Good morning, welcome to the Bekaert Q1 2026 trading update call. At this time, all participants are in a listen-only mode, we will open the floor for your questions after the presentation. If you require operator assistance, you may press star zero on your keypad at any time and an operator will assist you. If you wish to join the queue to ask a question at any time, you may press star one. Should you wish to remove yourself from the queue, press star two. As a reminder, this conference is being recorded. It is now my pleasure to turn the floor over to your host, Mr. Dries Van Hamme, Director of Investor Relations. Sir, the floor is yours.
Thank you very much and welcome everyone to our Q1 trading update call. I will first read out the safe harbor statement as usual before handing over. This presentation may contain forward-looking statements. Such statements reflect current views of management regarding future events and involve known and unknown risks, uncertainties, and other factors that may cause actual results to be different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Bekaert is providing the information in this presentation as of its date and does not take any obligation to update forward-looking statements contained in it in light of new information, future events, or otherwise.
Bekaert disclaims any liability for statements made or published by third parties and does not undertake any obligation to correct inaccurate data, information, conclusions, or opinions published by these third parties in relation to this or any other publication issued by the company. Then I hand over to Yves Kerstens, CEO.
Thank you, Dries. Also a warm welcome from my side on the trading update. For quarter one, we delivered a top line of EUR 917 million. On a like-for-like basis, stable business. Volume growth of 3%, mainly in areas like Rubber Reinforcement, Steel Wire Solutions in the transmission, but also in Sustainable Construction, with some lower volumes in the BBRG project. We continue, of course, and Seppo will give some more comments also on the FX impact and also of the impact on the top line of our Latin American disposal, which we still had consolidated in first quarter 2025. In this period of Q1, we continued to work on the actions to make the company more sustainable and in terms of profitability and resilience.
We all know the geopolitical tensions, the trade changes that are happening in the market around us. We've been continuously navigating that by additional initiatives on optimization of the cost structure and our conversion costs. We've seen that the conflict in Middle East has so far not impacted our business in the sense that the projects, mainly in the construction area, continue to be executed. Of course, we see an increase in the cost, like transportation cost or energy cost. We are carefully watching the indirect impact of this conflict in the Middle East on the rest of the world in terms of inflation and cost changes. We remain flexible in our supply chain and trade flows to serve our customers. From a financial point of view, we continue to drive good working capital.
CapEx for the year, we estimate around EUR 140 million, and we propose today, during the general assembly here in Zwevegem headquarters, a dividend of EUR 1.95 per share, which is a continuous increase of 3% versus last year, and continuing the share buyback of EUR 200 million, finalizing this program by the end of this year. Now I hand over to Seppo for more color by business and on the financials.
Thanks, Yves. Let's start by looking at the sales bridge from first quarter 2025 to first quarter of this year. Like Yves already mentioned, we have stable like-for-like sales after taking out - 5%, about 5% effect on FX. That is a reflection of weaker renminbi and U.S. dollar. Both those two started to devalue after first quarter last year, and more recently, devaluation of renminbi, sorry, Indian rupee versus EUR. Also, we had the disposal of Latin American business of SWS mid last year. If you look at the comparable figures, that had 3% effect on the top line. Looking at the volume growth and some business drivers before going to be used.
In Rubber Reinforcement, we had volume growth in Asia and North America, while in Steel Wire Solutions , we had volume growth, continued volume growth in transmission wires in North America, in energy and utilities business. Good positive trend continues there. In Sustainable Construction, we saw growth in higher value-added applications in North America. The positive sentiment over there in North America when it comes to our construction business has continued after a slowdown, after first half last year towards end of the year. I think that's also, I think, important business driver that we can see now. We had a bit unfavorable mix in Rubber Reinforcement as we saw more sales in China, if you look at the relative share of sales globally.
In Steel Wire Solutions in energy and utilities businesses, we saw some project delays in Europe. A bit similar trend in BBRG for the steel and synthetic ropes, we saw some project delays affecting the top line development for the quarter. Let's look at the separate individual business units, and let's start with the Rubber Reinforcement and Steel Wire Solutions, where we saw volume growth in both business units. Like mentioned, in Rubber Reinforcement, we had strong volume growth in China, and we continued to have full plant utilization levels over there. We also saw volume growth in North America, but volumes were down in Europe. We continue to focus on stronger tensile, high recycled content, tire cord, and increasing scrap content in tire cords.
