Turning Adversity into Opportunity Paris Stock Exchange:NEX


Press launch, Paris, France 5th November 2020

Q3 2020 Monetary Data

Turning Adversity into Alternative

  • Strong rebound in Cable companies and sound execution in Excessive Voltage
  • Absolutely operational models, regardless of lockdowns, to help stable backlog throughout all companies
  • Up to date 2020 Steerage1: narrowed EBITDA vary to between 320 and 360 million euro, improved Return on Capital Employed (ROCE) and enhanced Free Money Circulation (FCF)
  • Customary gross sales of 1,407 million euros in third-quarter 2020, representing natural progress of +5.6% in opposition to second-quarter 2020 and -9.8% year-on-year
  • Cable exercise commonplace gross sales of 1,249 million euros in third-quarter 2020, representing natural progress of +9.1% in opposition to second-quarter 2020 and -8.4% year-on-year
  • Absolutely loaded Excessive Voltage Subsea adjusted backlog of 1.5 billion euro2 with visibility past 18 months

Paris La Dfense, November 5, 2020 At present, Nexans introduced its gross sales figures for the third quarter of 2020. Commenting on the Group’s efficiency, Christopher Gurin, Nexans’ Chief Government Officer, mentioned: Within the midst of adversity, Nexans is demonstrating its skill to speed up its transformation,additional strengthen its resilience, enhance money technology and preserve a wholesome monetary construction such that, in the present day, we’re capable of affirm or enhance our full-year 2020 steering. Within the third quarter, our companies held up properly, as we successfully executed our technique, regardless of the rising impression of the pandemic. We’re totally dedicated to the well being and security of our folks and to offering the perfect providers and options to our key prospects, globally. Additionally, we affirm Nexans Capital Markets Day, to be held as beforehand introduced, on February 17, 2021. On that event, we’ll additional elaborate on the thrilling new steps of our technique.

CONSOLIDATED SALES BY SEGMENT

Revenues
(in hundreds of thousands of euros)
At fixed metallic costs
Copper reference at 5,000/t
Q3 20193 Q3 2020

Natural progress
Q3 2020 vs.
Q3 2019

Natural progress
Q3 2020 vs.
Q2 2020

Constructing & Territories 689 600 -7.8% +1.8%
Trade & Options 351 300 -13.6% +12.8%
Telecom & Information 122 101 -14.7% -4.2%
Excessive Voltage & Initiatives 211 158 -19.5% -15.5%
Different Actions 259 248 +0.1% +34.6%
Group whole 1,632 1,407 -9.8% +5.6%
Revenues
(in hundreds of thousands of euros)
At fixed metallic costs
Copper reference at 5,000/t
9M 2019 9M 2020 Natural progress
9M 2020 vs.
9M 2019
Constructing & Territories 2,075 1,832 -8.5%
Trade & Options 1,074 898 -15.9%
Telecom & Information 386 322 -15.5%
Excessive Voltage & Initiatives 547 534 +5.0%
Different Actions 820 716 -11.6%
Group whole 4,903 4,302 -9.8%

I. Q3 2020 Gross sales Evaluation and Normal Working Context

In opposition to the backdrop of the unprecedented sanitary disaster, Nexans third-quarter 2020 gross sales landed at 1,407 million euros (at fixed metallic costs4), down -9.8% versus third-quarter 2019. Whereas the Cables enterprise continued to be impacted by the Covid-19, Excessive Voltage & Initiatives stayed on monitor, executing initiatives within the backlog.
In the course of the quarter, to be able to sort out the difficult setting and emerge even stronger, the Group pursued its mitigation plan initiated at first of the 12 months, by notably reinforcing and accelerating the New Nexans Transformation Plan. The advantages have been fairly outstanding as Nexans up to date the full-year 2020 steering, narrowing the EBITDA vary, upgrading the ROCE and confirming substantial Free Money Circulation technology.

Third quarter gross sales versus second quarter gross sales had been characterised by a stable rebound within the Cables enterprise as most actions witnessed restoration versus the overall slowdown within the first half of 2020, impacted by the Covid-19 pandemic outbreak. Group natural progress was up +5.6% quarter-on-quarter. The restoration was sound each in Constructing & Territories and in Trade & Options, specifically in Automotive Harnesses. In each segments, gross sales elevated in Q3 2020 in opposition to Q2 2020 by +1.8% and +12.8% respectively. Conversely, the exercise in Telecom & Information continued to be challenged by the Covid-19 and gross sales had been down -4.2% within the third quarter versus second quarter 2020. Excessive Voltage & Initiatives stayed on monitor, whereas Land Excessive Voltage continued to progress in opposition to the backdrop of final 12 monthss restructuring and Subsea Excessive Voltage pursued the execution of its 1.5 billion euro adjusted backlog2, with important cable manufacturing in view of excessive stage of cable-laying exercise in 2021. Within the third quarter 2020 gross sales had been down -15.5% versus a second quarter 2020 when exercise was supported by exceptionally quite a few Inspection, Upkeep and Restore (IMR) initiatives.

Within the first 9 months, Nexans gross sales got here to 4,302 million euro, down -9.8% year-on-year.

Nexans gross sales efficiency for the varied companies in the course of the third quarter of 2020 is as follows:

| Constructing & Territories

Gross sales for the Constructing & Territories section amounted to 600 million euros at fixed metallic costs in third-quarter 2020, representing an natural decline of -7.8% versus third-quarter 2019 and progress of +1.8% versus the second-quarter of 2020.

Over the primary 9 months, the Territories (Utilities) section remained resilient supported by the need to resume the obsolescent grid, notably in Europe, and to a sure extent by Authorities subsidies. The Constructing section witnessed a slowdown in demand till the top of Might after which a sound restoration all through the third quarter, as lockdown measures had been progressively lifted throughout most geographies enabling development initiatives to restart.

In Europe, gross sales had been steady in opposition to the second quarter 2020 at -1.0% and down -9.5%
year-on-year. This pattern interprets a better selectivity in our enterprise portfolio (SHIFT methodology) and a robust catch-up impact within the Constructing exercise notably in Southern Europe, specifically in France and Spain. Following a sound demand resulting in elevated gross sales within the first half of the 12 months, Northern Europe noticed exercise slowdown and unfavourable natural progress within the third quarter 2020.

As lockdown measures had been progressively lifted over the third quarter, gross sales in South America rose steadily in comparison with the second quarter of 2020, near +50%, and down barely
(-1,3%) in comparison with the identical interval final 12 months. The development market restoration was robust throughout all nations, specifically Peru, Brazil, Chile and Colombia. Within the latter two nations, a photo voltaic undertaking and an infrastructure undertaking had been delivered in the course of the quarter.

As the primary area to be affected by the Covid-19 pandemic early January, Asia-Pacific was additionally the primary area to be impacted by the second wave over the summer time, which offset the restoration reported within the second quarter. Gross sales declined year-on-year by -13.8% organically within the third quarter of 2020 and by -8.3% within the first 9 months of the 12 months. Nevertheless, indicators of restoration had been confirmed each in China and New Zealand, with gross sales up +40.1% and +2.9% respectively in third-quarter year-on-year. In Korea the market remained difficult (-46.8% year-on-year) and in Australia (-17.9% year-on-year), the stable progress seen within the first half subsided.

In North America, gross sales had been fairly resilient in Q3 2020, down by -3.8% in opposition to Q3 2019, reflecting progress in demand in Canada supported by the Utilities market and a decline in gross sales as a result of a harder market within the US, as new Covid-19 waves had been declared, in addition to the closure of the Chester plant.

Because of dynamic gross sales each in Turkey (+8.8% year-on-year) and Morocco (+13.5% year-on-year), gross sales continued to withstand over the third quarter within the Center East and Africa, down by -5.6% year-on-year. The state of affairs in Lebanon remained difficult over the interval impacting gross sales negatively.

| Trade & Options

Third-quarter exercise was blended within the Trade and Options section. Whereas Automotive Harnesses demonstrated a robust restoration in comparison with the first-half of the 12 months and Wind Generators pursued a sound progress, the opposite companies remained challenged. Gross sales landed at 300 million euros at fixed metallic costs within the third quarter 2020, up +12.8% versus second-quarter 2020 and down -13.6% versus third-quarter 2019.

