2011 full year results - nexans prez_gb_vdef.pdf2011 full year results . this presentation contains...

February 8, 2012

2011 Full Year results

2

Safe Harbor

Investor relations :

Michel Gédéon

Jean-Marc Bouleau

Carole Vitasse

+ 33 1 73 23 85 31

+ 33 1 73 23 84 61

+ 33 1 73 23 84 56

[email protected]

[email protected]

[email protected]


This presentation contains forward-looking statements relating to the Group’s expectations for future financial performance, including sales and profitability.

The forward looking statements contained in this presentation are dependent on known and unknown risks, expectations and assumptions, uncertainties and other factors which may cause the Group’s actual results, performance and objectives to be materially different from those indicated by the forward looking statements. Such factors may include the trends in the economic and commercial conditions and in the regulatory framework and also the risk factors set out in section 6 of the 2011 Management Report (“Risk Factors”), in particular the antitrust investigations launched against Nexans in January 2009. As a result, achievement of the perspectives herein described remains uncertain.

These forward looking statements depend, amongst other things, on the following assumptions and risks :

(1) the resilience of the infrastructure energy business in developed countries, and the continued expansion of the markets for energy infrastructure in emerging countries;

(2) Growth in markets for renewable energies and Oil & Gas, together with the continuation of long-term investment programs of customers in such markets;

(3) Recovery in industrial cables in certain transport segments such as shipboard and Chinese rail development;

(4) the maintenance of sales volumes generally in the context of a possible decrease in macroeconomic growth;

(5) maintaining margins despite weakened demand;

(6) the possibility to pass on to final customers any increase in the costs of raw materials, energy and transport;

(7) the management of risks associated with sales in turnkey projects;

(8) the effect of currency fluctuations being neutral;

(9) the Company being able to reduce its cost base in the anticipated time frame through realization of restructuring actions;

(10) the Company being able to achieve productivity improvements;

(11) retention of key customers;

(12) the absence of substantial capacity increases by competitors in Nexans’ key markets;

(13) the Company successfully integrating acquisitions;

(14) the Company being able to adapt its organization;

(15) no 2011 impact of the above cited antitrust investigations.

Frédéric Vincent Chairman and CEO

2011 achievements

3 2011 Full Year results

4

2011 key figures: targets have been met 2011 Full Year results

4,309 4,594

2010 2011

Full year sales(*)

207

256

2011 2010

Operating margin(***)

4.8% 5.6%

144

366

222

Dec. 2010 June 2011 Dec. 2011

Net debt

13%

4% 3.9%

5.9%

Quarterly sales evolution(**)

Q1 Q2 Q3 Q4

+6.5% org(**)

(*) Sales at constant metal prices (**) Year over year organic growth (***) Operating margin rate on constant metal sales

M€

M€ M€

5

2011: growth in all businesses


Sales at constant metal prices in M€ and year over year organic growth

Industry

426 446 879 941

875 955 1,814 1,956

Energy Infrastructures

Building Telecom

2010 2011

+6.4% org(*) +10.6% org(*)

2010 2011

2010 2011

+7.1% org(*)

2010 2011

+ 5.4% org(*)

M€ M€

M€ M€

(*) Year over year organic growth

6

Further improvement in profitability 2011 Full Year results

Energy Infrastructures Industry Building Telecom Group

2010

2011

4.8%

2.6%

3.2%

6.0%

7.6%

5.6%

3.7%

6.8% 6.8%

6.3%

Operating margin rate on constant metal sales

7

Energy Infrastructures: sales and margin improvement in power distribution in H2 ‘11

Land Power transmission ∼15% of sales

• Significant impact of the Middle-East in 2011: Libya contracts interrupted, GCC contracts starting later than expected

• Stable order book (~12 months)

• Encouraging Q4 load but still challenging competitive environment

Submarine Power transmission ∼25 % of sales

• Double digit organic growth thanks to new capacity ramp-up in Norway leading to:

a 2011 improved operating margin despite one contract postponement due to non compliance with all specifications

• Strong order book (~24 months) backed by new capacity in place


Power distribution ∼60 % of sales

• Positive sales momentum in 2011 in all geographical areas:

