2005 results : Energy the main driver of the Group's performance in 2005

Download the 2005 full year results presentation

  • Sales*: 4.263 billion euros (+5.2% organic growth)
  • Operating margin** : 186 million euros (+40%)
  • Doubling of proposed dividend to 1 euro
  • Sale of distribution business in Switzerland for 206 million euros, on February 1st 2006
  • Revised outlook for 2007

Paris, February 2, 2006 – The Nexans Board of Directors, chaired by Gérard Hauser, met on February 1, 2006 and approved the accounts for 2005.

  • Sales in 2005 were 5.449 billion euros.
  • Sales calculated at constant non-ferrous metals* prices amounted to 4.263 billion euros compared to 4.080 billion euros in 2004 (at constant exchange rates), i.e. an increase of 4.5% (5.2% on a comparable consolidation scope).
  • Operating margin** was 186 million euros, an increase of 40% compared with 2004. Operating margin as a percentage of sales was 4.4%, more than a percentage point higher than 2004 (3.3%).
  • Net income was 108 million euros, including the capital gain on the disposal of the distribution business in Norway (33 million euros) and a positive variation, before tax, in the fair value of non-ferrous metal derivatives (pursuant to IAS standards 32 and 39) in an amount of 33 million euros. At stable non-ferrous metals prices, this item will be recorded as an expense of the same amount on this same line in 2006. The figure for net income also include losses arising from discontinued operations (-45 million euros including 11 million of restructuring costs recorded under this item as opposed to under restructuring).
  • Net income per share (after dilution) was 4.46 euros compared with 2.55 euros in 2004.
  • Net financial debt, after applying IAS standard 39 (+115 million euros) announced in June 2005, increased by 79 million euros to 374 million euros at December 31, 2005. This increase is the result of the growth in business, the continued rise in copper prices (+51% in one year) and includes the net proceeds from the disposal of Group subsidiaries (78 million euros).

Based on the strength of these results, the Board of Directors will propose to the General Shareholders' Meeting a dividend of 1 euro per share, double that paid in 2005 (0.50 euro).

 

*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 aluminium.

** Accounting aggregate which excludes variations in the fair value of metal and derivatives, restructuring costs and other revenue and expenses.

 

Continued refocusing on core businesses and key countries

The Group continues to develop its value-added businesses and focus on those geographic areas that offer the most potential.

Accordingly, Nexans has announced the disposal, effective February 1, 2006, of its distribution business in Switzerland (Electro-Matériel SA) to Rexel for an enterprise value of 206 million euros. The business generated sales of 189 million euros in 2005. The capital gain from this disposal (approximately 150 million euros) will be recorded in the first half of 2006.

Nexans has also announced the signing of an agreement for the setting up of a joint venture in Vietnam, to be controlled 60% by Nexans. The Vietnamese Nhat Linh Company Ltd and its subsidiary LIOA Wire & Cable will own 40% of this joint venture to which they will contribute their cable activities (approximately 10 million euros of sales) dedicated to energy networks, equipment cables and industrial cables. The deal is subject to the authorization of the Vietnamese authorities.

In addition, Nexans has finalized the acquisition of the Swiss Confecta AG Group, one of the main international specialists in high added value cable harnesses for the railway industry. The Confecta Group, based in Switzerland, employs around 180 people and generated sales of approximately 22 million euros. The Group also operates in France and Germany.

"On target to achieve our objectives in 2007"

Commenting on the 2005 results, Gérard Hauser, Nexans Chairman and CEO, said: "Despite the continued rise in raw material prices, Nexans' results are extremely encouraging. In addition to the benefits of restructuring and within the context of the booming energy markets in which the Group has a strong presence, these results are the consequence of a clear strategy of redefining our geographical and product portfolio.

These results will enable us to implement a significant 300 million euros investment plan over the next two years to support the development of our markets and accelerate our restructuring process. As a result thereof, we have increased our objective for our ratio of operating margin on sales for 2007 to between 5.2% and 5.5%.

