Nexans SA · EURONEXT:NEX
Nexans SA — FY2010 Earnings Presentation
36 slides from Nexans SA's earnings presentation, Feb 14, 2011
Slide 1: 2010 Full Year results
2010 Full Year results February 14th, 2011
Slide 2: Safe Harbor
2010 Full Year results 2 Safe Harbor This presentation contains forward-looking statements relating (3) the recovery of sales volumes in the other businesses; to the Group’s expectations for future financial performance, including sales and profitability. (4) maintaining margins despite weakened dem
Slide 3: 2010 achievements
2010 Full Year results 3 2010 achievements Frédéric Vincent Chairman and CEO
Slide 4: 2010 context
2010 Full Year results 4 2010 context Market Nexans 1st Half : 2nd Half : • Execution issues in HV • Difficult economic conditions in North • First benefits of Submarine America and Europe corrective actions in • Continuous pricing HV Submarine • Increased competition pressure in Building • Volume g
Slide 5: The targets have been met
2010 Full Year results 5 The targets have been met Expected Reported Year on Year sales organic evolution stable +0.4% Operating Margin rate 4.5% 4.8% Net debt < 250 M€ 144 M€ Net income >0 82 M€
Slide 6: A widespread sales upturn in H2 '10
2010 Full Year results 6 A widespread sales upturn in H2 ‘10 21.4% Organic growth H1’10 / H1’09 H2’10 / H2’09 11.9% 7.7% 6.5% 4.7% -2.5% -5.3% -8.6% -11.6% -16.2% Energy Infrastructures Industry Building Telecom Group
Slide 7: Recovery in profitability in H2 '10
2010 Full Year results 7 Recovery in profitability in H2 ‘10 8.4% H12010 S1 2010 H22010 S2 2010 7.3% 6.8% 5.6% 4.6% 4.2% 4.0% 3.5% 2.1% 1.6% Energy Energie Infra Industry Industrie Building Bâtiment Telecom Télécom Group Groupe Infrastructures
Slide 8: Energy Infrastructures: Sales upturn in H2 for power distribution
2010 Full Year results 8 Energy Infrastructures: Sales upturn in H2 for power distribution, improvements in Q4 in submarine transmission contract execution Submarine Power transmission Power distribution ∼25 % of sales ∼60 % of sales • Major order intakes in Q4 (450 M€) Sales evolution H1 ‘10 / H2 ‘
Slide 9: Industry: sales turnaround, improvement of the operating leverage in Q4
2010 Full Year results 9 Industry: sales turnaround, improvement of the operating leverage in Q4 % of Industry sales • Strong recovery in Mining and Nuclear Mining Renewables ~15% Resources • Oil & Gas nearly stable Oil & Gas Renewables • Strong expectations in nuclear in 2011 Aerospace Railways • F
Slide 10: Building: Sales upturn and price stability in H2
2010 Full Year results 10 Building: Sales upturn and price stability in H2 led to margin improvement Geographical exposure* Sales and operating margin by half-year APAC 460 M€ 419 MERA** 11% 4.2% 12% 49% Europe South 14% America 2.1% 14% North America H1 S1 ‘10 ‘10 S1 H2 S2‘10 S2 ‘10 • Widespread vo
Slide 11: Telecom: Good performance in LAN, upturn in H2
2010 Full Year results 11 Telecom: Good performance in LAN, upturn in H2 in Telecom Infrastructures Sales and operating margin Sales and operating margin 244 221 53 6.7% 43 8.3% 2.9% Fiber & 1.6% components 41 45 Copper 2009 2010 S1 H12010 ‘10 H22010 S2 ‘10 LAN Telecom Infrastructures • Confirmation
Slide 12: Continuation of transversal initiatives
2010 Full Year results 12 Continuation of transversal initiatives Safety Customer Innovation Accident frequency rate* orientation • A new organization with 4 Research Centers • Improve processes Metallurgy Customer Service Rubber 13.8 Customer relationship Materials and Simulation 8.9 mana
Slide 13: Financial results
2010 Full Year results 13 Financial results Frédéric Michelland CFO, Senior Corporate Executive VP
Slide 14: Key Figures
2010 Full Year results 14 Key Figures (in Million €) 2009 2010 Sales 5,045 6,179 At current metal prices Sales 4,026 4,309 +0.4% at constant metal prices organic EBITDA 363 345 Operating margin 241 207 Operating margin rate at constant metal 6.0% 4.8% prices Operating margin rate at current metal 4.
