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Value-driven growth

In implementing this strategy, Bekaert is making a clear statement about where we want to grow and how we can provide superior value to differentiate ourselves from the competition. 

We have not been successful in turning our organic volume growth into incremental profit in 2018. Various factors have been weighing on our profitability, whilst the actions we undertook to offset their impact were not sufficient.

We did make progress in a number of domains and will see more benefits from the actions we undertook in the years to come:

  • In the past two years, we have made significant investments to expand the manufacturing capacity of our rubber reinforcement activities in EMEA and Asia Pacific. The expansion programs generated extra costs related to the hiring and training of personnel and to extensive approval procedures, with tire customers inducing quality test runs for new technologies and raw material sources. The benefits from these expansion investments in Slovakia, Romania, Russia, China and India have therefore been restricted at the profit level. We project more value creation from our investments in 2019.
  • A number of loss generating and weaker performing activities have cast a shadow on the margin improvement of others. We have therefore implemented measures, in 2018, to start turning around the profitability of those businesses that have the potential to generate profitable growth, and have closed those entities without margin recovery potential. These actions include measures that will take time to deliver, but which we are convinced will improve our business portfolio. In 2019, our results will no longer be affected by the loss generation and one-off closure impacts related to the plants that have been closed in Italy and Costa Rica.
  • Our actions to further increase the market penetration of more advanced products, which lower the total cost in the value chain and are more value creating for our customers and for our business, gained traction during the course of the second half of the year. This particularly applies to the ever stronger and lighter tire cord constructions that allow tire makers to produce tires with a lower weight, thinner plies, and lower rolling resistance. Ultra-tensile steel cord is less expensive than the conventional steel cord it replaces when the total cost of ownership is taken into consideration because it drastically reduces the steel cord weight and the amount of rubber required for the thinner plies. 
  • To enable value-driven growth, we have defined several target markets with a long-term value growth potential. We have the intention to expand our presence in these target sectors, both in existing and into new markets, and are considering partnerships that will leverage complementary technologies, combined product solutions, and extended sales channels. The goal is simple: we want to take a leading position in the winning markets of tomorrow.

Value-driven growth: our strategy to shape a long-term perspective

Examples of partnership forms

  • In developing a new generation hybrid rope for special hoisting solutions, Bridon-Bekaert Ropes Group teamed up with leading producers of high modulus fibers. After successful field trials in mines all over the world, a high-strength, low-weight hybrid rope was launched at IMARC Australia in October 2018.
  • IdealAlambrec, Bekaert’s subsidiary in Ecuador, has established a 50/50 joint venture with AGF Group of Canada, specialized in reinforcing steel, post-tensioning, and scaffolding & access, to combine and grow the cut and bend and installation rebar business for construction works.
  • Bekaert has worked together with two leading finite element software companies to integrate the post-crack behavior of Dramix® steel fiber concrete in their software packages. Designers using the latest SCIA and ADAPT engineering and building software packages, can now integrate Dramix® steel fiber in their structural designs, giving Dramix® steel fibers more exposure as a reference solution in concrete design.
  • We team up with customers and suppliers around the globe to develop, implement, upgrade and protect both current and future technologies. Listening closely to our customers and understanding how our products function within their production lines and products is key to developing value-creating solutions. Co-creation is therefore one of the most impactful partnership forms being explored by Bekaert and its customers.

Our customers in several key markets have clear ambitions in terms of improving their sustainability performance and are setting high demands across the value chain, which involves suppliers being transparent and ambitious with regards to their own sustainability performance. Bekaert too, has set clear ambitions and targets in relation to the progress we want to achieve in this domain and has made further steps in improving its own performance, as well as in engaging more suppliers in its endeavors, hereby expanding the scope thereof within our total value chain. In 2018, Bekaert received, for the second year in a row, a gold label from Ecovadis, scoring high (99th percentile) in our industry. Our GRI-based monitoring and reporting also enabled us to score above industry average in CDPs Supply Chain listing. Steadily improving our sustainability performance is one key element in helping us to attain preferred supplier status with our customers.
Michelin supplier award

Bekaert receives Michelin Supplier Award 2018

In November 2018, Michelin honored Bekaert with a Supplier Award, praising our commitment to building a partnership with the Michelin Group that drives greater shared benefits for the future. This award is the result of years of cooperation, continuous improvements in many areas like quality, on-time delivery, project development, innovation, strategic alignment, and the allocation of dedicated resources. It demonstrates our successful approach of bringing value to Michelin and helping them achieve success.

Bekaert showcases steel wire product offering at Wire Düsseldorf - Germany

The Bekaert sales team met with customers and prospects from all over the world during Wire Düsseldorf 2018. Our booth showcased product designs for various sector applications, with special emphasis on the value creating properties of product innovations such as high-tensile strength products for the construction, energy, offshore and automotive industries.

In 2018, in our endeavor to create more value-driven growth, Bekaert developed a new Enterprise Performance Management (EPM) model. EPM is a set of processes and tools that will enable us to create more fact-based transparency with regards to the drivers of value creation and the root causes of performance gaps. In practice, EPM will help us be more ambitious in our target setting, and provide the tools to better understand the impact of planned and implemented improvement scenarios. EPM has been implemented in the planning process for 2019 and the longer-term strategic planning process of the Group.