Bekaert Sa · EURONEXT:BEKB
Bekaert Sa — Investor Presentation (September 2019)
67 slides from Bekaert Sa's investor presentation, September 2019
Slide 1: better together
better together = ts Wu <= 4 Wu oa jo)
Slide 2: Bekaert Investor Presentation
Bekaert Investor Presentation Most recent announcement: H1 2019 Results - 26 July 2019
Slide 3: Content
Content BEKAERT IN BRIEF INVESTMENT CASE 5 Fact Sheet Investing in Bekaert 39 8 Market and technological Leadership Strategy - Blue Slide 40 9 Core Competencies Sustainability 42 10 Global Presence Shareholder Value 45 11 Our History Analyst Expectations 47 SEGMENT PERFORMANCE FINANCIALS FY/2018 13
Slide 4: Content
Content BEKAERT IN BRIEF INVESTMENT CASE 5 Fact Sheet Investing in Bekaert 39 8 Market and technological Leadership Strategy - Blue Slide 40 9 Core Competencies Sustainability 42 10 Global Presence Shareholder Value 45 11 Our History Analyst Expectations 47 SEGMENT PERFORMANCE FINANCIALS FY/2018 13
Slide 5: Fact Sheet
Fact Sheet 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 30 000 employees worldwide Combined sales o
Slide 6: Often hidden or unknown… but always there…
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 wi
Slide 7: Sectorial breakdown Bekaert combined sales
Sectorial breakdown Bekaert combined sales 47% Tire & Automotive 20% Construction 7% Agriculture 7% Energy 7% Consumer goods 6% Basic materials 6% Equipment 7
Slide 8: Bekaert technological leadership
Bekaert technological leadership € 65 million International R&D teams About 1700 in-house R&D in 2018 in Belgium – China – India patent rights Co-creation with customers and suppliers Outward orientation • internationalization of technologists • cooperation with internationally renowned research cen
Slide 9: Bekaert core competencies
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 9
Slide 10: Bekaert global presence
Bekaert global presence Bekaert production plants Bekaert offices Bekaert Technology Centers BBRG production & distribution sites 10
Slide 11: Our History
Our History pioneering innovating growing diversifying BRIC transforming 1880 1952 Early 1970s Early 1980s 1993 2010-2018 Leo Leander Bekaert Steel cord production New steel cord plant Bekaert moves into Bekaert recognizes China’s The ups and downs in starts a small business start openings and compo
Slide 12: Content
Content BEKAERT IN BRIEF INVESTMENT CASE 5 Fact Sheet Investing in Bekaert 39 8 Market and technological Leadership Strategy - Blue Slide 40 9 Core Competencies Sustainability 42 10 Global Presence Shareholder Value 45 11 Our History Analyst Expectations 47 SEGMENT PERFORMANCE FINANCIALS FY/2018 13
Slide 13: Organization & leadership
Organization & leadership A new organizational structure has become effective 1 March 2019 and consists of four Business Units and four Global Functional Domains. Four Business Units: Rubber Reinforcement: serving industries that use tire cord, bead wire, hose reinforcement wire and conveyor belt
Slide 14: Organization & leadership
Organization & leadership Four Functional Domains: Finance, HR, Operations, Strategy The functions take a role as strategic business partners, accountable for providing specific expertise and services across the Group and ensuring the business has the right capability to deliver on short and long te
Slide 15: Segment reporting
Segment reporting Changes in the segment reporting In line with the organizational changes, Bekaert’s segment reporting has been changed in 2019. The new segmentation will drive transparency into the business dynamics of each reporting unit and replace the previous geographic segmentation, to which
Slide 16: New segmentation and sectorial breakdown
New segmentation and sectorial breakdown Rubber Reinforcement (RR) Steel Wire Solutions (SWS) Specialty Businesses (SB) Bridon-Bekaert Ropes Group (BBRG) Tire cord, bead wire, hose Steel wire products and Building products, fiber reinforcement wire and solutions serving industrial, technologies, com
Slide 17: Consolidated sales H1 2019
Consolidated sales H1 2019 Consolidated third party sales H1 2018 H1 2019 Share Variance Organic FX M&A Rubber Reinforcement 947 1 014 46% +7% +5% +2% - Steel Wire Solutions 762 751 34% -1% -3% +2% - Specialty Businesses 209 202 9% -4% -5% +1% - BBRG 227 242 11% +7% +6% +1% - Group 11 10 - -12% +42%
Slide 18: Segment report BU Rubber Reinforcement
Segment report BU Rubber Reinforcement (in mio €) Underlying Reported 1H 2018 1H 2019 1H 2018 1H 2019 Consolidated third party sales 947 1 014 947 1 014 Consolidated sales (intersegment) 964 1 031 964 1 031 Gross profit 119 126 99 123 EBIT 84 94 66 91 EBIT margin 8.7% 9.1% 6.9% 8.8% EBITDA 146 157 1
Slide 19: Segment report BU Steel Wire Solutions
Segment report BU Steel Wire Solutions (in mio €) Underlying Reported 1H 2018 1H 2019 1H 2018 1H 2019 Consolidated third party sales 762 751 762 751 Consolidated sales (intersegment) 789 778 789 778 Gross profit 97 82 96 82 EBIT 38 28 48 26 EBIT margin 4.8% 3.5% 6.1% 3.4% EBITDA 62 55 72 53 ROCE 11.