Europe: mid single digit growth but uneven situation among countries

APAC: double digit growth driven by Australia - New Zealand and Korea

Americas: double digit growth thanks to OHL projects in Brazil

MERA(*): mid single digit growth driven up by Russia despite a drop in Middle-East

3%

9%

12% 13%

Q2 Q3 Q4 Q1

YoY organic evolution

(*) Middle-East, Russia and Africa

~15%

~25%

~35%

~25%

Industry: volume upturn driving margin recovery

Transportation

Resources(*)

Automotive

Resources(*)

• Growing sales in mining (Australia, South America)

• Growth in windmill cables

• Significant projects under execution in nuclear

• Recovery in O&G onshore in H2 ‘11

Transportation • Strong growth in aeronautics

• Further growth in railways despite freezing of Chinese market in H2 ‘11

• Start of recovery in shipbuilding in Q4 ‘11

8

Auto & other segments

• Continuing strong demand in Automotive harnesses: sales +20% YoY

• Automation: sales +20%

YoY boosted by European demand

(*) Mining, renewable, nuclear and O&G activities


2.6%

3.7%

Operating Margin (% of constant metal sales)

Others

2010 2011

Breakdown of sales at constant metal prices


Building: Continuing overall positive sales evolution leading to profitability uplift

(*) Sales at constant metal prices

2010 2011

ROW

Europe

+7.1% org

H1 '10 H2 '10 H1 '11 H2 '11

Sales evolution by area in M€(*) Operating margin (% of constant metal sales)

2.1%

4.2%

6.5% 7.0%

879 941

• Overall widespread upturn • Favorable geographical mix in Europe • Full benefit of past restructuring • Overall positive price environment

10

• Copper cables: strong sales upturn in South America and mid single digit growth in Europe

• Optical fiber cables and components: uneven situations in Europe Growth in France and Sweden Lower performance in Switzerland

and Southern Europe

LAN

• Overall stable activity level: Stable in the USA and Europe Growing in South America Down in China

• Improved product mix in the USA

driving profitability up

Telecom Infrastructures


Telecom: Improved profitability

2011 2010

Sales in M€ and operating margin rate on constant metal sales

182 208

5.1%

6.4%

244 238

Sales in M€ and operating margin rate on constant metal sales

6.7%

7.2%

2010 2011


Frédéric Michelland CFO, Senior Corporate Executive VP

Financial results

2010 2011

Sales At current metal prices

6,179 6,920

Sales At constant metal prices

4,309 4,594 +6.5% organic

EBITDA(*) 345 392

Operating margin 207 256 Operating margin rate at constant metal prices

4.8% 5.6%

Operating margin rate at current metal prices

3.4% 3.7%

Restructuring (67) (22)

Net income (Group share) 82 (178)

Operational Cash Flow 189 209

Net debt 144 222

Key Figures (in Million €)


(*) Operating margin before depreciation

(in Million €) 2010 2011


4,309 4,594

Margin on variable costs 1,332 30.9% 1,478 32.2%

Indirect costs (987) (1,086)

EBITDA(*) 345 8.0% 392 8.5%

Depreciation (138) (136)

Operating margin 207 4.8% 256 5.6%

Core exposure impact 89 (40)

Asset impairment (43) (34)

Change in fair value of metal derivatives and other (4) (10)

Capital gain and loss on asset divestitures(**) 13 2


Reserve for risk related to EU antitrust procedure - (200)

Operating income 195 (48)

Income statement (1/3)

(*) Operating margin before depreciation (**) Including transaction costs on external acquisitions


345

392

41

58 (40)

(12) 2010

EBITDA

Volume effect

Mix & price

FX & Others 2011

EBITDA

in M€

EBITDA margin:

8.0%

EBITDA margin:

8.5%

14

EBITDA evolution: volumes, price and mix driving top line growth

Operating costs




(*) Operating margin before depreciation (**) Including transaction costs on external acquisitions

(in Million €) 2010 2011


4,309 4,594

Margin on variable costs 1,332 30.9% 1,478 32.2%

Indirect costs (987) (1,086)

EBITDA(*) 345 8.0% 392 8.5%

Depreciation (138) (136)

Operating margin 207 4.8% 256 5.6%

Core exposure impact 89 (40)

Asset impairment (43) (34)

Change in fair value of metal derivatives and other (4) (10)

