Bekaert NV

Annual / Quarterly Financial Statement • Feb 28, 2018

Press release

Regulated information

Press - Investors Katelijn Bohez T +32 56 76 66 10

www.bekaert.com

28 February 2018 – 07:00 a.m. CET

Full Year Results 2017

Bekaert delivers 10% sales growth and € 301 million underlying EBIT

7.3% Underlying EBIT margin - 7.8% EBIT margin – net result up 76% - stable dividend of € 1.10 per share

Highlights¹

Bekaert achieved more than 10% sales growth in 2017, exceeding the € 4 billion consolidated sales mark for the first time in history. Despite of the economic headwinds in Latin America, the various adverse portfolio effects and the unusual volatility in raw materials prices and currencies, we were able to reach broadly the same profit level as in 2016.

Our solid organic volume growth (+3.4%) stemmed from firm demand in global automotive markets and increased sales volumes in industrial steel wire and construction markets. Notwithstanding a delay in fully reflecting the raw materials price hikes in our selling prices, the aggregate effect of passed-on wire rod price increases and price-mix added 5.5% to the topline. The net effect of mergers, acquisitions and divestments was +2.2% while adverse currency movements accounted for -0.9%.

Bekaert achieved solid results in EMEA, further progress in margin improvement in North America, but lower margins in Latin America and Asia Pacific due to adverse mix effects (the Sumaré divestment and the sawing wire business decline respectively). The full-year integration of the Bridon activities in Bekaert's consolidated statements via Bridon-Bekaert Ropes Group tempered our profit performance. Continuously increasing wire rod prices weighed on margins in all segments, particularly in the middle part of the year.

Underlying EBIT decreased 1% to € 301 million, representing a margin on sales of 7.3%. Our underlying EBITDA totaled € 497 million, 3% down from last year and reflecting a margin of 12.1%. We achieved an underlying ROCE of 11.2%. Bottom-line, the net result attributable to the Group increased by 76% to € 185 million, or an EPS of € 3.26.

• Consolidated sales of € 4.1 billion (+10%) and combined sales of € 4.8 billion (+11%)
• Underlying gross profit of € 704 million (17.2% margin) compared with € 690 million (18.6% margin) in 2016
• Underlying EBIT of € 301 million (7.3% margin) compared with € 305 million (8.2% margin)
• EBIT of € 318 million (7.8% margin) compared with € 260 million (7.0% margin)
• Underlying EBITDA of € 497 million (12.1% margin) compared with € 513 million (13.8% margin)
• Underlying ROCE of 11.2% compared with 11.8%
• € 273 million capital expenditure (PP&E) versus € 159 million in 2016, in support of future growth
• Net debt of € 1 151 million. Net debt on underlying EBITDA was 2.3, higher than last year (2.1). Excluding Bridon-Bekaert Ropes Group, net debt on underlying EBITDA was 1.5
• Result for the period attributable to the Group: € 185 million, up 76% from € 105 million in 2016
• EPS: € 3.26 compared with € 1.87

The Board of Directors confirms its confidence in the strategy and future perspectives of the company and will propose to the Annual General Meeting of Shareholders to distribute a gross dividend of € 1.10 per share, unchanged from last year.

¹ All comparisons are made relative to the financial year 2016.

Press release – Full Year Results 2017 – 28 February 2018 1/19

Outlook

We project broad economic strength in most parts of the world in 2018, with the exception of Latin America. We anticipate good demand in our automotive markets, particularly driven by growth in truck tire markets, and in mining and construction markets. Prospects for the oil & gas sector may improve as oil prices continue to increase.

We recognize that the same factors that affected our performance at some point last year, with a margin impact particularly in the second half, will continue to weigh on the profitability of the first half of 2018. This includes:

• the difficult business climate in Latin America
• the divestment of Sumaré in Brazil
• continued volatility of wire rod prices and other inflationary costs
• continued low demand for loose abrasive sawing wire
• the slow recovery of Bridon-Bekaert Ropes Group

The only added caution for 2018 relates to the potential outcome and impact of the changes to fiscal and trade policies in the US.

However, we will progressively improve on all controllable factors in the course of the year:

• During the fourth quarter of 2017, we have been better able to pass on wire rod price increases without adversely affecting sales volumes. We expect continued margin recovery in 2018.
• We have made a breakthrough in the development of fixed abrasive sawing wire. All key customers have tested and approved the samples and we will build manufacturing capacity to start delivering a positive contribution in the 2nd half of 2018.
• Bridon-Bekaert Ropes Group has started to roll out the same transformation tools that we have implemented successfully within Bekaert. These programs will help create a turnaround in cost effectiveness, sales growth and margin capability and should steadily improve our performance over the coming years.
• The global transformational programs supporting our vision and strategies are expected to gain further ground over the coming years. They include our manufacturing excellence program aimed at gaining competitiveness by improving the company's safety, quality, delivery performance and productivity, our customer excellence program to drive growth and margin performance; our supply chain excellence program to improve our planning and inventory management capability; our global safety program to enhance our safety performance and culture; and the newly added Fit for Growth program aimed at driving functional excellence and capability throughout Bekaert. These programs are increasingly underpinning our move towards a sustainable higher-level performance.
• In addition, we will start to see some benefits from the ongoing expansion investments.

