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Nexans steered for growth

Nexans
·40 min de lecture

PRESS RELASE _

Nexans steered for growth

Steady EBITDA performance and net income turnaround unlocking value creation
Outperformance in ROCE and free cash flow, 10-year low Net Debt, setting strong financial footing
Nexans transformation anchored

In full-year 2020, amidst the global pandemic:

  • Resilient standard sales1 of 5,713 million euros, down by -8.6% organically2

  • Steady EBITDA3 of 347 million euros reflecting successful Group transformation, EBITDA rate of 6.1% in 2020 against 6.4% in 2019

  • Outperformance in ROCE4 at 10.2% end of December 2020

  • Strong turnaround in net income of 80 million euros, including a negative 102 million euros of estimated Covid-19 impact5 and the positive gains on divestments for 142 million euros (107 million euros net of tax), compared to a net loss of -118 million euros in 2019

  • Outstanding Free Cash Flow6 of 157 million euros, exceeding expectations and reflecting new Group norm of strict working capital management and cash generation focus

  • A 10-year low net debt of 179 million euros at December 31, 2020, demonstrating Nexans’ commitment to maintaining sound liquidity and improving cash conversion

  • Cable laying vessel Aurora and US High-Voltage cable plant Charleston operational mid-2021

  • Proposed dividend of 0.70 euro per share

Nexans has successfully anchored its transformation by unlocking value and setting a strong financial footing across the Group.

  • 2021 EBITDA outlook between 410 and 450 million euros

  • Best-in-class operating working capital, structural improvement at 5% of current sales in December 2020

  • Early repayment of French State backed 280 million euros term loan (“PGE”) and 250 million euros 2021 Bond

  • Nexans steered for growth, will host a historical Virtual Capital Market Day at 14.00 CET

Paris, February 17, 2021 – Today, Nexans published its financial statements for the year ended December 31, 2020, as approved by the Board of Directors at its February 16, 2021 meeting chaired by Jean Mouton.

Commenting on the Group’s 2020 results, Christopher Guérin, Nexans’ Chief Executive Officer, said: “Despite the unprecedented global health and economic crisis, 2020 was a tipping point for Nexans, as we demonstrated our ability to accelerate the company’s transformation, outperforming our financial performance both in ROCE and free cash flow, resulting in a 10-year low net debt. Our efforts, in the second semester, were focused on our long-term ambition, defining our new purpose to “Electrify the future”, our new values, our new ESG & Carbon neutrality commitment.
It’s full steam ahead that we will announce today our new strategic chapter up to 2024, and 2021 will be a year of acceleration of our new strategic moves on Electrification. Nexans is starting 2021 confident and with ambitious goals.”

2020 FULL-YEAR KEY FIGURES

(in millions of euros)

FY 2019

FY 2020

Sales at current metal prices

6,735

5,979

Sales at standard metal prices7

6,489

5,713

Organic growth

4.5%

(8.6)%

EBITDA

413

347

EBITDA as % of standard sales

6.4%

6.1%

Operating margin

249

193

Reorganization costs

(251)

(107)

Other operating items

(9)

160

Operating income (loss)

(11)

246

Net financial expense

(63)

(54)

Income taxes

(44)

(111)

Attributable Net Income (loss)

(118)

80

Net debt

471

179

Free cash flow

25

157


I. Overview of the full-year 2020 and General Operating Context in an unprecedented crisis

In 2020, as the world was affected by the Covid-19 pandemic, the Group took action to adapt the organization to the new health and safety standards, mitigating financial impacts by focusing on financial liquidity preservation and accelerating the deployment of the “New Nexans” transformation plan while maintaining continuity of production. Nexans Executive Committee rapidly put in place a stringent mitigation plan, focused on 5 pillars: i) Workforce protection, ii) Supply chain and Production Continuity, iii) Customer engagement, iv) Liquidity preservation and financial modelling, and v) reinforced communication with External stakeholders and the Board of Directors. Across all units, mitigation measures were successfully deployed with strict internal control processes, preventive actions, employee engagement and trade union support.

As the pandemic spread and governments globally implemented lockdown measures, demand was down in the first half of 2020, impacting Nexans activities, with the exception of the High Voltage & Projects segment, and, then, gradually recovered in the second half of the year.

Despite these challenging times, the Group maintained production continuity throughout the crisis. Over 2020, no shortage in raw materials was experienced, neither in copper nor aluminum. Seizing the opportunity to accelerate the Transformation Plan, all teams reinforced cost reductions, margin improvements and cash conversion. First, 90 million euros in savings was achieved in 2020 as cost reduction initiatives were accelerated and amplified. Second, 36 million euros was obtained thanks to the SHIFT program, which was reinforced and deployed across the Group. Stepping-up on selective growth, focus was placed on customer engagement, notably the Tier 1 customers generating 90% of the profitability, and on further improving margins while tightening working capital management to support the Group’s liquidity. Over the last twelve months period, the Group outperformed expectations notwithstanding the pandemic outbreak. EBITDA ended up at 347 million euros and free cash flows at 157 million euros, of which +366 million euros working capital improvement. At the end of December 2020, net debt position reached ten-year low level at 179 million euros.

