The following is an abridged version of Royal Ten Cate’s release regarding the company’s first half performance. The full release can be download here (PDF): http://www.tencate.com
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26 August 2010 – Loek de Vries, Executive Board Chairman and CEO: “The net profit has doubled compared to the first half of 2009, after adjustment for over €5 million of net non-recurring income during the period. The interim results demonstrate the positive effects of the measures taken, particularly in the Geosynthetics & Grass sector.
"On a lower volume of sales, the operating result in the second quarter of this year returned almost to the level recorded before the economic crisis (in comparison with the figure for the second quarter of 2008).
"In the synthetic turf activities, changes to both operational and commercial policies have been implemented, which have made an important positive contribution to the rise in income.
"The geosynthetics activities have also shown profit growth, partly as a result of good cost control.
"As a result of the developments referred to above, the EBITA margin of the Geosynthetics & Grass sector rose from 2.3% to 8.3% in the first six months of 2010.
"The reorganisation of the Dutch businesses involved in protective fabrics (TenCate Advanced Textiles) proved effective. The broadening of the product portfolio, which related in particular to the optimisation of characteristics such as wearing comfort and protection, led to an increased order intake.
"Sales of protective fabrics to the US Army are expected to return to the original level in the second half of the year. Products with the Multicam print are now being delivered.
"The outlook for aerospace and armour composites is improving. More positive news is coming out of the aircraft industry, and the destocking in the supply chain appears to be at an end.
"In view of these developments, the Advanced Textiles & Composites sector is expected to deliver an increased contribution to sales and profit in the second half of the year compared to the first six months."
Performance in the Second Quarter
Sales rose 14% in the second quarter compared to the same period in 2009, to €263.1 million (+6% organic; +5% currency effect; +3% acquisitions/divestments). This rise was due almost entirely to the Geosynthetics & Grass sector.
Sales in the Grass group showed considerable growth in the second quarter. That was partly due to the restrained sales policy in the fourth quarter of 2009 (reduction in off-season sales). The Geosynthetics group showed an (organic) increase in sales in all regions in the second quarter.
Apart from the decrease in sales of protective fabrics for the US defence market (TenCate Defender™ M and TenCate Gen2 products), almost all other activities in the Advanced Textiles & Composites sector showed sales growth in the second quarter of 2010. The sales growth in the industrial market for protective fabrics was due in particular to successful market launches, such as TenCate Tecasafe™ Plus. This also provided a positive boost for the Dutch business, which, as European market leader, focuses particularly on the industrial market.
Sales of composites also showed a rise during the period compared to the previous year.
The overall result was a slight decrease in sales in the Advanced Textiles & Composites sector in the second quarter.
EBITA (operating result before amortisation of intangible assets) rose in the second quarter from €13.4 million in 2009 to €30.1 million in 2010, with the largest rise occurring in the Geosynthetics & Grass sector.
Geosynthetics & Grass
The sales growth in the Geosynthetics & Grass sector amounted to 18% (+18% organic; +2% currency effect; -2% acquisitions/divestments). The sales growth was attributable particularly to the Grass group, and there was also an increased contribution from the related downstream activities.
The geosynthetics markets in the US and Europe developed favourably, although it is still premature to speak of a structural recovery. TenCate strengthened its position in the Asian market; commercial activities in the Asian infrastructure project market and the environmental market are increasing.
Following the policy changes implemented in the commercial and operational areas, there has been a significant recovery of sales in the synthetic turf businesses (approximately 35% growth). The Grass group’s inventories have decreased, due to the priority given to cash management.
The synthetic turf market in Europe is reluctant, although there is increased demand for high-quality products and systems, particularly in the football segment. TenCate is meeting this demand with products and system warranties and close co-operation with market participants.
EBITA rose 316% (+369% organic; +20% currency effect; -73% acquisitions/divestments).
The results improved both in Geosynthetics and in the Grass group. The Grass group recorded the biggest improvement, however, as a result of the measures taken.
ABOUT ROYAL TEN CATE
Royal Ten Cate (TenCate) is the multinational company which combines textile technology with chemical processes and material technology in the development and production of functional materials with distinctive characteristics. Systems and materials from TenCate come under four areas of application: safety and protection; space and aerospace; infrastructure and the environment; sport and recreation. TenCate occupies leading positions in safety fabrics, composites for space and aerospace, antiballistics, geosynthetics and synthetic turf. TenCate is listed on NYSE Euronext. www.tencate.com
CONTACT
Frank Spaan
Director Investor Relations & Corporate Development
Telephone: +31 (0)546 544 977
Mobile: +31 (0)6 12 96 17 24
f.spaan@tencate.com
www.tencate.com
