Nexans SA · EURONEXT:NEX
Nexans SA — FY2017 Earnings Presentation
50 slides from Nexans SA's earnings presentation, Feb 15, 2018
Slide 1: 2017 Full Year Results
2017 Full Year Results February 15, 2018
Slide 2: Safe Harbor
Safe Harbor This presentation contains forward-looking statements which are subject to various expected or unexpected risks and uncertainties that could have a material impact on the Company's future performance. Readers are also invited to log onto the Group’s website where they can view and downlo
Slide 3: Key Take-aways
Key Take-aways ● Sales of 6,370 M€; 5.1% organic growth (6.2% excluding Oil & Gas) Financial performance linked to robust Project ● Solid performance of Submarine High Voltage business (+44.9% organic) activities ● Stable sales excluding projects activity (-0.5% organic) ● Operating Margin at 272 M€
Slide 4: Agenda
Agenda 1 Full Year 2017 highlights 2 Business review 3 Key Financials 4 Paced for Growth 5 Appendix
Slide 5: Full Year 2017 Highlights
1 Full Year 2017 Highlights Arnaud POUPART-LAFARGE, CEO
Slide 6: Nexans, a global cable solution provider
HIGHLIGHTS 1 Nexans, a global cable solution provider Well positioned on its four end-markets Sales by business segments End markets Energy and data ● Power transmission infrastructures ● Power/data distribution 13% ● Accessories ● Mining 37% Transmission, Energy resources ● O&G Distribution ● Renew
Slide 7: Nexans, a global cable solution provider
HIGHLIGHTS 1 Nexans, a global cable solution provider End markets Sales by new business segments Strategy • Building • Smart Cities / Smart Grids Building • E-mobility 13% 15% • Local infrastructure Accelerate & Territories growth through • Decentralized energy systems portfolio 9% of activities • R
Slide 8: Nexans brings Energy to Life: Ecomobility
HIGHLIGHTS 1 Nexans brings Energy to Life Building & Territories: Ecomobility Nexans developing EV charging infrastructure 149 Nexans charging stations in the 61 municipalities in North-Eastern France. The charging stations are produced by Nexans Power Accessories France and will be supervised by in
Slide 9: Nexans brings Energy to Life: Ecomobility
HIGHLIGHTS 1 Nexans brings Energy to Life Building & Territories: Ecomobility Nexans accelerates sustainable mobility with investment in IES The investment in IES, global expert of EV fast-charging solutions, complements Nexans’ existing business in EV charging solutions, including alternating curre
Slide 10: Nexans brings Energy to Life: Energy Transition
HIGHLIGHTS 1 Nexans brings Energy to Life High Voltage & Projects: Energy Transition Nexans accelerates energy transition with cutting-edge submarine cabling solutions Nexans will install a 420 kV XLPE submarine cable system in Norway to supply power to ~200,000 households, businesses and industry f
Slide 11: Nexans brings Energy to Life: HV capacities
HIGHLIGHTS 1 Nexans brings Energy to Life High Voltage & Projects: Energy Transition and Innovation Nexans reinforces HV cabling manufacturing and installation capacities Nexans will increase its manufacturing and testing capacities through an investment in its US Goose Creek facility as well as ope
Slide 12: Nexans brings Energy to Life: Telecom & Data
HIGHLIGHTS 1 Nexans brings Energy to Life Telecom & Data: Exponential Growth of Data Nexans will manufacture and deliver 250 kilometers of subsea fiber-optic cable to Huawei Marine Nexans is becoming a prime turnkey supplier for the construction and deployment of the SEAX-1 project. The project will
Slide 13: Nexans Data Center Solutions
HIGHLIGHTS 1 Nexans brings Energy to Life Telecom & Data: Exponential Growth of Data Nexans Data Center Solutions servicing the growing data customers of tomorrow Nexans’ Data Center Solutions provides hyperscale data center operators with the latest high-end layered infrastructure products and serv
