Bekaert SA · EURONEXT:BEKB
Bekaert SA — FY2007 Earnings Presentation
57 slides from Bekaert SA's earnings presentation, Mar 14, 2008
Slide 1: Annual results 2007
Annual results 2007 14 March 2008 Baron Buysse, Chairman of the Board of Directors Bert De Graeve, Chief Executive Officer Bruno Humblet, Chief Financial Officer
Slide 2: Address by Baron Buysse, Chairman of the Board of Directors
Address by Baron Buysse, Chairman of the Board of Directors
Slide 3: Corporate Governance: Confirmation of a successful transition
Bekaert continues its sustainable profitable growth strategy Corporate Governance Confirmation of a successful transition • Correct functioning of Board and Committees • Fast Board decision process if required • More emphasis on longer term strategic positioning • Impeccable change at board level •
Slide 4: Principal shareholdings
Bekaert continues its sustainable profitable growth strategy Principal shareholdings Important update transparency declaration 100% 80% 60% 40% 20% 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 3 Annual results - 14 March 2008
Slide 5: Cash flow allocation
Bekaert continues its sustainable profitable growth strategy Cash flow allocation • Capital expenditures • Acquisitions • Dividends • Share buy back Dividends The Board seeks Ö To provide a stable or growing dividend, while maintaining an adequate level of cash flow Ö To maintain a pay-out ratio of
Slide 6: Overview share buy back program
Bekaert continues its sustainable profitable growth strategy Overview share buy back program Number of shares 25.000.000 20.000.000 15.000.000 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 5 Annual results - 14 March 2008
Slide 7: Bekaert share: Good resistance in a turbulent environment
Bekaert share Bekaert share Good resistance in a turbulent environment • Good start based on excellent 2006 results • Record share price in July with an all-time high at €113.9 • Bekaert share could not benefit from the 1 half results (sub prime crisis) • Q3 trading update confirmed the business fun
Slide 8: Bekaert share
Bekaert share • No negative effects from ending the deal with Uralkord by the fact that the acquisition criteria could not be met. Entering Russia via local production remained a part of Bekaert’s BRIC strategy and is realized in the meantime. • Polarization in the opinions of investors about China
Slide 9: Bekaert share
Bekaert share volume Euro 350 000 120 300 000 110 250 000 100 200 000 90 150 000 80 100 000 70 50 000 60 0 50 J F M A M J J A S O N D J F 8 Annual results - 14 March 2008
Slide 10: Bekaert versus Bel20 (2007-2008)
Bekaert share Bekaert versus Bel20® (2007-2008) 125 120 115 110 105 100 95 90 85 80 J F M A M J J A S O N D J F Bekaert BEL20® 9 9 Annual results - 14 March 2008
Slide 11: Bekaert versus Next100 & Next150 (2007-2008)
Bekaert share Bekaert versus Next100 & Next150 (2007-2008) 125 120 115 110 105 100 95 90 85 80 J F M A M J J A S O N D J F Bekaert Next100 Next150 10 10 Annual results - 14 March 2008
Slide 12: Bekaert as member of the BEL20 index
Bekaert share Bekaert as member of the BEL20 index Free float market capitalization threshold 1400 1200 1000 800 600 400 200 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 Bekaert FF Market Cap Minimum FF required for BEL20 11 Annual results - 14 March 2008
Slide 13: Evolution of the consensus target share price
Evolution of the consensus target share price 120 100 80 60 40 20 0 2002 2003 2004 2005 2006 2007 Target price Share price 12 12 Annual results - 14 March 2008
Slide 14: Bekaert share
Bekaert share 2001 2007 Principal shareholder 40.1% 38.3% Institutional shareholdings 15.1% 42.1% Registered shares 0.2% 0.1% Management Stock Options 0.7% 1.4% Public (unidentified) 43.9% 18.1% Institutional (Belgium) 81% 20% Institutional (International) 19% 80% 100% 100% Rest Rest 90% 90% Italy C
Slide 15: Economic environment 2008
Economic environment 2008 A fascinating world ? − The world is changing with the speed of light − New areas for growth: China, India, Central-Europe, Latin-America,… − A lot of opportunities, but also a lot of challenges: • Macro-economics Recession, inflation fear Major problem in the financial mar
