Scienza e Tecnologia
Nexans: Successful Turnaround. Powering Ahead to Full-Fledged Electrification Pure Player.
PRESS RELASE _
NEXANS: SUCCESSFUL TURNAROUND .
POWERING AHEAD TO
FULL-FLEDGE D ELECTRIFICATION PURE PLAYER .
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Paris, February 16 , 202 2 – Today, Nexans published its financial statements for the year ending 31 December, 2021, as approved by the Board of Directors at its meeting on 15 February, 2022 chaired by Jean Mouton. Commenting on the Group's performance, Christopher Guérin, Nexans' Chief Executive Officer, said : “ 2021 earnings illustrate our perfect alignment with our 10 - year industrial view , named “ New Nexans ” , presented in November 2018 and for which we have closed the first chapter. We are now ready for the second chapter , to turn the C ompany into a full-fledge d Electrification Pure Player . We are confident and we are determined . O ur “ Winds of Change ” 2022-2024 strategy is well defined and our roadmap perfectly laid out. We will pursue our ambition and deploy our action plan step by step , as rigorously and successfully as we have over the last three years . Nexans stands on solid ground s, we will grasp the energy transition momentum a nd unlock the C ompany 's full potential .”
FULL - YEAR 2021 KEY FIGURES
I. Full - year 2021
Highlights and G eneral
O perating C ontext
Strong 2021 performance
2019-2021 “New Nexans” Transformation achieve d
2022-2024 “ Wind s of change ” : p owering ahead to electrification
Convinced that remaining a generalist will be more a weakness than a strength, Nexans unveiled its ambition to become an Electrification Pure Player from the very start of production of energy, to transmission and distribution of energy, all the way to usage of energy on February 17, 2021 at its Capital Markets Day. Over the year, the Group started laying the groundwork on its three main pillars:
II. Full-year 2021 analysis per
Segment
CONSOLIDATED SALES BY SEGMENT
EBITDA BY SEGMENT
| HIGH VOLTAGE & PROJECTS: Strong catch up in Q4 ; 2.2 billion euros healthy adjusted Subsea backlog providing sound visibility
High Voltage & Projects standard sales stood at 796 million euros in 2021, up +9.3% year-on-year thanks to a strong fourth quarter as expected. Growth was +57.9% in the fourth quarter 2021 compared to fourth quarter 2020 reflecting project phasing, simultaneous operations of Nexans Aurora and Skagerrak cable laying vessels, as well as further ramp up of the transformed high voltage subsea cable plant in Charleston - which was officially opened by the Group in November.
In line with the Group's disciplined project execution, progress was made on the Crete-Attica interconnector project, and on Offshore Wind farm projects Seagreen and Dolwin6. All EPCI contracts combining subsea and land high voltage cables, engineering and installation activities have been managed flawlessly, without execution issues.
Adjusted Subsea backlog was at 2.2 billion euros at the end of December 2021, up +59% compared to December 2020. Tendering activity continued to be strong in both interconnection and offshore wind projects. Benefiting from its EPCI turnkey model positioning, state-of-the art assets and strong technical and execution know-how, the Group was awarded a major contract of more than 650 million euros for the Tyrrhenian Links project to build a new electricity corridor connecting Sicily and Sardinia to Italy's mainland, the supply of export cable solution to the offshore wind farm Moray West off the coast of Scotland and subsea export cables for South Fork Wind Farm, the first delivery of Nexans' framework agreement to supply Ørsted and Eversource with up to 1,000 km of high voltage subsea cables in the US.
EBITDA landed at 143 million euros, up +35.6% compared to 2020, reflecting phasing of projects and the ramp up of Charleston plant and Nexans Aurora vessel at the end of the year.
| BUILDING & TERRITORIES: SHIFT Performance and selectivity boosting EBITDA margin
Building & Territories segment sales amounted to 2,491 million euros at standard metal prices in 2021, a +3.3% organic growth compared to the same period last year reflecting selectivity and an upturn in most geographies notably in Europe and well oriented end-market. Sales were up +3.9% in the fourth quarter 2021 compared to fourth quarter 2020.
EBITDA was up +46.1% at 187 million euros compared to 128 million euros in 2020, with solid EBITDA margin of 7.5%. This +222bps margin increase reflects solid pricing monitoring and SHIFT Prime and Performance deployment to focus on selective growth and value-added products and services.
Over the period, the Building segment demand recovery was solid across all geographies driven by volume growth while remaining selective to support profitability. The Territories (Utilities) tendering activity was strong amidst frame-agreement renewals in Europe and will support the activity in 2022 and beyond. The segment witnessed good dynamics in South America throughout the year, and North America and Middle East and Africa witnessed an upturn in the fourth quarter.
The full-year sales trends by geographies were as follows:
| INDUSTRY & SOLUTIONS: R obust performance boosted by A uto-harnesses and Automation
Industry & Solutions sales landed at 1,366 million euros at standard metal prices in 2021, up +13.7% organically year-on-year supported by a strong recovery in auto-harnesses and automation businesses throughout the year. EBITDA was up +42.1% at 119 million euros against 84 million euros during the same period last year and EBITDA margin also strongly improved at 8.7% compared to 6.9% in 2020 thanks to enhanced selectivity.
Automation was strongly up (+43.3% year-on-year), boosted by demand in Europe and Asia. Railway Infrastructure & Rolling Stock sales were slightly down -4.3% year-on-year in virtue of lower Asian demand. Aerospace & Defense witnessed signs of recovery throughout the year (+10.0% year-on-year). Wind Turbine activity was down (-22.2% in sales year-on-year).