Slide 20: Segment report BU Specialty Businesses
Segment report BU Specialty Businesses (in mio €) Underlying Reported 1H 2018 1H 2019 1H 2018 1H 2019 Consolidated third party sales 209 202 209 202 Consolidated sales (intersegment) 214 208 214 208 Gross profit 56 60 57 54 EBIT 18 25 19 18 EBIT margin 8.6% 12.0% 9.0% 8.6% EBITDA 27 33 27 27 ROCE 14
Slide 21: Segment report BU Bridon-Bekaert Ropes Group (BBRG)
Segment report BU Bridon-Bekaert Ropes Group (BBRG) (in mio €) Underlying Reported 1H 2018 1H 2019 1H 2018 1H 2019 Consolidated third party sales 227 242 227 242 Consolidated sales (intersegment) 228 244 228 244 Gross profit 34 41 34 43 EBIT 2 6 (1) 8 EBIT margin 0.8% 2.6% (0.3%) 3.4% EBITDA 16 19 1
Slide 22: Content
Content BEKAERT IN BRIEF INVESTMENT CASE 5 Fact Sheet Investing in Bekaert 39 8 Market and technological Leadership Strategy - Blue Slide 40 9 Core Competencies Sustainability 42 10 Global Presence Shareholder Value 45 11 Our History Analyst Expectations 47 SEGMENT PERFORMANCE FINANCIALS FY/2018 13
Slide 23: Market developments and significant events in the first half of 2019
Market developments and significant events in the first half of 2019 Demand from tire markets remained solid, but started to slow at the end of Q2. Demand for steel fibers for concrete reinforcement was strong throughout the first half. The highly competitive steel wire solutions business suffered f
Slide 24: Consolidated results H1 2019: Bekaert improves profitability and reduces debt leverage
Consolidated results H1 2019: Bekaert improves profitability and reduces debt leverage Highlights and Actions In challenging market conditions, Bekaert improved its financial performance in the first half of 2019: - achieved 3% sales growth, particularly in tire and construction markets - realized m
Slide 25: Outlook
Outlook The business conditions in various sectors are trending lower as a result of continued uncertainty. We do not foresee a rebound in our agriculture, automotive OEM, and industrial markets in the near future. We project tire and construction markets to hold up well, but with the normal seasona
Slide 26: The Bekaert journey since 2013 + Our Ambition
The Bekaert journey since 2013 + Our Ambition Downside: • Continued volatility of wire rod prices and other Automotive demand strong on a global scale inflationary costs -> improving pass-through in H2 Better market position and market in Tire cord China • Continued uncertainty about the effects of
Slide 27: Consolidated income statement: key figures
Consolidated income statement: key figures (in mio €) Underlying Reported 1H 2018 1H 2019 1H 2018 1H 2019 Sales 2 157 2 218 2 157 2 218 Cost of sales (1 845) (1 909) (1 864) (1 916) Gross profit 311 309 292 302 • Sales increased by 2.9%: • -1.1 % organic volume decline • RR +4.3%, SWS -6.3%, SB (Bui
Slide 28: Consolidated income statement: key figures
Consolidated income statement: key figures (in mio €) Underlying Reported 1H 2018 1H 2019 1H 2018 1H 2019 Gross profit 311 309 292 302 Selling expenses (91) (88) (91) (89) Administrative expenses (82) (70) (87) (71) R&D expenses (35) (33) (37) (33) Other operating revenue and expenses 7 8 24 7 EBIT
Slide 29: Consolidated income statement: key figures
Consolidated income statement: key figures (in mio €) Underlying Reported 1H 2018 1H 2019 1H 2018 1H 2019 EBIT 111 126 101 115 EBIT margin 5.1% 5.7% 4.7% 5.2% EBITDA 214 239 204 226 EBITDA margin 9.9% 10.8% 9.5% 10.2% ROCE 8.1% 9.3% 7.4% 8.5% • Underlying operating performance: • IFRS 16 (Leases) ha
Slide 30: EBIT-Underlying bridge
