Nexans' half year results: Operating Profit maintained despite a difficult economic environment

2001 half year results - Presentation

Paris, September 12, 2001 -Nexans� Board of Directors met on September 11, 2001, under the chairmanship of Gérard Hauser, to review the group�s accounts for the first half of the year.

Commenting on these results, the Chairman declared:

� Sales for the first half came to 2,536 million euros. This represents a rise, at constant non ferrous-metals price, of 5.5% over the same period in 2000, to sales of 2,320 million euros.

Despite the depressed economic climate in North America, and thanks to good performance in infrastructure markets, operating profit came to 79 million euros as of June 30, 2001, which was stable compared to the first half of 2000.

Net income came to 19 million euros. As announced at the time of the IPO, this figure is less than that of the first half of 2000 owing to an increase in financial costs and a high effective tax rate during this period. The figure recorded on June 30th is not representative of the expected annual result. Second half net income will be significantly higher than the first half of the year.

In a difficult economic environment, due to the partial spread of the North American recession to Europe, we are confident in Nexans� capacity to pursue its growth policy and maintain its objective of reaching, for the entire 2001 fiscal period, operating profit close to that of the year 2000 resulting from the adjustments made as well as the energetic cost reduction programmes undertaken�.

Consolidated results (non audited):

In millions of euros

H1 2000*

H1 2001

     

Sales

2,360

2,536

Sales (at constant metal price)

2,198

2,320

EBITDA

(As % of sales)

145

6.6%

151

6.5%

Operating profit

(As % of sales)

79

3.6%

79

3.4%

Net income

31

19

Net income per share

1.27

0.78

*pro forma

As of 30 June 2001, EBITDA reached 151 million euros, representing a 4.1% increase compared to the first half of 2000. Operating profit came to 79 million euros, equivalent to that recorded on June 30th 2000. These figures demonstrate Nexans� ability to resist in an economic environment marked by a slowdown in the US and Italy.

As forecasted, the seasonal character of the business increased the debt to 247 million euros. The combined effect of this increase and the localisation of part of the debt in countries with high interest rates (Brazil and Turkey) meant that financial costs came to 20 million euros.

Furthermore, the Group�s average effective tax rate rose from 35 to 51%, owing to the fiscally unbalanced geographic distribution of the operating profit.

In this context, net income as of June 30th 2001 was 19 million euros compared to 31 million euros for the same period in the previous year.


2.     Results per activity (non audited):

In millions of euros

H1 2000

H1 2001

 

Sales (1) (2)

Operating profit (2)

Sales(1) (2)

Operating profit (2)

Energy

1,037

29

1,085

32

Telecom

429

23

461

23

Electrical wires

576

26

605

18

Distribution & Others

156

  1

169

6

         

Total

2,198

79

2,320

79

(1) Sales at constant metal price

(2) Pro forma combined data

Energy: Sales grew by 2.5% due to the good performance in medium and low voltage energy networks and the infrastructure market recovery. Operating profit increased by 13.4% in the first half of 2001 reaching 32 million euros compared to 29 million euros as of 30th June 2000. This result essentially reflects the positive impact of the restructuring programmes carried out in recent years, notably in France and Germany, and the recovery in the infrastructure markets.

Telecom: Sales grew significantly(+7.5%),in comparison to the first half of 2000. Operating profit remained stable at 23 million euros under the contrasting effect of very good performance in the field of cables for public operators and OEM�s and the weakness in LAN activities which have been particularly affected by the slowing down of the American economy. Cost reduction programmes already commenced will be pursued during the second half.

Electrical Wires: Growth in sales reflects the acquisition of Saficonel. Operating profit as of 30 June 2001 came to 18 million euros, a sharp decline (-31%) over that of the first half of 2000.

This is the result of the deterioration in performance in the enamelled wire segment, due to the continuous decline in the US market, especially in the automobile sector, and to the pressure on the selling prices of commodity products. Significant restructuring has taken place in the US and Italy with the aim of tackling this.


3.     Financial calendar

Publication of third quarter sales: 18th October 2001

The full set of accounts is available on Nexans� Internet site at www.nexans.com

 

Safe Harbor: "This press release contains forward-looking statements relating to the Company's expectations for future financial performance, including sales and profitability. Such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause our acutal results, performance and achievements to be materially different from those implied in the forward looking statements. Such expectations assume amongst others that (1) the European economy will not deteriorate further ; (2) demand in North American markets, in particular for LAN and winding wire does not further deteriorate ; and (3) telecom operators do not cut infrastructure spending more than expected."

