Bekaert Sa · EURONEXT:BEKB
Bekaert Sa — Investor Presentation (September 2018)
68 slides from Bekaert Sa's investor presentation, Sep 18, 2018
Slide 1: Bekaert Investor presentation
Bekaert Investor presentation Most recent announcement: first half 2018 Version 18/09/2018
Slide 2: Agenda
Bekaert in brief Strategy update Business update Financials & Investment case Annex: first half year results 2018 Annex: Sector Exposure
Slide 3: Bekaert in brief
Bekaert in brief - Founded in 1880 by Leo Leander Bekaert - Customers in 120 countries and in the most diverse industry sectors - Global manufacturing platform - Almost 30 000 employees worldwide - Combined sales1 of € 4.8 billion (2017) - Consolidated sales of € 4.1 billion (2017) - Listed on Euron
Slide 4: Often hidden or unknown… but always there
Often hidden or unknown… but always there … - Every year over 1 billion bottles of sparkling wines are opened via the muselet made of Bekaert wire - More than 30% of all tires around the world are reinforced with Bekaert tire cord - Every year, 8 million m³ concrete is being reinforced with Dramix®
Slide 5: Bekaert technological leadership
Bekaert technological leadership Focus on innovation - € 63 million in-house R&D in 2017 - International Research and Development team in Belgium - Research and Development in China - 1650 patent rights - with the right partners and priorities: Customer focused innovation and co-development Focu
Slide 6: Bekaert core competences
Bekaert core competences Steel wire transformation from wire rod Drawing, bunching, to metal fibers 6.5 mm cabling, profiling, welding, 1 µm knitting, weaving, … Coating technologies from traditional Adhesion to advanced coatings coatings Corrosion resistance Wear resistance Anti-fouling 6 Investor
Slide 7: Bekaert in brief
Bekaert in brief 6% 6% Automotive Bekaert has a strong presence in diverse 6% 44% Construction sectors. This makes Bekaert less sensitive Energy & Utilities 7% to sector-specific trends. It also benefits our Agriculture 10% Consumer goods customers, because solutions we develop Basic Materials for c
Slide 8: Bekaert global presence
Bekaert global presence 8 Investor presentation - Bekaert
Slide 9: Agenda
Bekaert in brief Strategy update Business update Financials & Investment case Annex: first half year results 2018 Annex: Sector Exposure
Slide 10: The Bekaert journey since 2013
The Bekaert journey since 2013 Downside • Divestment of Sumaré in Brazil Automotive demand strong on a global scale • Continued volatility of wire rod prices and other Better market position and market in Tire cord China inflationary costs Tire cord India and SEAS continue growing • Continued uncert
Slide 11: 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 12: Shareholder value creation: track record
Shareholder value creation: track record 20 18 16 14 12 10 8 6 4 2 0 1991 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 -2 -4 -6 -8 -10 Shareholder value WACC RoIC 12 Investor presentation - Bekaert
Slide 13: Portfolio Optimization
Portfolio Optimization Bekaert MatcoCables BJWP Jiangyin Southern Wire Malaysia SBE Shanghai Wire Latam consolidation Acquisitions Arrium Ropes Australia Cimaf Cabos Cables Bridon merger Pirelli steel cord Steel wire entities Wire/Ropes BIA Alambres Malaysia Costa Rica BBRG China BOSFA Chongqing Chi
Slide 14: Agenda
Bekaert in brief Strategy update Business update Financials & Investment case Annex: first half year results 2018 Annex: Sector Exposure
Slide 15: Business overview
