Nexans SA · EURONEXT:NEX
Nexans SA — Investor Presentation (August 2007)
35 slides from Nexans SA's investor presentation, August 2007
Slide 1: Group general presentation
Group general presentation August 2007
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: Agenda
AGENDA I. Nexans in the Cable Industry II. Financial performance III. Our Objectives & MT Target 2
Slide 4: A large and diversified industry
A large and diversified industry ▌ A worldwide market of $140 bn in 2006 ▌ Three end-user markets Building Industrial, Public & Residential Buildings •Medium & Low Voltage energy cables •Data & communication private networks (LAN, ..) Industry Infrastructures •Automotive, •Shipbuilding, Aeronautics
Slide 5: Industry dynamics: healthy LT drivers
Industry dynamics: healthy LT drivers ▌ An old industry with a bright future Worldwide Market Long-term drivers (at 2006 copper price) z Energy networks : % 9 Need to replace aging lines and interconnect 3.7 the networks GR % CA $156 Bn 4.8 9 Electrification programs in emerging GR 6.5 countries CA
Slide 6: Nexans: the world-wide market leader
Nexans: the world-wide market leader ▌ 2006 Sales of 7,5 billion euro ▌ Full–line player 2006 Sales in M€ , actual metal price – main US & European players 7,489 Prysmian 5,007 (ex Pirelli) General 2,820 Cable Draka 2,524 Superior Essex 2,100 Commscope 1,249 Electrical Wires Leoni 1,154 (excl. harne
Slide 7: Nexans positioning: a full range approach
Nexans positioning : a “full range” approach Electrical Wires Energy Telecom Infrastructure Energy Public Networks Copper & Fiber Networks, 32 % of Sales Accessories including HV insulated cables 5 % of Sales END MARKETS & Umbilicals Wirerod (mainly) Industry Industrial Applications Special Cables &
Slide 8: Geographically diversified
Geographically diversified ▌ 95 production sites in 30 countries ▌ World-wide commercial presence 2006 Sales in M€ , actual metal price – main US & European players 7,489 Prysmian (ex Pirelli) 5,007 General 2,820 Cable Draka 2,524 Superior Essex 2,100 Commscope 1,249 Europe North America Leoni 1,154
Slide 9: A multi-regional strategy
A multi-regional strategy Our markets are of multi-regional nature with a need for local presence Europe Leader strategy 55 % of sales* 9 Above 10% market shares Challenger position, present only in selected North America business segments : 22 % of sales* 9 Strong positions in Canada (Energy) 9 15%
Slide 10: II. Financial performance
AGENDA I. Nexans in the Cable Industry II. Financial performance III. Our Objectives & MT Target 9
Slide 11: 2003-2006: Nexans, a success story (1/2) - Growth
2003 - 2006 : Nexans, a success story (1/2) - Growth Nexans is growing faster than the market: 9 organic CAGR(*) of +6.7% since 2003 vs +4.8% for the market 9 driven by Energy cables (average +8.8%) Sales CAGR(*) (at constant metal prices) by cable types 12% 11,3% In M€ .7 % r 6 r yea 10% + pe 8,2%
Slide 12: 2003-2006: Nexans, a success story (2/2) - Profitability
2003 - 2006 : Nexans, a success story (2/2) - Profitability Strong improvement of profitability: 9 Operating Margin rate from 2.3% in 2003 to 5.8% of Sales (*) 9 profitability restored both in Energy and Telecom cables Operating Margin OM rate (*) by cable types 9% e ar 7.8% ry 8% In M€ pe 7% 5.9% 7
Slide 13: 2001-2006: Nexans, a company that has been transformed
2001 – 2006: Nexans, a company that has been transformed z The downturn of the cycle (2001-2003) was turned into an opportunity: Massive Massive Restructuring Restructuring Lowered break-even point 12
Slide 14: Lowered breakeven point, improved efficiency
Lowered breakeven point Improved efficiency z Restructuring efforts of 246 M€ in cash since 2001: Indirect Costs reduced by 10% between 2001 and 2003 kept under control since then (+2%) Indirect costs (*) 2006 vs 2001: same Sales level 1,030 with lower fixed costs 930 918 950 Sales at constant
Slide 15: Nexans: a company that has been transformed
Nexans : a company that has been transformed z The downturn of the cycle (2001-2003) was turned into an opportunity: Massive Massive Active Active Restructuring Restructuring M&A M&A policy policy Lowered Business-mix Geographical reach break-even point reorientation reorientation 14
Slide 16: Geographic & business mix re-orientation: acquisitions & joint ventures
Geographic & business mix re-orientation Acquisitions & Joint Ventures TVG Liban Cables Daesung Cable January 2007 PETRI July 2004 June 2001 June 2002 Kukdong December 2002 Minority Repurchase in Korea November 2006 Viscas Japan (JV) July 2006 LiOA Vietnam Furukawa cabos de Energia January 2006 Janu
Slide 17: Geographic & business mix re-orientation: divestitures
Geographic & business mix re-orientation Divestitures Distribution Norway Winding Wires USA June 2005 August 2004 Tianjin Simcoe January 2007 January 2007 Winding Wires Europe February 2005 Agro May 2002 Debt Debt reduction reduction == 350 350 M€ M€ Distribution Suisse February 2006 since since 200
Slide 18: Nexans: a company that has been transformed
