Nexans Sa · EURONEXT:NEX
Nexans Sa — H1 2014 Earnings Presentation
36 slides from Nexans Sa's earnings presentation, Jul 25, 2014
Slide 1: 2014 Half Year Results
2014 Half Year Results July 25, 2014
Slide 2: Safe Harbor
2014 Half Year Results 2 Safe Harbor This presentation contains forward-looking In addition to these risk factors, the main statements relating to the Group’s expectations for uncertainties for the second half of 2014 future financial performance, including sales and primarily relate to: profitabili
Slide 3: Activity overview
Activity overview Frédéric Vincent
Slide 4: Sales organic growth of 3.2% and growing OM
2014 Half Year Results 4 Sales organic growth of 3.2% and growing OM Sales (in M€, at constant metal prices) Tough market environment 2,351 2,304 2,235 Still difficult outlook in Europe Deterioration in South America, Russia and Middle East H1’13 H1’13 H1’14 Reported At 2014 FX and Progress on trans
Slide 5: Positive organic growth in all businesses
2014 Half Year Results 5 Positive organic growth in all businesses (Sales at constant metal prices, in M€) Q2/Q1 sequential growth Yoy organic growth 1,197 H1’13 H1’13 at Organic H1’14 +8% growth 2014 FX 1,107 +11% TD&O 993 936 +4.7% 993 523 470 +6% Industry 622 611 +1.1% 600 291 309 +8% 271 294 D&I
Slide 6: Operating margin by business
2014 Half Year Results 6 Operating margin by business TD&O Industry H1’14 H2’13 H1’13 H2’13 H1’14 H1’13 48 34 36 21 21 24 3.4% 3.5% 4.8% 3.4% 3.5% 3.9% Nexans Group H1’13 H1’14 H2’13(*) 75 70 at 2014 66 77 FX 3.2% 2.8% 3.4% D&I Other H1’13 H1’14 H1’13 H2’13(*) H1’14 24 H2’13 14 -4 -4 -9 13 4.1% 2.2%
Slide 7: Cable market in H1'14 remains very challenging
2014 Half Year Results 7 Cable market in H1’14 remains very challenging Europe Positive outlook in specific industrial applications Market slightly down in commoditized products Subdued growth overall Improvement of North Tough markets in France American market Euro strong against other currencies o
Slide 8: Sales evolution by area
2014 Half Year Results 8 Sales evolution by area Sales at constant metal and year on year organic growth H1’14 1,197 M€ 1,107 M€ +8% +31% +21% Transmission Land -13% +13% +10% -5% APAC -0.4% +5% +9% -8% South America -5.5% -3% +5% +3% North America +0.5% -2% +14% +3% +1% Europe & MERA +2.3% +5% Q1 y
Slide 9: D&I: recovery in volumes, except in South America
2014 Half Year Results 9 D&I: recovery in volumes, except in South America Back to growth in H1’14 after a tough H2’13 Sales(*) and organic growth by area Sales(*) 565M€ 596M€ 559M€ 565M€ +0.6% organic growth MERA +11% +2% APAC Europe +0% +7% South After decrease in pricing in America -10% -7% H2’13
Slide 10: Industry: redeployment starting to pay off in Europe
2014 Half Year Results 10 Industry: redeployment starting to pay off in Europe Yoy sales grow th by sector (* ) -20% 0% +20% Sales at constant metal prices 600M€, or +1.1% growth(*) Resources +5% Upstream O&G US, Korea • Europe: backlog at 3 year historical Downstream O&G MERA high on key segments (
Slide 11: U&O: volumes under pressure in Europe and Middle East
2014 Half Year Results 11 U&O: volumes under pressure in Europe and Middle East Sales (at constant metal price) -1.9% yoy organic growth Utilities: 512M€ Pock ets of grow th not sufficient to offset lack of v olumes EMEA in France and tough env ironment in Middle East France down on volumes Export t
Slide 12: Transmission: +17% yoy organic growth
2014 Half Year Results 12 Transmission: +17% yoy organic growth Land Submarine Sales: -13% organic growth Sales: +31% organic growth Still difficult environment Intensive and under control production Last legacy contracts executed early Yanggu production ramp up Q2’14 on-going and qualification test
Slide 13: Financial Results
Financial Results Nicolas Badré
Slide 14: Key figures
2014 Half Year Results 14 Key figures In M€ H1’13 H1’14 Sales 3,412 3,216 At current metal prices Sales 2,351 2,304 At constant metal prices EBITDA (1) 151 147 Operating margin 75 77 Operating margin rate at constant metal prices 3.2% 3.4% Operating margin rate at current metal prices 2.2% 2.4% Rest
Slide 15: Income statement (1/3)
2014 Half Year Results 15 Income statement (1/3) In M€ H1’13 H1’14 Sales 2,351 2,304 At constant metal prices vs 29.8% in Margin on variable costs 727 30.9% 701 30.4% FY’13 Indirect costs (576) (554) EBITDA (1) 151 6.4% 147 6.4% Depreciation (76) (70) Operating margin 75 3.2% 77 3.4% Core exposure i
Slide 16: EBITDA evolution (in M€)
2014 Half Year Results 16 EBITDA evolution (in M€) 5 Volume (29) 12 FX & Operating 151 scope costs 15 (excl. HV) 147 6.4% of (7) sales Price & Mix 6.4% of High Voltage sales Mostly H2’13 impact H1’13 H1’14
Slide 17: Pricing evolution
2014 Half Year Results 17 Pricing evolution Average prices change 2013 vs 2012 (Source CRU, April 2014) internal telco o Overcapacity ext Copper telco addressed through cost reduction and development Alu power of innovation and services -1,7% Copper power o FX: hedged -3,7% LV Energy Reflection on N
Slide 18: Income statement (2/3)