Business overview EMEA NAM LATAM APAC BBRG LT BEK ST LT BEK ST LT BEK ST LT BEK ST LT BEK ST Market position outlook Market Position outlook Market Position outlook Market Position outlook Market Position outlook A B + + + + + - + + + = C E F H + + = = - + - + - = + = + + + D G - + = = + = - + - + =
Slide 16: EMEA: 31% of consolidated sales 2017
EMEA: 31% of consolidated sales 2017 (26% of combined) 2017: Underlying EBIT H1: 12.3% / FY 11.1 % - Underlying EBITDA H1: 17.1% / FY: 15.9 % Automotive 2018: Underlying EBIT H1: 9.8% - Underlying EBITDA H1: 14.4 % Construction Energy & Utilities Presence and Consumer goods • Presence primarily in C
Slide 17: EMEA: Profitability evolution
EMEA: Profitability evolution 17 Investor presentation - Bekaert
Slide 18: NAM: 14% of consolidated sales 2017
NAM: 14% of consolidated sales 2017 (12% of combined) 2017: Underlying EBIT H1: 7.2% / FY 6.0% - Underlying EBITDA H1: 9.6% / FY: 8.5% 2018: Underlying EBIT H1: 4.6% - Underlying EBITDA H1: 6.9% Automotive Construction • Automotive: strong demand Presence and Energy & Utilities • Mixed inputs from a
Slide 19: NAM: Profitability evolution
NAM: Profitability evolution 19 Investor presentation - Bekaert
Slide 20: LATAM: 16% of consolidated sales 2017
LATAM: 16% of consolidated sales 2017 (29% of combined) 2017: Underlying EBIT H1: 8.0% / FY 8.2% - Underlying EBITDA H1: 11.1% / FY: 11.1% 2018: Underlying EBIT H1: 6.6% - Underlying EBITDA H1: 9.3% Automotive • Chile, Peru, Ecuador, Colombia, Venezuela and Central Construction America: economies ar
Slide 21: LATAM: Profitability evolution
LATAM: Profitability evolution EBIT and EBITDA in H1 2017 hold a gain on the divestment of 55% of the shares in Bekaert Sumaré of 25 mE 21 Investor presentation - Bekaert
Slide 22: APAC: 28% of consolidated sales 2017
APAC: 28% of consolidated sales 2017 (24% of combined) 2017: Underlying EBIT H1: 10.7% / FY 9.3% - Underlying EBITDA H1: 19.0% / FY: 17.1% 2018: Underlying EBIT H1: 6.8% - Underlying EBITDA H1: 14.7% Automotive Construction China: ~ 73% of APAC sales – ~ 20% of Bekaert consolidated Presence and Ener
Slide 23: APAC: Profitability evolution
APAC: Profitability evolution 23 Investor presentation - Bekaert
Slide 24: BBRG: 11% of consolidated sales 2017
BBRG: 11% of consolidated sales 2017 (9% of combined) 2017: Underlying EBIT H1: 4.7% / FY 3.3% - Underlying EBITDA H1: 9.4% / FY: 9.0% 2018: Underlying EBIT H1: 0.8% - Underlying EBITDA H1: 7.1% Construction • Includes since 1st July 2016 Bridon Equipment • Leading market player with global footprin
Slide 25: BBRG: Profitability evolution
BBRG: Profitability evolution Bekaert restated BBRG 25 Investor presentation - Bekaert
Slide 26: Agenda
Bekaert in brief Strategy update Business update Financials & Investment case Annex: first half year results 2018 Annex: Sector Exposure
Slide 27: Key profitability ratios
Key profitability ratios Underlying EBIT margin target towards 10% in the midterm, with a somewhat longer time horizon than initially planned. 27 Investor presentation - Bekaert
Slide 28: Working capital
Working capital Working capital % from 21.8% at half year 2017 to 22.3% at half year 2018 28 Investor presentation - Bekaert
Slide 29: Financial leverage
Financial leverage Medium-term target Net debt / EBITDA ≤ 2 • Our multiple Net debt / EBITDA increased to 3.3 (underlying: to 3.1) • We target to bring this down by year-end 2018 to around 2.5 – driven by reduced CAPEX, strict working capital control measures and improved underlying EBIT • Gearing r
Slide 30: Investing in Bekaert is taking part in
Investing in Bekaert is taking part in 1. The growth ambitions of a world market and technology leader in steel wire transformation and coating technologies 2. Value creation driven by our vision and core strategies 3. A transformation journey towards 10% underlying EBIT margin over the medium term