Slide 16: Address by Bert De Graeve, Chief Executive Officer
Address by Bert De Graeve, Chief Executive Officer
Slide 17: Introductory remark
Introductory remark The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. Combined sales are sales generated by consolidated companies plus 100% of sales of joint ventures and associates after
Slide 18: Content
Content - Highlights - Business review - Financials - Key challenges & Outlook 17 Annual results - 14 March 2008
Slide 19: Highlights 2007 results
Highlights 2007 results Ö Growth of 8.2% leading to record sales Ö EBITDA record of € 299 million Ö 8.6% EBIT margin on sales before non-recurring items, compared with 8.1% Ö 8.0% EBIT margin on sales, compared with 7.3% Ö EPS of € 7.63 compared with € 6.64 (+15%) Ö Gross dividend of € 2.76 per shar
Slide 20: Highlights 2007: adapting geographical footprint
Highlights 2007 Bekaert further adapted its geographical footprint to the evolving markets - Acquisitions • Titan Steel & Wire (Surrey, Canada) Integration remaining 30% • Mukand (Indian steel company) 50/50 joint venture • Vicson (Venezuela) Full ownership • Proalco (Colombia) Indirectly acquired •
Slide 21: Highlights 2007
Highlights 2007 - Commercial successes with clean tech products: • Dramix® Green (metal fibers for concrete reinforcement that contain an environmentally-friendly corrosion inhibitor) • Metal fibers for diesel particulate filters for trucks - Commercial successes with continued innovations : • Ultra
Slide 22: Highlights 2007
Highlights 2007 - R&D sustains growth: • Further increase investments in R&D (€ 57 million) • Opening of Bekaert Asia Research & Development Center for customer-oriented research in Jiangyin (Jiangsu province, China) • Modernization and upgrading of Belgian Technology Center in Deerlijk - Organizati
Slide 23: Content
Content - Highlights - Business review - Financials - Key challenges & Outlook 22 Annual results - 14 March 2008
Slide 24: Sales
Sales Effect 2006 Organic Acquisitions/ Currency 2007 growth divestments movements +2.5% -2.3% Consolidated +8.0% } +8.2% 2010 2174 1.2% -2.2% Combined +8.0% } +7.0% 3195 3419 in millions of € Ö Growth, both consolidated and combined, leads to record sales 23 Annual results - 14 March 2008
Slide 25: Growth for sustainable profitability
Growth for sustainable profitability Ö Focused top line growth: - Internal growth by further investing in growth markets: - Expansion of capacity in China (250 000 ton Tire Cord at year end) - Expansion of capacity in Karawang, Indonesia (galvanized wire plant) - Expansion of capacity in Zwevegem, B
Slide 26: Reinforcing Bekaert's global presence
Reinforcing Bekaert’s global presence Europe North America from 41% to 31% from 24% to 16% 24% 41% 16% 31% 2002 2007 Asia 2002 2007 from 8% to 15% 15% 8% 2002 2007 Latin America from 26% to 36% Other regions from 1% to 2% 26% 36% 1% 2% 2002 2007 2002 2007 25 Annual results - 14 March 2008
Slide 27: Strategy review
Strategy review Bekaert continues its sustainable profitable growth strategy - Focus on growth markets • Build capacity ahead of market growth to have capacity available to be first to capture the growth • Grow with and close to the customer • Protect worldwide market leadership position - Profitabl
Slide 28: Sales by business segment
Sales by business segment Consolidated sales Combined sales 2007 in millions of € variance in millions of € variance Advanced wire products 1 844 +9.2% 3 095 +8.4% Advanced materials 204 +10.4% 204 +10.4% Advanced coatings 124 -8.9% 124 -8.9% Intersegment and others 2 -4 Total 2 174 +8.2% 3 419 +7%
Slide 29: Sales by geographical area
Sales by geographical area Consolidated sales Combined sales 2007 in millions of € variance in millions of € variance Europe 1 051 +7.5% 1 057 +5.1% North America 511 -14.5% 544 -14.6% Latin America 71 +124.8% 1 248 +12.2% Asia 506 +36.9% 517 +33.9% Other regions 35 +3.9% 53 -0.5% Total 2 174 +8.2%
Slide 30: Advanced wire products: sales
Advanced wire products: sales +10.5% in millions of € +8.4% 3095 3155 combined 2854 Combined sales Wire Europe +10% Joint ventures 1165 1251 1272 Wire North America -2% and associates Wire Latin America +12% Wire Asia +14% Building products +11% Steel Cord China +48% consolidated Steel Cord Others -
