2006 third-quarter sales: organic growth of 6.3%

Paris, October 24, 2006 – Nexans today announced 2006 third-quarter sales of 1,900 million euros (at actual non-ferrous metal prices*). This result is based on 13 working weeks, compared to 14 working weeks in the third quarter 2005.

At constant non-ferrous metal prices**, sales stood at 1,066 million euros, an increase of 6.3%, on the basis of comparable scope, exchange rate and number of working days with the third quarter 2005.

Sales for the first 9 months of the year totaled 3,339 million euros, up 10.2% over the same period last year, on the basis of comparable data***.

Referring to these figures, Nexans Chairman and CEO, Gérard Hauser said: “The third quarter has matched our expectations, with strong activity on the energy market, especially in infrastructure and special cables, as well as a highly favorable product mix in telecom cables for local area networks. In this context, we are expecting an operating margin around 5.5% for 2006 as a whole, representing an improvement compared to our previous objective”.

Consolidated sales

Consolidated sales by business sector

	(main activities – constant metal prices)
in millions of euros (comparable data)	Q3  05	Q3 06
Infrastructure	291	315
Building	214	224
Industry	138	163

Sales of energy cables for infrastructure were up by 8.2% compared with the same period a year earlier. They continue to benefit from strong demand for high-voltage submarine cables and umbilical cables.

In the 3^rd quarter, this strong demand largely offset a lesser increase in medium and low-voltage cables in the Middle East (Lebanon crisis), and decreasing residential sector business in North America.

Third-quarter sales of special cables for industry markets (oil platforms, automotive, shipbuilding, railways, etc.) rose by more than 18%, thus confirming the sales growth targets for high value-added products.

 

	(constant metal prices)
in millions of euros (comparable data)	Q3 05	Q3  06
Infrastructure	66	63
LAN	63	71
Industry	27	32

Up 6.4% compared with 3^rd quarter 2005, Telecom has continued its steady recovery. It has enjoyed excellent results in LAN cables and special cables for the industry sector, offsetting a drop in infrastructure cables related to the postponing of some projects in Europe and a decreasing export activity.

 

	(constant metal prices)
in millions of euros (comparable data)	Q3  05	Q3  06
Bare wire (wirerod and electrical wires)	175	165
Winding wires	14	18

In this quarter, the metallurgy business slowed in Europe as a result of our activity refocus on our own needs, as well as in the residential building market in North America.

 

Sales by geographic area

• Europe: very strong demand for power cables

European activities achieved organic growth of 8% over the 3^rd quarter 2005.

The strong demand for power cables, especially in the industry and infrastructure sectors, offset the slowdown in activity in Europe in the metallurgy and telecom infrastructure sectors.

Dynamic sales of special cables for the oil sector, as well as instrumentation cables, particularly on the export market, contributed to maintaining a strong level of activity in Europe.

• North America: smaller volumes but activity of quality

On a comparable basis, sales for the North America area were down slightly by 2.3% over the 3^rd quarter of the previous year that had reported a particularly high level of activity.

Sales volumes, especially wirerod and cables for the residential building sector, suffered from the third-quarter economic slowdown in North America. This element has no effect on the result which benefit from a favorable product mix and a high level of margin.

In total, the organic growth for the first 9 months of the year 2006 is still above 13%.

• Asia: very strong demand in China for high value-added cables

Organic growth of sales was 12.9% over the third quarter 2005.

This increase is attributable to the very strong demand in China for cables with high value-added: telecom cables for LANs, and special cables for OEMs. This increase also reflects the production ramp-up at the third manufacturing facility opened in Shanghai (China) in June 2005.

• Rest of the World: excellent performance in growing countries

Organic growth in the rest of the world is 9.4% over the 3^rd quarter of the previous year.

This growth is due to excellent performance in certain countries: Morocco with very strong demand for energy infrastructure cables and automotive cables; Turkey, due to a particularly vigorous residential building market and many export contracts; and Egypt, where medium-voltage cable sales were up sharply.

Outlook for 2006

Ongoing measures taken by the Group to reduce its working capital needs should allow us to achieve our debt target of about 350 million euros by the end of the year, at current copper price.

Considering the high level of activity, the operating margin should reach 5.5% for 2006 as a whole, an improvement compared to our previous objectives.

Financial calendar

 

 

Appendix

Consolidated sales by business sector at actual metal prices