Bekaert reports progressive rebound
Sales, trends and actions
Despite a continued high level of uncertainty, the third quarter marked a turning point in most markets. Bekaert’s third quarter consolidated sales were up +24% from the weak second quarter of 2020 and sales volumes were just -2% below the volumes of the same quarter last year. Consolidated sales for the first nine months of 2020 were well below the same period last year (-14% at constant exchange rates) due to the heavy impact of the COVID-19 pandemic in the first half of 2020.
The external developments in the three-month period July-September 2020 were:
- A significant demand rebound in tire markets
- The positive sales evolution in various markets in Latin America, China, India, and EMEA
- Strong adverse currency movements
Bekaert’s actions in the third quarter focused on:
- Continued reinforcement of protective measures to limit the impact of the COVID-19 pandemic on the health and safety of our employees and their families
- Agile supply chain management across the value chain, ensuring supply continuity to customers
- Further improving the product and business mix, in line with our strategy to upgrade the business portfolio
- Continued tight control on working capital and capital expenditure to further deleverage debt
- Further mitigating and structural measures to improve the financial performance of the Group
- Post-balance sheet date: the successful issue of a 7-year € 200 million retail bond
Outlook
The structural improvement actions implemented since the end of 2019 and our agile response to Covid-19 have demonstrated their effectiveness in strengthening Bekaert’s resilience.
While the Covid-19 pandemic continues to create a high level of uncertainty, the recovery of demand in most of our markets and the lasting benefits from structural improvement actions will enable us to make a step-up in performance in the second half of 2020.
Despite lower overall sales than last year, we expect the underlying EBIT for the full year 2020 to be close to 2019, resulting in an improved underlying EBIT margin.
Driven by strong cash generation and disciplined working capital and debt management, we have brought down the net debt leverage below 2 at the end of the third quarter and will maintain this net debt on underlying EBITDA level as a target - ahead of plan - for the close of 2020.
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