Slide 31: Better together
— oc TT <x 4 lu a 3) better together
Slide 32: Agenda
Bekaert in brief Strategy update Business update Financials & Investment case Annex: first half year results 2018 Annex: Sector Exposure
Slide 33: Bekaert reports € 111 million underlying EBIT on higher sales
Bekaert reports € 111 million underlying EBIT on higher sales - Consolidated sales of € 2.2 billion (+3%) and combined sales of € 2.5 billion (+5%) - Currency impact: € -95 million (-4.5%) on consolidated sales; € -151 million (-6.2%) on combined sales - Underlying gross profit of € 311 million (14%
Slide 34: Consolidated sales H1 2018
Consolidated sales H1 2018 Consolidated sales Combined sales 11% 9% 27% 32% EMEA 23% North America 27% Latin America Asia Pacific 12% BBRG 14% 16% 29% 34 Investor presentation - Bekaert
Slide 35: Consolidated revenue: H1 comparison year-on-year
Consolidated revenue: H1 comparison year-on-year Total Organic growth Impact M&A Segment sales FX + evolution sales volumes Wire rod + impact divestments price-mix EMEA +6% +6% = +6% - - NAM +5% +15% +7% +8% -10% - LAM -3% +14% -3% +17% -6% -11% APAC +5% +10% +10% = -5% - BBRG -3% +3% +8% -5% -6% -
Slide 36: Underlying EBIT performance
Underlying EBIT performance Underlying EBIT: € 111 million, -37% compared to H1 last year A number of factors have weighed on our profitability since the second half of 2017: - Continued raw material price increases - The impact of changes to trade policies - The slow recovery of Bridon-Bekaert Rope
Slide 37: Consolidated income statement: key figures
Consolidated income statement: key figures Underlying Reported (in mio €) 1H 2017 1H 2018 1H 2017 1H 2018 Sales 2 095 2 157 2 095 2 157 Cost of sales (1 714) (1 845) (1 717) (1 864) Gross profit 382 311 378 292 − Sales increased by 2.9%: +3.9 % organic volume growth +5.4 % net of passed-on highe
Slide 38: Consolidated income statement: key figures
Consolidated income statement: key figures Underlying Reported (in mio €) 1H 2017 1H 2018 1H 2017 1H 2018 Gross profit 382 311 378 292 Selling expenses (95) (91) (95) (91) Administrative expenses (80) (82) (81) (87) R&D expenses (32) (35) (32) (37) Other operating revenue and expenses 2 7 27 24 EBIT
Slide 39: Consolidated income statement: key figures
Consolidated income statement: key figures (in mio €) Underlying Reported 1H 2017 1H 2018 1H 2017 1H 2018 EBIT 176 111 197 101 EBIT margin 8.4% 5.1% 9.4% 4.7% EBITDA 277 214 297 204 EBITDA margin 13.2% 9.9% 14.2% 9.5% ROCE 13.1% 8.1% 14.6% 7.4% Underlying operating performance: − Underlying EBIT dec
Slide 40: EBIT-underlying bridge
EBIT-underlying bridge in millions of € 40 Investor presentation - Bekaert
Slide 41: EBIT-underlying bridge
EBIT-underlying bridge in millions of € Price erosion Portfolio mix Inventory valuation Wire rod impact 41 Investor presentation - Bekaert
Slide 42: Segment reporting: EMEA
Segment reporting: EMEA (in mio €) Underlying Reported 1H 2017 1H 2018 1H 2017 1H 2018 Consolidated sales 653 693 653 693 EBIT 81 68 80 34 EBIT margin 12.3% 9.8% 12.3% 5.0% Depreciation, amortization and 31 32 31 43 impairment losses EBITDA 111 100 111 78 EBITDA margin 17.1% 14.4% 17.0% 11.2% ROCE 2
Slide 43: Segment reporting: North America
Segment reporting: North America (in mio €) Underlying Reported 1H 2017 1H 2018 1H 2017 1H 2018 Consolidated sales 287 300 287 300 EBIT 21 14 21 14 EBIT margin 7.2% 4.6% 7.2% 4.6% Depreciation, amortization and 7 7 7 7 impairment losses EBITDA 28 21 28 21 EBITDA margin 9.6% 6.9% 9.6% 6.9% ROCE 17.9%
Slide 44: Segment reporting: Latin America