Over the period, the Group pursued its strategic investments and portfolio management to refocus on its core business, notably completing two divestments and discontinuing two operations. On the investment side, the construction of the Aurora installation vessel is progressing as planned and will be delivered in May 2021. The extension of the Charleston plant for which 40 million euros where pushed to 2021 will be finalized by the summer 2021. This sole American based subsea high voltage cable facility has already created 150 jobs in the US. On the portfolio management front, Nexans completed both the sale of Berk-Tek, a manufacturer of local area network cables to Leviton Inc., on September 30, 2020, and Nexans Metallurgie Deutschland GmbH, on October 31, 2020. The divestments made by the Group in 2020 generated a net gain of 142 million euros in asset disposals. Finally, in July, Nexans discontinued operations at the Chester and Wallkill operations in the US. The success of Nexans’ Transformation and the impact of divestments contributed to the turnaround in net income at 80 million euros compared to -118 million euros in 2019.

Nexans strong crisis management culture, the acceleration of the Transformation Plan, it’s unrelenting customer satisfaction focus, have all been instrumental in maintaining profitability and liquidity, with a record low operating working capital in virtue of structural improvements. Nexans is set and geared for its next strategic plan which will be announced today, February 17, at 14:00 CET.

~~~

Following the Covid-19 outbreak, Nexans took several measures such as:

  • On June 11, 2020, Nexans was granted a 280 million euros French State backed loan guaranteed by the French State at 80%. The Board of Directors approved February 16, 2021 the entire early repayment of this loan.

  • To sustain operations and demonstrate social cohesion, a premium of 750 euros per month for frontline workers was set up for certain European plants and the top executives of the Group agreed for pay cuts of between 15% and 30%.

  • In March, in the context of the breakout of the Covid-19 pandemic, as several governments were taking, or planning to take, restrictive measures resulting into a possible impact on the Group’s supply chain and production schedule worldwide, given the overall uncertainty, and as it was too early to assess the impacts on the Group results, Nexans suspended its 2020 Guidance and withdrew the proposed dividend of 0.40 euro per share for the 2019 financial year, originally announced on February 20, 2020. At the end of July, as the global situation, dictated by the pandemic, marginally firmed up, the full year 2020 outlook was reinstated. On November 5, 2020, for third-quarter financial information, Nexans updated the 2020 guidance ranges: i) EBITDA was narrowed, ii) ROCE improved and iii) free cash flow enhanced.

~~~

Nexans’s full year results reflect a significant improvement in activity and profitability in the second half of the year compared to the first half of the year which was impacted by the slowdown in demand due to the Covid-19 pandemic in most activity excluding High Voltage & Projects business.

The Group’s consolidated sales for the twelve months ending December 31, 2020 closed at 5,713 million euros at standard metal prices, compared with 6,489 million euros in the same period of 2019, representing an organic decline of -8.6%. Sales improved in the fourth quarter, up +2.3% compared to third quarter 2020, and down -4.5% compared to fourth quarter 2019.

In order to compensate for the general slowdown in demand and protect profitability, the Group accelerated its Transformation program, undertaking additional cost reductions while also rolling-out the SHIFT program across all units. As a result, Group profitability was maintained despite the drop in demand and EBITDA landed at 347 million euros in 2020 versus 413 million euros in 2019, representing 6.1% of sales at standard metal prices, comparable to 2019 by virtue of a cost reduction of 90 million euros, a 36 million euros gain from SHIFT and 11 million euros from growth initiatives, offset by a negative 55 million euros price cost squeeze effect, a 31 million euros decline in volumes considered unrelated to Covid-19, a 94 million euros estimated Covid-19 impact and a negative 23 million euros decrease linked to a scope effect related to the sale of Berk-Tek and foreign exchange impacts.

Operating margin totaled 193 million euros, representing 3.4% of sales at standard metal prices (against 3.8% in 2019).

II. Full-year 2020 Analysis and General Operating Context

  1. Analysis by segment

CONSOLIDATED SALES BY SEGMENT

(in millions of euros)
At standard metal prices
Copper reference at €5,000/t

FY 20198

FY 2020

Organic growth FY 2020 vs. FY 2019

Organic growth Q4 2020 vs. Q4 2019

Building & Territories

2,754

2,422

-8.4%

-8.0%

Industry & Solutions

1,394

1,210

-12.6%

-1.4%

Telecom & Data

503

393

-14.8%

-11.5%

High Voltage & Projects

753

699

-0.8%

-15.9%

Other Activities

1,084

989

-6.0%

+12.5%

Group total

6,489

5,713

-8.6%

-4.5%

EBITDA BY SEGMENT

(in millions of euros)

FY 2019

FY 2020

FY 2020 vs.
FY 2019

Building & Territories

155

128

-17.9%

Industry & Solutions

109

84

-22.9%

Telecom & Data

49

29

-40.4%

High Voltage & Projects

104

105

+1.4%

Other Activities

(4)

1

n.a.

Group total

413

347

-15.9%

| Building & Territories

Sales for the Building & Territories segment amounted to 2,422 million euros at standard metal prices in 2020, representing an organic decline of -8.4% compared to 2019. After a mixed first half of the year, where Building demand slowed down as the pandemic spread while Territories remained resilient, the second half witnessed sound recovery in South America, Middle East and Africa as lockdown measures were lifted or softened. EBITDA totaled 128 million euros compared to 155 million euros in 2019 supported by Nexans’ self-help plan focusing on cost reductions and improving performance with the SHIFT program, resulting in a drop in overdues by close to 40% over 2020.

Over the year, the Territories (Utilities) segment remained resilient, supported by the grid modernization and long-term client frame agreements. While the Building segment, highly GDP related and exposed to the construction market, was further impacted by the pandemic particularly in the first half of the year, the Group reinforced the SHIFT program notably by increasing customer selectivity.

In Europe, sales remained resilient throughout the year, down -7.3% compared to 2019, supported by continuous demand in Switzerland, Italy and Sweden, partially offsetting lockdown effects. The activity improved in the second half of the year thanks to a catch-up effect notably in the Building activity in France. Utilities demand remained stable throughout the year.

