debt Management Taking part in Growth Ambitions STRATEGY UPDATE Our Journey Blue Slide Business Portfolio Changes ANNEXES Financial Performance Q H BUSINESS UPDATE Segment Reports Business Climate Segment Performance & Outlook SECTORS Sector Exposure Bekaert Product Offering Our Markets 10 Investor presentation - Bekaert

11 The Bekaert journey since 2013 Automotive demand strong on a global scale Better market position and market in Tire cord China Tire cord India and SEAS continue growing Sawing wire: more volatility due to Feed-in-Tariffs Kick off Customer excellence program Bridon added as from H2 16 Improvement Industrial wires APAC Improving profitability Challenging market in Tire cord China Q4 14 Q1 15 Sawing wire Plant in NAM caught fire Q4 14 Acquisition Pirelli Tire cord Q4 14 8,2% Downside Divestment of Sumaré in Brazil Continued volatility of wire rod prices and other inflationary costs Continued uncertainty about the effects of US trade policy changes Difficult business climate in Latin America Fast reduction in demand for loose abrasive sawing wire Weak performance and slow recovery in Bridon- Bekaert Ropes Group Upside: Further recovery of wire rod pass-through Cost mitigation exercises Accelerated turnaround in BBRG Impact of transformation programs Benefits of ongoing expansion investments 10% ,3% 5,2% 5,1% Portfolio optimization: exit stainless, carding, Xinyu China Better market position in RR China Tire cord India and SEAS picking up Sawing wire 2nd generation Kick off Manufacturing excellence program 6,3% 2017 Downside Bridon for full year (still below average margin) Sumaré : integration in JV Brazil (45% BEK) Fast changing raw materials prices & pricing dynamics Upside: Automotive/Construction remain strong Transformation programs Oil & gas: bottoming out < 2018 Downside: Cyclicality in demand end-markets Competitive landscape Economic uncertainty Upside: Transformation programs Impact winning business portfolio Better pricing power Rebound Oil & Gas Benefits of investments Environmental regulations = Underlying EBIT-margin 11 Investor presentation - Bekaert

12 July Investor presentation - Bekaert

13 Shareholder value creation Shareholder value Shareholder destruction WACC RoIC 13 Investor presentation - Bekaert

14 Portfolio Optimization Bekaert Acquisitions Wire Latam consolidation Cimaf Cabos Cables Arrium Ropes Australia Pirelli steel cord MatcoCables BJWP Jiangyin Southern Wire Malaysia SBE Shanghai Bridon merger Steel wire entities China Wire/Ropes Malaysia BIA Alambres Costa Rica BOSFA Chongqing China BBRG Divestments Industrial coatings Advanced Filtration Cardingsolutions Stainless Steel Wires Xinyu entities Shah Alam Malaysia Huizhou China Sumaré Brazil Solaronics M&A / Exit Change in shareholding 14 Investor presentation - Bekaert

15 Content BEKAERT IN BRIEF Fact Sheet Market and Technology Leader Global Presence INVESTMENT CASE Financial KPI Debt Management Taking part in Growth Ambitions STRATEGY UPDATE Our Journey Blue Slide Business Portfolio Changes ANNEXES Financial Performance Q H BUSINESS UPDATE Segment Reports Business Climate Segment Performance & Outlook SECTORS Sector Exposure Bekaert Product Offering Our Markets 15 Investor presentation - Bekaert

16 Business overview EMEA NAM LATAM APAC BBRG LT Market BEK position ST outlook LT Market BEK Position ST outlook LT Market BEK Position ST outlook LT Market BEK Position ST outlook LT Market BEK Position ST outlook A = B C E F + + = = = + = H D - + = = + = = - G = - + = = - Other industrials / Basic materials + + = + = - + = = = Agri = + = = + = + = + Latest update Previous version x Cross-reference to Business Overview per region on next slides 16 Investor presentation - Bekaert

17 EMEA: 31% of consolidated sales 2017 (26% of combined) 2017: Underlying EBIT H1: 12.3% / FY 11.1 % - Underlying EBITDA H1: 17.1% / FY: 15.9 % 2018: Underlying EBIT H1: 9.8% - Underlying EBITDA H1: 14.4 % Presence and Macroeconomic environment Presence primarily in Central Europe Automotive demand is strong Automotive Construction Energy & Utilities Consumer goods Other Market and position of Bekaert Course of action Automotive ~ 50% of EMEA sales Tire cord: big 5 tire manufacturers, long-term supply contracts and joint development agreements Other products: wiper blade, automotive spring wires,.. Impact of pricing pressure more fierce than past few years Start-up in central-europe to work through A Maintain market leadership Grow along with customers Reconfiguration: Figline Eliminating start-up costs RO/SK/RU Construction ~ 20% of EMEA sales About half is Dramix : flooring, underground solutions Other half: PC wire, fencing wire Competitive pricing C Maintain market leadership in target segments New product launches in masonry & road reinforcement Energy & utilities ~ 10 % of EMEA sales About one third is oil and gas related. Others include: wires for overhead power cable & conductors, subsea cable armoring, telecom/data cable armoring,.., D Monitor demand impact in oil & gas Downsizing of profiled wire activity in Bradford, UK Bekaert holds a top-3 market leadership position in its target sectors in EMEA. We anticipate the usual seasonal effects at year-end and project continued good demand in the fourth quarter from automotive and construction markets, no improvement in the near term in the oil and gas sector, and a potential further impact from trade tensions on the economy, which could affect our industrial steel wire markets in particular. x Cross-reference to slide Business Overview 17 Investor presentation - Bekaert

