Bekaert Business Report FY2009

Business Highlights

Recent Years

-In Feb. 2008, the Company and Haci Omer Sabanci Holding A.S. signed a letter of intent for the acquisition by the Company of 50% of the shares in Beksa Celik Kord Sanayi ve Ticaret A.S (Turkey). As a result the Company will acquire full ownership of Beksa, in which it already has a 50% stake. Beksa employs about 330 people and recorded 80 million euros sales in 2006. (From a press release on Feb. 18, 2008)

-In Mar. 2010, the Company completed acquisition of two Bridgestone tire cord units - BSSH, Huizhou (Guangdong Province, China) and Bridgestone Metalpha Italia S.p.A. (BMI), Sardinia (Italy) - as announced in February 2010. The long-term supply agreement of tire cord to Bridgestone, which was also then agreed, has come into effect upon closing the transaction. (From a press release on Mar. 31, 2010)

Joint Venture
-The Company and Ansteel, a leader in the Chinese steel industry, decided to set up a 50/50 joint venture. Tow companies will invest a total of 150 million euros in the construction of a new steel cord plant to be built in the Shuangqiao District within the Chongqing Municipality. The first phase is scheduled to enter production in 2009 and involves a capital investment of 40 million euros. Ansteel produces and sells steel products which are used in the automotive, construction, shipbuilding and other industries. (From a press release on June 6, 2008)

Business Partnership
-The Company signed a strategic cooperation agreement with the Indian steel company Mukand. Both partners will set up a 50/50 joint venture and invest Rs. 100 Crores (€ 18 million) in a new factory to be built in Maharashtra (India) for the production of stainless steel wires. These wire products are used around the world in components for the automotive industry and all sorts of other industrial applications. Mukand is a leading producer of alloy and stainless steel long products in India with manufacturing facilities in Kalwe, Thane and Hospet, Karnataka. Mukand has supplied to Bekaert previously and will provide the new plant with wire rod. Bekaert has been active in India for some time, mainly in production of steel cord for the reinforcement of radial tires and carding products for the textile industry. (From a press release on Sep. 5, 2007)


R&D Structure

-The Company earmarked 10 million euros towards the realization and expansion of its R&D facilities in Belgium and China. In both countries the Company set up new laboratories for materials analysis as well as pilot plants. Extensive testing of new materials and products in these pilot plants allows the Company to roll them out to its production platforms worldwide without the initial difficulties that typically arise during a new start-up.

-In China several major projects were executed to support local product and process developments in close collaboration with the Technology Center in Belgium and technical support to all production sites in Asia has been set up. To support this strong business growth in China and the rest of Asia, the corporate technology organization, based in Jiangyin (Jiangsu province) has been accommodated in a new building which was constructed in the course of 2009.

-In Mar. 2010, the Company opened its technical center, located in Ranjangaon near Pune in India. The company operates three local plants in Pune, Ranjangaon and Lonand, where steel cord for tire reinforcement and steel wire products are produced for the Indian automotive market. (From a press release on Mar. 24, 2010)

Development Products in 2009

-Ultra-thin metal fibers used in gas burners allow for efficient incineration and low NOx and hydrocarbon emissions.
-Wheel weights, made from profiled steel wire, which are attached to the rim to balance the wheel, are the environmentally-friendly alternative to lead, which is harmful to the environment.
-Sintered or welded fibers that go in diesel particulate filters filtrate fine particulates that can be harmful to health.
-Ultra-tensile steel cord for tires weighs less, causing vehicles to consume less fuel and, at the same time, provides better reinforcement.
-Heating cord, comprised of extremely thin wires with a plastic coating, is a crucial component in limiting soot emissions by trucks.

Investment Activities

Investments Outside Belgium

-In Jan. 2008, the Company announced to invest in a new steel cord production plant in the Lipetsk Special Economic Zone, Russia. This investment of more than € 97 million will take place in phases over the period 2008-2013. The first phase is scheduled to enter production in 2010. The Lipetsk region, about 400 kilometers south of Moscow, is strategically located close to the target markets, with good logistics, good access to energy supplies. (From a press release on Jan. 18, 2008)

-In Apr. 2009, the Company and Ansteel, a leader in the Chinese steel industry, opened a new steel cord production plant in Chongqing, China. The two companies concluded a partnership in May 2008 and subsequently set up a 50/50 joint venture named Bekaert Ansteel Tire Cord (Chongqing) Co., Ltd. (From a press release on Apr. 8, 2009)

-As for steel cord, plant in Karawang (Indonesia) is expanding its capacity in 2009 to supply to local customers. Several highspeed freeway projects will increase the demand for truck and bus radial tires.

-In 2009, Plant at Ranjangaon (India) increased its steel cord productive capacity by 40% to respond to the increased demand in radial tires.