Bekaert Investor Presentation
October 2020
Content
BEKAERT IN BRIEF | |
4 | Fact sheet |
- High-techsolution provider
- Sustainability ambitions and actions
8 | Global presence |
9 | Technological and Market leadership |
SEGMENT PERFORMANCE | |
13 | Leadership team |
14 | Segmentation and sectorial breakdown |
15 | Segment profile sheets |
19 | 1H2020 Sales |
GROUP RESULTS H1/2020
- Market developments and Covid-19 impact
- Our response + Financial highlights
26 | uEBIT bridge |
28 | Segment reports + Consolidated statements |
35 | Outlook |
36 | Debt management |
INVESTMENT CASE
Investing in Bekaert | 40 |
Strategy - Blue Slide | 41 |
Profitability: journey and ambition | 42 |
Dividend policy | 43 |
FINANCIALS FY2019
2019 performance | 45 |
2019 EBIT bridge | 47 |
Income statement Key figures | 48 |
Ratios | 50 |
OTHER
News updates | 52 |
History | 53 |
Product and Market Portfolio | 54 |
Contact information | 61 |
2 | Investor presentation - Bekaert |
Content
BEKAERT IN BRIEF | |
4 | Fact sheet |
- High-techsolution provider
- Sustainability ambitions and actions
8 | Global presence |
9 | Technological and Market leadership |
SEGMENT PERFORMANCE | |
13 | Leadership team |
14 | Segmentation and sectorial breakdown |
15 | Segment profile sheets |
19 | 1H2020 Sales |
GROUP RESULTS H1/2020
- Market developments and Covid-19 impact
- Our response + Financial highlights
26 | uEBIT bridge |
28 | Segment reports + Consolidated statements |
35 | Outlook |
36 | Debt management |
INVESTMENT CASE
Investing in Bekaert | 40 |
Strategy - Blue Slide | 41 |
Profitability: journey and ambition | 42 |
Dividend policy | 43 |
FINANCIALS FY2019
2019 performance | 45 |
2019 EBIT bridge | 47 |
Income statement Key figures | 48 |
Ratios | 50 |
OTHER
News updates | 52 |
History | 53 |
Product and Market Portfolio | 54 |
Contact information | 61 |
3 | Investor presentation - Bekaert |
Bekaert in brief
Founded in 1880 by Leo Leander Bekaert
The world's largest independent producer of steel wire products and solutions
Serving customers from a very wide range of industry sectors in 120 countries and operating a global manufacturing platform with 28 000 employees worldwide
Combined sales of € 5.1 billion and consolidated sales of € 4.3 billion (2019)
Listed on Euronext® Brussels
Bekaert in your day-to-day life…
We're present in a very wide range of applications
30% of all tires around the world are reinforced with Bekaert tire cord
Every year, 10 million m³ of concrete is being reinforced with Dramix® steel fibers
Bekaert's customers use 3.5 million kilometer of bookbinding wire per year
Over 1 billion bottles are uncorked annually by removing the muselet made of Bekaert steel wire
5 | Investor presentation - Bekaert |
High-tech solution provider
surfing the waves of megatrends
Bekaert develops sustainable materials for future mobility. Ever stronger and thinner tire cords enable lightweight tire design. Ultra-thin metal fibers are a core material of sensor technologies.
We develop innovative steel and synthetic mooring solutions for floating offshore wind turbines and our a-magnetic armoring wire protects submarine power cables against corrosion and energy losses.
Our high-tech solutions for realizing vertical cities include A-cords for elevators, ultra-thin metal fibers to manufacture scratch-free smart glazing, Dramix® steel fibers for concrete reinforcement and Murfor® Compact masonry reinforcement.
Based on our ultra-thin metal fiber technologies we develop the core elements of carbon-freehydrogen-fueled heating systems and hydrogen power stations.
6 | Investor presentation - Bekaert |
Ambitions and actions
for a sustainable future
We conduct and grow our business in a sustainable way so that our employees, customers, shareholders, business partners, and communities all benefit. Our commitment to drive value takes into account the broader environmental and social impacts of our operations, with clear responsibility:
for our people: we act with integrity
- commit to the highest standards of business ethics. We promote equal opportunity, foster diversity and we create a no-harm-to- anyone work environment globally.
for the environment: we develop equipment that reduces energy consumption and optimizes recycling. We use renewable energy sources wherever possible and we don't discharge untreated effluents & waste.
in our markets: we promote and apply responsible business practices in all our relationships. Our sourcing and innovation programs enhance sustainability improvements throughout the value chain.
to society: we support and develop initiatives that help improve the social conditions in the communities where we are active. Education programs form the backbone of our social funding.
7 | Investor presentation - Bekaert |
Bekaert global presence
Bekaert production plants
Bekaert offices
Bekaert Technology Centers
BBRG production & distribution sites
8
Bekaert technological leadership
€ 70 million | International R&D teams in | About 1800 | ||||||
R&D in 2019 | Belgium - China - India - UK | 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
9 | Investor presentation - Bekaert |
Bekaert core competencies
steel wire transformation
from wire rod | drawing, bunching, cabling, | to metal fibers |
6.5 mm | profiling, welding, | 1 µm |
knitting, weaving… |
coating technologies
from traditional | adhesion | to advanced |
coatings | corrosion resistance | coatings |
wear resistance | ||
anti-fouling |
10 | Investor presentation - Bekaert |
Bekaert market leadership in diverse sectors - combined sales (FY2019)
46%
18%
8%
8%
7%
7%
6%
Tire & Automotive
Construction
Agriculture
Energy & utilities
Consumer goods
Basic materials
Equipment
Bekaert has a strong presence in diverse sectors. This makes Bekaert less sensitive to sector- specific trends and it also benefits our customers, because solutions we develop for customers in one sector often form the basis of innovations in others.
