Bekaert enjoys Q1 organic growth, falls victim to currency effects

Steel cord manufacturer Bekaert reports organic sales growth in the first quarter of 2013, however the influence of changing exchange rates ensured this positive trend was more than cancelled out. In the first quarter of 2014, Bekaert achieved consolidated sales of €782 million and combined sales of €990 million, respective decreases of 2.1 per cent and 4.4 per cent compared with the first quarter of 2013. On a constant currency basis, Bekaert’s consolidated revenues increased 4.2 per cent and combined sales rose 4.9 per cent.

Sales by segment

EMEA: The upward trend in demand from automotive markets in Europe first seen in the second half of 2013 continued at the start of 2014. Bekaert says this led to robust volume growth for tyre cord and other steel wire products serving the automotive sector in Europe. The company’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 six per cent over the first quarter of 2013 and rose to the highest level in two years.

North America: 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 five per cent as a result of unfavourable year-on-year currency movements.

Latin America: 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 per cent versus the euro, year-on-year). The precarious situation in Venezuela will continue to affect Bekaert’s operations in the country; the company’s factories there have been closed 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 per cent year-on-year), which cancelled out the sales growth of Bekaert’s Brazilian joint ventures.

Asia Pacific: Bekaert’s activities in Asia Pacific achieved significant organic volume growth (+8 per cent), mainly as a result of regained market share in the Chinese tyre 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 per cent for the region.