CORPORATE NEWS:
Draka reports better than expected results
Draka’s net income in 2005 came in at €4.4m compared with a €9m deficit in 2004. Demand in 2005 was driven in particular by positive developments in emerging markets, while the West European market – Draka’s most important geographical market – contracted by around 2%.
Following the buoyant demand for cable in 2004 (up by around 7%), the growth in demand slipped slightly in 2005 to the long-term average of around 2–3%. Growth in 2005 suffered in particular from a sluggish start. The company says: “This was due to end-users using up their existing stocks in the first six months of 2005.”
At product level the company reports that all segments contributed towards the growth of the cable market, with the exception of copper telecommunication cable. Draka managed to achieve a growth in volume in 2005 of 2.7% but cautions: “Margins remained under pressure, due in particular to the sustained increase in raw material prices (copper and polymers).”
The European market grew slightly by 1–2% in 2005, with prices remaining under sustained pressure. Apart from the buoyant demand for special-purpose cable products, the utility and infrastructure markets grew particularly strongly.
The Low-Voltage Cable division succeeded in maintaining its market share in Europe. In certain market segments, however, such as fire-resistant cables, market share was increased. Internationally the division grew with the opening of sales offices in Australia and Indonesia. These concentrated in particular on special-purpose cable products: halogen-free and fire-resistant cables and cable solutions for the petrochemical industry. In addition, the division benefited from the favourable market conditions in the United States and the Asia/Pacific region.
Draka’s Marine, Oil & Gas division benefited last year from the unparalleled growth in the offshore market due to high oil prices and an increase in offshore oil drilling. In addition, the shipbuilding market grew strongly thanks to the rapidly expanding economies in Asia (especially China) and the resultant increase in transport flows. The maintenance market benefited from high capacity utilisation (approximately 95%) of offshore oil drilling facilities and from hurricane damages.
But again there was a slight sting in the tail: “Despite these favourable market conditions, international competition, especially from Korea, led to prices tending to decline.”
Notwithstanding, the division managed to increase its market share and to improve its results. The expansion of its worldwide network means that it is better placed to respond to the requirements of global oil companies, which had hitherto been obliged to work with domestic partners. With distribution centres in Houston, Singapore and Aberdeen and close cooperation with various partners, including ECS in Canada, DME in the Middle East and Oakwell in Asia, the division is now capable of providing ships and oil platforms in each of the major regions with an optimum service.
The communication cable market showed a healthy growth in 2005, with the strongest performance coming from the optical fibre segment. The growth in the optical fibre cable market amounted to approximately 12-13%, thanks in particular to a number of fibre-to-the-home projects in the United States and various European markets.
Draka Comteq maintained its position as market leader in the European and Chinese markets and increased its market share in the rapidly growing American market. The company comments: “More and more telecom operators are increasing their investment budgets, so continuing growth can be expected in 2006. The pressure on prices, however, continues unabated.”
Draka Comteq achieved a 24.2% growth in revenue in 2005 to €498.8m. Adjusted for the consolidation of Alcatel’s optical fibre activities (as from 1st July 2004) and the sale of the electronic cable and data communication copper cable activities in the US (as from 15th March 2005), revenue rose organically by 6.4%. Draka Comteq achieved a growth in volume in all market segments. The organic increase in revenue was, however, held back by the ongoing pressure on selling prices.
Company: |
Draka Holding NV |
Country: |
The Netherlands |
Fax: |
+31 20 66 33 699 |
Email: |
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Website: |
www.draka.com |