Strategic progress and financial resilience delivers improved profit margins
Sales at € 2.1 billion • EBITu of € 204 million (margin 9.9%) • EPSu of € 3.04 • Free Cash Flow of € 43 million • ROCEu 18.5% • Net debt/EBITDAu of 0.7x
Bekaert delivered another period of improving profit margins and solid cash flow generation in line with expectations, managing the challenges of weaker end markets and lower volumes.
Whilst the operational performance was mixed in certain business areas and there were some delays in growth markets, the ongoing strategic execution, improving product price and mix and extracting further cost efficiencies have offset these challenges to deliver a result in line with expectations. With underlying gross profit margin improving to 18.4%, EBITu margins up to 9.9% and robust free cash flow of € 43 million in H1 2024, profit expectations for the full year 2024 remain unchanged.
Financial highlights
- Consolidated sales of € 2.1 billion (-11.1%) and combined sales of € 2.5 billion (-12.0%), driven primarily by lower volumes, passed-on lower raw material costs and an unfavorable impact from exchange rate movements
- Underlying gross profit margin improved to 18.4% (vs 17.6% in H1 2023), with underlying gross profit at € 379 million (vs € 409 million in H1 2023)
- Strong margin performance, driven by ongoing business mix selection and operational improvements, despite lower volumes
- EBITDAu of € 288 million (-9.1%), delivering a margin on sales of 14.0% (vs 13.7% in H1 2023)
- EBITu of € 204 million (-9.4%), resulting in a margin of 9.9% (vs 9.7% in H1 2023)
- Underlying EPS stable at € 3.04 (vs € 3.07 in H1 2023)
- Stable cash generation, despite lower volumes
- Free Cash Flow (FCF) of € 43 million, compared to € 38 million in H1 2023 (excluding H1 2023 cash flows from disposed of businesses)
- Net debt of € 399 million (€ 530 million H1 2023), after acquisitions and an increased dividend, resulting in net debt to EBITDAu of 0.7x
Operational and strategic highlights
- Ongoing strategic execution
- Positive M&A momentum with the acquisition of BEXCO to increase capabilities in synthetic ropes
- Efficiency gains and structural cost improvements across the business
- Improving business mix
- Three BUs at >10% EBITu margin level, including SWS improving EBITu margins by +380bps to 11.4% in H1
- Some delays in growth businesses
- +4% volume growth in Sustainable Construction with notable Dramix® wins for landmark projects and increased adoption rates in newer markets
- Some delays in Hydrogen demand (12-18 months), but overall outlook remains robust
- Operational performance challenges in Steel Ropes businesses in US and UK - but turnaround plan deployed and to be completed during H2
- Bekaert chosen as one of the top 500 most sustainable companies in the world by TIME magazine
Outlook
The company's resilient financial performance in H1 and robust financial position gives us confidence in our ability to further deliver on our strategic and financial priorities. There have been delays to some growth businesses and in this environment, management now expects a modest decline in sales in FY 2024 against FY 2023. However, it does anticipate increasing EBITu margins in 2024 and EBITu in-line with current expectations, alongside further strong free cash flow generation. Looking beyond 2024, management remains confident in its existing longer term targets.
Conference call
Yves Kerstens, CEO of Bekaert and Taoufiq Boussaid, CFO, will present the H1 2024 results at 10:00 a.m. CET on Friday 26th July. This presentation can be accessed live upon registration via the Bekaert website (bekaert.com/en/investors) and will be available on the website after the event.