That is, of course, a competitive advantage we have and how we can differentiate from many of our competitors. Also a bit of positive news relating to Bridgestone acquisition that was completed after the end of first quarter at the end of April, as expected. We also signed long-term sales agreement. That has now added two new plants, one in China and one in Thailand, to our footprint in Asia, strengthen our position there in the Rubber Reinforcement business. We have 550 new employees coming from Bridgestone, EUR 80 million annualized sales, and EUR 60 million cash consideration that was paid for the acquisition. Those plants will be now included in our figures starting from second quarter of this year, so nothing included in the first quarter report yet. We have the structural change.
We moved HEP back to Rubber Reinforcement from Energy Transition, so that increased the sales of Rubber Reinforcement and equally reduced the sales in Energy Transition. It's because cord manufacturing is similar, takes place in the same entities, so the operational technology synergies when we get to RR and HEP, so that's the driver for the, for the change. Moving to Steel Wire Solutions on the right-hand side of the slide. There we saw volume growth in Europe, but some delays in energy and utilities project impacting the mix. We had lower volumes for flex pipe and flat cable armoring, replaced by volume growth in round wire cable armoring, which is more mature product. We also saw strong volume growth in energy and utilities in North America.
There is structural demand trend, large investment in power and data transmission related to data center connections, grid expansions, and modernization. The positive trend there that we have seen already earlier has continued. There's been some time lag of input price pass-through, especially U.S., where wire rod prices remain high. We also have seen some price increase on the European market recently after the SMAP actions by the EU that were announced end of last year. Let's move to BBRG and Specialties, where we had mixed performance in both PUs. In BBRG, we have some macro uncertainty that has continued to delay customer investment decisions impacting steel ropes demand. We have seen some delays in deepwater mooring projects impacting also synthetic ropes. Advanced Cords volumes were slightly lower as construction environment is subdued.
Our other cord applications are doing better and partly offsetting the sales value. In Specialties, Sustainable Construction had lower volumes in commoditized segments, but strong growth in high value-added applications, especially in North America. Mix has clearly improved there. That's something that we have been also actively working on. Other segments in Specialties, good to remember that we had high comparable sales in first quarter last year, especially in Hydrogen. As you remember, we did some right-sizing actions in Hydrogen business in Belgium last year. That is obviously then reflected as well on the sales. Now back to you, Yves, to summarize and come back to our outlook.
Yes, thanks, Seppo. As you can see, we continue the journey of making the company more resilient despite the market environment by work on portfolio, cost structure, and resilience. I want to highlight a couple of things specifically for 2026 that are coming our way. The first one is, of course, the Steel and Metals Action Plan that will come in place by the mid of this year. With the import duties for imported steel, and we have to see, as we said, how that develops and impacts the market. It should be favorably for the European steel industry production upstream and downstream. We source 90% of our wire rods locally, correct? From an cost impact, no impact.
Secondly, after also consultation and discussion with the European Union and European Commission, the SMAP or the Steel and Metals Action Plan is in the first phase focusing on the steel making industry and not on the downstream. There has been agreement to review the scope of that within six months so that the full value chain of the steel industry in Europe is protected. Second change for 2026 is CBAM, which came into place beginning of this year. There's a carbon border adjustment tax for imported products. That we are, for the products we import, translating to the customer, but also is protecting incentivizing the local production for our products here in Europe.
On the financial, I already mentioned, I don't want to repeat. If you look at the outlook for 2026, which is unchanged for the moment, we see no significant impact on the Middle East conflicts for us from a direct point of view. Indirect, we have to see how the inflation and the supply chain evolves the upcoming months and also how the conflict evolves. On the energy side, we have been proactive and also have some hedging on some of the energy cost increases. We see good growth in areas like Sustainable Construction. If you remember last year, 2025, probably 2024 was lower, let's say, tailwind we had in construction, but that has turned around, and we see stronger demand in the U.S. and also continued strong growth in markets like India and Middle East.
We of course, have to balance the competitiveness and uncertainty in more commoditized products like Rubber Reinforcement and some of the Steel Wire Solutions, but we have growth opportunities in the energy and utilities. Also in Energy Transition, last year we rightsized the growth platform, hydrogen. In 2026, we have a stable platform, good stable cost structure, and we also continue to win qualifications, certification with customers, which will increase gradually the volumes of that business upcoming months and years. Of course not with the growth areas above 10%, but some nice growth year-on-year. We expect a top line like for like, and also EBIT bottom line like for like to be the similar levels as 2025.
