Nexans SA · EURONEXT:NEX
Nexans SA — Investor Presentation (April 2008)
35 slides from Nexans SA's investor presentation, April 2008
Slide 1: Group presentation April 2008
Group presentation April 2008
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: Nexans in the Cable Industry
AGENDA I. Nexans in the Cable Industry II. Financial performance III. Strategy & MT Targets 2
Slide 4: A large and diversified industry
A large and diversified industry ▌ A worldwide market of $150 bn in 2007 ▌ 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
Industry dynamics ▌ Healthy long term drivers Worldwide Market Long-term drivers (at 2007 metal prices) z Energy networks : 9 Need to replace aging lines and interconnect 4% the networks GR 9 Electrification programs in emerging % CA $176 Bn 5.2 GR countries CA $150 Bn 7.7 Change 07-11 7.6 9 New for
Slide 6: Nexans: the world-wide market leader
Nexans: the world-wide market leader ▌ 2007 Sales of 7,4 billion euro ▌ Full–line player 2007 Sales in M€ , actual metal price – main US & European players 7,412 Prysmian 5,118 (ex Pirelli) General Cable 3,369 Draka 2,816 Superior Essex 2,185 Commscope 1,484 Electrical Wires Belden 1,409 Energy Cabl
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, 37 % of Sales Accessories including HV insulated cables 5 % of Sales END MARKETS & Umbilicals Wirerod (mainly) Industry Industrial Applications Special Telecom
Slide 8: A multi-regional strategy
A multi-regional strategy Our markets are of multi-regional nature with a need for local presence Europe Leader strategy 53 % of sales* 9 Above 10% market shares Challenger position, present only in selected North America business segments : 17 % of sales* 9 Strong positions in Canada (Energy) 9 15%
Slide 9: II. Financial performance
AGENDA I. Nexans in the Cable Industry II. Financial performance III. Strategy & MT Targets 8
Slide 10: Nexans is growing faster than its markets
Nexans is growing faster than its markets 9 organic growth of Cable activities+9.3% /year since 2003 vs +5.2% market CAGR (*) Sales (at constant metal prices) Organic growth by cable types In M€ .3 % 9 ar + ye p er ities a nic activ orgable C 4,822 3,924 2003 2007 (*) Compounded Annual Growth rate 9
Slide 11: Strong improvement of profitability
Strong improvement of profitability 9 OM rate from 2.3% in 2003 to 8,5% of Sales (*) 9 profitability restored both in Energy and Telecom cables Operating Margin In M€ OM rate (*) by cable types e ar ry 12% pe 5% 9,7% 10% +4 9,3% 7,8% 8% 409 5,9% 7,7% 8,5% 6% 4,5% 5,6% 4% 4,3% 5,8% 91 4,4% 3,3% 2003
Slide 12: Nexans: a company that has been transformed
Nexans : a company that has been transformed z Massive restructuring (2001-2005) z Selective M&A policy and organic development focused on: Higher added value segments Fast growing geographic areas Portfolio Portfolio turnover turnover Powerful Powerful operating operating leverage leverage crea
Slide 13: Geographic & business mix re-orientation: Divestitures
Geographic & business mix re-orientation Divestitures Distribution Norway Winding Wires USA June 2005 August 2004 Tianjin Simcoe July 2007 April 2007 Winding Wires Europe February 2005 January 2007 Agro May 2002 Distribution Suisse February 2006 Telecom Copper Santander February 2008 590 590 M€ M€ y
Slide 14: 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 Furukawa cabos de Energia January 2003 LiOA Vietnam Janu
Slide 15: Higher exposure to specialty products
Higher exposure to specialty products 2,328 In M€ 1,932 OEMs •Naval Shipboard 1,730 •Automotive •Robotics + 23 % •Nuclear Specialty Product 476 •Handling + 18 % of which 386 •LAN BUILDING 327 +9% 430 •Safety •Heating cables +9% 393 362 INFRASTRUCTURE Priority segments: + 22 % •High Voltage •Umbilica
Slide 16: Higher exposure to fast growing areas
Higher exposure to fast growing areas Sales from high growth areas (*) at constant metal price (M€) 1 220 X 6 in 5 years + 42 % • 30% through internal growth • 70% through acquisitions 860 + 65 % 522 in M€ + 140 % 218 2002 2005 2006 2007 Pro-forma with Olex Pro-forma with Madeco (**) % of total 5%
Slide 17: Strong financial structure protected
Strong financial structure protected (in Million €) Dec. 31, 05 (*) Dec. 31, 06 Dec. 31, 07 Capital employed Non-current assets 999 1,255 1,240 Working capital 1,093 1,465 1,222 Assets (net) held for sale 42 38 105 Total to finance 2,134 2,758 2,567 Financed by Net financial debt 374 633 290 Reserve
Slide 18: III. Strategy & MT Targets
AGENDA I. Nexans in the Cable Industry II. Financial performance III. Strategy & MT Targets 17
Slide 19: 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 18
Slide 20: A clear strategy
