Koninklijke Ten Cate NV

amsterdam : KTC


March 01, 2013 02:10 ET

Koninklijke Ten Cate NV : Decrease in TenCate profit due mainly to contraction of US defence market

ALMELO, THE NETHERLANDS--(Marketwire - Mar 1, 2013) -


Highlights of 2012

· Decrease in revenues of 8% to EUR1,049 million (autonomous - 15%).

· Normalized EBITA: EUR60 million; EUR8 million non-recurring expenses, mainly in the 4th quarter.

· EBITA: EUR52.0 million (autonomous -53%).

· Net profit EUR22.3 million (autonomous -63%); normalized net profit EUR27.6 million.

· Number of FTEs reduced by 350 since May 2012.

· Free cash flow rises from -EUR9 million to +EUR68 million.

· Interest-bearing debt decreased by approximately EUR60 million to EUR230 million.

· Debt ratio 2.55 (2011: 2.12).

· Advanced Textiles & Composites sector: substantial decrease in revenues and result due mainly to contraction of the US defence market.

· Geosynthetics & Grass sector: EBITA rose by EUR5 million (+20%) with revenues remaining virtually unchanged.

· Dividend proposal: EUR0.50 per share (pay-out 58%), in cash or as a stock dividend at shareholder's discretion (2011: EUR0.95 per share, stock dividend option).

Key figures for 2012
+------------------------------------+---------+---------+
| Key figures for 2012 x EUR1 million|    2012 |    2011 |
+------------------------------------+---------+---------+
| Net revenues                       | 1,049.0 | 1,138.8 |
+------------------------------------+---------+---------+
| Normalized EBITA                   |    60.0 |   102.5 |
+------------------------------------+---------+---------+
| EBITA                              |    52.0 |   102.5 |
+------------------------------------+---------+---------+
| EBITA margin                       |    5.0% |    9.0% |
+------------------------------------+---------+---------+
| Net profit                         |    22.3 |    58.7 |
+------------------------------------+---------+---------+
| Data per share (EUR)               |         |         |
+------------------------------------+---------+---------+
| Net profit                         |    0.86 |    2.31 |
+------------------------------------+---------+---------+
| Dividend                           |    0.50 |    0.95 |
+------------------------------------+---------+---------+
| Other information                  |         |         |
+------------------------------------+---------+---------+
| Free cash flow                     |    68.4 |    -8.5 |
+------------------------------------+---------+---------+
| Interest bearing debt              |   229.9 |   288.7 |
+------------------------------------+---------+---------+
| Debt ratio                         |    2.55 |    2.12 |
+------------------------------------+---------+---------+

Loek de Vries, President and CEO: 'The unexpectedly sharp decrease in sales in the US defence market resulted in a significant reduction in the sales of TenCate Defender™ M and the armour portfolio. TenCate has continually based its outlook on forecasts from the US defence authorities, who displayed increasing reticence, partly in view of the US presidential elections and the threat of the fiscal cliff. This had a major impact on the performance of the group as a whole. The US defence market represents a large proportion of total revenues.

Good progress was recorded in the other key markets where TenCate, on the basis of its buy & build strategy, seeks to promote itself, such as the markets for industrial safety fabrics and composite materials, as well as emerging markets. This occurred both through autonomous growth and by means of acquisitions, including Amber Composites, which was completed at the beginning of 2013.

The autonomous decrease in revenues of on balance approximately EUR168 million was such that, despite the implementation of cost reductions, a substantial decrease in profit resulted.

Since May 2012 the workforce has been reduced by approximately 350 FTEs. This resulted in a reduction in labour costs of approximately EUR7 million in the second half of the year.

As the result of increased market dynamics, the policy was further refined and in the fourth quarter non-recurring provisions were made for an amount of on balance EUR8 million.

Leading market positions were retained. TenCate has trendsetting products. Safety and protection continue to be the focus of attention worldwide, and consequently confidence is maintained in the future recovery of revenues and profitability.'

Annual figures for 2012

The revenues for 2012 amounted to EUR1,049 million (2011: EUR1,139 million). In autonomous terms revenues decreased by 15% (currency effect +5%; effect of acquisitions / divestments +2%). The operating result before the amortization of intangible assets (EBITA) decreased in 2012 by 49% to EUR52 million (autonomous -53%; currency effect +3%; acquisitions / divestments +1%). This includes an amount of approximately EUR8.0 million in non-recurring expenses. The normalized EBITA for 2012 amounted to EUR60.0 million. The net profit for 2012 decreased by 62% to EUR22.3 million (2011: EUR58.7 million). Net earnings per share amounted to EUR0.86 (2011: EUR2.31).

Advanced Textiles & Composites Sector

The revenues of the Advanced Textiles & Composites sector decreased by EUR78 million to EUR461 million (autonomous -21%). Due in part to the loss of high-grade US defence revenues amounting to approximately US $130 million, the operating result (EBITA) of this sector decreased to EUR23.5 million (2011: EUR70.3 million). The autonomous decrease amounted to 70%.

