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Summary of financial review


Besides IFRS accounts, Bekaert also presents the key underlying business performance parameters of profitability and cash generation, to provide a more consistent and comparable view on the Group’s financial performance. These underlying business performance indicators adjust the IFRS figures for the one-off accounting impacts of restructuring costs, provisions for environmental sanitization programs, asset impairments, M&A related fees, and other such non-recurring items that would distort the analysis of the Group’s underlying Business performance. ‘REBIT’ and ‘REBITDA’ - reflecting the ‘recurring’ or ‘underlying’ business performance - are now named1  EBIT-Underlying and EBITDA-Underlying respectively. EBIT and EBITDA according to IFRS are referred-to as such or as EBIT-reported and EBITDA-reported when specification adds clarity.

1 Definitions of financial parameters are described in the Financial Review of this Annual Report

Underlying EBIT performance, year-on-year

Bekaert’s underlying EBIT was € 242 million, reflecting a margin of 5.6% and an increase of € 32 million or +15% compared with last year. The overhead cost reduction and improved operational cost effectiveness contributed € +36 million in the year-on-year comparison. The small decline in sales volumes (-1%) had a positive impact of € +1 million on underlying EBIT due to a favorable mix effect across business units. The steep decline in wire rod prices resulted in major adverse non-cash inventory valuation adjustments which accounted for € -59 million (the aggregate effect of € +24 million in 2018 and € -35 million in 2019). Better pricing and an improved mix accounted for a total effect of € +57 million. Depreciation, the weaker results of the engineering department and the improved performance of activity platforms that use other performance indicators than volume as a result of lightweight materials and unit sales, offset the underlying EBIT performance by € -4 million. 

Sales and financial review


Bekaert achieved consolidated sales of € 4.3 billion in 2019, about stable (+0.4%) compared with last year. The organic volume decline (-1.2%), the effect of passed-on lower wire rod prices (-2.0%) and the small impact from divestments (-0.1%) were more than offset by price-mix effects (+2.4%) and favorable currency movements (+1.3%). Combined sales totaled € 5.1 billion for the year, up +1.1% from 2018 as a result of the revenue growth in the joint ventures in Brazil.


The Board of Directors will propose to the Annual General Meeting of Shareholders of 13 May 2020, a gross dividend of 35 eurocent. The dividend will, upon approval by the General Meeting of Shareholders, become payable as of 20 November 2020.

Financial results

Bekaert achieved an operating result (EBIT-underlying) of € 242 million (versus € 210 million last year). This resulted in a margin on sales of 5.6% (4.9% in 2018). The one-off items amounted to € -87 million (€ -63 million in 2018) and mainly included restructuring expenses in the US (Rome and Shelbyville), Malaysia (Ipoh), Belgium (Moen and Group functions) and the operational losses from strikes and go-slow actions following the announcement of the restructuring and plant closure in Belgium. Including the one-off items, EBIT was € 155 million, representing an EBIT margin on sales of 3.6% (versus € 147 million or 3.4% in 2018). Underlying EBITDA was € 468 million (10.8% margin) compared with € 426 million (9.9%) and EBITDA reached € 403 million, or a margin on sales of 9.3% (versus 9.0%).

Overhead expenses (underlying) decreased by € 28 million to 8.4% on sales (versus 9.1% in 2018). Selling and administrative expenses decreased by € 26 million due to lower consultancy costs and other savings. Research and development expenses amounted to € 62 million, compared with € 64 million in 2018. The one-off impact from the restructuring programs on overheads was € -24 million and mainly related to lay-off costs. Underlying other operating revenues and expenses were about stable (€ +1.5 million). Reported other operating revenues and expenses (€ +15 million) were lower in comparison with last year (€ +33 million) which included the gain on the sale of land and buildings related to the plant closures in Huizhou (China) and Shah Alam (Malaysia).

Interest income and expenses amounted to € -66 million, down from € -85 million in 2018 and a result of debt refinancing at lower interest rates, which was partly offset by the additional interest expense (€ -4 million) related to IFRS 16 (‘Leases’). Other financial income and expenses decreased from € 26 million in 2018 to € 18 million.

Income taxes decreased from € -58 million to € -51 million due to enhanced tax incentives. The overall effective tax rate was 73%, down from 161% in 2018.

The share in the result of joint ventures and associated companies was € +29 million (versus € +25 million in last year), reflecting the improved performance of the joint ventures in Brazil.

The result for the period thus totaled € 48 million, compared with € 3 million in 2018. The result attributable to non-controlling interests was € +7 million (versus € -37 million last year which reflected the net loss representation of BBRG as non-controlling interest for the share then held by a minority shareholder). After non-controlling interests, the result for the period attributable to equity holders of Bekaert was € +41 million almost stable compared with last year. Earnings per share amounted to € +0.73, up from € +0.70 in 2018.

