Belgium-headquartered steel wire specialist Bekaert is projecting a gradual recovery in tire markets in the remainder of the year. However, demand in other markets is more difficult to project in the current economic environment, the company says in its first-half earnings report seen by Kallanish.
The risk of a potential second wave of Covid-19 continues to create a high level of uncertainty, limiting the company’s ability to forecast the full-year impact.
H1 demand from tire and automotive markets was significantly impacted by the Covid-19 pandemic. Global tire demand on average reduced by -40% in the second quarter but showed some signs of recovery at the end of the period. Construction activity was constrained in most parts of the world by the Q2 lockdowns, except in China, where stimulus programmes started to boost infrastructure investment.
Demand from agriculture, utility, and mining markets remained solid across H1 as these sectors, generally considered as essential industries, appeared to be less affected by the pandemic.
The Steel Wire Solutions and Bridon-Bekaert Ropes Group business units accelerated the implementation of profit restoration measures and succeeded in substantially improving business-mix. This drove a solid turnaround in profitability and cash generation. The Specialty Businesses unit further enhanced its margin level through cost control and an improved product mix, while Rubber Reinforcement implemented extensive measures to partially mitigate the inevitable margin impact from a -43% sales collapse in Q2.
At present, all Bekaert’s production plants globally are operational, either fully or partially. H1 sales stood at €1,770 million ($2,077m), down -20% compared to H1 2019. Ebitda was €194m ($228m), Bekaert reveals.