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Paris, April 17, 2007 - Nexans today announced its 2007 first quarter sales of 1,805 million euros (at actual non-ferrous metal prices**). At constant non-ferrous metal prices***, sales were 1,194 million euros, reflecting organic growth of 6%. Excluding the electrical wires business where the reduction in activity has been programmed by the Group, growth was 15.1%.
This strong organic growth of sales was accompanied by a notable increase in operating margin compared with the first quarter of 2006.
Nexans net financial debt at March 31, 2007 remained stable compared to that recorded at December 31, 2006 (633 million euros).
* Cables and associated products (accessories), excluding electrical wires
** At actual metal prices, first quarter 2006 sales were 1,659 million euros (see Appendix).
*** 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 aluminum.
Consolidated sales by business sector
Sales figures are now presented according to the classification adopted in the new 2007-2009 strategic plan published in January.
|
(in millions of euro)
|
Q1 06
|
Q1 07
|
% Variation
|
|
|
At constant
metal prices
|
At constant
metal prices
and exchange rates
|
At constant
metal prices
and exchange rates
|
Organic growth
|
|
Energy infrastructures
|
309
|
303
|
371
|
+ 11,4 %
|
|
Industry
|
195
|
193
|
255
|
+ 17,3 %
|
|
Building
|
247
|
243
|
288
|
+ 16,7 %
|
|
Telecom Infrastructures
|
54
|
53
|
65
|
+ 21,8 %
|
|
Private Network (LAN)
|
64
|
60
|
71
|
+ 17,6 %
|
|
Other
|
2
|
2
|
1
|
|
|
Total: Cable businesses
|
871
|
854
|
1,051
|
+15,1%
|
|
Electrical wires
|
224
|
214
|
143
|
- 32,9 %
|
|
Total Group
|
1,095
|
1,068
|
1,194
|
+ 6,0 %
|
- Energy infrastructures: high level of activity
Demand for energy infrastructure cables remained very strong. Sales grew over 11% on the basis of comparable data during the first quarter. This growth was seen mainly in sales of accessories and high voltage cables.
- Industry: strong development of priority sectors
Up 17.3% on the basis of comparable data, sales of special cables for large industrial equipment manufacturers accelerated worldwide, with particularly vigorous growth in the Shipbuilding and Oil & Gas sectors.
- Building: strong organic growth and high margins
Sales in the building sector in the first quarter of 2007 continued at the same pace as in the second half of 2006 with organic growth of 17%. Profit margins continued to improve with sales volumes substantially the same in Europe as in the last quarter of 2006, and were slightly better in North America in the stated period.
- Telecom infrastructures: acceleration of sales
Telecom sales increased by approximately 22% on the basis of comparable data during the first quarter of 2007, as a result of positive developments in the niche markets for optical fiber cables as well as increasing sales in the telecommunications copper cable industry, in particular in Asia and originating from Spain.
- Private Network (LAN): further increase in sales
LAN cable activities recorded growth of 17.6%, following the same trends observed during the last quarter of 2006 (in terms of price and volumes).
Since the Group has refocused on its internal requirements, sales of electrical wires have decreased by 33%. Operating margin has nevertheless improved as a result of commercial measures taken in respect of external sales and cost reduction measures.
Sales by geographical area
|
(in millions of euros)
|
Q1 06
|
Q1 07
|
|
|
At constant metal prices
|
At constant metal prices
and exchange rates
|
At constant metal prices
and exchange rates
|
|
Europe
|
629
|
627
|
727
|
|
North America
|
112
|
10 3
|
106
|
|
Asia-Pacific
|
57
|
54
|
133
|
|
Rest of the World
|
73
|
70
|
85
|
|
Total: Cable businesses
|
871
|
854
|
1,051
|
|
Electrical wires (all areas)
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224
|
214
|
143
|
|
Total Group
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1,095
|
1,068
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1,194
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Sales rose in all geographical areas.