That is why we are confident we will improve our profitability progressively during the year to achieve the same profitability level of 2017.

We continue to believe that the improvements we are making throughout our business will allow us to move towards a 10% underlying EBIT margin over the medium term.

Financial Statements Summary

Underlying						Reported
in millions of €	2016	2017	1H 2017	2H 2017	2016	2017
Consolidated sales	3 715	4 098	2 095	2 003	3 715	4 098
Operating result (EBIT)	305	301	176	125	260	318
EBIT margin on sales	8.2%	7.3%	8.4%	6.2%	7.0%	7.8%
Depreciation, amortization and impairment losses	208	196	101	95	222	192
EBITDA	513	497	277	220	481	510
EBITDA margin on sales	13.8%	12.1%	13.2%	11.0%	13.0%	12.4%
ROCE	11.8%	11.2%			10.0%	11.8%
Combined sales	4 351	4 808	2 424	2 384	4 351	4 808

Underlying EBIT bridge

Bekaert's underlying EBIT was € 301 million, reflecting a margin of 7.3%. In terms of organic growth, the main factors preventing us from turning improved volumes into incremental profitability were the adverse mix effect of a fast declining loose abrasive sawing wire business and the time needed to pass on the continuously increasing wire rod prices. The impact of the latter on our margins was at its most severe during the middle part of the year. In the fourth quarter, we were better able to pass on wire rod prices without adversely affecting our sales volumes.

The incremental cost savings from transformation programs and other measures compensated for the full-year integration of the Bridon activities in the Bridon-Bekaert Ropes Group at lower than average margins, and the divestment of the high-margin Sumaré business in Brazil.

Sales

Bekaert achieved consolidated sales of € 4.1 billion in 2017, an increase of 10.3% compared with last year. Organic volume growth boosted sales by 3.4% and the aggregate effect of passed-on higher wire rod prices and price-mix added +5.5%. The net effect of mergers, acquisitions and divestments was +2.2% while currency movements accounted for -0.9%. Combined sales² totaled € 4.8 billion for the year, up 10.5% from 2016 due to 7.5% organic growth, a limited net effect of mergers, acquisitions and divestments (+2.8%) and about neutral exchange rate effects.

Consolidated sales	2016	2017	Share	Variance3	Organic	FX	M&A
EMEA	1 148	1 273	31%	+11%	+11%	-	-
North America	512	552	14%	+8%	+10%	-2%	-
Latin America	682	673	16%	-1%	+3%	+1%	-6%
Asia Pacific	1 052	1 145	28%	+9%	+12%	-3%	-
BBRG	320	455	11%	+42%	+5%	-1%	+38%
Total	3 715	4 098	100%	+10%	+9%	-1%	+2%
Combined sales2	2016	2017	Share	Variance3	Organic	FX	M&A
EMEA	1 147	1 264	26%	+10%	+10%	-	-
North America	512	552	12%	+8%	+10%	-2%	-
Latin America	1 320	1 394	29%	+6%	+2%	+4%	-
Asia Pacific	1 052	1 144	24%	+9%	+12%	-3%	-
BBRG	319	454	9%	+42%	+5%	-1%	+38%
Total	4 351	4 808	100%	+11%	+7.5%	-	+3%

Consolidated and combined sales by segment - in millions of €

2017 quarter-on-quarter progress – in millions of €

Consolidated sales	st Q 1	nd Q 2	rd Q 3	rd Q 4	4 Q4 y-o-y
EMEA	325	328	303	317	+16%
North America	147	140	134	130	+7%
Latin America	183	173	151	166	-7%
Asia Pacific	290	275	281	299	+9%
BBRG	117	117	108	113	+2%
Total	1 061	1 035	977	1 026	+7%
Combined sales2	1st Q	2nd Q	3rd Q	rd Q 4	4 Q4 y-o-y
EMEA	321	326	302	315	+16%
North America	147	140	134	130	+7%
Latin America	350	342	347	356	+4%
Asia Pacific	290	275	280	299	+9%
BBRG	117	117	108	112	+2%
Total	1 223	1 201	1 172	1 213	+8%

² Combined sales are sales of consolidated companies plus 100% of sales of joint ventures and associates after intercompany elimination.

³ Comparisons are made relative to the financial year 2016, unless when otherwise indicated.

⁴ Q4 year-on-year sales: 4th quarter 2017 versus 4th quarter 2016.

