Asia Pacific

Segment APAC
Combined sales: € 1 144 million
Capital expenditures (PP&E): € 122 million
Total assets: € 1 209 million
Employees: 11 046

Economic environment in 2017

China’s economy grew 6.9% in 2017, the fastest since 2015 and the first upturn since the downward growth trend that started in 2010.  The economic growth was the result of a rebound in the industrial sector, a resilient property market and strong export growth. 

Disruptions caused by demonetization and tax reforms in India led to a lower GDP growth than in the previous years. However, with a growth of 6.7% in 2017 and a better outlook for the coming years, India continues to show its vast growth potential. 

Indonesia’s economy, the largest in South East Asia and one of the world's largest emerging markets, hit a milestone in 2017 when it reached the USD 1 trillion mark, making it the world’s 16th largest economy.

Bekaert is present in Asia with manufacturing sites and development centers in China, India, Indonesia, Malaysia and Japan.

Our activity performance

Bekaert delivered 12% organic sales growth in Asia Pacific, driven by good volume growth and a positive aggregate effect of passed-on wire rod price increases and price-mix. Bekaert’s rubber reinforcement activities recorded firm growth across the region.  

Several developments hindered us from repeating the outstanding margin performance of last year:
  • The continuous price increases of raw materials hampered an immediate effective pricing response in the fierce competitive environment in China. The impact on our margins was at its most severe during the middle part of the year. In the fourth quarter, we were better able to pass on wire rod prices without adversely affecting our sales volumes. 
  • The demand for loose abrasive sawing wire declined sharply due to an acceleration of the technology shift to new generation products.
  • The ongoing expansion programs in the region generated additional costs related to hiring and training personnel.

These elements had an adverse effect on the overall profitability for the region in 2017. Underlying EBIT decreased to € 107 million at a margin of 9.3%, below our 2016 performance.

We have taken actions to upgrade our sawing wire offering so we can play a part in the ongoing technology shift. Bekaert has successfully developed in the course of 2017 a fixed abrasive sawing wire. All key customers have tested and approved the samples and we are progressively investing in production capacity to start serving our customers as of mid-2018.

In anticipation of continued growth perspectives, Bekaert invested € 122 million in PP&E in the region in 2017, more than doubling the investment pace of 2016 and including expansion investments in China, India and Indonesia. In order to better leverage scale, the company also closed two entities that did not have the potential to generate value-creating growth: the Shah Alam plant in Malaysia and the small tire cord plant in Huizhou (China).

Transforming our business

In 2017, Bekaert’s global manufacturing excellence program was successfully implemented in Ranjangaon (India), Ipoh (Malaysia), and Chongqing and Shanghai (China). Most Asian production plants have now gone through the Bekaert Manufacturing Excellence program and the identified savings and improvement potential will increasingly impact our competitiveness.

In addition, the other global transformation programs of Bekaert: the customer excellence program; the BeCare safety program; the supply chain excellence program; and the latest added Fit for Growth transformation are embraced by our engaged and passionate teams in Asia.

Expanding our business

Bekaert takes full ownership in Chongqing
In April 2017, Bekaert completed the acquisition of the 50% equity share Ansteel formerly held in Bekaert Ansteel Tire Cord (Chongqing) Co. Ltd (BATC).  Subsequently, BATC is now a wholly-owned Bekaert subsidiary and has been renamed Bekaert (Chongqing) Steel Cord Co. Ltd (BCSC).
Bekaert adds state-of-the-art production hall in Weihai, Shandong province
In June 2017, a new production hall was opened in Weihai as an extension to our existing tire cord plant. The greenfield project was finalized in just half a year and incorporates the latest industry standards. A high degree of automation and other innovative solutions make the new production area the ‘factory of the future’. Regional and global engineering and automation teams worked together to achieve the highest levels of safety, automation, flexibility and quality. 
Tire cord innovations earn Bekaert recognition from CRIA
China Rubber Industry Association (CRIA) granted the Bekaert China team a Contribution Award for their great efforts in supporting the CRIA Green Tire Week initiative. CRIA appreciated Bekaert’s commitment to developing lighter, stronger and better tire cords, which is a substantial support to the industry in developing and promoting greener tires. 
Accelerating growth in India
Bekaert has intensively invested and will continue to invest in its Ranjangaon plant in India to double the tire cord capacity in line with growing demand, and to extend the plant with half product capacity, so it does no longer need to import half product from other Bekaert facilities in Asia.