For the reason that Covid-19 outbreak and the consequential restrictive measures, gross sales progress was subdued in most end-markets within the transportation area. Third-quarter gross sales had been considerably down in Aerospace & Protection (-50.4% year-on-year), to a lesser extent in Shipbuilding
(-20.7% year-on-year), whereas Railway Infrastructure & Rolling Inventory resisted the perfect (-11.3% year-on-year) because of a gradual demand in China.

Conversely, nonetheless benefiting from the Vitality Transition pattern and Nexans main place as key provider to the OEM market leaders, the Wind Generators enterprise pursued the great momentum of first-half 2020, with natural progress of +7.4% in Q3 2020 versus Q3 2019.

As prospects reopened factories and automobile demand picked up, Automotive Harnesses exercise circled within the third quarter of 2020, reaching ranges in September 2020 above these of September 2019. Third-quarter natural progress was steady at -0.4% year-on-year and was multiplied by two versus second-quarter 2020.

| Telecom & Information

Telecom & Information gross sales amounted to 101 million euros at fixed metallic costs, down -4.2% and -14.7% within the third quarter versus second-quarter 2020 and versus third-quarter 2019 respectively.

In LAN Cables and Programs, gross sales improved in the course of the quarter (+8.1% quarter-on-quarter) supported by dynamic markets in Europe, the Center East and China, whereas North America recovered slowly. As of September 30, 2020 the sale of Berk-Tek to Leviton Inc. was closed. The transaction entailed an enterprise worth of US$ 202 million, which represents a a number of of roughly 10x over 2019 stand-alone adjusted EBITDA.

Regardless of underlying demand for Fiber to the Residence (FTTH) from end-users in Europe, deployment in most nations was sluggish over the quarter, and Telecom Infrastructure continued to undergo from weak optical fiber gear orders. Gross sales had been down by -10.7% in third-quarter 2020 in comparison with the second quarter of the 12 months.

Because of a stable backlog with medium-term visibility, Particular Telecom (subsea) constructive momentum continued in Q3 2020 and gross sales elevated by +55.3% in comparison with Q3 2019.

| Excessive Voltage & Initiatives

Within the third quarter of 2020, Excessive Voltage & Initiatives exercise was on monitor. The groups managed to beat execution challenges imposed by the Covid-19 sanitary measures effectively and well timed delivering cable manufacturing and cable set up initiatives. In comparison with third-quarter 2019, which was very dynamic as a result of excessive cable-laying exercise, whole gross sales in third-quarter 2020 had been down -19.5% at 158 million euros at fixed metallic costs.

Because of the stable combine and long-term visibility of the 1.5 billion euro5 adjusted backlog, Subsea Excessive-Voltage exercise continued to stay regular in the course of the quarter. In keeping with the backlog phasing, with the next portion of cable manufacturing within the third quarter versus earlier intervals, gross sales had been down -28.4% year-on-year and -21.2% quarter-on-quarter. Successfully, each comparable intervals benefitted from excessive cable-laying exercise, with the ultimate set up phases of each the NordLink and the East Anglia offshore wind farm initiatives in Q3 2019 and two IMR initiatives within the Mediterranean Sea area in Q2 2020. As deliberate, Q3 2020 centered extra on cable manufacturing in view of considerable set up phasing in 2021. Over the primary 9 months, gross sales continued to enhance at +1.1% in opposition to the primary 9 months of 2019 according to expectations. The Group continues to show that it’s best positioned within the Vitality Transition, partaking with prospects to actively and selectively take part in future subsea initiatives.

Within the third quarter, Land Excessive-Voltage continued to learn from the reorganization applied below the New Nexans Transformation Plan, notably from the synergies between Nexans Land and Subsea know-how and functionality, to supply a novel and cost-efficient built-in supply for subsea interconnection initiatives. Gross sales had been up +20.2% in Q3 2020 versus Q3 2019. Because of the profitable turnaround of the enterprise, notably enabled by the closure of the Hanover plant in Germany and the switch of all initiatives to the Charleroi plant in Belgium, the exercise is now arrange for sound undertaking execution to abide by the Groups risk-reward coverage and to maintain its give attention to built-in options.

| Different Actions

The Different Actions section which basically corresponds to gross sales of copper wires reported year-on-year natural gross sales progress of +0.1% for third-quarter 2020.