18 EMEA: Profitability evolution 18 Investor presentation - Bekaert

19 NAM: 14% of consolidated sales 2017 (12% of combined) 2017: Underlying EBIT H1: 7.2% / FY 6.0% - Underlying EBITDA H1: 9.6% / FY: 8.5% 2018: Underlying EBIT H1: 4.6% - Underlying EBITDA H1: 6.9% Presence and macroeconomic environment Automotive: strong demand Mixed inputs from agri, utilities (power grid), others Competition in industrial wires : primarily from integrated players and cheap imports Automotive Construction Energy & Utilities Agriculture Other Automotive and flat & shaped specialties ~ 50% of NAM sales Market and position of Bekaert Bead wire facility in Rome US duties on both steel and finished product -> no impact anticipated Tire cord plant in Rogers: Running at full capacity demand growth driven by customer investments and domestic sourcing policies. US duties on steel only -> customers and/or domestic TC producers might seek to import more TC Flat & shaped wire plant in Orrville: improved performance but hit by low oil and gas demand Demand automotive remained solid in third quarter A Course of action Ongoing focus to capture automotive growth. Given uncertainty re trade policy: frozen CAPEX plans Dealing/aligning with US trade policy Push price increases Industrial ~ 35% of NAM sales Demand in energy market remained solid, but slowed down in some other sectors: among which the US agricultural fencing market. Manufacturing facilities Van Buren, Shelbyville Improving performance, but not yet sufficiently structurally solved E Manufacturing excellence Customer excellence: segmentation customer mgt The transformation programs put in place in the region have had a material impact on the 2017 performance. The combined approach in implementing manufacturing, supply chain and commercial excellence have led to a stronger organization, better segmentation, and increased cost competitiveness. Cost of wire rod significantly impacted as of 1 August 2018 imported: +50% / domestic: +30% We project a continued good underlying demand in the fourth quarter with the exception of the usual seasonality impacts at the end of the year. x Cross-reference to slide Business Overview 19 Investor presentation - Bekaert

20 NAM: Profitability evolution 20 Investor presentation - Bekaert

21 LATAM: 16% of consolidated sales 2017 (29% of combined) 2017: Underlying EBIT H1: 8.0% / FY 8.2% - Underlying EBITDA H1: 11.1% / FY: 11.1% 2018: Underlying EBIT H1: 6.6% - Underlying EBITDA H1: 9.3% Presence and macroeconomic environment Chile, Peru, Ecuador, Colombia, Venezuela and Central America: economies are still weak, but improving. Less government & public infrastructure spending. Currencies revalue vs US$ in Q4 17 and Q1 18 Venezuela: reduced activity Brazil: recession continues - BRL devalued against EUR YTD Automotive Construction Agriculture Consumer goods Other Market and position of Bekaert Course of action Chile (43%); Peru (17%); Ecuador (14%) Improved business performance in Chile/Colombia Demand Peru/Ecuador remains subdued High market shares: 30%-75% Less industrialized demand: mainly construction and agri markets Venezuela: since 2012 consolidated at free market rate F Leverage market positions Transformation programs JV Brazil ~ 15% of combined sales (1) JV with ArcelorMittal (AM-55%, BK-45%) Complementary roles of the partners: distribution and wire rod (AM) operations (BK) JV is the market leader in Brazil Broad portfolio outperforming the market performance but weak business climate affects competitiveness Integrated Sumaré Tire Cord plant since beginning H2 17 Leverage capability range Implementation of (B)BMS/BCE Competitiveness vs imports Bekaert perceives a difficult but improving business climate in most countries and is confident that the actions taken to improve the business portfolio and commercial excellence of our businesses will continue to show their effect. At constant FX rate and scope of consolidation (excl. Sumaré), underlying EBIT increased by 20% yoy in H (1) Results are shown in P/L in Share in the results of joint ventures and associates x Cross-reference to slide Business Overview 21 Investor presentation - Bekaert

22 LATAM: Profitability evolution EBIT and EBITDA in H hold a gain on the divestment of 55% of the shares in Bekaert Sumaré of 25 me 22 Investor presentation - Bekaert