Press release – Full Year Results 2017 – 28 February 2018 4/19

Segment reports

EMEA

Underlying					Reported
Key figures (in millions of €)	2016	2017	1H 2017	2H 2017	2016	2017
Consolidated sales	1 148	1 273	653	621	1 148	1 273
Operating result (EBIT)	141	141	81	60	136	144
EBIT margin on sales	12.2%	11.1%	12.3%	9.7%	11.8%	11.3%
Depreciation, amortization and impairment losses	59	62	31	31	58	58
EBITDA	200	203	111	91	194	202
EBITDA margin on sales	17.4%	15.9%	17.1%	14.7%	16.9%	15.9%
Segment assets	881	1 018	965	1 018	881	1 018
Segment liabilities	240	299	268	299	240	299
Capital employed	642	718	697	718	642	718
ROCE	22.1%	20.8%			21.3%	21.2%

Bekaert's activities in EMEA achieved 11% sales growth in 2017, driven by robust organic volume growth (+7%) and the aggregate effect of passed-on wire rod price increases and price mix (+4%). Strong automotive, construction and other industrial markets boosted sales volumes throughout the year, while demand for specialty steel wires was flat compared with 2016.

Bekaert EMEA delivered solid results in 2017. We repeated the record € 141 million underlying EBIT of last year in absolute numbers. The margin performance was lower due to some delay in passing on wire rod price increases to our customers - particularly in the highly competitive construction markets - and because of additional costs of hiring and training personnel needed for the ongoing expansion programs in Central and Eastern Europe.

The one-offs amounted to € +3 million and were mainly related to the reversal of impairment losses.

Compared with last year, capital expenditure (PP&E) more than doubled to € 115 million and included, amongst others, major capacity expansions in Romania, Slovakia and Russia.

Bekaert anticipates continued good demand from most markets and increased benefits from the ongoing expansion programs. The steadily increasing oil prices may induce some investment activity in oil markets in the near future.

Underlying						Reported
Key figures (in millions of €)	2016	2017	1H 2017	2H 2017	2016	2017
Consolidated sales	512	552	287	265	512	552
Operating result (EBIT)	26	33	21	13	26	33
EBIT margin on sales	5.1%	6.0%	7.2%	4.8%	5.1%	6.0%
Depreciation, amortization and impairment losses	13	13	7	6	13	13
EBITDA	39	47	28	19	39	47
EBITDA margin on sales	7.6%	8.5%	9.6%	7.2%	7.6%	8.5%
Segment assets	300	299	301	299	300	299
Segment liabilities	62	88	76	88	62	88
Capital employed	237	210	225	210	237	210
ROCE	11.7%	14.9%			11.7%	14.9%

NORTH AMERICA

Press release – Full Year Results 2017 – 28 February 2018 5/19

Bekaert's activities in North America achieved almost 8% sales growth and a significant improvement in profitability. Passed-on higher wire rod prices and price-mix effects combined with more than 3% volume increase boosted an organic growth of almost 10%.

Automotive, industrial and specialty steel wire markets performed well in 2017. As anticipated, sales volumes were lower in the last quarter of the year due to the normal seasonality impacts. The adverse effects of a weaker USD in the second half of the year had a significant impact on both sales and profitability, year-on-year.

The transformation programs put in place in the region have had a material impact on the 2017 performance. The combined approach in implementing manufacturing, supply chain and commercial excellence have led to a stronger organization, better segmentation, and increased cost competitiveness. The underlying EBIT increased by 28% to € 33 million at a margin of 6%. The segment also reported a significant increase in EBITDA and ROCE margins compared with the previous reporting periods.

Capital expenditure (PP&E) was € 13 million in North America.

		Underlying		Reported
Key figures (in millions of €)	2016	2017	1H 2017	2H 2017	2016	2017
Consolidated sales	682	673	356	317	682	673
Operating result (EBIT)	67	55	28	26	67	80
EBIT margin on sales	9.8%	8.2%	8.0%	8.4%	9.8%	11.9%
Depreciation, amortization and impairment losses	22	20	11	8	22	20
EBITDA	89	74	40	35	88	100
EBITDA margin on sales	13.0%	11.1%	11.1%	11.0%	12.9%	14.8%
Combined sales	1 320	1 394	692	703	1 320	1 394
Segment assets	464	453	448	453	464	453
Segment liabilities	118	120	117	120	118	120
Capital employed	347	332	331	332	347	332
ROCE	16.6%	14.8%			16.5%	21.6%

LATIN AMERICA

In Latin America, consolidated sales were down 1% from last year. The divestment of the Sumaré entity accounted for -5.5% and the overall weak economic environment in the region drove demand for our products down, resulting in a volume loss of -5.6% for the year. These effects were almost completely compensated at the top-line by the impact of passed-on higher wire rod prices and slightly positive currency effects.

The segment's profitability was affected by the deterioration of the business climate in 2017. Underlying EBIT decreased by 18% due to weak market conditions and cost inflation, amongst other due to protective measures against wire rod imports in various countries. The cancellation of the obligations under an onerous supply contract offset the divestment impact of the high-margin Sumaré entity. The underlying EBIT margin reached 8.2% for the full year.

EBIT increased by more than 20% to € 80 million as a result of the gain on the sale of 55.5% of the shares of the Sumaré plant in Brazil which has been integrated into the BMB (Belgo Mineira Bekaert Artefatos de Arame Ltda) joint venture partnership with ArcelorMittal.

Bekaert invested € 22 million in property, plant and equipment across the region, particularly in Chile and Peru.

Bekaert's combined sales increase reflects the translation impact of a stronger average Brazilian real compared with last year and passed on higher raw material prices. The share in the results of joint ventures increased by 5.5% due to the integration of the Sumaré entity within the joint venture partnership in Brazil.

ASIA PACIFIC

Underlying						Reported
Key figures (in millions of €)	2016	2017	1H 2017	2H 2017	2016	2017
Consolidated sales	1 052	1 145	565	580	1 052	1 145
Operating result (EBIT)	119	107	61	46	100	104
EBIT margin on sales	11.3%	9.3%	10.7%	7.9%	9.5%	9.1%
Depreciation, amortization and impairment losses	103	90	47	43	119	89
EBITDA	222	196	108	89	219	193
EBITDA margin on sales	21.1%	17.1%	19.0%	15.3%	20.8%	16.8%
Combined sales	1 052	1 144	565	579	1 052	1 144
Segment assets	1 115	1 209	1 191	1 209	1 115	1 209
Segment liabilities	179	197	175	197	179	197
Capital employed	936	1 012	1 015	1 012	936	1 012
ROCE	12.2%	10.9%			10.3%	10.7%

Bekaert delivered 12% organic sales growth in Asia Pacific, driven by good volume growth and a positive aggregate effect of passed-on wire rod price increases and price-mix. Bekaert's rubber reinforcement activities reported firm growth across the region.

Several developments hindered us from repeating the outstanding margin performance of last year:

• The continuous price increases of raw materials hampered an immediate effective pricing response in the fierce competitive environment in China. The impact on our margins was at its most severe during the middle part of the year. In the fourth quarter, we were better able to pass on wire rod prices without adversely affecting our sales volumes.
• The demand for loose abrasive sawing wire declined sharply due to an acceleration of the technology shift to new generation products.
• The ongoing expansion programs in the region generated additional costs related to hiring and training personnel.

These elements had an adverse effect on the overall profitability for the region in 2017. Underlying EBIT decreased to € 107 million at a margin of 9.3%, below our 2016 performance.

We have taken actions to upgrade our sawing wire offering so we can play a part in the ongoing technology shift. Bekaert has successfully developed in the course of 2017 a fixed abrasive sawing wire. All key customers have tested and approved the samples and we are investing in production capacity to start serving our customers as of mid-2018.

In anticipation of continued growth perspectives, Bekaert invested € 122 million in PP&E in the region in 2017, more than doubling the investment pace of 2016 and including expansion investments in China, India and Indonesia. In order to better leverage scale, the company also closed two entities that did not have the potential to generate value-creating growth: the Shah Alam plant in Malaysia and the small tire cord plant in Huizhou (China).

We expect the high run rate in our tire markets to continue into 2018. We project improved margin performance in our ongoing businesses by progressively regaining pricing power. We take into account continued low demand for loose abrasive sawing wire in the first half of 2018 and a positive contribution from the launch of fixed abrasive sawing wire as from the second half onwards.

Bridon-Bekaert Ropes Group

	Underlying					Reported
Key figures (in millions of €)	2016	2017	1H 2017	2H 2017	2016	2017
Consolidated sales	320	455	234	221	320	455
Operating result (EBIT)	13	15	11	4	-9	12
EBIT margin on sales	4.1%	3.3%	4.7%	1.8%	-2.7%	2.7%
Depreciation, amortization and impairment losses	21	26	11	15	22	26
EBITDA	35	41	22	19	13	38
EBITDA margin on sales	10.8%	9.0%	9.4%	8.6%	4.0%	8.4%
Segment assets	613	574	591	574	613	574
Segment liabilities	92	108	87	108	92	108
Capital employed	522	465	504	465	522	465
ROCE	3.4%	3.1%			-2.3%	2.5%

Bridon-Bekaert Ropes Group (BBRG) achieved 42% sales growth. The integration of the Bridon activities since the end of June 2016, accounted for an increase of 38%. The former Bekaert activities within BBRG delivered 5% organic growth reflecting almost 4% volume increase stemming from double-digit growth in the advanced cords business and a modest volume increase in ropes.

The advanced cords business activities have performed strongly throughout the year. The steel ropes activities in North America, Australia and Chile gradually reported higher sales volumes on the wave of increased demand in the mining sector. The European and Brazilian entities, which are heavily dependent on oil, reported very weak sales and results throughout the year.

Underlying EBIT was € 15 million at a margin of 3.3%, reflecting the difficult conditions in oil & gas markets and the margin impact of continuous wire rod price increases. The projected recovery of Bridon-Bekaert Ropes Group is taking longer than anticipated due to the absence of a rebound in offshore oil & gas activities and the slow reconversion and entry process into more diversified market segments. While the order books are modestly growing, they have an extended delivery window with limited immediate growth effects.

BBRG invested € 15 million in PP&E in 2017, half of which in advanced cords and the other half in steel ropes manufacturing sites worldwide.

The management of Bridon-Bekaert Ropes Group is implementing actions to strengthen its market positions and to gradually leverage the benefits of its increased scale. Bridon-Bekaert Ropes Group is putting into practice the same transformation tools that have been implemented successfully within Bekaert. These programs will help create a turnaround in cost effectiveness, sales growth and margin capability and should progressively improve the performance of the segment over the coming years.