11 | Investor presentation - Bekaert |
Content
BEKAERT IN BRIEF | |
4 | Fact sheet |
- High-techsolution provider
- Sustainability ambitions and actions
8 | Global presence |
9 | Technological and Market leadership |
SEGMENT PERFORMANCE | |
13 | Leadership team |
14 | Segmentation and sectorial breakdown |
15 | Segment profile sheets |
19 | 1H2020 Sales |
GROUP RESULTS H1/2020
- Market developments and Covid-19 impact
- Our response + Financial highlights
26 | uEBIT bridge |
28 | Segment reports + Consolidated statements |
35 | Outlook |
36 | Debt maturity profile - Net debt leverage |
INVESTMENT CASE
Investing in Bekaert | 40 |
Strategy - Blue Slide | 41 |
Profitability: journey and ambition | 42 |
Dividend policy | 43 |
FINANCIALS FY2019
2019 performance | 45 |
2019 EBIT bridge | 47 |
Income statement Key figures | 48 |
Ratios | 50 |
OTHER
News updates | 52 |
History | 53 |
Product and Market Portfolio | 54 |
Contact information | 61 |
12 | Investor presentation - Bekaert |
Executive Leadership team
Four Business Units:
Divisional CEO | Divisional CEO | Divisional CEO | Divisional CEO |
Rubber Reinforcement | Steel Wire Solutions | Specialty Businesses | Bridon-Bekaert Ropes Group |
Arnaud Lesschaeve | Stijn Vanneste | Jun Liao | Curd Vandekerckhove |
Four Global Functional Domains:
CEO ad interim
Oswald Schmid
Chief Financial Officer | Chief HR Officer | Chief Strategy Officer | Chief Operations Officer |
Taoufiq Boussaid | Rajita D'Souza | Juan Carlos Alonso | Oswald Schmid |
13 | Investor presentation - Bekaert |
Segmentation and sectorial breakdown | (consolidated sales H1 2020) |
Rubber Reinforcement (RR) | Steel Wire Solutions (SWS) | Specialty Businesses (SB) |
Tire cord, bead wire, hose | Steel wire products and | Building products, fiber |
reinforcement wire and | solutions serving industrial, | technologies, combustion |
conveyor belt | agricultural, consumer and | technology and sawing wire |
reinforcement | construction markets |
Bridon-Bekaert Ropes Group
(BBRG)
Ropes and advanced
cords businesses
6% | 6% | 2% | 10% | |
9% | ||||
14% | 27% | 9% | 69% | 30% |
15% |
40%* | 36%* | 11% | 10%* | 13%* | |||||||||||||||
15% | |||||||||||||||||||
20% | 19% | ||||||||||||||||||
94% | 10% | 26% | |||||||||||||||||
8% | |||||||||||||||||||
11%36%4 | |||||||||||||||||||
Construction | Agriculture | Consumer Goods | Tire & Automotive | Energy & Utilities | Basic Materials | Equipment | Other | ||||||||||||
The sectorial mix in H1 2020 was impacted by COVID-19: tire & automotive sales were down, while the agriculture, energy & utilities, and mining (basic material) sectors were more resilient.
14 | Investor presentation - Bekaert | - | *BU share in the consolidated revenue over the 1st Half of 2020 |
Rubber Reinforcement | Combined revenue data FY2019 |
15 | Investor presentation - Bekaert |
Steel Wire Solutions | Combined revenue data FY2019 |
Combined revenue per sector - 2019
16 | Investor presentation - Bekaert |
Specialty Businesses | Revenue data FY2019 |
19 sites
Revenue per sector - 2019
17 | Investor presentation - Bekaert |
Bridon-Bekaert Ropes Group | Revenue data FY2019 |
2 450
15
Revenue per sector - 2019
18 | Investor presentation - Bekaert |
2020 H1 Sales
Consolidated sales | 2019 | 2020 | Share | Variance | Organic | FX |
Rubber Reinforcement | 1 014 | 709 | 40% | -30% | -30% | - |
Steel Wire Solutions | 751 | 639 | 36% | -15% | -12% | -3% |
Specialty Businesses | 202 | 185 | 10% | -9% | -8% | -1% |
BBRG | 242 | 229 | 13% | -6% | -4% | -2% |
Group | 10 | 9 | - | - | - | - |
Total | 2 218 | 1 770 | 100% | -20% | -19% | -1% |
Combined third party sales | 2 619 | 2 065 | 100% | -21% | -17% | -4% |
19
Content
BEKAERT IN BRIEF | |
4 | Fact sheet |
- High-techsolution provider
- Sustainability ambitions and actions
8 | Global presence |
9 | Technological and Market leadership |
SEGMENT PERFORMANCE | |
13 | Leadership team |
14 | Segmentation and sectorial breakdown |
15 | Segment profile sheets |
19 | 1H2020 Sales |
GROUP RESULTS H1/2020
- Market developments and Covid-19 impact
- Our response + Financial highlights
26 | uEBIT bridge |
28 | Segment reports + Consolidated statements |
35 | Outlook |
36 | Debt maturity profile - Net debt leverage |
INVESTMENT CASE
Investing in Bekaert | 40 |
Strategy - Blue Slide | 41 |
Profitability: journey and ambition | 42 |
Dividend policy | 43 |
FINANCIALS FY2019
2019 performance | 45 |
2019 EBIT bridge | 47 |
Income statement Key figures | 48 |
Ratios | 50 |
OTHER
News updates | 52 |
History | 53 |
Product and Market Portfolio | 54 |
Contact information | 61 |
20 | Investor presentation - Bekaert |
H1 2020
Bekaert counters significant impact of Covid-19 through effective mitigating measures and performance improvements
