Bekaert achieves 11% top line growth
Sales
Bekaert achieved consolidated sales of € 3 073 million in the first nine months of 2017, up more than 11% from the same period last year. The consolidated sales growth stemmed from increased organic sales (+7.5%), the net effect of mergers, acquisitions and divestments (+3.7%) and limited currency effects (+0.3%). The organic growth was driven by higher sales volumes (+2.5%) and the aggregate effect of wire rod price increases and price-mix (+5%).
Outlook
Market developments
Bekaert has reported solid underlying volume growth over the first nine months of the year, particularly in automotive and construction markets. We project continued strong demand in these sectors, while taking into account normal year-end seasonality.
The oil prices have been rising slowly but steadily for the last 6 months. If this trend continues, we may start to see some investment activity in this market in the near future. This would create opportunities for Bekaert's profiled wires for flexible pipes as well as for the Bridon-Bekaert Ropes Group where the projected recovery is taking longer than anticipated in the ropes part of the business.
We see little signs of recovery in Latin America and the uncertainty in the US is creating an increasingly difficult economic business climate.
The technology shift to new generation sawing wire solutions in solar markets is rapidly driving down demand for our loose abrasive wire products.
It has been extremely difficult to pass on raw materials price increases in almost all of our businesses. This is a very unusual dynamic in our industry and it is stopping us from being able to turn improved volumes into incremental profitability in the short term.
Business developments
As reported before, the integration of the formerly wholly-owned subsidiary in Sumaré (Brazil) into the partnership with ArcelorMittal and the full-year integration of the Bridon business in Bridon-Bekaert Ropes Group at lower than average margins, will have an adverse impact on Bekaert's 2017 margins.
Full year 2017
The pricing environment in the market today will not allow us to turn our improved volumes into incremental profit this year. We continue to forecast that we will broadly repeat the underlying EBIT performance of FY2016.
Moving forward, there will be more positive growth into 2018 as our actions to drive value creation will be gaining impact. We also remain confident about our underlying strategy and about the effectiveness of our transformation and investment programs that will allow us to move towards a 10% underlying EBIT margin over the coming years.