Bekaert rubber reinforcement business reports lower sales, earnings

Brussels – Bekaert SA has seen first half results for its rubber reinforcement unit decline year-on-year, due mainly to lower demand in Europe and restructuring costs in China.

Earnings (EBITDA) for the first six months of the year fell to €136 million, down 9.3% year-on-year, the Belgian group reported 26 July.

Consolidated sales fell 13% year-on-year to €897 million, due mainly to lower sales volumes.

The unit, however, delivered a margin improvement from 10.2% in first half of 2023 to 10.7% in the first half of this year.

This, Bekaert said, was achieved through “production cost optimisations, a high level of plant utilisation and growth in higher-margin, innovative tire cord constructions.”

The Belgian group linked lower sales to a 2% “unfavourable” currency movement, the 4.2% lower volumes and a 7.7% impact from passed-on input cost decreases on pricing.

In China, volumes decreased versus a very strong first half last year, but footprint rationalisation in Chongqing, and the related cost optimisation plans helped profitability, Bekaert said.

Lower demand impacted sales volumes in Europe, while volumes were flat in North America.

Compared to the second half 2023, however, volumes increased by 2% in the first six months of 2024, reflecting a 13% growth in Europe and an 8% increase in North America.

In terms of earnings, Bekaert reported a 0.6% price/mix positive effect due to the growth of stronger tensile tire cords in Europe and Asia.

This, it said, "offset impacts from a lower proportion of truck tire cord versus passenger car tires."

Furthermore, “some tactical business selection in China to optimise plant loading,” helped achieve a 95% capacity utilisation rate in Asia.

Earnings were negatively impacted by one-off costs, including the restructuring costs for footprint changes in China and environmental costs for the group’s closed site in Italy.

On the full-year outlook, Bekaert said the market was expected to remain subdued, particularly in the truck tire market globally and in Europe.

The group aims to tap “tactical business selection” to maintain high levels of capacity utilisation, particularly in India and China, which it says will support operational performance and cash generation.