Earnings Release • Nov 19, 2021
Earnings Release
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19 November 2021 • 7:30 a.m. CET
Market developments in the three-month period July-September 2021:
While the global macro environment remains unstable, Bekaert has successfully accelerated its transformation allowing the company to leverage on several opportunities. Third quarter actions have been specifically geared towards :
While we anticipate softening conditions in some of the demand tailwinds, remain cautious about supply chain disruption risks, and take into account the usual seasonality effects of the fourth quarter, we project solid sales in most of our business areas for the remainder of the year and reconfirm our outlook:
Barring unexpected events, Bekaert projects for FY 2021 an underlying EBIT margin on sales of 10% or better and sales of approximately € 4.6 billion.
2 Combined sales are sales of fully consolidated companies plus 100% of sales of joint ventures and associates after intercompany elimination.
Press & Investors • Katelijn Bohez • T +32 56 76 66 10 • bekaert.com 1 / 5
1 All comparisons are relative to the same period in 2020 and reflect organic growth at constant exchange rates, unless otherwise indicated.
| Consolidated sales | 2020 | 2021 | Share | Variance3 | Organic | FX |
|---|---|---|---|---|---|---|
| Rubber Reinforcement | 1 146 | 1 504 | 42% | +31% | +33% | -1% |
| Steel Wire Solutions | 982 | 1 338 | 38% | +36% | +38% | -2% |
| Specialty Businesses | 288 | 354 | 10% | +23% | +23% | - |
| BBRG | 330 | 358 | 10% | +9% | +9% | - |
| Group | 9 | 5 | - | - | - | - |
| Total | 2 755 | 3 559 | 100% | +29% | +30% | -1% |
| Combined sales4 | 2020 | 2021 | Share | Variance | Organic | FX |
| Rubber Reinforcement | 1 236 | 1 634 | 38% | +32% | +34% | -2% |
| Steel Wire Solutions | 1 385 | 1 980 | 46% | +43% | +47% | -4% |
| Specialty Businesses | 288 | 354 | 8% | +23% | +23% | - |
| BBRG | 330 | 358 | 8% | +9% | +9% | - |
| Group | - | - | - | - | - | - |
10% 10% 38% 42% BBRG Specialty Businesses Steel Wire Solutions Rubber Reinforcement
| Consolidated sales | 1st Q | 2nd Q | 3rd Q | Q3:Q2 | Q3 y-o-y5 |
|---|---|---|---|---|---|
| Rubber Reinforcement | 497 | 494 | 512 | +4% | +17% |
| Steel Wire Solutions | 411 | 438 | 489 | +12% | +43% |
| Specialty Businesses | 103 | 124 | 127 | +2% | +23% |
| BBRG | 115 | 120 | 123 | +3% | +21% |
| Group | 1 | 2 | 2 | - | - |
| Total | 1 128 | 1 178 | 1 253 | +6% | +27% |
| Combined sales | 1st Q | 2nd Q | 3rd Q | Q3:Q2 | Q3 y-o-y5 |
| Rubber Reinforcement | 533 | 539 | 562 | +4% | +18% |
| Steel Wire Solutions | 586 | 660 | 733 | +11% | +49% |
| Specialty Businesses | 103 | 124 | 127 | +2% | +23% |
| BBRG | 115 | 120 | 122 | +2% | +21% |
| Group | 1 | -1 | - | - | - |
| Total | 1 339 | 1 443 | 1 545 | +7% | +32% |
3 Comparisons are made relative to the first nine months of 2020, unless otherwise indicated.
4 Combined sales are sales of consolidated companies plus 100% of sales of joint ventures and associates after intercompany elimination.
5 Q3 year-on-year sales: 3rd quarter 2021 versus 3rd quarter 2020.
The consolidated organic sales growth (+30.3%) in the first nine months stemmed from higher volumes (+14.4%) and a positive impact from passed-on wire rod price changes and other mix effects (+15.9%). Part of the growth was offset by adverse currency movements (-1.1%), resulting in a top-line increase of +29.2%.
Including the vigorous sales growth of the Brazilian joint ventures (+66.9% organic), the combined organic sales growth was +36.2%. Currency movements (-2.6%) tempered the growth to +33.6%, resulting in a combined topline of € 4 327 million over the first nine months of the year.
Bekaert's Rubber Reinforcement business achieved +32.5% consolidated organic sales growth compared with the first nine months of 2020. This stemmed from higher volumes (+16.6%) and positive price-mix effects (+15.9%) including the impact from passed-on raw material prices. Adverse currency movements (-1.3%) tempered the top line growth to +31.2% or € 1 504 million in consolidated revenue year-to-date.