The demand in Europe for safety fabrics for industrial end-users was in line with the decreased level of activity in the industry. In the police and fire fighting market, which is a relatively new market for TenCate Protective Fabrics EMEA, important reference projects were secured. The US fire fighting market was cautious.

As a result of the postponements and delays of projects for vehicle armouring, sales in the market decreased during 2012 principally in the US. In Europe activities relating to armour for aerospace applications developed favourably, which had a positive effect on the overall performance of the European armour division.

Space / aerospace activities showed a positive picture. In Europe, however, a temporary delay occurred in deliveries to the Airbus A350 programme. In the course of 2012 the first steps were taken to develop the Chinese aerospace market. The first successful contacts were made for participation in future aerospace projects.

A start was made on expanding activities relating to composite materials for industrial applications. The acquisition of PMC Baycomp strengthened the position of TenCate Advanced Composites in the market for industrial composites.

Geosynthetics & Grass Sector

Revenues in the Geosynthetics & Grass sector remained, at EUR519 million, at a similar level to that of 2011 (autonomous -8%). The operating result of the Geosynthetics & Grass sector rose by in excess of EUR5 million to EUR31.5 million (autonomous +10%).

In the second half of the year there was a weakening of demand at TenCate Geosynthetics, In the US revenues decreased by 16% on an autonomous basis in 2012. In Asia slight autonomous growth was achieved. Despite this unfavourable market trend, the results within the Geosynthetics group continued to stand out positively, thanks to good monitoring of costs and margins. The cost measures taken within the Grass group also made a positive contribution to the trend in results.

The southern European synthetic turf market was under pressure from reduced government expenditure. Growth in revenues was achieved in the market activities allied to TenCate for synthetic turf sports systems. Woven synthetic turf systems were well received by the market. This technology offers considerable advantages in both quality and playing characteristics and has a positive effect on the service life of sports pitches.

TenCate Grass, through GreenFields, will also enter the market for hybrid systems (natural grass / synthetic turf) under the brand name Xtragrass. A number of reference pitches have already been installed.

Other activities

At the Other activities (TenCate Enbi, Xennia Technology and Holding & Services) revenues decreased by 6% to EUR69.7 million. EBITA amounted to -EUR3.0 million.

TenCate Enbi displayed a stable trend in revenues. In Europe, and in Asia in particular, growth was achieved. The volume of sales for leading Asian OEMs developed favourably.

At Xennia Technology Ltd (79%) a strategic reorientation took place, as a result of a disappointing performance. Furthermore, the level of costs was reduced.

Explanation of normalized result

The balance of non-recurring costs and income amounted to -EUR8.0 million. This amount related to the intention to discontinue production in Thailand (- EUR3.0 million), a downward revaluation within the TenCate Defender™ M inventory (- EUR3.0 million), as well as adjustments at Xennia Technology (-EUR2.7 million). In addition, reorganization provisions were made, amounting to a total of EUR2.6 million. The adjustment to the pension regulations had a non-recurring positive effect of EUR3.3 million. On the basis of this the normalized EBITA for 2012 amounted to EUR60 million.

General performance in the second half of 2012

+-------------------------------------------+-------+-------+------+------+
|2nd half of 2012 x EUR1 million            |H2 2012|H2 2011|2012  |2011  |
+-------------------------------------------+-------+-------+------+------+
|Net revenues                               |509.4  |546.4  |1049.0|1138.8|
+-------------------------------------------+-------+-------+------+------+
|Normalized EBITA                           |       |       |60.0  |102.5 |
+-------------------------------------------+-------+-------+------+------+
|EBITA                                      |19.7   |46.4   |52.0  |102.5 |
+-------------------------------------------+-------+-------+------+------+
|EBITA margin                               |3.9%   |8.5%   |5.0%  |9.0%  |
+-------------------------------------------+-------+-------+------+------+
|Net revenues Advanced Textiles & Composites|219.7  |248.9  |460.6 |538.4 |
+-------------------------------------------+-------+-------+------+------+
|Net revenues Geosynthetics & Grass         |257.0  |258.3  |518.7 |525.9 |
+-------------------------------------------+-------+-------+------+------+
|EBITA Advanced Textiles & Composites       |4.5    |29.1   |23.5  |70.3  |
+-------------------------------------------+-------+-------+------+------+
|EBITA Geosyntheics & Grass                 |15.7   |12.4   |31.5  |26.3  |
+-------------------------------------------+-------+-------+------+------+

The revenues for the second half of 2012 amounted to EUR509.4 million (- 7%). The autonomous change in revenues in the second half of the year amounted to - 13%. The currency effect was +5%.

The Advanced Textiles & Composites sector and the Geosynthetics & Grass sector recorded an autonomous change in revenues of -19% and -6% respectively in the second half of the year.