Let me close on a personal note, as this earnings call and today's general assembly meeting here at Zwevegem headquarters marks a transition for me as I conclude my mandate as CEO. It has been a privilege to lead Bekaert and to work alongside all our people and our customers around the world. I also want to express my thanks to the analysts for your constructive challenge and following of the business and also the investors who are putting their confidence in Bekaert and into the management. I wish my successor, Olivier, and the entire team every success as they take on the next step for the company. I'm confident they will continue to build on the strong foundation in place and deliver sustainable value for all our stakeholders. Thank you for your trust and your support.
We are open for questions.
Thank you. Ladies and gentlemen, the floor is open for your questions. If you wish to join the queue to ask a question at this time, please press star one on your telephone keypad. We do ask if listening on speakerphone today, that you please pick up your handset while asking your question to provide optimum sound quality. Once again, please press star one on your phone at this time to join the queue to ask a question. Please hold a moment while we poll for questions. Thank you. Our first question today is coming from Wim Hoste with KBC Securities. Your line is live.
Yes. Good morning. Let me maybe also start with a thank you from our side for the engaging interactions in the past couple of years. Let me wish you all the best in your future endeavors. On the questions Okay. Sorry. On the questions, first one is on Rubber Reinforcement. Can you maybe elaborate a little bit on the competitive situation, especially in China? I think your strategy in the past few years has been to go for an optimal capacity utilization. Is the rise of Zenith and the arrival of Zenith in the market changing anything to that strategy, or will it change anything to that strategy? If you can elaborate a little bit on that.
Then my second question would be on the whole inflationary discussion, raw materials, transportation costs, energy. Can you maybe elaborate a little bit on how much of a kind of percentage of cost increases you're seeing at the moment, and how swiftly can you pass these on? Have you already succeeded to pass on past inflation, or is that still an ongoing process? If you can offer a little bit more clarity on that would also be helpful. Those were my questions. Thank you.
Perfect. Thanks, Wim. Let me take first on the Rubber Reinforcement. From our perspective, no change on our strategy. We keep on loading the plants at RR, select RR in China, selecting the right customer profiles and mix in China. Our utilization rate is above 95% in China. Also taking of course, the opportunities in Europe and U.S. We've seen recently in the U.S. some opportunities for us to increase some of the volumes and the share there. It's an evolving competitive landscape. Concerning Zenith scaling up, of course, it's not up to us to make comments on our competitors, basically that of course, as mentioned in previous calls, the first impact is more local competition between local players.
We have to see over the long term how that plays out. For the moment, our strategy remains the same.
When it comes to your question on inflationary environment and effects, I think first of all, if you look at the key raw materials, especially wire rod, what we can see is that if you look at overall, I would say that prices are rather stable. In the U.S., we have seen a bit of reduction on the prices. In Europe, we have seen recently increase of steel and wire rod prices. I think it is an indirect effect of the SMAP Action Plan by the EU. We are working like always on the pass-through mechanism, which has been typically working well also with our customers. On energy, first of all, good to remember that energy is about 7% If you compare to sales.
That's equal that the share of the total. It's mainly electricity. Of course, volatility is having some concerns and has an effect on the overall cost. In the shorter term, we are pretty well hedged if you look at our hedging policy. That of course smoothens the effect. Going forward, depending on how the Middle East crisis develops and how the energy market is developing, that can of course become a bigger issue. Around the logistics, obviously increase in logistics cost, especially Middle East and around Middle East shipments. Some effect on the availability of ships and containers. There also we have been able to manage quite well on pushing through the increased costs to our customers. I would say that overall the pass-through mechanism continues to work well.
Obviously, as there has been quite significant increases also because of tariffs and other things in the past year or so, it's of course increased. What we see is an increase in pushback from customers. Our sales teams has been very strongly on this and keeping an eye on the ball, so to speak. I think we continue the strong push and work on that side.
I think we have to see how this whole inflation will impact the demand.
Yeah
...in the industry. That's, let's say an uncertainty moving forward. That's for all industries, correct?
Right.
Not only for ours.
Right.
Okay. Very clear. Thank you, and all the best again.
Thank you. Our next question is coming from Frank Claassen with Degroof Petercam. Your line is live.
Yes. Good morning, gentlemen. I have two questions. First of all, on your guidance, on the flat revenues, what can you say about seasonality? What do you expect H1 versus H2? Will it be, as usual, a stronger H1 and H2 weaker, or is there anything to say about seasonality? Then, more general question on competition, the Asian competition. You talk about supply chain issues maybe coming up, cost inflation. Do you already see that, let's say, in the Latin Americas, the U.S. Americas of this world, there's less competition from Asia because of these issues, or do you still expect to see this? What can you say on that? Thank you.
