Nexans announces preliminary FY-2001 results: Capacity proven for fast reaction in a difficult economic context, but promising perspectives for improving profitability

2001 Full year results - Presentation

Paris, February 13, 2002 � Nexans� Board of Directors met on 12 February 2002 under the chairmanship of Gérard Hauser to review the Group�s preliminary results for the 2001 financial year.

  • Sales were stable at 4,777 million euros. At constant non-ferrous metals prices, sales come to 4,467 million euros vs. 4,361 million in 2000, for a 2.4% increase (or 0.4% on a basis of comparable group structure).
  • Operating profit in 2001 was 139 million euros, down 18% from 169 million euros the year before. Net income stood at 30 million euros, vs. 75 million euros reported on 31 December 2000.
  • Operational cash flow amounted to 210 million euros, close to the 225 million euros reported at year-end 2000.
  • The company recorded a net debt of 71 million euros on 31 December 2001.

Gérard Hauser, Chairman and CEO, made the following comments concerning these results:

Full Year 2001 was a difficult year marked by an abrupt deterioration in our markets during the second half. In this context, Nexans demonstrated its resilience as well as its ability to react quickly to these events.

The company maintained its sales despite a fourth-quarter slowdown in orders in the telecom and winding wires activities. Owing to vigorous efforts to reduce stocks and lower fixed costs, Nexans maintained its operating cash flow and sharply reduced its debt from the 247 million recorded on 30 June to a level below that of 31 December 2000 (76 million euros).

In an economy that will continue to be very difficult in 2002, we must expand our restructuring efforts worldwide in order to regain profitability in selected areas. These new programmes, which are currently under study, will probably result in 80 million euros of cash expenditures over the years 2002 and 2003 (i.e. 30 million euros more than the restructuring initially foreseen for such period), to which should be added asset write downs of 40 million euros.

These strong actions, coupled with ongoing efforts to generate cash and reduce costs, and Nexans� solid fundamentals and sound Balance Sheet, should enable Nexans to reach in 2004 its objectives of a 5% operating margin and a return on capital employed of 16 to 20%."

Against this backdrop, the Board of Directors has decided to retire the 1,990,031 shares of treasury stock resulting from the share buyback programme launched in October 2001, by means of a corresponding reduction in share capital.

The Board of Directors was in favour of the management proposal in principle to declare a dividend of 10 million euros, being 0,43 euro per share. The dividend proposal, to be submitted to the shareholders meeting for approval, will be made by the Board at its next meeting on April 19, 2002.

Fourth-quarter and full-year sales for FY 2001

Q4-00

Q4-01

millions of euros

2000

2001

%

1 266

1 104

Sales

4,783

4,777

NS

1 128

1 071

Sales (at constant metals prices)

4,361

4,467

+ 2.4%

528

563

Energy

2,062

2,189

+ 6.2%

224

170

Telecom

876

835

- 4.7%

280

246

Electrical wire

1,095

1,102

+ 0.6%

96

92

Distribution & others

328

340

+ 3.7%

 

Preliminary consolidated results

millions of euros

2000

2001

Operating Margin 2001

EBITDA

301

280

 
Operating profit

Energy

Telecom

Electrical Wire

Distribution & others

169

64

46

43

16

139

80

30

15

14

3.1%

3.7%

3.6%

1.4%

4.1%

Net income

75

30

 

Income per share

3.00

1.22

 

Operational cash flow

225

210

 

Operating profit fell in the second half of 2001 as the US recession grew more severe and extended to Europe, after holding steady in the first half. In the fourth quarter, an especially sharp market contraction occurred in telecom cable products, particularly in the public networks segment. Operating profit finished at 139 million euros for the year, or the same level as in 1999, down from 169 euros in 2000. Nexans� operating margin in 2001 was 3.1% vs. 3.9% in 2000.

The drop in net financial costs stems from the increase in the Group�s average debt from 2000 to 2001, particularly the portion in high interest rate countries such as Turkey and Brazil.