23 APAC: 28% of consolidated sales 2017 (24% of combined) 2017: Underlying EBIT H1: 10.7% / FY 9.3% - Underlying EBITDA H1: 19.0% / FY: 17.1% 2018: Underlying EBIT H1: 6.8% - Underlying EBITDA H1: 14.7% Presence and macro-economic environment China: ~ 73% of APAC sales ~ 20% of Bekaert consolidated top line. Economy still growing but at lower pace than in peak period India and Southeast Asia show GDP acceleration Market and position of Bekaert Automotive Construction Energy & Utilities Basic materials Other Course of action Tire Cord China ~ 50% of APAC sales Tire Cord India, SEA ~ 25% of APAC sales Sawing wire ~ 6% of APAC sales Industrial markets APAC ~ 10 % of APAC sales 50% of global tire needs is produced in China Competitive market, but less pressure from overcapacity Running at full capacity Growth momentum in India and SEA India growth accelerated by higher radialization Third generation sawing wire (fixed abrasive sawing wire) came faster than anticipated. For third generation: BEK is approved by key customers Starting up production and supply as of end of August We continue to take action to increase profit generation of entities acquired in 12 (Malaysia/China) A G Products with lower total cost for customers Expansion in China/India and SEA Reduce/eliminate start-up costs India, Indonesia and China Innovation: 2 nd generation and entering 3d generation Investing in capacity for 3d generation Portfolio optimization Cost management Footprint: closure of Shah Alam, downsizing operations in Iph We expect the high run rate in our tire markets to continue into the final quarter of the year, with some seasonal impact from the Chinese mid-autumn holiday (beginning of October) and while remaining cautious of the potential impact of trade tensions on our business. In solar markets, the reduction of feed-in tariffs in China caused a sudden contraction in new photovoltaic installations as of the 3rd quarter onwards. In line with demand developments for fixed abrasive sawing wire, we are adding capacity to grow our still small production scale. x Cross-reference to slide Business Overview 23 Investor presentation - Bekaert

24 APAC: Profitability evolution 24 Investor presentation - Bekaert

25 BBRG: 11% of consolidated sales 2017 (9% of combined) 2017: Underlying EBIT H1: 4.7% / FY 3.3% - Underlying EBITDA H1: 9.4% / FY: 9.0% 2018: Underlying EBIT H1: 0.8% - Underlying EBITDA H1: 7.1% Presence Includes since 1st July 2016 Bridon Leading market player with global footprint Low demand in some key markets (oil & gas) Agreement on purchase by Bekaert of Ontario Teachers equity share (1/3) on 26 April 2018 Construction Equipment Basic materials Energy & Utilities Other Equipment ~ 30 % Basic materials ~ 30% Oil & Gas ~ 20 % Construction ~ 15 % Applications Broad market - Crane and hoisting ropes Timing belts (cord) => 15% OEM / 85% replacement Mining : surface and underground extraction: 60 / 40 => Surface mining much more stable Land and offshore exploration, infrastructure, extraction Suffering from continuing low investment activity In better cycles: 25% of sales => Demand : 50% CAPEX / 50% OPEX Hoisting applications (elevator) Structures H Course of action Continue strong business advanced cords Install (B)BMS, BCE Changed management team: CEO, CFO, COO, CCO Taking full ownership to speed up turnaround Reviewing business plan Debt is refinanced We project continued difficult market circumstances for the ropes business in the near future. On 24 April 2018, Bekaert acquired the 33% equity share held in BBRG. BBRG accelerating the turnaround efforts of the business. Brett Simpson has been appointed the new CEO to drive the business forward. x Cross-reference to slide Business Overview 25 Investor presentation - Bekaert

26 BBRG: Profitability evolution Bekaert restated BBRG 26 Investor presentation - Bekaert

27 Content BEKAERT IN BRIEF Fact Sheet Market and Technology Leader Global Presence INVESTMENT CASE Financial KPI Debt Management Taking part in Growth Ambitions STRATEGY UPDATE Our Journey Blue Slide Business Portfolio Changes ANNEXES Financial Performance Q H BUSINESS UPDATE Segment Reports Business Climate Segment Performance & Outlook SECTORS Sector Exposure Bekaert Product Offering Our Markets 27 Investor presentation - Bekaert

28 Key profitability ratios Underlying EBIT margin target towards 10% in the midterm, with a somewhat longer time horizon than initially planned. 28 Investor presentation - Bekaert

29 Working capital Working capital % from 21.8% at half year 2017 to 22.3% at half year Investor presentation - Bekaert

30 Financial leverage Medium-term target Net debt / EBITDA 2 Our multiple Net debt / EBITDA increased to 3.3 (underlying: to 3.1) We target to bring this significantly down by year-end 2018 driven by reduced CAPEX, strict working capital control measures and improved underlying EBIT Gearing ratio (net debt / equity) of 87 % Financial autonomy (equity / total assets) of 34 % 30 Investor presentation - Bekaert

