Koninklijke Ten Cate NV
amsterdam : KTC

February 29, 2012 02:15 ET

Koninklijke Ten Cate NV : TenCate continues upward trend with profit increase of 28%

ALMELO, THE NETHERLANDS--(Marketwire - Feb 29, 2012) -

Highlights of 2011

* Growth in sales of 16% to EUR 1,139 million (+12% organic)

* Operating result (EBITA) up 21% to EUR 102.5 million (+27% organic)

* EBITA margin in 2011: 9.0% (2010: 8.6%)

* Net profit up 28% to EUR 58.7 million

* Advanced Textiles & Composites: strong growth in sales and substantial increase in operating result

* Geosynthetics & Grass: growth in sales and non-recurring decline in operating result

* Dividend proposal: EUR 0.95 per share (+27%), in cash or as a stock dividend at shareholder's discretion (2010: EUR 0.75 per share, stock dividend option)

Loek de Vries, president and CEO: 'In 2011 TenCate continued the upward trend that started in 2010, as a result of which sales and profit once again rose sharply to record levels. Sales and net profit amounted to EUR 1,139 million (+16%) and EUR 59 million (+28%) respectively.

The Advanced Textiles & Composites sector recorded a very strong performance, in part as a result of the excellent positioning of the protective fabrics portfolio (including TenCate Defender™ M and TenCate Tecasafe® Plus) and through growth mainly in the sales of aerospace composites. This growth in sales was accompanied by a rise in the EBITA margin of this sector to 13%.

The Geosynthetics & Grass sector saw a rise in sales of 12%, although the development in results was disappointing. TenCate Geosynthetics put in an excellent performance worldwide with innovative products and large-scale TenCate Geotube® projects. The results of the Grass group came under pressure, in part as a result of the ending of an important supply contract. Because of economic conditions TenCate will refine its strategy in respect of synthetic turf activities. This will be implemented at an accelerated pace to achieve further cost reductions and to serve the market more effectively.

Most core activities enjoyed a successful year, in which the global growth of "performance materials" was clearly manifested. This has created positive expectations for the future. These expectations are in part based on the leading market themes of safety and protection as well as infrastructure and the environment. These themes will ensure growth in the longer term. Developments that will accelerate growth for the next few years relate to the TenCate ABDS™ active blast countermeasure system (vehicle armour), automotive composites, 3D weaving technology (synthetic turf) and inkjet technology (protective fabrics). This will enable the cornerstones of product differentiation and technological innovation from the business model operated by TenCate (value chain management model) to be further developed'.

2011 Full-year figures

Sales for 2011 amounted to EUR 1,139 million (2010: EUR 985 million). In organic terms sales increased by 12% (currency effect -3%; effect of acquisitions / divestments +7%).

Organic growth occurred principally at the Advanced Textiles & Composites sector. The TenCate Protective Fabrics market group recorded an excellent performance. The Space & Aerospace Composites and Advanced Armour market groups also developed strongly. The consequent increase in the results is in part attributable to a substantially higher result at the composites production facility in the Netherlands. This development is principally due to the increased production of new Airbus aircraft (A380 / A350 XWB).

The Geosynthetics & Grass sector showed a mixed picture. TenCate Geosynthetics developed favourably, but the sales of the Grass group came under pressure.

EBITA rose in 2011 by 21% to EUR 102.5 million (organic +27%; currency effect -6%).

The good performance within the Advanced Textiles & Composites sector resulted in substantial growth in EBITA. As a result of the trend in sales within the Grass group, there was pressure of a passing nature on the operating result of the Geosynthetics & Grass sector.

The net profit for 2011 rose by 28% to EUR 58.7 million (2010: EUR 46.0 million). Net earnings per share amounted to EUR 2.31 (2010: EUR 1.84).

General performance in the second half of 2011

| (x EUR mln)  | H2 2011   H2 2010 | 2011        2010 |
|              |                   |                  |
|              |                   |                  |
| Net sales    | 546.4     529.9   | 1,138.8   984.5  |
|              |                   |                  |
| EBITA        | 46.4      46.8    | 102.5      85.0  |
|              |                   |                  |
| EBITA margin | 8.5%      8.8%    | 9.0%      8.6%   |

Sales for the second half of 2011 amounted to EUR 546 million (+3%). The organic change in revenue in the second half of the year amounted to -2%. The currency effect was -2%.

The Advanced Textiles & Composites sector and the Geosynthetics & Grass sector recorded an organic change in revenue of -5% and -1% respectively in the second half of the year.

In order to judge the TenCate results in the second half of the year, it is important to consider the breakdown of sales of TenCate Defender™ M. As a result of catch-up demand, sales of TenCate Defender™ M were at a high level, in particular in the fourth quarter of 2010 and the first half of 2011. In the fourth quarter of 2011 US troops withdrew from Iraq (at an accelerated rate). In the last quarter sales to the US Army were clearly below the level of the fourth quarter of 2010.