EBIT-Underlying bridge 1235 130 125 120 115 110 105 100 95 111 EBIT Underlying 2018.06 In &Out's FX Volume Pricing, Mix and Invent. val. Cost Impact Overheads Other EBIT Underlying 2019.06 ®@ BEKAERT better together
Slide 31: Consolidated income statement: key figures
Consolidated income statement: key figures (in mio €) 1H 2018 1H 2019 EBIT 101 115 Interest income / expense (45) (33) Other financial income and expenses (0) (1) Result before taxes 56 81 Income taxes (23) (32) Result after taxes (consolidated companies) 33 48 • Net interest expenses were significa
Slide 32: Consolidated income statement: key figures
Consolidated income statement: key figures (in mio €) 1H 2018 1H 2019 Result after taxes (consolidated companies) 33 48 Share in the results of joint ventures and associates 12 13 Result for the period 45 62 Attributable to non-controlling interests (10) 4 Attributable to equity holders of Bekaert 5
Slide 33: Cash flow: key figures
Cash flow: key figures (in mio €) 1H 2018 1H 2019 Gross cash from operations 147 189 Cash flows from operations (17) 134 Cash flows from investment activities (54) (56) Cash flows from financing activities (60) (60) • Strong cash flow from operations as a result of a higher EBITDA and much better co
Slide 34: Working capital: key figures
Working capital: key figures (in mio €) 1H 2018 Year-end 2018 1H 2019 Inventories 904 932 914 Accounts receivable 1 011 851 850 Accounts payable (884) (908) (808) Working capital 1 031 875 956 • Average working capital on sales improved to 20.6%, compared to 22.3% at the end of 1H 2018. • Main contr
Slide 35: Consolidated balance sheet: key figures
Consolidated balance sheet: key figures (in mio €) Year-end 2018 1H 2019 Non-current assets 2 050 2 095 Current assets 2 400 2 375 Total assets 4 449 4 470 Equity 1 516 1 547 Non-current liabilities 907 1 291 Current liabilities 2 027 1 631 Total equity and liabilities 4 449 4 470 • Major changes •
Slide 36: Debt financing maturity table
Debt financing maturity table B EF OR E SCHU L DSCHEI N SEPTEMBER 2019 UPDATE Retail Bond EIB-loan Retail Bond EIB-loan Bridgeloan Convertible Bond Bridgeloan Convertible Bond SSD Loans Subsidiaries SSD Termloan Term Loan Loans Subsidiaries 25 38 355 50 308 410 58 380 4 380 90 50 195 75 195 189 75 1
Slide 37: Ratios: key figures
Ratios: key figures Underlying Reported 1H 2018 1H 2019 1H 2018 1H 2019 Gross profit margin 14.4% 13.9% 13.6% 13.6% EBITDA margin 9.9% 10.8% 9.5% 10.2% EBIT margin 5.1% 5.7% 4.7% 5.2% Sales on capital employed (asset rotation) 1.6 1.6 1.6 1.6 Return on capital employed (ROCE) 8.1% 9.3% 7.4% 8.5% Ret
Slide 38: Content
Content BEKAERT IN BRIEF INVESTMENT CASE 5 Fact Sheet Investing in Bekaert 39 8 Market and technological Leadership Strategy - Blue Slide 40 9 Core Competencies Sustainability 42 10 Global Presence Shareholder Value 45 11 Our History Analyst Expectations 47 SEGMENT PERFORMANCE FINANCIALS FY/2018 13
Slide 39: Investing in Bekaert is taking part in
Investing in Bekaert is taking part in The growth ambitions of a world market and technology leader in steel wire transformation and coating technologies Value creation driven by our vision and core strategies A growth traject to achieving above 7% underlying EBIT margin over the medium term a
Slide 40: Our Vision - Our Field of Play
Our Vision - Our Field of Play Consistent with our better together aspiration, we relentlessly pursue to be the preferred supplier for our steel wire products and solutions, by continuously delivering superior value to our customers around the world. » Goal Statement » Goal Statement for the Heart f
