Nexans Sa · EURONEXT:NEX
Nexans Sa — Debt Investor Presentation (May 2015)
36 slides from Nexans Sa's debt investor presentation, May 2015
Slide 1: Credit presentation – Bond issue
Credit presentation – Bond issue May, 2015
Slide 2: Disclaimer
Credit presentation – May 2015 2 Disclaimer NOT FOR DISTRIBUTION IN THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN This presentation is for information purposes only and is not an offer to sell securities or a solicitation to buy securities in any jurisdiction, including in the United States, Austral
Slide 3: Safe Harbor
Credit presentation – May 2015 3 Safe Harbor Forward-looking information in this presentation are based on risks and uncertainties, known and unknown to date, which may have an impact on the future performance of the Company, which may materially differ. Readers are also invited to log on to the Gro
Slide 4: 1. Company overview
1. Company overview 4
Slide 5: Nexans: a global cable maker
Credit presentation – May 2015 5 Nexans: a global cable maker MERA 6% Asia Pac 26,000 people 13% 40 countries South Europe America 43% 8% 91 plants North America 14% High Voltage 16% 6.4bn€ sales in 2014 Building Energy infrastructures Specialty cables (D&I) (TD&O) (Industry) Power Construction LAN
Slide 6: Nexans is a solution provider for a more efficient & sustainable future
Credit presentation – May 2015 6 Nexans is a solution provider for a more efficient & sustainable future Market size (*) 37bn€ Power and data Higher voltage & deeper submarine installations Aluminum solutions infrastructures Smart grids 5.5bn€ Fossil & Safer & more reliable cables resisting
Slide 7: Vision of Nexans
Credit presentation – May 2015 7 Vision of Nexans Given market evolution, the company confirms its focus on 4 sectors: % of sales at constant metal prices in 2014 Power transmission Power and data Power/data distribution 40% infrastructures Accessories Fossil & Mining O&G renewable 10% R
Slide 8: Biggest ever contract for Nexans
Credit presentation – May 2015 8 Biggest ever contract for Nexans NordLink HVDC interconnector between Norway and Germany will use Nexans’ subsea power cables
Slide 9: Among commercial successes
Credit presentation – May 2015 9 Among commercial successes A depth record setting for Chevron Safest airplanes for Airbus Airbus selects Nexans as main cable supplier for the next five years Deepest umbilical cables installed in Gulf of Mexico for Chevron-operated Jack and St. Malo oil and gas fiel
Slide 10: Fragmented landscape
Credit presentation – May 2015 10 Fragmented landscape Top 27 companies accounted for 40% of 2013 (excl winding wires) M US$ global production in 2013 9000 Telecom 8000 Power 7000 LV Top 5 6000 21% 5000 Top 10 28% 4000 Top 27 3000 40% 2000 1000 0
Slide 11: Market drivers are favorable for the long term…
Credit presentation – May 2015 11 Market drivers are favorable for the long term… Expectations for 2030 Population growth Urbanization +20% +40% Energy x2 Transport x2 +50% +60% +40% Electricity Energy consumption Energy from Automotive Air passengers consumption renewables 2014 2030 Sources: EIA, O
Slide 12: …But short term perspectives are challenging
Credit presentation – May 2015 12 …But short term perspectives are challenging Over the next 12 months: Currency and copper volatility create disruptions Spending from Power Utilities still low O&G and mining depressed Restructuring to weigh on cash flow generation Offset the increasing pric
Slide 13: 2. Group Strategy
2. Group Strategy 13
Slide 14: On the way to 2017: Nexans in motion
Credit presentation – May 2015 14 On the way to 2017: Nexans in motion Key challenges and opportunities: 2/3 of the growth to come from developing countries Europe to remain flat except niches US to show slow recovery Redesign the strategy: Strengthen market Regain leadership competitiveness
Slide 15: Regain competitiveness
Credit presentation – May 2015 15 Regain competitiveness Continue fixed cost reduction Complete reorganization launched in 2013 on Land High Voltage, Industry and Support functions in Europe Study new projects in order to deliver 100M€ additional savings by 2017 Continue variable cost reduction
Slide 16: Strengthen market leadership
Credit presentation – May 2015 16 Strengthen market leadership Grow on specific businesses Highly performing businesses: submarine HV, automotive harnesses, HV accessories Promising businesses: industrial segments in Europe, China Prioritize and differentiate CAPEX allocation Outperforming busin
Slide 17: Adapt portfolio to secure ROCE
Credit presentation – May 2015 17 Adapt portfolio to secure ROCE Shift the Group’s center of gravity towards the most profitable or promising businesses 1/3 capital employed generating limited return 1/3 capital employed 1/3 capital employed generating return in line accretive to margin with Group’s
Slide 18: 3. Financial results FY14
3. Financial results FY14 —— ms m: ey : =e 7 “ e: ee : == 5 . r,t A
Slide 19: Improved profitability on flat volumes
Credit presentation – May 2015 19 Improved profitability on flat volumes Figures in M€, unless otherwise specified Sales at constant metal prices Net debt 4,689 607 +0.7% organic growth 460 4,587 337 4,555 2013 as 2013 at constant 2014 Dec 31, 2013 Jun 30, 2014 Dec 31, 2014 published FX & scope Oper