 Restructuring costs came to 36.2 million euros, a 20% increase from 2000 owing mainly to the programmes underway at Nexans Wires in France, ADI in Norway, Berk Tek in the United States and Nexans Italia.The Group recorded consolidated taxes of 28 million euros, for an effective tax rate of 38.6% vs. 33.3% in 2000. This resulted from changes in the geographical breakdown of taxable profits from 2000.

Minority interests rose mainly because of the entry of Daesung into the scope of consolidation starting on 1 April 2001.

As a result, the net income per share, on a diluted weighted average basis, came to 1.22 euro. Analysis of operating profit by division Energy � The Energy Division�s sales increased 6.2% (3.7% on a basis of comparable group structure) to 2,189 million euros in 2001. The trend is mainly due to satisfactory sales for infrastructure projects and a strong performance in low voltage building cables. Full year 2001 operating profit rose 25% to 80 million euros, on the strength of market conditions and the effect of restructuring efforts made in previous years, notably in the High Voltage sector.

Telecom � Telecom Division sales slipped 4.7% to 835 million euros, and were down 7.5% on a basis of comparable group structure. They were especially affected by a drop in 4th quarter sales that occurred notably in the public networks segment and in special cables for telecom equipment manufacturers.

Operating profit came to 30 million euros, down 35% from 31 December 2000. The drop was mainly due to weak performances in the private networks (LAN) activities in the United States, as well as  in Europe beginning in the summer. A rise occurred in operating margins in the infrastructure markets, as copper cables continued to be deployed in expanding local loops.

Electrical wire � Sales in the Electrical Wire Division remained flat in 2001. Sales of winding wire continued to fall during the 4th quarter, notably in the United States. They were down 17.6% from the same period in 2000.

Operating profit fell 65% to 15 million euros. This decrease stems mainly from the sharp reduction in sales volumes of winding wire, an industry with high fixed costs. The result was more intense competition and lower prices, particularly in the United States.

Financial calendar
  • 22 April 2002: 2002 1st Quarter sales
  • 25 June 2002: Shareholders meeting
  • 22 July 2002: 2002 1st Half results

A full set of slides from the earnings presentation along with a detailed presentation of the financial statements are available on Nexans� internet site at www.nexans.com

 

SAFEHARBOR DISCLAIMER: 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 actual results, performance and achievements to be materially different from those implied in the forward looking statements.

Such expectations depend amongst others on the following assumptions and risks : (1) the European and North American economies will recover; (2) drop in demand for LAN and winding wire will reverse ; (3) telecom operators return to normal levels of infrastructure spending; (4) the effect of metal price and currency fluctuations will be neutral; (5) the company will be able to reduce its cost base through realization of restructuring actions in the anticipated time frame; (6) the company will be able to achieve productivity improvements ; and (7) the company will successfully integrate acquisitions.

Annex
  1. Income statement
  2. Abbreviated balance sheet
  3. Cash flow statement
  4. Business and geographical breakdown

Consolidated income statements
in millions of euros

 

2001

2000*

1999*

Net sales

4777

4783

4182

Metal price effect

(310)

(422)

(33)

Net sales at constant metal price

4467

4361

4149

Cost of sales

(3833)

(3714)

(3520)

Gross profit

634

647

629

Administrative and selling expenses

(445)

(440)

(456)

R&D costs

(50)

(38)

(35)

Income from operations

139

169

138

Financial income (loss)

(33)

(20)

-

Restructuring costs

(36)

(30)

(60)

Other revenues (expenses)

3

1

80

Income before taxes

73

120

158

Income tax

(28)

(40)

(31)

Share in net income of equity affiliates

-

-

-

Consolidated net income before amortization of goodwill

45

80

127

Amortization of goodwill

(2)

-

-

Minority interests

13

5

6

Net income

30

75

121

       

Earnings per share (in euros)

1.22

3.00

4.84

Diluted earnings per share (in euros)

1.22

3.00

4.84

* unaudited combined pro forma financial statements

Consolidated balance sheets at December 31
in millions of euros

ASSETS

2001

2000*

1999*

Goodwill, net

38

   