Slide 15: Income statement (1/3)
2010 Full Year results 15 Income statement (1/3) in Million € 2009 2010 Sales 4,026 4,309 at constant metal prices Margin on variable costs 1,310 32.5% 1 332 30.9% Indirect costs (947) (987) EBITDA (*) 363 9.0% 345 8.0% Depreciation (121) (138) Operating margin 241 6.0% 207 4.8% Core exposure impact
Slide 16: EBITDA evolution: a challenging pass-through of inflation
2010 Full Year results 16 EBITDA evolution: a challenging pass-through of inflation in plastics and components in M€ Volume Mix, price 2009 effect & HV Plastics & EBITDA components FX & 2010 18 Costs Others EBITDA (46) inflation reduction 52 (76) 34 o/w 20 M€ 363 related to 345 submarine HV executio
Slide 17: Focus on costs structure
2010 Full Year results 17 Focus on costs structure 2010 operating costs* breakdown (5.8 Bn€ at current metal prices) Other costs 13% Payroll 17% Energy & transportation 4% Partial Polymers, chemicals pass through of price v ariations 13% + ~ 25% year ov er year & components 53% Pass through of price
Slide 18: Indirect costs reduction
2010 Full Year results 18 Indirect costs reduction: Restructuring benefits to mature areas, Slight increase in emerging countries to fuel growth… 1,095 -10% … while indirect costs remain 997 influenced by activity level 987 +1% Indirect costs index * Activity index ** -13% Emerging countries Mature
Slide 19: Income statement (2/3)
2010 Full Year results 19 Income statement (2/3) in Million € 2009 2010 Sales 4,026 4,309 at constant metal prices Margin on variable costs 1,310 32.5% 1 332 30.9% Indirect costs (947) (987) EBITDA (*) 363 9.0% 345 8.0% Depreciation (121) (138) Operating margin 241 6.0% 207 4.8% Core exposure impact
Slide 20: Income statement (3/3)
2010 Full Year results 20 Income statement (3/3) in Million € 2009 2010 Operating income 153 195 Financial income (102) (85) Income before tax 51 110 Income tax (39) (26) Net income from operations 12 84 Net income Group share 8 82 Net income excluding restructuring, core exposure and capital gain (
Slide 21: Balance sheet
2010 Full Year results 21 Balance sheet in Million € 31 dec. 2009 31 dec. 2010 Long-term fixed assets 1,693 1,815 of w hich goodw ill 335 378 FX impact Deferred tax assets 57 82 Non-current assets 1,750 1,897 Working Capital 908 1 058 Total to finance 2,658 2,955 Net financial debt 141 144 Reserves
Slide 22: Further structural reduction in Working Capital
2010 Full Year results 22 Further structural reduction in Working Capital Operational Working Capital in % of sales(*) at current metal prices 21.2% 19.4% 18.9% 18.3% 16.5% Dec. 2008 Déc 2008 June Juin 2009 2009 Dec. Déc2009 2009 June 2010 Juin 2010 Dec. 2010 Déc 2010 More than 100 M€ cash generated
Slide 23: Stable net debt despite sharp increase in metal prices
2010 Full Year results 23 Stable net debt despite sharp increase in metal prices, industrial developments and restructuring efforts Change in working Dividends Other capital Net debt Net debt Operating 1 Dec. 09 (32) 23 Dec. 10 cash flow * Restructuring of which 70 M€ negative (68) cash impact of co
Slide 24: Focus on growth and value added products
2010 Full Year results 24 Focus on growth and value added products Frédéric Vincent Chairman and CEO
Slide 25: Nexans is well positioned to capture growth in high value added markets
2010 Full Year results 25 Nexans is well positioned to capture growth in high value added markets Power Transmission activities Review by area
Slide 26: Power Transmission activities
2010 Full Year results 26 Power Transmission activities • Further growth expected from : Land interconnections in Europe Submarine interconnections EU : Interconnection Offshore Wind Smart grids & sustainable energy Projects of European interest Superconductivity Carbon Core Composite OH
Slide 27: North-America T&D
2010 Full Year results 27 North-America T&D in North-America Cumulated public spending 2005-2030 in T&D (bn USD) 1,025 bn USD Distribution Transmission China North Europe India South Middle Russia America America East Source : World Energy Outlook Aging of existing networks Strong market opportunity
Slide 28: South-America Oil & Gas Offshore in Brazil
2010 Full Year results 28 South-America Oil & Gas Offshore in Brazil A 108 bn USD investment plan over 1977 2009 2010-2014 to feed production growth 1977 Production (million boe/day) Enchova 2,980 410ft + 49% 125m 1988 Marimba 1,610ft 491m 2,003 1994 Marlim 3,370ft 1,027m 1994 Marlim Sul 5,600ft 1,7
Slide 29: Asia-Pacific
2010 Full Year results 29 Industry market growth in Asia supported by Asia-Pacific the Group’s technological expertise Ramp up of Asian factories in specialty cables (wind turbine, rolling stock, nuclear…) Nexans to capture profitable market growth in Asia Transmission in China 33,000 HV investment
Slide 30: Middle-East, Russia, Africa
2010 Full Year results 30 Middle-East, Russia, Africa T&D in Russia Russian Infrastructure investments USD bn forecasts breakdown (2008-2015) 160 140 Electricity grids 120 Seaports & Other 100 transport 80 Airports 60 Roads 40 20 Rail - Source : CRU July ‘09 2008 2009E 2010E 2011E 2012E 2013E 2014E
Slide 31: Europe
2010 Full Year results 31 Europe Financial performance to benefit from sector consolidation Take full advantage of recent rationalization The inter-array subsea cable market: further growth ahead Innovation: Wind offshore market outlook in MW Superconductivity Fault- High Temperature Source : Make C
Slide 32: Outlook 2011
2010 Full Year results 32 Outlook 2011 • High single digit organic growth in H1 ’11 • FY 2011 organic growth target above 5% • Operating Margin rate target in 2011 around 5.5% subject to satisfactory pass-through of plastics and components price increases Reminder : antitrust investigation in proces
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Slide 34: Appendices
2010 Full Year results 34 Appendices
Slide 35: Sales and profitability by segment
2010 Full Year results - Appendices 35 Sales and profitability by segment 2009 2010 (in Million €) Sales OM OM% Sales OM OM% Energy Infrastructures 1,798 179 10.0% 1,814 138 7.6% Industry 746 6 0.7% 875 22 2.6% Building 838 44 5.3% 879 28 3.2% Telecom Infrastructures 185 16 8.7% 182 9 5.1% Private N
Slide 36: Impact of foreign exchange and consolidation scope
2010 Full Year results - Appendices 36 Impact of foreign exchange and consolidation scope Organic (in Million €) 2009 Forex Scope growth 2010 Energy Infrastructures 1,798 128 (2) (110) 1,814 Industry 746 34 (25) 120 875 Building 838 60 27 (46) 879 Telecom Infrastructures 185 10 1 (14) 182 Private Ne