Bekaert Less growth, more savings, solid cash returns to shareholders
Despite the weak macro environment and some delays in the ramp-up of some of the growth platforms, Bekaert is still committed to its 10% uEBIT margin target by 2026, acknowledging that less growth will likely have to be compensated by further savings initiatives. At current profitability levels, Bekaert is generating sizeable free cash flow. The ordinary dividend of € 1.9 per share represents a dividend yield of c. 5% whilst the share buyback program of € 200m over 2 years adds another 5% annual capital return to shareholders. At 3.8x EV/EBITDA25e, buying back own shares seems an extremely compelling idea and we remind that Bekaert not only has the cash flow generation but also balance sheet strength to do so, with net debt/EBITDA at 0.5x. On the back of the attractive valuation and the ongoing operational & strategic improvements, we maintain our BUY rating and € 55 target price.Bekaert is a global technological and market company engaged in advanced solutions based in steel wire transformation and coatings as well as an independent manufacturer of drawn steel wire products. In addition, Co. teams up with customers and suppliers globally to develop, implement, upgrade, and protect both current and future technologies. Co.'s business activities are put in practice along two main axes: Product Innovation and Process Innovation. Product Innovation helps Co. better serve its customers, while Process innovation enables Co. to increase operational effectiveness, minimizing its impact on the environment.
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