31 Investing in Bekaert is taking part in 1. The growth ambitions of a world market and technology leader in steel wire transformation and coating technologies 2. Value creation driven by our vision and core strategies 3. A transformation journey towards 10% underlying EBIT margin over the medium term Transformation on Portfolio optimization: M&A / Divestments and product substitution through innovation Programs: manufacturing excellence, customer excellence, supply chain excellence, Fit for Growth, BeCare Way of working: Focus and Complexity reduction 4. A corporate socially responsible company with approximately employees worldwide 5. A stocklisted (Euronext BEKB) multinational attaching great value to corporate governance 6. Bekaert s commitment to return value to its shareholders 31 Investor presentation - Bekaert

32 Content BEKAERT IN BRIEF Fact Sheet Market and Technology Leader Global Presence INVESTMENT CASE Financial KPI Debt Management Taking part in Growth Ambitions STRATEGY UPDATE Our Journey Blue Slide Business Portfolio Changes ANNEXES Financial Performance Q H BUSINESS UPDATE Segment Reports Business Climate Segment Performance & Outlook SECTORS Sector Exposure Bekaert Product Offering Our Markets 32 Investor presentation - Bekaert

33 Consolidated sales: YTD Q3 comparison year-on-year Consolidated sales Share Variance Organic FX M&A EMEA % +6% +6% % North America % +9% +16% -7% - Latin America % +2% +15% -4% -8% Asia Pacific % +6% +10% -4% - BBRG % - +5% -5% - Total % +5% +10% -3% -1.5% 11% Consolidated sales 9% Combined sales EMEA 31% 26% North America 28% 16% % 24% 29% % Latin America Asia Pacific BBRG 33 Investor presentation - Bekaert

34 Consolidated sales: YTD Q3 comparison year-on-year Segment Total sales evolution Sales Organic growth Volumes Wire rod + price mix FX impact Impact M&A + divestments EMEA +6% +6% = +6% % North America +9% +16% +6% +10% -7% - Latin America +2% +15% -3% +18% -4% -8% Asia Pacific +6% +10% +8% +2% -4% - BBRG - +5% +6% -2% -5% - Total +5% +10% +3% +7% -3% -1.5% Main drivers of consolidated sales growth: + Organic volume growth Asia Pacific + Pricing North America (passed-on tariff impact) and Latin America (passed on wire rod price increases and price-mix) Q3 market developments: Automotive and construction markets remained strong Some slowdown in industrial steel wire markets, reflecting the impact of rising trade tensions for the global economy Continued low demand for profiled wires Sales decline BCT Heating Demand contraction new PV installations as of Q3 > no impact yet on our volumes (small production scale still) 34 Investor presentation - Bekaert

35 Third Quarter Trading Update quarter-on-quarter progress - in millions of Consolidated sales 1st Q 2nd Q 3rd Q Q3 y-o-y EMEA % North America % Latin America % Asia Pacific % BBRG % Total % Key adverse impacts in the third quarter: Volume growth +1.4% compared with the same quarter last year Automotive and construction markets remained strong Slowdown in industrial steel wire markets wire rod price increases passed-on and price-mix added Currency movements and divestment effects were limited 35 Investor presentation - Bekaert

36 Outlook - We project continued good demand from our automotive and construction markets in the fourth quarter of We do take into account the usual seasonality effects of the end of the year and we remain cautious about any further developments in international trade policy that could impact the global economy or business conditions in our markets in particular. - From today s perspective and provided there will be no exceptional, unforeseeable circumstances, we expect underlying EBIT for the second half to be above the first half of As reported before, we are also implementing actions to reduce the net debt position by year-end. 36 Investor presentation - Bekaert

37 Content BEKAERT IN BRIEF Fact Sheet Market and Technology Leader Global Presence INVESTMENT CASE Financial KPI Debt Management Taking part in Growth Ambitions STRATEGY UPDATE Our Journey Blue Slide Business Portfolio Changes ANNEXES Financial Performance Q H BUSINESS UPDATE Segment Reports Business Climate Segment Performance & Outlook SECTORS Sector Exposure Bekaert Product Offering Our Markets 37 Investor presentation - Bekaert

38 Bekaert reports 111 million underlying EBIT on higher sales Consolidated sales of 2.2 billion (+3%) and combined sales of 2.5 billion (+5%) Currency impact: -95 million (-4.5%) on consolidated sales; -151 million (-6.2%) on combined sales Underlying gross profit of 311 million (14% margin) versus 382 million (18% margin) Underlying EBIT of 111 million (5.1 % margin) versus 176 million (8.4% margin) EBIT of 101 million (4.7% margin) compared with 197 million (9.4% margin) Underlying EBITDA of 214 million (9.9% margin) versus 277 million (13.2% margin) EBITDA of 204 million (9.5% margin) compared with 297 million (14.2% margin) Underlying ROCE of 8.1% versus 13.1% and ROCE of 7.4% versus 14.6% Net debt of million. Net debt on underlying EBITDA was 3.1, versus 2.2 for the same period last year and 2.3 at year-end Combined sales are sales of consolidated companies plus 100% of sales of joint ventures and associates after intercompany elimination. 38 Investor presentation - Bekaert

