- Sales to the third quarter 2008 inclusive: €781.2 million (+18%; +7% autonomous)
- EBITA to the third quarter 2008 inclusive: €71.1 million (+40%; +3% autonomous)
- EBITA margin: 9.1% (2007: 7.7%)
- Net profit before amortization and excluding result from divested activities to the third quarter inclusive (cash earnings): €45.3 million (+38.3%)
- Net profit to the third quarter 2008 inclusive: €37.3 million (2007: €30.6 million)
- Sales third quarter €269.6 million (+16%; +5% autonomous)
- Autonomous sales growth (Q3) Advanced Textiles & Composites sector +3%
- Autonomous sales growth (Q3) Geosynthetics & Grass +7%
- Net profit before amortization and excluding result from divested activities in the third quarter (cash earnings): € 15.0 miljoen (+22%)
- Profit forecast for 2008 as a whole maintained (cash earnings:+ 30%)
General performance in the third quarter of 2008
Sales increased in the third quarter of 2008 by 16% to €269.6 million.
The currency effect on sales amounted to -5%.
The operating result before amortization (EBITA) rose to €25.8 million (+ 32%; autonomous: 0%) in the third quarter.
The currency effect on EBITA amounted to -8% in the third quarter.
Net profit before amortization (cash earnings) increased by 22% to €15.0 million in the third quarter.
The Advanced Textiles & Composites sector once again turned in excellent results in the third quarter. The growth was mainly due to the strong demand from military markets and the aviation industry.
Sales in aerospace/space composites grew, primarily as a result of increased deliveries (TenCate Cetex® ) for the Airbus A380.
In the United States useful qualification processes in the space and aerospace sector have recently started up. Partly as a result of recent acquisitions, TenCate has strong technology positions, which will enable significant growth to be achieved in these markets in the near future.
The Geosynthetics & Grass sector recorded continuing growth in profit under difficult external circumstances in the third quarter. In the US the geosynthetics market is experiencing difficulties as a result of the current economic situation. TenCate took cost measures in good time at the geosynthetics activities in the United States and is gaining market share.
In the synthetic turf market closer cooperation is taking place with market parties of a high calibre in order to strengthen the position in end markets and to tackle the market more from a systems approach. These developments will lead to a greater degree of chain integration, where the quality and the performance of the end product (the sports pitch) will be paramount.
TenCate is regarded worldwide as a solid partner in the chain with a wide product portfolio. The current economic situation provides strategic opportunities for partnerships, in view of the fact that, as a result of the tightening of the financing market, some slowdown in growth is currently visible in this sector.
First nine months of 2008
Sales in the first nine months amounted to €781.2 million (first nine months of 2007: €659.6 million). This growth in sales can to a considerable extent be accounted for by acquisitions. Autonomous sales increased by 7%.
The currency effect on sales amounted to -7% for the first nine months.
The operating result before amortization (EBITA) amounted to €71.1 million, a rise of 40% compared with the first nine months of 2007. In autonomous terms the rise was 3%. The currency effect on EBITA amounted to -10% for the first nine months.
The net profit before amortization and result from divested activities and exceptional items amounted to €45.3 million for the first nine months of 2008 (2007: €32.9 million).
The net profit for the first nine months of 2008 amounted to €37.3 million (2007: €30.6 million).
The net earnings per share on a cash earnings basis amounted to €1.93 (2007: €1.44) for the first nine months.
Outlook for 2008
TenCate operates for a significant extent of its sales in markets that have relatively limited sensitivity to economic cycles. The current economic situation is, however, exceptional. It should be realized that in the future some local and national government budgets will decrease and that industrial markets in particular may be sluggish in the months ahead. The time when and extent to which this may occur are still unclear. However, the effect on sales for 2008 seems to be limited, in view of the current order position.
TenCate’s growth is mainly based on markets for the protection of people and the environment, subjects that remain at the top of the global agenda.
The high degree of functionality and the added value of TenCate materials, which are often mandatory in specifications, continue to be the company’s strengths.
TenCate stands by the profit forecast made earlier.
Performance by sector
Advanced Textiles & Composites
|(x € million)
Sales in the Advanced Textiles & Composites sector increased in the third quarter to €110.6 million (in autonomous terms +3%). The currency effect on sales for the third quarter amounted to -6%.
