Shares and shareholders

Bekaert share in 2011

Approach

Bekaert is committed to provide high-quality financial information to its shareholders. Clarity and transparency are not empty words and it is Bekaert’s intention to engage constantly in an open dialogue with its shareholders. Bekaert has always chosen to respond promptly to new international standards. The consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS), which have been adopted by the European Union. By creating value for the customer, Bekaert also creates value for shareholders and other stakeholders. Both private and institutional investors benefit from our sustained commitment to transparent reporting, be it at shareholders’ or analysts’ meetings. As a consequence, our shareholders have become more and more international.

Share identification

The Bekaert share is listed on NYSE Euronext Brussels as ISIN BE0974258874 (BEKB) and was first listed in December 1972. The VVPR strip is listed as ISIN BE0005640140 (BEKS). The ICB sector code is 2727 Diversified Industrials.

The Bekaert share in 2011

The share price started with an all-time high at € 87.98 on 4 January, followed by a 5 month period during which the share was hovering between € 70 and € 85. Bekaert posted a strong set of results, thanks to the higher-than-expected contribution of Asia-Pacific. Notwithstanding the step change realized in 2010 and an excellent first quarter 2011, the outlook was tempered by uncertainties about the measures for more controlled growth in China and policies to contain inflation in several countries. Both the volatility of raw material prices and changes in fiscal incentive programs in solar end-markets were indicators for more irregular growth.

The second quarter was characterized by the lack of direction by the financial markets, concerns on the slowing economic activity and the financing uncertainty in Europe. Although most investors understood that Bekaert’s margins were not sustainable, the fear for price adjustments and reduced earnings expectations from sawing wire dominated sentiment. Indeed, the photovoltaic market faced unforeseen and fast price decreases.

The second quarter was one of the most challenging quarters for the solar industry since the financial crisis. The full impact from the European decrease in incentives was felt together with increased competitive capacities taking effect. This resulted in pricing pressure and a huge overcapacity across the entire solar supply chain. Also Bekaert implemented adequate price adjustments to defend its market position in sawing wire. All this resulted in a steep fall in share price by more than 40% to levels around € 50 at the end of June.

The solid first half year results were overshadowed by the decline of the Asia Pacific results. While the non-China activities turned in a solid performance, it was in particular the impact of a faster and stronger-than-expected pressure on sawing wire prices that drove a decline. While the margin decrease was expected and well flagged, the financial market was positioning itself for a gradual decline. Nobody could foresee the sharp drop. Since the pricing pressure had manifested itself from May, the impact was severe and already hurt the consolidated margin in the first half.

The economic slowdown in China has offset Bekaert’s performance in the rest of the world in the third quarter. Bekaert achieved solid growth in most segments, but it also came clear that the increased capacity in sawing wire from competitors resulted in a capacity twice the size of demand. The early signs in July of a slight demand pick-up were not sustainable and the demand was insufficient to compensate for the increased supply which led to a significant reduction of revenues. As a consequence sawing wire prices have further been cut to more than 50%, in line with the value chain of solar products. The share price decreased further to about € 30 in the third quarter with high volumes at levels over 400 000 shares traded per day.

In the fourth quarter, overall analyst numbers were increasingly cut, based on the on-going competitive pressures on prices and margins, headwinds from the solar end market (and to a lesser extent tire cord in China), the Chinese credit policy tightening and global macro-economic and financial concerns, especially in Europe. In addition to the usual seasonal effects at year-end, Bekaert saw a growing impact from the global uncertain economic developments in most markets. The share decreased to a low at € 23.50 on 29 December and closed at € 24.785 on 31 December 2011. Bekaert confirmed its membership in the BEL20 index, the Belgian reference index and was ranked nr 16 with a market capitalization of € 1.5 billion or US$ 1.9 billion.

 

Share performance against stock indices

Volumes traded

The average daily trading volume with 284 300 shares was about 45% higher compared to previous year as a consequence of the high volatility caused by the changes in the photovoltaic market from the second quarter onwards. On 29 July 2011, the volume peaked; 1.5 million shares were handled in 1 day on the announcement of the half year results.