Segment reporting: Latin America (in mio €) Underlying Reported 1H 2017 1H 2018 1H 2017 1H 2018 Consolidated sales 356 344 356 344 EBIT 28 23 54 23 EBIT margin 8.0% 6.6% 15.1% 6.6% Depreciation, amortization and 11 9 11 9 impairment losses EBITDA 40 32 65 32 EBITDA margin 11.1% 9.3% 18.2% 9.3% ROCE
Slide 45: Segment reporting: Asia Pacific
Segment reporting: Asia Pacific (in mio €) Underlying Reported 1H 2017 1H 2018 1H 2017 1H 2018 Consolidated sales 565 593 565 593 EBIT 61 40 57 67 EBIT margin 10.7% 6.8% 10.1% 11.2% Depreciation, amortization and 47 47 47 36 impairment losses EBITDA 108 87 105 102 EBITDA margin 19.0% 14.7% 18.5% 17.
Slide 46: Segment reporting: Bridon-Bekaert Ropes Group (BBRG)
Segment reporting: Bridon-Bekaert Ropes Group (BBRG) (in mio €) Underlying Reported 1H 2017 1H 2018 1H 2017 1H 2018 Consolidated sales 234 227 234 227 EBIT 11 2 11 (1) EBIT margin 4.7% 0.8% 4.5% -0.3% Depreciation, amortization and 11 14 11 14 impairment losses EBITDA 22 16 21 14 EBITDA margin 9.4%
Slide 47: Consolidated income statement: key figures
Consolidated income statement: key figures (in mio €) 1H 2017 1H 2018 EBIT 197 101 Interest income / expense (41) (45) Other financial income and expenses (35) (0) Result before taxes 120 56 Income taxes (42) (23) Result after taxes (consolidated companies) 78 33 − Net interest expenses were higher
Slide 48: Consolidated income statement: key figures
Consolidated income statement: key figures (in mio €) 1H 2017 1H 2018 Result after taxes (consolidated companies) 78 33 Share in the results of joint ventures and associates 9 12 Result for the period 88 45 Attributable to non-controlling interests 1 (10) Attributable to the Group 87 54 − The share
Slide 49: Cash flow: key figures
Cash flow: key figures (in mio €) 1H 2017 1H 2018 Gross cash flows from operations 205 147 Cash flows from operations 6 (17) Cash flows from investment activities (64) (54) Cash flows from financing activities (0) (60) − Gross cash-ins from operations were € 58 million lower due to a decline in unde
Slide 50: Working capital: key figures
Working capital: key figures (in mio €) 1H 2017 Year-end 2017 1H 2018 Inventories 783 780 904 Accounts receivable 918 910 1 011 Accounts payable (715) (802) (884) Working capital 985 888 1 031 − The nominal increase in Working Capital by € 143 million versus year-end 2017 was the result of higher ou
Slide 51: Consolidated balance sheet: key figures
Consolidated balance sheet: key figures (in mio €) Year-end 2017 1H 2018 Non-current assets 2 124 2 103 Current assets 2 321 2 442 Total assets 4 445 4 545 Equity 1 583 1 543 Non-current liabilities 1 449 1 415 Current liabilities 1 413 1 588 Total equity and liabilities 4 445 4 545 51 Investor pres
Slide 52: Balance sheet: key figures
Balance sheet: key figures (in mio €) 1H 2017 Year-end 2017 1H 2018 Net financial debt 1 230 1 151 1 339 Gearing (net debt to equity) 81.7% 72.7% 86.8% Net debt on EBITDA (underlying) 2.2 2.3 3.1 Net debt on EBITDA (reported) 2.1 2.3 3.3 − Net debt on EBITDA (underlying) was 3.1 as net debt increase
Slide 53: Ratios: key figures
Ratios: key figures Underlying Reported 1H 2017 1H 2018 1H 2017 1H 2018 Gross profit margin 18.2% 14.4% 18.1% 13.6% EBITDA margin 13.2% 9.9% 14.2% 9.5% EBIT margin 8.4% 5.1% 9.4% 4.7% Sales on capital employed (asset rotation) 1.6 1.6 1.6 1.6 Return on capital employed (ROCE) 13.1% 8.1% 14.6% 7.4% R
Slide 54: Outlook (1/3)
Outlook (1/3) We recognize that our performance has been affected more than projected and we will accelerate our actions to progressively improve our profitability level. These actions include measures that we have announced before as well as other elements that will enable us to step up our perform