On this basis, for 2006 we anticipate an increase in sales of approximately 4% at constant consolidation scope, a further improvement in operating profit and a net financial debt end 2006 of approximately 230 million euros based on end of 2005 copper prices."

These forecasts are based on the assumption that worldwide economic context experienced in 2005, particularly in developing countries and in the oil industry, will remain the same  in 2006 and 2007.

Sales 2005: growth exceeding expectations

(in millions of euros)

At constant metal prices

At constant metal prices and exchange rates

   

IFRS Standards

 
 

2004 published

2004

2005

2004

2005

Sales

Energy

Telecom

Electrical wires

4,159

2,593

570

985

4,005

2,604

561

829

4,263

2,865

630

758

4,080

2,653

566

850

4,263

2,865

630

758

Following strong growth in the second half of the year, particularly in the last quarter (more than 7%), full-year sales for 2005, at constant non-ferrous metal prices, totaled 4,263 million euros, an increase of 5.2% at constant exchange rates and a consolidation scope comparable to 2004, evidence of particularly strong growth in all the Group's cable businesses (+8.6%).

Income by business sector

(in millions of euros)

2004

2005

% change

EBITDA*

222

281

+ 26.6 %

Operating margin:

Energy

Telecom

Electrical Wires

Autres

119

17

7

(10)

171

25

6

(16)

+ 43.7 %

+ 47.1 %

- 14.3 %

(+ 60   %)

Operating margin

133

186

+ 40    %

Net income (group share)

58

108

+ 86.2 %

Earnings per share (in euros)

2.55

4.46

+ 74.9 %

Net financial debt (after IAS 32 & 39)

295

374

+ 26.8 %

(*) Operating margin before depreciation
Analysis of sales* and operating margin by business sector

(* Sales at constant metal prices and exchange rates)

Energy cables: growth in all segments

Sales in the Energy sector, boosted by the development of energy markets worldwide (the interconnection and protection of the world's major energy networks, infrastructure development in developing countries, the rise of alternative sources of energy), increased by 8% compared with 2004, to 2,865 million euros. Sales grew in all market segments (infrastructure, industry and building).

Operating margin rose from 119 million euros in 2004 to 171 million euros in 2005, an increase of 44.6%. During 2005, orders for High Voltage and Umbilical Cables increased by more than 80%. Cables for industry also saw a significant turnaround with operating margin rising from 0.7 million euros in 2004 to 22.4 million euros in 2005. This is attributable to the marked improvement in industrial performance in Germany as well as the high demand for top-of-the-range automotive cables. Finally, Nexans has strengthened its positions in the building cables market, particularly in the USA. Operating margin in this segment increased by more than 47% compared with 2004.

Telecommunications cables: increased profitability

Telecom sales increased by 11.3% to 630 million euros.

Operating margin was 25 million euros in 2005, which represents a 4% profit margin on sales compared with 3.1% for the previous year. This margin comes close to the Group's objectives thanks to the high level of activity in certain segments of the infrastructure and private network cable markets in the USA.

Electrical wires: a challenge for the future

Sales in the Electrical Wires sector were 758 million euros in 2005 compared to 850 million euros at December 31, 2004, i.e. a 10.8% drop. Following the disposal to Superior Essex, the Group's winding wires activities are now residual but profitable.

Operating margin amounted to 6 million euros compared to 7 million euros in 2004, under the combined effect of falling external sales of wirerod and bare wires and strong pressure on prices in this sector.


Analysis of sales and operating margin by geographic area

(in millions of euros)

2004

2005

 

Sales*

OM

OM/Sales

Sales*

OM

OM/Sales

Europe

2,909

84

2.9%

2,988

108

3.6%

North America

726

31

4.3%

753

42

5.6%

Asia

232

10

4.3%

247

11

4.5%

Rest of the World

213

8

3.8%

275

25

9.1%

Total

4,080

133

3.3%

4,263

186

4.4%

(*) at constant metal prices and exchange rates

Nexans' sales have risen noticeably in all geographic areas.