Slide 31: Advanced materials: sales
Advanced materials: sales in millions of € 204 184 +10% Stainless +21% Fiber technologies +9% Combustion technologies +12% Composites -4% 2006 2007 Ö Stainless: growth reflects impact nickel based wire rod price increases Ö Fiber technologies: diesel particulate filters for trucks Ö Combustion techn
Slide 32: Advanced coatings: sales
Advanced coatings: sales in millions of € 136 124 -9% Industrial coatings -7% Specialized films -11% 2006 2007 Ö Industrial coatings: very competitive market; low sales + cessation of semicon and optical disk business (Asia) Ö Specialized films: weak market demand in United States and weak USD offse
Slide 33: Address by Bruno Humblet, Chief Financial Officer
Address by Bruno Humblet, Chief Financial Officer
Slide 34: Content
Content - Highlights - Business review - Financials - Key challenges & Outlook 33 Annual results - 14 March 2008
Slide 35: Consolidated income statement: key figures
Consolidated income statement : key figures (in thousands of €) 2007 2006 restated Sales 2 173 598 2 009 587 Cost of sales -1 739 669 -1 614 703 Gross profit 433 929 394 884 Gross profit margin 20.0% 19.7% Ö Slight increase of gross profit margin, despite high raw material prices and energy costs Ö
Slide 36: Consolidated income statement: key figures
Consolidated income statement : key figures (in thousands of €) 2007 2006 Gross profit 433 929 394 884 Selling expenses -98 239 -96 697 Administrative expenses -96 582 -95 314 R&D expenses -56 700 -49 562 Others 3 932 9 417 Operating result (EBIT) before non-recurring items 186 340 162 728 Ö SG&A ex
Slide 37: Consolidated income statement: key figures
Consolidated income statement : key figures (in thousands of €) 2006 2007 restated Operating result (EBIT) before non-recurring items 186 340 162 728 EBIT margin on sales before non-recurring items 8.6% 8.1% Non-recurring items -11 738 -16 794 Operating result (EBIT) 174 602 145 934 EBIT margin on s
Slide 38: Segment reporting: advanced wire products
Segment reporting: advanced wire products (in millions of €) 2007 2006 Consolidated sales 1 844 1 689 Operating result (EBIT) before non-recurring items 215 189 Operating result (EBIT) 208 177 Depreciation and amortization 106 99 EBITDA 314 276 EBIT margin on sales 11.3 % 10.5 % EBITDA margin on sal
Slide 39: Segment reporting: advanced materials
Segment reporting: advanced materials (in millions of €) 2007 2006 Sales 204 184 Operating result (EBIT) before non-recurring items 17 16 Operating result (EBIT) 17 15 Depreciation and amortization 8 9 EBITDA 26 24 EBIT margin on sales 8.5% 8.2 % EBITDA margin on sales 12.6% 13.1 % Ö Steep increase
Slide 40: Segment reporting: advanced coatings
Segment reporting: advanced coatings in millions of € 2007 2006 Sales 124 136 Operating result (EBIT) before non-recurring items 3 3 Operating result (EBIT) -1 1 Depreciation and amortization 12 11 EBITDA 11 12 EBIT margin on sales -0.6 % 0.6 % EBITDA margin on sales 9.0 % 8.5 % Ö EBIT reduction ref
Slide 41: Consolidated income statement: key figures
Consolidated income statement : key figures (in thousands of €) 2007 2006 restated Operating result (EBIT) 174 602 145 934 Interest income/expense -32 500 -24 436 Other financial result -8 482 -6 557 Result from continuing operations before taxes 133 620 114 941 Income taxes -19 095 -18 370 Result f
Slide 42: Consolidated income statement: key figures
Consolidated income statement : key figures (in thousands of €) 2007 2006 restated Result from consolidated companies 114 525 96 571 Share in the results of JV’s and associates 47 100 50 991 Result for the period 161 625 147 562 Attributable to - the Group 152 890 142 791 - minority interests 8 735
Slide 43: Cash flow: key figures
Cash flow: key figures (in millions of €) 2007 2006 Gross cash from operations 264.8 233.0 Net cash from operations 221.4 192.7 Cash from investment activities -151.9 -157.5 Cash from financing activities -62.6 -113.2 Cash flow allocation: Ö Working capital: € 494 million (+42 million), mainly due t
