Matthew Taylor - CEO Bruno Humblet - CFO

Wouter Vanderhaeghen - KBC Filip De Pauw - ING Stefaan Genoe - Petercam

Good afternoon everybody and thank you for joining us today. And Bruno and I want to take you through our presentation which I think you have in front of you on our result, but also how we see things going forward and how we want to change a little bit how we go about all business in the future.

But let’s start with the results and I will talk you through little bit highlight in the role economic environment before handing over to Bruno to go through the financial data in more detail. So first of all and again this is what you’ll see from the press release this morning, consolidated sales are marginally up and combined sales down 1.7%, currency impact on that was very significant so the currency impact so the currency impact was 72 million negative on the consolidated sales which was a 2.3% impact and of €144 million negative on the combined sales, 3.5% negative impact.

Gross profit 486 million was 15.1% margin which was the same margin as in prior year. REBIT to the 164 million which was 5.1% margin was down marginally on last year where we had made 166 million and 5.2% margin.

Then we had non-recurring items which were positive €7 million in 2014 compared to a negative €29 million in 2013 which meant the EBIT number was quite significantly different, so EBIT had 171 million or 5.3% of sales was up significantly on the 137 million and 4.3% of sales in 2013. EBITDA of 342 million or 10.6% of sales was similar up on prior year at 297 million and 9.3% of sales.

And this all translated into an earnings per share of €1.51. Just looking a little bit to the global economic environment and what were the things affecting us as we looked at 2014 and it was a fairly mixed pictured as we talked about through the year.

Lower growth in some of the emerging markets and different pressures in the emerging markets while Europe was actually strong for us and North American market was also very strong and resilient again some of other global movements. One of the cheeky challenges for us has been the overcapacity within the global steel industry and within that the wire industry particularly created in China with a slowdown of industrial growth in China and the competitive and pricing pressure that has brought about throughout the Asian market with particularly in South East Asia but also it impacts for us on Latin America which was one of the markets they focused their export activity on.

Low commodity prices mainly copper in terms of the way that affects us but also low oil prices has had an impact on quite a few the economies where we operate particularly in Latin America. And the weaker euro however and you’ll see this, I’ll talk about exchange impacts in the variance on exchange rate impacts through year.

The weaker euro will we believe help us as a business, keep the volume momentum in EMEA and also has an impact on the translation in a number as well. So the lower oil prices do have a negative impact in certainly countries where the GDPs are fairly dependent on oil revenue to drive them and to drive their revenues, but actually we anticipate them having a positive impact on those countries where that import is of oil.

Just to give you a prospective in a country like China importing around 7 million barrels of oil a day and that’s $50 a barrel times 7 million, $350 million a day of additional windfall -- disposable income let say to put into incentivizing movement in the economy, really around over $100 billion of incremental opportunity let’s say and so we do see that lower oil prices will have a significant impact in different economies around the world. If I look at it going into specific regions for us in Europe as I said before the market has been stronger there driven particularly by strength in the German market as a whole and export from Germany so the supplying into those manufacturer has been good for us.

The automotive market has been growing both OEM levels but also at its aftermarket level which meant that we’ve grown through that with tire cord but also in some of our specialty steel as well. In North America again the automotive market growing strong growth for our tire cord demand and also for our specialty steel line of products.

The agricultural sector, however, was very weak it had a very weak start to the year because of the freeze right across America this time around it’s a little bit more localized not quite as bad as it was last year. But the agricultural sector didn’t really recover as we went through the year we expected potentially a rebound to happen towards the end of the year that never happened and it’s still not looking particularly good at the moment.

So the agricultural sector was a main -- was a key issue in North America. The other aspect that we saw in North America were imports from Asia as well and over capacity in the local market which impacted us on the profitability as Bruno will talk about shortly.

When we look at Latin America this was a tailored change as we went through the year. We did see very weak demand due to those lower commodity prices and oil prices coming to play but also combined with political changes in some of the countries as well which brought things to a little bit of an impasse as they went through their elections in the most -- and the post selection policy development.

So we did see at the start of the year being relatively slow. We also saw strong price pressure from the Asian markets as China began to slowdown the export pressure got quite strong into Latin America.

However as we talked about at the half year we did see a buffering out as we went through the second quarter and it did bounce back a bit as we went into the second half and you will see that from the numbers that Bruno will take you through as well. As the currencies also continue to weaken in South America that did make the more competitive locally against the imports and allowed us to take some targeted price increases which helped our results as well.

Our market share despite those price increases did remain stable. In Asia Pacific here we see really the biggest issue has been the slowdown of the industrial growth rate particularly at the backend of the year continued with increasing capacity still going into the Asian market meant the capacity utilization was lowering as we went through the year and that resulted in quite strong price erosion in a lot of different sectors.

There was increased competitiveness as a result of people looking for more markets to go after with their wires and their industrial wires and particularly in Southeast Asia on the industry wire side but also on the tire cord side as we saw in China and that hit us very hard in the final quarter of the year and we did see a very weak final quarter reflecting both that pressure on pricing and the flow through to volumes that were happening there but also corrective actions taken place on stock build over the year and because of changes in import duties in North America. So there is a combination of different things coming together at the backend of the year.

If I look a little bit on sales by segment and just really wanted to pick out a couple of things here because of the growth in Europe and the strength in Europe what we’ve seen on a consolidated basis is that Europe actually is again our largest market at nearly a third of total sales ahead now of Asia. On a combined basis it continues to show the very strong part that Latin America represents of our business as a whole at 35% of the total business.

I’ve mentioned earlier just wanted to come back to the subject of currency just so that you can see the variation and effect that currency had on our sales numbers. This chart shows both the consolidated basis and then the combined basis, the impact from currency in the full year but what it was in the fourth quarter as well, just to give you an idea of the shift that happened as the euro started weakening at the backend of the year.

So full year effect in consolidated sales is minus 72 million but on the fourth quarter it was actually plus 25 million so we’ve reached 97 million by the end of the third quarter and then it recovered by 25 million. Similar picture but bigger number on the impact for the combined sales 144 million negative in total but it was again plus 24 in the final quarter of the year so very significant shift there through the fourth quarter.

If I look at the mix of business for us and what each sector represents to the business you don’t see in terms of region by region a huge shift there are some -- there is some movement in the different sectors by region but it’s not huge. But what I would pull out is that when you sum it all together automotive actually continues to grow in terms of its importance to us as a business and is now 38% of the total business with construction following it on 22%, so growing importance of the automotive business as a whole to the Bekaert business.

And with that in terms of the highlights I will hand over to Bruno to take you through the financial data in more detail.

Thank you, Matthew. Starting with the sales line, as you can see the sales increased with about 1% which reflects the volume increase of close to 3% and over the year still a negative exchange impact average euro was slightly stronger 2014 versus 2013 and that’s it into about 2%.

Now for all of you moving forward of course with the important weakening of the euro versus the other currencies, in 2015 maybe a rule of thumb which we try to establish is that for every percentage change in the euro versus the dollar and the other currieries saw every percentage that’s worth in our top line about 20 million, so you have a bit of reference point on an annual basis what is -- how important exchange rate movements are given and that of course assumes the current correlations of all of the currencies which remain, but that will give a bit of an idea also moving into 2015 with the huge fluctuation which we see as we speak. If you look at the gross margin, gross margin remains stable even though we had a negative impact of the pricing, the price erosion, mainly in tire cord China but also in Latin America.

