Message from the CEO and the Chairman

Dear reader, 

As per the publication date of this report, the Covid-19 virus spread is taking a huge toll on the economy and on people’s lives worldwide. It is heavily impacting industries and companies around the world, including ours. What we have achieved in 2019 has made us better equipped to deal with the challenges ahead. We are a robust company with a very resilient team and we are prepared to take on the unprecedented challenges posed by the pandemic.
 

In 2019 Bekaert made significant steps in improving underlying performance. We strengthened the balance sheet through better cash generation and improved our margins through a combination of stronger pricing actions and broad cost reductions, including the closure of loss-making operations.


Net debt in relation to underlying EBITDA decreased from 2.7 at the close of 2018 to 2.1 at the end of 2019. In addition, we refinanced our debt, spreading the maturity over a longer period and lowering the interest charges. All these actions significantly improved the balance sheet.

• We implemented a new organizational structure and added new leadership to the Bekaert Group Executive and to the Board of Directors to revitalize Bekaert’s business performance. These changes were geared to enable faster decision making, the agility to respond to change, and an enhanced ownership to drive performance. These organizational changes helped us to upgrade our capability for the future and, at the same time, to implement critically important measures quickly.
• We conducted a strategic portfolio review. Businesses not meeting the Group’s EBIT and ROCE targets were given clear improvement goals.  Where performance and market deterioration had proven to be structural and irreversible, the decision was taken to move the activities to other sites or exit the respective markets. We regret the social impact of closure and restructuring decisions on the employees affected, but they were necessary in securing and improving the health of our business as a whole.
• Measures were taken to enhance the product- and price-mix by focusing on quality business and better pricing. These segmentation actions resulted in improving and turning around some of our weaker performing business activities.
• The cost savings realized in the past year were significant and were the result of a strong focus on operational excellence programs, the effects of removing complexity from the organization, and from relocating certain activities.
• We also made a breakthrough in safety performance with robust improvements across the Group. While every accident or life-altering risk is one too many, we are proud of the progress made by our teams to create a no-harm-to-anyone working environment. 

These measures led to an improvement in underlying EBIT of 15%, a significant increase in Operating Free Cash Flow, and a higher net profit, despite the substantial restructuring costs.  The progress made in 2019 is a reflection of our decisiveness to deliver and the strong engagement of our teams. We want to thank our employees for their active contribution and irrepressible spirit. 

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. The Board of Directors, the leadership team and our employees are committed to implementing 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. 

Matthew Taylor Chief Executive Officer	Jürgen Tinggren Chairman of the Board