39 Consolidated sales H Consolidated sales 1H H 2018 Share Variance Organic FX M&A EMEA % +6% +6% - - North America % +5% +15% -10% - Latin America % -3% +14% -6% -11% Asia Pacific % +5% +10% -5% - BBRG % -3% +3% -6% - Total % +3% +9% -4% -2% Consolidated sales Combined sales 11% 9% 32% 27% 27% % % 12% 16% 29% EMEA North America Latin America Asia Pacific BBRG 39 Investor presentation - Bekaert

40 Consolidated revenue: H1 comparaison year-on-year Segment Total sales evolution Sales Organic growth Volumes Wire rod + price mix FX impact Impact M&A + divestments EMEA +6% +6% = +6% - - North America +5% +15% +7% +8% -10% - Latin America -3% +14% -3% +17% -6% -11% Asia Pacific +5% +10% +10% = -5% - BBRG -3% +3% +8% -5% -6% - Total +3% +9% +4% +5% -4% -2% Main drivers of consolidated sales growth: + Organic volume growth Asia Pacific + Pricing capability Latin America + Double-digit organic sales growth except in EMEA/BBRG - Adverse currency movements - Sumaré disposal 40 Investor presentation - Bekaert

41 Underlying EBIT performance Underlying EBIT: 111 million, -37% compared to H1 last year A number of factors have weighed on our profitability since the second half of 2017: - Continued raw material price increases - The impact of changes to trade policies - The slow recovery of Bridon-Bekaert Ropes Group - Continued low demand for loose abrasive sawing wire - Delayed investment activity in our oil and gas markets - Higher than anticipated start-up costs in the plant expansions in EMEA and APAC - The loss making activities in Figline Valdarno, Italy - Inflationary costs in general - The difficult business climate in Latin America - The divestment of Sumaré in Brazil 41 Investor presentation - Bekaert

42 Consolidated income statement: key figures (in mio ) Underlying Reported 1H H H H 2018 Sales Cost of sales (1 714) (1 845) (1 717) (1 864) Gross profit Sales increased by 2.9%: +3.9 % organic volume growth +5.4 % net of passed-on higher wire rod prices and price-mix -1.9 % less sales from the Sumaré disposal -4.5 % unfavorable impact of exchange rate movements. Gross profit decreased by 70 million (-18.4 %) resulting in a margin on sales of 14.4%: The decrease from last year s disposal of Sumaré accounted for -12 million Unfavorable impact from exchange rates: million Remainder is underperformance, including: A deterioration of the loose abrasive sawing wire business Delays in passing through raw material price increases Underperforming businesses and operational inefficiencies 42 Investor presentation - Bekaert

43 Consolidated income statement: key figures (in mio ) Underlying Reported 1H H H H 2018 Gross profit Selling expenses (95) (91) (95) (91) Administrative expenses (80) (82) (81) (87) R&D expenses (32) (35) (32) (37) Other operating revenue and expenses EBIT Overheads were stable in absolute numbers and declined as a percentage on sales to 9.7% (versus 9.9% in 1H 2017) The decrease in selling expenses ( -4 million) was from FX effects ( -4.5 million) and a lower bad debt allowance ( -0.5 million), partly offset by a spend increase of 1 million. The administrative expenses increased by 2 million. Last year s numbers included a cost reduction as a result of the impact of the change in pension age in Belgium on long-term employee benefit plans. On the other side, the 2018 FX effects drove expenses down by -3 million. The one-off expenses in 2018 related mainly to the support provided to BBRG and to the announced closure of the plant in Figline (Italy). The R&D expenses were 3 million higher due to resources allocated to R&D projects. The one-offs in 2018 relate to the restructuring of the R&D operations in Italy. Reported other operating results included the gain on the sale of land and buildings after the closing of the Huizhou (China) and Shah Alam (Malaysia) operations. The 2017 number included the estimated result of the sale of 55.5% of the shares in Sumaré (Brazil). 43 Investor presentation - Bekaert

44 Consolidated income statement: key figures (in mio ) Underlying Reported 1H H H H 2018 EBIT EBIT margin 8.4% 5.1% 9.4% 4.7% EBITDA EBITDA margin 13.2% 9.9% 14.2% 9.5% ROCE 13.1% 8.1% 14.6% 7.4% Underlying operating performance: Underlying EBIT decreased to 111 million, reflecting a margin of 5.1% (8.4% in 2017 Underlying EBITDA decreased by approximately the same amount ( -63 million) ROCE declined to 8.1% due to declined profitability and increased average capital employed. Reported operating performance: In 2018, reported EBIT included -10 million one-off items. These included the gain on the sale of land and buildings following the closing of the Huizhou (China) and Shah Alam (Malaysia) operations and incurred and accrued costs related to the closure of the Figline (Italy) plant. In 2017 one-off items were +21 million positive and included the estimated result on the sale of 55.5% of the shares in Bekaert Sumaré, partly offset by expenses related to restructuring programs. 44 Investor presentation - Bekaert

