Nexans SA · EURONEXT:NEX
Nexans SA — Non-Deal Roadshow (December 2007)
35 slides from Nexans SA's roadshow presentation, December 2007
Slide 1: Roadshow Presentation December 2007
Roadshow Presentation December 2007
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
AGENDA 1. Business update at end Q3 ’07 2. Why is Nexans more resilient to cycle downturns ? 3. Highlights on our three core-businesses 4. Highlights on the Acquisition of Madeco 2
Slide 4: Business update at end Q3 of 2007
Business update at end Q3 of 2007 z Robustness of the growth confirmed z Further improvement of operating margin Cable activities growing 12.5% z Focus on Energy Cables organically, of which: 9 Energy infrastructures +9% 9 Industry +18.3% 9 Building +15.5% 3
Slide 5: 2007: Back to cash generation
2007 : Back to cash generation Free cash flow at current copper prices (€m) 150 100 2005 2006 (79) H1 07 FY 07 ext. (259) * Free cash flow = Operating Cash Flow + ∆ working capital - Capex 4
Slide 6: Why is Nexans more resilient to cycle downturns?
Why is Nexans more resilient to cycle downturns ? z Lower Breakeven point z Higher exposure to fast growing economies z Internal and external growth designed to exit cyclicality z Increasing backlog and visibility 5
Slide 7: Lowered breakeven point
Lowered breakeven point Improved efficiency z Restructuring efforts of €246m in cash since 2001: Indirect Costs reduced by 10% between kept under control despite activity growth 01 03 05 06 07 2006 vs 2001: •Same Sales level •Lower fixed costs (-10%) •Profitability improved 200 bp with same leve
Slide 8: Business mix reorientation: higher exposure to fast growing areas
Business mix reorientation: Higher exposure to fast growing areas Sales from high growth areas 1,245 (1) at constant metal prices (M€) + 45 % 860 + 65 % 522 + 140 % 218 2002 2005 2006 2007 Pro-forma with Olex Pro-forma with Madeco Activity x6 in 5 years • 20% through internal growth and 80% throug
Slide 9: Internal and external growth designed to exit cyclicality
Internal and external growth designed to exit cyclicality Development of z Exposure to cyclical end markets Specialty products reduced €240m annual sales divested in Winding total €280m annual sales down-sized in ’07 Sales (*) aiming at €500m 47 % 41 % Specialty 39 % products z Exposure to “long
Slide 10: Increasing backlog and visibility
Increasing backlog and visibility HIGH VOLTAGE Number of days of sales within backlog (1) % +29 z Higher proportion of R CA G Infrastructure cables z Better mix between product oriented & project oriented activities OTHER SEGMENTS z Business predictability Number of days of sales within backlog (1)
Slide 11: Highlights on our three core-businesses
Highlights on our three core-businesses 10
Slide 12: Building: geographically diversified
Building : geographically diversified … Scandinavia Geographical breakdown 8% of « Building » Sales as of Sept 2007 UK – Ireland 8,5% France - Benelux 35% Germany NAM - Spain 12% Turkey – 15% Greece 11% North Africa – M.East 3% Austral- c.20% of Sales in fast growing markets Asia 7,5% … less than
Slide 13: Building: with a resistant business model
Building : … with a resistant business model a limited exposure to residential a mature & resistant European Industrial & construction market Commercial Building Civil Maintenance Residential engineering & Remodeling constructions ~65% 20% 43% ~35% New constructions … less cyclical … very limite
Slide 14: Industry: high growth and profitability potential
Industry : high growth and profitability potential “Priority segments” boost Sales & profitability … 9 record CAGR of 17% over 3 years c.145 Shipyards 9 high added value c.1,000 c.100 Oil & Gas 805 In M€ c.485 Other Transport related 706 675 c.240 industries: 401 9Aerospace Priority 338 9Aut
Slide 15: Energy infrastructures: long term growth and leading positions
Energy infrastructures: long term growth and leading positions Distribution ~60% * Transmission (HV) &umbilicals~40%* 9strong positions in well oriented 9 2 digit growth rate markets 9 2 years backlog Europe 9 Submarine HV capacity X2 in 2 years NAM 9 Furukawa/ Fujikura partnersip 53% 9% Austral
Slide 16: Highlights on the Acquisition of Madeco
Highlights on the Acquisition of Madeco 15
Slide 17: Key terms of the transaction
Key terms of the transaction Structure z Acquisition by Nexans of Madeco’s Wire & Cable division with a mix of cash, debt assumption and Nexans shares (2.5m) z Enterprise value1 of US$822m (based on Nexans share price as of Consideration November 14 closing of €101.67) z 9.5x implied EV/EBITDA 20072
Slide 18: A strong strategic fit
A strong strategic fit Combination of the leading cable producer in South America with the worldwide leader in the cable industry… z N°1 in South America and in 1 Brazil, the largest market z Worldwide leader z High growth and margin perspective z Increased z Product portfolio in geographic z Key pl
Slide 19: A natural outcome of Nexans strategy