Balance sheet

As at 31 December 2019, equity represented 35.6% of total assets, up from 34.1% at year-end 2018. The gearing ratio (net debt to equity) was 64% (versus 76% at year-end 2018).

Net debt was € 977 million, down from € 1 153 million as at 31 December 2018 and down from € 1 253 million as at 30 June 2019. Net debt on underlying EBITDA was 2.1, compared with 2.6 on 30 June 2019 and 2.7 on 31 December 2018.

Cash flow statement

Cash from operating activities amounted to € +524 million (versus € +244 million in 2018) as a result of higher cash generation and a reduction in cash-outs to fund working capital by tight inventory control, significant efforts done in collecting outstanding receivables, and extended use of off-balance sheet factoring.

Cash flow attributable to investing activities amounted to € -91 million (versus € -102 million in 2018): cash-out from capital expenditure was substantially lower in 2019 (€ -99 million versus € -185 million last year). The 2019 cash-out from investing activities additionally included the payment related to the land use right in Vietnam (€ -13 million). The 2018 cash flow included the cash from the sale of land and buildings in China and Malaysia (€ +56 million).

Cash flows from financing activities totaled € -269 million, compared with € -157 million last year. The cash-in from the Schuldschein (€ 320.5 million) and the retail bond (€ 200 million) was used to repay the bridge loan (€ 410 million) and the retail bond that matured in December 2019 (€ 195 million).

Investment update and other information

Net debt was € 977 million at year-end 2019, down from € 1 153 million at the close of 2018 and € 1 253 million on 30 June 2019. Net debt on underlying EBITDA was 2.1, compared with 2.7 last year. The introduction of IFRS 16 (Leases) added € 83.5 million to net debt in 2019. Excluding this impact, net debt on underlying EBITDA would have been 2.0 at the close of 2019. The working capital decreased by € -176 million year-on-year, which was the result of lower inventories, successful cash collection efforts, better aligned payment terms, and an extended use of off-balance sheet factoring (€ 121 million, compared with € 73 million at the end of 2018). Working capital on sales was 16.2% at the close of the year - a record low in the last 25 years – and the average working capital on sales was 18.2%, down from 20.4% in 2018.

On 9 October 2019, Bekaert launched a new issuance of bonds with a maturity of 7 years for a total amount of € 200 million, all of which was raised in one day. The retail bond, with an annual coupon of 2.75%, enables Bekaert to optimize its debt maturity and decrease the interest charges in coming years. On 6 December 2019 the 8-year tenor tranche of the 2011 retail bond matured and was repaid (€ 195 million).

Investments in property, plant and equipment amounted to € 98 million in 2019, € -100 million below the level of 2018. In addition, Bekaert also invested € 13 million in land use rights for the greenfield investment project in Vietnam.

On 31 October 2019, Bekaert concluded the buy-out of Maccaferri’s 50% share in ‘Bekaert-Maccaferri Underground Solutions’ (BMUS). Bekaert considers the buy-out as an opportunity to grow faster in the underground applications of Dramix© steel fibers for concrete reinforcement.

On 17 December 2019, Bekaert and AGRO, a world-leading manufacturer of high quality innersprings, signed and closed an agreement for the establishment of the AGRO-Bekaert joint venture. The shareholders in the joint venture are AGRO Holding (50%) and Bekaert Ideal Holding (50%), in which Bekaert holds 80%. The new joint venture will develop, manufacture and promote value solutions for mattress and upholstery manufacturers in Colombia, Central America and the Caribbean. The production plant will be located in Barranquilla, Colombia and will become operational in the 2nd quarter of 2020.

Post-balance sheet event: Bekaert acquired on 29 February 2020 the (20%) shares previously held by Continental Global Holding Netherlands BV in Bekaert Slatina in Romania.

On 31 December 2018, the Company held 3 902 032 treasury shares. Of these 3 902 032 treasury shares, 13 787 shares were transferred to the Chairman of the Board of Directors as part of his fixed remuneration and 13 670 shares were transferred to members of the BGE pursuant to the Company share-matching plan. In addition, 1 500 stock options were exercised under the Stock Option Plan 2015-2017 and 1 500 treasury shares were used for that purpose. The Company did not purchase any shares in the course of 2019 and no treasury shares were cancelled. As a result, the Company held an aggregate 3 873 075 treasury shares on 31 December 2019.

Segment reports

Rubber Reinforcement

Bekaert’s Rubber Reinforcement business achieved 2.4% sales growth, driven by higher volumes. The effect of passed-on lower raw material prices (-1.8%) was entirely offset by favorable currency movements. 

The business unit achieved 10% volume growth in China as a result of increased market share and strong demand, particularly in the first half of the year. Sales were about stable in EMEA and North America but fell short in Indonesia and India. 

Significant wire rod price decreases led to inventory valuation corrections at year-end and drove underlying EBIT below the level of 2018 to € 172 million, at a margin of 8.7%. The profitability improved significantly in Asia, but declined in EMEA and in the US.