The turnaround of SWS and BBRG
and the effectiveness of implemented measures moderate the impact of Covid-19 on the Rubber Reinforcement business
Market developments and Covid-19 impact in the first half of 2020
- Demand from tire and automotive markets
- Hit hard, first in China and quickly followed in the rest of the world
- Up to -30% drop in global car/truck production over the first half
- Global tire demand reduction: -40% on average in Q2 ; lowest point in April
- Construction and infrastructure markets
- Held up relatively well in the first quarter of 2020
- Constrained by lockdowns in Q2: up to -20% (depending on the region)
- Stimulus programs start to boost infrastructure investment in China
- Demand from agriculture, utility, and mining markets
- Remained relatively solid throughout the first half (up to -10% impact)
- Currently less affected by the Covid-19 pandemic
- Considered 'essential industries'
Main applications
Tire cord Bead wire
Heat resistant textiles Micro-cables Window regulator cord
Dramix fibers Masonry reinforcement Construction strand & ropes Welded mesh
Elevator hoisting cords Burners & heat exchangers
Agri fencing solutions
Power cable armoring
Conductor strands
Mining ropes
22
Our response
Health
& Safety
- Early, rigorous measures to limit infection risks
- Awareness among team members and their families
- Early promotion of smart working
Customer | Liquidity | Profit | ||||||||
Centricity | & Cost | Restoration | ||||||||
• Close contact to | • Strict control on | • Acceleration of the | ||||||||
understand current and | working capital and | turnaround of SWS | ||||||||
future needs | cash collection risk | and BBRG | ||||||||
• Ensure customers do | • Stringent capex and | • Robust improvement | ||||||||
not suffer from supply | cost control + flexing | in business mix and | ||||||||
interruptions | of fixed cost | margins | ||||||||
• Reinforce digital tools | • Positive cash flows | • Impactful mitigating | ||||||||
and practices | and strong liquidity | actions | ||||||||
Supply
Chain Mgt
- Secured supplies of critical products to avoid interruptions
- Adequate sourcing activities aligned with sales evolution
- Global virtual supplier campaign
- Effective governance and coordination in aligning decisions and actions in managing this crisis
- Communication streams and channels across the business and the regions
- Focus on emerging stronger from the crisis and anticipating risk and opportunity in our markets and in our business
23
H1 2020 Financial Highlights
- Underlying EBIT margin of 5.2% (5.7% H1 2019) on a revenue decrease of -20%
- Robust performance improvement SWS and BBRG - SB remaining strong - RR significantly affected
- Proactive actions and mitigating response to Covid-19: reduction of cost and working capital
- Stronger business mix
- Very strong liquidity: € 834 million euro cash on hand, doubling 30 June 2019 levels
- Debt leverage at 2.5x underlying EBITDA, slightly below H1 2019 (2.6x)
Sales | uEBIT | Measures | Business mix | Liquidity | ||||
-20% | 5.2% | cost - capex | stronger | x2 |
working capital |
24
H1 2020 Financial Highlights
H1 | 2019 | 2020 | yoy | % |
Sales | 2 218 | 1 770 | -448 | -20% |
EBITDA-underlying | 239 | 194 | -45 | -19% |
EBIT-underlying | 126 | 92 | -34 | -27% |
% EBITDA-underlying | 10.8% | 11.0% | +0.2pp | +2% |
% EBIT-underlying | 5.7% | 5.2% | -0.5pp | -9% |
Working Capital | 956 | 720 | -236 | -25% |
Net Financial Debt | 1 253 | 955 | -298 | -24% |
Net debt on EBITDA-underlying | 2.6 | 2.5 | -0.1pp | -4% |
25 In millions of € unless otherwise indicated
EBIT-Underlying bridge
130 | 6 | -2 | ||||||||
110 | ||||||||||
90 | 30 | |||||||||
70 | ||||||||||
126 | ||||||||||
- | 17 | |||||||||
50 | 92 | |||||||||
30 | 18 | |||||||||
10 | 34 | |||||||||
-10 | ||||||||||
EBIT Underlying | Inventory Valuation | FX effects | COVID 19 | COVID 19 | business mix | cost + overheads | EBIT Underlying | |||
2019.06 | volume + cost | mitigation | 2020.06 |
external levers | internal levers |
26
EBIT-Underlying bridge by Business Unit
27
Rubber Reinforcement: significantly affected by Covid-19 impact on tire & automotive markets in Q2
(in mio €) | Underlying | Reported | ||||
H1 2019 | H1 2020 | H1 2019 | H1 2020 | |||
Consolidated third party sales | 1 014 | 709 | 1 014 | 709 | ||
Consolidated sales | 1 031 | 725 | 1 031 | 725 | ||
Gross profit | 126 | 55 | 123 | 54 | ||
EBIT | 94 | 28 | 91 | 27 | ||
EBIT margin | 9.1% | 3.9% | 8.8% | 3.7% | ||
EBITDA | 157 | 81 | 154 | 79 | ||
EBITDA margin | 15.3% | 11.1% | 15.0% | 10.9% | ||
ROCE | 13.6% | 4.7% | 13.2% | 4.5% | ||
- Consolidated sales contracted by -30% or € -300 million.