Europe: growth in specialized products

Sales were 2,988 million euros, an increase of 2.7% compared with 2004, while operating margin rose by 28.6%. Europe has benefited from the initiatives put in place to reduce losses, and from the performance in specialist sectors such as high voltage and umbilical cables and top-of-the-range cables for the automotive industry.

North America: growth across the board

Sales totaled 753 million euros compared with 726 million euros in 2004, reflecting improvements across all activity sectors.

Operating margin reached 42 million euros compared with 31 million euros in 2004. The Group is well positioned in the booming North American market and has won significant market share as a result.

Asia: a calculated e and measured approach

Sales continued to grow in 2005 (+6.5%) reaching 247 million euros.

The area's operating margin also increased compared with 2004, reflecting Nexans' ability to resist in a fiercely competitive market subject to very strong pressure on prices.

Rest of the World: operating margin tripled

In line with the forecasts contained in Nexans' strategic plan, operating profit for the Rest of the World area this year was three times that of 2004. This outstanding performance is attributable to particularly strong growth in certain regions and countries (for example, the Middle East, Morocco and Brazil).


Increase in capital reserved to Nexans employees

Nexans has announced an increase in capital reserved to Group employees by the issuance of a maximum of 400,000 new shares with a nominal value of one euro each, at a price that will be discounted by 20% compared to the reference price (subject to compliance with local regulations). It is Nexans objective to strengthen relations with its employees, both in France and abroad, and to implicate them in the future development and growth of the Company.

Employees will be provided with the details of this program, called “Act 2006” and which the Company expects should be completed before the Annual Shareholders’ Meeting on 15 May 2006, after the relevant information has been made available to employee representatives.

Financial calendar
  • April 26, 2006: Publication of first-quarter sales for 2006
  • April 27, 2006: Individual shareholders’ information meeting in Bordeaux
  • May 15, 2006: Annual Shareholders’ Meeting
  • May 29, 2006: Individual shareholders’ information meeting in Rennes
  • July 20, 2006: Publication of first-half sales and results for 2006
  • October 3, 2006: Individual shareholders’ information meeting in Versailles
  • December 7, 2006: Individual shareholders’ information meeting in Montpellier

A full set of slides presenting the results, including by business activity, as well as a detailed presentation of the accounts, are available on the Nexans Web site at www.nexans.com

 

  Appendices
  1. Consolidated income statement under IFRS
  2. Consolidated balance sheet under IFRS
  3. Consolidated statement of cash flows under IFRS
  4. Information by sector

Find the complete and definitive appendices in the 2005 Annual Report


Consolidated income statement under IFRS

in millions of euros

2005

2004

Net sales

5 449

4 732

Metal price effect

(1 186)

(727)

Net sales at constant metal prices

4 263

4 005

Cost of sales

(3 640)

(3 449)

Gross profit

623

556

Administrative and selling expenses

(386)

(377)

R&D costs

(52)

(47)

Operating margin

186

133

Fair value change on non ferrous metal derivatives

33

-

Gains or losses on asset disposals

34

8

Restructuring costs

(24)

(36)

Asset impairment losses and reversals for negative goodwill

(4)

7

Cost of financial debt (gross)

(26)

(19)

Income from cash and cash equivalents

7

5

Other financial expenses

(17)

(22)

Income before taxes

189

78

Income taxes

(26)

(19)

Share in net income of associates

(0)

(0)

Net income from continuing operations

163

58

Net income from discontinued operations

(46)

5

Consolidated net income

117

63

Of which Group share

108

58

Of which minority interests

9

5

     

Net income from continuing operations per share (in euros)

   

- Basic earnings per share

7.30

2.53

- Diluted earnings per share

6.36

2.33

Net income from discontinued operations (in euros)

   

- Basic earnings per share

(2.18)

0.24

- Diluted earnings per share

(1.89)

0.22

Net income, Group share (in euros)

