Economic environment 2015
The US recorded GDP growth of about 2.5%, reflecting an upswing in consumer spending in comparison with the previous year. Automotive demand, in particular, was strong throughout 2015.
The improved demand from automotive markets could not compensate for the continued low demand in other North American industrial and agriculture markets in 2015. Demand for cable armoring products which depends on public investments for the renewal of the US power grid remained at a low level. Our ropes activities in Canada performed relatively well, while the facility in Texas, US, was affected by the downturn in the oil extraction sector.
Our activity performance
Currency effects drove up sales by 16% in North America, while volumes declined significantly due to the volume losses from the plant closure in Surrey, Canada (end of first quarter 2014) and the fire damage in Rome, Georgia (US) (November 2014). Moreover, weaknesses in agricultural and industrial steel wire markets continued to weigh on the segment’s performance. Profit margins have not yet reached the desired levels due to a low volume base and competitive price pressure from imports.
We invested € 55 million in PP&E in 2015, mainly for the reconstruction of the Rome plant and for investments in the ropes and tire cord activities.
Bekaert projects a better performance in 2016 as we start to see improvements from actions put in place to raise our competitiveness in target markets.
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 North America, Bekaert will enter – upon closing - the WRI roperies in Canada and the US. Ontario Teachers’ will then contribute its entire ownership interest in Bridon to the Bridon Bekaert Ropes Group, which in North America includes the wire and steel rope manufacturing facilities in Exeter, Hanover and Wilkes Barre (PA, USA).