In South America, sales resisted strongly notably due to the robust recovery in the second half of 2020. Sales were down by -6.5% in 2020 against 2019, boosted by the lifting of lockdown measures in September and the solid restart of the construction market which followed in Peru (+2.8% in second half 2020 against second half 2019), in Brazil (+9.3% in second half 2020 against second half 2019) and in Chile (+10.5% in second half 2020 against second half 2019).

In Asia Pacific, sales were down -10.4% compared to 2019. Thanks to mild lockdowns and an overall dynamic market, both Australia (-4.3% year-on-year) and New Zealand (-4.5% year-on-year) benefitted from solid demand and continuous operations. While China, despite strict lockdowns and plant closure early 2020, showed sound growth over the twelve months of 2020, at +1.8% year-on-year.

In North America, despite solid demand in Canada (up +3.9% year-on-year) supported by the Utilities market, sales declined by -15.9% versus 2019, directly linked to the closure of the Chester plant in the US.

Sales in the Middle East and Africa were down by -5.1% year-on-year on an organic basis. The region picked up in the second half of the year, back to 2019 levels. During the year, both Turkey (+12.6% year-on-year) and Morocco (+3.2% year-on-year) regions witnessed backlog recovery with visibility into 2021, the latest benefitting from export sales growth. North West Africa recovered during the second half of the year. The situation in Lebanon remained politically challenging over the period and impacted sales negatively (-45.7% year-on-year).

| Industry & Solutions

For 2020, Industry & Solutions sales landed at 1,210 million euros at standard metal prices. After a sharp drop in demand in the first half of the year, activity firmed up in the second half notably in Automotive Harnesses which witnessed a record fourth quarter, leaving total segment sales at -1.4% in fourth quarter 2020 compared to fourth quarter 2019. EBITDA landed at 84 million euros for the full year compared to 109 million euros in 2019 supported by the strong recovery of Automotive Harnesses, the additional cost reduction initiatives and the deployment of the SHIFT program.

In line with growing investments in the energy transition and Nexans leading position in the OEM market, the Wind Turbine activity was strong in 2020 (+16.5% in sales year-on-year). While Railway Infrastructure & Rolling Stock sales only slightly decreased (-3.6% year-on-year) in virtue of the steady demand in China, Aerospace & Defense (-42.8% year-on-year) remained challenged by the pandemic restrictions worldwide and Automation (-13.8% year-on-year) witnessed slow recovery in demand in the second part of the year 2020.

After a challenging first half of the year as clients closed down plants for several weeks due to Covid-19 pandemic, Automotive harnesses sales rebounded by +8.1% in the second half of 2020 boosted by a strong catch-up in demand starting in the third quarter and progressively growing to land with a record fourth quarter (+17.9% compared to fourth quarter 2019). In addition, the flexibility of the cost base compensated for the drop in demand to a certain extent, protecting business performance.

| Telecom & Data

Telecom & Data sales amounted to 393 million euros at standard metal prices in 2020, down -14.8% organically compared to 2019. The segment was challenged throughout the year notably by Covid-19 lockdowns which put a strain on installation campaigns. EBITDA totaled 29 million euros in 2020, down -40.4%, due to slowdown in activity and the disposal of Berk-Tek to Leviton Inc.

In 2020, LAN cables and systems activity was mostly impacted by Covid-19 lockdowns in the first half of the year and then by the Berk-Tek divestment in the third quarter. In the second half of the year, the sector benefitted from the rebound in Asia as well as the resilient market in the Middle East who won major project awards. Despite, sales down by -12.5% in 2020 year-on-year, performance was resilient as a result of accelerated cost reductions.

Telecom Infrastructure over the year was impacted by intense Asian competition with high pricing pressure and by Covid-19 lockdown measures weighing on installation campaigns. Despite the underlying demand from end-users for Fiber to the Home (FTTH), deployment in most countries was slow over the second half of the year compared to the same period last year. As a result, sales for the business contracted by -23.5% in 2020 compared to 2019. Overall, fiber optic cables and accessories demands were dynamic in Sweden (+3.5% year-on-year) thanks to a sustained infrastructure market dynamic and market share gains, partially offsetting weak volumes in the rest of Europe, notably in France (-36.7% year-on-year) impacted by a base effect due to intense backbone installations and inventories build up in 2019. Throughout the period the segment worked on fixed cost reductions which enabled to deliver a good performance in the fourth quarter and overall resilience for the full year.

Thanks to the solid demand and Nexans’ leading position, both sales and EBITDA were strongly up in the Special Telecom (Subsea) business year-on-year. With a buoyant increase in backlog compared to 2019, visibility for next year is strong.

| High Voltage & Projects

Benefitting from its well-balanced and low-risk backlog both in offshore wind farms and interconnection projects as well as the successful turnaround of the Land activity, High Voltage & Projects delivered a solid performance in 2020. Sales stood at 699 million euros at standard metal prices, in line with 2019, while EBITDA totaled 105 million euros, up by +1.4% year-on-year. Throughout the year, the Group enforced its risk-reward tendering analysis combining for each project: i) financial modelling, ii) technological risk and iii) contract terms & conditions.

Subsea high-voltage project execution was in line with backlog phasing and the activity benefitted from continued execution. Tendering activity continued to be strong as several projects were secured during the year such as Seagreen and Crete-Attica. Adjusted backlog9 landed at 1.4 billion euros at the end of December, with a 24-month visibility. Over the period, sales were resilient year-on-year thanks to a first semester boosted by four Inspection Maintenance and Repair projects, compensating lower sales in fourth quarter 2020 compared to strong fourth quarter 2019 as NordLink and East Anglia projects were completed. In parallel, the Charleston plant transformation extension progressed and the first phase of the Seagreen project cable manufacturing was launched. In line with the Group’s flawless and disciplined project execution, progress was made on the execution of the turnkey projects NSL, Lavrion-Syros, Mallorca-Menorca and Mindanao – Visayas.

As planned, the Land high-voltage business achieved breakeven in 2020, supported by increased sales (+11.6% year-on-year) and the execution of both the closure of the Hannover, Germany, manufacturing plant and the transfer of all its projects to the Group’s other plants. The activity is now set for sound project execution to abide by the Group’s risk-reward policy and to keep its focus on integrated Land and Subsea projects to offer a unique and cost-efficient offer for subsea interconnection projects.

| Other Activities

The “Other Activities” segment – corresponding for the most part to copper wires sales – reported sales of 989 million euros at standard metal prices in 2020, down -6.0% year-on-year. EBITDA was +1 million euros over the period against a negative 4 million euros for 2019.

Since October 31, 2020, the Group completed the disposal of Nexans Metallurgie Deutschland GmbH, a Nexans company specialized in oxygen free copper drawing to Mutares SE & Co. KGaA.

The 2020 figures also include corporate structural costs that cannot be allocated to the other segments, such as the impact of IFRS 16 for lease assets not allocated to specific activities.

2. Accelerating the “New Nexans” 2019-2021 Plan

Under the backdrop of the unprecedented global Covid-19 pandemic, the Group accelerated and executed its “New Nexans” Transformation plan. First, by both reinforcing cost reduction measures initiated 27 months ago and implementing additional savings. Second, by amplifying the SHIFT program to increase portfolio conversion from value burners and transformation to profit drivers as well as enhancing cash optimization. Over 2020, 137 million euros of EBITDA improvement were achieved.

| Cost Reduction initiatives

In 2020, the Group accelerated cost saving measures to mitigate the slowdown in activity and generated 90 million euros of EBITDA improvement during the year.

  • The organization simplification plan completed in 2019 enabled the Group to be very agile. Teams on the field swiftly adjusted production capacity and raw material supply in accordance with the change in demand, avoiding any bottlenecks while partial unemployment was applied in regions benefitting from government subsidies and lifted as demand returned.

  • Efforts were made to contain or reduce direct costs, including subcontracting, travel, manpower, working hours and salaries as well as on indirect costs, such as consulting fees, insurance, marketing campaigns and communication.

  • The implementation of an industrial productivity plan, combining dedicated teams deployed in the field with a series of transverse actions, enabled better use of group scale by duplicating “best practices” and/or by standardizing key processes.

| SHIFT deployment and Cash conversion

The SHIFT transformation plan, based on a holistic methodology developed in-house at Nexans, was accelerated and deployed across all units in 2020. Key customer focus and product selectivity, based on cash conversion criteria and profitability levels, was implemented across the Group, generating 36 million euros positive impact in EBITDA.

In order to safeguard liquidity and maintain a positive cash level, cash conversion measures focused on operating working capital management were deployed in record time:

  • Strict cash conversion targets were set and implemented at all business units;

  • Close inventory management was enforced, and specific commercial actions were initiated resulting in an improvement of 7 days on Days Inventory Outstanding;

  • Industrial measures were deployed to accelerate productivity and the flow of work in progress;

  • Payables and Receivables were strictly controlled with partners (customers and suppliers) positively contributing to a shorter Cash Conversion Cycle and improved contractual conditions;

  • Capex was also rigorously controlled, all non-essential investments were frozen and maintenance expenditures adjusted to utilization rates.

| Value growth initiatives

Over the year, the value growth initiatives were mainly focused on High Voltage Subsea activities, strengthening Nexans position among the key players of the energy transition. In 2020, these initiatives generated a positive EBITDA impact of 11 million euros.

3. Analysis of net income/(loss) and other income statement items

(in millions of euros)

2019

2020

EBITDA

413

347

Depreciation and amortization

(163)

(154)

Operating margin

249

193

Core exposure effect

(11)

42

Reorganization costs

(251)

(107)

Other operating income and expenses
o/w net asset impairment
o/w net gain on asset disposals

2
13
7

120
(21)
142

Share in net income of associates

(0)

(2)

Operating income (loss)

(11)

246

Net financial expense

(63)

(54)

Income taxes

(44)

(111)

Net income (loss) from continuing operations

(118)

80

Attributable net income (loss)

(122)

78

The Group ended the year with a positive operating income of 246 million euros, compared with an 11 million euros loss in 2019. The main changes were as follows:

  • The Core exposure effect was a positive 42 million euros in 2020 against a negative 11 million euros in 2019, reflecting much higher average copper prices over the period.

  • Reorganization costs amounted to 107 million euros in 2020 versus 251 million euros in 2019. In 2020, they include 44 million euros for the New Nexans program, mainly related to the reorganization of the Group’s activities in Europe which was announced on January 24, 2019. The other reorganization costs of 63 million euros mainly come from the new actions launched during the year in Asia-Pacific, Northern Europe and North America, and from the on-going transformation of the Charleston’s plant in the United States.

  • Net asset impairment represented a charge of 21 million euros in 2020 versus a net reversal of 13 million euros in 2019. In 2020, the impairment losses were related to some individual items of property, plant and equipment, mainly in South America. It also included the impairment of the German metallurgy business for 3 million euros, in relation to the divestiture process.