Slide 14: Nexans brings Energy to Life: Energy Resources
HIGHLIGHTS 1 Nexans brings Energy to Life Industry & Solutions: Energy Resources Nexans provides cabling and services for major energy resources projects Mosaic has selected Nexans for their expansion project which will make its K3 facility in Canada, the world’s largest potash mine by 2024. As part
Slide 15: Nexans Industry & Solutions offer
HIGHLIGHTS 1 Nexans brings Energy to Life Industry & Solutions: Energy transition and Innovation Nexans continues to expand its Industry & Solutions offer Nexans acquired a controlling interest in BE CableCon, the Denmark-based manufacturer and supplier of cable kits, allowing the Group to accelerat
Slide 16: Corporate Social Responsibility
HIGHLIGHTS 1 Nexans brings Energy to Life Corporate Social Responsibility Nexans pursues its commitment to sustainable development Nexans signed a new Memorandum of Understanding with Codelco, to develop and implement environmental, community-friendly and ethical processes in the copper industry. A
Slide 17: Nexans Foundation and energy poverty
HIGHLIGHTS 1 Nexans brings Energy to Life Corporate Social Responsibility The Nexans Foundation reaffirms its commitment to fighting energy poverty In collaboration with NGOs and NPOs, the Nexans Foundation has helped over 700,000 people in 30 countries obtain access to electricity since 2013. The N
Slide 18: Business Review
2 Business Review Arnaud POUPART-LAFARGE, CEO
Slide 19: Full Year 2017 key figures
BUSINESS REVIEW 2 Full Year 2017 key figures Completion of the transformation plan “Nexans in motion” +5.1% organic growth Operating margin +16%*** Sales at constant metal prices in M€ HY 1 HY 2 Operating margin in M€ 4,587 M€ 4,604 M€ 4,571 M€ 272 M€ 242 M€ 4,431 M€ 195 M€ 148 M€ 107 132 100 71 95
Slide 20: Sales by geographies
BUSINESS REVIEW 2 Sales by geographies Strong performance of High Voltage and MERA resuming growth in Europe and APAC in H2 % of Standard Sales 2017 Organic Growth of which O&G Impact SAM 6% SAM -18.7% MERA 6% MERA 9.2% APAC 12% APAC -1.4% -5.3% NAM 12% NAM -4.0% +0.0% Europe 31% Europe 2.7% High Vo
Slide 21: Distributors & Installers
BUSINESS REVIEW 2 Distributors & Installers Negative impact of LAN in the US offsetting progressive recovery of general markets in Europe Sales at constant metal: 1,125 M€ Business Update Organic growth Organic growth -2.7% +0.6% +0.9% % of Sales at constant metal 14.8% HY 2 3.5% 559 547 553 2.7% Sa
Slide 22: Industry
BUSINESS REVIEW 2 Industry Contrasted performances across the segments Sales at constant metal: 1,126 M€ Business Update Organic growth Organic growth -0.4% -3.8% -1.6% % of Sales at constant metal TRANSPORT RESOURCES OTHERS HY 2 2% 16% 3% 2% 14% 603 12% 7% 569 539 Sales -18% -31% HY 1 647 602 587 A
Slide 23: Transmission Distribution & Operators
BUSINESS REVIEW 2 Transmission Distribution & Operators Sound performance driven by Submarine High Voltage business Sales at constant metal: 2,029 M€ Key macro-indicators and trends Global market sales of HV cables1 Offshore wind investments2 Organic growth -1,2% -2.0% +13.0% €Bn, 2017-2022 $Bn, 201
Slide 24: TD&O / Transmission
BUSINESS REVIEW 2 TD&O / Transmission Optimal phasing for both manufacturing and installation Organic Growth: +34.3% Sub-sea Organic growth 55% 5% 9% ● Strong growth in Submarine High Voltage benefitting from effective execution of major projects HY 2 ● Full leverage of the past investments in Halde
Slide 25: TD&O / Utilities and Operators
BUSINESS REVIEW 2 TD&O / Utilities and Operators Improving organic trend and recovering margins after a weak H1 Organic growth: -0.8% Business Update Organic growth Organic growth -3.6% -1.9% -0.8% % of Sales at constant metal 17.1% 7.0% 3.2% HY 2 -1.1% Sales -26.1% HY 1 Europe NAM APAC MERA SAM UTI
Slide 26: Strategic Initiatives offsetting the volume & price pressure effects