A natural outcome of Nexans strategy Nexans’ objectives Madeco Wire & Cable contribution z Enhance position in z Attractive growth prospects (>12% organic fast-growing and volume growth over the last two years) More 9 highly attractive strong infrastructure needs profitable markets large electri
Slide 20: The combination of two key players
The combination of two key players Madeco Nexans Wire & Cable Net sales €7.6 billion €0.6 billion EBITDA €500 million €59 million Number of employees 21,150 1,670 A global A regional Geographic footprint player leader Europe: 62% Brazil: 43% North America: 19% Chile: 28% Asia Pacific: 12% Peru: 18%
Slide 21: An active M&A policy
An active M&A policy Evolution of Nexans sales at constant metal prices In M€ M&A 4,840 1 CAGR of M&A Asia Pac Cable Cessions Europe activities 3,924 NAM (70) 9% 314 Acquisitions RoW (418) 40 (30) 49 2003 2007 Note: 1 Analysts' consensus 20
Slide 22: A unique combination
A unique combination Nexans Group - €7.6bn sales1 Pro forma - €8.2bn sales1 Africa / South Middle East America South America Africa / 5% 2% 8% Middle East Pacific 5% 5% Asia Pacific Increase 7% 5% exposure to Asia high growth North Europe 6% Europe America regions 19% 62% North 58% America 18% Elect
Slide 23: The undisputed global leader in the cable industry
The undisputed global leader in the cable industry Pro forma sales 2006 (€m) – Main US & European players 7,489 496 457 7,946 5,007 2,495 795 3,290 2,529 2,000 1,154 (excl. Harnesses) 1,106 1,018 Sources : Financial communication of corresponding companies, Nexans estimates Note : Actual metal price
Slide 24: A truly global player
A truly global player Combined 2007 Sales1 clearly demonstrate future global leadership of Nexans Group North Europe 1 America €4,680m €1,470m Africa / Asia Middle East €500m €420m 1 South America Pacific 1 €760m €380m Note 1 Based on H1 2007 x 2 23
Slide 25: The estimated pro forma profile
The estimated pro forma profile Madeco Transaction Nexans Combined Wire & Cable impact Net sales €7.6 billion €0.6 billion - €8.2 billion €500 million €59 million €559 million EBITDA - (6.6%) (10.6%) (6.8%) Employees 21,150 1,670 - 22,820 Financial Debt €533 million n.a. €287 million €820 million Sh
Slide 26: The pro-forma entity: a stronger combination
The pro-forma entity: a stronger combination z Sharp increase in EBITDA, 1 z Nexans standalone1 going from €509m to €567m (€m) 2007(e) 2008(e) in 2007E and from €556m to Sales (at constant metal price) 4,836 5,042 Growth 4.3% €624m in 2008E EBITDA 509 556 Margin 10.5% 11.0% z Margins improvement, fr
Slide 27: Indicative timetable
Indicative timetable Nov. 14 ♦ Board of directors of Nexans ♦ Framework Agreement signing Nov. 15 ♦ Public announcement Before SPA ♦ Confirmatory and reciprocal due diligences signing ♦ Anti-trust filing Before Jan. 31, 2008 ♦ SPA signing ♦ EGM of Nexans to authorize issuance of 2.5 M shares and app
Slide 28: A "win-win" partnership
A “win-win” partnership zA new stronger leader zIncreasing geographical With a well-balanced presence geographical zPremium assets footprint Consolidate the zEnhancing position in Positioned as a key High value company strong growth and highly player in a leading position added profitable market
Slide 29: Appendices
exans ppendices
Slide 30: Nexans positioning: a "full range" approach
Nexans positioning : a “full range” approach Electrical Wires Energy Telecom Infrastructure Energy Public Networks Copper & Fiber Networks, 32 % of Sales Accessories including HV insulated cables 5 % of Sales END MARKETS & Umbilicals Wirerod (mainly) Industry Industrial Applications Special Telecom
Slide 31: Energy 1/2
Energy 1/2 Market Trends z Energy transmission: LT demand in insulated HV cables ÎInterconnection needs in Europe, ÎIsland/mainland connections Infrastr. ÎOffshore Oil & Gas platform connections z Energy distribution: ÎDemographic growth & urbanization ÎMaintenance z Unprecedented development of tra
Slide 32: Energy 2/2
Energy 2/2 Our plan Nexans performance Sales (*) Organic OM rate fHigher exposure to (M€) growth HY 06/07 fSubmarine HV : Tokyo High Voltage activities 1,883 Bay will start producing cable for Hainan project 7.2 % fConsolidate our 1,546 (140 M€) in HY2 5.4 % leadership + 6.5 % HY '06 HY '07 fSustain
Slide 33: Telecom 1/2
Telecom 1/2 Market Trends f Development of High Speed strategies by a growing number of players Telecom f Variety of the existing network solutions and accessory Infrastr. requirements (xDsL, FTTH, FTTx ..) f Moves towards FTTH implementation f Consolidation within the sector LAN f Commoditization o
Slide 34: Telecom 2/2
Telecom 2/2 Our plan Nexans performance Sales (*) Organic OM rate f Fiber: strong positions (M€) growth HY 06/07 f Strong development of in targeted countries FTTx & FFTH in Northern Europe and in Asia f Copper: maintain 276 239 presence in profitable 7.1 % f Development of + 13.5 % markets 5.5 % co
Slide 35: Electrical Wires
Electrical Wires Market Trends Our plan Wires & f Strong demand f Down-sizing external sales conductors f Emerging specialized players (Brazil, Turkey...) Winding Full exit in the process of finalization wires Nexans performance Sales (*) Organic OM rate (M€) growth HY 06/07 433 f Active sales reduc