Investment update and other information

Net debt increased to € 1 151 million, up from € 1 068 million as at year-end 2016 and down from € 1 230 million as at 30 June 2017. Net debt on underlying EBITDA was 2.3, compared with 2.1. on 31 December 2016. Excluding Bridon-Bekaert Ropes Group, net debt on underlying EBITDA was 1.5, below our target of 2.0.

Bekaert is investing in all continents to expand and upgrade the production capacity to the levels needed. Investments in property, plant and equipment amounted to € 273 million in 2017 and included major tire cord expansion programs in EMEA and Asia Pacific.

In addition to the 3 885 446 treasury shares held as of 31 December 2016, Bekaert purchased 172 719 own shares in the course of 2017. A total of 403 150 stock options were exercised in 2017 under the Stock Option Plan 2010-2014 and 403 150 treasury shares were used for that purpose. 18 735 treasury shares were transferred in the context of the Personal Shareholding Requirement Plan. As a result, Bekaert held an aggregate 3 636 280 treasury shares as of 31 December 2017.

Financial Review

Dividend

The Board of Directors confirms its confidence in the strategy and future perspectives of the company and will propose that the General Meeting of Shareholders on 9 May 2018 approve the distribution of a gross dividend of € 1.10 per share, stable from last year. The dividend will, upon approval by the General Meeting of Shareholders, become payable as of 15 May 2018.

Financial results

Bekaert achieved an operating result (EBIT-Underlying) of € 301 million (versus € 305 million in 2016). This equates to a margin on sales of 7.3% (versus 8.2% in 2016). The one-offs amounted to € 17 million (€ -45 million in 2016) and included the gain on the sale of 55.5% of the shares in the formerly wholly-owned subsidiary in Sumaré (€ +25.8 million) and other items adding up to a net expense of € -8.8 million.

Including these one-offs, EBIT was € 318 million, representing an EBIT margin on sales of 7.8% (versus € 260 million or 7.0%). Underlying EBITDA was € 497 million (12.1% margin) compared with € 513 million (13.8%) and EBITDA reached € 510 million, or an EBITDA margin on sales of 12.4% (versus 13.0%).

Reported selling and administrative expenses increased by € 17 million to € 345 million due to the impact of mergers, acquisitions and divestments (€ 17.8 million) and consulting costs related to transformation programs (€ 7.5 million), effects which were partly offset by overhead cost reductions and the positive impact from currency movements. Research and development expenses amounted to € 63 million, stable from last year. Other operating revenues and expenses mainly reflected the gains on operating cash flow hedges, income from government grants and less impairment losses compared to 2016.

Interest income and expenses amounted to € -87 million, higher than last year (€ -14 million) due to an increase of gross debt and a higher average interest rate. Other financial income and expenses amounted to € -6.4 million (versus € -37.5 million) and included a gain of € 17.7 million on the conversion option related to the convertible bond issued in June 2016 (versus a loss of € -37.4 million in 2016).

Taxation on profit amounted to € 69 million, compared with € 62 million in 2016. The effective tax rate decreased from 41.6% last year to 30.8% in 2017.

The share in the result of joint ventures and associated companies increased from € 25 million to € 27 million and includes the integration of the Sumaré business into the joint venture partnership from the second half of 2017 onwards.

The result for the period thus totaled € 183 million, compared with € 112 million in 2016. The result attributable to non-controlling interests decreased from € 7 million to € -2 million. After non-controlling interests, the result for the period attributable to the Group was € 185 million, compared with € 105 million last year. Earnings per share amounted to € 3.26, up from € 1.87 in 2016.

Balance sheet

As at 31 December 2017, shareholders' equity represented 35.6% of total assets, down from 37.1% in 2016. The gearing ratio (net debt to equity) was 72.7% (versus 66.8%).

Net debt was € 1 151 million, down from € 1 230 million as at 30 June 2017 and up from € 1 068 million as at year-end 2016. Net debt on underlying EBITDA was 2.3, compared with 2.1 on 31 December 2016.

Cash flow statement

Cash from operating activities amounted to € 244 million, compared with € 400 million in 2016, due to lower cash generation and the cash-out impact of a higher working capital.

Cash flow attributable to investing activities amounted to € -226 million (versus € -100 million): € -277 million related to substantially higher capital expenditure (intangibles and PP&E) while the net impact of acquisitions and divestments dropped from € 41 million to € 20 million.

Cash flows from financing activities totaled € 47 million (versus € -302 million in 2016). The cash-ins from gross financial debt in 2016 reflected the repayment of a long-term loan offset by the extra cash received from the Convertible Bond Exchange.

NV Bekaert SA (statutory accounts)

The Belgium-based entity's sales amounted to € 410 million, compared with € 358 million in 2016. The operating profit before non-recurring results was € 23 million, compared with a loss of € -8 million last year, while nonrecurring result as part of the operating result was € 50 million in 2017, compared to € -4 million last year. The financial result was € 15 million versus € -16 million in 2016. This led to a result for the period of € +91 million compared with € -24 million in 2016.

