Koninklijke Ten Cate NV : TenCate records 22% organic growth in EBITA in second quarter of 2014

ALMELO, Netherlands, July 24, 2014 (GLOBE NEWSWIRE) --

Summary of first half of 2014

  • Revenues for the first half of 2014 remain unchanged in organic terms; 5% organic growth in revenues in the second quarter.
  • Substantial increase in revenues from composites and synthetic turf offsets virtually the entire decrease in defence-related revenues.
  • EBITA for the first half declines in organic terms by 13%; EBITA in the second quarter increases by 22% in organic terms.
  • Earnings per share €0.38 (H1 2013: €0.50).
  • Net debt / EBITDA ratio virtually unchanged at 2.87.
  • TenCate maintains expectation for the year as a whole; increase in defence revenues in second half of the year.

Key figures for first half of 2014

x 1 € million H1 2013 H1 2014 Change Organic
Revenues 510.9 497.6 -3% 0%
EBITA 28.8 24.3 -16% -13%
EBITA margin 5.6% 4.9%
EBIT 21.2 18.1 -15% -11%
Net profit 13.0 10.0 -23% -22%
Net earnings per share (€) 0.50 0.38 -24%
Other information
Investments in tangible and intangible fixed assets 4.8 12.0
Return on average net capital invested 6.0% 5.9%
Net interest-bearing debt 237.0 213.4
Debt ratio 2.80 2.87
FTE excluding temporary personnel (end of half year) 4,245 4,318


For the year as a whole TenCate maintains its previously announced growth projection in respect of the trend in revenues for the company, barring unforeseen circumstances and currency effects.

The defence-related revenues within TenCate Protective Fabrics and TenCate Advanced Armour show, on the basis of the current order position, a more favourable picture for the second half of the year compared to the first half. This positive sentiment can be ascribed to recent orders for TenCate Defender(TM) M and the order positions for armour composites.

Loek de Vries, Chairman and CEO of Royal Ten Cate: 'After a weak first quarter, an improvement in revenues and result occurred in the second quarter. Revenues and EBITA increased in organic terms by 5% and 22% respectively in the second quarter.

The policy-related strengthening of marketing and sales activities within the company and the introduction of composites into new markets showed positive results. As a result of strong growth in the composites and synthetic turf activities, the decline in revenues in defence markets was largely offset.

The defence-related activities represented 4% of the revenues in the first half of 2014 (first half of 2013: 9%). Although defence budgets have been depressed for a prolonged period, TenCate is investing in innovations for this market. This has strengthened the market position in particular of TenCate Advanced Armour. TenCate expects revenues from defence markets to increase in the second half of the year.

The previously announced revenue growth projection for the company remains unchanged for the year as a whole.'

Performance by sector

Advanced Textiles & Composites sector

The revenues of the Advanced Textiles & Composites sector declined in the first half of 2014 by 9% to €206.9 million (organic -7%, currency effect -2%). EBITA rose by 4% to €14.6 million (organic +7%, currency effect -3%).

x 1 € million H1 2013 H1 2014 Change Organic
Revenues 228.4 206.9 -9% -7%
EBITA 14.1 14.6 4% 7%
EBITA margin 6.2% 7.1%
Investments in tangible and intangible fixed assets 2.9 5.6
Depreciation 5.3 4.6
Amortization 3.9 3.2
Net capital invested (end of half year) 297.8 287.2
FTE excluding temporary personnel (end of half year) 1,518 1,601

The revenues of TenCate Protective Fabrics declined in the first half as a result of a low level of demand from the US Army for TenCate Defender(TM) M. The revenues from protective fabrics for the industrial market (TenCate Tecasafe® Plus) rose by in excess of 10%. With TenCate Tecasafe® Plus, TenCate satisfies the desire for higher levels of employee protection.

TenCate Advanced Composites recorded an organic revenue growth of 24% in the first half of 2014. Profitability also increased as a result of a higher capacity utilization rate. This market group benefited from an increase in demand from the aerospace industry. Future growth is related to the latest generation of aircraft for which TenCate materials have been certified. The use of composite materials for full-scale production in the automotive industry is still at the developmental stage. Current revenues in automotive composites are, however, developing positively.
In other markets too there is increased interest in composite materials (industrial composites).

The TenCate Advanced Armour market group had to contend with a further decline in revenues. This market group, however, remains optimistic about the outlook for TenCate in this market, partly in view of the company's engineering capacities. The expected recovery in demand from the armour market reported earlier this year will occur in the second half of 2014. Recently several long-term orders were announced, work on which is expected to start later this year.

The commercial launch of the TenCate ABDS(TM) active blast countermeasure system is expected to take place in 2017, when major vehicle programmes are planned. The system passed a number of important tests in the first half of the year. The success of this system will further strengthen the market position of TenCate Advanced Armour.