   

- Basic earnings per share

5.12

2.77

- Diluted earnings per share

4.46

2.55


Consolidated balance-sheet under IFRS

in millions of euros

2005

2004 after
IAS 32-39

2004*

ASSETS

     

Goodwill

88

80

77

Intangible assets

14

7

7

Property, plant and equipment

942

925

925

Investment in associates

18

1

1

Other investments

56

35

35

Deferred tax assets

76

51

66

Other non-current assets

-

-

-

NON-CURRENT ASSETS

1 194

1 100

1 112

Inventories and work in progress

563

500

500

Amounts due from customers on construction contracts

47

27

27

Trade receivables and related accounts

1 105

836

706

Current tax receivables

63

51

51

Other financial current assets

155

67

55

Cash and cash equivalents

117

121

121

CURRENT ASSETS

2 049

1 603

1 461

Assets and group of assets held for sale

81

135

135

TOTAL ASSETS

3 324

2 837

2 707

LIABILITIES & EQUITY

     

Capital stock

24

23

23

Additional paid-in capital

1 019

1 014

1 014

Treasury stock

(28)

(28)

(28)

Retained earnings

(40)

(152)

(168)

Net income, Group share

108

58

58

Shareholders' equity - Group share

1 083

915

899

Minority interests

77

70

71

TOTAL EQUITY

1 160

986

970

Accrued pension and retirement obligations

353

363

363

Provisions

14

18

18

Convertible bonds

117

116

135

Other long-term financial debt

5

14

10

Deferred tax liabilities

33

32

32

Other non-current payables

-

(0)

(0)

NON-CURRENT LIABILITIES

522

543

558

Provisions

83

91

91

Other current financial debt

369

286

156

Customers' deposits and advances

18

16

16

Amounts due to customers on construction contracts

70

36

36

Trade payables and related accounts

692

505

505

Current tax payables

64

58

58

Other current payables

308

252

253

CURRENT LIABILITIES

1 603

1 243

1 115

Debts related to group of assets held for sale

39

65

65

TOTAL LIABILITIES AND EQUITY

3 324

2 837

2 707

* Nexans has applied IAS 32 and IAS 39 from January 1st 2005


Consolidated statement of cash flows under IFRS

in millions of euros

2005

2004

Net income, Group share

108

58

Minority interests

9

5

Depreciation and amortization

101

77

Interest expense

27

19

Other restatements

(49)

(16)

Cash flow from operations before interests and taxes

196

143

Decrease (increase) in accounts receivable

(404)

(47)

Decrease (increase) in inventories

(64)

(117)

Increase (decrease) in accounts payable and accrued expenses

310

75

Other assets and liabilities

-

(1)

Income tax paid

(46)

(25)

Changes in provisions on current assets (including accrued contract costs)

(14)

3

Net change in current assets and liabilities

(218)

(112)

Net cash from operating activities

(21)

31

Proceeds from disposals of tangible and intangible assets

10

19

Capital expenditures

(130)

(97)

Decrease (increase) in loans

(10)

(0)

Cash expenditures for acquisitions of consolidated companies, net of cash acquired

(28)

(113)

Cash proceeds from sale of previously consolidated companies, net of cash sold

113

16

Net cash used in investing activities

(45)

(175)

Net cash flow change after investing activities

(67)

(144)

Proceeds from / (repayment of) long-term borrowings

8

141

Proceeds from / (repayment of) short-term borrowings

83

43

Proceeds from issue of shares

7

1

Financial interest paid

(23)

(17)

Dividends paid

(12)

(9)

Net cash from financing activities

63

160

Net effect of currency translation differences

3

2

Impact of change in scope of discontinued activities

(3)

-

Net increase (decrease) in cash and cash equivalents

(4)

17

     

Cash and cash equivalents at the beginning of period

121

104

Cash and cash equivalents at the end of period

117

121


Information by business segment

in millions of euros

Electrical wires

Energy

Telecom

Others
(or non-allocated)