Slide 41: Business portfolio changes: Acquisitions and Divestments
Business portfolio changes Bekaert MatcoCables BJWP Jiangyin Southern Wire Wire Latam Malaysia consolidation Acquisitions SBE Shanghai Arrium Ropes Cimaf Cabos Australia Cables Bridon Pirelli merger steel cord Steel wire Wire/Ropes BIA Alambres BBRG entities China Malaysia Costa Rica BOSFA Chongqing
Slide 42: Bekaert’s ambitions and actions for a sustainable future
Bekaert’s ambitions and actions for a sustainable future OUR AMBITION “We conduct and grow our business in a sustainable way so that our employees, customers, shareholders, business partners, and communities all benefit” OUR ACTIONS Pillars and actions to step up our sustainability performance. 1 2
Slide 43: Bekaert’s ambitions and actions for a sustainable future
Bekaert’s ambitions and actions for a sustainable future OUR PEOPLE THE ENVIRONMENT As a company and as individuals, we act with integrity and commit to the We care for the climate and promote a circular economy: we develop and highest standards of business ethics. We promote equal opportunity, fost
Slide 44: How do we put our ambitions into action?
How do we put our ambitions into action? OUR PROCESS For each pillar of sustainability, we formulate a vision statement: it is 1 3 5 an expression of our ambition; of what we want to be. 2 4 Derived from that, we determine measurable targets, and we monitor VISION STATEMENT and report our performanc
Slide 45: Shareholder value creation
Shareholder value creation 25 20 15 10 5 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 -5 -10 Shareholder value Shareholder destruction WACC RoIC 45 Investor presentation - Bekaert
Slide 46: Dividend policy
Dividend policy in millions of € 400 100% 90% 350 80% It is the policy of the Board of Directors to propose a 300 proft appropriation to the General Meeting of 70% Shareholders which, insofar as the proft permits, 250 provides a stable or growing dividend while 60% maintaining an adequate level of c
Slide 47: Analyst expectations
Analyst expectations Consensus data by analyst H1/2019 + FY/2019 Consensus key valuation data 1H 2019 Average A1 A2 A3 A4 A5 A6 Consolidated sales 2 199 2 235 2 150 2 222 2 195 2 192 2018 2019 2020 2021 Combined sales 2 619 2 642 2 615 2 600 EBIT-underlying 124 126 122 131 122 120 SALES 4305 4366 44
Slide 48: Content
Content BEKAERT IN BRIEF INVESTMENT CASE 5 Fact Sheet Investing in Bekaert 39 8 Market and technological Leadership Strategy - Blue Slide 40 9 Core Competencies Sustainability 42 10 Global Presence Shareholder Value 45 11 Our History Analyst Expectations 47 SEGMENT PERFORMANCE FINANCIALS FY/2018 13
Slide 49: Consolidated sales 2018 – as reported (previous segmentation)
Consolidated sales 2018 – as reported (previous segmentation) Consolidated sales 2017 2018 Share Variance Organic FX M&A EMEA 1 273 1 335 31% +5% +6% - -1% North America 552 618 14% +12% +16% -4% - Latin America 673 692 16% +3% +13% -4% -6% Asia Pacific 1 145 1 197 28% +5% +8% -3% - BBRG 455 463 11%
Slide 50: Consolidated sales 2018 – restated (new segmentation)
Consolidated sales 2018 – restated (new segmentation) 2018 Consolidated sales Share Combined sales Share Rubber Reinforcement 1 908 44% 2 073 41% Steel Wire Solutions 1 497 35% 2 118 42% Specialty Businesses 411 10% 411 8% BBRG 463 11% 463 9% Other 26 - 9 - Total 4 305 100% 5 074 100% 11% 9% BBRG BB
Slide 51: Key Financials recent past: 2014 – 2018
