Nexans SA · EURONEXT:NEX
Nexans SA — FY2004 Earnings Presentation
38 slides from Nexans SA's earnings presentation, Feb 3, 2005
Slide 1: 2004 Full Year Results
2004 Full Year Results February 3, 2005 Gérard Hauser
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, as well as an estimation of the impact that the IAS / IFRS accounting standards will have on its results. Forward looking statem
Slide 3: Project to divest control of Winding wires
Project to divest control of Winding wires z Non Binding "Memorandum of Understanding" signed on February 2nd,2005 with US company Superior Essex (SE), Largest North American producer of winding wires, aiming at The full disposal of Nexans’ interest in Nexans Tianjin (80 %) The creation of a joi
Slide 4: A very encouraging year 2004
2004 A very encouraging year All product lines and geographical areas profitable 2004 SALES = 4,159 M€ + 6.6 % organic Operating Margin = 3.3 % (2.3 % in 2003) Stronger positions in emerging markets (Lebanon, Egypt, S. Korea) BUSINESS MIX REORIENTATION Project to divest control of European and Chine
Slide 5: Key Figures
Key Figures (in Million €) 2003 2004 Sales at current metal prices 4,046 4,900 Sales at constant metal prices 3,924 4,159 Sales at constant metal prices and exchange rates 3,859 4,159 EBITDA 190 228 EBITDA margin 4.9 % 5.5 % Operating profit 91 135 Operating profit margin 2.3 % 3.3 % Net income (gro
Slide 6: Sustained organic growth
2004 Sustained organic growth (Figures at constant metal prices) “Acquisitions & Disposal” End Dec. Organic effect 2004 growth 46 •Consolidation of 4,159 Kukdong, Furukawa 254 from April 1, 2003 and Liban Cables from Foreign July 1, 2004 End Dec. Currency 2003 effect •Disposal of Winding Wires US on
Slide 7: Faster growth in HY2
2004: Faster growth in HY2 Annual evolution in organic sales (Constant consolidation scope, copper prices & exchange rates) +20.5 % +19.8 % Asia / Rest of World +18.9 % North America France +15.2 % Europe excluding France +14.1 % +12.9 % +5.6 % +4.9 % +4.1 % +2.6 % +1 % -0.4 % HY1 04 / HY1 03 HY2 04
Slide 8: Performance by business and by geographical area
Performance by business and by geographical area 8
Slide 9: Overall Recovery
Overall Recovery (in Million €) Sales at constant 2003 2004 2003 / 2004 metal prices and exchange rates Sales OP % Sales OP % Sales OP Energy(*) 2,382 91 3.8 % 2,593 116 4.5 % + 8.9 % + 27.5 % Telecom 527 (1) - 570 17 3% + 8.2 % ++ Electrical wires 945 10 1% 985 14 1.4 % + 4.2 % + 40 % Other 5 (9) -
Slide 10: Energy
Energy Solid positions in a growing business sector Sales (M€) (*) Operating Profit (M€) At constant metal prices and exchange rates Σ: 1,145 1,241 1,237 1,353 Σ: 91 116 27.4 1.6 21.5 26.5 Superconductors & 27.7 533.2 Other 35.5 508.2 515.2 (a) 4.8 483.1 Building 12.4 Infrastructure 449 444.4 526.1
Slide 11: Telecom
Telecom Out of the crisis zone Sales (M€) (*) Operating Profit (M€) at constant metal prices and exchange rates Σ : 267 279 260 291 Σ: -1 17 107.7 107.4 Private Networks (LAN) 97.8 96.0 11.3 Infrastructure 106.9 105.2 119.4 5.9 107.4 OEMs 4.1 0.3 0.1 -4.9 62.1 66.0 56.9 64.0 2003 2004 HY1 03 HY1 04
Slide 12: Electrical Wires
Electrical Wires Early signs of improvement Sales (M€) (*) Operating Profit (M€) at constant metal prices and exchange rates Σ: 488 504 457 481 Σ: 10 14 Wirerod 10.9 253.4 271.3 264.8 14.2 241.4 Winding Wires 2.9 0.3 Bare conductors -1.7 175.7 174.4 163.5 159.2 -2.7 58.6 58.7 52.4 56.9 2003 2004 HY1
Slide 13: Geographical Areas