Financial Calendar

28	February	2018
30	March	2018
9	May	2018
9	May	2018
11	May	2018
		The CEO and the CFO of Bekaert will present the results to the investment community at 02:00 p.m. CET. This conference can be accessed live upon registration via the Bekaert website in listen-only mode.

Dividend payable 15 May 2018 2018 half year results 27 July 2018 Third quarter trading update 2018 15 November 2018

Statement from the statutory auditor

The statutory auditor has confirmed that the audit procedures on the consolidated financial statements have been substantially completed and have revealed no material adjustments that would have to be made to the accounting information included in this press release. In preparing the consolidated financial statements, the same accounting policies and methods of computation have been used as in the 31 December 2016 annual consolidated financial statements. No new, amended or revised IFRSs that have been adopted as of 1 January 2017 have had a material impact on this report.

Statement from the responsible persons

The undersigned persons state that, to the best of their knowledge:

• the consolidated financial statements of NV Bekaert SA and its subsidiaries as of 31 December 2017 have been prepared in accordance with the International Financial Reporting Standards, and give a true and fair view of the assets and liabilities, financial position and results of the whole of the companies included in the consolidation; and
• the annual report on the consolidated financial statements gives a fair overview of the development and the results of the business and of the position of the whole of the companies included in the consolidation, as well as a description of the principal risks and uncertainties faced by them.

On behalf of the Board of Directors,

Matthew Taylor - Chief Executive Officer Bert De Graeve - Chairman of the Board of Directors

Disclaimer

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.

Company Profile

Bekaert (www.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 almost 30 000 employees worldwide, headquarters in Belgium and € 4.8 billion in combined revenue.

Annex 1: Press release 28 February 2018

Consolidated income statement

(in thousands of €)	20161	2017
Sales	3 715 217	4 098 247
Cost of sales	-3 058 093	-3 396 431
Gross profit	657 124	701 816
Selling expenses	-175 769	-180 100
Administrative expenses	-151 727	-164 411
Research and development expenses	-63 322	-62 670
Other operating revenues	14 657	48 863
Other operating expenses	-21 309	-25 436
Operating result (EBIT)	259 654	318 062
EBIT - Underlying	304 952	301 095
Interest income	6 325	3 117
Interest expense	-79 493	-89 852
Other financial income and expenses	-37 458	-6 408
Result before taxes	149 028	224 919
Income taxes	-62 052	-69 276
Result after taxes (consolidated companies)	86 976	155 643
Share in the results of joint ventures and associates	25 445	26 857
RESULT FOR THE PERIOD	112 421	182 500
Attributable to
the Group	105 166	184 720
non-controlling interests	7 255	-2 220
EARNINGS PER SHARE (in € per share)
Result for the period attributable to the Group
Basic	1.87	3.26
Diluted	1.85	2.67

¹2016: The one-off items initially reported in other operating expenses and revenues have been assigned to the applicable functional line items (cost of sales, selling expenses, administrative expenses, R&D…).

Annex 2: Press release 28 February 2018

Reconciliation of segment reporting

Key Figures per Segment

		Underlying
(in millions of €)	EMEA	N-AM	L-AM	APAC	GROUP1	BBRG	RECONC2	2017
Consolidated sales	1 273	552	673	1 145	-	455	-	4 098
Operating result (EBIT)	141	33	55	107	-45	15	-5	301
EBIT margin on sales	11.1%	6.0%	8.2%	9.3%	-	3.3%	-	7.3%
Depreciation, amortization, impairment losses	62	13	20	90	5	26	-19	196
EBITDA	203	47	74	196	-40	41	-24	497
EBITDA margin on sales	15.9%	8.5%	11.1%	17.1%	-	9.0%	-	12.1%
Segment assets	1 018	299	453	1 209	199	574	-285	3 466
Segment liabilities	299	88	120	197	122	108	-134	802
Capital employed	718	210	332	1 012	77	465	-152	2 664
ROCE	20.8%	14.9%	14.8%	10.9%	-	3.1%	-	11.2%
Capital expenditure - PP&E	115	13	22	122	17	15	-32	273

	Reported
(in millions of €)	EMEA	N-AM	L-AM	APAC	GROUP1	BBRG	RECONC2	2017
Consolidated sales	1 273	552	673	1 145	-	455	-	4 098
Operating result (EBIT)	144	33	80	104	3	12	-58	318
EBIT margin on sales	11.3%	6.0%	11.9%	9.1%	-	2.7%	-	7.8%
Depreciation, amortization, impairment losses	58	13	20	89	4	26	-19	192
EBITDA	202	47	100	193	7	38	-77	510
EBITDA margin on sales	15.9%	8.5%	14.8%	16.8%	-	8.4%	-	12.4%
Segment assets	1 018	299	453	1 209	199	574	-285	3 466
Segment liabilities	299	88	120	197	122	108	-134	802
Capital employed	718	210	332	1 012	77	465	-152	2 664
ROCE	21.2%	14.9%	21.6%	10.7%	-	2.5%	-	11.8%
Capital expenditure - PP&E	115	13	22	122	17	15	-32	273

