Market developments

EMEA combined sales per quarter 2012

Combined sales: € 1 040 million
Capital expenditures (PP&E): € 39 million
Total assets: € 758 million
Employees: 6 000

Automotive markets shift into lower gear

The automotive industry is a large user of Bekaert’s steel wire products. Both in the original equipment and replacement markets, Bekaert serves a wide range of customers. The economic conditions in 2012 were unfavorable and pushed demand down for our products serving the OEM markets.  Demand for new cars and commercial vehicles in the EU reached the lowest level recorded since 1995 and reflected a substantial decrease year-on-year. Most countries saw their markets contract, with vehicle sales in southern European countries sliding to their lowest levels in decades. This had an impact on, amongst others, spring wires and diesel particulate filter media.

The tire manufacturers also saw their European sales figures drop in 2012, not only because of the sluggish OEM market but also due to a global delay of tire replacement, especially in southern Europe. Some tire makers therefore downsized their manufacturing capacity in EMEA.

Bekaert was, however, able to secure its market share and continued the future-oriented development programs with its customers. Other steel wire products with an important aftermarket such as wiper blades, performed well throughout 2012.

Energy markets fuel performance …

Demand continued to be strong in markets of oil and gas extraction, power distribution, and other energy-related applications.

Bekaert’s armoring wires for overhead power cables and submarine power distribution, flat and shaped wires for offshore pipes and wedge filters, as well as anchorage rope wires for oil platforms, all performed well in 2012.

… but shadow on solar industry remains

The one big exception in energy-related markets was the solar industry. The entire supply chain of the European PV solar market saw its business further decline in 2012. The sawing wire market in Europe has become a shadow of its former self. Most wafer makers have stopped their production activities in the region or have ceased to exist.

Bekaert announced on 2 February 2012, a major restructuring program with actions directly related to the changed solar market. This program included measures to rightsize Bekaert’s global sawing wire operations. More specifically in Europe, and in Belgium in particular, the plan drastically decreased our activity scope and employment in production, technology and engineering.

Building the foundations for further growth

Bekaert’s business platform targeting European construction markets withstood the continued difficult market circumstances well and gained market share by offering product innovations and optimal service in the many infrastructure and construction segments it serves.

Demand was particularly strong for Bekaert’s Dramix® steel fibers for concrete reinforcement. The Dramix® fibers portfolio has been substantially extended in 2012 with the launch of the 3D-4D-5D fiber series. The addition of the new fiber types takes concrete reinforcement to the next performance class. Previously unknown levels of anchorage, tensile strength and ductility guarantee the best possible solution for an ever wider range of applications.

Operations

Our continued pursuit for operational excellence

As part of its pursuit for operational excellence, and of specific actions taken related to the cost savings program announced in February 2012, Bekaert’s EMEA production plants were able to reduce costs and improve the balance between flexible and fixed costs more in particular.

Effective operational excellence programs also ensured the successful start-up of manufacturing extensions in Slovakia and Russia. Additionally in Russia, Bekaert teams worked together with local wire rod suppliers to help develop and improve a qualitative supply of domestic rod. At the end of 2012, 80% of Bekaert Lipetsk’s wire rod supply originated from local sourcing. 

In line with the growing needs of the building industry in Russia and the wider CIS, Bekaert announced in September 2012 its plans to start the production of Dramix® steel fibers in its Lipetsk plant in Russia. In the meantime Bekaert is serving its customers there with supplies ensured by other production plants in EMEA.
 
Bekaert’s manufacturing plants in Slovakia and the Czech Republic performed well as a result of successful efforts to optimize product quality, process efficiency and delivery service. Furthermore our flat and shaped production platforms in Belgium and the UK performed strongly. Several investments were realized successfully to serve innovation needs and quality improvements.

Our operations in France and the Netherlands expanded their product portfolios with new solutions to increase the performance levels and reduce the energy consumption of combustion equipment, paper drying installations and emitters, and heat exchangers. Additionally the fiber technologies activities in Belgium continued to develop new products and applications and recorded stable sales in difficult markets.

Staying close to our customers

Our customers have strongly appreciated Bekaert’s manufacturing proximity throughout the region as an enabler of delivery flexibility to ever shorter planning timeframes in the difficult year 2012.

 60 years serving tire cord customers
Bekaert has been developing and manufacturing products for tire reinforcement since 1952. This expertise of the past 60 years has been celebrated with our customers in 2012. The anniversary illustrates, particularly in Europe, the very long cooperation of Bekaert with the tire manufacturers.

Adapting to change

Bekaert adapted to market downturns quickly, such as with the restructuring of its stainless steel wire and sawing wire activities.

Bekaert started up several projects in Belgium aiming at a reconversion of idle industrial buildings and land and the construction of a new office building which houses, as of the beginning of 2013, all management and administration of the global business platforms and the regional management team for Europe.

We sold the Industrial Coatings activities to Element Partners, a Pennsylvania, US-based equity fund. The transaction covered, in addition to activities in Jiangyin (China) and Spring Green (US), the production facilities and all personnel in Deinze (Belgium).

Bekaert incurred a substantial amount of non-recurring costs in EMEA. These non-recurring items reflect the costs and provisions for the restructuring plans and asset impairments in the European manufacturing platforms of solar related activities mainly (€ -85 million) and the positive impact of the gains on the sale of the industrial coatings activities and of land, both in Belgium (€ +10 million).

Steering compliance with standards and regulations by leveraging advanced technologies

On 1 November 2012 the EU tire labeling regulation went into effect. The tire label is a mark for automotive tires and is valid for every tire sold in EU markets. It provides important information about safety and environmental aspects and covers 3 specifications: fuel consumption, wet grip and noise classification. Bekaert’s tire cord products with super, ultra and next generation tensile strengths allow our customers to produce tires with a lower weight and lower rolling resistance, thereby increasing fuel efficiency. Bekaert's innovations in rubber reinforcement thus help tire manufacturers improve their tire rating.

Bekaert_poultry farming wireA European Union Council Directive of 1999 banned the conventional battery cage in the EU from 2012 and determined the minimum sizes and comfort features for chicken batteries in Europe. Bekaert was the preferred supplier of many cage manufacturers in Europe who target animal husbandry markets.

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