- Volumes decreased by -25%(-36% in Q2) and the impact of passed-on wire rod price changes and other price-mix effects was -5%.
- Gross profit was -56% below H1 last year.
- Underlying EBIT decreased by € -65.5 million, resulting in a margin on sales of 3.9%.
- Underlying EBITDA margin of 11.1%
28
Steel Wire Solutions: robust profit improvement on lower sales
(in mio €) | Underlying | Reported | ||||||
H1 2019 | H1 2020 | H1 2019 | H1 2020 | |||||
Consolidated third party sales | 751 | 639 | 751 | 639 | ||||
Consolidated sales | 778 | 655 | 778 | 655 | ||||
Gross profit | 82 | 93 | 82 | 93 | ||||
EBIT | 28 | 40 | 26 | 39 | ||||
EBIT margin | 3.5% | 6.0% | 3.4% | 5.9% | ||||
EBITDA | 55 | 67 | 53 | 64 | ||||
EBITDA margin | 7.1% | 10.2% | 6.9% | 9.8% | ||||
ROCE | 7.9% | 13.7% | 7.6% | 13.4% | ||||
- Steel Wire Solutions reported -15% lower consolidated sales. This stemmed from a volume decline of -11%,passed-on wire rod price changes and other price-mix effects (-1%) and unfavorable currency movements (-3%).
- Gross profit increased by 12.6% to € 93 million due to an improved business mix and footprint optimization, stringent cost control, and impactful Covid-19 mitigation actions.
- Underlying EBIT increased by +44% to reach a solid margin on sales of 6% and underlying EBITDA improved accordingly to a double- digit margin of more than 10%.
29
Specialty Businesses: continued strong profit contribution
(in mio €) | Underlying | Reported | ||||
H1 2019 | H1 2020 | H1 2019 | H1 2020 | |||
Consolidated third party sales | 202 | 185 | 202 | 185 | ||
Consolidated sales | 208 | 188 | 208 | 188 | ||
Gross profit | 60 | 57 | 54 | 56 | ||
EBIT | 25 | 24 | 18 | 23 | ||
EBIT margin | 12.0% | 12.9% | 8.6% | 12.0% | ||
EBITDA | 33 | 31 | 27 | 30 | ||
EBITDA margin | 15.7% | 16.6% | 13.2% | 15.7% | ||
ROCE | 20.7% | 20.1% | 14.7% | 18.7% | ||
- Specialty Businesses reported a decrease of -8.5%in sales, driven by lower demand in the second quarter, both in Building Products (-10%) and Fiber Technologies (-10%). Combustion Technologies reported a moderate decrease and sales in Sawing Wire activities remained limited.
- Underlying EBIT was slightly below last year but the margin on sales improved to 12.9% and the underlying EBITDA margin increased to a robust 16.6%.
30
Bridon-Bekaert Ropes Group (BBRG): exceptionally strong step-up in performance
(in mio €) | Underlying | Reported | |||||
H1 2019 | H1 2020 | H1 2019 | H1 2020 | ||||
Consolidated third party sales | 242 | 229 | 242 | 229 | |||
Consolidated sales | 244 | 230 | 244 | 230 | |||
Gross profit | 41 | 50 | 43 | 50 | |||
EBIT | 6 | 24 | 8 | 24 | |||
EBIT margin | 2.6% | 10.3% | 3.4% | 10.3% | |||
EBITDA | 19 | 39 | 19 | 39 | |||
EBITDA margin | 8.0% | 17.2% | 7.9% | 17.2% | |||
ROCE | 2.6% | 10.0% | 3.4% | 10.0% | |||
- BBRG reported a sales decline of -5.6%, driven by lower volumes. Part of the volume decrease was a result of BBRG's strategy to reduce its presence in lower margin applications.
- The business unit delivered an underlying EBIT of € 24 million, four times the result of the same period last year and reaching an underlying EBIT margin on sales of 10.3% (versus 2.6% in the same period last year). Underlying EBITDA reached an exceptionally strong margin of 17.2%.
