Chairman & CEO message

Message from the Chairman and the Chief Executive Officer

Dear reader,

2009 was a year in which the effects of the global downturn were felt hard in all of the world’s economies. Stock exchanges plunged and governments took on substantial financial commitments in an effort to counter the recession. The significant overall decline in economic activity also impacted Bekaert’s activities, especially in those servicing the automotive and construction markets.

Despite these challenging market conditions – as you will read further on in this annual report – Bekaert has shown global resilience in 2009. The operating result (EBIT) amounted to € 232 million or 9.5% on sales, while EBITDA on sales rose to a record high 15.8%.

Resilient people make for a resilient organization

We largely owe our resilience in 2009 to our employees. It is they who made the difference. They have answered the call for additional flexibility in these tough times and succeeded in downsizing our working capital and in achieving additional significant cost savings. Throughout the year their sense of urgency, their relentless efforts to build ever closer customer relationships and their clear dedication to fast results have been instrumental in Bekaert’s performance.

A wide span across sectors and the globe

‘Spanning the globe’ – referring to our regional spread and the theme of this year’s annual report – is one of the key drivers that enabled Bekaert to display continued resilience in 2009. The strategic choice to diversify our geographical presence has made us a more resilient organization, less prone to cyclic economic fluctuations.

2009 revealed the advantage of our global manufacturing footprint. On every continent we experienced the crisis differently in onset, duration and intensity and we reacted to it in the most appropriate way. At times when economic activity nearly halted in the mature markets, the emerging markets were already picking up again. By being present in these growth markets we could react promptly to the sudden rise in demand and seize new opportunities.

With our operations spanning a wide range of sectors, we have been able to spread the risks and maintain our resilience. Governmental efforts to strengthen the United States’ power grid for instance stimulated our activities in the utilities sector when construction and automotive markets were down. In China the automotive sector recovered strongly after the Chinese New Year. The worldwide growth of the renewable energy sector resulted in increased sales of our solutions for the photovoltaic industry. In mining, a sector that was relatively untouched by the economic downturn, we expanded our product offering and continued to do well.

Fast response makes for durable effects

The steep price drop in steel-based raw materials and massive stock depletion of our customers which had set in at the end of 2008, affected both Bekaert’s sales figures and profits. Thanks to swift and stringent working capital control throughout our organization, and stabilizing steel prices from the second half of 2009 onwards, Bekaert actively countered negative margin impact in the last two quarters.

Bert De Graeve and Baron Buysse

‘Cash is king’ – especially in economic down times. Consequently, besides working capital control, we timely initiated stringent cost-saving measures, both at the level of our manufacturing organization as well as in sales and administrative expenses. Also, our plants demonstrated their versatility by driving up volumes for specific product lines to increase capacity utilization and absorb fixed costs. These actions and efforts led to structural benefits in terms of cash generation and net debt position.

Simultaneously, we kept investing in the future while strictly controlling expenditures in general. Capacity investments in Chongqing (China), Lipetsk (Russia) and Pune (India) were sustained. Likewise, we continued allocating a high budget – € 63 million – to R&D. In addition, we kept on hiring talented people. In the course of 2009, this allowed us to consolidate the building blocks of our leadership position: our cost-effective way of operating, our close proximity to our customers, and our sharp focus on innovation and talent.

Balance of funding secured by bond issue

Throughout its history, Bekaert has always sailed a financial course characterized by controlled risk. We therefore went through a challenging year without financing problems. In Belgium, Bekaert was one of the first companies to issue retail bonds for a total amount of € 300 million, thereby optimizing its financial structure and the balance between our short- and long-term debts.

Opportunities and challenges ahead

Our efforts at spanning the globe, the mix of sectors we are active in, together with a wide range of innovative products, our technological edge and a healthy financial policy have all provided us with a wide repertory of assets to take on economically difficult times. The effects of the global crisis will most likely continue in 2010, presenting specific challenges in the different parts of the world. At the same time opportunities in growth markets are gaining momentum. At Bekaert we are ready and in a good position to seize these opportunities and serve our customers even better. Our shareholders are showing continued trust and our employees are motivated to go the extra mile. We thank all stakeholders for their valued contribution to our success in 2009, and look forward to making 2010 an even better together story.

  • Print