Elimination inter-business
*

Total Group

2005

           

Net sales at current metal prices

2 072

3 342

677

10

(653)

5 449

Net sales at constant metal prices

1 103

2 865

630

10

(345)

4 263

Operating margin

6

171

25

(16)

-

186

Depreciation and amortization

10

61

20

4

-

95

Impaiment losses

-

(8)

(6)

-

-

(14)

Reversal of impaiment losses

3

3

2

-

-

8

EBITDA **

15

232

45

(12)

-

280

             

Capital expenditures

6

102

20

1

-

129

Net tangible assets

142

581

162

58

-

942

             

Total segment assets

570

1 990

424

71

-

3 054

Total segment liabilities

320

816

151

66

-

1 353

             

Investment in associates

17

1

-

-

-

18

Share in net income of associates

-

-

-

-

-

-

Staff (number of employees)

1 162

14 157

3 473

792

-

19 584

2004

           

Net sales at current metal prices

1 752

2 874

588

11

(492)

4 732

Net sales at constant metal prices

1 154

2 604

561

11

(325)

4 005

Net sales at constant metal prices and 2004 exchange rates

1 186

2 653

566

11

(336)

4 080

Operating margin

7

118

17

(10)

-

133

Depreciation and amortization

23

57

19

4

-

103

Impaiment losses

-

-

-

-

-

-

Reversal of impaiment losses

2

-

-

-

-

2

EBITDA **

29

175

36

(6)

-

236

             

Capital expenditures

4

68

18

6

-

96

Net tangible assets

149

563

159

54

-

925

             

Total segment assets

406

1 573

365

57

-

2 403

Total segment liabilities

183

647

124

57

-

1 011

             

Investment in associates

-

1

-

-

-

1

Share in net income of associates

-

-

-

-

-

-

Staff (number of employees)

1 178

14 316

3 525

830

-

19 849

* Inter-business eliminations comes for the most part from the upstream Electrical Wires sector
** Operating margin excluding depreciation and amortization on tangible and intangible fixed assets

Information by geographical area

in millions of euros

France

Germany

Other Europe

North America

Asia

Rest of the world

Total Group

2005

             

Net sales at current metal prices (before inter-segment eliminations)

2 065

692

1 846

1 153

302

348

-

Inter-segment sales

(592)

(43)

(293)

(1)

(3)

(26)

-

Net sales at current metal prices

1 473

649

1 553

1 152

299

322

5 449

Net sales at constant metal prices

1 024

553

1 411

753

247

275

4 263

Operating margin

(4)

27

85

42

11

25

186

Capital expenditures

18

22

51

12

14

12

129

Net tangible assets

232

160

237

156

78

81

942

Total segment assets

979

372

869

354

215

266

3 054

Staff (number of employees)

4 061

5 489

4 876

1 663

1 270

2 225

19 584

2004

             

Net sales at current metal prices (before inter-segment eliminations)

1 844

617

1 609

956

243

239

-

Inter-segment sales

(489)

(32)

(235)

-

(3)

(18)

-

Net sales at current metal prices

1 356

585

1 374

956

240

221

4 732

Net sales at constant metal prices

1 072

530

1 291

697

214

200

4 005

Net sales at constant metal prices and 2004 exchange rates

1 072

530

1 307

726

232

213

4 080

Operating margin

(9)

13

80

31

10

8

133

Capital expenditures

29

15

22

7

15

7

96

Net tangible assets

246

156

262

134

64

63

925

Total segment assets

718

326

774

252

148

185

2 403

Staff (number of employees)

4 311

5 578

5 031

1 652

1 166

2 111

19 849

 

Net sales at current metal prices by geographical market

in millions of euros

France

Germany

Other Europe

North America

Asia

Rest of the world

Total Group

Year 2005

740

616

1 957

1 127

407

601

5 449

Year 2004

619

554

1 809

950

350

450

4 732

 

Find the complete and definitive appendices in the 2005 Annual Report

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