BUSINESS REVIEW 2 Strategic Initiatives offsetting the volume & price pressure effects Operating margin evolution in M€ (77) 108 7 272 242 (8) Operating reserves, depreciation FX & Scope & others STRATEGIC PRICE COST INITIATIVES SQUEEZE 2016 2017 26 I 2017 Full Year Results
Slide 27: Strategic Initiatives' contribution as expected
BUSINESS REVIEW 2 Strategic Initiatives’ contribution as expected 2015 European plan Fixed Cost ● +31 M€ before inflation in addition to the 84 M€ already delivered OPEX and other plans Reduction ● Continuous focus on competitiveness efforts in fixed cost 31 M€ performance next year High Voltage pro
Slide 28: Look back at Nexans in Motion strategic plan
BUSINESS REVIEW 2 Strategic initiatives – Look back at “Nexans in Motion” strategic plan Operating margin evolution in M€ 2017 124 (208) 2016 51 2015 (77) 39 115 34 (78) 31 22 (53) 272 94 62 26 58 148 10 VCR FCR ML PRICE COST OTHER SQUEEZE 2014 2017 28 I 2017 Full Year results
Slide 29: Key Financials
00o@o Key Financials exans BRINGS ENERGY TO LIFE
Slide 30: Income Statement (1/2)
KEY FINANCIALS 3 Income Statement (1/2) Key figures Gross Margin evolution In M€ 2016 2017 83 (53) 31.9% 32.3% 26 Price Sales at actual metal prices 5,814 6,370 FX ML Pressure Scope VCR Sales at constant metal prices 4,431 4,571 2016 2017 Margin on variable costs 1,432 1,458 Indirect costs evolution
Slide 31: Income Statement (2/2)
KEY FINANCIALS 3 Income Statement (2/2) Key figures From Operating Margin to Operating Income In M€ 2016 2017 In M€ 2016 2017 Restructuring (33) (37) Operating margin 242 272 Core exposure impact (6) 64 Net asset Impairment (8) (8) Restructuring (33) (37) Anti-trust investigation (20) (6) Change in
Slide 32: Focus on cash management
KEY FINANCIALS 3 Focus on cash management Net Debt last 12 month evolution in M€ 11 332 17 52 FX & Other 211 Equity 94 Non Operations* Operating WC 63 Operating (277) Restructuring Working Capital cash-out 161 * Of which dividend payments (23 M€), share buy back (11 M€), acquisitions (22 M€) and sto
Slide 33: Evolution of cash management over 3 years
KEY FINANCIALS 3 Evolution of cash management over 3 years Net Debt last 3 years evolution in M€ (692) 466 253 (183) 2017 460 (32) High Voltage 2016 63 2015 86 (151) Cable activities & other 332 (277) 49 104 (15) (6) 161 (224) 135 Operating Non Equity FX Restructuring Working Operating Operations* &
Slide 34: Balance Sheet strength
KEY FINANCIALS 3 Balance Sheet strength Balance Sheet Interest Charge over EBITDA Interest/ 27% In M€ 2016 2017 24% 17% EBITDA 14% Long term fixed assets 1,661 1,633 Interest charge Of which goodwill 254 236 Deferred tax assets 180 135 2014 2015 2016 2017 Non-current Assets 1,840 1,767 Net debt and
Slide 35: Strong liquidity covering future debt refinancing needs
KEY FINANCIALS 3 Strong liquidity covering future debt refinancing needs Net Debt breakdown Debt redemption In M€ In M€ 2017 Long-term ordinary Bonds 447 Long-term convertible Bonds 267 Undrawn 1,137 facility 600 committed up Other long-term borrowings 4 to 2020 200 Short-term borrowings and short-t
Slide 36: Paced for Growth
4 Paced for Growth Arnaud Poupart-Lafarge, CEO
Slide 37: By bringing energy and information to life, we are the essential link
PACED FOR GROWTH 4 By bringing energy and information to life, we are the essential link OUR EXPERTISE OUR MISSION OUR PURPOSE Cable maker Beyond cables Life link Producing cables, we are the material Our systems deliver energy & data, Our purpose is to support development, link at the heart of indu
Slide 38: Paced for Growth: Driving shareholder value
PACED FOR GROWTH 4 Paced for Growth: Driving shareholder value …supported by a three axis strategy… C Accelerate growth Develop new offers in the through portfolio solution space and accelerate of activities M&A For mature businesses, focus on efficiency and lean efforts to A B Focus investments on