Reported EBIT was € 155 million, slightly above last year. EBIT was impacted by one-off elements in both 2018 (€ -25 million – mainly related to the closure of the Figline plant in Italy) and 2019 (€ -18 million – mainly due to the footprint change in the US).

Underlying EBITDA was € 295 million with a margin on sales of 14.8%.

Capital expenditure (PP&E) amounted to € 42 million and included investments in all continents. The purchase of land use rights in Vietnam amounted to € 13 million.

Steel Wire Solutions

The business unit Steel Wire Solutions reported a sales decrease of -3.3% compared with last year. The positive effects of price-mix (+3.7%) and currency movements (+0.8%) partially offset the impact from passed-on wire rod price decreases (-2.6%) and lower volumes (-5.2%). 

The economic uncertainty affecting the automotive, other industrial and agricultural market demand drove sales down in EMEA, North America, and South East Asia. The business climate in Latin America further worsened due to significant protest actions across the region in the last quarter of 2019. The steel wire activities in India and China delivered robust growth.

Underlying EBIT was € 51 million, 11% lower than last year and resulting in a margin on sales of 3.4%. Several factors accounted for the profit decline:

  • The low volumes in North America, South East Asia and some business areas in EMEA
  • The structurally weak performance of a number of plants, which drove the decision to close the production sites in Shelbyville (Kentucky, US) at year-end 2019 and in Ipoh (Malaysia) by March 2020. 
  • Sharp wire rod price decreases and obsolete inventories led to inventory valuation corrections at year-end.

In 2019 we also started to see the benefits from recent profit restoration programs in Qingdao (China), Bradford (UK), and Proalco (Colombia) and we expect to see further margin improvement in 2020.

The one-off items related to the plant closures and various restructuring programs totaled € -25 million and are driving the decline in reported EBIT.

Capital expenditure (PP&E) was € 28 million and mainly included investments in Slovakia, China, the US and Chile.

Specialty Businesses

The business unit Specialty Businesses reported about stable sales, with significant differences between the respective activity platforms.

Building products achieved +6% revenue growth in 2019. The organic growth (+5%) was equally driven by strong volumes and a positive price-mix and currency movements added +1%. Fiber technologies reported stable sales for the year after a strong fourth quarter and the combustion activities ended the year 4% below the revenue of 2018. Sales of (diamond) sawing wire were limited.

Underlying EBIT doubled to € 52 million at a margin of 12.2%, mainly driven by a strong underlying performance of the building products activities and reduced losses in the sawing wire business. Reported EBIT included one-off elements (€ -18 million) that are mainly related to the closure of the Belgian building products plant and to losses generated by social actions in the Belgian sites of the business unit. 

Bridon-Bekaert Ropes Group

Bridon-Bekaert Ropes Group (BBRG) achieved 5.5% top line growth, which stemmed from solid organic growth (+4.2%) and favorable currency movements (+1.2%). The organic growth was the result of an improved product- and price-mix in ropes and firm sales growth in advanced cords (A-Cords).

The ropes business of BBRG booked solid sales growth in oil & gas, mining, and crane & industrial applications. In fishing and marine markets, sales volumes were about stable compared to last year. The project business applications reported lower sales than the previous year due to a slow start in construction markets at the beginning of 2019. 

The ropes activities made significant progress in enhancing the business mix by focusing on quality business and by reducing their presence in the lower margin segments. This strategy accounted for a volume decrease of 8% compared with last year, while increasing revenues and margins.

The advanced cords (A-Cords) activities saw continued strong demand in timing belt markets and an uplift in hoisting applications in the second half of the year.

Underlying EBIT and EBITDA improved significantly as a result of successful profit restoration actions. Reported EBIT was € 9 million and included € -3 million in one-offs. The EBITDA margin more than doubled from last year to reach 8.1%.

BBRG invested € 14 million in PP&E, most of which in the A-Cords platform and in the ropes plants in the UK and the US. 

Update Covid-19 – post balance sheet

The outbreak of Covid-19 initially did not raise concerns about Bekaert’s ability, as a global company, to ensure business continuity for our customers and in our operations. The rigorous measures implemented in China to contain the virus spread had proven to be successful and allowed us to restart operations in the country on 10 February 2020.

Developments in March 2020 started to become indicative of the potential effects on populations and economies all over the world. In the second half of March 2020, Bekaert has been forced to temporarily shut down plants as a result of government-mandated lockdowns and plant shutdowns by customers. As per the issuance date of this Annual Report, it is not yet clear to what extent and within which timeframe the markets will recover from the impact of Covid-19. Bekaert is taking all actions necessary to safeguard the health and safety of our people and their families, to understand and serve the customer needs, and to mitigate as far as possible the impact of the pandemic on our liquidity and results.

More details in section 7.5 Events after the balance sheet date in the financial review of this annual report.