31
Consolidated income statement: key figures
(in mio €) | Underlying | Reported | ||||
H1 2019 | H1 2020 | H1 2019 | H1 2020 | |||
Sales | 2 218 | 1 770 | 2 218 | 1 770 | ||
Cost of sales | (1 909) | (1 518) | (1 916) | (1 521) | ||
Gross profit | 309 | 252 | 302 | 249 | ||
- Sales decreased by -20.2%:
- -17.7%organic volume decline (-26.5% in Q2)
- -1.1%passed-on wire rod price changes and other price-mix elements
- -1.4%unfavorable impact of exchange rate movements
- Underlying Gross profit decreased by € -56.7million (-18.3%) but increased as a margin on sales to 14.3% (13.9% in H1 last year):
- adverse cost of sales and margin impact from a significant decrease in volumes
- positive mix effects from growth in good margin businesses
- robust progress in the profit restoration of BBRG and Steel Wire Solutions
- mitigation actions in response to COVID-19 impact
- unfavorable impact from currency movements
32
Consolidated income statement: key figures
(in mio €) | Underlying | Reported | ||||
H1 2019 | H1 2020 | H1 2019 | H1 2020 | |||
Gross profit | 309 | 252 | 302 | 249 | ||
Selling expenses | (88) | (81) | (89) | (81) | ||
Administrative expenses | (70) | (59) | (71) | (60) | ||
R&D expenses | (33) | (25) | (33) | (26) | ||
Other operating revenue and expenses | 8 | 4 | 7 | 4 | ||
EBIT | 126 | 92 | 115 | 87 | ||
EBIT margin | 5.7% | 5.2% | 5.2% | 4.9% | ||
EBITDA | 239 | 194 | 226 | 188 | ||
EBITDA margin | 10.8% | 11.0% | 10.2% | 10.6% | ||
- Overheads decreased by € -25.9 million.
- full impact of restructuring and structural savings actions implemented in the second half of 2019
- mitigation actions taken in response to COVID-19 (€ -17.6 million)
- Underlying EBIT decreased by € -34.5 million to € 91.5 million
- Underlying EBIT margin on sales was 5.2%, a relatively slight decrease on 20% lower sales.
- Underlying EBITDA margin improved to 11.0%.
33
Other information
- CAPEX in PP&E: € 37 million, € -11 million below the level in H1 last year
- In July 2020, Bekaert reached final agreements with buyers on the sale of properties in Belgium:
- Hemiksem land: net cash impact of € +23 million and income statement impact of € +36 million in Q4
- Moen plant and small factory building in Zwevegem: net cash impact of € +10 million in Q4
34
Outlook
- We project a gradual recovery in tire markets in the remainder of the year
- Demand evolutions in other markets are more difficult to project in the current economic environment
- We will continue to implement mitigating actions and other improvement measures
- We expect continued impact from the progress made in strengthening our resilience
The current evolutions and potential second wave risk of the Covid-19 pandemic continue to create a high level of uncertainty.
In this context, we have limited visibility on the full-year impact in our markets and our business.
35
Debt management: new bond issue - strong liquidity - reducing debt & net debt leverage
- New retail bond issue (€ 200 mln - 7 years - 2.75% annual gross coupon): (over)subscribed in one day - settlement date is 23 October. Proceeds will be used to pay back the convertible bond (€ 380 mln) maturing in June 2021.
- Liquidity and cash generation are strong and allow:
- Pay-backof EIB loan in early October 2020 without refinancing (€ 75 mln)
- Pay-backof retail bond on 17 October 2020 without refinancing (€ 46 mln)
- Pay-backof € 190 mln drawdown on credit lines
- Pay-backof part of the convertible bond maturing in 2021 from cash (€ 180m)
36 | Investor presentation - Bekaert |
Debt maturity table
600 000 000 | 60 mio € will be paid back on 24/12/2020 | ||||||
400 000 000 | Pay-back on 9 June 2021 | ||||||
200 000 000 | |||||||
0 | |||||||
2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 |
-200 000 000 | |||||||
-400 000 000 | |||||||
-600 000 000 | |||||||
-800 000 000 | |||||||
-1 000 000 000 |
Bond Convertible LT ST Schuldschein Cash
37 | Investor presentation - Bekaert |
Net debt and leverage evolution
1200 | In millions of € | |
1000 | 2.7 | 2.6 |
800 | 2.3 |
2.1 | |
600 |
400
200
1151 | 1153 | 1253 | 977 | ||
0 | |||||
2017 | 2018 | 1H 2019 | 2019 | ||
Net debt | Net debt/EBITDA-Underlying | ||||
2.5
955
1H 2020
3
2.5
2
1.5
1
0.5
0
38 | Investor presentation - Bekaert |
Content
BEKAERT IN BRIEF | |
4 | Fact sheet |
- High-techsolution provider
- Sustainability ambitions and actions
8 | Global presence |
9 | Technological and Market leadership |
SEGMENT PERFORMANCE | |
13 | Leadership team |
14 | Segmentation and sectorial breakdown |
15 | Segment profile sheets |
19 | 1H2020 Sales |
GROUP RESULTS H1/2020
- Market developments and Covid-19 impact
- Our response + Financial highlights
26 | uEBIT bridge |
28 | Segment reports + Consolidated statements |