  • Net gain on asset disposals represented 142 million euros in 2020, mainly from the sale of Berk-Tek to Leviton, effective end of September 2020. It also included the remaining costs related to the divestiture of the German metallurgy business during the last quarter of the year. In 2019, the net gain of 7 million euros mainly concerned some disposals of real estate assets in France and Switzerland.

  • Other operating income and expenses represented a net income of 120 million euros compared with a net income of 2 million euros in 2019. The main items are the net asset impairment and a net gain on asset disposals referred to above.

  • Net financial expense amounted to 54 million euros in 2020 compared with 63 million euros during the previous year. The decrease is mainly related to a more favorable foreign exchange impact.

The Group reported an 80 million euros net income for the year, versus a net loss of 118 million euros for 2019. The 2020 figure corresponds to a 192 million euros income before taxes (versus 73 million euros in loss before taxes in 2019). Income tax expense stood at 111 million euros, the tax impact of the sale of Berk-Tek and the depreciation of some deferred tax assets in Europe being the main reasons for the difference with an income tax expense of 44 million euros in 2019.

The Group ended the year with an attributable net income of 78 million euros versus an attributable net loss of 122 million euros in 2019.

At the Annual Shareholders' Meeting, the Board of Directors will recommend paying a 2020 dividend of 0.70 euro per share.

Net debt significantly decreased to 179 million euros at December 31, 2020, from 471 million euros one year earlier, reflecting:

  • Cash from operations of +260 million euros;

  • Reorganization cash outflows of -170 million euros, of which two thirds concerned the European reorganization plan announced at the end of January 2019;

  • Capital expenditures for -225 million euros, corresponding for the most part to the investments made for the transformation of the Charleston plant, and to those for the construction of the new Aurora cable-laying vessel;

  • Net cash inflows of 152 million euros for the divestments made during the year;

  • Other investing flows for -27 million euros, mainly for the reclassification of Lebanese bank deposits in short-term financial assets;

  • A +366 million euros improvement in working capital due mainly to the improved working capital positions of both the Group’s Cables and Projects business in connection with the liquidity preservation measures and, to a lesser extent, to the decrease in volumes;

  • Cash outflows of -44 million euros from financing activities, mainly including -47 million euros in interest payments, partly offset by a net inflow of +7 million euros from the equity operations related to the employee shareholding plan;

  • An -18 million euros negative impact corresponding to lease liabilities;

  • A negative impact of -2 million euros for unfavorable foreign exchange evolutions.

III. 2021 Outlook

In the current macro environment and incorporating no material change in the current view on the impact of the Covid-19 crisis, the Group expects to finalize the deployment of the New Nexans plan in 2021.

For 2021, Nexans therefore sets its targets as follows:

  • EBITDA between 410 and 450 million euros;

  • Free Cash Flow before M&A and equity operations between 100 and 150 million euros;

  • Return on capital employed (ROCE) between 12.5% and 14.5%.

IV. Significant events since the end of December

February 16, 2021, Nexans’ Board of Directors approved the entire early repayment of a 280 million euros French State backed loan guaranteed by the French State at 80% granted on June 11, 2020 and a 2021 of 250 million euros at a 3.25% rate.

February 2, 2021, Nexans was selected by Réseau de Transport d’Electricité (RTE), France’s Transmission System Operator (TSO) for a three year frame contract (option for 2 additional years) to deliver cables, accessories and installation services for underground grid connections at 90 kV, 220 kV and 400 kV.

February 1, 2021, Nexans Submarine Telecom and Special Cables (STSC) business won a contract to continue to develop its customer relationship with the Programa Amazônia Conectada (PAC) and bring high-speed data connectivity to a remote and environmentally sensitive region of Brazil. The project involves laying fiber-optic cables on the riverbeds of the Amazon Basin.

January 27, 2021, Nexans reinforced its long-lasting relationship with Airbus with a new contract to supply specialized aerospace cables and wires that form the electrical backbone of civilian and military aircraft and helicopters.

January 21, 2021, Nexans strengthens its industrial presence in Morocco with the inauguration of a new plant for the Telecom Systems Business Unit. This inauguration was chaired by Mr. Moulay Hafid Elalamy, Minister of Industry, Trade, Green and Digital Economy of Morocco.

January 11, 2021, Nexans extended its long-standing partnership with Eiffage, one of France’s largest civil engineering companies, by winning a contract to supply AGICITY® electric vehicle charging stations for the company’s Vélizy headquarters.

~ ~ ~

A video webcast/conference call is scheduled today at 9:00 a.m. CET.

Webcast link: https://channel.royalcast.com/landingpage/nexans/20210217_1/

To participate in the audio conference call, please find below the dial-in details:
• International switchboard: +44 (0) 33 0551 0200
• France: +33 (0) 1 7037 7166
• United Kingdom: +44 (0) 33 0551 0200
• United States: +1 212 999 6659
Confirmation code: nexans full year

~ ~ ~

Financial calendar

February 17, 2021: Capital Markets Day

April 29, 2021: Frist Quarter Financial Information

May 12, 2021: Annual Shareholders' Meeting

May 19, 2021: Dividend – Ex date

May 20, 2021: Dividend – Record date

May 21, 2021: Dividend – Payment date

July 28, 2021: 2021 Half Year Financial Information

~ ~ ~

NB: Any discrepancies are due to rounding

This press release contains forward-looking statements which are subject to various expected or unexpected risks and uncertainties that could have a material impact on the Company’s future performance.