 

Annex:

  1. Consolidated income statements
  2. Consolidated Balance Sheet
  3. Consolidated Statements of Cash Flow

Consolidated income statements

In millions of euros

 

Notes

1st half 2001

1st half 2000*

2000*

Net sales

(3)

2536

2360

4783

Metal effect

 

(216)

(162)

(422)

Net sales at constant metal price

(3)

2320

2198

4361

Cost of sales

 

(1981)

(1874)

(3714)

Gross profit

 

338

324

647

Administrative and selling expenses

 

(234)

(224)

(440)

R&D costs

 

(25)

(21)

(38)

Income from operations

(3)

79

79

169

Financial income (loss)

(4)

(20)

(7)

(20)

Restructuring costs

(9)

(12)

(18)

(30)

Other revenues (expenses)

(5)

2

 

1

Income before taxes and goodwill amortization

 

49

54

120

Income tax

 

(25)

(19)

(40)

Share in net income of equity

       

Consolidated net income before goodwill amortization

 

24

35

80

Goodwill amortization

 

(1)

   

Minority interests

 

4

4

5

Net income

 

19

31

75

Earnings per share (in euros)   0.78 1.27 3.00

* Combined pro forma financial statements


Consolidated Balance Sheet

In millions of euros

ASSETS

Notes

June 30 2001

December 31 2000*

Goodwill, net value

(6)

33

-

Other intangible assets, net

 

5

5

Intangible assets, net

 

38

5

Property, plant and equipment

 

2885

2758

Depreciation

 

(1990)

(1932)

Property, Plant and equipment, net

 

895

826

Share in net assets of equity affiliates

(7)

10

2

Other investments and miscellaneous, net

 

56

61

Investments and other non-current assets, net

 

66

63

TOTAL NON CURRENT ASSETS NET VALUE

 

999

894

Inventories and work in progress, net value

 

806

704

Trade receivables and related accounts, net

 

1045

1005

Other accounts receivables, net

 

217

160

Accounts receivables, net value

 

1262

1165

Marketable securities, net value

 

29

4

Cash, net

 

277

125

Cash and cash equivalents

 

306

129

CURRENT ASSETS

 

2374

1998

TOTAL ASSETS

 

3373

2892

       

LIABILITIES AND SHAREHOLDER'S EQUITY before appropriation

Notes

June 30 2001

December 31 2000*

Capital stock (Euro 1 nominal value ; 25 000 000 shares issued at June 30, 2001)

 

25

25

Additional paid-in capital

 

1044

1044

Retained earnings

 

(23)

(78)

Cumulated translation adjustments

 

69

45

Net income

 

19

75

SHAREHOLDERS� EQUITY before appropriation

 

1134

1111

MINORITY INTERESTS

 

93

49

Accrued pension and retirements obligations

 

260

259

Accrued contract costs and other reserves

(9)

168

181

TOTAL RESERVES FOR LIABILITIES AND CHARGES

 

428

440

Other borrowings

 

553

205

TOTAL FINANCIAL DEBT

 

553

205

Customers� deposits and advances

 

39

32

Trade payables and related accounts

 

615

635

Other payables

 

511

420

TOTAL OTHER PAYABLES

 

1165

1087

TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY

 

3373

2892

* Combined pro forma financial statements


Consolidated Statements of Cash Flow

In millions of euros

 

1st half 2001

2000*

- Consolidated net income, group share

19

75

- Minority interests

4

5

- Depreciation and amortization

72

132

- Changes in reserves for pension obligations, net

1

(7)

- Changes in other reserves, net

2

(58)

- Net (gain) loss on disposal of non-current assets

(2)

(1)

- Share in net income of equity affiliates

1

-

(net of dividends received)

   

- Other

-

-

Cash flow provided by operations

97

146

- Decrease (increase) in accounts receivables

(43)

(151)

- Decrease (increase) in inventories

(81)

(71)

- Increase (decrease) in accounts payable and accrued expenses

-

114

- Changes in reserves on current assets (including accrued contract costs)

2

(7)

Net change in current assets and liabilities

(122)

(115)

Net cash provided (used) by operating activities

(25)

31

Proceeds from disposal of fixed assets

5

21

Capital expenditures

(98)

(239)

Decrease (increase) in loans

(1)

(1)

Cash expenditures for acquisition of consolidated companies, net of cash

   

acquired, and for acquisition of unconsolidated companies

(20)

(31)

Cash proceeds from sale of previously consolidated companies, net of

   

cash sold, and from sale of unconsolidated companies

-

-

Net cash provided (used) by investing activities

(114)

(250)

Net cash flow after investment

(139)

(219)

Proceeds from issuance of shares

-

2

Dividends paid

(23)

(25)

Net cash provided (used) by financing activities

(23)

(23)

Net effect of exchange rate changes

(9)

(5)

Net increase (decrease) in net debt /cash

(171)

(247)

     

Net (Debt)/Cash at beginning of year

(76)

171

Net (Debt)/Cash at end of year

(247)

(76)

* Combined pro forma financial statements

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

Formed from Alcatel Cables and Components, Nexans is a worldwide leader in the cable industry. Nexans product portfolio includes an extensive range of cables and systems. Nexans solutions can be found in every area of people's lives, from telecommunications and energy networks, to aeronautics aerospace, automobile, building, petrochemical and medical applications. Operating in 20 countries, Nexans employs 19,000 people and had sales in 2000 of euros 4.8 billion. More information on www.nexans.com