35 | Outlook |
36 | Debt maturity profile - Net debt leverage |
INVESTMENT CASE
Investing in Bekaert | 40 |
Strategy - Blue Slide | 41 |
Profitability: journey and ambition | 42 |
Dividend policy | 43 |
FINANCIALS FY2019
2019 performance | 45 |
2019 EBIT bridge | 47 |
Income statement Key figures | 48 |
Ratios | 50 |
OTHER
News updates | 52 |
History | 53 |
Product and Market Portfolio | 54 |
Contact information | 61 |
39 | Investor presentation - Bekaert |
Investing in Bekaert is taking part in
- The growth ambitions of a world market and technology leader
- A transformation towards 7% underlying EBIT margin over the medium term and higher beyond
- A high-tech solution provider focusing on product and application innovations in attractive growth markets
- Technology and Innovation priorities aligned with the megatrends that will shape our future
- Our drive to develop durable solutions for renewable energy projects, carbon-free heating systems and
a significant emission reduction of vehicles
- Ambitious targets to reduce the company's carbon footprint
- A corporate socially responsible company with 28 000 motivated employees worldwide
- Bekaert's commitment to return value to its shareholders
40 | Investor presentation - Bekaert |
41 | Investor presentation - Bekaert |
The Bekaert journey since 2013 + Our Ambition
5,2%
2013
Negative: | |||||
Volatility of wire rod prices and inflationary costs | |||||
Uncertainty related to US trade policy changes and Brexit | |||||
Difficult business climate in Latin America | |||||
Very limited demand for our sawing wire | 2020 | ||||
Start-up issues in expansion projects | |||||
Unfavorable one-time effects in BBRG | Downsides: | ||||
Positive: | Impact of Covid-19 | ||||
Growth and strengthening position in tire markets | Political & economic uncertainty | ||||
Tire/Automotive demand strong on a global scale | Impact of transformation programs | ||||
Better market position in Tire cord China | Benefits of ongoing expansion investments | Upsides: | |||
Customer excellence program | Benefits from restructurings 2019-2020 | ||||
Bridon added as from H2 16 | Benefits of turnaround/profit restoration actions | ||||
Pricing discipline & mix improvement | |||||
8,2% | Strong global response to Covid-19 crisis | ||||
Environmental regulations | |||||
2016 | Innovation opportunities | ||||
7,3% | 7% | ||||
6,3% | |||||
2017 | |||||
2015 | 5,6% | ||||
5,1% | 2019 | ||||
2014 | Negative | 4,9% | |||
Negative: | |||||
Bridon for full year (still below average margin) 2018 | |||||
Trade war, Brexit, … | |||||
Deconsolidation Sumaré: integration in JV | Inventory valuation impact of steep decline in wire rod prices | ||||
Pirelli Tire Cord acquisition Q4 ´14 | Brazil (45% BEK) | ||||
Softening OEM tire cord markets in H2 | |||||
Fast changing raw materials prices & pricing | |||||
Portfolio optimization: exit stainless, | Lower demand in agricultural, industrial and automotive | ||||
dynamics | |||||
carding, Xinyu China | Positive : | ||||
Better market position in RR China | Positive : | Pricing and mix improvement in BBRG & Building Products | |||
Tire cord India and SEAS picking up | Market share and volume growth in Tire Cord China | ||||
Tire/Construction remain strong | |||||
Sawing wire 2nd generation | Profit restoration programs in weaker business areas | ||||
Transformation programs | |||||
Manufacturing excellence program | Manufacturing cost & overhead cost savings | ||||
42 | Investor presentation - Bekaert | = Underlying EBIT-margin |
Dividend policy
In millions of €
400 | 80% | ||||
300 | 60% | out-Pay | |||
44% | |||||
200 | 40% | ||||
40% | |||||
ratio | |||||
100 | 20% | ||||
- | 0% | ||||||||
2009 | 2010 | 2011 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
Result Attributable to the Group | Dividend pay-out | ||
Pay-out policy over the years | Average pay-out % over the years | ||
It is the policy of the Board of Directors to propose a profit appropriation to the General Meeting of Shareholders which, insofar as the profit permits, provides a stable or growing dividend while maintaining an adequate level of cash flow in the company for investment and self-financing in order to support growth.
In practice, this means that the company seeks to maintain a pay-out ratio of around 40% of the result for the period attributable to equity holders of Bekaert, over the longer term.
In view of all measures taken by Bekaert to mitigate, as far as possible, the impact of the Covid-19 pandemic on the Group's profitability and liquidity, the Annual General Meeting approved to halve the initially proposed dividend to 35 eurocent and to postpone the dividend payment to November 2020.
