Germany: Nexans Reports Q1 Sales of EUR 1,752 Million

Germany: Nexans Reports Q1 Sales of EUR 1,752 Million

Nexans today announced 2012 first-quarter sales of 1,752 million euros, that is, 1,169 million euros at constant non-ferrous metal prices, reflecting an annual growth of +0.6% at constant exchange rates and comparable scope. As a reminder, the organic growth rate for the first quarter of 2011 was 13%.

Effective January 1, 2012, the business segmentation is aligned on the Group’s organization by market, which principally aims at reinforcing the proximity to customers.

The energy and telecom infrastructure activities have been grouped together to form the “Transmission, Distribution and Operators” business. The Building and LAN businesses have been grouped together to form the “Distributors and Installers” business. The “Industry” segment remains unchanged while the “Others” segment now also includes Electrical Wires2).

The market trends observed in 2011 have carried forward into the first months of 2012. The “Distributors and Installers” business has gained almost 9% compared with the first quarter 2011.

For Industry, the increase is 6%, driven by the automotive and oil & gas activities.

The “Transmission, Distribution and Operators” business has contracted by 6%. It results from the joint effect of a strong growth in the Distribution (Medium Voltage) and Operators (+7%) segments and of a decrease in the Transmission segment (High Voltage). The latter is mainly attributable to a slower than expected production rate of submarine high voltage cables. In underground transmission, the political situation in Libya does not allow yet resumption of local installation works which would have been able to compensate partly for the situation in submarine. These elements will weigh on the profitability of the activity and of the Group at June 30, 2012.

“Others” activity (formerly Electrical Wires) has contracted by nearly 5%, with the Group internal sales favored at the expense of external clients.

At the end of March 2012, net debt came to 566 million euros compared with 222 million euros at the end of December 2011. This increase is mainly due to the acquisition of AmerCable, finalized on February 29, 2012, for an enterprise value of 211 million euros. The increase was also compounded by the seasonal rise in working capital cumulated with the significantly higher raw material prices in the first quarter 2012 compared with the last quarter 2011.

Transmission, Distribution and Operators

The “Transmission, Distribution and Operators” business reported an organic contraction in the first quarter 2012 of 6.1%. This decrease is attributable to the lower invoicing on the quarter in the Transmission activities, whereas the growth of segments Distribution of energy and Operators Telecom remained strong.

Regarding submarine transmission activity, the Group experienced in the quarter a slower than expected rate in commencing certain production runs: the Group has to face increasingly large projects, a source of greater complexity, and a high workload level.

The fundamentals of this activity are not affected and tendering activity continued steadily during the quarter, in particular for offshore wind projects. The Group recently won a significant submarine cable contract in Belgium (Northwind) for offshore wind turbines. With the other contracts awarded so far, totaling more than 1,000 km of submarine cables for the wind power market, the Group has acquired outstanding experience in this market segment.

In underground transmission, business remains competitive. In Libya, however, in spite of the attribution of new contracts, the political situation has not yet sufficiently stabilized to allow work to resume onsite.

The Group’s Distribution activity has increased in the first quarter of 2012 compared with the same period a year earlier. In Europe, growth was driven by the ongoing major investment program in France and a favorable climate factor in Scandinavia. North America reported a recovery in the quarter. South Korea was the main source of growth in the Asia-Pacific area. Sales rose sharply in the Middle East, Russia and Africa area as a result of ongoing large-scale investment plans in Russia and Lebanon and a positive base effect in Egypt and Morocco. Finally, after a period of strong growth in 2011, the South America area remained steady at a high level thanks to ongoing overhead power line projects in Brazil.

The “Operators” activity (formerly Telecom Infrastructure) reported strong growth for the first quarter 2012 for copper cables in South America and fiber cables and components in Scandinavia and France.

Overall, , the profitability of the « Transmission, Distribution and Operators » segment will decline to June 30, 2012 compared to the first half 2011.


In the first quarter 2012, organic growth for “Industry” came to 6.1% compared with the first quarter 2011.

For Automotive harnesses, which account for about one third of the “Industry” activity, sales continued their double-digit growth, driven by the strength of the German high end auto industry.

The transportation-related activities reflect significant contrasts: the recovery was confirmed for shipbuilding, activity is stable in aeronautics, and the railways segment is still suffering from weak demand in China. Demand was weaker for the capital goods and the automation market segments.

Finally, in the area of resources, the Group is continuing to enjoy very strong growth, largely attributable to the oil & gas and mining industries.

AmerCable, which has leading positions in the oil and gas and mining industries in North America was incorporated into the Group on 1st March 2012. Its contribution to Group sales at constant metal prices in the first quarter 2012 was 16 million euros for the period. The integration plan has been implemented and is proceeding to schedule. The first benefits from synergies are expected in the second half of 2012.

Offshore WIND staff, April 25, 2012; Image: nexans

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