Message from the Chairman and the Chief Executive Officer

Dear reader,

The year 2012 has been extremely challenging for the global economy. Uncertainty ruled on all continents, in all sectors and markets and in all domains, be it economically, financially or politically. The manufacturing industry saw this uncertainty translated into unpredictable demand patterns, increased credit restrictions, extended trade barriers, and a highly competitive environment driven by general overcapacity in many sectors.

Our business has also been characterized by unstable demand and fierce competition in most markets. The sawing wire business collapse in particular hit us hard and wiped out the profitability of a once exceptionally successful platform in no time. Bekaert took drastic actions to realign its related manufacturing and technology footprint with the new business reality. We regret that we were forced to take decisions that affected jobs, but they proved right in an irreversibly-negative market landscape. The further prospects and importance of this platform have become limited within our Group’s overall strategy. This business evaluation is fully reflected in the major employment and capacity reduction as well as in the respective non-recurring costs in the 2012 financial statements.

Global financial turbulence and economic uncertainty also impacted other activities throughout 2012. An overall demand slowdown combined with general overcapacity and high inventory levels in the entire supply chain of many industries, fueled aggressive competition and persistent price pressure in the markets we serve. We addressed these unfavorable conditions from three tracks that reflect our Group’s strategic pillars: technological leadership, global market leadership and operational excellence.

Strong strategic pillars as a foundation for future opportunities

We continued to invest substantially in R&D since we believe that our technological leadership is exactly what sets us apart from the competition. We filed a record number of new patents in 2012 and launched several new products and product improvements to serve our customers’ current and future needs. We also invested in process improvements and installed newly developed, state-of-the-art equipment that improves performance and product quality and at the same time reduces the impact on the environment.

Bekaert also increased its global market leadership in different markets and regions by investing in capacity extensions of manufacturing platforms with continued growth opportunities, and by acquiring or increasing our ownership in businesses we expect to create sustainable, profitable growth.

We expanded our operations in India and Russia, concluded important acquisitions in China and Malaysia, and raised our shareholding above 50% in the Chilean partnership with operations in Chile, Peru and Canada.

In pursuit of operational excellence we continued to provide our customers with high-quality products and customized service, around the world. Bekaert also started the implementation of an international program to reduce the company’s global cost structure which aims to restore the Group’s long-term profitability. Moreover, we have changed the organizational set-up of the company to help streamline business decisions and operations in the most efficient way.

Commitment and confidence

We want to thank our employees for the extra efforts made in the past year. Their resilience, their cooperation in identifying savings opportunities, and their dedication to quality and customer care have illustrated the drive and commitment of our people – also in difficult times. We are highly appreciative of our business partners who maintained their confidence in Bekaert as a preferred supplier or strategic partner. Thanks to the commitment and confidence of many, we were able to keep our volumes stable in this difficult year. This not only illustrates the solid underlying business of our company, but also strengthens our resolve in taking on the opportunities and challenges ahead.

The Board of Directors of Bekaert is also confident that the company’s strategy will continue to safeguard the growth potential of our industrial Group. This confidence is shown by the Board’s decision to propose to the General Meeting of Shareholders in May 2013, the distribution of a gross dividend of € 0.85 per share. We strongly value the support of the shareholders who have maintained their confidence in the strategy and resilience of the company and we thank them for their continued trust.

While the effects of the global crisis will most likely continue in 2013, opportunities may arise and we are ready and motivated to seize them, true to our resilience and customer-oriented better together spirit that so accurately describes Bekaert’s overall approach.

Bekaert’s Board of Directors, management team and employees are committed to realize our ambition to restore the profit levels that we have achieved in the past, in support of all our valued stakeholders.

Bert De Graeve

Baron Buysse CMG CBE
Chairman of the Board of Directors

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