Slide 44: Working capital: key figures
Working capital: key figures (in millions of €) 2007 2006 Inventories 385.4 368.8 Accounts receivable 437.7 398.9 Accounts payable -329.1 -316.1 Working capital 494.1 451.6 Ö Increase driven by fast growth of China business Ö Average working capital on sales: 21.8% (2006: 22.0%) 43 Annual results -
Slide 45: Consolidated balance sheet: key figures
Consolidated balance sheet: key figures Assets Equity and Liabilities in millions of € in millions of € 2 313 2 220 2 313 2 220 Non-current assets 1 336 1 306 Equity 1 147 1 109 Non-current 526 liabilities 516 Current assets 977 914 Current 640 595 liabilities 2007 2006 restated 2007 2006 restated Ö
Slide 46: Balance sheet: key figures
Balance sheet: key figures 2006 (in millions of €) 2007 restated Net financial debt 448 375 Gearing (net debt to equity) 39.1% 33.8% Ö Net financial debt substantially increased as a result of share buy back program + higher capital expenditures Ö Gearing ratio of 39% closer to long term target (50%
Slide 47: Key figures: EBITDA
Key figures: EBITDA (in millions of €) 2007 2006 Operating result 175 146 Depreciations PP&E 109 103 Amortizations 11 7 Impairment losses 4 6 Total 299 262 Ö Record EBITDA of 299 million euro (+ 14 %) 46 Annual results - 14 March 2008
Slide 48: Ratios: key figures
Ratios: key figures 2006 2007 restated EBITDA on sales 13.7% 13.0% EBIT margin on sales before non-recurring items 8.6% 8.1% EBIT on sales 8.0% 7.3% Sales on capital employed (asset rotation) 1.5 1.5 Return on capital employed 11.9% 10.5% Return on equity 14.3% 13.3% Ö Increased return on equity ref
Slide 49: Key figures per share
Key figures per share (in €) 2007 2006 restated Share price at 31 December 92.00 94.70 Number of existing shares at 31 December 19 831 000 20 946 779 Book value 57.82 52.94 Result for the period attributable to the Group 7.63 6.64 Weighted average number of shares 20 039 098 21 491 565 Cash flow att
Slide 50: 2007 in a nutshell
2007 in a nutshell Ö Sales growth of 8.2% mainly driven by growth markets Ö Record EBITDA of € 299 million Ö EBIT increased by 19.6% Ö Interest expense increased due to higher interest rates and higher debt Ö More competitive market conditions leading to lower result in joint ventures Ö Gross divide
Slide 51: Content
Content - Highlights - Business review - Financials - Key challenges & Outlook 50 Annual results - 14 March 2008
Slide 52: Key challenges
Key challenges - Capture volume in growth markets • Further increase production capacity in growth areas (China, Indonesia) • Total capital expenditures will exceed € 200 million in 2008 • Establish presence in future markets supported by local production platforms: • Russia: greenfield steelcord pl
Slide 53: Key challenges: raw material and energy supply
Key challenges: raw material and energy supply - Supply • Wire rod • consolidation steelmakers continues • limitations from geo-political point of view • counterproductive anti-dumping files in Europe • barriers can be raised in mum of time ( tax regulation in China) or have abrupt impact (tax regul
Slide 54: Outlook
Outlook Ö Material prices will stay high, yet with some regional variances Ö Mature markets will remain challenging Ö Continue to defend our Latin American leadership positions Ö We will further sustain our investment programs, mainly in Asia Ö We will remain focused on worldwide operational excelle
Slide 55: Financial calendar
Financial calendar Financial calendar 2007 annual report available on Internet 18 April 2008 First quarter trading update 2008 14 May 2008 General Meeting of Shareholders 14 May 2008 Dividend payable (coupon n°9) 21 May 2008 2008 half-year results 01 August 2008 Third quarter trading update 2008 07
Slide 56: Contact
Contact We like to keep on listening to you. Any questions? Please do not hesitate to contact us: Jacques Anckaert Nathalie Meert Investor Relations Corporate External Communication President Kennedypark 18 President Kennedypark 18 BE-8500 Kortrijk BE-8500 Kortrijk T +32 56 23 05 72 T +32 56 23 55 3
Slide 57: better together
better together www.bekaert.com 56 Annual results - 14 March 2008