Bekaert. November 2014

Transcription

1 Bekaert

2 Content Bekaert in essence Strategy review Annex: 3 rd quarter trading update st half year results

3 Company profile Industrial company with unique geographic, product and sector exposure Focus on industrial growth in emerging markets and solid position in mature markets Sector innovator 2

4 Bekaert in essence Sustainable Profitable Growth Worldwide market and technological leadership advanced metal transformation and coatings Q 2014 Combined sales consolidated joint ventures 4.1 billion b 3.2 b billion b 2.4 b 0.6 Operational cash flow (EBITDA) consolidated joint ventures Worldwide production platform 413 million m 297 m 116 1st half million m 190 m countries employees Listed on Euronext Brussels BEL20, DJ Stoxx, FTSE, SRI Market capitalization of 1.5 billion 2 million euro per day 3

5 Bekaert core competences Steel wire transformation from wire rod 6.5 mm Coatings from traditional coatings Adhesion Corrosion resistance Wear resistance Anti-fouling 1 µm to metal fibers to advanced coatings 4

6 Bekaert in brief: market leadership in diverse sectors Basic materials 4% Agriculture 7% Automotive 36% Machinery 9% Consumption 7% Utilities 13% Construction 23% 5

7 Strategy review : sources of Bekaert competitive advantages 50% of product portfolio less than 10 years Bring products from mature to emerging countries Unique global footprint Innovation Geographical presence Co-develop and scale up Opex Own machine making = rapid scale-up Key pillar of strategy Source of competitive advantage lean manufacturing 6

8 Strategy review Strategy remains unchanged, but different focus areas. Bekaert creates sustainable profitable growth by: - Diversified geographic presence with a broad product portfolio and focus on growth markets: Changed demand patterns More focus outside China - Innovation Continue to develop customer relevant innovation Less focus on sawing wire - Operational excellence More important than ever before (more low-end local competitors/imports) Cost competitiveness in our plants and in our structure Program to reduce overall cost structure with 100 million 7

9 Global cost reduction program (in mio ) Ongoing Identified Implementation started Impact on cost structure Headcount impact Reference 2011 End 2013 Difference Mgmt & WC % of cost reduction are in cost of sales Wage cost inflation partly offsets cost saving efforts, estimated 15 million annual Investment in selling expenses to support future growth M&A activities negatively impacted absolute amount of indirect costs Exchange rate fluctuation 8

10 Geographical expansion: mature and growth markets ,2 Growth 72, ,8 Mature 27, Q14 Growth Mature 9

11 Bekaert global presence Combined sales third quarter 2014 North America EMEA 420 million sales employees 14% 26% 807 million sales employees Latin America 1064 million sales 35% employees Asia-Pacific 25% 761 million sales employees Automotive Construction Energy & Utilities Other 10

12 Divestitures Acquisitions Portfolio Management Wire Hlohovec Wire Orville Wire CDP Peru (38%) Ecuador(80%) Wire Latam Integration (52%) Solaronics Combustion Carding Solutions Venezuela (80%) Columbia (80%) Tire cord Bridgestone Plants Wire Chinese Entities Wire Malaysia Wire Cimaf Cabos Wire Costa Rica Fencing Europe Fencing Handling 2 Diamond Like Coatings Window Films Industrial coatings Advanced Filtration Fencing Handling 1 Composites 11

13 2014 focus areas by region EMEA Maintain growth momentum with focus on high value added products. North America Turnaround the business momentum to capture growth in a difficult market. Important investment program and closure of Canadian wire activities. Latin America Maintain strong market shares by remaining competitive versus Asian imports. Integration of Costa Rica and consolidation of ropes activities in Brazil. Asia Pacific Retain volume momentum in Rubber Reinforcement China. Improve profitability in newly acquired entities. 12

14 Bekaert s technological leadership Continued focus on innovation 62 million in-house R&D in 2013 International Research and Development team in Belgium Research and Development in China Close to patent rights 43 new patents in with the right partners and priorities: Customer focused innovation and co-development Focus on high-tech products, systems and solutions Outward orientation internationalization of technologists cooperation with internationally renowned research centres & universities R&D partnerships Assuring intellectual property protection 13

15 Our flat and shaped wire gives you more flexibility Flexible pipes that are better, leak proof and reusable Offshore industry Need of flexibility Development of flat wires and profiles Fulfillment of demands Transport of oil and gas Greater flexibility = easier to place Mechanical reinforcement Various advantages Bekaert enables companies to work in more extreme conditions - Use & re-use of pipes over 2 kms in length with guaranteed lifespan of up to 20 years - Pipes can be installed at depths up to 3000 m - Easier to install - No leakage 14