Bekaert closing prices and volumes in 2011


Bekaert versus Bel20®, NEXT100 and NEXT150

In the BEL20, Bekaert is ranked as number 16, with a market capitalization of € 1 486 million, a free float market capitalization of € 966 million (61.72% and within the free float band of 65%), velocity at 161% and a weight of 1.89 %.

Bekaert versus Bel20® (2011)



Bekaert versus the NEXT100 and the NEXT150 (2011) 

 
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Internationalization of the shareholder structure and significant participations

The shareholder structure showed a strong internationalization in previous years and this trend was maintained in 2011, although it was more difficult to identify the institutional shareholders since there has been a major shift in shareholdings.

In connection with the entry into force of the Act of 2 May 2007 on the disclosure of significant participations (the Transparency Act) Bekaert has, in its Articles of Association, set the thresholds of 3% and 7.50% in addition to the legal thresholds of 5% and each multiple of 5%. An overview of the current notifications of participations of 3% or more can be found in the Financial Review (Parent company information: interests in share capital).

The principal shareholders own 38.28% of the shares, while the identified institutional shareholders own 39.3% of the shares. Of the total number of Bekaert shares, 2.87% is in registered form.

Internationalization of our institutional shareholder structure

Capital structure and dividend

Capital structure

As of 31 December 2011 the registered capital of the Company amounts to € 176 512 000, and is represented by 59 976 198 shares without par value. The shares are in registered or non-material form.

The number of VVPR strips is 12 648 201.

The total number of outstanding subscription rights under the SOP1 and SOP 2005-2009 stock option plans is 644 108.

A total of 91 225 subscription rights were exercised in 2011 under the SOP1 and SOP 2005-2009 employee stock option plans, resulting in the issue of 91 225 new Company shares and VVPR strips, and an increase of the registered capital by € 270 000 and of the share premium by
€ 2 275 952.33.

The Company held 963 700 treasury shares as of 31 December 2010, which were used as follows in 2011:

  • 24 000 shares were delivered to an individual who had exercised his options under the SOP2 stock option plan in 2011; and
  • the remaining 939 700 shares are held as treasury shares.

No purchases or cancellations of shares took place in 2011.

In 2011 a first grant of options took place under new NV Bekaert SA Share Option Plan 2010-2014 (“SOP2010-2014”): 360 925 options were granted to members of the Bekaert Group Executive, senior management and a limited number of management employees of the Company and a number of its subsidiary companies. Each option will be convertible into one existing Company share (without VVPR strip) at an exercise price of € 77.00. A second offer of 293 800 options was made on 22 December 2011. Each option of the second series will be convertible into one existing Company share without VVPR strip at an exercise price of € 25.14.

The SOP2010-2014 plan and its predecessor plans comply with the relevant provisions of the Act of 26 March 1999 and with Articles 520ter and 525, last paragraph, of the Companies Code.

Detailed information about capital, shares and stock option plans is given in the Financial Review (Note 6.11 to the consolidated financial statements).

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Bekaert’s dividend policy

It is the policy of the Board of Directors to propose a profit appropriation to the General Meeting of Shareholders which, insofar as the profit permits, provides a stable or growing dividend while maintaining an adequate level of cash flow in the Company for investment and self-financing in order to support future growth. In practice, this means that the company seeks to maintain a pay-out ratio of around 40% of the result for the period attributable to the Group over the longer term.

In July the Board of Directors approved the distribution of a gross interim dividend of € 0.67 per share.


(*) All indicators per share before 2010 are stock split-adjusted to enable comparison with 2010-2011 figures.
(**) Dividend subject to approval by the General Meeting of Shareholders 2012.
(***) Subject to applicable fiscal legislation

Appropriation of available profit

The Board of Directors will propose that the General Meeting of Shareholders to be held on 9 May 2012 approve the distribution of a gross dividend of € 0.50 per share. Together with the gross interim dividend of € 0.67 per share paid in October 2011, this will result in an aggregate gross dividend of € 1.17 per share for 2011.

General Meetings of Shareholders

The Annual General Meeting was held on 11 May 2011. An Extraordinary General Meeting was held on the same day. A Special General Meeting took place on 7 April 2011. The resolutions of the three meetings are available at www.bekaert.com.

More detailed information is available in the Bekaert Shareholders’ Guide 2011 and at www.bekaert.com.

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