Geographical Areas Marked Progress Sales (M€) Operating Profit (M€) at constant metal prices and exchange rates Σ: 3,859 4,159 Σ: 91 135 Europe 3,048 North Am. 84 2,943 Asia 54 Rest of World 32 697 22 624 10 163 129 214 200 12 3 9 2003 2004 2003 2004 Europe : Profitability up as a result of restru
Slide 14: Financial Results
Financial Results Frédéric Vincent 14
Slide 15: Profit & Loss Account
Profit & Loss Account (in Million €) 2003 2004 Sales at constant metal 3,924 4,159 Margin on variable costs 1,021 1,065 HY1 = 25.1 % Margin on variable costs (%) 26 % 25.6 % Indirect costs (831) (837) HY2 = 26 % EBITDA(*) 190 228 EBITDA margin (%) 4.8 % 5.5 % Depreciation (99) (93) Operating profit
Slide 16: Cash flow statement
Cash flow statement (in Million €) 2003 HY1 2004 HY2 2004 2004 Net income (incl. Minority interests) 11 37 25 62 Depreciation and Amortization 113 46 43 89 Other non-cash items (31) (35) 1 (33) Cash Flow 93 48 69 118 Capital expenditure (67) (34) (63) (97) Disposals 15 17 2 19 Capital expenditure, n
Slide 17: Cash Flow 2004
Cash Flow 2004 Impact of copper price rise (in Million €) 8 Other 80 Copper price rise Net debt Dec. 31, 04 96 Acquisitions & Divestitures Operating cash flow 118 Net debt 78 Capex Dec. 31, 03 22 WC -23 +118 -284 -188 -166 17
Slide 18: Working Capital
Working Capital 2,446 2,504 Copper price : € / t 1,866 1,834 % 1,730 1,676 37 + 1,557 15.6 % 16.9 % 16.9 % 14.3 % 14.1 % 13.8 % 13.5 % WC on sales at 812 current metal price 645 711 686 677 616 569 Dec. 31 June 30 Dec. 31 June 30 Dec. 31 June 30 Dec. 31 2001 2002 2002 2003 2003 2004 2004 18
Slide 19: Summary Balance Sheet
Summary Balance Sheet in Million € Dec. 31, 03 Dec. 31, 04 Intangible assets 27 82 Property, Plant & Equipment 784 796 Investments and other non-current assets 68 60 Total non-current assets 879 937 Working capital 569 677 Total to Finance 1,448 1,614 Net debt(*) 23 188 Reserves 380 373 Minority int
Slide 20: Nexans and the adoption of IFRS standards
January 2005 Nexans and the adoption of IFRS standards 20
Slide 21: Impact matrix for main standards
Impact matrix for main standards By topic • Plant, prop., equip.. ** IAS 16, 17 & 36 • Copper* IAS 2, 32 & 39 High • Financial instruments (excl. copper) * IAS 32 & 39 impact • Personnel * IAS 19 & IFRS 2 • Presentation and consolidation * IAS 1, 7, 14, 27, 34 & IFRS 3 • Revenues IAS 11 & 18 • Intan
Slide 22: Copper 1/3
Copper 1/3 z The challenge ◗ Copper : A fundamental financial challenge : 40 % of sales – Volatility (+ 60 % in 1 year) z Current arrangements ◗ Rigorous and proven management 15 dedicated professionals One book per subsidiary Net firm flow and “adjusted” estimated flow positions hedged throug
Slide 23: Copper 2/3
Copper 2/3 Physical LME/Contract C Day 1 Order received from O LME contract the customer at M purchased at 1,500 €/T (LME price on M 1,500 €/T I order date) T M E Day 2 Copper received from N supplier at 1,800 €/T LME contract sold at T (LME price on delivery 1,800 €/T date) Invoicing P A Y Day 3 (3
Slide 24: Copper 3/3
Copper 3/3 z The consequences ◗ Keep the current hedging arrangements ◗ Reclassify core exposure as fixed assets : 150 M€ reduction in WC ◗ Switch from LIFO to WAP : Very little impact ◗ Financial instruments : Booking at fair value of the hedging instruments leads to the Operating Income before Tax
Slide 25: Financial instruments (excluding copper)
Financial instruments (excluding copper) z Relevant standards ◗ IAS 32 and 39 (Application effective January 1, 2005) z Stated principles ◗ Include the non-recourse sales of receivables in working capital with its counterpart in financial debt ◗ Split the convertible bond in a debt component and a s
Slide 26: Employee benefits