A clear strategy X Focus on four core businesses Energy Energy infrastructures infrastructures Consolidating Consolidating our our leadership leadership Industry Industry (Energy (Energy & & telecom) telecom) Commercial Commercial development development Building Building Expanding Expanding the the
Slide 21: Energy infrastructure: greater visibility and improved profitability
Energy infrastructure: greater visibility and improved profitability X Solid fundamentals X Marked increase in order backlog X Position of co-leader in the world X 2 years' X Powerful growth drivers : 1 year business Î Network renovation in High Voltage 2004 2007 and Umbilical Î New energy sources Î
Slide 22: Industry: High potential for growth and profitability
Industry: High potential for growth and profitability X Appropriate resources X Backed by growth sectors X New sales organization for global Oil & Gas : markets 9 2007/2011 Capex of this industry increased X Multi-site offering structure by 25% vs 2002/2006 period X Capacity freed up by re-examini
Slide 23: Building: strength of Nexans business model
Building: strength of Nexans business model X A balanced product mix X 2002/2007 : a different business model Industrial & ~65% Commercial 9 Significant changes: Residential Building Construction ~35% • Development of product portfolios • Geographic redistribution 9 residential US very limited : 30
Slide 24: Telecom: clarified positioning
Telecom: clarified positioning X LAN Confirmed Confirmed in in X Systems offering under development “Core “Core Business” Business” activity activity X Progression of 10 Gigabit X Fiber Optic X Rollout in progress in Europe Growth Growth opportunities opportunities X Technology and service offering
Slide 25: Electrical Wires: ongoing down-sizing
Electrical Wires: ongoing down-sizing X Faster down-sizing Weight in Nexans Sales (*) X 37 % reduction 18 % in external sales in 2007 10 % of Sales X Improved margins (prices and costs control) 2006 2007 X Optimized capital employed Reduction Reduction program program stepped stepped up: up: X Capit
Slide 26: 2009 objectives
2009 objectives X Operating margin ~10% under favourable economic environment 8,5% 5,8% ~ 7% under depressed 4,4% economic environment New targets including announced M&A operations 2005 2006 2007 2008 2009 Achieved results X Organic growth of Cable activities X Free Cash Flow excluding metal impact
Slide 27: Q1 2008 trading update: top-line growth in line with objectives
Q1 2008 trading update: top-line growth in line with objectives North Europe Q1 2008 Sales + 6,4 % Organic America by business segment in M€ growth + 5,7 % Energy Infrastructure 441 16,4% Asia- Industry 237 3,8% Pacific Rest of the + 1,2 % Building 294 -0,7% World + 15 % Telecom Infrastructure 58 -8
Slide 28: Half Year 2008 outlook: further improvement of profitability
Half Year 2008 outlook: further improvement of profitability Under comparable economic conditions as in Q1 2008 X Organic growth of Cable activities : above 6% X Strong improvement of Operating Margin rate: between 8.5% and 9% vs 7.6% at HY 2007 X Net Debt as of June 2008 : significantly below June
Slide 29: Appendices
SNexans Appendices
Slide 30: Strong operating leverage created
Strong operating leverage created (in Million €) 2005 2006 2007 w/o E.W Sales at current metal price 5,449 7,489 7,412 5,920 Sales at constant metal price 4,263 179 4,442 380 4,822 4,320 Margin on variable costs 1,104 1,209 1,437 1,372 Margin on variable costs (%) 26 % 27.2 % 29,8% 31,8% Indirect co
Slide 31: Energy
Energy Sales Sales (M€) (M€) (*) (*) Operating Operating margin margin (M€) (M€) at at constant constant metal metal and and exchange exchange rates rates Σ: 3 104 3 780 Σ: 242 365 1 132 Building 126 956 Infrastructures 100 1 643 152 1 355 Industry 97 793 1 005 87 45 2006 2007 2006 2007 (*) Organic
Slide 32: Telecom
Telecom Sales Sales (M€) (M€) (*) (*) Operating Operating margin margin (M€) (M€) at at constant constant metal metal and and exchange exchange rates rates Σ: 472 529 Σ: 40 49 Private Networks 282 (LAN) 31 248 24 Infrastructures 224 247 16 18 2006 2007 2006 2007 (*) Organic growth = + 12 % 31
Slide 33: Electrical Wires
Electrical Wires Sales Sales (M€) (M€) (*) (*) Operating Operating margin margin (M€) (M€) at at constant constant metal metal and and exchange exchange rates rates Σ: 787 502 Σ: 8 Electrical Wires -4 2006 2007 2006 2007 (*) Organic growth = - 33 % 32
Slide 34: Investment case Nexans: a promising return on investment
Investment case Growth Business Operating Financial Potential Model Margin Structure • Electrification • Leadership • High level of • Strong & steady needs worldwide positions profitability cash flow • Emerging countries • Rebalancing • Dividend • Exposure to fast • Oil & Gas growing pay out infrast
Slide 35: Nexans
exans Nenan: