TenCate records 11% growth in sales in Q4 2008

04 Mar '09

5 min read

Cash earnings for 2008 amounted to €62.7 million (+35%). Cash earnings per share amounted to €2.68 (2007: €2.04).

Net profit for 2008 amounted to €51.1 million (2007: €46.4 million). Net profit excluding the result from divested activities and exceptional items amounted to €43.0 million for 2007.

Net earnings per share for 2008 amounted to €2.18 (2007: €2.04).

Dividend policy
In view of the performance of the global economy, Ten Cate pursued early on in 2008 a cautious investment policy and took a number of cost-cutting measures.

The ratio between the net debt position and EBITDA amounted to 2.6 (bank covenant: 3.0) at the end of December 2008.

A financial objective was formulated in which the ratio between the net debt position and EBITDA should be structurally below 2.5. TenCate has a solid balance sheet with solvency of 42%.

TenCate pursues a consistent dividend policy, which is based on a payout ratio of 40% and, at the option of the shareholders, payment in cash or as a stock dividend. In the past more than 50% of TenCate shareholders always opted for a stock dividend, in view of the growth potential of the share.

TenCate operates in sustainable growth markets and, as stated in the outlook, it expects growth prospects particularly in the current market situation. TenCate has built up a good track record in respect of acquisitions. Its buy & build strategy has resulted in a substantial growth in earnings per share in recent years. TenCate's growth objective requires net earnings growth per share before amortization to be at least 10%.

In view of the objectives referred to above, it is proposed to set the dividend for 2008 at €0.85 per share (2007: €0.80 per share), with half payable in stock dividend and the other half either payable in cash or in the form of a stock dividend. The value of the stock dividend will slightly exceed the cash dividend.

Financial
Investments amounted to €48 million (2007: €63 million). The most important investments related to the expansion of synthetic turf production, the new geosynthetics plant in China and expansion of the production capacity for aerospace composites (including UD technology).

Working capital amounted to €262 million at the end of December 2008. In addition to the effect of acquisitions, the increase compared to 2007 was due to the restraint exercised by market players as a result of cutbacks in inventories (de-stocking).

Cash flow from operational activities rose from €27.8 million to €48.7 million.

The net interest-bearing debt for 2008 increased from €230.4 million to €331.1 million, mainly as a result of acquisitions. Net financing expenditure amounted to €13.7 million. This includes a gain of €3.7 million from changes in the value of financial instruments and from foreign exchange differences.

The tax rate amounted to 27.3%, compared to 20.5% in the previous year. In 2007 there was a non-recurring tax credit. The higher tax rate is linked to an increasing profit share of the American activities, where a relatively high tax rate applies (approximately 35%).

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