2014 Half Year Results 18 Income statement (2/3) In M€ H1’13 H1’14 Sales 2,351 2,304 At constant metal prices Margin on variable costs 727 30.9% 701 30.4% Indirect costs (576) (554) EBITDA(1) 151 6.4% 147 6.4% Depreciation (76) (70) Operating margin 75 3.2% 77 3.4% Core exposure impact (27) (17) Res
Slide 19: Antitrust investigations in high voltage
2014 Half Year Results 19 Antitrust investigations in high voltage 200 Provision booked in H1’11 account related to the European Commission’s investigation Potential fine imposed by the European Commission on April 2nd, 2014. (71) Cash out early July 2014, sorted in ‘Other current liabilities’ in BS
Slide 20: Income statement (3/3)
2014 Half Year Results 20 Income statement (3/3) In M€ H1’13 H1’14 Operating income (78) 91 Cost of debt (45) (43) Other financial charges (1) (10) Income before tax (124) 38 Income tax (21) (14) Net income from operations (145) 24 Net income Group share (145) 25
Slide 21: Balance Sheet
2014 Half Year Results 21 Balance Sheet In M€ Dec 31, 2013 Jun 30, 2014 Long-term fixed assets 1,844 1,862 of w hich goodw ill 414 425 Deferred tax assets 120 143 Non-current assets 1,964 2,005 Working Capital 879 1,039 Total to finance 2,843 3,043 Net financial debt 337 607 Reserves 824 716 Deferre
Slide 22: Net debt evolution
2014 Half Year Results 22 Net debt evolution 607 Other (19) Restructuring costs OCF(1) CAPEX (29) 337 66 (67) OWC variation (221) Dec 31, Jun, 30 2013 2014 (1)Operational cash flow as described in footnote 4 of the consolidated cash flow statement
Slide 23: Operating working capital evolution
2014 Half Year Results 23 Operating working capital evolution Evolution of operating working capital Based on (Q2 current sales)*4 Significant improvement in 19,8% 19,7% total OWC on the back of 19,1% return to average situation 18,4% in submarine high voltage OWC excluding project activities impact
Slide 24: Update on strategic initiatives
Update on strategic initiatives Arnaud Poupart-Lafarge
Slide 25: Progress made over H1'14
2014 Half Year Results 25 Progress made over H1’14 Implementation of strategic initiatives and collection of results are progressing on line. Operating margin in M€ 75 77 5 66 Scope 27 14 Variable cost takeout 70 High Voltage 52 50 Strategic initiatives Fixed cost Baseline business reduction H1’13 H
Slide 26: Submarine and Land
2014 Half Year Results 26 High Fixed cost Variable cost Innovation Organic Voltage reduction take out growth Submarine Operating mode stabilized Improvement phase on-going (+31% sales in H1’14; +20% expected for FY14) Preparation of growth ahead Opportunities in SHV: major contracts at bidding stage
Slide 27: Process update
2014 Half Year Results 27 High Fixed cost Variable cost Innovation Organic Voltage reduction take out growth Process update Transfer of activity under process in several Australia (closing of one plant effective Q4): E European sites: France, Italy, Germany U Most of homologation done A Starting
Slide 28: Gross savings on direct costs: +21M€; net savings +9M€
2014 Half Year Results 28 High Fixed cost Variable cost Innovation Organic Voltage reduction take out growth Gross savings on direct costs: +21M€ Energy price Productivity Optimohm Other Purchasing actions Scrap and material usage Redesign-to-Cost Net savings on direct costs: +9M€ In current tough e
Slide 29: Harnesses, Smartgrids and Superconductivity
2014 Half Year Results 29 High Fixed cost Variable cost Innovation Organic Voltage reduction take out growth Harnesses Continuous improvement in Europe and North America, and start up in China, with 2 objectives: o secure market position by global growth to tighten relationship with key customers o
Slide 30: Some initiatives on track with the plan, offset by lack of tailwind
2014 Half Year Results 30 High Fixed cost Variable cost Innovation Organic Voltage reduction take out growth Some initiatives on track with the plan… 7 strategic segments in Europe Railway development Market growth well oriented for the most part Europe: new multi-years contracts won Medical Nexans
Slide 31: Perspectives and priorities for H2
2014 Half Year Results 31 Perspectives and priorities for H2 No upside expected on current environment Focus on priorities: Turnaround in high voltage and restructuring in Europe and APAC Capture opportunities: Development of niche, emerging and high ROCE businesses OM FY14 still expected higher tha
Slide 32: Questions & Answers
Questions & Answers
Slide 33: 2014 Half Year Results
2014 Half Year Results July 25, 2014
Slide 34: APPENDICES
APPENDICES
Slide 35: Sales and profitability by segment
2014 Half Year Results 35 Sales and profitability by segment HY’13 HY’14 In M€ Sales OM OM % Sales OM OM % Transmission, Distribution & 993 34 3.4% 993 48 4.8% Operators Industry 622 21 3.4% 600 24 3.9% Distributors and Installers 596 24 4.1% 565 14 2.5% Other 140 -4 146 -9 Total Group 2,351 75 3.2%
Slide 36: Impact of foreign exchange and consolidation scope
2014 Half Year Results 36 Impact of foreign exchange and consolidation scope Organic HY’13 FX growth Scope HY’14 In M€ Transmission, Distributors & 993 (58) 45 13 993 Operators Industry 622 (11) 6 (17) 600 Distributors & Installers 596 (36) 4 1 565 Other 140 (11) 18 (1) 146 Total Group 2,351 (116) 7