Asia Pacific

Combined sales: € 1 014 million
Consolidated sales:
€ 966 million
Capital expenditures (PP&E): € 51 million
Total assets: € 1 282 million
Employees: 11 700

Economic environment in 2014

China's economy grew at its slowest pace in two decades in 2014 as property prices declined and companies and local governments struggled under debt burdens. GDP grew by 7.4%, a rate envied by most countries, but a cause for concern due to the significant production overcapacity, slower demand and hence, fierce competition in several industrial markets.

Demand from tire markets remained solid in the first nine months of 2014, but dropped significantly in the final quarter of the year. Prices further eroded in a market which was characterized by less export volumes for Chinese tire makers, structural domestic overcapacity and commoditization of truck tire reinforcement solutions. 

Demand from solar markets in China picked up in 2014, and several other industrial markets, such as the elevator businesses and the automotive parts sector, performed well. Bekaert’s activities in Shenyang and Jiangyin were able to answer the development and supply needs of customers in search of high-end steel wire solutions. 

Economic growth in India moved up firmly from the sub 5% levels of the past two fiscal years. Domestic industrial demand picked up after the newly elected Government took office and implemented reforms to strengthen the economy. Bekaert’s tire cord activities in India recorded solid growth by gaining market share in a rebounding market environment.

South East Asia continued its solid growth trend in most countries, although the region’s largest economy, Indonesia, grew at a slower pace in 2014 with a downward trend for the third consecutive year. On the positive side, the manufacturing industry is one of the strongest contributors to the GDP of the country.

Bekaert is present in Asia Pacific with manufacturing and development centers in China, India, Indonesia, Malaysia and Japan. After the balance sheet date, we also completed the acquisition of the ropes business from Arrium in Newcastle, Australia.

Growing our global presence in Ropes
Bekaert announced, at the beginning of 2015, the acquisition of the wire rope business of Arrium Ltd in Newcastle, Australia. The integration of the Australian ropes activities will enhance Bekaert's growth strategy in steel wire ropes in general and will enable the Group to take a leading global market position in mining ropes in particular. The transaction is estimated to add € 40 million to Bekaert's consolidated sales on an annual basis and will be integrated as of 1 March 2015.

Our activity performance

Bekaert’s activities in Asia Pacific achieved 6% volume growth year-on-year. This was the result of strong sales across Asia in the first nine months of the year, followed by a weak fourth quarter driven by the overall demand slowdown in Chinese tire markets. Price erosion, currency effects and passed-on lower wire rod prices tempered the top line growth rate in the region to 1.3% year-on-year. 
Bekaert held on to stable price levels in China during the weak final quarter of 2014 and lost some market share in truck tire markets. 
We retained our leadership position at a constant share in the growing solar markets in China and achieved promising results in some recent investments with high value adding products for, e.g., the automotive components sector.

Bekaert’s tire cord activities in India recorded solid growth and managed to grow market share. Other platforms in India, such as the stainless activities in Lonand, continued to underperform in terms of profitability.
In South East Asia, Bekaert posted solid growth in its rubber reinforcement activities in Indonesia. The recently acquired entities in Malaysia had not yet achieved a turnaround in profitability and coped with increased competition.

Bekaert continued to invest significantly across the region and recorded a total of € 51 million investments in PP&E in 2014. Major investments took place in the advanced cords plant in Shenyang, the finalization of the Xinyu spring wire greenfield and in tire cord expansions in India and Indonesia.
After the balance sheet date, Bekaert announced the divestment of its Carding business.
Bekaert and Groz-Beckert signed an agreement regarding the sale of Bekaert’s Carding Solutions activities to Groz-Beckert, a global company with headquarters in Albstadt, Germany. 

The transaction covered the carding production facilities in Belgium, India, China and the US and the global sales and services network. The deal involved the employees and assets of the activity platform. 

As part of this transaction, the companies entered into a long-term supply agreement of Bekaert steel wire to Groz-Beckert. 

Pirelli Acquisition: after balance sheet date in China
Bekaert and Pirelli successfully closed the acquisition by Bekaert of the Pirelli steel cord plant in Yanzhou, Shandong Province, China on 27 March 2015.

The deal closing in China follows the ownership transfers of the steel cord plants in Figline (Italy), Slatina (Romania), Sumaré (Brazil) and Izmit (Turkey).

Bekaert holds 80% of the shares of Bekaert (JiNing) Steel Cord Co, Ltd. Hixih Rubber Industrial Group Co Ltd, Pirelli’s partner in the Yanzhou entity, retains the remaining 20%.  

TAWI – a ternary alloy application invented by a Chinese-Belgian duo
We successfully launched our ternary Cu-Zn-Co coated tire cord that makes it possible for tire makers to create cobalt-free rubber compounds. As a result, the cobalt salt mixing step can be eliminated in the rubber compounding process and the amount of cobalt in the total supply chain of tire making can be reduced by 80%.

Tire Technology International nominated Bekaert for its TAWI invention in the prestigious Tire Technology of the Year category, competing against major international players in the industry - Michelin, Yokohama and Trelleborg for the award. No fewer than 13 tire manufacturers, among which several Chinese customers, are testing TAWI steel cord today either in lab tests, field tests or both. Their feedback confirms the revolutionary character of the TAWI innovation.