43 | Investor presentation - Bekaert |
Content
BEKAERT IN BRIEF | |
4 | Fact sheet |
- High-techsolution provider
- Sustainability ambitions and actions
8 | Global presence |
9 | Technological and Market leadership |
SEGMENT PERFORMANCE | |
13 | Leadership team |
14 | Segmentation and sectorial breakdown |
15 | Segment profile sheets |
19 | 1H2020 Sales |
GROUP RESULTS H1/2020
- Market developments and Covid-19 impact
- Our response + Financial highlights
26 | uEBIT bridge |
28 | Segment reports + Consolidated statements |
35 | Outlook |
36 | Debt maturity profile - Net debt leverage |
INVESTMENT CASE
Investing in Bekaert | 40 |
Strategy - Blue Slide | 41 |
Profitability: journey and ambition | 42 |
Dividend policy | 43 |
FINANCIALS FY2019
2019 performance | 45 |
2019 EBIT bridge | 47 |
Income statement Key figures | 48 |
Ratios | 50 |
OTHER
News updates | 52 |
History | 53 |
Product and Market Portfolio | 54 |
Contact information | 61 |
44 | Investor presentation - Bekaert |
2019 Sales
Consolidated third party sales | 2018 | 2019 | Share | Variance | Organic | FX |
Rubber Reinforcement | 1 908 | 1 953 | 45% | +2% | +1% | +2% |
Steel Wire Solutions | 1 497 | 1 448 | 34% | -3% | -4% | +1% |
Specialty Businesses | 411 | 414 | 10% | +1% | = | +1% |
BBRG | 463 | 489 | 11% | +5% | +4% | +1% |
Group | 26 | 19 | - | - | - | - |
Total | 4 305 | 4 322 | 100% | +0.4% | -0.7% | +1.3% |
Combined third party sales | 5 074 | 5 132 | +1.1% | +0.5% | +0.7% | |
45 | Investor presentation - Bekaert |
2019 Financial Highlights
2018 | 2019 | yoy | % | |
Sales | 4 305 | 4 322 | +17 | +0.4% |
EBITDA-underlying | 426 | 468 | +42 | +9.9% |
EBIT-underlying | 210 | 242 | +32 | +15.1% |
One-off items | (63) | (87) | -24 | 37.4% |
Result of the period | 3 | 48 | +45 | - |
% EBITDA-underlying | 9.9% | 10.8% | 0.9pp | +9.1% |
% EBIT-underlying | 4.9% | 5.6% | 0.7pp | +14.7% |
% ROCE-Underlying | 8.0% | 9.5% | 1.5pp | +18.8% |
Working Capital | 875 | 699 | -176 | -20.1% |
Net Financial Debt | 1 153 | 977 | -176 | -15.3% |
Change in Working Capital | (13) | (176) | -163 | - |
Net debt on EBITDA-underlying | 2.7 | 2.1 | -22.2% | |
CAPEX (PP&E) | 198 | 98 | -100 | -50.5% |
Improvement Actions and Results
- Market share increase RR China
- Better pricing
- Improved mix from better segmentation
- Cost savings from manufacturing excellence programs
- Organizational efficiencies from deploying new organizational structure
- Turnaround and restructuring programs
- Overhead reduction
- Less interest expenses from refinancing
- Strong reduction working capital
- Stringent CAPEX control
- Net debt / underlying EBITDA at 2.1
46 | Investor presentation - Bekaert |
EBIT-Underlying bridge: by result driver
47 | Investor presentation - Bekaert |
Consolidated income statement: key figures
(in mio €) | Underlying | Reported | |||||
2018 | 2019 | 2018 | 2019 | ||||
EBIT | 210 | 242 | 147 | 155 | |||
EBIT margin | 4.9% | 5.6% | 3.4% | 3.6% | |||
EBITDA | 426 | 468 | 387 | 403 | |||
EBITDA margin | 9.9% | 10.8% | 9.0% | 9.3% | |||
ROCE | 8.0% | 9.5% | 5.6% | 6.1% | |||
- Improvement in EBIT, EBITDA and ROCE
- The difference between Underlying and Reported is due to one-off elements. Full disclosure of one-offs: cf page 39.
48 | Investor presentation - Bekaert |
Consolidated income statement: one-off items
(in mio €) | 2018 | 2019 |
EBIT - Underlying | 210 | 242 |
Restructuring programs | (62) | (82) |
Rubber Reinforcement | (25) | (15) |
Steel Wire Solutions | 2 | (23) |
Specialty Businesses | (18) | (16) |
Bridon-Bekaert Ropes Group (BBRG) | (13) | (5) |
Group | (8) | (23) |
Other | (1) | (4) |
EBIT | 147 | 155 |
2018:
- € -63 million one-off items:
- € -62 million from restructuring programs and € -1 million other
- net effect of € -108 million one-off costs and € +45 million one-off revenues
- Main elements in one-off costs:
- RR: Figline (Italy plant closure)
- SWS: restructurings in Latin America and Shah Alam Malaysia
- SB: asset impairments sawing wire + closure of Dramix plant in Costa Rica
- BBRG: expenses turnaround program and restructuring Brazil
- Main elements in one-off revenues:
- RR: the gain on the sale of land and buildings of Huizhou (China)
- SWS: the gain on the sale of land and buildings in Shah Alam (Malaysia)
2019:
- € -87 million one-off items:
- € -82.4 million related to restructuring
- € -4.4 million from losses incurred as a result of go-slow actions in a number of sites, partly offset by positive depreciation adjustments in BBRG
- Main elements in one-off costs:
- RR: Rome (US, relocation)
- SWS: plant closures Ipoh (Malaysia) and Shelbyville (US)
- SB: Dramix plant closures in Costa Rica and Belgium
- BBRG: restructuring programs in EMEA
- Lay-offsin Group functions (mainly Belgium)
- No one-off revenues in 2019
49 | Investor presentation - Bekaert |
Ratios: key figures
Underlying | Reported | |||||
2018 | 2019 | 2018 | 2019 | |||
Gross profit margin | 13.6% | 13.6% | 12.2% | 12.2% | ||
EBITDA margin | 9.9% | 10.8% | 9.0% | 9.3% | ||
EBIT margin | 4.9% | 5.6% | 3.4% | 3.6% | ||
Sales on capital employed (asset rotation) | 1.6 | 1.7 | 1.6 | 1.7 | ||
Return on capital employed (ROCE) | 8.0% | 9.5% | 5.6% | 6.1% | ||
Return on equity (ROE) | 0.2% | 3.2% |
(in mio €) | 2018 | 2019 |
Net financial debt | 1 153 | 977 |
Gearing (net debt to equity) | 76.0% | 63.8% |
Net debt on EBITDA (underlying) | 2.7 | 2.1 |
Net debt on EBITDA (reported) | 3.0 | 2.4 |
- As per introduction of IFRS 16 (Leases), € 83.5 million additional net debt was recognized.