Other intangible assets, net

6

5

4

Intangible assets, net

44

5

4

Property, plant and equipment

2918

2758

2686

Depreciation

(1997)

(1932)

(1938)

Property, plant and equipment, net

921

826

748

Share in net assets of equity affiliates

10

2

2

Other investments and miscellaneous, net

65

61

55

Investments and other non-current assets

75

63

57

TOTAL NON-CURRENT ASSETS, NET

1040

894

809

Inventories and work in progress, net

637

704

623

Trade receivables and related accounts, net

861

1005

817

Other accounts receivable, net

133

160

195

Accounts receivable, net

994

1165

1012

Marketable securities, net

87

4

6

Cash, net

190

125

492

Cash and cash equivalents

277

129

498

TOTAL CURRENT ASSETS

1908

1998

2133

TOTAL ASSETS

2948

2892

2942

* unaudited combined pro forma financial statements
in millions of euros

LIABILITIES AND EQUITY

2001

2000*

1999*

Capital stock (Euro 1 Nominal value; 25 000 000 shares issued at December  31, 2001)

25

25

25

Additional paid-in capital

1044

1044

1044

Retained earnings

(23)

(78)

(174)

Cumulative translation adjustments

53

45

(3)

Net income

30

75

121

Treasury stock

(33)

   

SHAREHOLDERS� EQUITY

1096

1111

1013

MINORITY INTERESTS

104

49

84

Accrued pension and retirement obligations

257

259

263

Accrued contract costs and other reserves

157

181

257

TOTAL RESERVES FOR LIABILITIES AND CHARGES

414

440

520

TOTAL FINANCIAL DEBT

348

205

327

Customers� deposits and advances

48

32

32

Trade payables and related accounts

530

635

532

Other payables

408

420

434

TOTAL OTHER PAYABLES

986

1087

998

TOTAL LIABILITIES AND EQUITY

2948

2892

2942

* unaudited combined pro forma financial statements

Consolidated statements of cash flow
in millions of euros

 

2001

2000*

1999*

Net income

30

75

121

Minority interests

13

5

6

Depreciation and amortization

143

132

127

Changes in reserves for pension obligations, net

(2)

(7)

(15)

Changes in other reserves, net

(11)

(58)

(72)

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

(3)

(1)

(37)

Share in net income of equity affiliates (net of dividends received)

-

-

3

Other

-

-

(8)

Cash flow provided by operations

170

146

125

Decrease (increase) in accounts receivable

204

(151)

50

Decrease (increase) in inventories

82

(71)

37

Increase (decrease) in accounts payable and accrued expenses

(163)

114

16

Changes in reserves on current assets (including product sales reserve)

3

(7)

(26)

Net change in current assets and liabilities

126

(115)

77

Net cash provided (used) by operating activities

296

31

202

Proceeds from disposal of fixed assets

8

21

13

Capital expenditures

(203)

(239)

(143)

Decrease (increase) in loans

(17)

(1)

(2)

Cash expenditures for acquisition of consolidated companies, net of cash acquired, and for acquisition of unconsolidated companies **

(53)

(31)

(8)

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

-

-

52

Net cash provided (used) by investing activities

(265)

(250)

(88)

Net cash flow after investment

31

(219)

114

Proceeds from issuance of shares

2

2

-

Dividends paid

(24)

(25)

(25)

Net cash provided (used) by financing activities

(22)

(23)

(25)

Net effect of exchange rate changes

(4)

(5)

(11)

Net increase (decrease) in net debt / cash

5

(247)

78

Net (debt) / cash at beginning of year

(76)

171

93

Net (debt) / cash at end of year

(71)

(76)

171

* unaudited combined pro forma financial statements

** including in 2001, 33 millions of euros of treasury stock

Information by business division
In millions of euros

2001

Electrical Wires

Energy

Telecom

Distribution

Other 

Total Group

Net sales at constant metal price

1102

2189

836

340

-

4467

Income from operations

15

80

30

17

(3)

