Nexans achieves remarkable performance

Nexans First quarter 2007 sales: Nexans achieves a remarkable performance with organic growth of 15% of its cable businesses* (excluding electrical wires)

Paris, France – Nexans 2007-04-17 announced its 2007 first quarter sales of
1,805 million euros (at actual non-ferrous metal prices**). At constant non-ferrous metal prices***, sales were 1,194 million euros, reflecting organic growth of 6%.
Excluding the electrical wires business where the reduction in activity has been
programmed by the Group, growth was 15.1%.

This strong organic growth of sales was accompanied by a notable increase in operating margin compared with the first quarter of 2006.

Nexans net financial debt at March 31, 2007 remained stable compared to that
recorded at December 31, 2006 (633 million euros).

* Cables and associated products (accessories), excluding electrical wires
** At actual metal prices, first quarter 2006 sales were 1,659 million euros
*** 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.

Consolidated sales by business sector

  • Energy infrastructures: high level of activity
    Demand for energy infrastructure cables remained very strong. Sales grew over
    11% on the basis of comparable data during the first quarter. This growth was seen mainly in sales of accessories and high voltage cables.
  • Industry: strong development of priority sectors
    Up 17.3% on the basis of comparable data, sales of special cables for large
    industrial equipment manufacturers accelerated worldwide, with particularly
    vigorous growth in the Shipbuilding and Oil & Gas sectors.
  • Building: strong organic growth and high margins
    Sales in the building sector in the first quarter of 2007 continued at the same
    pace as in the second half of 2006 with organic growth of 17%. Profit margins
    continued to improve with sales volumes substantially the same in Europe as in
    the last quarter of 2006, and were slightly better in North America in the stated
    period.
  • Telecom infrastructures: acceleration of sales
    Telecom sales increased by approximately 22% on the basis of comparable data
    during the first quarter of 2007, as a result of positive developments in the niche
    markets for optical fiber cables as well as increasing sales in the
    telecommunications copper cable industry, in particular in Asia and originating
    from Spain.

  • Private Network (LAN): further increase in sales
    LAN cable activities recorded growth of 17.6%, following the same trends
    observed during the last quarter of 2006 (in terms of price and volumes).
  • Electrical wires
    Since the Group has refocused on its internal requirements, sales of electrical
    wires have decreased by 33%. Operating margin has nevertheless improved as a
    result of commercial measures taken in respect of external sales and cost
    reduction measures.

Sales by geographical area
Sales rose in all geographical areas.

The acquisition of Olex was finalized in December 2006 and resulted in strong growth
in the Asia-Pacific area (+145%) following the integration of Olex. Excluding Olex, the
Asia-Pacific area recorded organic growth for cables businesses of 13.7%.

During the first quarter of 2007, sales in the cable businesses in North America only
grew by 3.1%, due to the temporary closure of a production site dedicated to energy
networks, which is currently starting up again.

On the basis of comparable data, cable business sales increased by 16.6% in Europe and by 22.1% in the Rest of the World area.

Facts and figures of Consolidated sales by business sector and geographical area at current metal prices can be viewed at www.nexans.com

Nexans takes this opportunity to update its communication regarding significant outstanding litigation.

Disputes

  • 1. The most significant ongoing dispute for which provisions have been recorded relates to cables supplied by Nexans for corvettes for the South African navy. The supply of certain of these cables was subcontracted to a South African manufacturer. After installation of the cables on the first two corvettes, it was found that the cables supplied by the subcontractor were non-compliant. All the cables already installed were then removed and replaced. The customer has claimed damages of approximately 36 million euros, which Nexans is contesting. The allocation of liability between Nexans and the parties involved – including the customer, the insurers and the subcontractor – has not yet been determined. In view of the general uncertainty as to the liability of each party, Nexans considered it to be prudent and reasonable in its 2004 financial statements to increase the €5 million euro provision already set aside at December 31, 2003. At December 31, 2006 this provision was maintained in the Group’s financial statements. Based on the information available and the position of the insurer, the 11 million euro provision currently recorded in the accounts will probably prove to be
    unnecessary.
  • 2. In the proceedings started by the competition authorities in France, the Direction Nationale des Enquêtes (National Investigation Agency) of the Direction Générale de la Concurrence, de la Consommation et de la Répression des Fraudes (Department of Competition, Consumer Affairs and Repression of Fraud) started investigations in both 2003 and 2006, into certain contracts
    awarded by EDF for the supply of high voltage cables, and the market for electric cables
    respectively. Nexans received a statement of complaint from the French Competition Council (“Conseil de la Concurrence”) further to the 2003 investigation, but no indication was given of the fines which may be applied for the alleged wrongdoings. Following receipt of the statement, Nexans France has agreed with the executive case officer of the French Competition Council on a settlement procedure. No provision has been recorded for this case as the circumstances do not meet the required recognition criteria. In light of the specific circumstances of the case, Nexans believes the outcome of this procedure will not have a significant impact on the Group’s net
    financial situation. Finally, the statement of complaint confirms that the 2006 investigation has been closed.

About Nexans
With energy as the basis of its development, Nexans, the worldwide leader in the cable industry, offers an extensive range of cables and cabling systems. The Group is a global player in the infrastructure, industry and building markets. Nexans addresses a series of market segments from energy, transport and telecom networks to shipbuilding, oil and gas, nuclear, automotive, electronics, aeronautics, handling and automation. With an industrial presence in more than 30 countries and commercial activities worldwide, Nexans employs 21,000 people and had sales in 2006 of 7.5 billion euros. Nexans is listed on the Paris stock exchange, compartment A of the Eurolist of Euronext. More information on www.nexans.com

Auteur: Redactie Infrasite

Bron: Nexans