2011 Full-Year Results
Improved performance in the second half in a supportive environment
- Sales at constant metal prices 1) : 4.594 billion euros
- Organic growth of 6.5%
- Operating margin rate at 5.6% for the full year 2)
- Net debt at 220 million euros, down compared with June 30, 2011
- Proposed dividend of 1.1 euros per share 3)
Paris, February 8, 2012 - The Nexans Board of Directors meeting on February 7, 2012, chaired by Frédéric Vincent, approved the Financial Statements for 2011.
Net sales for 2011 totaled 6.920 billion euros compared with 6.179 billion euros in 2010. At constant non-ferrous metal prices 1) , the figure is 4.594 billion euros compared with 4.309 billion euros in 2010.
At constant exchange rates and scope, business reported growth of 6.5% 4) across the entire Group. The second half of the year was marked by ongoing growth in business for all Group activities with organic growth of 3.9% and 5.9% respectively in the third and fourth quarters of 2011 compared with the same periods a year earlier.
The operating margin totaled 256 million euros, that is, 5.6% of sales at constant non-ferrous metal prices, compared with 4.8% in 2010. Profitability rose in the second half driven by the ongoing strong growth in low and medium voltage energy infrastructure business, Industry, Building and Telecom infrastructure business.
The increased profitability of these segments was offset by a softer performance in power transmission business as a consequence of the political situation in the Middle-East (in Libya in particular) and of the postponement of the installation of a submarine cable in Northern Europe.
The 2011 operating loss is -48 million euros (compared with an operating profit of 195 million euros in 2010). This result reflects in particular restructuring costs, asset depreciations and a 200 million euros reserve relating to a fine that may be imposed on Nexans following the announcement of the statement of objections received on July 5, 2011, from the European Commission’s Competition Department for anti-competitive behavior.
The net financial charge came to 106 million euros compared with 84 million euros in 2010 and the tax charge to 31 million euros versus 26 million euros in 2010.
As a consequence, the net income (Group share) for 2011 totaled a negative 178 million euros. It was a positive 82 million euros at December 31st, 2010.
The Board of Directors will put to the General Shareholders’ Meeting, called in the first half of 2012, a proposal to pay a dividend of 1.1 euros per share for 2011.
The consolidated net debt was 222 million euros at December 31st, 2011, compared with 144 million euros a year earlier. In 2011, the Group generated cash flow from operations in progress. At the same time, the Group maintained its focus on investing in high-potential market segments, especially energy infrastructure, for which extruded submarine cable production capacity has virtually doubled. Business growth has generated an increase in the working capital requirement in absolute value, but posted a relative decline at year end (17% of sales at December 31st, 2011 compared with 18.4% at June 30, 2011).
Referring to the 2011 results, Frédéric Vincent, Chairman and CEO said: «Despite a troubled macro-economic environment in Europe and in the United States during second-half, the activity of the Group’s various businesses continued to grow in the third and fourth quarters of 2011. This enables Nexans to report results in line with its guidance. In 2011, Nexans pursued its expansion with strategic initiatives, such as the agreement to acquire a majority participation in the Medium and High Voltage power cable business of Shandong Yanggu Cables in China.
In this context and despite an uncertain environment, we are approaching 2012 with confidence in the Group’s capacity to grow further, should the current economic environment remain the same. Initiatives in the areas of industrial rationalization, the Group’s redeployment to growth areas and businesses, and the reorganization of our European operations will contribute positively to 2012».
General management organization
Frédéric Michelland, member of the Management Committee, Senior Corporate Executive Vice President Administration and Finance, will take over responsibility, from April 2nd, of the “High Voltage & Underwater Cables” Business Group. He retains supervision of the North America and South America areas. He will be replaced on April 2nd, for the financial function, by Nicolas Badré, currently Deputy Chief Financial Officer who will report to the Chairman and CEO, and will join the Executive Committee at the same date.
1) 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.
2) A management indicator used by the Group to measure its operating performance. The operating margin rate is expressed as a percentage of the sales at constant non-ferrous metal prices.
3) Proposed dividend that will be submitted to the 2012 General Shareholders’ Meeting for approval.
4) 2010 sales on the basis of comparable data correspond to constant non-ferrous metal sales, recalculated after adjustments for comparable scope and exchange rates. The exchange rate effect on sales at constant non-ferrous metal prices amounts to 14 million euros, while the comparable scope effect amounts to -11 million euros.