45 Segment reporting: EMEA (in mio ) Underlying Reported 1H H H H 2018 Consolidated sales EBIT EBIT margin 12.3% 9.8% 12.3% 5.0% Depreciation, amortization and impairment losses EBITDA EBITDA margin 17.1% 14.4% 17.0% 11.2% ROCE 24.1% 18.7% 23.9% 9.4% Sales increase of +6%, resulting from the aggregate effect of passed-on wire rod price increases and price-mix (+6%) on stable volumes. The volume growth in rubber reinforcement activities was offset by a decrease in others. The underlying EBIT margin decrease to 10% reflected increased price pressure, the higher losses in Figline (Italy), and startup costs in the plants with expansion programs in Central and Eastern Europe. The reported data include the operational losses incurred since the announcement of the closure of the Figline plant, the impairment losses of its assets and accrued closure expenses. 45 Investor presentation - Bekaert

46 Segment reporting: North America (in mio ) Underlying Reported 1H H H H 2018 Consolidated sales EBIT EBIT margin 7.2% 4.6% 7.2% 4.6% Depreciation, amortization and impairment losses EBITDA EBITDA margin 9.6% 6.9% 9.6% 6.9% ROCE 17.9% 12.6% 17.9% 12.6% Sales increased by +5% and reflected strong organic volume growth (+7%) and a positive effect of passed-on higher wire rod prices and price-mix (+8%). The adverse FX effects (-11%) offset a large part of the growth. The volume growth was from strong demand in tire and equipment markets benefiting the rubber reinforcement platform. Volumes in other platforms were stable in the aggregate. Profitability was affected by increased costs from domestic wire rod price increases (about +30%) and other cost inflation (eg, transport costs) which are difficult to pass on in competition with integrated players and import flows of finished products. FX changes had an additional adverse impact of -3 million. Rubber reinforcement plants were not yet affected by the new duties in the first half but duty-free imports from Brazil are no longer available in H2. 46 Investor presentation - Bekaert

47 Segment reporting: Latin America (in mio ) Underlying Reported 1H H H H 2018 Consolidated sales EBIT EBIT margin 8.0% 6.6% 15.1% 6.6% Depreciation, amortization and impairment losses EBITDA EBITDA margin 11.1% 9.3% 18.2% 9.3% ROCE 16.9% 13.7% 32.1% 13.6% Our Latin American activities achieved strong organic consolidated sales growth (+14%). The efforts to pass on price increases of raw materials to customers and improvement to product-mix were highly successful (+17%) and achieved on somewhat lower volumes (-3%). This robust organic growth was, however, more than offset by the disposal effect (-11.5%) of Sumaré (Brazil) and adverse currency movements (-6%), resulting in a -3% lower topline. At constant exchange rates and scope of consolidation (excluding the impact of Sumaré) and provisions, the underlying EBIT increased by about +20%. This significant improvement reflects the impact of the transformation programs we have implemented in the region. Including all elements, underlying EBIT decreased to 23 million, reflecting a margin of 6.6%. Reported EBIT was significantly lower than in the same period of 2017 which included the gain on the sale of 55.5% of the shares of the Sumaré plant in Brazil. 47 Investor presentation - Bekaert

48 Segment reporting: Asia Pacific (in mio ) Underlying Reported 1H H H H 2018 Consolidated sales EBIT EBIT margin 10.7% 6.8% 10.1% 11.2% Depreciation, amortization and impairment losses EBITDA EBITDA margin 19.0% 14.7% 18.5% 17.2% ROCE 12.5% 7.6% 11.7% 12.7% We delivered 10% organic sales growth in Asia Pacific, all of which was driven by strong volumes. Consolidated sales growth was tempered due to unfavorable currency movements (-5%). Underlying EBIT decreased to 40 million at a margin of 6.8%, below our performance of the first half of Several developments hindered us from repeating the margin performance of the same period last year: the strong deterioration of the loose abrasive sawing wire business and additional start-up costs in expansion programs. Reported EBIT included the gain on the sale of land and buildings following the closing of the Huizhou (China) and Shah Alam (Malaysia) operations. 48 Investor presentation - Bekaert

49 Segment reporting: Bridon-Bekaert Ropes Group (BBRG) (in mio ) Underlying Reported 1H H H H 2018 Consolidated sales EBIT (1) EBIT margin 4.7% 0.8% 4.5% -0.3% Depreciation, amortization and impairment losses EBITDA EBITDA margin 9.4% 7.1% 9.1% 6.0% ROCE 4.3% 0.8% 4.1% -0.3% BBRG reported a sales decline of -3% compared with the first half of Significant currency movements (-6%) more than offset the organic growth (+3%) which resulted from increased volumes (+7.5%) and an unfavorable price-mix (-5%). Underlying EBIT was 1.8 million, further down from previous reporting periods due to the weak performance of the ropes business. The advanced cords business activities continued to perform well. Reported EBIT and EBITDA included the cost of services to support the turnaround of the business ( -3 million). 49 Investor presentation - Bekaert

50 Consolidated income statement: key figures (in mio ) 1H H 2018 EBIT Interest income / expense (41) (45) Other financial income and expenses (35) (0) Result before taxes Income taxes (42) (23) Result after taxes (consolidated companies) Net interest expenses were higher than last year due to an increase of gross debt. Difference in other financial results entirely related to the adjustment in fair value of the conversion option embedded in the convertible bonds ( +17 million in 2018 versus -21 million in 2017). The lower income tax expense was from lower profitability in various tax paying entities (including the effect of the disposed Sumaré business) and from a higher withholding tax on foreign dividends incurred in The effective tax rate was 40.5%. 50 Investor presentation - Bekaert

51 Consolidated income statement: key figures (in mio ) 1H H 2018 Result after taxes (consolidated companies) Share in the results of joint ventures and associates 9 12 Result for the period Attributable to non-controlling interests 1 (10) Attributable to the Group The share in the results of joint ventures and associates increased because of the integration of Sumaré into the joint venture partnership from the second half of 2017 onwards, and from an improved performance of the steel wire activities in Brazil. The depreciation of the real (-20% compared to HY 2017) had a significant adverse translation effect. Results attributable to non-controlling interests reflect the lower profitability in the companies where minority stakes are held by third parties. 51 Investor presentation - Bekaert

52 Cash flow: key figures (in mio ) 1H H 2018 Gross cash from operations Cash flows from operations 6 (17) Cash flows from investment activities (54) (54) Cash flows from financing activities (0) (60) Gross cash-ins from operations were 58 million lower due to a decline in underlying EBITDA. The cash-out impact of the higher working capital amounted to 148 million in This resulted in -23 million lower cash flows from operations. Cash-outs from investment activities were -10 million lower in Capital expenditure ( 95 million) was slightly lower compared to last year ( -8 million). The 2018 proceeds from the sale of land and buildings in China and Malaysia were +3 million higher than the proceeds of the Sumaré business transaction in Cash flows from financing activities totaled -60 million versus -0.3 million in 2017, due to lower proceeds from gross debt ( - 64 million), higher expenditure on treasury shares ( -19 million) and lower expenditure on purchases of non-controlling interests ( +17 million). 52 Investor presentation - Bekaert

53 Working capital: key figures (in mio ) 1H 2017 Year-end H 2018 Inventories Accounts receivable Accounts payable (715) (802) (884) Working capital The nominal increase in Working Capital by 143 million versus year-end 2017 was the result of higher outstanding trade receivable balances, while the organic increase in trade payables balances did not offset the increase in inventories. Movements in FX closing rates drove Working Capital up by +5 million. Average working capital on sales was 22.3% (versus 22.5% same period last year), up from 21.4% at year-end Investor presentation - Bekaert

54 Consolidated balance sheet: key figures (in mio ) Year-end H 2018 Non-current assets Current assets Total assets Equity Non-current liabilities Current liabilities Total equity and liabilities Investor presentation - Bekaert

55 Balance sheet: key figures (in mio ) 1H 2017 Year-end H 2018 Net financial debt Gearing (net debt to equity) 81.7% 72.7% 86.8% Net debt on EBITDA (underlying) Net debt on EBITDA (reported) Net debt on EBITDA (underlying) was 3.1 as net debt increased and EBITDA-underlying decreased. 55 Investor presentation - Bekaert

56 Ratios: key figures (in mio ) Underlying Reported 1H H H H 2018 Gross profit margin 18.2% 14.4% 18.1% 13.6% EBITDA margin 13.2% 9.9% 14.2% 9.5% EBIT margin 8.4% 5.1% 9.4% 4.7% Sales on capital employed (asset rotation) Return on capital employed (ROCE) 13.1% 8.1% 14.6% 7.4% Return on equity (ROE) 11.3% 5.7% 56 Investor presentation - Bekaert

57 Content BEKAERT IN BRIEF Fact Sheet Market and Technology Leader Global Presence INVESTMENT CASE Financial KPI Debt Management Taking part in Growth Ambitions STRATEGY UPDATE Our Journey Blue Slide Business Portfolio Changes ANNEXES Financial Performance Q H BUSINESS UPDATE Segment Reports Business Climate Segment Performance & Outlook SECTORS Sector Exposure Bekaert Product Offering Our Markets 57 Investor presentation - Bekaert

58 Bridon Bekaert combined ropes group (BBRG) Additional USD 350 million sales (normalized) from Bridon Bridon Europe 4 sites WRI Canada Bridon American WRI USA Bridon Middle East Bekaert Aalter Belgium Bekaert Shenyang Bekaert Qingdao Bridon Hangzhou Bridon Hong Kong Bridon Singapore Procables Bekaert CIMAF Prodinsa Bridon Brazil Original JV established in 2016: BEK 67% and Ontario Teachers Pension Plan (OTPP) 33% Buy-out OTTP: 24 October 2018 Approx employees 18 plants in 10 countries (ScanRope Norway now closed) Total 650 mio USD sales (normalized) Bekaert roperies Bekaert advanced cord activities Commercialization scope Bekaert BRIDON locations Bridon Indonesia Bekaert WRI Australia Bridon NZ 58 Investor presentation - Bekaert