We’ve seen some of that and of course you also have the cost inflation but all of that has been offset through on the one hand the volume and on the other hand the cost savings programs which we’ve been putting in place. Looking at our SG&A, as a percentage of sales increasing slightly from 9.9% to 10.1%, the biggest increase you will see selling expenses from 128 to 138, but you need to note that 10 million of that is due to a bad debt reversal which we had as a benefit into 2013.

So excluding that, the total selling expenses would have remained stable because we increased selling expenses because we bring in some new companies and also if we sell more through distributors so instance in Latin America there is a higher cost to that, but at the same time we had some positive movement in exchange rate. So all in all those are the key drivers for the changing selling expenses similar in admin where we see a small increase really reflected the fact that we have more entities in the consolidated parameter the ropes entities in Brazil and the entities in Costa Rica and that end partly offset by movements in exchange rate.

All of that brings us to a REBIT of 164 million. On Slide 12, you will then see that, that REBIT at 5.1% of sales turns into an EBIT which is above that at 5.3% because we have a positive nor-recurring in 2014 and already significant part of the positive was sitting in the first half of the year related to sale of land mainly in Europe.

The negative goodwill on the acquisition of the ropes entity in Brazil and we also now had some reversals of environmental provisions given that we every year do a very detailed review of all of those provisions and this year we had some windfalls versus what we normally see as increasing some of these reserves. Now all of that has been offset by impairments or partly offset by impairments mainly in Southeast Asia in our wire business, but we also took some impairment on our Russian business reflecting the current economic situations in that country with the high devaluation of the currency.

And next to that so movements in pension related provisions due to different interest rates and so on which impact that. If I then look at the REBIT’s reach because I think that really important to understand how we move from one year to the other.

First there are these scope changes i.e. the new entities, which are now under our parameter, the consolidated parameter and that’s mainly Costa Rica the startup of the facility which we are building their for Dramix created still a loss together with a small but nonperforming business which we also took in from ArcelorMittal, but it’s mainly the startup of the entity which we had in there.

There is some negative impact on the exchange rate movement as we saw it on the top line. You also have it on the operational profit line of course.

We still single out Venezuela that really relates to the first half of the year as we told you at that point of in time as well. In 2013 Venezuela was still delivering profitability and since the middle of 2013 we are basically running the country at about breakeven, so for the last 18 months we’ve been running that at breakeven, but year to year that still is about a 4 million change.

And then we can come to the business impacts of the ongoing business, I would say where you see that we have been able to build our volume helping us in a profitability with 42 million, but to be able to do that we had to give in pricing and as indicated pricing in tire cord China because of the competitiveness in the market, but also in Latin America which is why you saw the margins in that region going down to compete with the import coming out of Asia. So to be able to secure the volume growth we had to give in, in prices and the volume growth is more than offsetting the concessions which we had to do in pricing.

A similar story on the cost side, where there is an overall cost inflation driven by wage inflation, energy cost because it’s not just oil but a lot electricity. Electricity reaching a lot the courtiers around the world where we are active is based on hydro, so if there are low rain levels then electricity costs are more expensive so we do see a cost inflation of about 27 million offset by the cost reduction program which we have been able to materialize of close to 40 million.

So also here we can say that we’ve been able to offset all of the cost increases by our savings programs. And then finally a real one off, I would say that we have the benefit in 2013 not to having that one in 2014.

And all of that meant that our recurring profits on the two years were very comparable. If I then move on slide number 14 to the different regions, Europe recorded record profits even though the second half the growth was less but we were also up against a much stronger 2013 already in the second half.

The final quarter was slightly below the same quarter last year and that mainly is because the seasonality is typically more important if the business cycles are so much weaker than people stop ordering a bit faster if you are in a very strong business cycle you typically see less seasonality. We saw some increase of seasonality not massively but some increase in seasonality.

Non-recurring again reflects the gain of the land but also some impairments in Russia and some of the pension related impairments are sitting in Europe. If I then look at North America there you will see that the sales in the second half of the year is comparable to the first half but that really -- the underlying element there is that there was lower volume due to seasonality in the second half of the year but of course the exchange rate was very different and offset that movement.

The second half in 2014 was about 5% of both the second half in 2013 from a volume point of view. So there is a bit more volume momentum still not to the level where we expected to be but at least some volume momentum.

The results here are not impacted by the fire in our Rome facility our bitwire facility in Rome because those costs are covered through insurance and actually you will see that there is a positive small positive sitting in non-recurring because of that fire and that is due to the way one needs to record and calculate for the proceeds which we get from the insurance company you need to bring in as a non-recurring income and the costs will come later on as an expense as the way it needs to be done. But basically this is why there is a positive sitting into this year.

For your reference also here looking forward the total Rome business represents about 10% of the sales of our business in North America. So having the bulk of that wiped out that means that there is up to 10% of down side in the sales for 2015.

But we are doing everything which we can to get the facility up and running and to capture some if not most of that volume back but of course in the first quarters it will not be the case it will be more some pickup towards the second half of the year given that we are reconstructing the facility in Rome. If I then move to Latin America, in Latin America we said at the half year results that we thought that we were bottoming out and that’s also what you see the second half of the year is stronger and also compared to the same period last year we are seeing a better business momentum part of that is because there are new acquired companies in there the ropes facility as well as Costa Rica but also because there is an organic growth and we can start to see some specific targeted price increases in local currency given that the devaluation of the local currency make that in some areas we start to be more competitive.

That also explains why we see some margin pick up but still not to the level where we were before and that is the price erosion which we see to ensure that we can compete with imports out of Asia. Important to note here our key strategy remains to protect our market shares our strong market positions and we’ve been able overall to do that in all of the countries and then we also expect if there is a bit of more economic upturn or the countries get more competitive due to the devaluation of their local currencies that we will start benefiting from a better business momentum in Latin America as well.

And finally looking at Asia you see the big drop in the profitability while the consolidate sales stays about stable the sales is helped by the movement in the exchange rates there as well and I think also here to note is that the second half year volume is still slightly above second half of 2013 but it is fully due to good quarter three because in quarter four our volumes were below the same quarter in 2013. So as we indicated also in the early announcements of our results the quarter four business in tire cord China but also in Southeast Asia in wired so very weak quarter reflecting the lower demand which we see there.

Non-recurring mainly relates to asset impairments in the Southeast Asia businesses. We’ll then move back to the overall the P&L getting back to the non-operating parts I’m on slide number 18 for the people on the phone.

Looking first at the interest expense they are about stable versus last year reflecting on the one hand higher gross debt because as you know we did issuing of the bonds in June to ensure liquidity to be able to pay for the Pirelli tire cord acquisition but in spite of that higher gross dept. we don’t see an increase in interest expenses because of the overall interest rates on our debt reduced.

Maybe a few words on other financial income number which is extremely difficult to predict where it’s coming out. Basically a way to look at it is if the euro is strong at the end of the year because a lot of it has to do with unrealized gains and losses so the balance sheet rate is very important at December 31st.

A strong euro typically means negative number there weaker euro -- tailing off euro compared to the few months before turns into a positive number and that’s also what we saw this year last year strong euro so therefore a big negative this year the other way around, but we also have created some reserve for potential exchange rate losses in Venezuela. We’re not increasing our exposure to Venezuela but some historical potential exchange rate losses which means we still need to get some dollars from the local government.

But it’s less likely that we will be able to get them so we created some reserves to cover for that. And then finally on the income taxes we have of course on the one hand the cash taxes but we also slightly increased our tax reserves given that we see more aggressive situations in the tax environment globally and to cope with those increased challenges we just increased somewhat our global tax reserves.