II. Accelerating the New Nexans 2019-2021 Plan

All through the implementation of the New Nexans plan, launched in November 2018, the Group has demonstrated its stable skill: i) to generate value financial savings, commonly exceeding preliminary targets, ii) to rethink and optimize its operational mannequin, rising returns whereas decreasing inefficiencies, and iii) to regulate working capital administration to a tailored-to-demand method producing sound money flows.

| Value Reductions

Since its inception, the Nexans Transformation plan has enabled the Group to attain important value financial savings by way of the reorganization and restructuring of the group, together with the discount of oblique prices, elevated productiveness and capex re-engineering. For the reason that starting of the 12 months, value discount initiatives have been accelerated and strengthened throughout your entire Group. Over the interval, the stable execution of the Nexans Transformation plan along with the continued efforts to cut back each direct and oblique prices have enabled the Group to protect margins in the course of the low 9-month quantity setting.

| SHIFT deployment, Investments and Money Conversion

However the truth that sure nations lifted lockdown measures and witnessed a sound restoration in the course of the interval, the SHIFT program was strengthened even additional. Whereas it was deployed throughout all models within the first half of the 12 months, necessities had been elevated within the third quarter of 2020. All models at the moment are required to focus consideration on bettering profitability and avoiding further prices moderately than progress on gross sales and manufacturing. Additionally, for all entities, the main focus stays on rising enterprise for revenue drivers, intently monitoring money tanks and chopping any progress on worth burners. In keeping with this method, non-strategic capex is diminished to a minimal and money conversion cycle per unit is being considerably improved.

| Strategic Development / Worth progress initiatives

As per the November 2018 Transformation Plan, Nexans has centered on selective worth progress for these markets the place the Group is greatest positioned and has recognized undisputable progress traits. Accordingly, it has dedicated to strategic investments to place Nexans as one of many key gamers within the Vitality Transition with a novel built-in supply each in Europe and the US. The Group has engaged in rising capability in Subsea Excessive-Voltage and pursued the convergence of all companies across the Three Ps: Revenue, Folks & Planet.

III. Deal with Liquidity Preservation

Nexans liquidity place is in extra of 1.6 billion euro as of September 30, 2020 together with a 600 million euro undrawn revolving credit score facility.

Within the midst of the unprecedented Covid-19 disaster, the Group has taken and continues to take robust measures to optimize working capital to be able to protect money. Non-strategic capital spending has been, and continues to be, strictly monitored.

Nexans has adequate liquidity for its operations and foreseen monetary commitments, with no debt compensation earlier than the second quarter of 2021.

IV. Outlook

Contemplating the continual success of the Nexans Transformation Plan, specializing in key prospects and complexity discount, triggering important value financial savings in addition to implementing strict monitoring of working capital and money conversion cycle, Nexans has up to date its full-year 2020 Steerage:

  • EBITDA between 320 and 360 million euro (beforehand between 310 and 370 million euro),
  • Return on capital employed (ROCE) earlier than tax between 8% and 10% (beforehand between 7% and 10%),
  • Free Money Circulation between +50 and +100 million euro earlier than M&A and dividends (beforehand constructive), or between +150 and +200 million euro together with M&A.

The above is topic to there being, for the steadiness of 2020 a number of materials adjustments:

  • No materials adjustments within the total macro-economic setting;
  • No materials Covid-19 impression on its models and companies such that they are going to stay unimpacted and totally operational;
  • No downturn in market demand;
  • No materials impression from the pandemic second wave on Nexans operations globally.

V. Vital occasions because the finish of September

On October 31, 2020, Nexans accomplished the sale of Nexans Metallurgie Deutschland GmbH (NMD) to Mutares SE & Co. KGaA.

A convention name with webcast is scheduled in the present day at 9:00 a.m. CET.

Webcast hyperlink: https://edge.media-server.com/mmc/p/j4p5bcyg

To take part within the audio convention name, the dial-in particulars are as follows:

  • Worldwide switchboard: +44 (0) 2071 928000
  • France: +33 (0)176700794
  • United Kingdom: +44 (0) 8445718892
  • United States: +1 6315107495

Affirmation code: 8145143

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Monetary calendar

November 18, 2020: Nexans ESG

February 17, 2021:

  • 2020 Full-12 months Monetary Outcomes
  • Capital Markets Day

April 29, 2021: 2021 First Quarter Monetary Data

NB: Any discrepancies are as a result of rounding

This press launch accommodates forward-looking statements that are topic to varied anticipated or surprising dangers and uncertainties that would have a fabric impression on the Firms future efficiency.