- Improvement of Underlying EBITDA following IFRS 16: € 25.1 million.
- Impact IFRS 16 on Net Debt to EBITDA (underlying): would have been 2.0 instead of 2.1.
50 | Investor presentation - Bekaert |
Content
BEKAERT IN BRIEF | |
4 | Fact sheet |
- High-techsolution provider
- Sustainability ambitions and actions
8 | Global presence |
9 | Technological and Market leadership |
SEGMENT PERFORMANCE | |
13 | Leadership team |
14 | Segmentation and sectorial breakdown |
15 | Segment profile sheets |
19 | 1H2020 Sales |
GROUP RESULTS H1/2020
- Market developments and Covid-19 impact
- Our response + Financial highlights
26 | uEBIT bridge |
28 | Segment reports + Consolidated statements |
35 | Outlook |
36 | Debt maturity profile - Net debt leverage |
INVESTMENT CASE
Investing in Bekaert | 40 |
Strategy - Blue Slide | 41 |
Profitability: journey and ambition | 42 |
Dividend policy | 43 |
FINANCIALS FY2019
2019 performance | 45 |
2019 EBIT bridge | 47 |
Income statement Key figures | 48 |
Ratios | 50 |
OTHER
News updates | 52 |
History | 53 |
Product and Market Portfolio | 54 |
Contact information | 61 |
51 | Investor presentation - Bekaert |
News updates:https://www.bekaert.com/en/about-us/news-room
€ 200 million bond (over) subscribed in one day
Launch of € 200 million retail bond - 7 years
Merger of steel wire players in Colombia
Floating offshore wind partnership with Ideol
H1 2020 results
Sale of real estate: € +36 million P&L impact
Entering VPPA to source 55% of US electricity needs from wind energy
Move of Dramix activities to BBRG plant in US
52 | Investor presentation - Bekaert |
History
pioneering | innovating | growing | diversifying | BRIC | transforming | |
1880
Leo Leander Bekaert starts a small business in barbed wire in Zwevegem, Belgium
1922
First investment abroad: Tréfileries de Bourbourg, France
1948
First investments in Latin America: Argentina and Chile
1952 | Early 1970s | Early 1980s |
Steel cord production | New steel cord plant | Bekaert moves into |
start | openings and | composite materials, |
expansions in US, | non-ferrous forged | |
Brazil, Belgium, Japan | products, vacuum | |
coatings and filtration |
1964 | 1972 | 1988 |
Establishment of R&D | Listing on the Brussels | New plant openings in the |
center in Deerlijk, | stock exchange to fund | US in response to local |
Belgium | continued growth | demand |
1965 | 1975-1977 | 1990 |
Start-up of Engineering | Establishment of joint | Bekaert has become a truly |
facility for machine | ventures in Ecuador | international company with |
design and manufacture | and Brazil | 15000 employees worldwide |
1993
Bekaert recognizes China's huge market potential and builds a first steel cord plant in Jiangyin, Jiangsu Province
Mid 90s
Investments and expansions in Brazil, India, Indonesia, China, Peru and Chile
2000-2010
Strong growth in China, Central Europe, and start-up production in Russia
2013
Bekaert lifts its ambition level and deploys global excellence programs across the business
2014-2016
Bekaert concludes its largest acquisition (Pirelli) and merger (Bridon) ever
2019
The company implements a new organizational structure to revitalize its performance
53 | Investor presentation - Bekaert |
Tire & Automotive (46%)
In the tire & 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. |
54
Construction (18%)
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. |
55
Agriculture (8%)
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
56
Energy & Utilities (8%)
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. |
57
Consumer goods (7%)
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. |
58
Basic Materials (7%)
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
59
Equipment (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 | • | hose reinforcement wire |
• | shovel ropes | • Syncrocord® a-cords reinforcing synchronous belts |
• Bezinal® XP/XC coated spring wires | • | customized profiled components |
• | brush wire | • fiber media for sound attenuation |
• Fleximat® for conveyor belts | • | etc. |
60
Contact
Investor Relations : | Katelijn Bohez | +32 56 76 66 10 | katelijn.bohez@bekaert.com |
Documentation : | Dries Van Hamme | +32 51 33 34 23 | dries.vanhamme@bekaert.com |
Christine Clarysse | +32 56 76 66 13 | 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: | Dividend payable (new date) | 20 | November | 2020 |
Third quarter trading update 2020 | 20 | November | 2020 |
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.
61 | Investor presentation - Bekaert |
Investor section online @ www.bekaert.com
62 | Investor presentation - Bekaert |
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Bekaert NV published this content on 23 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 October 2020 16:19:07 UTC