Comprehensive measures to safeguard employees, with a limited number of Covid-19 infections
Sales down -11% due to government-mandated lockdowns and global tire & automotive demand decline
Effective cost reduction measures in place
Liquidity more than € 190 million up on year-end 2019 to over € 750 million cash on hand
Debt leverage stable from year-end 2019 at 2.1x underlying EBITDA
Gross dividend proposal of € 0.35 with payment postponed to 20 November 2020
We project Q2 sales to markedly decline in different sectors that are relevant to us. While the magnitude of the impact of the Covid-19 pandemic on the global economy has become visible, its duration remains highly uncertain. We therefore have no visibility on a full-year impact in our markets and on our business.
Bekaert continues to apply strict control on costs, working capital and capital expenditure.
The actions implemented in 2019 and in the first quarter of 2020 have made us stronger and more resilient to cope with severe challenges. We are convinced that our strong liquidity position, combined with other measures we have implemented and continue to implement, puts us in the right position to weather the crisis.
Market developments, operations, sales
Market developments in the first quarter of 2020
Demand from tire and automotive markets was hit hard in China due to the outbreak of Covid-19. Domestic Chinese markets rebounded in March 2020, while export-oriented Chinese tire manufacturers increasingly suffer from low demand in global markets. Demand outside China was severely affected as a result of a 25% drop in car production and reduced road traffic due to lockdowns and homeworking, altogether leading to low demand for tires and large-scale temporary plant shutdowns in the tire industry, particularly in Europe and in the US.
Construction markets held up relatively well in the first quarter of 2020, with the exception of some delays in reopening construction sites in China, and the effects of government-mandated lockdowns in Latin America.
Demand from agriculture, utility, and mining markets was strong across the first quarter of 2020 as these sectors – generally considered as ‘essential industries’ – currently appear to be less affected by the Covid-19 pandemic.
Bekaert’s priorities and operations in the first quarter of 2020
• Health and Safety of our employees: we implemented actions early to allow smart working in all areas of the business and to enforce rigorous discipline in protective measures. Our proactive approach resulted in few infections recorded among our 28 000 team members.
• Customer centricity: we stay in close contact with our customers so we understand their current and future needs to support them in every possible way.
• Managing liquidity and cost to mitigate as far as possible the impact of the pandemic on our business.
Government-mandated lockdowns, customer shutdowns, and preventative actions implemented by Bekaert have led to a number of temporary plant shutdowns, initially in China and since the middle of March in the rest of the world, which have affected Bekaert’s sales in the first quarter of 2020.
Bekaert’s sales in the first quarter of 2020
• Consolidated organic sales decline of -10%, driven by -9% volume decline, -4% passed-on wire rod price
decreases, and a positive +3% price-mix impact.
• The -17% sales decrease in Rubber Reinforcement stemmed from a sharp volume decline (-13.5%) and the
aggregate impact (-4%) of lower passed-on wire rod prices and price-mix.
• Sales decreased -8% in Steel Wire Solutions: the volume losses in Peru and Ecuador (average aggregate
volume loss of -30%) were largely offset by strong demand from agricultural, utility and construction markets in
EMEA, the US, and China.
• Relatively stable sales levels in Specialty Businesses (+1%) and Bridon-Bekaert Ropes Group (-2%).
• More information is included in the table below and in the segment reports on the next page.
Consolidated and combined sales for the first quarter of 2020 – in millions of €
Consolidated sales 2019 2020 Share Variance1 Organic FX
Rubber Reinforcement 502 417 43% -17% -18% +1%
Steel Wire Solutions 376 345 35% -8% -6% -3%
Specialty Businesses 97 98 10% +1% +1% -
BBRG 117 115 12% -2% -1% -1%
Group 2 2 - - - -
Total 1 094 977 100% -11% -10% -1%
Combined sales2 2019 2020 Share Variance1 Organic FX
Rubber Reinforcement 544 451 39% -17% -17% -
Steel Wire Solutions 535 490 42% -8% -3% -6%
Specialty Businesses 97 98 9% +1% +1% -
BBRG 117 115 10% -2% -1% -1%
Group 1 - - - - -
Total 1 294 1 154 100% -11% -8% -3%
Strong first quarter performance1 despite significant volume decline
Despite the impacts of Covid-19 on the Group’s first quarter operations and sales, Bekaert made a good start to the
The actions taken in 2019 have significantly strengthened our balance sheet structure and additional measures taken in the past months (including a drawdown of € 190 million on committed facilities) have resulted in an
extension of liquidity (€ 750 million of immediate cash on hand) and to a high level of preparedness enabling us to go into the current crisis from a solid position.
This position is a consequence of Bekaert’s significant delivery in reducing costs, implementing effective restructuring measures, and successful profit restoration programs - particularly in Steel Wire Solutions and Bridon-
Bekaert Ropes Group - as well as effective actions to deleverage debt.
1 Comparisons are made relative to the first quarter of 2019, unless otherwise indicated. The figures in this press release are provisional and
2 Combined sales are sales of consolidated companies plus 100% of sales of joint ventures and associates after intercompany elimination.
see & read more on
Webcast: Bekaert will present the first quarter update to the investment community at 02:00 p.m. CET. This conference can be accessed live upon registration via the Bekaert website (bekaert.com/en/investors) in listen-only mode.