Readers are additionally invited to go to the Groups web site the place they’ll view and obtain the presentation of the 2019 annual outcomes to analysts in addition to the 2019 monetary statements and Nexans Common Registration Doc, which features a description of the Groups danger elements – notably these associated to the investigations into anti-competitive habits launched in 2009.
Along with the danger elements described in Part 3.1 of the 2019 Common Registration Doc and the dangers inherent in executing the New Nexans Transformation Plan, the uncertainties for the second half of 2020 primarily embrace:

  • The impression of protectionist commerce insurance policies globally (equivalent to these applied by the present US authorities), in addition to rising strain to extend native content material necessities;
  • Geopolitical instability, notably in sure nations, cities or areas equivalent to Qatar, Libya, Lebanon, Iraq, the Persian/Arabian Gulf, Hong Kong, Ivory Coast and Nigeria;
  • The impression that the coronavirus pandemic and the adoption by State authorities, in lots of nations around the globe, of nationwide restrictive measures specifically within the context of a second wave of the pandemic equivalent to in Europe (together with extended measures to manage the pandemic equivalent to journey bans, curfews and nation lockdowns) may have on our Groups enterprise progress, working revenue and monetary place;
  • The rise in credit score danger in sure nations (like Brazil, Peru, Colombia, Morocco and Turkey) within the context of the coronavirus pandemic;
  • The unsure financial setting in america and Europe, with the danger of progress being slowed by potential main adjustments in US commerce coverage on the one hand and the doable penalties of Brexit on the opposite;
  • Political, social and financial uncertainty in South America, equivalent to in Brazil, Chile, Venezuela and Bolivia, which is i) affecting the constructing market in addition to main infrastructure initiatives within the area (such because the Maracaibo undertaking in Venezuela), ii) creating trade fee volatility and iii) rising the dangers of buyer default;
  • A marked drop in non-ferrous metallic costs ensuing within the impairment of Core publicity, not having an impression on money or working margin, however impacting internet revenue;
  • The impression of rising inflationary strain, notably on uncooked materials costs (resins, metal) and labor prices, which may have an effect on competitiveness relying on the extent to which they are often handed on to prospects in promoting costs;
  • The sustainability of progress charges of the fiber and copper structured cabling (LAN) market and the Groups capability to grab alternatives regarding the transfer to larger performing classes on this market;
  • The pace of deployment of ftth (fiber to the house) options in Europe and North West Africa and the Groups capability to grab alternatives regarding the event of this market;
  • The impression of the coronavirus pandemic on the aeronautic business which has led our prospects to revisit their order books for the approaching months and years;
  • The truth that automotive gross sales might proceed to be adversely affected within the context of the coronavirus pandemic on a world foundation and that the progress {of electrical} propulsion options will penetrate markets slower than predicted;
  • Fluctuating oil and gasoline costs, and the downturn within the Oil & Gasoline sector which have lead Oil & Gasoline sector prospects to revise their exploration and manufacturing capex applications. The appreciable uncertainty concerning the implementation of those prospects capex applications can also have an effect on the Groups skill to plan for future means of manufacturing cables and umbilicals for these prospects, and for imposing adjustments to the agreed supply schedules for contracted initiatives within the context of the coronavirus pandemic.
  • The chance of the award or entry into pressure of subsea and land cable contracts being delayed or superior, which may intrude with schedules in a given 12 months;
  • Inherent dangers associated to (i) finishing up main turnkey initiatives for high-voltage cables, which will probably be exacerbated within the coming years as this enterprise turns into more and more concentrated and centered on a small variety of large-scale initiatives (NSL, Hornsea 2, Mindanao-Visayas, Seagreen, Marjan, Crete-Attica and DolWin6, the latter of which will probably be our first contract to provide and set up HVDC extruded insulation cables), (ii) the excessive capability utilization charges of the vegetation concerned, (iii) the initiatives geographic location and the political, social and financial environments within the nations involved (Philippines);
  • The inherent dangers related to main capital initiatives, notably the danger of completion delays and the dangers of delays to win initiatives to fill the brand new capacities. These dangers notably concern the development of a brand new subsea cable laying ship, the transformation of the Charleston plant in North America to supply subsea excessive voltage cables, two initiatives that will probably be instrumental in guaranteeing that we fulfill our 2020 and 2021 goals;
  • The challenges created by the coronavirus pandemic (with subsequent measures taken by nationwide States equivalent to nation lockdowns or journey bans) for the efficiency of initiatives in nations like america (e.g. to satisfy the outlined manufacturing schedule in Charleston) in addition to for turnkey initiatives equivalent to Seagreen (Scotland) and Visayas-Mindanao (Philippines) and onshore initiatives in Europe;
  • Inherent dangers associated to the reorganization undertaking introduced in January 2019 for the land excessive voltage exercise that would result in undertaking delays or generate further prices which may name into query a speedy return to interrupt even.

