Annual Report 2017 - EMEA

EMEA

Segment EMEA 2017
Combined sales: € 1 264 million
Capital expenditures (PP&E): € 115 million
Total assets: € 1 018 million
Employees: 7 486

Economic environment in 2017

The EU economies have grown by almost 2.5% in 2017, enjoying the strongest period of economic growth in a decade. Most countries saw their GDP growth expand more than in previous years, except for the UK where lingering concerns about the impact of Brexit and the slow nature of the process led to the weakest pace in five years.  The Central European economies especially grew robustly in 2017. Tailwinds to the economies included strong export demand, fiscal stimulus programs, industrial and public investments, and tight labor markets.  

Outside the EU, GDP growth in Turkey surged above 6%, supported by government stimulus measures encouraging borrowing and spending. In Russia, the economy has returned to modest growth amidst positive global growth, a recovery in trade, and rising oil prices.

The European automotive and construction markets – sectors that are crucial for Europe and highly relevant for Bekaert’s activities – witnessed continued strong demand in 2017. EU new registrations of both cars and commercial vehicles exceeded 3% growth over 2017. The EU construction sector also improved markedly in 2017, owing to high levels of consumer and business sentiment, easy access to financing, and increased investment in public infrastructure works. After a long downturn in the oil and gas sector, the industry has ended 2017 with a degree of renewed confidence. Oil prices have shown a growth trend over the course of the year and gas exports from Russia to Europe have risen to a new record.

Bekaert has a presence in both the Western European and the Central & Eastern European markets. In Europe, we offer a quality portfolio of advanced steel wire products for sectors that are in search of innovative, high-end products and solutions.

Our activity performance

Bekaert’s activities in EMEA achieved 11% sales growth in 2017, driven by robust organic volume growth (+7%) and the aggregate effect of passed-on wire rod price increases and price mix (+4%). Strong automotive, construction and other industrial markets boosted sales volumes throughout the year, while demand for specialty steel wires was flat compared with 2016. 

Bekaert’s activities in EMEA delivered solid results in 2017. We repeated the record € 141 million underlying EBIT of last year in absolute numbers. The margin performance was lower due to some delay in passing on wire rod price increases to our customers - particularly in the highly competitive construction markets - and because of additional costs of hiring and training personnel needed for the ongoing expansion programs in Central and Eastern Europe. 

Compared with 2016, capital expenditure (PP&E) more than doubled to € 115 million and included, amongst others, major capacity expansions in Romania, Slovakia and Russia.

Transforming our business

  • Bekaert’s global manufacturing excellence program aims to gain competitiveness by optimizing our safety, quality, delivery performance and productivity. In 2017, the EMEA implementation action radius was extended with the Bekaert plants in Slatina (Romania), Sládkovičovo (Slovakia) and Lipetsk (Russia). 
  • The customer excellence program accelerated over the course of 2017 and included both global and regional business platforms and cells. The program is projected to drive growth and margin performance.
  • Bekaert’s global safety program, BeCare, was further rolled out on a global scale. Our Slovak plants started BeCare in September 2017, using momentum from the company’s international Health & Safety Week to enroll more than 1 600 employees in the program. The BeCare launch in Lipetsk (Russia) not only engaged the team to increase safety, it also further stimulated communication and empowerment among an enthusiastic team.

Growth through expansion

  • To accommodate the growth of the domestic tire industry in Russia, Bekaert’s Lipetsk plant announced in September 2017 its plans to add 50% tire cord capacity and double the half-product capacity by mid-2018. The head of the Lipetsk Special Economic Zone, Mr. Koshelev Ivan Nikolaevich, stressed the importance of Bekaert’s expansion investments for the Russian tire industry during the announcement ceremony. During the official visit of Belgium’s Prime Minister Charles Michel to the Russian Federation in January 2018, Russian Prime Minister Dmitry Medvedev explicitly referred to the Bekaert investment project in Lipetsk as a great illustration of business development with good prospects.
  • In October 2017, the Board of Directors of Bekaert held one of its regular meetings in Romania and visited the Bekaert plant in Slatina (Romania), which is in full expansion. The plant is adding 50% tire cord capacity to meet growing demand. The group also visited the neighboring customer plants Pirelly Tyre and Prysmian. The members of the Board of Directors of Bekaert literally walked the whole supply chain, from wire rod to end product.
 
Bekaert opens new Headquarters
Less than a year and a half after the first stone was laid, Bekaert teams from three locations moved into the new group headquarters in Zwevegem (Belgium). Merging tradition with innovation, the offices introduce a dynamic way of working while honoring the company’s heritage. A transparent hall connects the two wings of the building: one is a completely new structure, while the other is a renovated neo-gothic building that takes us back in history to Bekaert’s first nail factory built in the early 1900s. With its high vertical windows and brick walls, the new building echoes the style of the original, though with a modern, sleek design. It captures the Bekaert spirit in full, as some of our own products were used to reinforce the structure: Murfor® Compact for masonry reinforcement and Dramix® for the concrete reinforcement of the ground plate. The new headquarters will replace older, less energy-efficient buildings and meet the most demanding environmental requirements.