Key Financials recent past: 2014 – 2018 5 000 Consolidated sales Combined sales 5 000 710 769 4 000 4 000 731 636 824 3 000 3 000 2 000 2 000 3 216 3 671 3 715 4 098 4 305 1 000 3 216 3 671 4 098 4 305 1 000 3 715 0 0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Joint ventures and associates Co
Slide 52: 2018 FY Results
2018 FY Results Consolidated sales of € 4.3 billion (+5.1%) and combined sales of € 5.1 billion (+5.5%) Underlying gross profit of € 585 million (13.6% margin) compared with € 704 million (17.2% margin) in 2017 Underlying EBIT of € 210 million (4.9% margin) compared with € 301 million (7.3% ma
Slide 53: Consolidated income statement: key figures underlying <> reported
Consolidated income statement: key figures underlying <> reported (in mio €) Underlying Reported 2017 2018 2017 2018 EBIT 301 210 318 147 EBIT margin 7.3% 4.9% 7.8% 3.4% EBITDA 497 426 510 387 EBITDA margin 12.1% 9.9% 12.4% 9.0% ROCE 11.2% 8.0% 11.8% 5.6% Reported operating performance: • In 2018: €
Slide 54: Financial leverage
Financial leverage Net Debt/U-EBITDA: • Short-term ≤ 2.5 • Medium-term ≤ 2.0 • Our multiple Net debt / U-EBITDA decreased to 2.7 compared with H1 2018 (3.1) • In 2019 we will continue to put in place cash generation actions to reduce the net debt leverage. • Gearing ratio (net debt / equity) of 76 %
Slide 55: Consolidated balance sheet: key figures
Consolidated balance sheet: key figures (in mio €) 2017 2018 Non-current assets 2 124 2 050 Current assets 2 321 2 400 Total assets 4 445 4 449 Equity 1 583 1 516 Non-current liabilities 1 449 907 Current liabilities 1 413 2 027 Total equity and liabilities 4 445 4 449 • Non-current assets: drop in
Slide 56: Ratios: key figures
Ratios: key figures Underlying Reported 2017 2018 2017 2018 Gross profit margin 17.2% 13.6% 17.1% 12.2% EBITDA margin 12.1% 9.9% 12.4% 9.0% EBIT margin 7.3% 4.9% 7.8% 3.4% Sales on capital employed (asset rotation) 1.5 1.6 1.5 1.6 Return on capital employed (ROCE) 11.2% 8.0% 11.8% 5.6% Return on equ
Slide 57: Content
Content BEKAERT IN BRIEF INVESTMENT CASE 5 Fact Sheet Investing in Bekaert 39 8 Market and technological Leadership Strategy - Blue Slide 40 9 Core Competencies Sustainability 42 10 Global Presence Shareholder Value 45 11 Our History Analyst Expectations 47 SEGMENT PERFORMANCE FINANCIALS FY/2018 13
Slide 58: The tire & automotive sector (47%)
The tire & automotive sector (47%) 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
Slide 59: The construction sector (20%)
The construction sector (20%) 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. • Dr
Slide 60: The agriculture sector (7%)
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 • f
Slide 61: The energy & utilities sector (7%)
The energy & utilities sector (7%) 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 explor
Slide 62: Consumer goods (7%)
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
Slide 63: The basic materials sector (6%)
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
Slide 64: The equipment sector (6%)
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
Slide 65: Contact
Contact Investor Relations : Katelijn Bohez +32 56 76 66 10 [email protected] Dries Van Hamme +32 51 33 34 23 [email protected] Documentation : Christine Clarysse +32 56 76 66 13 [email protected] Shareholders, investors and other interested parties wishing to receive
Slide 66: Investor section online @ www.bekaert.com
Investor section online @ www.bekaert.com Copyright © by NV Bekaert SA, 2019 66 Investor presentation - Bekaert
Slide 67: better together
better together = oc Wu <= x Wu oa jo)