There was a strong trend in sales in armour composites resulting from the delivery of various project-related orders, particularly in Europe.

TenCate Geosynthetics continued its good performance in the second half of the year. In the second half of the year market demand for synthetic turf unexpectedly declined, and consequently the Grass group was unable to continue the improvement in the result that had started in 2010. There was also increasing price pressure in end markets.

The operating result before the amortization of intangible assets (EBITA) remained virtually unchanged at EUR 46.4 million in the second half of the year. The organic decline amounted to -2%. The currency effect was -2%. The EBITA margin in the second half of 2011 amounted to 8.5%.

The Advanced Textiles & Composites sector and the Geosynthetics & Grass sector recorded an organic change in EBITA of +2% and 0% respectively in the second half of 2011.

Net profit for the second half of 2011 amounted to EUR 25.6 million (2010: EUR 26.4 million).

Other financial information

In 2011 also investment policy remained cautious. The total of investments in fixed assets amounted to EUR 25.7 million (2010: EUR 21.3 million), EUR 4.4 million of which were intangible, principally through activated development costs.

The net interest-bearing debt amounted to EUR 288.7 million at the end of 2011 (2010: EUR 240.7 million). In addition to acquisition effects, a major reason for the rise related to the increase in working capital. This was mainly due to further growth in sales at the Advanced Textiles & Composites sector.

The debt ratio at the end of 2011 (debt / EBITDA ratio) remained virtually unchanged at 2.12 (2010: 2.09). The net financing expenses rose by EUR 1.3 million to EUR 11.3 million, principally as result of an average higher debt as well as through higher interest on loans.

Dividend proposal

The dividend policy is based on a pay-out ratio of approximately 40% of net profit. It is proposed to set the dividend for 2011 at EUR 0.95 per EUR 2.50 par value share, payable at shareholder's discretion either in cash or in shares charged to the share premium reserve.

Current performance and outlook for 2012

TenCate operates predominantly in growth markets. Although the tight budgetary conditions experienced by governments will persist in 2012, the positive market trends for TenCate are expected to remain intact and to continue.

There was a very strong first half in 2011. The reason for this was to be found principally in the catch-up demand by the US Army for TenCate Defender™ M products. The sales of TenCate Defender™ M will end up at a lower level in 2012 as a result of the gradual withdrawal of US troops from Afghanistan. It is expected that compensation will be found in new projects within the US Army and that there will be sustained growth in sales in markets outside the US. During 2011 a large number of new wear trials were started by armies outside the US. The positive developments in complementary markets (security services, industry) of both TenCate Defender™ M and TenCate Tecasafe™ Plus will also contribute to further growth.

The growth in sales of composite materials for the aircraft industry and aerospace may well continue. This market is mainly based on long-term contracts.

The geosynthetics activities are also expected to record continuing growth, with further development of the market in emerging countries (BRIC countries) being pursued. The Grass group will take further organizational measures to achieve an improvement in its results in the short term.

The greater commercial focus at Xennia Technology should result in an improvement in the results.

No significant contribution is as yet expected from the TenCate ABDS™ active blast countermeasure system for the current financial year. The application of such a system in vehicle programmes requires a certain period of technical and logistical preparation. In the defence market there is great interest in this system.

As a result of the more even breakdown of sales of TenCate Defender™ M products, 2012 is expected to present a different picture from 2011. The performance in the first half of 2012 will therefore not be comparable with that seen in 2011.

Partly in view of a number of long-term contracts and larger projects that have already started or are in its portfolio, TenCate expects to record a result for 2012 as a whole that at least matches the level of 2011, barring unforeseen circumstances.

Performance by sector

Advanced Textiles & Composites Sector

|  (x EUR mln) | H2 2011   H2 2010 | 2011      2010 |
|              |                   |                |
|              |                   |                |
| Net sales    | 248.9     255.4   | 538.4   448.4  |
|              |                   |                |
| EBITA        | 29.1      27.7    | 70.3     43.8  |
|              |                   |                |
| EBITA margin | 11.7%     10.8%   | 13.1%   9.8%   |

Sales for 2011 rose in organic terms by 21% to EUR 538.4 million (currency effect -4%; effect of acquisitions / divestments +3%). EBITA rose in organic terms in 2011 by 65% (currency effect -7%; effect of acquisitions / divestments +3%). In 2011 there were record sales of TenCate Defender™ M products. Sales in the industrial markets for safety fabrics also increased sharply, both in the US and in Europe. This trend also resulted in a considerable improvement in the result at the Dutch production facility. In Asia there is also great interest in TenCate safety fabrics, such as TenCate Tecasafe™ Plus.

