The year 2023 was marked by global economic adverse trends. Low global GDP growth directly affected most of our main markets, negatively impacting market demand and margins. Raw material and energy prices did fall gradually, improving our margin, but the loss of volume could only be partially offset. In Belgium, we especially felt the effect of sharply increased labor costs combined with a high energy cost due to our energy-intensive activities. On top of this, several of our divisions are confronted with cheap imports from Asian countries, which offer products at much lower prices than products from our own production.
Finally, the tide turned for the chemicals market in 2023, where after several years of exceptional performance, we returned to historically lower margins. Sales also decreased significantly by 26%, primarily driven by declining raw material prices that also pushed down the sales prices significantly.
All this resulted in consolidated annual sales of 2.0 billion euro and EBITDA of 98.1 million euro for 2023, significantly lower than last year. After investments of 80.7 million euro and perimeter changes (acquisitions and restructurings), we report break-even consolidated free cash flow.
The Group's equity evolved from 895.0 million euro at the end of 2022 to 730.3 million euro at the end of 2023. This decrease includes the payment of a dividend, which was still calculated on the good results of 2022, but was only paid in June 2023. No dividend will be paid in 2024.
As a result of these mediocre figures and with only a rather slow recovery in 2024 in sight, Beaulieu already announced in April its intention to discontinue 3 production sites that were structurally loss-making.
In addition, Beaulieu plans to implement some footprint rationalizations, with production optimization the main objective to counter lower market demand. Thus, on June 6, at a Special Works Council meeting at the Berry Yarns site in Komen, Belgium, it announced its intention to close the site and concentrate entirely on yarn production at the 2 remaining sites located in Comines, France (4 km away from the Belgian Komen site) and in China. In addition, Beaulieu also announced its intention to close the tufting activities of its Belgian artificial grass site in Oostrozebeke. The extrusion of artificial grass yarns, with business development focused more and more on the sports segment, will be retained in Oostrozebeke. If the intention were to be confirmed, the tufting & finishing activities will, as of 2025, only be carried out in the Spanish artificial grass plant of Beaulieu.
By rationalizing and concentrating the same activities on a single site, the company can optimize its production and cope with the intense competition from Asia. These interventions are not only necessary to make the company more efficient. They also provide the opportunity for Beaulieu to further specialize in the high-end markets and niche segments such as sports (artificial grass) and contract (yarns) where we can occupy a unique position and thanks to innovation and digitalization, offer better and more durable products to the customers.
The planned footprint optimization would potentially result in the loss of 119 jobs at the Komen site - although 40 employees could be employed at the French site 4 km away from the Komen site - and 30 jobs in Oostrozebeke. Today, a total of 1.751 permanent employees work for Beaulieu in Belgium across 8 sites and more than 4.700 employees work for the Group worldwide.
Following this announcement, the legally required information and consultation process began. Beaulieu will present all facts to employee representatives in full disclosure and transparency.
At the same time, as described in detail in its Sustainability Report, Beaulieu is making good progress with its sustainability program and optimizing its efforts to best approach the 2030 ambition. For 2023, we had established clear plans to achieve our Net Zero goals, with a particular focus on reducing emissions related to our value chain (Scope 3). More than 70% of our divisions worldwide have a clear roadmap with intermediate milestones. In addition to a lower level of activity, actions such as lower energy consumption combined with an increase in renewable energy sources (+ ~4% compared to 2022), a higher proportion of recycled/reused or less carbon-intensive raw materials, and a reduced impact of some of our products at the end of their useful lives are behind this positive result.
Along with the announced footprint rationalization of its yarn sites, Beaulieu will also make another significant investment in a new state-of-the-art machine park for its yarns business, an essential step to increase its European market share. The new machine park guarantees a more energy-efficient, faster and more flexible production systems (more small rolls, smaller batch sizes, etc.), which will allow the company to increase its competitiveness and offer its contract customers a unique and sustainable product.
Another future-oriented investment concerns the new state-of-the-art Experience Center that opened its doors in Wielsbeke in mid-May. In this nearly energy-neutral building, which also houses 3 floors of offices, Beaulieu brings all its solutions together under one roof. With this new building, B.I.G. anchors itself firmly in Belgium.
Beaulieu is thus keeping its eye on forward-looking projects with a focus on sustainability, innovation, safety and its employees, so that the company will be ready when the market recovers. To this end, it has a significant investment plan of around 100 mio euro in 2024.
PRESS RELEASE
06/06/2024