The final part which I then need to look at is the joint ventures. Starting with sharing the results of the joint venture which is the part of the entities which we do not consolidate so this is the after tax benefits, our share of the after tax benefit of those entities which is largely our business in Brazil and that also explains why we see a bit of reduction the overall economic environment in Brazil has been difficult and continues also in 2015 to be challenging.

2013 also had a bit of windfalls for sure in the beginning because of some reversals which we had there. But overall 25 million after tax our share of the results of what we are doing in Brazil.

And then the final part is the results that for the non-controlling interest i.e. the joint venture partners where we’re in the lead and here you see combination on the one hand this number is positive one for our joint venture partners mainly in Latin America.

So they’re sharing the profits in Latin America, but they also share in the losses and also related of course to the impairments which we took in Southeast Asia and both of them are offsetting each other which is why this number exceptionally is at zero. All of that means that the result attributable to the group now is at 87 million versus 25 million last year.

Looking at the cash generation the gross cash reflect of course to a larger extent what we see in the EBITDA line the delta which we see between the two years on the cash from the operation reflect the increase in working capital in 2014 while we have the decrease in working capital in 2013. And that’s why you see such an important gap between two years it’s really the delta in working capital which play there.

The investment activity of course reflects the acquisition of three of the five Pirelli steel cord sites. Now looking at the working capital, you’ll see that working capital increased mainly due to three things, one is that the three sites of Pirelli have with them about 55 million of working capital.

Second element is that is a snapshot on December 31st, a weaker euro means that all of the working capital which we have all over the world gets translated into euro and therefore it’s a big number translated into euros. The exchange rate impact there is about 61 million on the working capital.

And then there is the final part which I would call the real increase of working capital the organic increase is about 66 million. All that, if we look to the average working capital over the year it remains stable as a percentage of sales, which is of course an important metric as well at about 27%.

Now looking at the balance sheet you seen an important increase in our balance sheet but to a large extent all of that relates to the Pirelli acquisition, and/or to the funding which we had to pay for that acquisition. So whether it's on the asset side or on the liability side, the bulk of the changes here, the increases are explained by the Pirelli acquisition.

Now looking at the net debt, the increase from last year 575 to the 853 which we see this year, 207 million we would like to allocate to the Pirelli acquisition, a cash out related to the Pirelli tire cord acquisition, 155 million to acquire the three plants which were under our control by the end of the year and 52 million related to the share buyback which we started to cover for potential dilution related to the convertible bonds, but that convertible bond of course was also directly done for the Pirelli acquisition which is why we combine those elements to say the Pirelli related debt if you want was about 207 million, 52 million for share buyback, 155 million to acquire the assets of the three plants. The remaining part for the Turkish and Chinese plants will be in the first quarter, first half of 2015 of about 100 million.

Our net debt to EBITDA stands at 2.5 but excluding the Pirelli impact it would have been 1.9 exactly in line with where were last year. And then a few more Slides with ratios but I think I covered most of them, last slide you see the number of treasury shares slightly over 4 million treasury shares of course again reflecting the buyback program which we started.

So that provides somewhat more detail on the P&L, the balance sheet and the cash flow statement and I would like now to hand it back to Matthew to look at 2015.

Thank you Bruno. The outlook for us which is on the next Slide 27.

Is what we put into the press release today? Essentially we see that the low running rate that we saw in the fourth quarter driven primarily by the down-turn in Asia, we would expect that to continue through the first quarter of 2015.

However as we move out of the first quarter we do see there are both the positive impact of currency movements together with the impact from the lower oil prices. We do see that driving improved demand as we go through the balance of the year.

Now as we fully understand that the economic environment is challenging and our own performance is not where we believe we can get it to, and as a result there is quite a lot within the business we're doing to try and turn that around and make ourselves stronger to both coupe with the environment as well as to grow going forward. A big part of that is through the M&A activity that we are undertaking, and I'll talk a little bit later strategically how those fit in but obviously you have seen the announcements over the Pirelli acquisition, the closing of that and also the ropes business, the expansion of our ropes business the acquisitions last year in Brazil, the restructuring of our business in South America and then finally the acquisition of Arrium's rope business, Molycorp ropes most recently.

And I'll talk about how those fit into the strategy going forward. Before I jump into the sort of actions of what we're doing and outline the strategic intent that we are, I just wanted to say we started as we went into last year and I started taking over the running of the business, looking at where do we want to be and what business we do want to be, what field of play what we want to achieve.

I am not going to go through the internal goals that we laid out but I did want to start with this slide to talk about little bit about Field of Play or the vision of where the business wants to be. Because there is certain words on here which we'll say are only words, provide very clear filters for us in terms of how we look at the business going forward.

We want to be the preferred supplier to our customers and we want to be the preferred supplier in steel wire products and solutions and we want to become a preferred supplier by offering superior value to our customers. The reason I single out those words are because effectively if we can't achieve those and those are businesses or product lines that we have to question whether we want to be in them or not.

And also when we look at M&A activity it's about how do they reinforce our position within that very clear field of play. So from that field of play we then derived five core strategies for the business about how we actually want to deliver the results that we want to achieve and how we want to then maximize our performance within that field of play.

First one is about driving the customer into the heart of our business and this means becoming the preferred supplier not through responsiveness to the customer but through genuine insight as to what means value to a customer and then the ability within our organization to deliver that value to the customer. It is quite a different statement to be able to do that and being able to respond to the customer on a short-term basis.

We then want to drive growth, and drive growth through providing those value solutions to the customer across both existing and new sectors and by having differentiated solutions particularly in terms of the value proposition they represent to the customers and done in a way to create value for us. We want to maintain technology leadership in the sector, it's where we stand today we want to maintain that but we actually want to accelerate the way in which we bring new products and processes to market so that they can have a bigger impact on our business and they have more relevant to what we’re trying to do in terms of adding value, we want to leverage our scale to greater effect whether the number one wire producer, steel wire producer in the world and we want to make that count more than it has done in recent years, and a big part of that is by reducing the complexity of how we go about our business not just in terms of products that we offer in the market but also the processes we’ve actually both develop and manufacture those products and our way of working as a business as well.

That reduction of complexity would allow us to create a much greater focus on our strengths as a business and on the areas of greatest opportunity that we can but also drive a much high level of standardization of best-in-class levels throughout the Bekaert business. And then finally about being lowest total cost as well, it doesn’t mean about mean being the cheapest product in the market place, it means about understanding what is the value proposition that we want to offer to the customer and being able to provide that at the lowest total cost both to the customer as well as to ourselves and therefore enabling us to create value for ourselves as a business.

So five core strategies which are driving the long-term thinking of our business that how do we want to go about delivering on that. And the first part of that is how do we look at the short term because while so strategies are essentially about long-term transformation of the Bekaert business about how we go to market.

We have to deal with the short term issues and we have to both deliver improved performance as a business and continue to grow as business in the short term. And now big part of that is growth and margin enhancement by taking advantage of the investments we’ll be making over recent times.

Investments in our own capability and capacity so for example things like the investments in Dramix, you know, over the last 18 months we've built new operations of Dramix in India, in Russia, in Costa Rica we’ve expanded in Europe. So we created a much bigger footprint for our Dramix busies and it’s about taking full advantage of that as we go forward.

It’s also about taking advantage of the M&A activity that we’ve been doing, so bringing in the Pirelli tire cord business bringing in the ropes businesses in to Bekaert. They operated higher average margin in the Bekaert business as a whole so they will both enable us to grow but also to enhance our overall margin as a business.

