2007 third-quarter financial information

  • Sustained organic growth in cable* business in the third quarter 2007 (up 12.5% excluding electrical wires)
  • Stronger sales of energy infrastructure cables (up 9%)
  • Confirmation of the target double-digit growth for cable business in 2007, and the significant improvement in operating profitability

 

Paris, October 18, 2007 Nexans today announced 2007 third-quarter sales of 1,776 million euros (at actual non-ferrous metal prices). At constant non-ferrous metal prices**, the quarter’s sales stood at 1,166 million euros. Organic growth for cable business was 12.5% (5.0% including the Electrical Wires business).

 

With an organic growth rate of 12.8% for cable business*, sales, for the first 9 months of the year at constant non-ferrous metal prices, reached 3,617 million euros.

 

The operating profitability improved beyond the 7.6% reported for June 30, 2007.

Financial debt is at a similar level to that at June 30, 2007, being a reduction of approximately 100 million euros compared with December 31st, 2006, despite the increased volume of business.


CONSOLIDATED SALES

 

 

2006

2007

(in millions of euros)

At constant
metal prices (**)

On the basis of
comparable data (***)

At constant
metal prices (**)

       

3rd quarter

1,066

1,110

1,166

2nd quarter

1,178

1,216

1,257

1st quarter

1,095

1,127

1,194

       

Total on September 30

3,339

3,453

3,617

 

 

CONSOLIDATED SALES BY BUSINESS SECTOR

 

 

 Q3 2006

Q3 2007

Change

(in millions of euros)

At constant metal prices (**)

On the basis of comparable data  (***)

At constant metal prices (**)

Organic growth

Energy infrastructures (a)

336

368

401

9.0%

Industry (a)

195

208

246

18.3%

Building (a)

224

245

283

15.5%

Telecom infrastructures (b)

55

54

58

7.4%

Private networks (LAN) (b)

70

67

72

7.5%

Other

3

3

3

0.0%

Sub-total: Cable business

883

945

1,063

12.5%

Electrical wires

183

165

103

-37.6%

Group total

1,066

1,110

1,166

5.0%

 (a) Energy business segment, (b) Telecom business segment.

 

 

  • Energy infrastructures: sharp rise in growth

Sales rose 9.0% in the third quarter, on the basis of comparable data, compared with 6.5% on June 30, 2007.

This growth is attributable to the combined effect of the ramp-up of the Tokyo Bay High Voltage Submarine cable plant, the resumption of activity at the Quebec plant, and the buoyant conditions in the Rest of the World area.

Overall, the fundamentals of this segment remain positively oriented.

 

 

  • Industry: confirmation of strong business growth

Sales of special cables to the world’s leading industrial OEMs were up by 18.3%, on the basis of comparable data, and have continued to grow at a very strong rate, driven by the shipbuilding and the oil industry segments in particular.

 

 

  • Building: ongoing organic growth

Building business continues to be strong. When compared to the 2006 third quarter, the main highlight was higher volume sales in Europe (especially to installers) in a more favorable price environment.

Compared with the 2nd quarter in 2007, the volume sales for this business remained steady with ongoing robust prices.

 

 

  • Telecom Infrastructures: confirmation of the first-half year trend

Sales rose 7.4% in the 2007 third quarter on the basis of comparable data.

European business continued to grow driven by Accessories and Optical Fiber cables. Business in Asia slowed down temporarily following the closure of the Vietnamese telecom cable joint venture, the activity of which is anticipated to resume in the final quarter but under Nexans’ exclusive control.

Excluding this event’s impact, the organic growth for Telecom Infrastructures totaled 11.6% for the quarter.

 

 

  • Private networks (LAN): selective growth

LAN cable business posted organic growth of 7.5% for the third quarter,
the emphasis essentially being on the development of higher value-added products.

  • Electrical wires: continuing strategy to refocus solely on the Group’s needs

As planned, electrical wire sales were reduced by 37.6%, on the basis of comparable data. The sale of the Chinese winding wire business (Tianjin plant) was finalized in July 2007.


DEVELOPMENTS BY GEOGRAPHIC AREA

CONSOLIDATED SALES BY GEOGRAPHIC AREA

 

 Q3 - 2006

Q3 - 2007

Change

(in millions of euros)

At constant metal prices (**)

On the basis of comparable data (***)

At constant metal prices (**)

Organic growth

Europe

632

626

724

15.7%

North America

109

103

108

4.9%

Asia-Pacific

63

137

138

0.7%

Rest of the World

79

79

93

17.7%

Sub-total: cable business

883

945

1,063

12.5%

         

Sub-total: electrical wire business (****)

183

165

103

-37.6%

         

Group total

1,066

1,110

1,166

5.0%

(****) The breakdown of “electrical wire” sales by geographic area for the 2006 third quarter was: Europe 87 million euros; North America 91 million euros, and Asia 5 million euros. In 2007, the breakdown by area is: Europe 55 million euros and North America 48 million euros.

 

 

  • Europe: strong growth across all segments

In the third quarter, the organic growth for cable business was +15.7%. Energy infrastructures, industry cables and building cables were the main contributors to this growth.

 

  • North America: growth driven by industry cables

The organic growth for cable business was +4.9%, up against the previous half at +1.1%, reflecting the gradual resumption of activity at the Quebec plant.

The US residential sector crisis had little effect on Nexans given its limited exposure to this segment in the US and the relative stability of prices and volume sales.
Nexans is nonetheless keeping a close watch on developments of this market.

Energy infrastructure remained steady in its positive trend, and LAN cables continued to enjoy a more profitable product mix.

 

  • Asia-Pacific: strong growth in China

The modest +0.7% organic growth is attributable to the combined effect of the reduction in copper telecom cables for which the joint venture operation in Vietnam is being terminated (expected to resume under exclusive Nexans control in the final quarter) and the very strong growth in Chinese business that is fully capitalizing on the relocation of the leading European OEMs and the ramp-up of Chinese OEMs.

 

 

  • Rest of the World: very strong growth in all of the area’s countries

Organic growth for the Rest of the World totaled 17.7% for the third quarter.

The Group’s historical business in this area remains solid; by example, the overhead cables for the power grids in Brazil, the building segment in Turkey and the special cables for the oil industry in the Middle East.

New market segments are also making a significant contribution to this growth: automotive cables in Morocco, start-up of insulated copper cables in Brazil and LAN cables in Turkey.

  Appendix 1 - 2007 first three quarter sales

Financial calendar

  • November 13, 2007: Individual shareholder information meeting in Strasbourg
  • November 19, 2007: Individual shareholder meeting in Bordeaux
  • January 31, 2008: Publication of 2007 annual consolidated results

* Cables and related products (accessories), excluding electrical wires.

** To neutralize the effect of variations in the purchase price of non-ferrous metals and thus measure the underlying sales trend, Nexans also calculates its sales using a constant price for copper and aluminum.

*** 2006 sales  is on the basis of comparable data for sales at constant metal prices, restated to account for  estimated adjustments for constant consolidation scope and exchange rates.

Related Document

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About Nexans

With energy as the basis of its development, Nexans, the worldwide leader in the cable industry, offers an extensive range of cables and cabling systems. The Group is a global player in the infrastructure, industry and building markets. Nexans addresses a series of market segments from energy, transport and telecom networks to shipbuilding, oil and gas, nuclear, automotive, electronics, aeronautics, handling and automation. With an industrial presence in more than 30 countries and commercial activities worldwide, Nexans employs 21,000 people and had sales in 2006 of 7.5 billion euros. Nexans is listed on the Paris stock exchange, compartment A of the Eurolist of Euronext. More information on www.nexans.com