* Sales first half 2008: EUR 511.6 million (+20%; +8% autonomous)
* EBITA first half 2008: EUR 45.3 million (+45%; +5% autonomous)
* EBITA margin: 8.9% (first half 2007: 7.3%)
* Net profit before amortization and excluding result from divested
activities and exceptional items (cash earnings): EUR 30.3 million
(+47%)
* Net profit first half 2008: EUR 25.4 million (2007: EUR 19.4 million)
* Very strong second quarter: EBITA grows by 59% to EUR 31.9 million
* Autonomous sales growth Advanced Textiles & Composites sector
+15%
* Autonomous sales growth Geosynthetics & Grass sector +8%
* Good market outlook
* Rise in cash earnings of at least 30% expected for 2008 as a
whole
General performance second quarter 2008
Sales in the second quarter of 2008 increased by 28% to EUR 302
million. In autonomous terms growth was 11%. The currency effect on
sales amounted to
-8%. The growth can be attributed to both American military orders
for protective fabrics and vehicle armour (acquisition of Composix)
and to European military orders for vehicle armour.
In addition, there were increasing sales of aerospace composites,
mainly due to the deliveries to Airbus Industries and strong growth
in the sales of synthetic turf activities.
Apart from the geosynthetics market in the US, which is mainly
related to activities in the construction and infrastructure
industry, there was in the second quarter a continuation of the
growth in the core markets in which TenCate occupies leading
positions worldwide.
The recent opening of the production site in China for geosynthetics
and the joint venture in Thailand for safety fabrics has strengthened
the position in the rapidly growing Asian markets.
The operating result before amortization (EBITA) rose in the second
quarter to
EUR 31.9 million (+59%). In autonomous terms, the rise amounted to 10%.
The currency effect on EBITA amounted to -13% in the second quarter.
The EBITA margin rose from 8.5% to 10.5% in the second quarter.
The net profit before amortization and excluding the result from
divested activities and exceptional items (cash earnings) increased
by 52% to EUR 21.8 million in the second quarter. (Amortization
amounted to EUR 3.8 million in the second quarter.)
First half 2008
Sales in the first half amounted to EUR 511.6 million (2007: EUR 426.3
million). This sales growth of 20% was to a large extent the result
of acquisitions. On an autonomous basis sales increased by 8%.
The currency effect on sales amounted to -8%, primarily as a result
of the weak American dollar.
The operating result before amortization was EUR 45.3 million, a rise
of 45% compared to the first half of 2007. In autonomous terms the
rise was 5%. The currency effect was -12%.
The EBITA margin rose from 7.3% to 8.9% in the first half of the
year.
Cash earnings amounted to EUR 30.3 million for the first six months of
2008 (compared to 2007: +47%). The growth is above the previously
indicated profit growth based on provisional figures, due to the
completion of the processing of acquisitions.
The total amortization charge rose to EUR 4.9 million (2007: EUR 1.3
million) as a result of the acquisitions made during the first half
The net profit for the first half of 2008 amounted to EUR 25.4 million
(2007: EUR 19.4 million).
Net earnings per share for the first six months were EUR 1.08 (2007: EUR
0.86).
Outlook for 2008
The market outlook for TenCate 's major core markets remains
favourable. TenCate therefore expects once again a strong annual
result.
The net profit before amortization and excluding the result from
divested activities and exceptional items (cash earnings), which
amounted to EUR 46.6 million in 2007, is expected to increase by at
least 30%, barring unforeseen circumstances. The amortization charge
for 2008 as a whole will be approximately EUR 10 million (2007: EUR 3.6
million).
The Advanced Textiles & Composites sector showed a growth in sales of
48% in the first half. A major proportion of the increase in sales
resulted from the acquired company Composix. In the first half of the
year sales increased by 15% on an autonomous basis. The currency
effect amounted to -9%.
The results too showed very strong growth. In autonomous terms, EBITA
rose in the first half of the year by 11%
The further rise in the EBITA margin reflects the increase in the
proportion of products with a high functional value and distinctive
capability.
Sales in this sector are to a large extent determined by the
tightening up of the requirements relating to levels of protection
with regard to fire-resistance and armour for military personnel and
materiel. The American defence market is of particular importance in
this respect.
The defence orders for safety fabrics form a major part of the total
sales in this sector. In the future too the demand for fire-resistant
fabrics will continue to develop strongly, in view of the safety
requirements of the US army and increasing interest from Europe.
TenCate Defender(TM) M material, which was specially developed by
TenCate to meet the specifications of the US army, is the leading
product in this market. The capacity relating to fibre production by
suppliers has now been brought in line with current needs. In the
second half of the year volumes may be stepped up further.
Sales in Europe in the field of safety fabrics, where sales are
primarily generated in the industrial market for professional wear
and protective clothing, are at a lower level than the previous year.