2011 key figures
|(in millions of euros)||At constant non-ferrous metal prices|
|Operating margin rate (% of sales)||4.8%||5.6%|
|Net income attributable to equity holders of the company (Group share)||82||(178)|
|Diluted EPS (in euros)||2.84||(6.21)|
Detailed analysis by business sector
Sales breakdown by business sector
|(in millions of euros)||At constant non-ferrous metal prices||At constant non-ferrous metal prices|
|- Private Networks (LAN)||244||238||0.3%|
|Sub-total : Cable businesses||4,020||4,328||7.4%|
Operating margin by business sector
|(in million of euros)||2010||2011|
|- Private Networks (LAN)||16||17|
|Sub-total : Cable businesses||200||245|
In 2011, Energy business sales totaled 3,852 million euros compared with 3,568 million euros in 2010, that is, organic growth close to 8%.
Energy Infrastructure: stronger sales in power distribution in the second half
In 2011, the Energy Infrastructure business totaled organic growth of 6.4%.
Low and Medium Voltage cables and accessories
The business upturn observed by the Group in this segment starting from the second half of 2010 gained further momentum in 2011.
In Europe (about 45% of sales for this business), growth exceeded 5% with performances varying between the countries. The second half-year shows a progress and anticipations are positive.
South America (about 16% of sales for this segment) reported double-digit growth in 2011 driven by the very strong Brazilian market for overhead power lines.
For the Asia-Pacific area (about 16% of the segment), sales also registered double-digit growth in 2011 thanks to the performance of the South Korean market and the one of the Australian and New Zealand markets.
Finally, for the Middle East, Russia and Africa (MERA) area (about 15% of the segment’s sales), 2011 sales were up by 7% compared with 2010. The strong development in Russia will have widely offset the turnover decline in countries such as Egypt.
Land High Voltage
Land high voltage business contracted sharply compared with 2010. The Group’s business in this segment suffered from the close-down of two large contracts in Libya in the first quarter of 2011. The gradual stabilization of the situation in Libya in recent months has allowed the Group to consider a resumption of business in this country.
2011 was also notable for the delayed start-up of certain contracts in the Gulf States but the level of fourth-quarter business is encouraging.
At the end of December 2011, the order backlog represented approximately 12 month’s activity. The competitive environment remains challenging.
Submarine High Voltage
In this business segment, sales rose by more than 15% in 2011 compared with 2010. In 2011, the Group benefited from a production capacity increase at its Halden plant in Norway. The year was also marked by the completion of large-scale projects.
In the second half of 2011, Nexans decided to postpone the installation of certain cables for a significant project in Norway, as they did not comply with all the contractual specifications. This impacted the segment’s performance.
The order backlog at the end of 2011 represents nearly two years’ activity.
In 2011, the operating margin for Energy Infrastructure came to 124 million euros, that is, 6.3% of sales at constant metal prices, compared with 138 million euros and 7.6% in 2010.
Industry: improving volumes and margins
In 2011, sales of industry cables rose by almost 11%. After a jump of more than 50% between 2009 and 2010, the harnesses business saw organic growth of more than 20% in 2011.
Perspectives for the first months of 2012 are positive.
Sales of special cables for the transportation segment is comparable from one year to the other as a result of a strong growth in aeronautics, a slowdown in China for rail rolling stock during in the second half and a shy recovery in shipbuilding.
The other industry cable segments improved by a rate close to 9% in 2011. The Group’s strong positions on the robotic cables market in Europe allow to benefit from the segment’s strong demand. For energy resources, after a difficult 2010, Oil & Gas sales improved significantly following the recovery of investment in this segment.
The operating margin improved in 2011 to 36 million euros, that is, 3.7% of sales at constant metal prices, compared with 22 million euros and 2.6% in 2010.
Building: sales and profitability up
In 2011, cable sales to the building industry rose by 7% at a constant scope and exchange rate.
Europe, which accounts for almost half this business’s sales, recorded growth in its activity of more than 5%.
In North America (about 15% of this business), sales growth reached double digits. This result is attributable to a targeted sales and marketing policy on the American market combined with vigorous demand from the commercial and industrial sectors in Canada.
In the other areas, the Group will globally have known a satisfying development in spite of strong contrasts according to countries.
The organic growth recorded by the Group allowed a strong increase of the operating margin which reaches 64 million euros, that is, 6.8% of sales at constant metal prices, compared with 28 million euros and 3.2% in 2010.
In 2011, Telecom business sales came to 446 million euros compared with 426 million euros in 2010, that is, an organic increase of more than 5%.
Private networks (LAN)
Sales of cables for LANs held steady in 2011 compared with 2010. After almost 15% growth between 2009 and 2010, sales in North America (about 55% of the total) were flat in 2011. In Europe (about 30% of the total), demand was down slightly. Demand remains strong in the other areas (South America, Asia). The slow recovery of the data centers market was not able to offset the sluggish commercial building market.