Frank, I take your second question and then Seppo can comment on the financials by half or the business by half. I would say if your question is specifically about the impact of the Middle East conflict on some of these global competitive threats, perhaps a little bit of mixed bag. For example, what we see in Middle East is that where Chinese competition has been also pretty severe. For example, there we see a little bit relief from that competitive pressure, and again, a little bit more local for local dynamics. The impact on the U.S., I think we don't see specifically on certain trade flows changes, so perhaps a little bit too early to see.
I would say in summary, except one left area, no impact for the moment or no change.
When it comes to seasonality, your question first half versus second half. Like you said, normally, that's also expectation that typically first half is stronger than second. As with the second half, we have the holiday season, Christmas, et cetera. What you could say that the wild card obviously is currently what happens in the Middle East crisis or Ukrainian war. Those can of course change a lot, as you can imagine, with the macro environment when it comes to demand development. Leaving that aside, I mean, no reason to sort of expect anything else with the seasonality than normal.
Okay. That's clear. Of course, also from my side, thank you for the past few years and good luck in your future endeavors. Thank you.
Thank you, Frank.
Thank you. Our next question is coming from Martijn Den Drijver with ABN AMRO. Your line is live.
Thank you, operator, and good morning, gentlemen. Yves, it's been a tough few years market-wise, but again, all the best with your future endeavors. Let me start off with that. Question-wise, I have three, and I'll take them one by one. I just want to come back to that RR volume plus in North America, because if I look at production volumes in the U.S., they were down mid to high single digits, passenger cars and light commercial vehicles. You just mentioned that the competition from Asia in the U.S. was stable. What drove the volume plus then? Because I assumed it was market share gains because the trade tariffs were hampering your Asian competitors. That's question one.
Martijn, you know that first of all, on top of mind, I don't have the exact ratio, but if you look at tire cord production locally versus import, you know that for the U.S. market, most of them are import. We are one of the few local players. What we've seen recently is for our business that we produce locally, but also on what we import is also some gain of market share at customers specifically. I think you don't have to link it back to the overall tire demand, but more about how we've been able to develop some of the relationship with some local producers there and get some share from competition.
Again, it's the local part is minority versus what we import, yeah, at tire cord.
Just to follow up on this one, do you think this is sustainable in the coming quarters?
I think yes, in the sense of, because these customers evolution mix is not something that changes quarter by quarter in a business like RR.
That's great. That's understood. Thank you. On, on Asia, I was wondering, you mentioned something which I would call pre-buying, that customers were anticipating some supply chain issues. Is there some way you could help us understand what roughly the effect was in Q1 of that pre-buying in Asia? Was that material? Was it? Any color would be helpful.
No, it's not really material. Some increases, but not substantial.
Okay. On, you briefly mentioned CBAM and your discussions with the EU. What are your thoughts now currently on the effect of local, read European wire rod prices once implemented?
Yeah. First of all, I think, in the current geopolitical situation, I think industrial companies like us are welcoming the trade barrier certainly, for a period in time because we know that trade barriers are not a solution long term for competitiveness, but for the whole industry, upstream, downstream to get organized energy costs in under control in Europe and becoming more competitive. From that perspective, of course, welcoming for Europe, the imported duties. They will be applicable from mid of the year.
Basically, and I imagine in the last call, I hope that the steel wire rod prices are not increasing in Europe because the objective is that, the upstream, our suppliers would be able to produce more from the downstream business and become so more competitive. A little bit to be watched, and we are may coming closer to July to see what the prices are doing. We see slight increases, correct? That is certainly the opportunistic approach with import duties coming to increase margin and price in Europe. Of course, the steel makers need to be very careful because if they do much and the downstream products are not protected, they will not have a sustainable increase volume and profitability. I think that's a little bit the trade-off and the dynamic that we need to watch the upcoming months until the downstream products are also fully.
Okay. Moving on to SWS, can you help us understand the effect that you mentioned of these power transmission project delays in Europe and the effect on volume? Because you've done well in the U.S., are you now guiding for a more stable volume development in Q2 given these project delays, or how should we view that element?
You know, first of all, it's project business. That's always a challenge in the project business that when it comes to project delays, whether it means the tenders are delayed or the existing projects are delayed, obviously, they are not disappearing.
Yeah
a delay in the in the volume rather than lost business as such. The key thing here is like also referred to in my comments that, of course, geopolitics has an effect as well there on the business activity and investments going forward, and that might then be driving the volume development as well.