The operating result before the amortization of intangible assets (EBITA) decreased by EUR26.7 million compared with the second half of 2011. The non-recurring items reported earlier should be taken into consideration here. The autonomous decrease amounted to -60%; the currency effect was +2%. The EBITA margin in the second half of 2012 amounted to 3.9%.

The Advanced Textiles & Composites sector and the Geosynthetics & Grass sector recorded an autonomous change in EBITA of -87% and +21% respectively in the second half of 2012.

Net profit for the second half of 2012 amounted to EUR7.6 million (2011: EUR25.6 million).

Other financial information

Total investments amounted to EUR16.6 million (2011: EUR25.7 million). The major investment (EUR4 million) related to the development of the TenCate ABDS™ active blast countermeasure system (protection against roadside bombs). Of the total investments, more than half related to innovations.

The net interest-bearing debt amounted to EUR230 million at the end of 2012 (2011: EUR289 million). The autonomous decrease in the debt position amounted to EUR58 million. A large portion of this was the result of a decline in working capital. The debt ratio at the end of 2012 (debt / EBITDA ratio) improved from 2.74 (at the end of June) to 2.55 (2011: 2.12).

The tax rate rose to 34% (2011: 24%). This increase compared with 2011 is mainly the result of the increase in losses in countries where no full deferred tax asset is recognized. The normalized tax rate amounted to 28%.

Since May 2012 the workforce has decreased by approximately 350 FTEs. The greatest changes occurred at the Grass group, the Geosynthetics group and the Advanced Armour group.

Dividend proposal

It is proposed to set the dividend for 2012 at EUR0.50 per EUR2.50 par value share (pay-out 58%). This means a deviation from the usual pay-out percentage of 40%, in accordance with the communicated dividend policy. Underpinning this dividend proposal are the expectations of the company's continued growth in the longer term and confidence, which is based on the leading market positions that TenCate occupies. The dividend will be payable at shareholders' discretion either in cash or in shares charged to the share premium reserve.

Outlook

There is uncertainty about the further effects of the governmental budgetary measures that will be taken in the United States of America. The outcome of this process will also be of significance for the trend in revenues of TenCate. In the short term European governments too are expected to remain cautious in the expenditure of public funds. The market themes on which TenCate focuses and which are primarily related to people's safety, the protection of their living environment and the theme of sustainability, however, continue to be very topical. This opens up opportunities for TenCate.

In 2013 the marketing of safety fabrics in Asia will be restructured. TenCate will thereby strongly position its successful TenCate Tecasafe™ Plus portfolio and other products for the industrial market, in order to boost sales in Asia. As a result of this, the Thai joint venture will be closed down.

In mid-2012 a refining of the strategy was announced. TenCate intensified its focus on the development of industrial markets, such as protective clothing for industrial use, the automotive sector (weight reduction) and further geographic spread (BRIC countries). TenCate aims to secure partnerships with third parties in order to achieve accelerated growth here. During 2012 the first results of this became visible (3M, BASF, qualifications for the automotive industry). This policy will be continued in 2013.

Above-average growth is expected for key growth products, such as TenCate Cetex® (aerospace composites), TenCate Tecasafe™ Plus and TenCate Geotube® (geocontainers for water management systems). The international growth in sales of TenCate Defender™ M will to an increasing extent offset a possible further decline in US sales. A decrease in sales such as manifested itself in this area in 2012 is not expected to occur in 2013.

Royal Ten Cate Almelo, the Netherlands, Friday 1 March 2013

Note to editors

On Friday 1 March 2013 a conference call in English with regard to the 2012 full-year figures will be held at 08.30 CET. Please call +31 (0)10-3010805 and then key in the participant code 2016#.

For the media, the Dutch language press conference by the Executive Board of TenCate relating to the 2012 full-year figures will be held at 10.30 CET in the Hilton Hotel Amsterdam. This invitation to the media was sent out earlier. The press conference can also be followed on the webcast on www.tencate.com.

Royal Ten Cate nv (TenCate) is a multinational company that combines textile technology with chemical processes and material technology in the development and production of functional materials with distinctive characteristics. TenCate products are sold throughout the world. Systems and materials from TenCate come under four areas of application: safety and protection; space and aerospace; infrastructure and the environment; sport and recreation. TenCate occupies leading positions in protective fabrics, composites for space and aerospace, antiballistics, geosynthetics and synthetic turf. TenCate is listed on NYSE Euronext (AMX).

Key figures: http://hugin.info/130798/R/1682270/550241.pdf

Press release as PDF: http://hugin.info/130798/R/1682270/550240.pdf

This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that:

(i) the releases contained herein are protected by copyright and other applicable laws; and

(ii) they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: Koninklijke Ten Cate NV via Thomson Reuters ONE

[HUG#1682270]

Contact Information

  • For further information:
    F.R. Spaan
    Group Director, business development & investor relations
    Telephone : + 31 546 544 977
    Mobile : + 31 612 96 17 24
    E-mail : Email Contact
    Internet : www.tencate.com