Slide 20: Industry and Submarine leading the growth
Credit presentation – May 2015 20 Industry and Submarine leading the growth Distributors Industry & Installers Sales (constant metal prices) Sales (constant metal prices) 1,120M€ 1,213M€ Year on year organic growth Year on year organic growth -0.5% +2.9% Operating margin Operating margin 26M€ 50M€ T
Slide 21: Strategic initiatives have materially contributed to FY’14 operating margin
Credit presentation – May 2015 21 Strategic initiatives have materially contributed to FY’14 operating margin Operating margin evolution, in M€ 202 Unfavorable market conditions have 141(*) 148 affected the baseline while strategic 19 initiatives have contributed for about 73 half of the operating m
Slide 22: All initiatives have delivered as planned …
Credit presentation – May 2015 22 All initiatives have delivered as planned … 1 Turnaround in HV Target achieved on quality, processes, planning, competencies Continue focus on improvement Preparation of growth ahead Sales 2011 2012 2013 2014 2 Fixed cost reduction Sav ings, 0 5 10 15 20 25 30
Slide 23: … with exception of South America and mining
Credit presentation – May 2015 23 … with exception of South America and mining 3 Variable cost reduction Manufacturing: redesign-to-cost, energy efficiency, Optimohm Purchasing: renegotiations 4 Innovation Harnesses: good development in Europe and progress in China Smart grids: opening of an
Slide 24: Income statement (1/2)
Credit presentation – May 2015 24 Income statement (1/2) In M€ 2013(1) 2014 Sales 4,689 4,587 At constant metal prices Margin on variable costs 1,397 29.8% 1,390 30.3% Indirect costs (1,081) (1,102) EBITDA(2) 316 6.7% 288 6.3% Depreciation (145) (140) Operating margin 171 3.6% 148 3.2% Core exposure
Slide 25: EBITDA evolution
Credit presentation – May 2015 25 EBITDA evolution In M€ 286(*) 288 (6) +33 FX & scope (31) 0+ +6 High Price/Mix Volume Operating voltage effect effect costs (excl. HV) 2013 2014 (*) excluding non recurring pension effect of 30 million euros
Slide 26: Significant impairments: environment changes in 2014
Credit presentation – May 2015 26 Significant impairments: environment changes in 2014 Total: 197M€ AmerCable Australia Sharp decline of commodity Drop in metal and mineral prices prices over the last 18 months leading to drastic investment impacting investment in O&G and reductions from mining
Slide 27: Income statement (2/2)
Credit presentation – May 2015 27 Income statement (2/2) In M€ 2013 2014 Operating income (182) (35) Financial charge (109) (103) Income before tax (291) (138) Income tax (39) (32) Net income from operations (330) (170) Net income Group share (333) (168)
Slide 28: Balance sheet
Credit presentation – May 2015 28 Balance sheet Dec 31, 2013 Dec 31, 2014 Long-term fixed assets 1,844 1,737 Of which goodwill 414 303 Deferred tax assets 120 153 Non-current assets 1,964 1,890 Working Capital 879 803 Total to finance 2,843 2,693 Dec 31, 2013 Dec 31, 2014 Net financial debt 337 460
Slide 29: Net debt evolution
Credit presentation – May 2015 29 Net debt evolution Evolution over the past 12 months, in M€ (13) (460) (77) 78 (71) Other CAPEX (337) OCF Restructuring Working Antitrust (141) costs capital fine 101 variation of which • Tax paid -34 • Interests paid -74 Dec 31, 2013 Dec 31, 2014 Evolution of net d
Slide 30: 4. Credit considerations & Transaction Overview
4. Credit considerations & Transaction Overview 30
Slide 31: Strong liquidity
Credit presentation – May 2015 31 Strong liquidity 1,407 Convertible Bond 2.5% 1,273 As of December 31, 2014 (in M€) Bond 275 4.25% Cash & cash 810 Bond equivalent 250 5.75% Convertible 350 Bond 4.0% Local Undrawn borrowings 213 committed 597 facility 185 Main liquidity 2015 2016 2017 2018 2019 Tota
Slide 32: Rating: BB- Outlook stable
Credit presentation – May 2015 32 Rating : BB- Outlook stable Long Term Short term Outlook BB- B Stable S&P as of April 2015: “ Nexans S.A. will gradually improve its underlying profitability and increase its free operating cash flow (FOCF) generation. […] we expect Nexans will sustain an adjusted
Slide 33: Transaction overview Use of Proceeds
Credit presentation – May 2015 33 Transaction overview Issuer: Nexans SA (NXFP) Rating: BB- (stable) S&P Status: Senior, unsecured, RegS Size: 250 M€ Maturity: 5yr bullet (June 2020) Docs: Stand Alone French Law / Paris Listing / CoC / Negative pledge Denomination : 100 k€ + 100 k€ Use of Proceeds
Slide 34: 5. Q1’15 overview & Conclusion
5. Q1’15 overview & Conclusion 34
Slide 35: Q1’15: activity overview
Credit presentation – May 2015 35 Q1’15: activity overview Sales (at current metal prices): 1.6 bn€ Organic growth: +1.8% vs 2014 Brazil Submarine activities Australia Automotive harnesses Oil & Gas LAN cables Better mix in Europe (at Satisfactory progress on the cost of sales) strategic initiatives
Slide 36: Conclusion: On the way to 2017
Credit presentation – May 2015 36 Conclusion : On the way to 2017 Operating margin evolution, in M€ Market Price/cost leadership squeeze highly volatile Variable cost reduction Uncertainty relies Fixed cost on environment in 2014/2017 reduction 2014 2017 Target values 135 90 150 of initiatives