Employee benefits z Relevant standards ◗ IAS 19 and IFRS 2 z Stated principles ◗ Book all actuarial differences in retirement commitments (as per the IFRS 1 option) as well as assimilated benefits by deduction from shareholders’ equity at January 1, 2004 (net of deferred tax) ◗ Book stock option cha
Slide 27: Property, plant & equipment
Property, plant & equipment z Relevant standards ◗ IAS 16 and 36 z Stated principles ◗ Depreciation period specific to each asset component ◗ Impairment test applied to Property, Plant & Equipment and Intangible Assets z Main consequences for Nexans (already booked since 1/1/03) ◗ Effect on sharehol
Slide 28: Presentation of financial statements
Presentation of financial statements z Relevant standards ◗ IAS 1 and IAS 27 z Stated principles ◗ Suppression of the notion of exceptional or non-recurring income ◗ More precise definition of the scope of consolidation ◗ Current and non-current presentation of the balance sheet z Main consequences
Slide 29: Summary of estimated impacts on the Balance Sheet
Summary of estimated impacts on the Balance Sheet Excluding impact of IAS 16 and 36 already booked at end 2003 (in M€) January 1, 2004 January 1, 2005 Reported Core Autoelektrik Pension IFRS restated Convertible Non-recourse 12/31/2003 exposure Consolidation 01/01/2004 Bond sale of receivables Intan
Slide 30: Medium-Term Outlook
SNexans Medium-Term Outlook
Slide 31: Three strategic priorities
Medium-term objectives Build a sustainable profitability Identify and Develop selective growths Three strategic engines priorities Make Nexans more attractive to customers and employees 31
Slide 32: Build sustainable profitability
Build sustainable profitability In a European market in moderate growth : z Continue Restructuring / Rationalization efforts ◗ Rationalize production facilities (number and specialization of plants) ◗ Reduce fixed costs (especially non-manufacturing structural costs) z Develop a more aggressive Proc
Slide 33: Develop selective growth engines 1/2
Develop selective growth engines 1/2 + High Voltage z Capitalize on priority market segments Aerospace Offshore Infrastructure (HV, XDSL, Railway) Market attractiveness Accessories Nuclear Special cables for OEMs (marine, offshore, Heating cables automotive) Marine LAN LAN Cat 6 + products z S
Slide 34: Develop selective growth engines 2/2
Develop selective growth engines 2/2 45% Eastern 40% Brazil Europe z Priority geographical areas Growth 2004-07 (%) 35% China Asia 30% Russia Middle East 25% South Korea Eastern Europe 20% South East Asia 15% Middle-East z Expand group product offer 10% 5% z Acquisitions 0% 0 1000 2000 3000 40
Slide 35: Make Nexans more attractive for customers and employees
Make Nexans more attractive z Improve sales & marketing efficiency Specialize sales teams Strengthen sales & marketing organization z Improve human resources management Lower age pyramid Renew key resources … for its Customers and Employees 35
Slide 36: Medium-term objectives
Medium-term objectives (in Million €) 2001 2004 2007 Manage Catch the downturn the rebound Sales at constant metal 4,467 4,159 4,700 to 4,800 OP/Sales (%) 3.9 % 3.3 % 5% ROCE(a) after tax 7.4 % 5.9 % 9.5 % Means for the 3 years CAPEX ≅ DEPRECIATION RESTRUCTURING ≤ 40 M€/yr CONSTANT DEBT WACC
Slide 37: 2005 Perspectives
2005 Perspectives Assuming a stabilization in raw material and energy costs z Growth of activity between 3 % and 4 % at constant exchange rates z Increase in operating profitability z Restructuring ≤ 40 M€ (effort mainly targeted to Europe) z 2004 Dividend foreseen : 0.50 €/share to be proposed at t
Slide 38: INexans
INexans