16 Operational excellence: based on a strong financial structure 1H Growth -2,4% -7.9% 3.6% 2.4% 11.3% 2.2% ROIC > WACC 8,5 > 8,0 4.8 < < > > < 9.1 EBITDA on sales 11.8% 9.3% 7.9% 14.9% 16.4% 12.0% REBIT 6.3% 5.2% EBIT 7.3% 4.3% -1.4% 8.7% 10.1% 4.9% WC (mature/growth) 26.5% 26.5% 27.9% 28.0% 23.2% 19.4% Dividend pay out NA 202% NA* 36% 34% 50% Tax 25% 89% NA* 27% 21% 21% Debt Equity / total assets 41% 45% 44% 42% 46% 48% Gearing (net debt /Equity) 44% 38% 44% 49% 40% 36% Net debt / EBITDA Net debt / REBITDA * Due to negative result 15

17 Shareholder value in % Q WACC RoIC 16

18 Influences on Bekaert stock price Fact sheet /2014 Number of shares : Average closing ,315 Average daily traded volume High price ,195 Average daily traded value m 2,3 Low price Market capitalization m Closing price , Structural result volume improvement ROIC > WACC Product innovation Solar Crisis Eurozone Drop in solar euro Emerging markets

19 Third quarter trading update 2014

20 Highlights third quarter % Sales growth in Q vs Q FX : -1,2% decline mainly due to Latam M&A : +0,8% positive impact of the inclusion of Costa Rica and Ropes in Brazil Price/Mix : Positive impact of 4.4% due to mix improvement and especially price increases in Latam YTD Stable sales : Organic sales neutralized by negative Fx impacts Net debt decreased to 717 million versus 730 m in Q Compared to 1H2014 net net debt increased slightly due to higher working capital and share buy-back. 19

21 Sales 3Q in mio Consolidated Combined 3Q 2013 Venezuela Organic growth Acquisitions / Divestments FX 3Q 2014 EMEA: Strong demand throughout the first nine months of Particularly apparent in the automotive sector, the energy-related markets and other industrial sectors. North America: Strong volume and sales growth in the third quarter of 2014, driven by higher demand from automotive and construction markets compared with the same period last year. Latin America Excluding Venezuela, Organic volume growth of 4%. Important negative Fx impacts, compensated by significant First-in (M&A) as to price increases resulted in strong revenue growth of 13% in Q3. Asia Pacific Strong sales volumes in highly competitive tire markets across Asia. Sawing wire sales also grew significantly, contributing to a positive product mix. Price pressure and passed-on lower wire rod prices tempered the top line growth rate to 3%. 20 November

22 Consolidated 3Q14 sales by segment variance share FX impact EMEA North America Latin America Asia Pacific % -0.8% -7.7% +2.0% 34% 17% 19% 30% Total % 100% -97 1Q14 2Q14 3Q14 3Q13-3Q14 FX impact EMEA North America Latin America Asia Pacific % +8.0% +13.0% +2.7% Total % % 19% 34% 17% Europe North-America Latin America Asia 21

23 Combined 3Q14 sales by segment variance share FX impact EMEA North America Latin America Asia Pacific % -0.7% -10.4% +1.7% 26% 14% 35% 25% Total % 100% Q14 2Q14 3Q14 3Q13-3Q14 FX impact EMEA North America Latin America Asia Pacific % -0.7% -10.4% +1.7% Total % % 35% 26% 14% Europe North-America Latin America Asia 22

24 Outlook 2014 Mitigation of adverse currency effects on a year-to-date basis. Moderate slowdown in the European tire markets. Usual year-end seasonal effects on volume, especially in Emea and NA. Latam : turnaround to remain for the coming months Asia Pacific : In China, continued price erosion in tire markets and a weakening industrial demand overall. 23

25 First half year results 2014

26 Highlights first half Organic volume growth of 3.9% - Consolidated sales of 1.61 billion, (-2.4%), combined sales of 2.02 billion (-5.4%) - Currency impact : -85 million (-5.1%) on consolidated sales and -158 million (-7.4%) on combined sales - Negative price/mix effect (-1.2%), mainly reflecting lower wire rod prices - REBIT of 101 million (6.3% margin) - Non-recurring items of million - EBIT of 118 million (7.3% margin) - EBITDA of 190 million (11.8% margin) - EPS: 1.34 compared with Net debt of 673 million, versus 770 million on 30 June 2013; 574 million at year end 25