That’s the first element there. The second element really relates back to what Bruno is going through is his REBIT chart and about how we look at offsetting the price deterioration that we expect to continue and cost inflation re-pressures through cost activity and cost reduction acidity ourselves and very targeted activity.

Now we’ve given ourselves very stiff targets as we go through this year in terms of cost reduction throughout the business so that we can offset as much as possible all of that pricing impact that we anticipate and cost inflation and therefore flow through the majority of what is the growth that we expect to be able to deliver this year in terms of its impact of the bottom line. So actually a better where this year we needed both that volume growth and the cost activity to offset the pricing deterioration and the cost inflation, we would look to be able to flow through much more of that volume advantages as we look at 2015.

And that will require some fairly significant cost changes within our business as we go through this year. But it’s not just about this year that’s really about delivering on the short term and what we want to look at is structurally and transformationally how do we improve this business’ ability to move forward in a much more profitable and value creative way going forward in terms of delivering those five strategies.

And I picked out some of elopements that we’re very focused on at the moment and we’ve been implementing over the last sort of 12 months. Firstly on organization, we’re going to change to be a much more customer-driven company with a much better understanding of how to create value to the customers, we have to able to get in and bring that insight into our business so we’ve restructured to create the platforms role to be really one of understanding that customer value proposition and being able to bring into our business in a way that we can then develop products and solutions to enable it to happen.

Then they have a long-term planning responsibility on how do you deliver the product and technology that will allow us to have that solutions how do you deliver the cost structure that we’re required to have for it and the footprint requirements that we need to deliver it through. The regions will then be responsible for the deliveries, so we’ve had some fundamental structure change in the organization already to allow us to start to the process of driving growth through creating value for our customers through insight into their requirements.

We’ve also launched our manufacturing excellence program internally. This isn’t one off right which we just going to get a bit better on our operations.

This is a fundamental transformation of how Bekaert around the world uses its 80 factories around the world to produce the goods we then sell to our customers. This is a full year program for us a 3-to 4-year program and we’ll via transformation for every single one of the over 80 different operations that we have around the world.

This essence is about creating a sustainable platform for continuous improvements throughout our business, in a way it’s about saying we need to move away from operating as 80 individual plants all taking huge efforts individually to drive continuous improvement, but each of those because it’s so dissipated being a very small step to bring in that effort together and having the impact of 80 operating as one and working as one and driving continuous improvement, so it has much more significant impact and therefore the small steps become great stride. And to do that we’re going to launch this program, we have launched this program which is really designed to drive safety, quality, delivery consistency for our customers as well as cost improvement throughout our business enabling us to really give a strong commitment to our customers about what we will able to deliver to them consistently over time and throughout our operations anywhere in the world.

It is about best in class benchmarking both internally and externally so that we understand how to apply the best practice and then bring that out across all of our operations through shared approach and common methodology throughout the business. Complexity reduction is a big part of it as well because that enables us to focus on more streamline processes as a big part of taking cost out of the business.

When we look at the total addressable area or addressable cost within what we want to tackle with our manufacturing excellence. We take our wire rod cost material cost because that’s handle separately that form is maybe a little bit more part of the day to day operating cost reductions that we need to achieve.

And we look at the structural cost of the business. And it’s about €1.3 billion of structural cost but there we have the opportunity to improve on.

So we set ourselves very clear task of how we want to improve that. And it’s covering really all aspects of the operations whether that’s in labor, utilities, maintenance, energy use, consumables, packaging, coating really every investment of our business driving down in detail to how we apply best practice.

We’ve launched this already in China and here in Belgium our operations in Yanzhou in China and inserting them in Belgium. There is an ancillary benefit that we want to drive through it included with drive to lower complexity.

But as you improve the efficiency of your processes on each line you actually reduce the amount of change over time into products that you are producing that actually means that you can uptime you can increase quite considerably the amount of time that you have available on each of your product lines to you. And therefore increase capacity for ourselves without huge investment.

This is one of the challenges that we have as a business if we want to improve our return on invested capital is how do you actually get more out of the investments that you put in. So the manufacturing excellence program is really very clear in terms of its drive to improve that available capacity as well.

Moving on to complexity reduction and prioritization, this is really all about focus and as that creating focus within the business on the things that allow us to create impact in the market place. And this is on product and it’s on process as well.

And it’s really about narrowing down the different number of things that we’re doing within the business so that we can apply the right resources and the right focus onto those elements which we believe that we can apply to biggest impact and leverage our strengths most clearly within the marketplace. One example for this is to say for example in R&D without changing our R&D spend fundamentally we’ve actually reduced the number of projects that we’re working on within R&D from over 400 to under 200.

It’s not as I say about spending less money it’s about actually focusing the resource that we have on those projects which have greatest impact and enabling ourselves to bring them to market much more quickly which means they can have greater impact for us in a shorter period of time. Also related to complexity and you will hear me talk quite a lot about complexity because it is one of the big costs that we have in our business that needs to be tackled.

We want to look at our portfolio optimization. And again what this really means this is about using that filter that I put up in terms of our field of play to say should we be in a business.

If we cannot be a preferred supplier, if we cannot add value to the customer, or if we cannot create value for ourselves in part of the business with certain products in the business should we be in that business or not? If we get out of it does that free up resource that we can apply to those areas of the business where we know we can add value and where we know we can grow.

So this is about being much more selective as a business about where we want to play. And sometimes that will be whole businesses that we want to look at other times it will be individual areas of the business maybe a certain level of products within a certain region not even on a global basis but a very clear ability to prioritize where do we put our effort, where do we put our resources and get out of businesses which we don’t think we can create value with.

And then finally footprint optimization now you might expect me tends to say okay footprint optimization immediately means that we have lesser number of factories. Actually it starts with a very different way to that because the first point to be there is again about complexity reduction.

We tend to build most production in most factories as a fairly broad generalization but as a basic principle is one that we have followed in many part of the world. The more we can specialize into different factories what we built the more you can increase your available capacity within those factories, the more you can drive cost down at the products that you build within a factory because basically you have a much more continuous flow of product going through the single operation or down a single line.

That has a benefit firstly of giving you lower price so if you can reduce that matrix of complexity across your plants you do get into lower cost. You also start freeing up more capacity than the more capacity you free up and then add to that the manufacturing excellence program and the impact that we feel that we can create on that through freeing up capacity.

That combination will then give us a level of capacity that may enable us to then rationalize the overall footprint around the world as well. So it’s not something the way you can make that change in very short order but certainly the more we can free up capacity within the existing equipment that we have available to us the more we can think about rationalization of the footprint longer term as well.

And it’s certainly one of the goals that we put onto ourselves. So those are the key areas that we are working on and started working through the last 12 months of the business to set ourselves up to be in the much stronger position going forward.

We feel very confident about the impact those can have on the business and actually that underlying structural change to the cost for us in bringing products to market and putting them into the marketplace to the customer. We feel makes it very clear that we can confirm the targets that we’ve had with you before getting to 7% on our EBITDA.

But also doing it in a way because we’re not single minded in terms of the EBIT number. We’re actually much more focused on it being value created as a whole so we want to look at that 7% in combination with the significant improvement in terms of the capital efficiency of the business so the return on invested capital will be able to be achieved as well.

And the part of that is I talked about that releasing of capacity from the existing level of equipment and asset base that we have throughout the business. So we have a very clear focus but it’s not an immediate turnaround because is a long-term action and so we’re saying that over the next three years we absolutely reaffirm our belief that we get to those target of EBIT and also improvement on capital efficiency.