Capital gain and loss on asset divestitures(**) 13 2


Reserve for risk related to EU antitrust procedure - (200)


(in Million €) 2010 2011


Financial charge (84) (106)

Income before tax 110 (155)

Income tax (26) (31)

Net income from operations 84 (186)

Net income Group share 82 (178)

Net income excluding restructuring, core exposure, capital gain and antitrust reserve (*) 78 70


16

Proposed dividend of 1.10€ per share(**)


(*) Restated with a theoretical income tax rate of 30% (**) To be approved at the 2012 Annual Shareholders’ meeting

(in Million €) 31 dec. 2010 31 dec. 2011

Long-term fixed assets 1,815 1,819 of which goodwill 378 386

Deferred tax assets 82 96

Non-current assets 1,897 1,915

Working Capital 1,058 961

Total to finance 2,955 2,876

Net financial debt 144 222

Reserves 474 632

Deferred tax liabilities 130 102

Shareholders' equity and Minority interests

2,207 1,920

Total financing 2,955 2,876

Balance sheet 17 2011 Full Year results

19.4%

21.2%

18.9% 18.3%

16.5%

18.4%

17.0%

Working Capital kept under control

18

(*) Based on last quarter sales x 4

Operational Working Capital in % of sales(*) at current metal prices


Dec. ‘08 June ‘09 Dec. ‘09 June ‘10 Dec. ‘10 June ‘11 Dec. ‘11

(144)

209 (131)

(48)

(32)

(66) (10)

(222)


Strict control of net debt despite significant rise in activity

Net debt Dec. 10

Operating cash flow(*)

CAPEX

Restructuring

Dividends

Net debt Dec. 11 Others

19

Change in working capital

No impact of copper price variation

(*) Operating cash flow is defined in note 3 to the Consolidated statement of cash-flows

in M€


Frédéric Vincent Chairman and CEO

Strategic initiatives


Continue focus on customer orientation

Develop in attractive growing markets

Consolidate our position in mature markets

Gain competitiveness through excellence and cost reduction

Drive differentiation through technology leadership and services

Engage our talents and value our brand

6 strategic guidelines

2011 strategic initiatives


• China EHV: acquisition of Shandong Yanggu cables in progress

• China industrial cables: capacity extension decided

• Rolling stock: JV with Alstom in Morocco

• USA EHV: Greenfield launched

• Madeco confirmed as a key reference shareholder • Europe: new organization in place

Nexans resilience matrix in case of downturn 23 2011 Full Year results

Transport

Submarine Power Transmission

Power Distribution

Land Power Transmission

Industry

Building

Telecom

Europe

Worldwide

Automotive

APAC SAM MERA NAM

Europe MERA APAC

Resources Others

Northern Europe

APAC SAM MERA NAM

LAN & Infrastructure

Central Europe

South-ern

Europe

Strong resilience

Medium resilience

Low resilience

24

Appendices


Sales and profitability by segment

25

2010 2011

(in Million €) Sales OM OM% Sales OM OM%

Energy Infrastructures 1,814 138 7.6% 1,956 124 6.3%

Industry 875 22 2.6% 955 36 3.7%

Building 879 28 3.2% 941 64 6.8%

Telecom Infrastructures 182 9 5.1% 208 13 6.4%

Private Networks (LAN) 244 16 6.7% 238 17 7.2%

Others 26 (13) NS 30 (9) NS

Total Cable activities 4,020 200 5.0% 4,328 245 5.7%

Electrical Wires 289 7 2.4% 266 11 4.3%

Total Group 4,309 207 4.8% 4,594 256 5.6%

2011 Full Year results - Appendices

Impact of foreign exchange and consolidation scope

26

(in Million €) 2010 Forex Scope Organic growth 2011

Energy Infrastructures 1,814 18 7 117 1,956

Industry 875 5 (16) 91 955

Building 879 (4) 3 63 941

Telecom Infrastructures 182 4 0 22 208

Private Networks (LAN) 244 (7) 0 1 238

Others 26 0 0 4 30

Total Cable activities 4,020 16 (6) 298 4,328

Electrical Wires 289 (2) (5) (16) 266

Total Group 4,309 14 (11) 282 4,594

2011 Full Year results - Appendices

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