Nexans SA · EURONEXT:NEX
Nexans SA — Investor Presentation (October 2008)
37 slides from Nexans SA's investor presentation, October 2008
Slide 1: Group presentation October 2008
Group presentation October 2008
Slide 2: Safe Harbor
Safe Harbor This presentation contains forward-looking statements relating to the Group’s expectations for future financial performance, performance including sales and profitability. profitability The forward looking statements contained in this presentation are dependent on known and unknown risks
Slide 3: Agenda: Nexans in the Cable Industry
AGENDA I. Nexans in the Cable Industry II. Financial performance III. Strategy & MT Targets
Slide 4: A large and diversified industry
A large g and diversified industryy ▌A worldwide market of $ ▌ $156 bn in 2007 ▌Three end-user markets B ildi Building Industrial, Public & Residential Buildings •Medium & Low Voltage energy cables •Data a a & communication co u ca o private networks (LAN, ..) Industry Infrastructures •Automotive, A
Slide 5: Industry dynamics
Industry dynamics ▌Healthy long term drivers Worldwide Market Long-term drivers (at 2007 metal prices) z Energy gy networks : 9 Need to replace aging lines and interconnect the networks $181 Bn 9 Electrification programs in emerging 8 countries ti $156 Bn 6.3 Change 07-11 9 New forms of energy produ
Slide 6: Nexans: the world-wide market leader
Nexans: the world world-wide wide market leader 8,005 2007 Cable & Wire sales in M€ (6,512 exc. main listed players EW) Madeco W&C (proforma for Nexans, GC and LS) 5,118 4,300e PDIC 2,816 4,800e 1,484 1,409 2,367 o/w SE~ 2,200e , 1 409 3,300e GC Belden Commscope p Prysmian y Draka Leoni 2,300e 2,000
Slide 7: Nexans positioning: a full range approach
Nexans positioning : a “full full range” range approach Electrical Wires Energy Telecom ucture Copper & Energy Public Networks Fiber Networks, Infrastru 38 % off Sales S l Accessories including HV insulated cables 5 % of Sales D MARKETS & Umbilicals Wirerod (mainly) Industry Industrial Applications,
Slide 8: A multi-regional strategy
A multi-regional strategy Our markets are of multi-regional nature with a need for local presence Europe p Leader strategy gy 51 % of sales* 9 Above 10% market shares Challenger h ll position, present only l in North America selected business segments : 17 % of sales* 9 Strong positions in Canada (E
Slide 9: Agenda: Financial performance
AGENDA I. Nexans in the Cable Industry II. Financial performance III. Strategy & MT Targets
Slide 10: Nexans is growing faster than its markets
Nexans is growing faster than its markets 9 organic growth of Cable activities +9.3% +9 3% /year since 2003 vs +5.2% market CAGR (*) S l Sales (at constant metal prices) Organic growth by cable I M€ In types 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 O Operating ti M Margin i In M€ OM rate (*) by cable types 12% 9,7% 10% 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 2007 2%
Slide 12: Nexans: a company that has been transformed
Nexans : a company that has been transformed f Massive restructuring (2001-2005) (2001 2005) f Selective M&A policy and organic development focused on: Î Higher added value segments Î Fast growing geographic areas Portfolio turnover Powerful operating leverage created f Strong financial structure ma
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 Switzerland February 2006 Telecom Copper Santander February 2008 590 M€ yea
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 N l 476 •Handling Specialty Product + 18 % BUILDING of which 386 •LAN 327 +9% 430 •Safety S f t •Heating cables +9% 393 362 INFRASTRUCTURE Priority segments: + 22 % •High Voltage
Slide 16: Higher exposure to fast growing areas
Higher exposure to fast growing areas Sales from high growth areas (*) ( ) at constant metal price (M€) 1 280 X 6 in 5 years + 49 % • 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 tota
Slide 17: Strong financial structure protected
Strong g financial structure protected p (in Million €) D Dec. 31 31, 07 J June 30 30, 08 Long term fixed assets 1,192 1,209 of which g goodwill 192 201 Deferred tax assets 48 45 Non-current assets 1,240 1,254 Working g capital p 1,222 , 1,556 , Assets (net) held for sale 105 1 Total to finance 2,56
Slide 18: Agenda: Strategy & MT Targets
AGENDA I. Nexans in the Cable Industry II. Financial performance III. Strategy & MT Targets
Slide 19: Our medium term objectives
Our medium term objectives j A Nexans group: f More Profitable f Less Cyclical f More Streamlined f With more Synergies between businesses 18
Slide 20: A clear portfolio strategy
A clear p portfolio strategy gy X Focus F on four f core businesses b i Energy infrastructures Consolidating our leadership Industry (Energy & telecom) Commercial development Building Expanding the offer Telecom l LAN Enhancing the product mix X Arbitrage within the Telecom activities Downsizing Tel