Nexans : a company that has been transformed z The downturn of the cycle (2001-2003) was turned into an opportunity: Selective Selective Massive Massive Active Active organic organic Restructuring Restructuring M&A M&A policy policy development development Lowered Business-mix Geographical reach bre
Slide 19: Business mix reorientation: higher exposure to specialty products
Business mix reorientation Higher exposure to specialty products 1,932 In M€ 1,730 OEMs •Naval Shipboard 1,558 •Automotive •Robotics Specialty Product + 18 % 386 •Nuclear •Handling 43% of Sales in 2006 +8% 327 BUILDING 304 +9% •LAN 393 •Safety of which + 16 % 362 •Heating cables 313 INFRASTRUCTURE P
Slide 20: Higher exposure to fast growing areas
Business mix reorientation: Higher exposure to fast growing areas Sales from high growth areas 860 at constant metal prices (M€) + 65 % 522 + 140 % 218 2002 2005 2006 Pro-forma with Olex Activity doubled twice in 4 years • 20% through internal growth and 80% through acquisitions Currently includ
Slide 21: Nexans: a company that has been transformed
Nexans : a company that has been transformed z The downturn of the cycle (2001-2003) was turned into an opportunity: Selective Selective Massive Massive Active Active organic organic Restructuring Restructuring M&A M&A policy policy development development Lowered Business-mix Geographical reach bre
Slide 22: Strong operating leverage created
Strong operating leverage created (in Million €) 2004 2005 2006 Sales at current metal price 4,732 5,449 7,489 Sales at constant metal price 4,005 258 4,263 179 4,442 Margin on variable costs 1,022 1,104 1,209 Margin on variable costs (%) 25.5 % 26 % 27.2% Indirect costs (*) (800) (823) (854) EBITDA
Slide 23: Strong financial structure protected
Strong financial structure protected (in Million €) Dec. 31, 05 (*) Dec. 31, 06 Jun. 30, 07 Capital employed Non-current assets 999 1,255 1,234 Working capital 1,093 1,465 1,520 Assets (net) held for sale 42 38 31 Total to finance 2,134 2,758 2,785 Financed by Net financial debt 374 633 533 Reserves
Slide 24: III. Our Objectives & MT Target
AGENDA I. Nexans in the Cable Industry II. Financial performance III. Our Objectives & MT Target 23
Slide 25: Pursuing our strategic model: value creation
Pursuing our strategic model Value Creation Growth Operating Margin Capital Efficiency Product mix Reduce capital Restructuring effort Reorientation intensive Businesses Geographical mix Increase Capex Operating Leverage very selectively Reorientation Pursue selective Divest Businesses at multiple A
Slide 26: Our medium term objectives
Our medium term objectives A Nexans group: z More Profitable z Less Cyclical z More Streamlined z With more Synergies between businesses 25
Slide 27: 2007-2009: a clear strategy
2007 – 2009: a clear strategy z A strategy that requires several types of actions: z 9 Focus on our core businesses Energy Energy infrastructures infrastructures Consolidating Consolidating our our leadership leadership Industry Industry (Energy (Energy & & telecom) telecom) Commercial Commercial de
Slide 28: 2009 Financial goals (1/2): sustained growth in revenues & income
2009 Financial goals (1/2) : sustained growth in revenues & income (*) Goals under review - to be updated early 2008 z Solid organic growth with Sales close to 4.9 bn€ In M€ (constant metal prices) 5 .5%year + nic/ a Olex E. W. org 4,900 4,442 2006 2009 z Operating margin rate of 7.5 % z ROCE(**) be
Slide 29: 2009 Financial goals (2/2): entering a cash generation phase
2009 Financial goals (2/2): entering a cash generation phase (*) z Massive investments behind ….. 246 M€ restructuring since 2001, 540 M€ acquisitions & Capex in 2006 (1/3 of the total effort of the sector) z …. cash generation ahead Cash generating (**) 2007 (*)/ Beyond 9 Capex program of 500
Slide 30: Objectives for 2007
Objectives for 2007 z Double digit organic growth for the Cable activities z Operating margin above 7.6 % z Decrease of net debt compared to December 2006 level (*) z ROCE improvement compared with 2006 (*) (**) z Restructuring of 30 M € z Investments around 195 M€ (*) at half year 2007 copper price
Slide 31: Appendices: Performances by businesses
Appendices: Performances by businesses 30
Slide 32: Energy
Energy Sales Sales (M€) (M€) (*) (*) Operating Operating Margin Margin (M€) (M€) at at constant constant metal metal prices prices and and exchange exchange rates rates Σ: 2,883 2,983 Σ: 171.4 233 5.4 76.9 58.4 Superconductors & Other 968 4.4 100.1 1,094 Construction 54.4 Infrastructure 1,261.6 OEMs
Slide 33: Telecom
Telecom Sales Sales (M€) (M€) (*) (*) Operating Operating Margin Margin (M€) (M€) at at constant constant metal metal prices prices and and exchange exchange rates rates Σ: 631 648 Σ: 25 48 Private networks 259.7 (LAN) 249 24,0 Infrastructure OEMs 11,1 266.4 259.8 20,9 15,7 3,5 115.6 128.9 -1,9 2005
Slide 34: Electrical Wires
Electrical Wires Sales Sales (M€) (M€) (*) (*) Operating Operating Margin Margin (M€) (M€) at at constant constant metal metal prices prices and and exchange exchange rates rates Σ: 777 801.5 Σ: 5.6 - 4.2 2.4 Wirerod and Bare conductors 3.2 3.4 714.8 732.7 Winding Wires -7.6 62.1 68.8 2005 2006 2005
Slide 35: Nexans
exans Nenan: