Capital market event Regionalizing Wire. Henri-Jean Velge Group Executive Vice-President

Transcription

1 Capital market event 2008 Regionalizing Wire Henri-Jean Velge Group Executive Vice-President 0

2 Regional AWP (excl steel cord, building, carding, AM and AC) North America Europe 16% 32% Asia Latin America 14% 36% Rest of the world 2% 1

3 Regionalizing Wire Latin-America Andina project Venezuela - Colombia Majority in Vicson (Venezuela) Proalco (Colombia) 2

4 Venezuela and Colombia: background information Venezuela GDP 2007: 210 billion USD (growth about 5 %) Population: Export products: 27 million mainly oil export 50 billion USD Colombia GDP 2007: 150 billion USD (growth about 5 %) Population: 44 million Export products: Manufacturing : 40 % Oil : 28 % Coffee : 6 % 3

5 Background Vicson and Proalco Company: Vicson Previous ownership: % Sivensa % Bekaert Actual ownership: 100 % Bekaert Location: Valencia and San Joaquin Activities: Advanced Wire Products, Wire Key numbers 2007: - personnel: Sales: 100 m - Volume: ton Vicson is majority owner of Proalco (75%). Acquisition of Vicson results in majority share in Proalco Company: Previous ownership: Actual ownership: Location: Activities: Proalco 75% Vicson / 25% Alansa % Bekaert (12.50 % Kohn family) Bogota Advanced Wire Products, Wire Key numbers 2007: - personnel: Sales: 50 m - Volume: ton 4

6 Market - Market Venezuela: High market share with strong local demand High growth over the last periods: +15% p.a. Growth is driven by high oil prices and public construction spending Growth may be affected by an economic slowdown Bekaert sales: 90% local market, 10% export (Caribbean, USA, ). - Market Colombia: High market share Sustained market growth Diversified economy enables stable growth High potential: market expected to continue to grow at strong pace possibility to further consolidate the still atomized market would lead to higher market share Bekaert sales: 99% local market, 1% export 5

7 Opportunity for Bekaert - Latin American market is changing rapidly - Strategic fit, reinforcing Bekaert s position in Central and South America - Added value Strong operational performance and strong local management Leaders in their markets, growing market share in Colombia Financially sound companies Resilient: survived many economical crises Strategic logistical location for deliveries to USA (deep sea transport) - Some risks External environment sometimes uncertain and volatile Looming economical crisis in Venezuela 6

8 Economics - Purchase price $m 35.5 ( m 25.4) - Effect on consolidated sales + 7 % p.a. - Effect in fourth quarter sales 2007 m 35.0 ( m 140 annual change from combined to consolidated) - Share in the result of joint ventures and associates 2005 m m 3.8 1H07 m partly to be incorporated in consolidated P&L (from 1/10/2007) 7

9 Regionalizing Wire India Wire opportunities Project in Stainless Steel Project for Flat and Shaped Wire 8

10 India: background information GDP 2007: Growth 800 billion USD about 9 %, second fastest in Asia Steel consumption per capita = 1/8 of USA Population: 1.12 billion Export: 120 billion $ Textile, Jewels, Engineering goods Software and services India has since 1991 gradually opened its markets through economic reforms and reduced government controls on foreign trade and investments. Expect car production to multiply by 3 in 2015 (up to 3 million cars) Auto component CAGR market of 15 % (crossed $b 15) of which 50 % is exported 9

11 India : Bekaert presence - Pune Products Steel cord Carding products for textile industry Engineering and business development People Mukand joint venture 50/50 JV for stainless wires 10

12 Regionalizing Wire India Wire opportunities in Stainless Steel 11

13 India: wire opportunity in stainless steel products - Stainless steel wire rod Worldwide capacity 2.1 million ton India and China counts for about 25% of all capacity Ongoing consolidation - Stainless steel wire products Cold heading, welding wire, spring wire, 1.2 million ton specialities, general wires More than 50% of stainless steel wire production in Asia Fragmented market Other players: Sangsa, Ugitech, Sandvik, Inoxfil, Novametal, Nippon Seizen, VSL wires, Rodacciai and many Indian, Chinese and Taiwanese wire drawers. 12