EBITA showed growth of €14.9 million in the third quarter.
The good performance in the field of protective fabrics for the American market continued, especially in relation to fire-resistant fabrics for the military (TenCate Defender™ M). The US Army has opted for this material as the standard for the equipment of troops who are on active deployment. TenCate holds a strong order position.
A new development in TenCate Defender™ M has also occurred. There is great interest in this product, which will be launched in the fourth quarter. This fire-resistant material has multifunctional characteristics (such as an insulating effect). This further extends the possible ways of using this product and it can be deployed in numerous applications under a variety of conditions.
The European industrial market for safety fabrics is currently somewhat cautious. For the near future here too the military market will be an interested party.
Activities in the field of vehicle armour in the US, such as the MRAP programme, have developed extremely favourably, partly on the basis of the delivery of orders received in the second quarter.
The Asian market is an emerging market for safety fabrics. TenCate recently entered into a joint venture here with a Thai producer in the shape of TenCate Union-Protective Fabrics Asia Ltd. (50.65% holding). This joint venture became operational in the third quarter and is still in the start-up phase.
Xennia plc (75% holding) showed positive growth. The introduction of the new print technology, which in the first instance was used in the printing of ceramics, is progressing successfully. TenCate will deploy this technology in the future for the coating/finishing of technical textiles (functional materials).
In Europe sales of vehicle armour were at a higher level in the third quarter compared with the same period in the previous year. In the United States, following the acquisition of Composix, there has been considerable sales growth in vehicle armour (including the MRAP programme).
Sales in Europe in the field of aerospace composites grew strongly, particularly as a result of the start-up of the production of the Airbus A380.
The acquisition of Phoenixx strengthens the technology position of TenCate in the aerospace market. There is great interest in this technology. In the future there are real opportunities in both the aviation sector and aerospace. This has involved investments and costs for developments and qualification.
Within the entire Advanced Textiles & Composites sector there is a high degree of innovation and product development, which forms an important basis for further growth in the future.
Geosynthetics & Grass
|(x € million)
The sales of the Geosynthetics & Grass sector increased in the third quarter of 2008 to €145.7 million (in autonomous terms +7%). The currency effect on sales amounted to –5% in the third quarter.
EBITA was €12.1 million in the third quarter. The EBITA margin in this quarter declined slightly.
Although the American market for geosynthetics continued to develop adversely, TenCate was able to strengthen its market position. There was growth in the volume of TenCate Geotube® systems. The European markets displayed a varied picture, depending on the country. On balance, however, there was some growth as a result of the rapid development of the East European market. The Asian markets continued to perform well.
The slight decline in the EBITA margin of the Geosynthetics & Grass sector in the third quarter can be attributed principally to the price increase in raw materials markets (PE, PP). In the fourth quarter these prices, by contrast, have declined sharply. In addition, there is some restraint within the synthetic turf market due to the financing opportunities in the sector, which are becoming tighter. The situation on the financial markets occurred at an extremely unfavourable moment for the synthetic turf market, in view of the fact that the season peaks in the period from August to October inclusive. Nevertheless, moderate growth is expected.
In view of the current uncertainties in the market, cost measures have also been taken at the Grass group in order to be able to achieve over time the objective in respect of further growth of the result and EBITA margin in this sector (EBITA margin of at least 10%).
Technical Components / Holding & Services
|(x € million)
The markets for printers and copiers in which TenCate Enbi operates are currently depressed. Throughout the world the major producers are announcing measures. In addition, new projects, for which delays had previously been announced, have not yet resulted in the expected volumes. Despite the less favourable market outlook, TenCate Enbi as a supplier on three continents is well positioned.
Investments from May to September inclusive amounted to €39.2 million (2007: €47.5 million. Investments for 2008 as a whole will be at a level of approximately €45 million.
The interest-bearing debt rose from €235 million in 2007 to €337 million at the end of the third quarter.
The tax rate up to and including the third quarter rose to approximately 31% (2007: 23%). This rise was mainly due to an increase in the relative share in the profit of activities in the United States, where a relatively high rate applies.
Almelo, 30 October 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