Readers are also invited to visit the Group’s website where they can view and download the presentation of the 2020 annual results to analysts as well as the 2020 financial statements and Nexans Universal Registration Document, which includes a description of the Group’s risk factors
In addition to the risk factors described in Section 3.1 of the 2020 Universal Registration Document, the uncertainties for 2021 mainly include:

  • The impact of protectionist trade policies globally, as well as growing pressure to increase local content requirements;

  • Geopolitical and political instability, particularly in certain countries, cities or regions such as Qatar, Libya, Lebanon, Iraq, the Persian/Arabian Gulf, Hong Kong, Ivory Coast and Nigeria;

  • The instability of banking system in Lebanon and uncertainties on the Lebanese pound;

  • The impact that the coronavirus pandemic and the adoption by State authorities, in many countries around the world, of national restrictive measures (including prolonged measures to control the pandemic such as travel bans, curfews and country lockdowns) in particular in the context of further waves of the pandemic in countries around the world together with the appearance of variants to the coronavirus (including in UK, Brazil and South Africa) could have on our Group’s business prospects, operating profit and financial position;

  • The increase in credit risk in certain countries ( including Brazil, Morocco and Turkey) in the context of the coronavirus pandemic;

  • Political, social and economic uncertainty in South America, such as in Brazil, Venezuela and Bolivia, which is i) affecting the building market as well as major infrastructure projects in the region (such as the Maracaibo project in Venezuela), ii) creating exchange rate volatility and iii) increasing the risks of customer default;

  • A marked drop in non-ferrous metal prices resulting in the impairment of Core exposure (non-ferrous metal owned by Nexans and integral part of the production chain), not having an impact on cash or operating margin, but impacting net income. Such marked drop in non-ferrous metal prices might occur in particular in the context of further waves of the coronavirus pandemic;In the current context of marked increase in non-ferrous metal prices, should this increase trend continues it might have on impact of the non-ferrous market which could potentially lead to rarefaction of non-ferrous metal offers; The sustainability of growth rates of the fiber and copper structured cabling (LAN) market and the Group’s capacity to seize opportunities relating to the move to higher performing categories in this market;

  • The speed of deployment of “ftth” (“fiber to the home”) solutions in Europe and North West Africa and the Group’s capacity to seize opportunities relating to the development of this market;

  • The impact of the coronavirus pandemic on the aeronautic industry which has led our customers to revisit their order books for the coming months and years;

  • The fact i) that automotive sales may continue to be adversely affected in the context of the coronavirus pandemic on a global basis with issues in components supplies and slower recovery of the cars demand, as well as that ii the progress of electrical propulsion solutions will penetrate markets slower than predicted;

  • Fluctuating oil and gas prices, and the downturn in the Oil & Gas sector which have lead Oil & Gas sector customers to revise their exploration and production capex programs. The considerable uncertainty about the implementation of these customers’ capex programs may also affect the Group’s ability to plan for future means of producing cables and umbilicals for these customers, and for imposing changes to the agreed delivery schedules for contracted projects in the context of the coronavirus pandemic;

  • The risk of the award or entry into force of subsea and land cable contracts being delayed or advanced, which could interfere with schedules in a given year;

  • Inherent risks related to (i) carrying out major turnkey projects for high-voltage cables, which will be exacerbated in the coming years as this business becomes increasingly concentrated and centered on a small number of large-scale projects, (ii) the high capacity utilization rates of the plants involved, (iii) the projects’ geographic location and the political, social and economic environments in the countries concerned (such as Philippines for Visayas-Mindanao project);

  • The inherent risks associated with major capital projects, particularly the risk of completion delays and the risks of delays to win projects to fill the new capacities. These risks notably concern the construction of a new subsea cable laying ship, the transformation of the Charleston plant in North America to produce subsea high voltage cables, two projects that will be instrumental in ensuring that we meet our objectives;

  • The challenges created by the coronavirus pandemic (with subsequent measures taken by national States such as country lockdowns or travel bans) for the performance of projects in countries like the United States (e.g. to meet the defined manufacturing schedule in Charleston) as well as for turnkey projects such as Seagreen (United Kingdom) and Visayas-Mindanao (Philippines) and onshore projects in Europe.

Without having major operational impacts, the two following uncertainties may have an impact on the financial statements:

  • Sudden changes in metal prices that may affect customers’ buying habits in the short term;.

  • The impact of foreign exchange fluctuations on the translation of the financial statements of the Group’s subsidiaries located outside the euro zone.

~ ~ ~

About Nexans

Nexans is a key driver for the world’s transition to a more connected and sustainable energy future. For over 120 years, the Group has brought energy to life by providing customers with advanced cable technologies for power and data transmission. Today, Nexans goes beyond cables to offer customers a complete service that leverages digital technology to maximize the performance and efficiency of their critical assets. The Group designs solutions and services along the entire value chain in three main business areas: Building & Territories (including utilities and e-mobility), High Voltage & Projects (covering offshore wind farms, subsea interconnections, land high voltage), and Industry & Solutions (including renewables, transportation, oil and gas, automation, and others).
Corporate Social Responsibility is a guiding principle of Nexans’ business activities and internal practices. In 2013 Nexans was the first cable provider to create a Foundation supporting sustainable initiatives bringing access to energy to disadvantaged communities worldwide. The Group’s commitment to developing ethical, sustainable and high-quality cables also drives its active involvement within leading industry associations, including Europacable, the NEMA, ICF and CIGRE.
Nexans employs nearly 25,000 people with an industrial footprint in 38 countries and commercial activities worldwide. In 2020, the Group generated 5.7 billion euros in standard sales.