139

Depreciation and amortization *

32

67

34

4

4

141

EBITDA**

47

147

64

21

1

280

             

Capital expenditures

41

101

40

6

14

202

             

Property, plant and equipment , net

214

414

222

44

27

921

Inventories and work in progress, net

162

334

101

44

(4)

637

Trade receivables and related accounts, net

142

504

164

56

(5)

861

Total assets from operations, net

518

1252

487

144

18

2419

             

Staff

2625

9266

4372

831

906

18000

             

2000

Electrical Wires

Energy

Telecom

Distribution

Other 

Total

Group

Net sales at constant metal price

1095

2062

876

327

1

4361

Income from operations

43

64

46

12

4

169

Depreciation and amortization *

27

67

27

6

5

132

EBITDA**

70

131

73

18

9

301

             

Capital expenditures

71

80

64

4

20

239

             

Property, plant and equipment , net

208

332

181

37

68

826

Inventories and work in progress, net

185

354

110

28

27

704

Trade receivables and related accounts, net

179

469

198

26

133

1005

Total assets from operations, net

572

1155

489

91

228

2535

             

Staff

2672

9026

4696

904

888

18186

             

1999

Electrical Wires

Energy

Telecom

Distribution

Other 

Total Group

Net sales at constant metal price

945

2060

821

318

5

4149

Income from operations

43

46

36

17

(4)

138

Depreciation and amortization *

25

68

26

4

3

126

EBITDA**

68

114

62

21

(1)

264

             

Capital expenditures

36

45

25

4

34

144

             

Property, plant and equipment , net

156

316

142

43

91

748

Inventories and work in progress, net

139

335

105

51

(7)

623

Trade receivables and related accounts, net

166

549

190

55

(143)

817

Total assets from operations, net

461

1200

437

149

(59)

2188

             

Staff

2709

9259

4197

962

1246

18373

* Property, plant and equipment excluding  amortization of goodwill

** EBITDA is defined as income from operations, excluding depreciation and amortization.


Information by geographical area
in millions of euros

2001

France

Germany

Other Europe

North America

Rest of World

Total Group

Net sales :

           

- by subsidiary location

1472

644

1508

914

239

4777

- by geographical market

760

597

1977

931

512

4777

Income from operations

24

25

63

5

22

139

Property, plant and equipment, net

207

146

271

193

104

921

Total assets from operations, net

664

334

822

379

220

2419

Staff

5281

3105

5901

1940

1773

18000

             

2000

France

Germany

Other Europe

North America

Rest of World

Total Group

Net sales :

           

- by subsidiary location

1461

645

1456

1064

157

4783

- by geographical market

762

584

1970

1088

379

4783

Income from operations

46

23

41

36

23

169

Property, plant and equipment, net

174

144

250

195

63

826

Total assets from operations, net

693

349

924

430

139

2535

Staff

5188

3243

6118

2453

1184

18186

             

1999

France

Germany

Other Europe

North America

Rest of World

Total Group

Net sales :

           

- by subsidiary location

1253

647

1360

777

145

4182

- by geographical market

690

625

1632

795

440

4182

Income from operations

59

1

27

40

11

138

Property, plant and equipment, net

148

163

232

152

53

748

Total assets from operations, net

603

356

773

342

114

2188

Staff

5421

3618

6023

2225

1086

18373

Note : the above information is analyzed by subsidiary location,  except for net sales  which are also analyzed by geographical market.

Related Document

Your Contact

Angéline Afanoukoe Press relations
Phone +33 (0)1 73 23 84 12
Angeline.afanoukoe@nexans.com
Michel Gédéon Financial Communication
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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 systems can be found in every area of people's lives, from telecommunications and energy networks, to aeronautics, aerospace, automobile, railways, building, petrochemical, medical applications, etc. With an industrial presence in 28 countries and commercial activities in 65 countries, Nexans employs 17,500 people and had sales in 2001 of euros 4.8 billion. Nexans is listed on the Paris stock exchange. More information on www.nexans.com