And then I just wanted to finish off by talking again in terms of relating to how the M&A activity that we’re being going on feedback into what I have just been talking about I’ll just talk about the three latest acquisition or M&A activities that we’ve had. Firstly the Pirelli tire cord acquisition, this is the business we should, we’re still optimistic about closing the China deal in the first quarter but this is the business when we finalize that will give us a 150,000 tons of additional capacity and it’s a €300 million sales business that we add into our top line.

As a business it has a better average margin in the Bekaert business does today and so it does enable us to both provide a top line growth as well as an improvement to the average margin of the business and it’s in area where we are world leaders we have technological leadership and we can create the biggest impact on our business. So it’s something that fits absolutely with our strategy and if it’s absolutely where we can add value for our customers where we have genuine insight about their needs and we can differentiate ourselves from our competition.

The next one is in the ropes business. And I’ll talk a little bit about the total ropes business but also about [indiscernible] our most recent acquisition.

This map just gives you an idea of where our ropes business are maybe to give you a bit of view as to actually the scale and scope it. Here you see the various operations we have around the world and some of this applying wire plants that provide the rope wire into the wire ropes businesses.

So you can see our operations throughout North and South America for ropes and sales and also in China in Yanzhou and in Malaysia as well. We also have our advance cords business which we get with our ropes business and that base in here in Belgium [indiscernible], in Fleckvieh in Slovakia and also in Shenyang in China.

And then at bottom there you see the acquisition of the Molycorp ropes business in Australia. Just a few words on Molycorp themselves it’s an extremely good and well positioned business in Australia and today it’s very much in Australia significant player in the overall mining industry.

They do export into other countries the main market now in their main market share is very much in Australia. It’s a company that’s over 90 years old based just north of Sydney and New Castle in Australia very experienced technologically advance team as well with the very stable customer base.

What is it mean, that our ropes business looks like as we go forward from the here. Well, we’ve been in the ropes business for about over 50 years and with this acquisition our ropes business grows about €250 million of sales annually.

And growth in ropes -- in wire ropes is absolutely a key priority for us within the business. It’s one of our own internal must win battles.

Including the ropes business from Molycorp does make us the leading supplier and producer of mining ropes in the world. We also have very strong differentiated technology in key sectors and that’s been enabling us to drive both organic growth as well as adding that growth with these acquisitions.

So we do have a strong ropes business which again has a better average margin in the Bekaert business as a whole so that something that we feel can bit both growth and margin enhancement. And then finally go in the other way, this morning we announced the divestment over the Bekaert carding solutions business.

Bekaert carding solution is being acquired by Groz Bekaert, the German company and this is a very good example about looking at where we can add value and where we don’t add value. This carding element of this business is not a core competence for us.

It is not an area where we know exactly where we can add value for the customers. We’re not the preferred supplier in the industry there are other people they are doing that.

And actually Groz Bekaert and their structure and their expertise in supplying equipment tooling and services and systems into the textile industry we feel can do a much better job than us in nurturing and growing this business. However where we are experts is in the wire that goes into those carding solutions and so the core of the agreement with Groz Bekaert is a long-term supplier agreement on the carding wire that we will continue to supply into their business.

We're the world's leading manufacturer of carding wire and that's where our expertise and our ability add value comes. So this is a very good example of how we look at our ability as a business within that filter being a preferred supplier, being able to add value to the customers and also create value for ourselves as a business.

So I just wanted to use that as a final example of really trying to explain from a point of view of the vision and a field of play, how we look at acquisitions and divestments within our business to reinforce what we want to do strategically but also hopefully have given you a good picture of the areas that we're concentrating on as a business to drive ourselves into a much healthier position as we go forward over the next three years. So with that, that is what Bruno and I wanted to share with you.

And so now I'd like to open it up to questions, but I'll Intercall to give a short introduction as to how we'll manage this with all of the conference call participants.

Maybe we can take a question from the room here.

Couple of questions from our Wouter Vanderhaeghen from KBC. The first comment on your capacity utilization and your Chinese tire cord plans and how it has evolved over recent months?

And then secondly on the U.S. restrictions on import of Chinese tires.

Do you see an increase of -- do you see that has trigger an increase of demand of tire cord in U.S. market itself or do you see that being replaced by inputs from other regions.

Then finally little bit linking us also as you comment on your foot print. Are you considering to move or reduce installed capacity in China to install that in EMEA region or North America?

Let me start, we have seen a reduction in capacity utilization probably down into the mid 70% in China on our tire cord activities at the back end of last year. And I think we have to understand that that is very much a trough position because there was an adjustment particularly in terms of stock within the sector, partly driven by the change in import duties in the U.S.

But just to be clear on the import duties and how big an impact it is on our business. It is in one part of the tire industry only within the truck tires, within the passenger tires -- again the way we're in -- Within the passenger tires it's not applicable on the truck tires, its total impact on the volume of the business is not huge for us.

Obviously there is some of the individual manufacturers within China and it's about how we drive that and it's also true that we've been growing market share better in passenger tires than we had in truck tires in China. So yes it will have an impact.

Do we expect it means more availability or more demand for tire cord in North America. Not per se I think there are other factors which will drive that and I'll come back to that in a second.

But I think that it opens up the window because it's a very singularly focused restrictive import duty on the Chinese. I think that you will see a lot of tire imports coming out of other parts of the world going into the U.S.

as a result. But there will be some more demand from the U.S.

tire makers. At the same time we're also seeing a lot of investment going into North America potentially Mexico as well over the coming years and that we do feel is going to generate quite a lot of incremental demand in the U.S.

and so we're investing into our tire cord wire operations in the U.S. at the moment.

So we do believe there is going to be growth in that sector in the U.S. going forward.

What about shifting capacity out of China? I mean I expect to have over 100,000 tonnes of idle capacity, is it an option to ship to Europe or North America?

I don't think there is a huge option for what I have seen previously because you can't just create capacity out nothing. So we'd have to move equipment and capacity around, that's a very expensive thing to do.

I actually think long-term that we've got opportunity for that capacity in China anyways. So I am very optimistic about where the Chinese market can go longer term and also what we can do within it.

So long-term I believe the capacity we have in China we need and in fact think we will need more over time as well. China will continue to be export platform for us as well, so we know we have a cost base of this competitive to export from, the activity that we're doing on cost in China now and we'll continue to accelerate to address the pricing issues in China through this year.

And I think will make us continuously more competitive. So no plans to shift that capacity out of China.

Maybe try technology and then I'll come to you David and see whether we can get somebody from the phone.

A question on China again, what would be -- what is currently the commercial industrial strategy in tire cord so in China and in particular relative to the let say the lower end of the market for the lower quality let’ say tire cord.

I think the Chinese tire cord market as a whole not just as a low rent has become very commoditized over the last couple of years and I think one of the challenges for us a manufacturer together we some of the other bigger players has been trying to find the balance point between that back commoditization and what you can offer in terms of better value on other products to the customers. And it’s not something that we’ve executed well over anybody and as a result the proportion of those commoditized product represent of our business has increased overtime and frankly that is something we’re working on turning around.

And for me that is long-term exactly how we get out of the dynamic that we’re in at the moment is not something that can happen overnight and it’s something that takes time to do because you’re changing how your customer operate as well as what you offer those customers. But in the meantime it means that we have to take a much more aggressive stance on how we tackle cost in the markets so that we can continue to business in the volume that we want to do business in China to use the capacity that we have, but do that in a profitable way and stop the slide of profitability that we have in China.