¹ Group and business support

² Reconciliations

Annex 3: Press release 28 February 2018

Consolidated statement of comprehensive income

(in thousands of €)	2016	2017
Result for the period	112 421	182 500
Other comprehensive income (OCI)
Other comprehensive income reclassifiable to profit or loss in subsequent periods:
Exchange differences	36 837	-123 933
Inflation adjustments	1 483	2 032
Cash flow hedges	742	-247
Available-for-sale investments	2 349	-1 389
Share of reclassifiable OCI of joint ventures and associates	-	-
Deferred taxes relating to reclassifiable OCI	-135	-75
OCI reclassifiable to profit or loss in subsequent periods, after tax	41 276	-123 612
Other comprehensive income non-reclassifiable to profit or loss in subsequent periods:
Remeasurement gains and losses on defined-benefit plans	-9 978	15 089
Share of non-reclassifiable OCI of joint ventures and associates	40	16
Deferred taxes relating to OCI not to be reclassified	-602	-1 176
OCI non-reclassifiable to profit or loss in subsequent periods, after tax	-10 540	13 929
Other comprehensive income for the period	30 736	-109 683
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	143 157	72 817
Attributable to
the Group	134 687	87 481
non-controlling interests	8 470	-14 664

Annex 4: Press release 28 February 2018

Consolidated balance sheet

(in thousands of €)	2016	2017
Non-current assets	2 136 528	2 124 225
Intangible assets	140 377	125 217
Goodwill	152 345	149 895
Property, plant and equipment	1 514 714	1 501 028
Investments in joint ventures and associates	146 582	165 424
Other non-current assets	32 142	41 944
Deferred tax assets	150 368	140 717
Current assets	2 167 785	2 320 506
Inventories	724 500	779 581
Bills of exchange received	60 182	55 633
Trade receivables	739 145	836 809
Other receivables	108 484	126 876
Short-term deposits	5 342	50 406
Cash and cash equivalents	365 546	418 779
Other current assets	52 225	44 329
Assets classified as held for sale	112 361	8 093
Total	4 304 313	4 444 731
Equity	1 597 893	1 583 036
Share capital	177 612	177 690
Share premium	36 594	37 278
Retained earnings	1 432 394	1 529 268
Other Group reserves	-179 508	-256 581
Equity attributable to the Group	1 467 092	1 487 655
Non-controlling interests	130 801	95 381
Non-current liabilities	1 504 487	1 448 734
Employee benefit obligations	182 641	150 810
Provisions	63 107	46 074
Interest-bearing debt	1 161 310	1 180 347
Other non-current liabilities	44 873	27 121
Deferred tax liabilities	52 556	44 382
Current liabilities	1 201 933	1 412 961
Interest-bearing debt	297 916	454 401
Trade payables	556 361	665 196
Employee benefit obligations	132 913	130 204
Provisions	17 720	9 181
Income taxes payable	101 683	91 597
Other current liabilities	61 840	62 382
Liabilities associated with assets classified as held for sale	33 500	-
Total	4 304 313	4 444 731

Annex 5: Press release 28 February 2018

Consolidated statement of changes in equity

(in thousands of €)	2016	2017
Opening balance	1 511 651	1 597 893
Total comprehensive income for the period	143 157	72 817
Capital contribution by non-controlling interests	-	9 870
Effect of acquisitions and disposals	-6 004	-17 020
Creation of new shares	5 365	762
Treasury shares transactions	7 538	3 978
Dividends to shareholders of NV Bekaert SA	-50 472	-62 441
Dividends to non-controlling interests	-17 791	-27 949
Other	4 449	5 126
Closing balance	1 597 893	1 583 036

Annex 6: Press release 28 February 2018

Consolidated cash flow statement

(in thousands of €)	2016	2017
Operating result (EBIT)	259 654	318 062
Non-cash items included in operating result	256 227	191 588
Investing items included in operating result	1 034	-16 194
Amounts used on provisions and employee benefit obligations	-44 864	-50 098
Income taxes paid	-96 388	-87 059
Gross cash flows from operating activities	375 663	356 299
Change in operating working capital	16 336	-109 544
Other operating cash flows	7 553	-2 609
Cash flows from operating activities	399 552	244 146
New business combinations	40 917	-
Other portfolio investments	-41	-17 362
Proceeds from disposals of investments	13	37 596
Dividends received	22 422	28 615
Purchase of intangible assets	-5 955	-3 853
Purchase of property, plant and equipment	-158 529	-272 666
Other investing cash flows	1 187	1 404
Cash flows from investing activities	-99 986	-226 266
Interest received	7 338	3 284
Interest paid	-63 397	-60 066
Gross dividend paid	-67 977	-90 163
Proceeds from non-current interest-bearing debt	172 072	179 274
Repayment of non-current interest-bearing debt	-375 255	-29 829
Cash flows from/to(-) current interest-bearing debt	-5 567	69 629
Treasury shares transactions	7 538	3 978
Other financing cash flows	23 193	-28 916
Cash flows from financing activities	-302 055	47 191
Net increase or decrease (-) in cash and cash equivalents	-2 489	65 071
Cash and cash equivalents at the beginning of the period	401 771	365 546
Effect of exchange rate fluctuations	-25 495	-20 079
Cash and cash equivalents reclassified as held for sale	-8 241	8 241
Cash and cash equivalents at the end of the period	365 546	418 779