TenCate recently entered into a joint venture with a Thai producer in
order to secure a position in the emerging Asian market for
protective fabrics. The joint venture will become operational in
mid-August.
The acquisition of Xennia plc (75%) in March 2008 represents an
acceleration in the marketing of inkjet technology for certain
industrial applications, including production processes in the
textile sector. TenCate will exclusively deploy this technology in
markets for technical textiles (functional materials). Other
industrial sectors will be allowed to use the technology under
licence.
In previous years the company focused mainly on research projects for
third parties. In the first half of 2008 Xennia made a number of
major commercial breakthroughs using its own technology solutions.
As a result of the acquisition of Composix at the end of January 2008
TenCate secured an excellent starting position in the American market
for vehicle armour. The acquisition has enabled TenCate to tender for
large-scale projects. This has resulted in substantial orders in this
market in the first half of 2008.
In Europe sales of vehicle armour increased. For the remainder of the
year too there is a well-filled order book in the field of both
antiballistic products and personal protection.
With regard to aerospace composites sales increased, mainly as a
result of the production of composite materials (TenCate Cetex®) for
the Airbus A380.
The acquisition of Phoenixx (US) has enabled TenCate to take a major
step in the development of UD technology for the aerospace sector.
Its position as a development partner and supplier to the entire
aircraft industry will consequently be strengthened.
Through the acquisition of the company YLA / CCS in the US, TenCate
has acquired a leading position in the field of composites for the
space industry. TenCate materials were once again incorporated in
NASA's recent Mars Mission.
Sales growth for the first six months amounted to 7%. In autonomous
terms the rise was 8%. The negative currency effect put downward
pressure to an amount of 7% on sales growth.
On an autonomous basis the rise in EBITA amounted to 14% in the first
half of 2008. A higher EBITA margin was achieved through cost
reductions and better process management, although the sharp rise in
the price of raw materials had a negative effect on this. Market
prices can only brought in line with developments in the raw
materials market (PE / PP) after a certain time lag.
The growth in the Geosynthetics & Grass sector was achieved under
less favourable market conditions. These are due on the one hand to
economic factors and the sharply rising costs of raw materials and on
the other hand to the current cash crunch resulting from the problems
in the financial markets.
The Asian market for geosynthetics continues to develop strongly.
TenCate opened a production site in China in mid-June in order to
meet the growing demand. The American geosynthetics market is
unremittingly sluggish.
Apart from applications in infrastructure and the construction
industry, TenCate has developed a number of interesting applications
in the field of water management, the environment and industry. A
large order for example was secured for the manufacture of cages for
large-scale natural fish farming (TenCate Aquagrid®).
Although the synthetic turf market shows continuing growth, there are
major regional differences. In Europe the football market is strongly
represented in synthetic turf. In America and Asia the market is
dominated by multipurpose sports pitches for schools, universities
and other institutions. On balance the growth of the synthetic turf
market currently falls short of the long-term market outlook (15%-20%
growth).
TenCate Enbi showed a declined in sales, which was mainly due to
delays in new projects. These will go ahead later in the year.
TenCate Enbi regularly generates new qualifications for new types of
inkjet and laser copiers, for which the components must once again be
developed. The timing of the launch of these new models will have an
impact on the trend in sales of TenCate Enbi as one of the major
suppliers in this industry.
A successful policy has been pursued in respect of the acquisition of
qualifications for major Asian producers.
Financial
Investments in the first half of the year amounted to EUR 29.4 million
(2007: EUR 28.9 million). These investments are in part related to
projects that were already started in 2007 or were approved in that
year. For 2008 as a whole investments will be at a lower level than
in the previous financial year.
Important projects included the expansion of the production capacity
for composites, particularly in the light of the increasing
production for Airbus, the construction of the new geosynthetics
plant in China and the expansion of synthetic turf production in
Dubai and the US.
The tax rate for the first six months rose from 23% in 2007 to 30% in
2008. The rise was due to a non-recurring tax credit in 2007 and a
non-deductible part of the amortization item, which has risen sharply
in the current financial year. The altered geographic composition of
profit, in which the proportion from the US has increased, also led
to a higher average tax charge.
The net interest-bearing debt increased in the first half to EUR 349
million (2007: EUR 246 million) as a result of the acquisitions made.
The net finance charges were favourably affected by the exchange rate
trend of the American dollar, the lower level of dollar interest and
the positive development in value of interest and currency
instruments.
Almelo, 20 August 2008
Royal Ten Cate
For further information:
F. R. Spaan
Director Investor Relations & Corporate Development
Tel: + 31 546 544 338
Mob: + 31 6 12 96 17 24
f.spaan@tencate.comwww.tencate.com
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