So short term you will see a lot more emphasis on cost from us from China. Longer term it will be a different value proposition in the market place.

And so that mean for instance in 2015 that you might be more aggressive in terms of pricing to increase market share?

We certainly -- again we’ve learned -- maybe we should have learned our lesson probably the first time, we last, not last year in 2013, we try to hold pricing when the market was moving down and we lost market share as a result. As we look at the back end of the last year we again try to hold onto pricing, we felt we’ve gone down a lot and try to hold onto pricing in the back end of the year and we lost shares in the fourth quarter as well.

So if we want to stay and use the capacity that we have in China, we have to get to a lower cost base so that we can compete on pricing.

And currently what do you think is the -- let say the financial health of your competitors in the market, is there room to consolidate or to see competitors going bust how do you outset?

There is always room to see competitor going bust that’s always very well, but the resilience that they’ve shown overtime has been considerable and is not a starting assumption that will see people going bust which is why our assumption has to be that we can compete on price, that we can compete on price while retaining good margin and there are very different types of businesses in China and I think we have to recognized that they’re highly professional China, good technology producers alongside ourselves who are facing some of the same challenges as we are but who probably through more simplified operating structures got some cost advantage over us as well and can translate that into either better margins or lower prices and that’s one of the areas we have to fight on. But there are a lot of manufacturers who have very low technology levels, very low investment levels in terms of their capability but who will produce eight tire cord products that the sell into the market may not have the quality that we would want to put onto our product, but at the end of the day they’re selling it and that setting price levels in the market place.

I don’t think they can last forever doing that and I don’t think they can keep pushing those prices down because they’re already at a point where their contribution their marginal cash generation on those products is going to be extremely limited. We continue to sell at a premium but we can’t allow ourselves to thing that, that premium can widen and so that’s why we have to keep the focus on comp.

And just very last follow-up on this cash generation of let’s say few competitor -- lower quality competitors in China, do you consider that have reached a kind of -- I’d say a very low bond compared to a large two-year in terms of --.

I think we have. I think we have because I don’t think that cost of borrowing is getting any cheaper.

I don’t think the cost of capital is getting any cheaper and I don’t think they can take that cost base per se any further down. So anything that they’re doing in terms of price reduction is effectively taken cash out, so always reducing their cash margin and how far they have to go I really don’t know and I am not trying to guess, but when you get to the point where they’re selling it, it almost as what we were classified as a zero cash conversion cost then they can’t really be generating any cash.

Good afternoon, Filip De Pauw, ING. I have a question on Slide 13 or related to that, so you have seen that your breakout that fixed cost inflation of 25 million to 30 million every year.

It was supposed to 27 in 2014. This was overcompensated by the final stage of the 100 million cost savings plan in 2014.

And I am wondering how we should think about that going forward in 2015, is there still more to come from the Finish cost savings plan or is the continuous improvement plan that you’re announcing today so that mitigates for the wage inflation you have anyway, so who should we think about how should we model?

I think absolutely we will be focusing on further reducing our costs after the focus which we had in reducing our indirect cost, there is a very, very strong focus to try to see how we can bring the cost down further. And moreover as Matthew said so far what we or in 2014 what we have been able to do is to offset the price erosion with the volume and ensure that we could get the cost inflation were to with the cost savings.

We’re putting a target on ourselves to do better than that and see whether through the cost savings we can not only offset the cost inflation but also part if not all of the price erosion. So that’s basically what’s our extreme high challenge which we put for ourselves is we will completely succeeded in putting to take that charge to two red boxes of pricing and cost completely true cost saving, it is extremely aggressive but for sure this then would allow us to have the volume growth really better improving our overall margin.

But to specifically answer your question yes our target is to more than offset the cost inflation through further cost reduction programs.

We continue -- I mean I’ll just add a little bit to that, we continue to see the simplification of our organization and a better capability to drive empowerment down through the organization can take ways out which will enable us to both be faster and linear. So we still see cost come out of the organization.

Do another try on the technology and see where we can get distant somebody from overseas or from Holland it’s also partly overseas I guess it depends how we go.

I have three questions please my first question is on Latin America we have seen quite a bit of political currencies exchange rates down there in 2014. Could you please quantify it the impact on operating profit due to ForEx reached there and if we assume that the current exchange rate stays then what should we expect for the full 2015?

And then second question is on your -- per margin target of 7% and just comparing it from 5% or 5.1% you have in 2014, if you can give us some more clarity regard which are the divisions or which are the businesses where you have higher top off margins improvement compared to others, where you have already made some good progress that for example in -- 7% and then couple of housekeeping question on maybe we can just say something on punching cash flow -- cash out flow and tax rate for the next two years please?

I’ll let Bruno answer the first and the last of your questions Akash and I’ll try to answer the middle one.

Okay, let’s take them in order then. On the exchange rates in Latin America it is extremely difficult to see and to predict where they are going.

Now you need to first of all know that it’s very regional business so therefore it’s to a large extent a translation effect which we will be seeing. That being said the devaluation of the local currencies and the most important one the biggest impact on the negative exchange rates which we had in 2014 was actually from the Chilean peso, so the devaluation of those currencies has an impact but also help to be more competitive versus the imports allowing us to start rebuilding the margins there again.

So it is a double thing, a weaker currency translates into lower numbers for us but at the same time hopefully over time it allows us also to get better from an overall profitability point of view. I think what you have from an exchange rate point of view in the second half of the year is more or less where I think the current exchange rates are running at because yes the euro devalued but also the local currencies in Latin America continue to devalue and there not that much gap between what happens on the euro versus what happened most of the Latin America currencies within the last six months.

The biggest part of versus the dollar but given euro went down and the Latin America currencies went down there is not so much different on across to the euro and the local currencies there I hope that add the perspective you needed. Matthew?

You can talk on pension.

I can take the pensions part, given the evolution which we’ve seen there is indeed some but not material I would say some high requirements to bring some cash and that’s not P&L related but some cash into funding some of our pension plans, in Europe but more specifically in the U.S. At the same time the U.S.

have changed their legislation to avoid that a lot of American companies put all of their cash into pensions and therefore it allows companies to be slightly lower funded in their plans giving them quite some relief on the cash out to be allocated to pension. So all in all the change year-on-year is expected to be from the cash out dealt on less than 10 million versus what we’ve seen last year so not material from that angel.

And then maybe taking the last point on taxes, overall we think that our long-term tax rate will be in the range of 30% but here it’s very important to note that even and you show that in 2012 when we had actually losses there were still an absolute tax which is always in the range of around 40 million and that’s also what we show now. So I think overriding element is that there a tax related to withholding taxes, taxes which we made in certain countries while our losses in other countries don’t generate a tax benefit.

So to take at the minimum around 40 million but if profitability further increase about 30% tax rate is I think optimal where Bekaert can be.

Okay. Akash let me talk about the margin improvement where that comes from.

Essentially we’re looking really across the board in terms of how we driver the margins obviously improved mix in our business and by that the acquisition of Pirelli and the acquisitions focused on the ropes businesses, the investment in expansion of the Dramix business for example, all of those are designed to improve the average margin within the Bekaert business and move us up towards that 7%. But actually the underlying structural improvements that we want to make to the business through things like the manufacturing excellence program are about improving the margins across all areas of our business.

The reason why I want to signal that out is because we can’t just grow in the high margin business because you also have a capital intensity which goes with some of those businesses which means whilst you might drive your margins in the right direction you’re not necessarily moving yourself to become value creative because your return on capital is not improving at the same rate. Some of our maybe lower margin businesses also happen to be the most cash generative and some of the best value creating businesses.