With out having main operational impacts, the 2 following uncertainties might have an effect on the monetary statements:

  • Sudden adjustments in metallic costs that will have an effect on prospects shopping for habits within the brief time period;
  • The impression of overseas trade fluctuations on the interpretation of the monetary statements of the Groups subsidiaries positioned outdoors the euro zone.

About Nexans

Nexans is a key driver for the worlds transition to a extra linked and sustainable vitality future. For over 120 years, the Group has introduced vitality to life by offering prospects with superior cable applied sciences for energy and information transmission. At present, Nexans goes past cables to supply prospects a whole service that leverages digital expertise to maximise the efficiency and effectivity of their vital property. The Group designs options and providers alongside your entire worth chain in 4 foremost enterprise areas: Constructing & Territories (together with utilities and emobility), Excessive Voltage & Initiatives (protecting offshore wind farms, subsea interconnections, land excessive voltage), Telecom & Information (protecting information transmission, telecom networks, hyperscale information facilities, LAN), and Trade & Options (together with renewables, transportation, oil and gasoline, automation, and others).

Company Social Duty is a tenet of Nexans enterprise actions and inner practices. In 2013 Nexans was the primary cable supplier to create a Basis supporting sustainable initiatives bringing entry to vitality to deprived communities worldwide. The Groups dedication to growing moral, sustainable and high-quality cables additionally drives its lively involvement inside main business associations, together with Europacable, the NEMA, ICF and CIGRE.

Nexans employs practically 26,000 folks with an industrial footprint in 34 nations and industrial actions worldwide. In 2019, the Group generated 6.7 billion euros in gross sales.

Nexans is listed on Euronext Paris, compartment A.

Further info:

Appendices

(in hundreds of thousands of euros)

Third-quarter
2019 2020
Gross sales at present non-ferrous metallic costs by section
Constructing & Territories 722 639
Trade & Options 357 301
Telecom & Information 122 102
Excessive Voltage & Initiatives 214 159
Different Actions 258 279
Group whole 1,674 1,480
Gross sales at fixed non-ferrous metallic costs by section
Copper commonplace of 5,000 /t
Constructing & Territories 689 600
Trade & Options 351 300
Telecom & Information 122 101
Excessive Voltage & Initiatives 211 158
Different Actions 259 248
Group whole 1,632 1,407

Influence of adjustments within the scope of consolidation and trade charges on gross sales at fixed non-ferrous metallic costs
Copper commonplace of 5,000 /t

Third-quarter 2019 Foreign money impact Natural progress Third-quarter 2020
Constructing & Territories 689 -38 -51 600
Trade & Options 351 -5 -47 300
Telecom & Information 122 -3 -17 101
Excessive Voltage & Initiatives 211 -14 -38 158
Different Actions 259 -11 0 248
Complete 1,632 -71 -154 1,407

1 2020 Steerage as of 2020 HY Outcomes: EBITDA between 310 and 370 million euro, ROCE between 7% and 10%, and FCF constructive

2 Adjusted subsea backlog at finish of September 2020 together with contracts secured not but enforced

3 Beginning January 1, 2020 change in copper commonplace worth from 1,500 /ton to five,000/ton. 2019 information restated accordingly.

4 To neutralize the impact of fluctuations in non-ferrous metallic costs and subsequently measure the underlying gross sales pattern, Nexans additionally calculates its gross sales utilizing fixed costs for copper and aluminum.

5 Adjusted subsea backlog finish of September 2020 together with contracts secured not but enforced



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