All right. I'll squeeze in one final one. You mentioned several times that there are initiatives to mitigate inflation and supply chain challenges. Can you give us a few examples of what you do, what you're planning to do, or what you're currently doing already to mitigate those effects? That would be my final question.
Yeah. Well, obviously, like always, we continue to work on overhead SG&A reductions like we have been doing earlier successfully. That work continues. We are working on the footprint consolidation as well as cash conversion costs. For instance, couple of simple relevant examples, for instance, on the procurement side, we continue to work our sourcing strategy when it comes to wire rod, simplifying the SKUs structure, combining, consolidating the volumes to more to fewer number of SKUs, meaning that we are more volume player in those.
We can then shift easier volumes from one supplier to another or one region to another, and that may also mitigate the effect of CBAM or SMAP, as well as increasing our access when it comes to tendering of our volumes. Then also I think the passthrough mechanism, that's important part. I mean, our sales teams are actively working on passing through the increased costs also to our customers. They're very active.
Understood. Many thanks. Those were my questions.
Thank you. Our next question is coming from Alexander Craeymeersch with Kepler Cheuvreux. Your line is live.
Good morning, also from our side. Thank you, Yves, for the interactions and the color that you have provided on Bekaert. I have three questions. The first question would be on Rubber Reinforcement. I think the mix has been a bit lower. I think you also mentioned that there's more volumes in China. I remember in the past that the Right, China production has been a bit more margin dilutive, I'm wondering how we should see the margins for the remainder of the years if volumes remain like this for the rest of the year. The second question would be on BBRG. You mentioned weakened steel rope demand due to delays in projects.
Are we now in the outlook foreseeing a pickup in the remainder of the year? Also if volumes would remain where they are at the moment for BBRG, what would the effect be on the EBIT margin? Because I remember OpEx is rather stable in this segment, so it is not giving much room for adjustments, if I remember correctly. The third question would be on the outlook. The flat sales, flat margins. Is that base made with the basis that we see an improvement versus Q1 or that we see the same as Q1? Thank you.
Let me start with the first one on RR.
Yeah.
Seppo, you can take BBRG and on the outlook. On RR, the strong business in China is of course linked to the whole, let's say shifting of the automotive industry. Is it car making? Is it truck making? Is it the tire industry, correct, which is increasing the global impact out of China? That means there is a strong pull and strong opportunity in that market. We've been always very selective. You know, in the past we've been also reducing our capacity in China while optimizing an existing plant. We have four plants running at full throttle.
It's true that the competition in RR has been severe, but it's continued to be severe. We're also working on our cost side, correct, to protect margin in a business or in a market where there is more price pressure than you have typically in Europe or in the U.S. It's a combination of good filling of the plan, but also we continue to be disruptive in the way we lead our production plans and drive cost efficiency. That the journey we are on. Yeah.
Coming to your question on SWS and rope business. I think in SWS what we are continuing to work in is the mix, both geographical and product mix, and that's of course the key going forward. It's not only volume always, as you can imagine. On the ropes business, it's good to remember that there are number of tenders are still in the pipeline and think about the future outlook and where do we then end up with the full year depends very much also on our success on the tenders going forward. That's I think one of the key drivers there. When it comes to outlook, as you saw that Q1 is in line with the last year like for like, as we are guiding.
Other than that, of course, I mean, we expect normal seasonality, like I commented earlier. No change in that expectation. Think about the outlook. As you saw, we flagged and highlighted certain risks around the geopolitics, indirect effects of the war in Ukraine and energy market turbulence, et cetera, which I think it's something we all are facing, the macroeconomy. That will of course drive the way forward. So far, like we said, we have been mitigating well and direct effects have been very limited, and we have been able to manage the indirect. Of course, if the situation continues, we are not immune, and that is of course the risk side of it. So far so good.
Okay. In conclusion, I mean, the margins in Q1 have been, we cannot say much about the absolute and the relative margins, but the margins have been somewhat stable versus the prior year.
Yeah. Like I said, so far so good.
Okay. That's Thank you.
Thank you. Once again, ladies and gentlemen, if you have any final questions or comments, please indicate so now by pressing star one on your telephone keypad. Okay. As we have no further questions on the lines at this time, I would like to turn the call back over to management for any closing remarks.
Good. All right. Thanks for taking the time for the trading update. Some more to come the upcoming months. Again, thanks for the good collaboration, constructive discussions we had from the analysts and investors. Really enjoyed it. Looking forward to meet you somewhere else. Thank you.
Thank you.
Thank you. This does conclude today's conference call. You may disconnect your lines at this time. Have a wonderful day, and we thank you for your participation.