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 % |
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 profitabilityTelecom 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 futureSales 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 productsSales 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 boardSales 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
- Consolidated income statement under IFRS
- Consolidated balance sheet under IFRS
- Consolidated statement of cash flows under IFRS
- Information by sector
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 |
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 |
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 |
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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 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
A propos de Nexans
Nexans, leader mondial de l'industrie du câble, propose une large gamme de solutions câbles cuivre et fibre optique pour les marchés d’infrastructure, de l’industrie et du bâtiment. Les câbles et systèmes de câblage de Nexans sont présents dans notre vie quotidienne depuis les télécommunications jusqu'aux réseaux d'énergie, l’aéronautique, l’espace, la construction, l’automobile, le ferroviaire, la pétrochimie, les applications médicales, etc. Avec une présence industrielle dans 29 pays et des activités commerciales dans le monde entier, Nexans emploie 20 000 personnes avec un chiffre d'affaires de 5,4 milliards d’euros pour 2005. Nexans est coté à la Bourse de Paris. Pour plus d’informations : www.nexans.com