Nexans SA · EURONEXT:NEX
Nexans SA — H1 2006 Earnings Presentation
27 slides from Nexans SA's earnings presentation, Jul 25, 2006
Slide 1: 2006 Half Year Results
2006 Half Year Results July 25, 2006
Slide 2: Safe Harbor
Safe Harbor 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 assumpt
Slide 3: HY1 2006: Strong growth in results
HY1 2006 Strong growth in results Organic growth in Energy Sales = 2,273 M€ businesses : + 13.9 % + 12 % Organic growth in North America Organic + 22 % Development Operating margin = 108 M€ in speciality products Continuing “operational leverage” + 48 % effect Increase contained Net debt = 431 M€ Is
Slide 4: Outlook for 2006 in line with HY1
Outlook for 2006 in line with HY1 At HY1 2006 economic environment : z Organic growth close to 10 % (vs + 4 % in February 2006) z Operating margin rate at least 5 % z Restructuring confirmed at about 80 M€ z Capex around 170 M€ (vs 160 M€ in February 2006) z Net debt of approximately 350 M€ 4
Slide 5: Results outpacing mid-term objectives
Results outpacing mid-term objectives Objectives 2005 – 2007 (*) Half way achievements (18 months) Growth Organic growth in sales ≥ 4 % p.a. 9 + 7.5 % Profitability 4.8 % 5 % in 2007 9 today ROCE + 1.8 points Return on capital employed up 3 to 4 points over 3 years 9 despite 137 % rise in copper pri
Slide 6: A 2006 growth geographically diversified
A 2006 growth geographically diversified Sales by origin North America Europe + 22 % + 11 % Asia Pacific Rest of World flat +8% Total Nexans = + 12 % 6
Slide 7: Continuing development in speciality products
Continuing development in speciality products (in Million €) + 18 % Σ: 494 586 OEMs •Marine •Automotive •Robotics •Nuclear •Handling + 12 % 144 BUILDING 128 •LAN •Safety + 17 % 161 •Heating cables 137 INFRASTRUCTURE •High Voltage + 23 % •Umbilicals •Energy Accessories 281 •Railways •xDSL 229 •FTTx •
Slide 8: External growth favoring speciality products
External growth favoring speciality products z Given the exceptional growth in the high voltage market Signature on July 21 of an agreement for the creation of a manufacturing joint-venture Nexans (66 %) / Viscas (34 %) for high voltage submarine cables ¾ Operation of the Tokyo bay (Japan) plant c
Slide 9: Sustained restructuring effort
Sustained restructuring effort z Expected charge of approximately 80 M€ in 2006 maintained At June 30, 06 : 36 M€ ¾ Worker consultations underway for the closure of 3 sites (LAN Europe and Electrical wires) By end 2006 : ¾ Wirerod Europe : focus on our own needs (as from 2007) under consideratio
Slide 10: Capital employed under control
Capital employed under control z Despite continuous increase z Growth in capital employed in raw materials correlates less and less with copper prices (Base 100 at June 30, 2004) 240 242 Copper price 5,924 200 In Million € (Quarterly average € / t) 157 3,793 160 2,446 2,504 2,860 120 Copper WC 80 Ju
Slide 11: Strengthening of the financial structure
Strengthening of the financial structure Cash Divestiture of Swiss distribution 206 M€ Conversion of 2004 OCEANE Reclassification of 117 M€ (convertible bond) in shareholders' equity OCEANE (convertible bond) issue on July 7, 2006 : • High effective strike : 85.75 € Extended maturity • Low coupon :
Slide 12: Operations and Financials
Operations and Financials 12
Slide 13: Key Figures HY1 2006
Key Figures HY1 2006 (*) (in Million €) HY1 05 HY1 06 Sales at current metal prices 2,435 3,686 Sales at constant metal prices 2,003 2,273 Sales at constant metal prices and exchange rates 2,058 2,273 EBITDA 122 155 EBITDA margin 6% 6.8 % Operating margin 73 108 Operating margin rate 3.5 % 4.8 % Net
Slide 14: 2006 Half Year Sales: Organic growth + 12 %
2006 Half Year Sales Organic growth + 12 % Sales at constant metal (M€) Organic Perimeter June growth Calendar 2006 242 -101 74 Foreign June Currency 2,273 2005 IFRS 5 effect 55 -13 2,016 2,003 06/05 + 12 % 14