If we look particularly in Latin America for example, a lot of our business in Latin America is not high margin business but actually it’s being some of the most value created business for Bekaert overtime. So we don’t want to lose focus on that.

So we want to be able to drive the cost structure that enables us to do that business competitively in the market place in a way that we can take full advantage of the ability to drive cash generation but also expect that that hasn’t down with pull on the average margin, if you do that. So it’s a question of balancing between those.

So, yes, we’re enforcing the focus in different areas like tire cord and ropes and the specialty steels we do. But same time enabling growth in the industrial wire business like the fencing and the nails, so that can be cash generative and value creative for the business as whole.

So even though I just mention one number on here internally we look at this as a triumvirate of target, we look at growth we look at margin and we look at return on invested capital and it’s those, so how those three metrics come together which is actually driving us as a team forward in terms of delivering the results for the business.

And perhaps if you can say if this target a 7% acquired [pending] recovery volumes or?

We are assuming the volume increase over this period of time, yes, both from the acquired businesses that we’re bringing in as well as on the other investments that we’d be making into our own business. So yes, we believe that will growth at the same time which will be part of how we deliver those results but if you look at that combination of both growth and margin improvement so if you take a higher volume or higher sales figure for us and also get to 7% on the higher sales figure as you can then very quickly workout the bottom line improvement becomes very significant in the business over that time.

Thank you. Stefaan Genoe from Petercam.

First point of your core strategy you indicate drive customer into the heart of the business, could you give some more color on that? And I would argue or I would think that Bekaert for example in China or when we talk about China would already be differentiating at that level towards its competitors.

So do you think you can differentiate by this versus competitors because you also mention that at the end of the day they’re selling their products when they sell them at their lower quality products at low prices? So perhaps don’t you figure that in China your competitors will not continue to just require a lower hurdle cost of capital and related to that in your 7% margin target following three years’ time what’s the margin target you would need in China to get there?

And a last question, can you give us the excess capacity currently in the Chinese market? Thank you.

Okay. Quite a lot of questions there.

In terms of bringing the customer into the heart of the business, no I don’t think it’s the strength for us today. I think we’re an operation led and product led business, not a customer led business.

I think we have a very strong responsiveness to our customers. If we bend over backwards for our customer, that’s not always good for the business.

It’s not the structured way of approaching, creating value for a customer. So I think we can actually differentiate ourselves quite significantly to having a much better understanding of you create value for the customer.

And it's about, if I maybe look at -- I'll give one example just to try and highlight a little bit how I feel about it I can use quite a lot. But in one of our tire cord factory recently we were asked about implementing processes to ensure we gave exactly the same length of wire on to each spool that were giving to our customers for use on their lines.

To do that we had to put in place some fairly sophisticated measuring and control equipment on to our lines or we're going to have to which would have been a fairly significant investment for us as a business. One of our guys went to the customer to talk to them about something completely different but just happened to mention this issue about getting to exact lengths on spools, because spools will vary by a couple of hundred meters.

I mean they were many kilometers long. So to get to exact same lengths is it fairly big challenge.

And we talked the customer about this and the customer said, yes it's just the end of the day I want to be able to change all of the spools because they run a lot of spools going into their processes at the same time, so that just want to able to change all those spools at the same time. We said okay; well just send is the spools back with whatever is left on, with whatever is left on them.

So we don't have to invest anything at all in terms of our ability to resolve that problem for the customer. And so it's the mindset that says okay I will respond to exactly what the customer is asking for, not necessarily the customer is asking you for what they really need.

So the insight is to be able to have that understanding of where is the value for the customer and why and then applying a solution which works for them and works for you as a business and that's what I mean about having real customer understanding and insight. And so I think there is a long way for us to go and I think if we can do that well and this is certainly my area of background I bought people into the business who have that strength as well I think it's something that we can use to fundamentally differentiate ourselves in the marketplaces.

So I do think as differentiator. I think it's equally a differentiator in China, I think the reason we've lost ground in China is because we've lost focus on that.

I think we like everybody has responded to the commoditization of the secretary in China as oppose to trying to find the right point of value for the customer in a way that provides them with a total cost benefit rather than just purely a purchase price benefit on the tire cord that they're putting into their products. There are a lot of factors that go into the total cost of a tire and its production and lot of factors that go into the revenue that could be generated by that tire as well.

And as to have a better understanding of how that equation comes together as a whole that I think will enable us to get back to having a very differentiated offer in the marketplace. It's how we started business in China so I absolutely agree with you we had a very strong and very differentiated produce offering in the marketplace.

The impact of that has deteriorated over time and there is a big part of why we see that deterioration in our margin over time. The team is extremely aware of that and we have a very clear view of how we can get back to a point of creating that value proposition and that total cost of ownership proposition to our customers but it's not something you can do overnight, because both they have to change and we have to change to deliver it.

So in the meantime back to the question from David I think it was, we have to focus on cost to see ourselves through this period, but I think we can do it. In terms of overall capacity utilization in China I think is in the 50%, so I don't know Bruno whether you've got a more up to date number.

On the tire cord as we said towards on the tire cords specifically towards the end of the year we're more in the 70% for us on the total market it's below that.

Specifically in China then?

Yes. And that's the use over capacities in China and that's not new.

We have been seeing that and that's also why huge price pressure is there because there is just that very, very significant over capacity which got created when there was a very, very strong growth year-after-year with margins which were very attractive, the reality to date in the market is that the margins for most of the players are becoming very thin or negative but the market hasn't been growing -- lately less capacity has been added but the market has not picked up all of that volume.

I think if you think that, we're in that mid 70s we believe sort of round about that and all this varies on how people define capacity which is always a little bit of challenge in China. But our largest competitor in China is probably operating at a much higher level than we are in terms of capacity utilization.

We think [indiscernible] probably in the mid 90s in terms of capacity unitization. So the two of us are strongly ahead of the rest of the industry and the industry as a whole is below that the level that we're at, you could imagine that some people are extremely low levels of utilization and that probably explains the profit warnings that we saw in December from some of the key players as well.

And finally, if you have the 7% target we've seen high margin in China in the past going forward. What led to it?

I don’t think we'll break out the target specifically for China but it will be getting China tire cord to the right level of margin for us will be a major contributor to getting back to the 7% across the business as a whole.

And given the cost of capital in China you are above the 7% I assume?

And the cost of capital in China is a hurdle that we have to climb over so, not going to break out what is for us in China.

[Indiscernible]

Europe, indeed we are at -- we had record profits in Europe for this year and of course it’s always extremely difficult to improve from a record, that’s not to be said that I think we do see also in Europe opportunities to further optimize our overall structure, but we had some very high capacity utilization so I think it is fair to say the upside which we should expect in that region is more limited than some of the older regions where it’s much more straightforward to see and expect that. That’s not to say that there will not be alike on all of our facilities a very, very close look at the overall cost structures the cost which we have and by the way one of the first plans where we looked at is Belgium and it’s always good to start with a very challenging one if you can prove that you can further improve your cost structure on the good ones.

And it really shows the potential on how much you can do on the other ones, so we do believe there is future there but it will be tough to go from the maximum the record profit which we had this year.

