Koninklijke Ten Cate NV : TenCate net profit €15 million for first half of 2012

27 juli 2012 Summary of first half of 2012 * Decrease in revenues of 9% to €540 million (-17% organic; +4% currency effect; +4% acquisitions / divestments) * EBITA €32.3 million; -42% (-48% organic; +4% currency effect; +2% acquisitions / divestments) * Net profit €14.7 million (2011: €33.1 million) * Revenues of Advanced Textiles & Composites sector show an organic decrease of 25%, due to decline in sales of TenCate Advanced Armour and TenCate Defender(TM) M product portfolio (related to US defence forces) * Positive trends at TenCate Advanced Composites, TenCate Geosynthetics and TenCate Grass (downstream) * Net earnings per share -56% to €0.57 * Adjustment to 2012 profit forecast and sharpening of strategic focus, combined with structural cost reductions, with a future positive effect on EBITA of approximately €25 million on an annual basis (see press release dated 20 July, 2012). TenCate key figures for first half of 2012 +------------------------+---------+---------+------------+ | x €1 million | H1 2012 | H1 2011 | Change (%) | +------------------------+---------+---------+------------+ | Revenues | 539.6 | 592.4 | -9% | +------------------------+---------+---------+------------+ | EBITA | 32.3 | 56.1 | -42% | +------------------------+---------+---------+------------+ | EBITA margin | 6.0% | 9.5% |   | +------------------------+---------+---------+------------+ | EBIT | 25.0 | 50.1 | -50% | +------------------------+---------+---------+------------+ | Pre-tax profit | 18.8 | 44.4 | -58% | +------------------------+---------+---------+------------+ | Net profit | 14.7 | 33.1 | -56% | +------------------------+---------+---------+------------+ | Earnings per share (€) | 0.57 | 1.30 | -56% | +------------------------+---------+---------+------------+ Loek de Vries, President and CEO: 'The anticipated decrease in US Army-related sales proved to be greater than had been expected in the second quarter. The revenues anticipated for the current financial year were largely based on forecasts issued by the US Army with regard to the purchase of TenCate Defender(TM) M products. Due to the strong growth in revenues and profit in the first half of 2011, principally as a result of an exceptional rate of growth in TenCate Defender(TM) M products, the performance in the first half of 2012 cannot, as indicated previously, be compared to that in the first half of 2011. US budget discussions and the forthcoming presidential elections led to lower defence expenditure, partly due to a delay in releasing projects and to the cutting back of inventories in the US market. The picture for the future remains positive, because TenCate materials protect army units and this theme continues to feature high on the political agenda. The protection of military personnel in crisis areas therefore remains a global growth market. The present trend in sales of TenCate Defender(TM) M outside the United States provides a sound basis for a greater geographic breakdown in sales. The composite markets are one of the strongest growth markets in the TenCate business portfolio, with organic growth expected to be well in excess of 10%. A sharpening of the strategic focus will be implemented in the buy & build strategy, with the aim of also achieving revenue growth outside the aerospace market. The automotive market offers opportunities for the composite technologies developed by TenCate. This market is currently showing strong growth, partly as a result of current industrial trends. The Geosynthetics & Grass sector recorded an organic recovery in results in the second quarter, with a major contribution being delivered by TenCate Geosynthetics. The process of profit recovery in the coming periods must be continued, with a growing contribution from TenCate Grass.' Performance in the second quarter of 2012 Revenues in the second quarter of 2012 decreased by 10% to €283 million. In particular the impact of the decrease in sales of the TenCate Defender(TM) M portfolio was a determining factor in the financial performance of TenCate. The European armour activities showed growth, which can mainly be attributed to increases in the activities relating to armour for helicopters and aircraft. In the US by contrast there was a marked fall in the number of vehicle armour projects. Positive developments occurred in the composites market for aerospace applications as well as at the Geosynthetics group and TenCate Grass (downstream). The operating result before amortization of intangible fixed assets (EBITA) decreased by 47% to €19.1 million. The net profit in the second quarter amounted to €9.6 million (-59%). Other financial information for first half of 2012 Investments in the first six months of €9.6 million remained at a relatively low level (2011: €13.3 million). The main investments were made in China (production of geosynthetics), in development costs for the TenCate ABDS(TM) active blast countermeasure system and in digital finishing (TenCate Advanced Textiles). The net interest-bearing debt at the end of June 2012 is €6 million below the level of June 2011. The organic decline in the debt position amounted to €57 million, partly as a result of the organic reduction in working capital. The exchange rate trend in the dollar led to a considerable rise (€34 million) in the debt position (translation effect). The debt / EBITDA ratio was 2.74 at the end of June. Outlook for 2012 In the press release of Friday, 20 July, 2012 it was indicated that some restraint is expected to become evident during the second half of 2012, particularly in the US defence market, resulting in uncertainty as regards the timing of government orders. It is consequently no longer likely that, as previously announced, the profit forecast for full-year 2012 that was issued earlier will be attainable. No further profit forecast for the current year will be made. Sharpening of strategic focus At the same time it was indicated that a sharpening of the buy & build strategy will be implemented, in which the emphasis will be placed on growth (organic and through acquisitions and / or alliances) in the field of composite materials. A  key market in this regard is the automotive industry. TenCate will also implement structural cost savings with a positive EBITA effect of approximately €25 million on an annual basis. This will involve the shedding of approximately 450 jobs, partly through the termination of flexible contracts and natural wastage. The majority of these workforce reductions will be made outside the Netherlands and they are not expected to result in any significant restructuring charges. Performance by sector Advanced Textiles & Composites sector +--------------+---------+---------+------------+ | (x €million) | H1 2012 | H1 2011 | Change (%) | +--------------+---------+---------+------------+ | Net revenues | 240.9 | 289.5 | -17% | +--------------+---------+---------+------------+ | EBITA | 19.0 | 41.2 | -54% | +--------------+---------+---------+------------+ | EBITA margin | 7.9% | 14.2% |   | +--------------+---------+---------+------------+ The organic decrease in revenues for the first half of the year amounted to 25% (+4% currency effect; +4% acquisition / divestment effect). This decrease in revenues occurred mainly in the US defence market. Overall, sales of TenCate Defender(TM) M products decreased in the first half of 2012 by approximately US$ 60 million. In the second quarter there was an unexpected reduction in the demand for orders by the US military. There continues to be an increasing number of applications for these products among various units of the US Army. Another positive trend is the gradual increase in the geographic breakdown of sales. The demand for TenCate Tecasafe(TM) Plus products continued to grow satisfactorily, with the oil and gas industry constituting a major potential market. Initial orders have now been received from leading players such as Shell, BP, Gazprom and Total. TenCate has expanded its European product portfolio to include new products, which are attracting a good degree of interest. The TenCate Advanced Composites and TenCate Advanced Armour market groups as a whole showed continued growth, which is attributable to the activities of aerospace and industrial composites and of European armour composites. The European aerospace-armour activities recorded continued growth and the prospects for the future are favourable. The combination of specific aerospace and armour competencies affords TenCate a unique position in the market. A decrease in US armour sales resulted overall in a decrease in revenues in the armour segment of approximately €4.8 million during the first six months. The acquisition of Baycomp - the company that forms the basis for the Industrial Composites market group, which is currently under development - has already given an encouraging boost to TenCate activities in the field of composite materials for new markets, such as the automotive industry. Developments relating to the TenCate ABDS(TM) active blast countermeasure system are promising, with a number of government agencies also being involved. For reasons of confidentiality, no further announcements can be made at present with regard to the financial consequences, the timing of the market launch, etc. Geosynthetics & Grass sector +--------------+---------+---------+------------+ | (x €million) | H1 2012 | H1 2011 | Change (%) | +--------------+---------+---------+------------+ | Net revenues | 261.7 | 267.6 | -2% | +--------------+---------+---------+------------+ | EBITA | 15.8 | 13.9 | +14% | +--------------+---------+---------+------------+ | EBITA margin | 6.0% | 5.2% |   | +--------------+---------+---------+------------+ The organic change in revenues of the Geosynthetics & Grass sector amounted to -10% (+ 4% currency effect; +4% acquisitions / divestments). The geosynthetics activities in Asia showed strong growth, mainly due to the recent acquisition of Emas Kiara (Malaysia). In organic terms there was a decrease in revenues of 9% at the Geosynthetics group. Nevertheless, for the geosynthetics activities as a whole there was a positive margin trend, which provided an important basis for the trend in results in this sector. The growth in the downstream activities within the Grass group has also largely occurred through acquisitions. Increasing interest is being shown by market participants (installation companies) in affiliating with the downstream organization of TenCate Grass. TenCate supports such partners in the development of new / innovative synthetic turf systems. As a result GreenFields has witnessed an increase in sales. A number of independently operating high calibre players, in addition to GreenFields, have also secured the position of "preferred partner" and are able to make use of the innovative synthetic turf systems and components from TenCate Grass. This enables them to present a profile of distinctive quality to the market. Technologies sector / Technical Components sector / Holding & Services +--------------+---------+---------+-----------+ | (x €million) | H1 2012 | H1 2011 | Change(%) | +--------------+---------+---------+-----------+ | Net revenues | 37.0 | 35.3 | +5% | +--------------+---------+---------+-----------+ | EBITA | -2.5 | 1.0 |   | +--------------+---------+---------+-----------+ The revenues of the other activities relate to TenCate Enbi and Xennia Technology. The performance at Enbi showed no significant changes overall. In the US high initial start-up costs were incurred relating to components for a new printer type of a major US customer. In Asia developments were positive due to an increase in qualifications for Japanese producers of printers and copiers. This is one of the reasons for the Enbi site in China (Zhuhai) becoming the activity to have shown the strongest rate of growth. Xennia Technology continued the developments associated with the expansion of its commercial focus on industrial decoration. In the first half of 2012 Xennia recorded a 27% organic increase in revenues. The development costs relating to process innovation for textile-related applications (approximately €2.5 million on an annual basis) are currently putting pressure on the result. Major steps have been taken with regard to the implementation of inkjet technology within TenCate and the creation of a business model. The development in EBITA partly reflects a revised policy associated with the capitalization of development costs (Xennia Technology). These are to a large extent immediately recorded as costs in 2012. Statement by the Executive Board 'The Executive Board hereby states that, to the best of its knowledge, 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 included in the consolidation, and that the interim report provides a true and fair view of the information required pursuant to Section 5.25d paragraphs 8 and 9 of the Dutch Financial Supervision Act.' Royal Ten Cate Almelo, Friday, 27 July, 2012 For further information: On Friday, 27 July, 2012 the Executive Board press conference concerning the interim results for 2012 will be held for the media in the Hilton Amsterdam at 10.30 CET. At 11.30 CET a conference call will take place for the financial relations of TenCate. Dial number +31 (0)10-3010805 and than the participant code 2016#. TenCate (corporate) F.R. Spaan, Corporate Director, Business Development & Investor Relations Tel.              : +31 546 544 977 Mobile             : +31 612 96 17 24 E-mail           : f.spaan@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. TenCate products are sold throughout the world. 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 protective fabrics, composites for space and aerospace, antiballistics, geosynthetics and synthetic turf. TenCate is listed on NYSE Euronext (AMX). Press release as PDF: http://hugin.info/130798/R/1630012/522271.pdf This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Koninklijke Ten Cate NV via Thomson Reuters ONE [HUG#1630012]