4. Segment Reporting
The Group has adopted IFRS 8, Operating Segments, with effect from 1 January 2009. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance. In contrast, the predecessor Standard (IAS 14, Segment Reporting) required an entity to identify two sets of segments (business and geographical), using a risks and returns approach, with the entity’s system of internal financial reporting to key management personnel serving only as the starting point for the identification of such segments. As a result, following the adoption of IFRS 8, the identification of the Group’ s reportable segments has changed; and the segment reporting is now based on a geographical segmentation in accordance with the system of internal financial reporting to the Bekaert Group Executive, the CEO and the Board.
The geographical segmentation shapes the basis for the Company’s financial reporting as it is the best enabler to evaluate the nature and financial effects of the business and to make stakeholders understand our business as a whole in a transparent way. Key in this choice has been the increasing importance of the regions following from the Company’s growth strategy, with a clear focus on the emerging markets.
The Company’s regional businesses are typically characterized by common cost drivers, a product portfolio that is tailored to regional industry requirements, and specific distribution channels. They distinguish themselves in terms of political, economic and currency risks and growth drivers of the business. Adding to the relevance of the segmentation is the fact that the Company sells approximately 90% of its products in the region where they are produced. According to IFRS 8, four reporting segments have been defined, reflecting the company’s presence in four main regions:
- EMEA - Europe, Middle-East and Africa (2009: 34% of consolidated sales)
- North America (2009: 20% of consolidated sales)
- Latin America (2009: 13% of consolidated sales)
- Asia Pacific (2009: 33% of consolidated sales)
Key data by reporting segment
Only capital employed elements (intangible assets, goodwill, property, plant and equipment and the elements of the operating working capital) are allocated to the various segments. All other assets and liabilities are reported as unallocated corporate assets or liabilities. ‘Other’ mainly consists of the functional unit technology and unallocated expenses for group management and services. The geographical segmentation is based on the location of the Bekaert entities rather than on the location of its customers. Since it is Bekaert’s strategy to produce as close as possible to the customers, most customers are serviced by Bekaert entities in their own region.
1 ROCE: Operating result (EBIT) relative to average capital employed
Revenue by product application
Additional information by country
The table below shows the relative importance of Belgium (i.e. the country of domicile), China and the USA for Bekaert in terms of revenues and non-current assets (i.e. intangible assets, goodwill, property, plant and equipment).