The operating margin was up on 2010 and came to 17 million, that is, 7.2% of sales at constant metal sales.
In 2011, the Group’s growth in Telecom Infrastructure sales was nearly 12%. Copper cables represent almost half the sales for this business; they were driven by strong demand in Europe and South America.
Growth for fiber optic cables and accessories, the other half of this sector’s sales, was close to 8%.
The higher volumes took the operating margin to 13 million euros, that is, 6.4% of sales at constant metal prices and exchange rates, compared with 9 million euros or 5.1% in 2010.
In 2011, external sales of electrical wires were down by almost 6% at constant scope and exchange rate, falling from 289 to 266 million euros. This trend is mainly due to South America where a larger proportion of local electrical wire production was absorbed internally to meet the region’s rapid growth in cable sales.
The operating margin came to 11 million euros, that is, 4.3% of sales at constant metal prices, compared with 7 million euros and 2.4% in 2010.
Capital increase reserved for Nexans employees
Nexans is announcing its intention to launch, during the first semester 2012, an employee-shareholder operation involving a capital increase reserved for Group employees, through the emission of a maximum of 400,000 new shares. This will be the fifth employee shareholder operation carried out by the Group at the international level. Employees will be given the opportunity to subscribe to a structured “leverage effect” formula, the same as the one proposed in 2010, guaranteeing the amount invested by the employees. Subject to approval from the AMF (French market authority), the shares will be subscribed through a Corporate Trust Fund at a unit price including a 20% discount to the reference share price (unless local regulations require otherwise).
As for Act 2010, it can be proposed, subject to decision of the Annual Shareholders’ meeting of the shareholders called to meet in the first half of the year 2012, to structure the financing of certain alternative formulae by means of a capital increase reserved for the structuring bank of a 100 000 euro maximum amount, that is an issue of 100 000 additional shares.
This approach reflects Nexans’ aim to involve its worldwide employees more closely in the Group’s development and future results.
Employees will be advised at a later date of the details of the operation, called “Act 2012” and scheduled for completion before the end of the third quarter. A specific press release will also be published.
The launch of this operation will be subject to notification or approval by the authorities in the countries concerned, in particular the AMF in France, and the completion of consultation procedures with the employee representatives as required under applicable law. Group employees in the United States of America are advised that the offer has not and will not be registered with the Securities and Exchange Commission. The Company reserves the right to change the offer procedure and schedule, and even to suspend it.
- April 25, 2012: First-quarter 2012 financial information
- May 15, 2012: Annual General Shareholders’ Meeting
- June 6, 2012: Individual shareholder information meeting in Tours (France)*
- July 25, 2012: First-half 2012 results
* Approximate date to be confirmed
Readers should also consult the Group’s Web site on which are available in particular the presentation of the annual results to financial analysts, the full financial statements and the 2011 management report, which includes the Group’s risk factors and confirmation of the risks relating to the antitrust investigations in Europe, United States, Canada, Brazil, Australia and Korea in relation to anticompetitive behavior in the sector of submarine and underground power cables as well as the related accessories and services. If the outcome of these investigations is unfavorable, together with the consequences thereof, could have a material adverse effect on the results and the financial situation of the Group.
Appendixes (115 KB in PDF)
- Consolidated income statement
- Consolidated statement of comprehensive income
- Consolidated statement of financial position
- Consolidation statement of cash flows
- Information of reportable segment
- Information by major geographical area
In accordance with the AMF recommendation dated February 5, 2010, Nexans confirms that the audit procedures for the financial statements referred to in this press release have been performed and that the auditors’ certification report is under preparation
With energy as the basis of its development, Nexans, worldwide expert in the cable industry, offers an extensive range of cables and cabling systems. The Group is a global player in the infrastructure, industry, building and Local Area Network markets. Nexans addresses a series of market segments: from energy, transport and telecom networks to shipbuilding, oil and gas, nuclear power, automotives, electronics, aeronautics, material handling and automation. Nexans is a responsible industrial company that regards sustainable development as integral to its global and operational strategy. Continuous innovation in products, solutions and services, employee development and engagement, and the introduction of safe industrial processes with limited environmental impact are among the key initiatives that place Nexans at the core of a sustainable future. With an industrial presence in 40 countries and commercial activities worldwide, Nexans employs 24,500 people and had sales in 2011 of 7 billion euros. Nexans is listed on NYSE Euronext Paris, compartment A. For more information, please consult: www.nexans.com or www.nexans.com/fy2011