- Cable business down at the end of September, in the same trend observed in the first half (-17.2% vs -16.4%)
- Energy infrastructure business continues to hold up well; major contracts signed in the third quarter
- Ongoing cost-cutting actions
- Further decrease of financial net debt
- Target operating margin of about 6% at the end of the year confirmed
Paris, October 22, 2009 – Nexans today announced 2009 third-quarter sales of $NZD2,521 million dollars (at current non-ferrous metal prices), $NZD1,966 million dollars at constant non-ferrous metal prices*, which correspond to an organic decrease in cable business sales of 18.9%.
For the first nine months of the year, the organic drop in cable business sales is a negative 17.2%**, compared with a negative 16.4% at the end of the first half. This deterioration is attributable to the combined effect of an ongoing sharp base effect (sales at September 30, 2008: + 7.2%) and a slight intrinsic deterioration in the third quarter 2009 compared with the second quarter of the same year. This situation was compounded by a slight decline in building cable sales in Europe and Asia-Pacific coupled with a temporary setback in the execution of High Voltage contracts, which should be absorbed by the end of the year.
The 2009 third quarter data reflect an environment quite similar to that of the first half, without any marked deterioration or noteworthy improvement either. Still, several positive factors are worth mentioning:
- a clear improvement in the prospects for submarine umbilical cable contracts (BP contracts) and High Voltage contracts for wind farms following the confirmation of financings, as evidenced by the Belwind contract ($NZD78 million dollars) and large contracts to come in the same sphere;
- prices remain stable, which is an essential factor for meeting our targets;
- improved activity in the area of automotive harnesses resulting in a recovery in profitability thanks to a lower cost base.
The Group is continuing to align its structure and production facilities on market conditions. After the significant actions carried out in the first half in Germany, Canada and Central Europe, the Group stepped up its projects in Europe in the second half.
The Group’s consolidated net debt came to $NZD547 million dollars at the end of September, reflecting a steady improvement throughout the year, despite the increase in non-ferrous metal prices in the third quarter. The Group has thus confirmed its capacity to continue to strengthen its financial fundamentals, even in a crisis period.
In this context, and despite a difficult economic climate that will lead to organic shrinkage in cable sales likely to be close to 15% at the end of the year, the Group should produce an operating margin of about 6%, which is consistent with the levels of return noted at this point in time, providing prices remain stable in the last quarter and submarine and terrestrial High Voltage contracts are performed as scheduled.
(*) To neutralize the effect of variations in the purchase price of non-ferrous metals and therefore measure the underlying sales trend, Nexans also calculates its sales using a constant price for copper and aluminum.
(**) 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, at the end of September 2008, is a negative $NZD135 million dollars, while the comparable scope effect is a negative $NZD38 million dollars.
Note: All figures have been converted from Euro to New Zealand Dollars at a rate of 1.99.