Slide 39: Ambition built on four businesses
PACED FOR GROWTH 4 Ambition built on four businesses …implemented with discipline through all businesses AMBITION BECOME LEADER IN ADVANCED CABLING AND CONNECTIVITY SOLUTIONS STRATEGIC A Continue to focus on B Build on strengths in C Accelerate growth through AXES cost leadership attractive markets
Slide 40: Nexans Paced for Growth
PACED FOR GROWTH 4 Nexans Paced for Growth “ We are opening a period of profitable growth… ~ €600 M > 60% EBITDA² Become leader in Revenues in HV, advanced cabling and Industry & ~10% Telecom EBITDA/Sales¹ connectivity solutions, committed to support its partners in smart energy Inorganic growth tra
Slide 41: Appendices
‘ Lit UEC tii, Appendices J\Sexans BRINGS ENERGY TO LIFE
Slide 42: Sales and profitability by segment
APPENDICES Sales and profitability by segment 2016 2017 In M€ Sales OM OM % Sales OM OM % Transmission, Distribution & Operators 1,842 122 6.6% 2,029 155 7.7% Industry 1,171 59 5.0% 1,126 56 5.0% Distributors & Installers 1,127 78 6.9% 1,125 53 4.7% Other 291 (17) n/a 290 7 n/a TOTAL GROUP 4,431 242
Slide 43: Impact of foreign exchange and consolidation scope
APPENDICES Impact of foreign exchange and consolidation scope Organic Sales at constant metal prices, in M€ 2016 FX Scope 2017 growth Transmission, Distribution & Operators 1,842 (8) 233 (38) 2,029 Industry 1,171 (3) (19) (23) 1,126 Distributors & Installers 1,127 (15) 10 4 1,125 Other 291 (0) (2) 0
Slide 44: Sales by quarter by segment
APPENDICES Sales by quarter by segment Sequential Growth Sales at constant metal in M€ Distributors & Installers Industry 301 292 301 302 295 292 279 279 280 283 286 282 268 270 268 271 +7.4% +5.2% +3.0% +2.7% +2.2% -0.5% +0.4% -0.5% +0.3% -1.6% +4.7% -0.6% -7.1% -6.1% -8.2% -11.6% Q1’16 Q2’16 Q3’16
Slide 45: Financial highlights
APPENDICES Financial highlights Sales at current metal prices (in M€) Sales at standard metal prices (in M€) Operating Margin Net income/(Loss) attributable (in M€ and as % of sales at constant metal prices) to the owners of the parent (in M€) 6,711 6,403 6,239 4,689 4,587 4,604 4,431 4,571 6.0% 125
Slide 46: Split of market segments
APPENDICES Split of market segments Current New TRANSMISSION, HIGH DISTRIBUTORS TELECOM INDUSTRY & BUILDING & DISTRIBUTION INDUSTRY OTHER VOLTAGE OTHER & INSTALLERS & DATA SOLUTIONS TERRITORIES & OPERATORS & PROJECTS Harnesses Harnesses Land High Voltage Land High Shipbuilding Operators Shipbuilding
Slide 47: Sales by new segment
APPENDICES Sales by new segment 2017 In M€ Q1 Q2 HY 1 Q3 Q4 HY 2 FY Building & Territories 427 456 883 436 438 874 1,757 High Voltage & Projects 207 239 446 214 224 438 885 Telecom & Data 131 139 270 119 124 243 512 Industry & Solutions 295 292 587 268 271 539 1,126 Other 76 73 149 72 68 141 290 TOT
Slide 48: Organic growth by new segment
APPENDICES Organic growth by new segment 2017 In M€ Q1 Q2 HY 1 Q3 Q4 HY 2 FY Building & Territories -6.0% -4.6% -5.3% +4.8% +7.6% +6.2% +0.1% High Voltage & Projects +23.8% +37.9% +31.0% +38.2% +25.4% +31.4% +31.2% Telecom & Data +4.4% +1.1% +2.7% +2.5% +21.6% +11.5% +6.7% Industry & Solutions -0.7%
Slide 49: Profitability by new segment
APPENDICES Profitability by new segment 2017 EBITDA OM In M€ HY 1 HY 2 FY HY 1 HY 2 FY Building & Territories 59 67 126 33 44 77 High Voltage & Projects 62 56 118 43 37 80 Telecom & Data 37 25 62 31 20 52 Industry & Solutions 50 40 89 33 23 56 Other 3 13 16 (1) 9 7 TOTAL GROUP 211 200 411 140 132 27
Slide 50: Changes due to IFRS 15
APPENDICES Changes due to IFRS 15 (first application Jan 1st 2018) Past Method – IAS#11 New method – IFRS#15 Sales and margin are recognized Sales and margin are recognized according to contractual milestones / according to percentage of cost P&L Recognition schedule. completion. ● As an example