Slide 15: Strong improvement in operations and profitability
Strong improvement in operations and profitability (*) (in Million €) HY1 05 HY1 06 Sales at constant metal prices and exchange rates Sales OPM % Sales OPM % Energy 1,371 63 4.6 % 1,491 97 6.5 % Telecom 299 10 3.3 % 327 15 4.6 % Electrical Wires 384 4 1% 450 2 0.4 % Other 4 (4) - 5 (6) - Total 2,058
Slide 16: Profit & Loss Account
Profit & Loss Account (*) (in Million €) HY1 2005 2005 HY1 2006 Sales at constant metal 2,003 4,263 2,273 Margin on variable costs 527 26.3 % 1,104 25.9 % 580 25.5 % Indirect costs (405) (823) (425) EBITDA(**) 122 6 .1 % 281 6.6 % 155 6.8 % Depreciation (49) (95) (47) Operating margin 73 186 108 Ope
Slide 17: Cash flow statement
Cash flow statement (*) (in Million €) HY1 2005 HY1 2006 Operating Cash Flow (**) 72 74 Capital expenditure (net of disposals 6 M€ in 05 and 3 M€ in 06) (51) (59) Change in Working Capital (215) (338) Cash impact of (acquisitions) / disposals (7) 176 Restructuring expended (19) (14) Dividend paid (1
Slide 18: Debt increased with metal prices
Debt increased with metal prices (in Million €) OCEANE Conversion Working (convertible bond) Net debt Other Metal June 30, 06 Operating Capital Net debt -13 Dec. 31, 05 Cash flow Restructuring -48 117 Capex net -14 Acquisitions 74 -59 & Divestitures - 431 - 374 176 -290 Capex and restructuring fin
Slide 19: Working Capital
Working Capital 5,924 Copper price (Quarterly average € / t) + 56 % 3,793 + 33 % 2,504 2,860 2,446 + 14 % +2% + 33 % 1,834 18.2 % 16.7 % WC on quarter sales Dec. 31, 2003 13 % 14.4 % 14.4 % at current metal prices 1,169 (in Million €) 749(*) 617 (*) 851 782 June 30, 2004 Dec. 31, 2004 June 30, 2005
Slide 20: Summary Balance Sheet
Summary Balance Sheet (in Million €) Dec. 31, 05 June 30, 06 Long-term fixed assets 1,115 1,135 Deferred tax assets 76 96 Non-current assets 1,191 1,231 Working Capital 782 1,169 Assets (net) held for sale 42 7 Total to finance 2,015 2,407 Net Financial Debt Current 246 423 Non-current 128 8 Reserve
Slide 21: 2007: comfort for ambitions
2007: comfort for ambitions Reminder of objectives 2007 (*) Sales at constant metal = 4,400 M€ OPM/Sales (%) = 5.2 % to 5.5 % ROCE(**) after tax = 8 % to 8.4 % At HY1 2006 economic environment : A possible upgrade as part of a new 2007 to 2009 plan (*) Presentation on February 2, 2006 (**) Return on
Slide 22: Appendices
Appendices Performance by Business and Geographical area 22
Slide 23: Energy
Energy Sales (M€) (*) Operating Margin (M€) at constant metal prices and exchange rates Σ: 1,371 1,491 Σ: 63 97 38.8 1.1 25.1 Superconductors & 494.2 Other 540.4 Building 41.9 0.6 Infrastructure 16.9 628.8 511.8 OEMs 34.3 38.3 293.9 329.6 19.7 7.2 HY1 05 HY1 06 HY1 05 HY1 06 Infrastructure : Organ
Slide 24: Telecom
Telecom Sales (M€) (*) Operating Margin (M€) at constant metal prices and exchange rates Σ: 299 327 Σ: 10 15 130.3 Private networks (LAN) 112.5 7.0 Infrastructure 3.5 OEMs 128.8 129.7 7.8 7.9 66.8 0.2 57.4 -1.4 HY1 05 HY1 06 HY1 05 HY1 06 Infrastructure : Steady activity with growth in fiber on pr
Slide 25: Electrical Wires
Electrical Wires Sales (M€) (*) Operating Margin (M€) at constant metal prices and exchange rates Σ: 384 450 Σ: 4 2 1.4 Wirerod and 416.3 351.6 Bare conductors Winding Wires 2.3 1.2 0.6 32.2 33.9 HY1 05 HY1 06 HY1 05 HY1 06 Winding wires • Strong progress in China • Manufacturing reorganization un
Slide 26: Geographical Areas
Geographical Areas Marked progress Sales (M€) Operating Margin (M€) at constant metal prices and exchange rates Σ: 2,058 2,273 Σ: 73 108 Europe 59.6 1,542 1,441 North America Asia 43.5 Rest of World 31.4 359 453 14.9 126 3.2 5.8 122 136 152 11.3 11.3 HY1 05 HY1 06 HY1 05 HY1 06 Europe : • Construc
Slide 27: INexans
INexans