||€ 1 227 million
|Capital expenditures (PP&E):
||€ 48 million
||€ 884 million
Economic environment in 2015
Europe has seen its economic performance improve during 2015, with discrepancies across the EU member states. The recovery was supported by cheap oil prices, the quantitative easing measures implemented by the European Central Bank and a relatively low euro, which increased the export competitiveness of euro countries. The moderate upswing remains fragile though, in view of increased economic, financial and political uncertainties.
Automotive and construction markets, sectors which are crucial for Europe’s prosperity and highly relevant for Bekaert’s activities, witnessed strong demand over the course of 2015. Energy-related markets showed a slowdown in demand due to a downturn in the oil and gas sector.
Bekaert has a presence in both the mature Western European markets as well as in the Central and Eastern European markets. The company offers a quality portfolio of advanced steel wire products for sectors that are constantly searching for stronger, safer and lighter materials. As a result, opportunities for innovation-oriented technologies continue to exist.
|The Russian crisis
The political instability in Russia, the falling rouble and plunging oil revenue have turned the Russian economy into recession. Bekaert’s activities performed well in Russia in 2015: trade restrictions have not affected our business continuity and growth as Bekaert Lipetsk sources, manufactures and sells locally.
Our activity performance
Demand from European markets was strong throughout 2015 across most sectors. Automotive demand boosted volume growth for tire cord and other steel wire applications in the region. Bekaert’s activities in EMEA delivered excellent results driven by volume growth and a favorable product mix. The successful integration of the steel cord plants acquired from Pirelli in Italy, Romania and Turkey accounted for 14% growth and strengthened EMEA’s solid, double digit profit base. Bekaert’s building products platform achieved firm growth and most other industrial steel wire activities performed at the strong level of 2014. Bekaert achieved 22% REBIT increase for the region and lifted profit margins to a record high of 11.3%. Capital expenditure (PP&E) amounted to € 48 million and included capacity expansions and equipment upgrades, particularly in Slovakia and Belgium.
Successful integration of Pirelli’s steel cord plants
Bekaert has successfully integrated the steel cord activities acquired from Pirelli in Figline Valdarno (Italy), Slatina (Romania), and Izmit (Turkey). The integration of these steel cord activities and Bekaert’s long-term supply agreement with Pirelli further enhanced Bekaert’s status as a preferred supplier to the tire industry and have grown the contribution of the EMEA region to Bekaert’s consolidated figures even further.
Merger: Bridon Bekaert Ropes Group
At the end of 2015 Bekaert and Ontario Teachers’ Pension Plan announced the intended merger of the global ropes and advanced cords businesses of Bekaert and Bridon, through the establishment of a new joint venture: Bridon Bekaert Ropes Group. The merger is subject to customary closing conditions including regulatory approvals. In Europe, Bekaert will, upon closing, enter the advanced cords businesses of Bekaert in Aalter (Belgium). Ontario Teachers’ will then contribute its entire ownership interest in Bridon to the new group. Their European facilities include manufacturing plants in Doncaster, Newcastle and Coatbridge (UK), Gelsenkirchen (Germany) and Tønsberg (Norway).
A stronger business portfolio aimed at value creation
Bekaert has made a clear prioritization of where to grow and how to improve the business portfolio globally. In Europe, both the M&A activity of 2015 and the implemented divestments are illustrations of how Bekaert is narrowing its focus on those parts of the business where we can leverage our strengths.
- The divestment of the Carding Solutions activities underpinned Bekaert’s strategic direction of building and selecting a value creating product and business portfolio which fully leverages the Group’s core competences in steel wire transformation and coating technologies. Bekaert sold the carding business with activities in Belgium, Asia and the US to Groz-Beckert on 1 May 2015 and entered a long-term supply agreement for the delivery of carding wire, which is value creative for our business.
- Bekaert stepped out of the round stainless steel wire market. Despite investments and other efforts made by Bekaert in the past years, Bekaert was not able to drive a profitable turnaround for this business activity which was affected by the structural overcapacity in the market, competition from low cost countries and unfavorable anti-dumping regulations. This decision had an impact on our Zwevegem (Belgium) and Lonard (India) sites and on the related sales organization in North America.