Nexans is listed on Euronext Paris, compartment A.
For more information, please visit www.nexans.com

Contacts:

Financial communication
Aurélia Baudey-Vignaud
Tel.: +33 (0)1 78 15 03 94
aurelia.baudey-vignaud@nexans.com

Communication
Catherine Garipoglu
Tel.: +33 (0)1 78 15 04 78
catherine.garipoglu@nexans.com

Elodie Robbe-Mouillot
Tel.: +33 (0)1 78 15 03 87
elodie.robbe-mouillot@nexans.com

Minaa El Baz
Tel.: +33 (0)1 78 15 04 65
minaa.el_baz@nexans.com


~ ~ ~

Appendices
The audit procedures have been carried out and the Statutory Auditors' report is being issued at the date of the present press release.

CONSOLIDATED INCOME STATEMENT

(in millions of euros)

2020

2019

NET SALES (1)

5,979

6,735

Cost of sales

(5,324)

(5,949)

GROSS PROFIT

654

786

Administrative and selling expenses

(385)

(442)

R&D costs

(77)

(94)

OPERATING MARGIN (2)

193

249

Core exposure effect (3)

42

(11)

Other operating income and expenses(4)

120

2

Reorganization costs

(107)

(251)

Share in net income of associates

(2)

(0)

OPERATING INCOME (LOSS)

246

(11)

Cost of debt (net) (5)

(43)

(38)

Other financial income and expenses

(11)

(24)

INCOME BEFORE TAXES

192

(73)

Income taxes

(111)

(44)

NET INCOME (LOSS) FROM CONTINUING OPERATIONS

80

(118)

Net income from discontinued operations

-

-

NET INCOME (LOSS)

80

(118)

attributable to owners of the parent

78

(122)

attributable to non-controlling interests

2

5

ATTRIBUTABLE NET INCOME (LOSS) PER SHARE (in euros)

- basic earnings (loss) per share

1.80

(2.81)

- diluted earnings (loss) per share

1.76

(2.81)

(1) Sales at standard metal prices calculated using reference prices are no longer presented in the income statement but are still presented in the segment information.Sales at standard copper and aluminum prices are used by the Group to monitor its operational performance, because the effect of changes in non-ferrous metals prices is neutralized to show underlying business growth. Cost of sales is restated on the same basis. Since January 1, 2020, the reference price for copper has been 5,000 euros per tonne (compared with 1,500 euros in 2019 and previous years). For both 2019 and 2020 the reference price for aluminum was 1,200 euros per tonne

(2) Operating margin is one of the business management indicators used to assess the Group’s operating performance

(3) Effect relating to the revaluation of Core exposure at its weighted average cost.

(4) In 2020, "Other operating income and expenses" included some 142 million euro net disposal gains and (21) million euros in net asset impairment

(5) Financial income amounted to 3 million euros in 2020 versus 4 million euros in 2019.


CONSOLIDATED BALANCE SHEET

(At December 31, in millions of euros)

2020

2019

ASSETS

Goodwill

232

242

Intangible assets

115

126

Property, plant and equipment

1,346

1,382

Investments in associates

32

37

Deferred tax assets

115

175

Other non-current assets

102

92

NON-CURRENT ASSETS

1,942

2,053

Inventories and work in progress

937

1,113

Contract assets

94

69

Trade receivables

829

1,015

Current derivative assets

86

40

Other current assets

201

186

Cash and cash equivalents

1,142

642

Assets and groups of assets held for sale

0

0

CURRENT ASSETS

3,288

3,065

TOTAL ASSETS

5,230

5,117


(At December 31, in millions of euros)

2020

2019

EQUITY AND LIABILITIES

Capital stock, additional paid-in capital, retained earnings and other reserves

1,258

1,167

Other components of equity

(42)

42

Equity attributable to owners of the parent

1,216

1,209

Non-controlling interests

40

42

TOTAL EQUITY

1,256

1,251

Pensions and other long-term employee benefit obligations

350

373

Non-current provisions

78

106

Long-term debt

684

923

Non-current derivative liabilities

0

7

Deferred tax liabilities

133

118

NON-CURRENT LIABILITIES

1,246

1,527

Current provisions

122

191

Short-term debt

636

190

Contract liabilities

364

256

Current derivative assets

46

33

Trade payables

1,213

1,319

Other current liabilities

349

350

Liabilities related to groups of assets held for sale

0

0

CURRENT LIABILITIES

2,729

2,339

TOTAL EQUITY AND LIABILITIES

5,230

5,117

CONSOLIDATED STATEMENT OF CASH FLOWS

(in millions of euros)

2020

2019

Net income

80

(118)

Depreciation, amortization and impairment of assets (including goodwill)

175

151

Cost of debt (gross)

46

43

Core exposure effect (1)

(42)

11

Current and deferred income tax charge (benefit)

111

44

Net (gains) losses on asset disposals

(142)

(7)

Other restatements(2)

(94)

135

CASH FLOWS FROM OPERATIONS BEFORE GROSS COST OF DEBT AND TAX(3)

136

260

Decrease (increase) in working capital

362

56

Impairment of current assets and accrued contract costs

4

19

Income taxes paid

(46)

(36)

NET CHANGE IN CURRENT ASSETS AND LIABILITIES

320

40

NET CASH GENERATED FROM OPERATING ACTIVITIES

456

300

Proceeds from disposals of property, plant and equipment and intangible assets

16

12

Capital expenditure

(225)

(238)

Decrease (increase) in loans granted and short-term financial assets (4)

(42)

(1)

Purchase of shares in consolidated companies, net of cash acquired

(2)

(1)

Proceeds from sale of shares in consolidated companies, net of cash transferred

155

(1)

