Nexans Posts 2004 ProfitNexans Posts 2004 Profit

Nexans reports net income of €57M, or €2.38 per share compared with €1M, or 0.06 per share, in 2003

February 3, 2005

4 Min Read

PARIS -- The Nexans Board of Directors, chaired by Gérard Hauser, met on February 2, 2005 and reviewed the estimated accounts for 2004.

  • Sales in 2004 totaled 4.9 billion euros.

  • Sales calculated at constant non-ferrous metal prices were 4.159* billion euros compared to 3.859 billion euros in 2003 (at constant exchange rates), i.e. an increase of 7.8% (+6.6% on a comparable consolidation scope).

  • Operating profit stood at 135 million euros, an increase of 48% compared with 2003. The operating margin was 3.3% compared with 2.3% in the previous year.

  • All product lines and all geographic areas were profitable.

  • Net debt increased from 23 million in 2003 to 188 million euros at December 31, 2004, reflecting the impact of the strong increase in copper prices (+37% in one year) and of acquisitions made during the year.

  • Net income was 57 million euros, compared with 1 million euros in 2003 and net income per share reached 2.38 euros compared with 0.06 euro in 2003. Excluding exceptional items, net income for the year was 36 million euros.

  • On a preliminary basis, the Board of Directors is in favor of proposing a dividend of 0.50 euro per share, more than double the dividend paid in 2003 (0.20 euro), for decision by the General Shareholders' Meeting.



Pursuing the policy implemented in the US in the first part of the year, and in line with the planned withdrawal from the winding wire sector announced in early 2004, Nexans announces the signature of a non-binding Memorandum of Understanding (MOU) with Superior Essex regarding a joint-venture combining Nexans' European winding wires and enamel businesses with Superior Essex's UK winding wires business. The combined entity would be majority owned and controlled by Superior Essex, with Nexans retaining a significant minority interest.

In addition the MOU includes negotiations for the purchase by Superior Essex of Nexans' 80% interest in Nexans Tianjin, a Chinese winding wires joint-venture.

The transaction is subject to workers consultations, successful due diligence, execution of a definitive binding purchase agreement, approval of certain third parties, regulatory approvals, and other customary conditions.

If closed, the transaction would result in removing these activities from Nexans' consolidation scope (approximately 250 million euros of sales) and a debt reduction of approximately 50 to 60 million euros.

Commenting on these preliminary results, Nexans Chairman and CEO Gérard Hauser said:

"In 2004 Nexans reaped the fruits of its dedicated drive over the last three years to restructure, reorient its portfolio of businesses, and to develop in growth markets. The increase in sales across all business sectors and geographic areas where the Group operates, was accompanied by a satisfactory increase in profitability. Assuming costs of raw materials and energy stabilize, Nexans is confident that it will be able to pursue its development strategy to build sustainable profitability and develop the growth drivers it has identified in order to further improve its attractiveness. The encouraging results for 2004 mean that we can anticipate growth in our business in 2005 between 3 and 4% at constant exchange rates and metal prices, with further improvement in the operating margin.

Such advances will constitute the first step toward achieving our medium-term goals: sales of 4.7 to 4.8 billion euros, assuming equivalent conditions in the economy, in 2007, with an operating margin of 5% and a return on capital employed of 9.5% and higher than the weighted average cost of capital."

This outlook for the future encouraged the Board of Directors' favorable view on the management's proposal to pay out a dividend of 0.50 euros per share. The dividend proposal for the General Shareholders' Meeting will be finalized when the Board meets to approve the definitive financial statements.

Following a faster growth in the second half of the year, full-year sales for 2004, at constant non-ferrous metal prices, totaled 4,159 million euros, an increase of 7.8% at constant exchange rates compared to 2003. Full year sales include those of the Liban Cables group as from July 1, and reflect the sale of the American Winding Wires business, taken into account as from September 30. Excluding changes in consolidation scope, organic growth for the year was 6.6%.

Restructuring costs were 36 million euros.

Net income reached 57 million euros, after the release of a financial provision of 8 million euros and badwill totaling 4 million euros, and other exceptional items of 9 million euros. Net income before exceptional items was therefore 36 million euros.

Taking into account the diluted weighted average number of shares during FY 2004, net earnings per share stood at 2.38 euros compared with 0.06 euros in 2003.

Nexans

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