2 May 2007

Results Q1 2007

TenCate net profit grows by 15% to € 6.0 million in the first quarter.
  • Corporate sales € 191 million (Q1 2006: € 189 million)
  • EBIT € 10.9 million (+ 26%)
  • Net profit € 6.0 million (+15%)
  • Substantially increased order position as of 31 March 2007
  • Sharp rise in sales of safety fabrics (American army orders and growth of European market)
  • Restrained American economy produces lower sales of geosynthetics in the US; slight recovery is visible
  • Growth in sales of Grass group of 18%; lower margins as a result of product mix (intensified seasonal pattern); increase in capacity operational as of the second quarter
  • Impact of acquistions is limited: Roshield included in the figures as of mid-February. Mattex included in the result from the second quarter
  • Expected growth in net profit of at least 25% for the whole of 2007 (apart from the result of divestments)

General performance

Trend in sales
In the first quarter of 2007 sales amounted to € 191 million. There was a 7% autonomous rise in sales. The currency effect amounted to –4%, as a result of the lower US dollar.

Considerable growth was generated in the area of safety fabrics. The deliveries of American army orders reported earlier contributed significantly to this.

Although the Aerospace & Armour Composites cluster showed an autonomous decline in sales, the outlook in these markets continues to be favourable. In the first quarter there was a delay here in a number of important government orders.

The growth in sales in the Geosynthetics & Grass sector was depressed by the restraint in the American Geosynthetics market. The demand for Geosynthetics related to the construction industry stagnated in this market. There is, however, a good demand from the remaining geographical markets.

Grass group sales rose by 18% in respect of the first quarter of 2007. The acquisition of Mattex had not yet been able to make a contribution to this, due to its consolidation as of 31 March 2007.

TenCate Enbi showed a decline in sales of approximately 7%.

Operating result (EBIT) and net profit
The increase in the operating result (EBIT) to € 10.9 million (2006: € 8.6 million) can be ascribed to a significant extent to the strong autonomous growth in safety fabrics. The autonomous EBIT growth amounted to 26%. The currency effect amounted to -9%.

As a result of seasonal influences, in the Geosynthetics & Grass sector both the level and the composition of sales in the first quarter were unrepresentative. This sector realized a relatively low EBIT and margin.

Due to the sharp rise in market demand, there has been an expansion of capacity at the artificial grass activities for the second consecutive year. This will be ready for production from the second quarter, as a result of which the operating result and the margin have come under pressure. Also the supply of high-grade and customized artificial grass products was still not fully available during the first quarter.

Net profit increased by15% to € 6.0 million. The tax rate decreased from 33% to 31%.

Financial position
Following the announced acquisitions of Roshield (antiballistic vehicle protection) and Mattex (artificial grass), a share issue of approximately € 51 million (after costs) was successfully placed. The number of shares issued consequently increased to a total of 23,169,621 units as of the end of March.

Furthermore, a new credit facility to the amount of € 250 million was taken out with a banking syndicate. TenCate thus has sufficient self-financing capacity for further acquisitions as part of its buy & build strategy.

The need for investment for 2007 is expected to remain at a relatively high level of well over € 60 million for the year as a whole.

As of the end of March 2007 the net interest-bearing debt amounted to € 230 million.

The net cash flow for acquisitions and divestments amounted to - € 21.8 million in the first quarter (Q1 2006: - € 20.4 million).

In view of seasonal influences and the considerable increase in the order position, the outlook is favourable.

We repeat the expectation that for the whole of 2007 net profit, adjusted for results on divestments, will increase by at least 25%, barring unforeseen circumstances.

The results per sector and the complete appendices can be found in the press release in .pdf

Conference call
We would like to offer analists the possibility to participate in a conference call. The conference call will start at 9.30 CET.
Frank Spaan, director Investor Relations, will present the Q1 figures. After the presentation you will be able to ask questions.
The telephone number for the conference call is +31 20 713 27 56. An operator will welcome you and explain the procedure.

Download: press release Q1 2007 EN plus appendices
Blue fabric (Tecawork Blue 65287)