Annex 7: Press release 28 February 2018

Additional key figures

(in € per share)	2016	2017
Number of existing shares at 31 December	60 347 525	60 373 841
Book value	24.31	24.64
Share price at 31 December	38.49	36.45
Weighted average number of shares
Basic	56 263 172	56 741 126
Diluted	56 886 582	66 427 499
Result for the period attributable to the Group
Basic	1.87	3.26
Diluted	1.85	2.67
(in thousands of € - ratios)	2016	2017
EBITDA	481 432	509 602
EBITDA - Underlying	513 230	496 925
Depreciation and amortization and impairment losses	221 779	191 541
Negative goodwill	-	-
Capital employed	2 649 944	2 663 725
Operating working capital	842 508	887 586
Net debt	1 067 683	1 150 857
EBIT on sales	7.0%	7.8%
EBIT - Underlying on sales	8.2%	7.3%
EBITDA on sales	13.0%	12.4%
EBITDA - Underlying on sales	13.8%	12.1%
Equity on total assets	37.1%	35.6%
Gearing (net debt on equity)	66.8%	72.7%
Net debt on EBITDA	2.2	2.3
Net debt on EBITDA - Underlying	2.1	2.3
NV Bekaert SA - Statutory Profit and Loss Statement	2016	2017
(in thousands of €)
Sales	358 291	409 874
Operating result before non-recurring items	-8 131	22 853
Non-recurring operational items	-3 898	49 587
Operating result after non-recurring items	-12 029	72 440
Financial result before non-recurring items	33 121	19 334
Non-recurring financial items	-49 098	-4 027
Financial result after non-recurring items -15 977		15 307
Profit before income taxes	-28 006	87 748
Income taxes	3 691	3 657
Result for the period	-24 315	91 405

Annex 8: Press release 28 February 2018

Financial definitions

Added value	Operating result (EBIT) + remuneration, social security and pension charges + depreciation, amortization, impairment of assets and negative goodwill.
Associates	Companies in which Bekaert has a significant influence, generally reflected by an interest of at least 20%. Associates are accounted for using the equity method.
Book value per share	Equity attributable to the Group divided by number of shares outstanding at balance sheet date.
Capital employed (CE)	Working capital + net intangible assets + net goodwill + net property, plant and equipment. The average CE is weighted by the number of periods that an entity has contributed to the consolidated result.
Capital ratio	Equity relative to total assets.
Combined figures	Sum of consolidated companies + 100% of joint ventures and associated companies after elimination of intercompany transactions (if any). Examples: sales, capital expenditure, number of employees.
Dividend yield	Gross dividend as a percentage of the share price on 31 December.
EBIT	Operating result (earnings before interest and taxation).
EBIT - Underlying	EBIT before operating income and expenses that are related to restructuring programs, impairment losses, business combinations, business disposals, environmental provisions or other events and transactions that have a one-time effect.
EBIT interest coverage	Operating result divided by net interest expense.
EBITDA	Operating result (EBIT) + depreciation, amortization, impairment of assets and negative goodwill.
Equity method	Method of accounting whereby an investment (in a joint venture or an associate) is initially recognized at cost and subsequently adjusted for any changes in the investor's share of the joint venture's or associate's net assets (i.e. equity). The income statement reflects the investor's share in the net result of the investee.
Gearing	Net debt relative to equity.
Joint ventures	Companies under joint control in which Bekaert generally has an interest of approximately 50%. Joint ventures are accounted for using the equity method.
Net capitalization	Net debt + equity.
Net debt	Interest-bearing debt net of current loans, non-current financial receivables and cash guarantees, short-term deposits, cash and cash equivalents.
Return on capital employed (ROCE)	Operating result (EBIT) relative to the weighted average capital employed.
Return on equity (ROE)	Result for the period relative to average equity.
Return on invested capital (ROIC)	NOPLAT on invested capital. NOPLAT is EBIT after tax (using a target tax rate of 27%), and includes the Group's share in the NOPLAT of its joint ventures and associates. Invested capital is the aggregate of total equity, net debt, non-current employee benefit obligations and non-current other provisions, and includes the Group's share in the net debt of its joint ventures and associates.
Subsidiaries	Companies in which Bekaert exercises control and generally has an interest of more than 50%.
Weighted average cost of capital (WACC)	Cost of debt and cost of equity weighted with a target gearing of 50% (net debt/equity structure) after tax (using a target tax rate of 27%). Bekaert calculates a WACC for its three main currency environments: EUR, USD and CNY, the average of which (7.6%) has been rounded to 8% to set a long-term target.
Working capital (operating)	Inventories + trade receivables + bills of exchange received + advanced paid - trade payables - advances received - remuneration and social security payables - employment-related taxes.