Slide 21: Energy infrastructure: greater visibility and improved profitability
Energy infrastructure: greater visibility and improved profitability X Solid fundamentals X Marked increase in order b kl backlog X Position of co-leader in the world X 2 years' business X Powerful growth drivers : g Voltage in High g 1 year Î Network renovation and Umbilical Î New energy sources 20
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 Multi site offering structure by 25% vs 2002/2006 period X Capacity freed up by
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 D l t off product d t portfolios tf li • Geographic redistribution 9 residential US v
Slide 24: Telecom: clarified positioning
Telecom: clarified positioning p g X LAN Confirmed in X Systems y offering g under development p “Core Business” B siness” activity acti it X Progression of 10 Gigabit X Fiber Optic X Rollout in progress in Europe X Technology and service offering Growth opportunities X Potential partnerships X Tele
Slide 25: Electrical Wires: ongoing down-sizing
Electrical Wires: ongoing g g down-sizing g X F t down-sizing Faster d i i Weight in Nexans Sales (*) X 37 % reduction in external sales in 2007 18 % 10 % of Sales X Improved margins (prices and costs control) 2006 2007 X Optimized capital employed Reduction program stepped up: X Capital p employed
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: Q3 '08 trading update: Sustained growth in cable activities
Q3 ‘08 trading update : Sustained growth in cable activities f 7.4 % organic growth of cable Sales (**) activities (*) by destination at Sept.’08 end f Electrical Wires down-sizing North America Asia Pacific In M€ 18% 13% Sales at constant metal prices Rest of 17% World Cable 1,166 FX activities 1,1
Slide 28: Outlook for 2008
Outlook for 2008 A Assuming i continuation ti ti off fi first-half t h lf 2008 economic i ttrends d f Above 6 % organic growth in cable activities for the year f Increase of operating margin compared to 2007 f Net debt between 500 M€ and 600 M€ after acquisitions financing (Intercond et Madeco) and
Slide 29: Appendices
S\fexans Appendices
Slide 30: HY 2008: Break-down by business segments
HY 2008: Break-down by business segments Sales Operating margin by business segments by business segments at constant metal and exchange rates 1% 7% 7% 6% Energy infrastructure 3% 5% Industryy 38 % Building 24% 47% 24 % Private networks (LAN) Telecom infrastructure 20 % Electrical wires 18% 29
Slide 31: Sales & Operating margin by business
Sales & Operating p g margin g byy business In M€ HY 2007 HY 2008 Sales* OM % Sales* OM % Energy infrastructure 784 56 7.2 % 919 106 11.4 % Industry 510 39 7.7 % 482 41 8.6 % B ildi Building 589 65 10 9 % 10.9 571 55 97% 9.7 Private network (LAN) 147 18 12.3 % 149 15 10.4 % Tl Telecom IInfrastructur
Slide 32: Very high growth in Energy networks
Very high growth in Energy networks Organic growth of Cable activities 2007 Q1 Q2 HY ’08 Q3 Sustained Energy infrastructure 10.2% 16.4 % 22.6 % 19.7 % 22.7 % Energy infrastructure activity Industry 17.5 % 3.8 % 6.1 % 4.8 % - 2.3 % Building 10.4 % -0.7 % -7.7 % -4.2 % -3.5 % Growth in priority indust
Slide 33: Higher profitability in two of our main core businesses
Higher profitability in two of our main core businesses Operating margin rate HY '07 07 HY '08 08 Energy Infrastructure 7.2 % 11.4 % Energy i f infrastructure accelerating Industry 7.7 % 8.6 % Building 10.9 % 9.7 % Consolidation of industry Private networks k ((LAN) AN) 12.3 % 10.4 % margins i Telec
Slide 34: Highly reactive to cost hikes
Highly g y reactive to cost hikes Impact ∆ margin on variable Operating costs Actions costs HY ‘08/’07 HY 2008 (*) Other fixed costs 8% Increase Selecting customers under control Payroll 13% Infrastructure : Productivity Energy, transportation 4% + 2.4 ppts Plastics and ~ 20 M€ Partial components 15
Slide 35: Strong operating leverage maintained
Strong g operating p g leverage g maintained Excluding Electrical Wires (in Million €) June 07 June 08 Sales cable activities, at current metal prices 2,937 3,029 Sales l cable bl activities, at constant metal prices 2,163 6 80 2,243 Margin on variable costs 687 751 Margin on variable costs (%) 31.8
Slide 36: Opportunities remain the same
Opportunities pp remain the same Growth Business Profitability Financial potential model structure • Electrification needs • Global • Constantly • Solid and stable worldwide leader improving Cash flow • Oil & gas • Geographyh profitability fit bilit infrastructure and product • Resilience • Dividend
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