The acquisition of Olex was finalized in December 2006 and resulted in strong growth in the Asia-Pacific area (+145%) following the integration of Olex. Excluding Olex, the Asia-Pacific area recorded organic growth for cables businesses of 13.7%.
During the first quarter of 2007, sales in the cable businesses in North America only grew by 3.1%, due to the temporary closure of a production site dedicated to energy networks, which is currently starting up again.
On the basis of comparable data, cable business sales increased by 16.6% in Europe and by 22.1% in the Rest of the World area.
Nexans takes this opportunity to update its communication regarding significant outstanding litigation in Appendix 2 attached hereto.
Financial calendar
May 10, 2007: Annual Shareholders’ Meeting
May 15, 2007: Payment of dividend
June 7, 2007: Individual shareholders’ information meeting in Clermont-Ferrand*
June 19, 2007: Individual shareholders’ information meeting in Lille*
July 25, 2007: Publication of 2007 first-half sales and results
* provisional dates
Appendix
- Consolidated sales by business sector and geographical area at current metal prices
- Update on certain significant litigation
Appendix 1
Consolidated sales by business sector at current metal prices
|
(in millions of euros)
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At current metal prices
|
|
|
Q1 06
|
Q1 07
|
|
Energy infrastructure
|
372
|
469
|
|
Industry
|
239
|
326
|
|
Building
|
369
|
451
|
|
Telecom Infrastructures
|
64
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82
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Private Network (LAN)
|
70
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84
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Other
|
2
|
1
|
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Total: Cable businesses
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1,116
|
1,413
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|
Electrical wires
|
543
|
392
|
|
Total Group
|
1,659
|
1,805
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Consolidated sales by geographical area at current metal prices
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(in millions of euros)
|
At current metal prices
|
|
|
Q1 06
|
Q1 07
|
|
Europe
|
803
|
950
|
|
North America
|
143
|
142
|
|
Asia-Pacific
|
76
|
194
|
|
Rest of the World
|
94
|
127
|
|
Total: Cable businesses
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1,116
|
1,413
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|
Electrical wires (all areas)
|
543
|
392
|
|
Total Group
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1,659
|
1,805
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Appendix 2
Update on certain significant litigation
(in relation to the annual report submitted March 28, 2007)
Disputes
- The most significant ongoing dispute for which provisions have been recorded relates to cables supplied by Nexans for corvettes for the South African navy. The supply of certain of these cables was subcontracted to a South African manufacturer. After installation of the cables on the first two corvettes, it was found that the cables supplied by the subcontractor were non-compliant. All the cables already installed were then removed and replaced. The customer has claimed damages of approximately 36 million euros, which Nexans is contesting. The allocation of liability between Nexans and the parties involved – including the customer, the insurers and the subcontractor – has not yet been determined.
In view of the general uncertainty as to the liability of each party, Nexans considered it to be prudent and reasonable in its 2004 financial statements to increase the €5 million euro provision already set aside at December 31, 2003. At December 31, 2006 this provision was maintained in the Group’s financial statements. Based on the information available and the position of the insurer, the 11 million euro provision currently recorded in the accounts will probably prove to be unnecessary.
- In the proceedings started by the competition authorities in France, the Direction Nationale des Enquêtes (National Investigation Agency) of the Direction Générale de la Concurrence, de la Consommation et de la Répression des Fraudes (Department of Competition, Consumer Affairs and Repression of Fraud) started investigations in both 2003 and 2006, into certain contracts awarded by EDF for the supply of high voltage cables, and the market for electric cables respectively. Nexans received a statement of complaint from the French Competition Council (“Conseil de la Concurrence”) further to the 2003 investigation, but no indication was given of the fines which may be applied for the alleged wrongdoings. Following receipt of the statement, Nexans France has agreed with the executive case officer of the French Competition Council on a settlement procedure. No provision has been recorded for this case as the circumstances do not meet the required recognition criteria. In light of the specific circumstances of the case, Nexans believes the outcome of this procedure will not have a significant impact on the Group’s net financial situation. Finally, the statement of complaint confirms that the 2006 investigation has been closed.
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