NET CASH USED IN INVESTING ACTIVITIES

(99)

(228)

NET CHANGE IN CASH AND CASH EQUIVALENTS AFTER INVESTING ACTIVITIES

356

71

Proceeds from (repayments of) long-term and short-term borrowings

218

(261)

- of which repayment of 2016-2019 OCEANE bonds

-

(269)

- of which proceeds from the government-backed loan

279

-

Cash capital increases (reductions)

7

-

Interest paid

(45)

(52)

Transactions with owners not resulting in a change of control

(7)

(5)

Dividends paid

(4)

(15)

NET CASH USED IN FINANCING ACTIVITIES

169

(332)

Net effect of currency translation differences

(19)

(0)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

507

(260)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

626

886

CASH AND CASH EQUIVALENTS AT YEAR-END

1,133

626

- of which cash and cash equivalents recorded under assets

1,142

642

- of which short-term bank loans and overdrafts recorded under liabilities

(9)

(16)

(1) Effect relating to the revaluation of Core exposure at its weighted average cost, which has no cash impact.
(2) “Other restatements” in 2020 primarily include (i) a negative adjustment of 98 million euros (2019: positive adjustment of 103 million euros) to cancel the net change in operating provisions (including provisions for pensions, reorganization costs and antitrust proceedings), (ii) a 7 million euro negative adjustment (2019: 13 million euro positive adjustment) related to the cash impact of hedges and (iii) 3 million euro positive adjustment (2019: 6 million euro positive adjustment) to cancel the cost of share-based payments.
(3) The Group also uses the “operating cash flow” concept, which is mainly calculated after adding back cash outflows relating to reorganizations (170 million euros and 129 million euros in 2020 and 2019 respectively), and deducting income tax paid.
(4) In 2020, this caption included 39 million euros corresponding to bank deposits by the Group’s Lebanese company with Lebanese banks that have been reclassified from Cash and cash equivalents in accordance with IAS 7.


INFORMATION BY REPORTABLE SEGMENT

2020 (in millions of euros)

Building & Territories

High Voltage & Projects

Telecom & Data

Industry & Solutions

Other Activities

Group total

Net sales at current metal prices

2,578

707

395

1,222

1,078

5,979

Net sales at standard metal prices

2,422

699

393

1,210

989

5,713

EBITDA

128

105

29

84

1

347

Depreciation and amortization

(48)

(36)

(8)

(36)

(27)

(154)

Operating margin

80

69

22

48

(26)

193

Net impairment of non-current assets (including goodwill)

(14)

(3)

-

-

(4)

(21)


2019 (in millions of euros)

Building & Territories

High Voltage & Projects

Telecom & Data

Industry & Solutions

Other Activities

Group total

Net sales at current metal prices

2,799

779

572

1,374

1,212

6,735

Net sales at standard metal prices

2,754

753

503

1,394

1,084

6,489

Net sales at standard metal prices and 2020 exchange rates

2,645

705

495

1,384

1,062

6,291

EBITDA

155

104

49

109

(4)

413

Depreciation and amortization

(50)

(40)

(10)

(38)

(26)

(163)

Operating margin

106

64

39

71

(31)

249

Net impairment of non-current assets (including goodwill)

-

15

-

(1)

-

13

INFORMATION BY MAJOR GEOGRAPHIC AREA

2020 (in millions of euros)

France

Germany

Norway

Other (2)

Group total

Net sales at current metal prices (1)

917

741

691

3,632

5,979

Net sales at standard metal prices (1)

874

740

680

3,419

5,713

Non-current assets IFRS 8 (at December 31) (1)

199

164

302

1,059

1,725

  1. Based on the location of the assets of the Group’s subsidiaries.

  2. Countries that do not individually account for more than 10% of the Group’s net sales at standard metal prices.

2019 (in millions of euros)

France

Germany

Norway

Other (2)

Group total

Net sales at current metal prices (1)

1,040

819

758

4,118

6,735

Net sales at standard metal prices (1)

1,005

811

750

3,924

6,489

Net sales at standard metal prices and 2020 exchange rates (1)

1,005

811

689

3,786

6,291

Non-current assets IFRS 8 (at December 31) (1)

203

195

291

1,097

1,786

  1. Based on the location of the assets of the Group’s subsidiaries.

  2. Countries that do not individually account for more than 10% of the Group's net sales at standard metal prices.


1 To neutralize the effect of fluctuations in non-ferrous metal prices and therefore measure the underlying sales trend, Nexans also calculates its sales using standard prices for copper (new standard price at 5,000 €/t) and aluminum.

2 The full year 2019 sales figure used for like-for-like comparisons corresponds to sales at standard non-ferrous metal prices, adjusted for the effects of exchange rates and changes in the scope of consolidation. Exchange rates and changes in the scope of consolidation impacted sales at standard non-ferrous metal prices by -€197m and -€45m respectively.
3 Consolidated EBITDA is defined as operating margin before depreciation and amortization.
4 12 months operating margin on end of period capital employed excluding antitrust provision.

5 The estimated Covid-19 impact included in the net loss corresponds to (i) the amount after tax of the EBITDA estimated loss, (ii) the depreciation of deferred taxes losses in Europe reflecting the update of business plans in Automotive, and (iii) the sanitary expenses spent to protect employees and maintain the activity.
6 Excluding M&A and equity operations.
7 Starting January 1, 2020 change in copper standard price from 1,500 €/ton to 5,000€/ton. 2019 data restated accordingly.
8 At standard metal prices, new copper standard of €5,000/ton and according to P&L simplification
9 Adjusted subsea backlog including contracts secured not yet enforced

Attachment