Bekaert reports strong volume growth, offset by currency impact
First quarter trading update 2014
In the first quarter of 2014 Bekaert achieved consolidated sales of € 782 million and combined sales of € 990 million, a decrease of 2.1% and 4.4% respectively, compared with the first quarter of 2013. On a constant currency basis, Bekaert's revenues increased by more than 4%.
Consolidated sales increased 4.2% organically. Exchange rate effects (-5.9%) and the net effect of acquisitions and divestments (-0.4%) cancelled out the growth entirely.
Combined sales increased by 4.9% on an organic basis. A substantially weaker Brazilian real added to the negative currency impact at the combined level (-8.2%), while acquisitions and divestments had little effect (-0.3%).
Sales by segment
The upward trend in demand from automotive markets in Europe as of the second half of 2013, continued at the start of 2014. This led to robust volume growth for tire cord and other steel wire products serving the automotive sector in Europe. Bekaert's activity platforms in EMEA also recorded solid growth in other markets, such as the oil and gas sector. Total revenues for the region were up 6% over the first quarter of 2013 and rose to the highest level in two years.
Continued low demand from domestic industrial markets kept Bekaert's sales volumes stable in comparison with the first quarter of 2013. The region's top-line decreased 5% as a result of unfavorable currency movements, year-on-year.
Bekaert has phased out its steel wire manufacturing activities in Surrey, Canada and stopped all production there at the end of the first quarter. The Canadian wire rope activities in Pointe-Claire, on the other hand, continued to achieve strong sales.
As anticipated, demand in Latin America slowed down in line with the GDP trend for the region. Bekaert's activities maintained solid market shares but saw demand contract as a result of a slowdown in mining and infrastructure activities.
Revenues dropped substantially in comparison with the first quarter of 2013 as a result of the drastic depreciation of the Venezuelan bolivar since the beginning of last year, and of the translation effect of other currency movements such as the Chilean peso (-21% versus the euro, year-on-year).
The precarious situation in Venezuela will continue to affect Bekaert's operations in the country, among others by a forced shutdown of our factories since the second half of April as a result of raw material shortages.
The significant impact of currency movements on combined sales was due to the sharp devaluation of the Brazilian real (-22% year-on-year), which cancelled out the sales growth of the Brazilian joint ventures.
Bekaert's activities in Asia Pacific achieved significant organic volume growth (+8%), mainly as a result of regained market share in the Chinese tire sector, strong sales growth in the Southeast Asian and Indian automotive markets, and a demand pick-up in sawing wire.
Other industrial steel wire markets showed continued low demand, especially in Southeast Asia.
The total effect of currency movements was -4% for the region.
Bekaert expects sustained solid demand in Europe and will continue to defend and grow its strong positions in China. The company does not expect major changes in North American markets and anticipates a continued slowdown in Latin America, in line with the GDP trend for the region. Currency movements are expected to cause an unfavorable translation impact also in the second quarter of 2014.
Bekaert reconfirms its determination to maintain leading market positions in various sectors and regions, in full support of its customers and all other stakeholders worldwide. With a regained financial and business power to invest in future growth, Bekaert is ready to seize the opportunities that will support the long-term strength of its core businesses.
This press release may contain forward-looking statements. Such statements reflect the current views of management regarding future events, and involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Bekaert is providing the information in this press release as of this date and does not undertake any obligation to update any forward-looking statements contained in this press release in light of new information, future events or otherwise. Bekaert disclaims any liability for statements made or published by third parties and does not undertake any obligation to correct inaccurate data, information, conclusions or opinions published by third parties in relation to this or any other press release issued by Bekaert.
 Volume increase of 3.3% at the consolidated sales level, compared with the first quarter of 2013.
 All comparisons are made relative to the first quarter of 2013.
 Combined sales are sales of consolidated companies plus 100% of sales of joint ventures and associates after intercompany elimination.
Bekaert Advanced Coatings NV
Bekaert (www.bekaert.com) is a world market and technology leader in steel wire transformation and coatings. Bekaert (Euronext Brussels: BEKB) is a global company with headquarters in Belgium, employing 27 000 people worldwide. Serving customers in 120 countries, Bekaert pursues sustainable profitable growth in all its activities and generated combined sales of € 4.1 billion in 2013.