14 India: wire opportunity in stainless steel products - Mukand joint venture Goal: expansion in India with a strategic partner double the worldwide sales in stainless steel products supply of top quality to the automotive industry and all sorts of other industrial applications 50/50 JV Greenfield factory to be built in Maharashtra, 100 people, m2 - Mukand Leading producer and supplier of highest quality stainless steel wire rod Family owned and professionally managed About 2000 people Facilities in Kalwe, Thane and Hospet Listed on the stock exchange of Mumbai 13

15 Economics - Investments Greenfield m 18 (Rs. 100 Crores) at 50 % - Effect on consolidated sales 0 - Effect on combined sales + m 30 (first sales expected in 2009) 14

16 Regionalizing Wire India Wire opportunities in Flat and Shaped Wire 15

17 India: wire opportunity in flat and shaped wire - Annual wire production in India 2.0 million ton Tata Group Usha Martin Ramsarup Bansal Mika Arti Raj Ratan Mukand Aradhya H D Wire Etc. Organized Un-organized - Expected growth x 2 in upcoming 5 years 16

18 Scope of the project Investment in a wire production plant in Pune for flat and profiled wires in line with the needs of the local Indian market for automotive wires Clutch and valve spring wires Springs made out of flat and profiled wires a.o. seat recliners and belt tensioners, circlips and wiper components. for flexible pipes Strong growth of the off-shore industry in South-East Asia Major investment is planned by the Technip Group for the production of flexible pipes 17

19 Product: wire for flexible pipes Zeta wires Flat wires 18

20 Product: wire for automotive components Window regulator/recliner springs circlips Wires for clutch springs 19

21 The automotive industry in India - 10 million vehicles are produced in India (7 million two wheelers) (amounting to US$ 28 billion) - The penetration rate of passenger cars is only at 7 cars per 1000 people - The Indian automotive industry has grown with more than 15% p.a. (but only 2% of the world production) - Rising per capita income and the changing demographic distribution are the drivers for growth - The Automotive Mission Plan aims at doubling the contribution of the automotive sector in GDP (from 5 to 10%) by taking the turnover to 145 billion USD in 2016 and special emphasis on export of small cars. By 2016 India would emerge as the world s seventh largest car producer - Auto component industry growth is directly linked to the growth of automobile industry. However component exports are becoming an important growth driver. 20

22 Flat and shaped wires: product segments to consider - The market in India for flat and shaped wires could be split into: Existing market: circlips, bobby pin wires and some others. Finished parts made of flat and shaped wires are currently imported but increasingly made locally (belt tensioners, flat springs for window regulator seat recliners, augers) Other flat and shaped wires, commonly used in Europe and the US, but not yet in India i.e. steering shafts, wood clamps Market for flexible pipes: strongly growing in the Far East 21

23 Economics - Investments m 15 - Effect on consolidated sales + m 20 (gradually built up to 2012) 22

24 Regionalizing Wire Indonesia Wire opportunities Project galvanizing plant Dramix 23

25 Indonesia: background information GDP 2007: 410 billion USD Growth about 5% Population: 225 million Export: 85 billion $ petroleum, natural gas, textiles, apparel, and mining. Major agricultural products include palm oil, rice, tea, coffee, spices, and rubber. The growth rate, however, is not enough to make a significant impact on unemployment and wages Increases in fuel and rice prices have worsened poverty levels About 20% of the population live below the poverty line 24

26 Indonesia: Bekaert presence - Karawang Products Coated advanced wire products (Bezinal, colored, galvanized, etc.) Baling wire, fencing wire, etc. People

27 Scope of the project Investment driven by a number of considerations: Growth in pulp baling industry in Asia and difficult to compete from Europe (strong Euro) Cable armoring wire market, an opportunity again in Japan Steady Bezinal wire demand in South-east Asia and Australia Limited capacity in global AWP European plants to support coated low carbon growth in Asia Growing demand for building products: Dramix Availability of land and ability to share existing management at PT Bekaert Indonesia 26

28 Regionalizing Wire: Dramix sales In % % 75% 50% 25% 0% sales Estimate 27

29 Regional AWP Dramix production sites New investment 28

30 Economics - Investment in galvanizing capacity and in capacity for fibres for concrete reinforcement m 22 - Effect on consolidated sales ton m 35 (gradually built up to 2010) 29

31 better together 30