The market for space and aerospace composites developed favourably. The sales of TenCate Cetex®, the thermoplastic composite material that is used in the new generation of aircraft from Airbus, Boeing and others, developed strongly. A number of new opportunities also presented themselves in complementary markets, such as the automotive market.

There was a slight growth in sales in the field of armour materials. In the fourth quarter a number of projects were completed. There is increasing strategic focus on armour systems for vehicles. In the second half of the year the plant in France for aerospace armour systems became operational and the first deliveries took place as part of the Eurocopter programme.

At the end of 2011 the shares of ABDS ApS were acquired. As a result the international contacts of TenCate in the market for vehicle armour can be used to maximum effect to launch the TenCate ABDS™ active blast countermeasure system. The acquisition was completed and the required government approvals obtained in early 2012.

Geosynthetics & Grass Sector

| (x EUR mln)  | H2 2011   H2 2010 |   2011    2010  |
|              |                   |                 |
|              |                   |                 |
| Net sales    | 258.3     242.6   | 525.9     469.3 |
|              |                   |                 |
| EBITA        | 12.4      12.6    | 26.3     31.4   |
|              |                   |                 |
| EBITA margin | 4.8%      5.2%    | 5.0%     6.7%   |

Sales in 2011 rose in organic terms by 2% to EUR 525.9 million (currency effect -3%; effect of acquisitions / divestments +13%). On the one hand, sales rose at the TenCate Geosynthetics market group worldwide (+16% organic), on the other hand, there was a decline in the sales of synthetic turf yarns (-16% organic).

The EBITA for 2011 declined on an organic basis by 7% to EUR 26.3 million. The currency effect and the effect of acquisitions / divestments amounted to -7% and -2% respectively.

TenCate Geosynthetics put in a strong performance. Throughout the world TenCate is more and more often involved in larger infrastructure and environmental projects. A new development that is enjoying great interest is the detection of subsidence and underground leaks, to which TenCate, with TenCate GeoDetect®, is responding. In such system solutions TenCate works closely with environmental consultancy firms, construction companies and dredging companies.

TenCate Grass has not been able to fully compensate for the initial loss of volume resulting from the ending of the relationship with a major customer in 2011. In the synthetic turf market both the number of installations and the price of sports pitches also came under pressure in the course of 2011.

A number of new high quality US and European market players affiliated themselves with TenCate during the year, which constitutes a further strengthening of the downstream activities. The formation of a geographically strongly represented downstream activity is expected to be completed in the course of 2012.

Technologies Sector / Technical Components Sector / Holding & Services

|(x EUR mln)| H2 2011   H2 2010 |  2011   2010 |
|           |                   |              |
|           |                   |              |
| Net sales | 39.2      31.9    | 74.5    66.8 |
|           |                   |              |
| EBITA     | 4.9       6.5     | 5.9     9.8  |

Revenues came mainly from TenCate Enbi and Xennia Technology. TenCate Enbi showed a slight decline in sales, in particular as a result of the lower volume of sales of one of its larger customers. The facility in China (Zhuhai) is obtaining a growing number of qualifications for components for Asian producers of printers and copiers. As a result of the earthquake in Japan, which forced Japanese producers to transfer their production elsewhere, TenCate Enbi in Zhuhai also received orders from new Japanese producers.

The British company Xennia Technology Ltd (79%) is specialized in the development of industrial production processes based on inkjet technology. Xennia combines technology (hardware solutions) with operating systems (software) and self-developed ink formulae to create industrial production systems.

Progress was made in developing the ceramics market in 2011. This market generated a significant share of the revenues in 2011. The largest sales area is China, which uses the technology for the printing of ceramic tiles for interior use. The ceramics industry applies the inkjet technology so as to achieve not only product improvements but also substantial cost savings by digitalizing the process. TenCate sees new opportunities in this technology for digitalizing coating processes. In 2012 the production of protective fabrics in the Netherlands using this technology will start up.

The decline in EBITA was due to a slight decrease in the result at both TenCate Enbi and Xennia Technology and by a lower EBITA at holding level as a result of non-recurring benefits in the fourth quarter of 2010.

Although there was considerable growth in sales at Xennia Technology, the results still lagged behind, partly due to relatively high development and patent costs.

Royal Ten Cate

Almelo, Wednesday 29 February 2012

The press conference relating to the 2011 full-year figures will be held on Wednesday, 29 February 2012 between 10.30 and 11.30 am in the Hilton Hotel, Apollolaan 138, Amsterdam. Please register for the Dutch audio webcast at www.tencate.com.

Royal Ten Cate (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).

Press release as PDF: http://hugin.info/130798/R/1589746/499308.pdf

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Source: Koninklijke Ten Cate NV via Thomson Reuters ONE


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