Slide 55: Outlook (2/3)
Outlook (2/3) - Passing on raw material price increases without delay continues to be a major challenge, but we are stepping up our efforts and are deploying new pricing tools to improve the pass-through more effectively. We are cautious about the cost inflation facing our US operations as a direct
Slide 56: Outlook (3/3)
Outlook (3/3) - Cash generation actions are being put in place to bring net debt/underlying EBITDA to around 2.5 at year-end 2018. This includes: improvement of the operating result (underlying EBIT) strict working capital control measures a thorough review of all capital expenditure needs. We
Slide 57: Agenda
Bekaert in brief Strategy update Business update Financials & Investment case Annex: first half year results 2018 Annex: Sector Exposure
Slide 58: Bridon – Bekaert combined ropes group (BBRG)
Bridon – Bekaert combined ropes group (BBRG) Additional USD 350 million sales (normalized) from Bridon Bridon Europe – 4 sites Bekaert Aalter Belgium WRI Canada Bridon American Bekaert Shenyang Bekaert Qingdao WRI USA Bridon Hangzhou Bridon Hong Kong Bridon Middle East Bridon Singapore Bridon Indone
Slide 59: The automotive sector (44%)
The automotive sector (44%) In the automotive sector, we set ourselves apart by consistently creating high-quality and innovative products that are tailored to our customers’ needs. We supply specialized wire products that meet the highest quality standards. • tire cord • bead wire • wires for winds
Slide 60: The construction sector (22%)
The construction sector (22%) By offering wire, mesh and fiber products in numerous construction applications, we seek out more environment- friendly solutions with a focus on better materials, greater safety and lower energy consumption, all with an eye on cost-efficiency. • Dramix® steel fibers fo
Slide 61: Energy and utilities sector (10%)
Energy and utilities sector (10%) Whether it concerns onshore or offshore oil extraction, gas mining, power transmission, solar energy, or even telecommunications, Bekaert products are key contributors to sustainable, safer and more cost-efficient operations. • wire and ropes for oil and gas explora
Slide 62: Consumer goods (6%)
Consumer goods (6%) As ever higher quality and comfort standards and functionalities are required, the demand for more advanced coated steel wire products evolves accordingly. Often unknown, but always there: Bekaert is a part of the products we all use every day. • champagne cork wire • wire for ki
Slide 63: Agriculture (7%)
Agriculture (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. • biodegradable wire • tensioning wire for plant support and b
Slide 64: The basic materials (6%)
The basic materials (6%) Many Bekaert products are used in exploring and producing raw materials, from coal and metals to pulp and paper, to chemicals and textiles. We make cable and wefts for conveyor belts that are used across many industries. We continue to find new ways to span every step of the
Slide 65: 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 66: Contacts
Contacts Investor Relations : Katelijn Bohez +32 56 23 66 10 [email protected] Joeri Goethals +32 56 76 62 23 [email protected] Documentation : Christine Clarysse +32 56 76 66 13 [email protected] Shareholders, investors and other interested parties wishing to receive
Slide 67: Investor section online
Investor section online @ www.bekaert.com Copyright © by NV Bekaert SA, 2018 67 Investor presentation - Bekaert
Slide 68: Better together
— oc TT <x 4 lu a 3) better together