First quarter 2006 sales: Organic growth of over 7%

Proposal to accelerate conversion of OCEANE bonds

Paris, April 26, 2006 - Nexans announces first quarter 2006 sales of 1,659 million euros (at current non-ferrous metal prices*).

Sales at constant non-ferrous metal prices** were 1,095 million euros, which at constant exchange rates represents:

  • + 11.5% compared with the first quarter of 2005 in the current scope of
    consolidation
  • + 16.3% on a comparable scope of consolidation
  • + 7.3% on a comparable scope of consolidation and number of working days***

This growth is accompanied by an increase in profitability in line with the Group’s objectives for 2006 and 2007.

The economic environment in which the Group operates is however characterized by a sharp increase in non-ferrous metal prices, including copper which has increased, since 1 January 2006, by more than 2,200 euros a ton or over 57%. This increase, practically the whole of which is passed on to customers, has had a positive effect on net income (variation in the fair value of non-ferrous metal-based financial instruments (IAS 39), and should result in debt at the end of 2006 of close to 450 million euros, all other relevant factors unchanged.

In this context, the Company has already started negotiations with its customers to reduce payment terms in particular for bare wires, and is pursuing its strategic review of how to position those of its activities which are highly copper consumptive. Furthermore, in view of the sharp rise in the share price, the meeting of Nexans Board of Directors which was held on 29 March decided, in addition to the cancellation of 2 221 199 treasury shares, to call a meeting of the holders of its OCEANE bonds to propose an amendment to the early redemption clause at the option of the issuer. If this amendment is approved, Nexans will reduce its reported debt by 117 million euros (cf. the related press release published today).


In view of the above, the Company remains confident that it has the ability to limit the adverse impact of the evolution of non-ferrous metal prices on the indebtedness of the Group.

* At current metal prices, first quarter 2005 sales were 1,143 million euros (IFRS5, see Appendix).
** To neutralize the effect of variations in the purchase price of non-ferrous metals and thus measure the effective underlying sales trend, Nexans also calculates its sales using a constant price for copper and aluminum.
*** Estimated.

Consolidated sales by business sector

(in million euros)

At constant metal prices

At constant metal prices and exchange rates

  Q1 05 Q1 06 Q1 05 Q1 06
Energy
Telecom
Electrical Wires
Other
Total
632
134
180
2
948

710
159
224
2
1,095

650
139
191
2
982
710
159
224
2
1,095

 

  • Energy : positive environment in all markets
    (main businesses – constant metal prices and exchange rates)
(in million euros)
Q1.05
Q1.06
Infrastructure
242 284
Building 254 247
Industry 142 161

The cable market for infrastructure confirmed the favorable trend in high voltage and umbilical cables. Demand for medium and low voltage cables was also stronger, particularly in the United States, driven by the need to maintain power grids.

The good trend for Building activity (after the disposal of the distribution businesses) reflects the significant improvement in volumes and margins both in Europe and North America.

There was also an improvement in speciality cables, thanks to strong demand for cables with high added value.


  • Telecom : growth in private local area networks
    (constant metal prices and exchange rates)
(in million euros)
Q1.05
Q1.06
Infrastructure
54 61
Private Local Area Networks (LAN)
55 64
Industry 30 34

The Telecom business is continuing its recovery.
Volume growth was strong in all three business sectors, particularly for private local area networks in the United States and Europe.

  • Electrical Wires: volumes which are not sufficiently profitable
    (constant metal prices and exchange rates)

(in million euros)
Q1.05
Q1.06
Bare wires (machine and electrical)

175

206

Winding Wires

16

18

There was a clear rebound in electrical wire volumes, with profitability however remaining weak.


Sales by geographic zone

(in million euros)

At constant metal prices

At constant metal prices and exchange rates
  Q1 05 Q1 06 Q1 05 Q1 06
Europe
North America
Asia
Rest of the World
Total
691
156
47
54
948

742
218
62
73
1,095

689
176
56
61
982

742
218
62
73
1,095

Quarterly sales in Europe were 742 million euros. Restructuring in this area is continuing, and there has been a noticeable increase in operating margin.

There was a significant increase in sales recorded in North America across all the business activities.

Activity in Asia, where the Group is seeking more profitable growth, was generally stable.

Growth in the Rest of the World was very strong due to continued high demand for electricity networks in developing countries.

Calendrier financier

  • May 15, 2006: AGM of shareholders (on second call) at the Musée du Louvre
  • May 15, 2006: AGM of OCEANE bondholders at the head office of Nexans
  • May 19, 2006: payment of dividend
  • July 25, 2006: publication of first half 2006 sales and results
  • October 3, 2006*: information meeting for individual shareholders in Versailles
  • October 24, 2006*: information meeting for individual shareholders in Tours
  • November 13, 2006*: information meeting for individual shareholders in Lyon
  • December 7, 2006*: information meeting for individual shareholders in Montpellier

    * provisional dates

Appendix

Consolidated sales by business sector at current metal prices

(in million euros)

At current metal prices

  Q1 05 Q1 06
Energy
Telecom
Electrical Wires
Other
Total
710
142
289
2
1,143

936
178
543
2
1,659

 

 


Related Document

Your Contact

Angéline Afanoukoe Press relations
Phone +33 1 78 15 04 67
Angeline.afanoukoe@nexans.com
Michel Gédéon Financial Communication
Phone +33 1 78 15 05 41
michel.gedeon@nexans.com

About Nexans

Nexans is the worldwide leader in the cable industry. The Group brings an extensive range of advanced copper and optical fiber cable solutions to the infrastructure, industry and building markets. Nexans cables and cabling systems can be found in every area of people’s lives, from telecommunications and energy networks, to aerospace, automotive, railways, building, petrochemical, medical applications, etc. With an industrial presence in 29 countries and commercial activities worldwide, Nexans employs 20,000 people and had sales in 2005 of 5.4 billion euros. Nexans is listed on the Paris stock exchange. More information on www.nexans.com