Sales continued to be strong in the three-month period July-September 2021, except in China and Indonesia, where demand tailed off due to softening domestic markets and lower export sales of tire makers as a result of container shortage and freight cost increases.
Combined sales totaled € 1 634 million (+34.2% organic growth), boosted by very strong sales growth of the Rubber Reinforcement joint venture in Brazil (+56.0%) over the first nine months.
The business unit takes into account the usual seasonality effects of the fourth quarter of the year and expects continued subdued business conditions in China.
Steel Wire Solutions delivered robust organic sales growth in the first nine months of 2021 (+37.9% compared to the same period last year). This growth stemmed from favorable price-mix effects (+25.4%) including the impact of passed-on raw material prices and from strong volume growth (+12.5%), particularly in Latin America, EMEA and China. Adverse currency movements accounted for -1.6%, resulting in a top-line growth of +36.3% to € 1 338 million, well above pre-Covid-19 levels.
Combined sales totaled € 1 980 million (+47.2% organic growth), boosted by vigorous sales growth of the Steel Wire Solutions joint venture in Brazil (+69.3%) throughout the first nine months.
Demand is expected to remain solid in most markets in the last quarter of 2021. We do project some impact from the usual year-end seasonality effects and remain cautious about the risk of potential supply chain interruptions.
The business unit Specialty Businesses reported a sales increase of +23.1% to € 354 million, driven by solid organic growth (+23.2%) above pre-Covid-19 levels and almost neutral currency effects (-0.1%). Building Products reported strong volume growth and a good product mix. Combustion Technologies saw increased demand for environmentally-friendly burners, particularly in EMEA. Fiber Technologies achieved strong growth in Asia and in high-end filtration and hydrogen markets in general. Demand for heat-resistant textiles and microcables was affected by the prevailing global shortage of microchips in automotive OEM, although order books remain strong.
The business unit projects solid underlying demand in the last quarter of 2021, while taking into account the usual seasonality effects and temporary shutdown plans of customers suffering from material shortages.
Bridon-Bekaert Ropes Group (BBRG) recorded an organic sales growth of +8.7% compared to the first nine months of 2020, mainly driven by higher volumes, both in Ropes and in the Advanced Cords business. Top-line growth was +8.5% - including almost neutral currency movements (-0.1%) - and reached € 358 million.
Sales were particularly strong in the three-month period July-September 2021, but are expected to slow down in the last quarter of the year due to the usual seasonality effects and some temporary shutdowns by A-Cords customers as a result of the microchip shortage in OEM markets. The order books continue to be strong, particularly in ropes.
The average working capital on sales was 14%, on the back of disciplined capital allocation and working capital management.
Net debt was € 538 million on 30 September 2021, € -66 million down from year-end 2020 (€ 604 million) and € -296 million down from € 834 million on 30 September 2020.
Bekaert's investments in PP&E amounted to € 68 million in the first nine months of 2021 (versus € 54 million in the same period last year).
On 30 June 2021, Bekaert owned 3 352 374 treasury shares. Between 1 July 2021 and 30 September 2021, a total of 100 914 stock options were exercised under SOP 2010-2014, SOP 2015-2017 and SOP2, and 100 914 own shares were used for that purpose. Including the transactions exercised under the liquidity agreement the balance of treasury shares held by Bekaert was 3 250 829 on 30 September 2021.
| Third quarter trading update 2021 | 19 November | 2021 |
|---|---|---|
| 2021 full year results | 25 February | 2022 |
| 2021 annual report available on bekaert.com | 25 March | 2022 |
| First quarter trading update 2022 | 11 May | 2022 |
| General Meeting of Shareholders | 11 May | 2022 |
| 2022 half year results | 29 July | 2022 |
| Third quarter trading update 2022 | 18 November | 2022 |
This press release 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 press release as of this date and does not undertake any obligation to update any forward-looking statements contained in this press release 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 press release issued by Bekaert.
Bekaert (bekaert.com) is a world market and technology leader in steel wire transformation and coating technologies. We pursue to be the preferred supplier for our steel wire products and solutions by continuously delivering superior value to our customers worldwide. Bekaert (Euronext Brussels: BEKB) is a global company with 27 000 employees worldwide, headquarters in Belgium and € 4.4 billion in combined revenue in 2020.
Press & Investors Contact Katelijn Bohez Phone: +32 56 76 66 10 E-mail: [email protected]
www.bekaert.com
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