59 The automotive sector (44%) In the automotive sector, we set ourselves apart by consistently creating high-quality and innovative products that are tailored to our customers needs. We supply specialized wire products that meet the highest quality standards. tire cord clutch spring wire bead wire wheel weights wires for windscreen wiper arms and blades steering column profiles wires and cables for window systems insulation wire and fiber yarns for car seat heating heating cord conductive yarns in tires heating cables for SCR tubes and tanks metal fiber media for exhaust filtration, etc. 59 Investor presentation - Bekaert

60 The construction sector (22%) By offering wire, mesh and fiber products in numerous construction applications, we seek out more environment-friendly solutions with a focus on better materials, greater safety, improved ease-of-use and lower energy consumption, all with an eye on cost-efficiency. Dramix steel fibers for concrete reinforcement gabions Stucanet plaster lath steel strands for cable stay bridges Mesh Track and Fortifix road reinforcement prestressed concrete strands Murfor and Murfor Compact masonry reinforcement post-tensioning strands wires and cables for hoisting applications environmentally friendly gas burners a-cords for elevators residential, public and industrial fencing solutions welded mesh etc. 60 Investor presentation - Bekaert

61 The energy & utilities sector (10%) Whether it concerns onshore or offshore oil extraction, gas mining, power transmission, solar energy, or even telecommunications, Bekaert products are key contributors to sustainable, safer and more cost-efficient operations. wire and ropes for oil and gas exploration profiled wires for wedge filters steel wires and strands for overhead power lines sawing wire / diamond wire telecom armoring wire hose coupling profiled wires for flexible pipes etc. 61 Investor presentation - Bekaert

62 The agriculture sector (7%) Across the agricultural sector, Bekaert provides innovative solutions that make day-to-day work easier. Through our global footprint and our mix of trading and manufacturing, we can offer total packages to our customers. tensioning wire for plant support and binding fencing systems vineyard wire fishing ropes spiral wire for the livestock feed industry etc. barbed wire 62 Investor presentation - Bekaert

63 Consumer goods (6%) As ever higher quality and comfort standards and functionalities are required, the demand for more advanced coated steel wire products evolves accordingly. Often unknown, but always there: Bekaert is a part of the products we all use every day. champagne cork wire bookbinding and stitching wire wire for kitchen utensils Bezinal XP/XC spring wire for medical instruments spring wire for bedding and seating stainless steel fibers for smart clothing brassiere wire stainless steel fibers for composite materials staple wire etc. 63 Investor presentation - Bekaert

64 The equipment sector (6%) Bekaert supplies heavy equipment makers and operators with a range of specialized steel wire products. As we build our own proprietary machinery, we know exactly what it means to make high-performance equipment. This allows Bekaert to focus on innovation and machine makers to focus on operational excellence. hoisting ropes for cranes Syncrocord a-cords reinforcing synchronous belts shovel ropes paper drying solutions Bezinal XP/XC coated spring wires customized profiled components brush wire fiber media for sound attenuation Fleximat for conveyor belts etc. hose reinforcement wire 64 Investor presentation - Bekaert

65 The basic materials sector (6%) Many Bekaert products are used in exploring and producing raw materials, from coal and metals to pulp and paper, to chemicals and textiles. We make cable and wefts for conveyor belts that are used across many industries. We continue to find new ways to span every step of the value chain. steel ropes for mining applications pulp baling wire sintered metal fiber filtration media Fleximat steel cord fabric for mining belts heat-resistant separation materials etc. fibers for conductive and protective clothing 65 Investor presentation - Bekaert

66 Contacts Investor Relations : Katelijn Bohez katelijn.bohez@bekaert.com Joeri Goethals joeri.goethals@bekaert.com Documentation : Christine Clarysse christine.clarysse@bekaert.com Shareholders, investors and other interested parties wishing to receive the Group's annual report, the shareholders guide, the annual accounts of NV Bekaert SA or other information published by the Group may contact the Investor Relations department at any time. Agenda 2018 full year results 1 March annual report available on the Internet 29 March 2019 First quarter trading update May 2019 General Meeting of Shareholders 8 May half year results 26 July 2019 Third quarter trading update November 2019 Disclaimer This presentation may contain forward-looking statements. Such statements reflect the current views of management regarding future events, and involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Bekaert is providing the information in this brochure as of its date and does not undertake any obligation to update any forward-looking statements contained in this brochure in light of new information, future events or otherwise. Bekaert disclaims any liability for statements made or published by third parties and does not undertake any obligation to correct inaccurate data, information, conclusions or opinions published by third parties in relation to this or any other publication issued by Bekaert. 66 Investor presentation - Bekaert

67 Investor section Copyright by NV Bekaert SA, Investor presentation - Bekaert

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