Geosynthetics & Grass sector

The revenues of the Geosynthetics & Grass sector rose by 5% to €259.2 million (organic +8%, currency effect -3%) as a result of strong recovery in the second quarter. EBITA declined by 27% to €11.0 million (organic -24%, currency effect -3%). The decline in EBITA can be almost entirely attributed to TenCate Geosynthetics.

x 1 € million H1 2013 H1 2014 Change Organic
Revenues 246.9 259.2 5% 8%
EBITA 15.0 11.0 -27% -24%
EBITA margin 6.1% 4.2%
Investments in tangible and intangible fixed assets 1.5 3.7
Depreciation 10.9 9.3
Amortization 2.4 1.7
Net capital invested (end of half year) 389.0 379.3
FTE excluding temporary personnel (end of half year) 2,101 2,054

The revenues of TenCate Geosynthetics rose in the first half of 2014 by 6% in organic terms. After a slow start to the year revenues picked up in the second quarter, mainly due to recovery in the United States. The recovery in EMEA and Asia-Pacific lagged behind as a result of lower government budgets and local political uncertainty in major Asian markets.

The TenCate Grass market group showed an increase in revenues of more than 10% in organic terms. The focus of TenCate is on the creation of new quality standards in respect of synthetic turf systems. Close cooperation with partners in the market and other stakeholders, such as national and international sports federations, is of importance here. The introduction of the GreenFields brand into the United States has led to acceleration in growth and a strengthening of market positioning. The growth was in part driven by a recovery in the global synthetic turf market and the rising demand for high-grade fibres and sports systems, such as the GreenFields® TX hockey system, which was introduced earlier. This system is enjoying international interest as a result of its exposure to a large number of national hockey federations during the recent World Cup. There is also increased interest in synthetic turf in Dutch professional football, which is also having a positive international effect. The number of orders for the second half of the year for high-grade synthetic turf systems has therefore increased sharply.

Other Activities sector

The revenues of the other activities relate to TenCate Enbi and Xennia Technology. The revenues and profitability of TenCate Enbi were temporarily depressed as a result of start-up costs for new contracts. The outlook for TenCate Enbi, however, remains favourable. Profit recovery of Xennia Technology continued in the first half of the year. The focus on ink sales had a positive effect on the sales mix. In technical textile markets in particular there was strong revenue growth. Inks from Xennia Technology offer demonstrable quality advantages to the end-user.

x 1 € million
H1 2013 H1 2014 Change Organic
Revenues 35.6 31.5 -12% -9%
EBITA -0.3 -1.3
Investments in tangible and intangible fixed assets 0.4 2.7
Depreciation 1.5 1.5
Amortization 1.3 1.3
FTE excluding temporary personnel (end of half year) 626 663

Other financial information for the first half of 2014

The level of investment by TenCate rose to €12.0 million (€4.8 million in the comparable period last year). The main investment projects were the expansion of capacity for the 3D matrix-woven synthetic turf system GreenFields® MX, the development of the TenCate ABDS(TM) active blast countermeasure system and digital printing and finishing.

The net interest-bearing debt amounted to €213 million at the end of June 2014, which represents a decline of €24 million compared to June 2013. Compared to the end of 2013 the net interest-bearing debt rose as a result of the seasonal pattern in the Geosynthetics & Grass sector and increased order positions. The debt ratio at the end of June amounted to 2.87 (June 2013: 2.80); covenant 3.50.
The number of FTEs rose by 73 to 4,318 at the end of June, principally as a result of the strong growth of the TenCate Advanced Composites market group.

Board statement

'Based on the information available to us the Executive Board hereby states that the interim report, prepared in accordance with IAS 34, Interim Financial Reporting, gives a true and fair view of the assets, the liabilities, the financial position and the profit of Royal Ten Cate and the companies jointly included in the consolidation, and that the interim report provides a true and fair view of the information required under Article 5:25d, subsections 8 and 9 of the Dutch Financial Supervision Act.'

Royal Ten Cate
Almelo, The Netherlands, Thursday 24 July 2014

For further information:

On Thursday 24 July 2014 the conference call in English by the Executive Board with regard to the 2014 interim figures will be held for analysts and investors at 9:00 CET. The dial-in number for this call is +31 (0) 10 713 72 95.

For the media, the Dutch-language press conference by the Executive Board will be held in the Hilton Hotel Amsterdam at 10:30 CET. At 14:00 CET the Dutch-language analysts' meeting will be held at the same location.

TenCate (corporate)
Pieter Zwinkels, investor relations manager
Tel. +31 (0)546 544 977
Mobile +31 (0)6 1088 6338
e-mail p.zwinkels@tencate.com
Internet 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 with the mission of 'Protecting People'. Systems and materials from TenCate come under four areas of application: personal protection and defence; mobility; infrastructure and the environment; sport and recreation. TenCate occupies leading positions in protective fabrics, composites for aerospace, antiballistics, geosynthetics and synthetic turf. TenCate is listed on NYSE Euronext Amsterdam and included in the AMX index.

Press release as PDF http://hugin.info/130798/R/1836390/638205.pdf
Key figures http://hugin.info/130798/R/1836390/638206.pdf
Explanatory notes http://hugin.info/130798/R/1836390/638207.pdf


Source:Koninklijke Ten Cate NV