And maybe I’ll talk about a little bit about the China cost and now I think that having a distributed network gives you some advantages, it gives you some significant disadvantages as well and it’s is a question of which one out weight the others at certain points in time, distribution cost can be an advantage and if you satisfying only local markets after the local factories then it does become an advantage, but there can be disadvantages both in the sourcing of the wire rod because wire rod may have the opposite impact on distribution cost that you’re shipping it further around the world, but by definition trying to satisfy local needs out of local production capability drives the complexity in your operations which is fairly significant. And just to give you an example of the inefficiency maybe of complexity, if on one line you’re doing relatively short runs of products and you have to say do a changeover of the product on that line two or three times a day each change overtakes an hour and half.

You’re automatically losing between 3 and 4.5 hours a day of that time on your line. If you’re losing 3.5 and 4 hours a day on your lines that’s already sort of 12% to 15% reduction in your capacity and if you’re able to just run a single product on a single line whichever you have all of your operation together is something that you more likely to be able to do and then you can get an advantage from that.

So for us we have look at and that’s what I talked about complexity reduction can we lower the number of products, we do in each factory so that we have a much higher utilization of single lines and more consistently you drive both improvement in your ability to utilize that capacity but also the simplicity of the process drives down things like inventory, it drive down supervision cost in the factory so that gives you a very straight benefits as well. And those can potentially offset maybe distribution impact so you have which could be worse, so I think it does depend on quite a lot of different factors but the reality is and we have to accept that when we look at the numbers some of our factories in China are cost competitive without our number one competitor there but overall we are probably now.

And maybe if I look at the footprint optimizations, that is primarily looked at -- we will look that firstly on a regional basis because this is about really what I have just talked about there in China, it’s about telling do we need to produce every product in every factory that we’ve got for tire cord in China the simple answer that is no. And there is one construction in China accounts for 15% of the total tire cord market, if you have all your operations on one side you can run certain lines to manufacture that and makes that product just continuously and the more even run something continuously the lower that you can get the cost too, the more consistent you can get the quality too, you take out -- this makes your business a huge much more simple and therefore less costly.

And if we can change one of our factories to do that product and then move the complexity into other factories and concentrate your complexity in single operation, I think overall you can take a lot of cost out of the business but it’s using that for that philosophy across regions and across different products types which I think can help us bring quite a bit of cost out of the business and optimize the footprint and overtime then free up capacity or create capacity on the on the equipment that we have that enables us to look at options and on whether or not we have superfluous capacity.

Let me take your last question on the CapEx you see that the CapEx for 2014 increased versus where we were in 2013 we had about 100 million we went to slightly above 130 million. We do see still quite some investment programs in place also including now the revitalization of the Rome front and after the fire it’s going to be a bigger spending which we have to do there so therefore I would expect it to be in the range between 150 million to 170 million depending a bit on opportunities how fast it goes and where the business opportunities are and how strong the business momentum is on a global basis.

But it’s in that magnitude that we should expect our CapEx to be.

Should we expect any CapEx for additional one off cost related to the optimization of the footprint?

There are some cost involved and there will be CapEx involved going forward on that. We would look to contain the CapEx spend within our normalized CapEx spending as Bruno has talked about at the moment there are some one off set up costs that we see this year in terms of establishing the core principles and dynamic of the program which will be funded we believe by benefits the program will deliver in year one but we don’t see a net cost saving coming through on that manufacturing excellence transformation in year one, no.

One question about the return on capital employed could you actually kind of give your target -- internal target for the coming years?

The value creation is what we’re spending for.

No, I am not going to go into the targets. At the end of the day we’ve talked a lot about what we want to do and over time yes we will look at communicating more to you about what that actually means.

Part of this though I am going to be very clear for me is, I want to see us getting that impact before I understand exactly how and when it’s going to materialize. I can see it over a period of time how it drops into individual years I am not 100% sure and there will be somewhere we do more than we believe in others where we do less than we believe so at this stage I just need to get feel the rolling before I think we get into talking a lot more about where we were and how it splits up between different areas of the business.

As Bruno said we have created internationally some very clear views on how we create value as a business. We have created clear long term growth targets, clear long term margin targets and clear long term targets for return on invested capital.

But how we achieve each one at what point in time will depend on the outcome of a lot of different things. So at this stage I am not yet ready to go into that in more detail now.

Okay, neither a target nor what is actually achievable in the -- that's in the comment here?

No I just go back to saying we reaffirm 7% and at the same time that will also be in conjunction with a significant step up in terms of return on invested capital.

Okay, maybe one more question for Bruno on working capital what should we expect in 2015?

You will have as you saw the impact on 2014 we will -- you need to take into account that we will have two more sites from Pirelli which come in and one from the acquisition in ropes in Australia partly offset by the divestment we just announced. But the net of that will be an increase I will try to provide you with more specific number but it’s going to be a few tens of millions of working capital increase because of those.

That’s the first point the second one which will be much more significant in absolutes is the exchange rate part. Again if you saw that there was already 60 million exchange rate impact versus the end of the year exchange rate this year versus 2013, if the exchange rate remains where it is today there is a going to be a much bigger impact there.

The real organic -- so those two again leaving aside, our target is in line with what I think we just said on trying to improve the efficiencies of the capital which we use not to increase our working capital even though we do have -- we expect to see further growth in our business. So percentage of sales therefore should be coming down that’s our target.

Two float questions from my side in the third quarter trading update you mentioned the recovery of the sowing-wire business. Can you give an update there?

How important is that business today and the sales level overall for Asia Pacific? And then can you give any indication on growing margins over the sowing-wire and versus the group margins or region margins?

And then secondly, in energy abilities how do you see the outlook given reduce them from the oil and gas industries going forward at least in ‘15 and ’16? Thank you.

I think if we look at the business compared, sowing-wire it’s purely an Asia business as you know this where -- and I think we can that it’s about 10% of our business in Asia today, okay. The margins are a bit inflated because we did take a very important impairment on our assets and therefore the EBITDA which you see as overall in the region is most probably a fair reflection of what you also have their but the big difference versus the other businesses that most of the capital have been impaired before.

So I think those are the two elements which you’re looking for.

The other question was on the energy.

Yes. There will a negatively recent short term impact, primarily what we talked about in terms of the overall economic environment in certain countries.

So the oil producing countries will have less funds available for projects internally. They will cut budgets very quickly and that will have an impact on our business, particularly construction business.

So Latin America I think gets hit quite hard there. Other impacts for example even though Brazil is not such a high proportion of GDP, the oil and gas is still quite a big part of our business there and it’s not necessarily all in the ways that you’d expect.

So Petrobras is the biggest customer for fencing that we have in Brazil, because our security fencing is something they need for most of their installation. So as they reduce the number of projects they do that has an immediate impact on areas of business like that.

So there will be short term impact. On businesses where it’s about supplying into the major projects, so well development and extraction so things like our flex pipe business I think the impact is bit slower and hitting there, because those projects have longer lead times.

And so therefore in cancelling them doesn’t necessarily have a short term impact on our business and in fact our order book complex fight is still very strong because we’re supplying in the projects that were being started and are going through different phases of exploitation. What does happen though and where I think we’ll see a slowdown potentially towards the bank end of this year is one as the new projects and don’t come on stream as quickly but also as the level of extraction goes down as I suspect people look at reducing oil production to drive prices back up again I think that will then have an impact on some of the consumables and some of these flex pipes are deemed as consumables as well.

So I think that will also begin to have an impact. So I think in the major projects stuff, I think 2015 will have some impact but not that significant but I do think 2016 -- even if we see a price recovery, I think 2016 will be more affected in that area of business than 2015.

Any more questions? Nothing from the phone.

Then I would like to thank you for listening in and also thank you for being over here and we wish you a very nice weekend.