Nexans Full Year Results 2009
17 Feb 2010
- Net sales at constant metal prices 1): $NZD7,851 billion dollars
- Organic growth in Cable businesses 2): negative 17.2%
- 6% objective for operating margin 3) met as a result of the sharp increase in restructuring efforts
- Net income at breakeven or $NZD201 million dollars excluding non-recurring items
- Group net debt reduced by almost $NZD780 million dollars
- Proposed dividend of $NZD2 dollars per share 4)
Paris, February 10, 2010 – The Nexans Board of Directors chaired by Frédéric Vincent, which met on February 9, 2010, has approved the accounts for 2009.
Net sales for 2009 totaled $NZD9,838 billion dollars compared with $NZD13,258 billion dollars in 2008. At constant non-ferrous metal prices 1), the figure is $NZD7,851 billion dollars compared with $NZD9,313 billion dollars in 2008.
At constant consolidated scope and exchange rates, Cable business reported an organic drop of 17.2% 5). The second half of the year proved more difficult than the first on the building and certain industrial markets.
The operating margin totaled $NZD470 million dollars, that is, 6.0% of sales at constant non-ferrous metal prices, compared with 8.9% in 2008. The significant reduction in overheads, company restructuring operations and the priority given to the policy to protect margins rather than looking for volumes partially helped offset the impact on the Group’s profitability of volumes dropping more sharply than expected. The operating margin did, however benefit (to the extent of $NZD72 million dollars) from the non-ferrous metal inventory reduction policy implemented by the Group. This trend reflects Nexans’ commitment to continuing to improve the return on its capital employed.
The pre-tax net income totaled $NZD99 million dollars in 2009, down from $NZD263 million dollars in 2008. This line was particularly hard hit by a restructuring cost of $NZD232 million dollars. These restructuring operations resulted in some cases in the closure of manufacturing sites and involved almost 1,800 people, about 1,000 of whom had left the Group by the end of 2009.
The 2008 income had been affected by a negative copper effect to the extent of $NZD322 million dollars as a result of the way in which the weighted average price of non-ferrous metal inventory was booked. In 2009, this effect was positive by a slight $NZD35 million dollars because of the upturn in copper prices.
As a consequence, the net income (Group share) totaled $NZD16 million dollars in 2009 (compared with $NZD160 million dollars in 2008). Excluding restructuring operations, copper effect and capital gains on divestments, it was $NZD201 million dollars.
The Board of Directors will put to the General Shareholders’ Meeting, called in the first half of 2010, a proposal to pay a dividend of $NZD2 dollars per share for 2009, that is, a distribution of about 30% of the year’s consolidated current net income.
The consolidated net debt was $NZD275 million dollars at December 31, 2009, compared with $NZD1,045 million dollars a year earlier. In 2009, the Group generated $NZD503 million dollars cash from operations (including the impact of restructuring costs) compared with $NZD883 million dollars in 2008. At the same time, the Group reduced its working capital requirement by $NZD509 million dollars. Thanks to the significant commitment by the Group, this reduction was greater than that required for its activity.
Referring to the 2009 results, Frédéric Vincent, Chairman and CEO, said:
“Nexans achieved its target operating margin despite an economic environment that was much more difficult than expected. The second half saw a further deterioration in activity resulting in a 17.2% organic drop for the full year, for cables alone. That the 6% margin rate was achieved reflects the strength of the group’s economic model and the strong commitment by Nexans’ teams.
“The Group remains positioned as a key actor in cables for Transmission and Distribution (T&D) networks and has developed promising positions in applications specifically for renewable energies, rail transportation and offshore oil resources, all of which are examples of the ongoing potential of the market sectors served by Nexans.
“It is for these reasons that we are confident about the future, even if early 2010 still reflects an economy struggling to recover. In this context, the level of sales in the first quarter of 2010 of the cable activity is expected to be at a similar level as the fourth quarter 2009, and less than first quarter 2009 sales. The return of sales volumes, especially in the Building market and certain industrial sectors, is a condition to an improvement in the Group’s operating margin over 2009. In 2010, the Group will continue to concentrate on its growth, the ongoing improvement of its manufacturing processes and continuing to adapt its organizational structure to its rapidly changing markets.”
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) Cable related products (accessories), excluding Electrical Wires.
3) 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.
4) Proposed dividend that will be submitted to the 2010 General Shareholders’ Meeting for approval.
5) 2008 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 effect on sales at constant non-ferrous metal prices amounts to a negative $NZD105 million dollars, while the comparable scope effect amounts to a positive $NZD289 million dollars.
Note: All figures have been converted from Euro to New Zealand Dollars at a rate of 1.95.
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