27 Business review - Solid volume growth in a difficult global industrial environment - Weakening of the growth of the Chinese industrial economy lowered key commodity prices and affected the output of the mining sector in Latin America with an important impact on those economies - Lower local demand in China for commodity products increases the export at very low prices, creating price pressure all over the world - Strong demand in automotive markets globally - Overcapacity in China resulted in continued price pressure - Strong Euro had a significant translation impact but limited transactional effect as only 10% of our production is shipped across Regions 26

28 Business review EMEA: Very strong results due to solid volume growth, favorable product mix and sustained effect of cost reduction program. North America: Slow recovery mainly driven by better automotive demand while other markets like agricultural and public investments remain weak. Latin America: Slowdown in GDP growth driven by weaker mining sector impacted demand and created very competitive price environment in lower end product segments. Political uncertainty in different countries also impacted the economic environment. Asia Pacific: Growing but very competitive tire cord and sawing wire market in China while other markets were softer reflecting overall economic slowdown. SEA and India had strong industrial growth but were impacted by imports from China. 27

29 Sales in mio 1H2013 Venezuela Organic growth Acquisitions / Divestments FX 1H2014 Consolidated H2013 Venezuela Organic growth Acquisitions / Divestments FX 1H2014 Combined Consolidated organic growth more than offset by exchange rate movements - Impact of exchange rate movements on combined even more significant reflecting the weaker Brazilian Real versus same period last year 28

30 Sales by segment First Half 2014 Consolidated sales Combined sales EMEA North America Latin America Asia Pacific In mio variance in mio variance % -5% -16% +2% % -5% -16% +1% Total % % Consolidated sales Combined sales 30% 35% EMEA 25% 27% North America Latin America Asia Pacific 14% 18% 17% 34% 29

31 Consolidated income statement: key figures (In mio ) 1H H 2014 Sales Cost of sales (1 400) (1 351) Gross profit Gross profit margin 15.1% 16.0% - Sales decline of -2.4% reflects: - Solid organic volume growth of 3.9% - Negative price/mix effect mainly reflecting lower wire rod prices (-1.2%) - Negative impact of exchange rate movements (-5.1%) - Increase of gross profit due to volume increase and sustained cost control partly offset by translation effect of exchange rate movements 30

32 Consolidated income statement: key figures (In mio ) 1H H 2014 Gross profit Selling expenses (68) (68) Administrative expenses (63) (65) R&D expenses (32) (30) Others 5 6 Operating result before non-recurring items (REBIT) SG&A remained stable: - Final impact of cost reduction program largely offset by inflation - Positive impact of exchange rate movements - Selling expenses negatively impacted by movement in bad debt reserves 31

33 Consolidated income statement: key figures (In mio ) 1H H 2014 Operating result before non-recurring items (REBIT) REBIT margin on sales 5.5% 6.3% Non-recurring items (2) 17 Operating result (EBIT) EBIT margin on sales 5.4% 7.3% EBITDA EBITDA margin on sales 10.4% 11.8% - REBIT increase of 10 million reflects an organic increase of 22 million partly offset by the business situation in Venezuela -6 million and the impact of exchange rate movements for -6 million - Non-recurring items include: i) negative goodwill of the transaction in Latam ( 11 million), ii) gains on sale of real estate ( 8 million), iii) change in environmental provision ( 6 million) and iv) impairments and other elements ( -8 million) 32

34 Segment reporting: EMEA (In mio ) 1H H 2014 Consolidated sales Operating result before non-recurring items (REBIT) REBIT margin on sales 8.7% 11.5% Non-recurring items (1) 7 Operating result (EBIT) Depreciation, amortization and impairment losses EBITDA EBITDA margin on sales 12.8% 16.7% - Sales increase due to a very strong volume growth mainly in Q1 and good product mix - Profitability well above 10% due to very high capacity utilization combined with sustainable cost control - Non-recurring reflect sale of real estate and reversal of some environmental provisions 33

35 Segment reporting: North America (In mio ) 1H H 2014 Consolidated sales Operating result before non-recurring items (REBIT) REBIT margin on sales 4.3% 5.1% Non-recurring items (0) 1 Operating result (EBIT) Depreciation, amortization and impairment losses 6 5 EBITDA EBITDA margin on sales 6.2% 7.2% - Sales decline due to exchange rate movements partly offset by 2% volume increase - REBIT and REBITDA margin improve thanks to slightly better capacity utilization and the impact of cost savings program but are still below target 34

