Bekaert: 2020 first half-year results
31 Luglio 2020 - 7:15AM
Bekaert: 2020 first half-year results
Bekaert counters significant impact of Covid-19 through
effective mitigating measures and performance improvements
Safe working conditions • strong cash flow and liquidity • solid
uEBIT margin in depressed markets
The turnaround of Steel Wire Solutions and
Bridon-Bekaert Ropes Group and the effectiveness of implemented
measures moderate the impact of Covid-19 on the Rubber
Reinforcement business.
Financial highlights H1 2020• Consolidated sales of € 1 770
million (-20%) and combined sales of € 2 065 million (-21% down vs
H1 2019)• Underlying EBIT of € 92 million, delivering a solid
margin on sales of 5.2%, compared to 5.7% in H1 2019• Underlying
EBITDA of € 194 million, generating a higher margin on sales
(11.0%) than in H1 last year (10.8%)• Working capital reduction of
€ -236 million compared to H1 last year, despite reduced factoring
utilization• Positive cash flow generation: cash flows from
operating activities amounted to € 111 million (vs € 134 million)•
Very strong liquidity: € 834 million cash on hand, doubling 30 June
2019 levels• Net debt of € 955 million, approximately € -300
million down from € 1 253 million as at 30 June 2019, and a further
decrease (€ -22 million) from the close of 2019. This resulted in a
net debt on underlying EBITDA of 2.5, down from 2.6 on 30 June last
year.
Market developments and prioritiesMarket developments in
the first half of 2020Demand from tire and
automotive markets was significantly impacted by the
Covid-19 pandemic, first in China and quickly followed in the rest
of the world. Global tire demand on average reduced by -40% in the
second quarter but showed some signs of demand recovery at the end
of the period.Construction activity was in most
parts of the world constrained by the lockdowns of the second
quarter, except in China, where stimulus programs started to boost
infrastructure investment.Demand from agriculture,
utility, and mining markets
remained solid across the first half of 2020 as these sectors –
generally considered as ‘essential industries’ – appeared to be
less affected by the Covid-19 pandemic.
Bekaert’s priorities in the first half of 2020•
Health and Safety of our employees: we proactively
implemented actions to promote smart working in all areas of the
business and enforced rigorous discipline in protective measures.
The safety of our team members and their families was the key
priority.• Customer centricity: we have continued
to serve our customers throughout the first half of 2020, ensuring
that their businesses did not suffer from any supply disruptions.
We stayed in close contact with our customers in order to
understand their current and future needs and supported them in
every possible way.• Managing liquidity and cost
to mitigate the impact of the pandemic on our business. We kept
strict control on working capital, capital expenditure and debt and
we implemented measures to flex our fixed costs and lower the cost
structure.
Focus and effectiveness of our actions• We coordinated and
enforced strict measures around the globe to prevent the
infection risks in our sites and create awareness in and
beyond the workplace. We have, however, been confronted with a
number of covid-19 infections among our workforce during the 2nd
quarter, particularly in Latin America. • Business Unit
performance: • The business units
Steel Wire Solutions and Bridon-Bekaert Ropes Group accelerated the
implementation of profit restoration measures and succeeded in
substantially improving their business-mix, driving a solid
turnaround in profitability and cash generation.
• The business unit Specialty Businesses further
enhanced its strong margin level through stringent cost control and
an improved product-mix in building products.
• The business unit Rubber Reinforcement implemented
extensive measures to partially mitigate the inevitable margin
impact from a -43% sales collapse in the second quarter, resulting
from the crisis in the tire & automotive industry.•
Working capital has been kept under tight control
with significantly lower inventory levels, improved payment terms,
and successful cash collection actions. Total working capital was €
720 million on 30 June 2020, down € -236 million from the same
period last year, despite a reduction in factoring usage of € -32
million.• Capital expenditure was limited to the
necessary projects and amounted to € 37 million (PP&E) versus €
48 million in the first half of last year.
The actions implemented during the last 12 months demonstrated
their effectiveness in strengthening Bekaert’s resilience. Despite
a substantially reduced demand (-30% sales decline in the second
quarter and -20% over the first half) we achieved a solid
underlying EBIT margin on sales of 5.2% versus 5.7% in the first
half of last year.
Profit restoration actions have significantly strengthened the
profitability of Steel Wire Solutions and Bridon-Bekaert Ropes
Group. Their robust performance improvement partially offset the
severe impact of the crisis on the Rubber Reinforcement
business.
Outlook
The Covid pandemic impacted the business significantly in the
first half. At present, all Bekaert’s production plants globally
are operational, either fully or partially. We project a gradual
recovery in tire markets in the remainder of the year. Demand
evolutions in other markets are more difficult to project in the
current economic environment.We will continue to implement
mitigating actions and other improvement measures and we expect
continued impact from the progress made in strengthening our
resilience.The current evolutions and potential second wave risk of
the Covid-19 pandemic continue to create a high level of
uncertainty. In this context, we have limited visibility on the
full-year impact in our markets and our business.
- p200731E - First half year 2020 results
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