36 Segment reporting: Latin America (In mio ) 1H H 2014 Consolidated sales Operating result before non-recurring items (REBIT) REBIT margin on sales 7.9% 3.9% Non-recurring items (0) 10 Operating result (EBIT) Depreciation, amortization and impairment losses 11 (3) EBITDA EBITDA margin on sales 11.1% 6.2% - Sales drop of 16% due to devaluation of the Chilean Peso by 21% and a 50% volume drop in Venezuela due to the political and economic situation - Overall market share remained stable at a very strong level - REBIT significantly impacted by Venezuela -6 million, devaluation of Chilean Peso -2 million and lower margins on commodity products to remain competitive with import from Asia 35

37 Segment reporting: Asia Pacific (In mio ) 1H H 2014 Consolidated sales Operating result before non-recurring items (REBIT) REBIT margin on sales 8.4% 8.9% Non-recurring items (0) (4) Operating result (EBIT) Depreciation, amortization and impairment losses EBITDA EBITDA margin on sales 17.8% 18.4% - Sales increase of 2% due to 10% volume increase partly offset by exchange rate movements -6%, lower prices reflecting lower wire rod costs and the competitive market situation in tire cord and sawing wire in China - Non-recurring includes impairment of some assets in Malaysia as the turnaround of the acquired business remains challenging 36

38 Consolidated income statement: key figures (In mio ) 1H H 2014 Operating result (EBIT) Interest income / expense (33) (28) Other financial income & expenses (8) 0 Result before taxes Income taxes (30) (23) Result after taxes (consolidated companies) Lower interest cost due to average lower net debt of 100 million - Taxes reflect current cash tax cost and some adjustments in tax related to prior years 37

39 Consolidated income statement: key figures (In mio ) 1H H 2014 Result after taxes from consolidated companies Share in the results of JVs and associates Result for the period Attributable to non-controlling interests 9 2 Attributable to the Group Result of the joint ventures is lower due to the devaluation of the Brazilian Real and 2013 included some one off items - Result attributable to non-controlling interest is low due to low profitability in Latam and impairment in Malaysia 38

40 Cash flow: key figures (In mio ) 1H H 2014 Gross cash flows from operations Cash flows from operations Cash flows from investment activities (20) (46) Cash flows from financing activities (80) Cash flows from operations impacted by an increase in working capital - Investments at a higher level versus

41 Working capital: key figures (In mio ) 1H 2013 YE H 2014 Inventories Accounts receivable Accounts payable (432) (462) (502) Working capital Working capital increased versus year end 2013 in line with typical seasonality but remains below the level of the same period last year - Average working capital to sales reduced to 26.9% vs. 28.4% for the same period last year 40

42 Consolidated balance sheet: key figures Assets Equity and Liabilities Non-current assets Equity Current assets Non-current liabilities Current liabilities YE June 2014 YE June Assets and liabilities increase significantly with issue of the convertible bond for which the proceeds have not been used yet to finance the Pirelli Tire cord acquisition 41

43 Balance sheet: key figures (In mio ) 1H 2013 YE H 2014 Net financial debt Gearing (net debt to equity) 49.3% 38.2% 43.6% Net debt on EBITDA Net debt on REBITDA Net debt increase versus year end 2013 due to seasonality effect of increased working capital, dividend payment and some share buyback - Both gearing and net debt / EBITDA remain below long term company target 42

44 Ratios: key figures (In mio ) 1H H 2014 EBITDA margin on sales 10.4% 11.8% REBIT margin on sales 5.5% 6.3% EBIT margin on sales 5.4% 7.3% Sales on capital employed (asset rotation) Return on capital employed (ROCE) 7.4% 10.7% Return on equity (ROE) 4.4% 10.5% 43

45 Key figures per share (In mio ) 1H H 2014 Share price Number of existing shares Book value Earnings per share (EPS) Weighted average number of shares

46 Outlook - Unchanged overall business climate. - Price erosion in Chinese tire cord market will accelerate in Q3. - EMEA remains strong but modest slowdown is projected in automotive market. As always there will be a seasonal effect of second half year. - We believe that Latam is bottoming out with some potential upward trend towards the last quarter of the year. - Recovery in North American remains fragile with limited visibility on project business from public sector investments. - Continued internal drive to better leverage our scale while focusing on driving growth in our key markets. 45

47 Contacts Investor Relations : Mr. Jérôme Lebecque Jerome.Lebecque@bekaert.com Documentation : Mrs. 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 2014 Results 27 February annual report available on the internet 27 March 2015 First quarter trading update May 2015 General Meeting of Shareholders 13 May 2015 Dividend ex-date 15 May 2015 Dividend payable 20 May 2015 First half year results July 2015 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. 46

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