Automotive harnesses was strongly up by +23.9% in 2021. Sales reached a record high in virtue of a strong first half reflecting growing market shares despite being marginally impacted by customers' semiconductor shortages.
| TELECOM & DATA: Sound profitability improvement with SHIFT Program delivering EBITDA margin at 11 .5% in 2021 compared to 7.5% in 2020
Telecom & Data sales amounted to 320 million euros at standard metal prices in 2021, up +6.1% organically (excluding Berk Tek sold in third quarter 2020) compared to 2020 and up +8.0% in fourth quarter 2021 showing a rebound in demand. EBITDA improved by +25.5% and reached 37 million euros in 2021, reflecting continued profitability focus which more than offset unfavorable base effect of the Berk Tek sale. As a result, EBITDA margin improved strongly at 11.5% compared to 7.5% in 2020.
LAN cables and S ystems rebounded by +17.3% organically in 2021 compared to 2020 with activity benefitting across the year from the upturn in both Asia and Europe.
Telecom Infrastructure was down -0.2% in 2021 although the segment witnessed sequential improvement across the year. Price pressure was mitigated by competitiveness actions and stronger selectivity of markets.
Special Telecom (Subsea) sales continued to perform well, up +11.9% since the beginning of the year thanks to the execution of segment backlog.
| OTHER ACTIVITIES
The Other Activities segment – corresponding for the most part to copper wire sales and including corporate structural costs that cannot be allocated to other segments, such as the IFRS 16 impact for lease assets not allocated to specific activities – reported sales of 1,081 million euros at standard metal prices in 2021, up +14.0% year-on-year mainly linked to strong copper wire demand in North America, while the Group initiated the reduction of external copper sales in the second half of the year. The segment was down -18.9% in the fourth quarter reflecting Group's continued monitoring and reduction of external copper sales. EBITDA was -22 million euros over the period against 1 million euros in 2020.
III. “New Nexans” 2019-2021 Plan s uccessful achievement
The Group completed its “New Nexans” transformation plan, exceeding expectations. Over the three years of the plan, the teams implemented cost reduction measures supporting Group's profitability in the context of Covid-19 pandemic. The in-house SHIFT Transformation methodology successfully enhanced cash conversion as well as complexity reduction. Focus on operating working capital and customer selectivity on all commercial opportunities and turnkey projects is now embedded within units to improve profitability in all environments.
Over the three years of the plan, 382 million euros of EBITDA improvement were achieved, offsetting the 177 million euros negative effect of price pressure and cost inflation:
IV. Analysis of net income/(loss) and other income statement items
Operating margin totaled 299 million euros, representing 4.9% of sales at standard metal prices (against 3.4% in 2020).
The Group ended the year 2021 with an operating income of 338 million euros, compared with 246 million euros in 2020. The main changes were as follows:
Net financial expense amounted to 101 million euros in 2021 compared with 54 million euros during the same period last year. The increase is mainly related to the impairments of some financial investments for 51 million euros, notably in Lebanon.
Group's net income landed at 164 million euros for 2021, versus a net income of 80 million euros for the comparative year. The 2021 figure corresponded to a 237 million euros income before taxes (versus 192 million euros in 2020). Income tax expense stood at 72 million euros, lower than the tax expense of 111 million euros of 2020 as this last year included a strong taxable profit from the United States in relation with the sale of Berk-Tek.
The Group ended the period with an attributable net income of 164 million euros versus an attributable net income of 78 million euros in 2020.
At the Annual Shareholders' Meeting, the Board of Directors will recommend paying a 2021 dividend of 1.2 euro per share, up +71% compared to 2020 dividend of 0.70 euro per share.
Net debt decreased to 74 million euros on December 31 , 2021, from 179 million euros on December 31 , 2020, reflecting among others:
V. 202 2 Outlook
Within the context of successful completion of its 2019-2021 Transformation plan, the Group is confident in its ability to maintain and enhance further its performance momentum. Nexans will continue to pursue a strategy focused on value growth over volume, to build-on strong innovation as well as on its investments in the growing High Voltage & Project market and to develop value added systems and solutions for its end-users.
Driven by the agility of its teams, its ambition to electrify the future and its 2022-2024 transformation plan, Nexans enters 2022 with confidence and, sets its targets for 2022 as follow:
VI. Environment, Social and Governance commitments
In 2021, Nexans celebrated the tenth anniversary of its Corporate Social Responsibility (CSR) department and made significant progresses towards its CSR commitments. Key achievements over the year include:
The Group launched its E3 (Environment, Economic, Engagement) performance model, bridging financial and non-financial performance. To manage and strengthen this systemic approach, a new position was created and Olivier Chevreau appointed Vice President Sustainability.
The Group also further strengthened its Corporate Governance with the appointment of Marc Grynberg as Director responsible for monitoring climate and environmental issues (“Climate Director”). The Climate Director will assist the Strategy and Sustainable Development Committee and the Board of Directors, in promoting, facilitating and stewarding the pursuit of climate and environmental considerations in the implementation of the Company strategy. His missions are described in detail in the Internal Regulations of the Board.
The Board of Directors also proposed to the 2022 Annual General Meeting the renewal of the term of office of Anne Lebel as a director and resolved, subject to her appointment as director by the Annual General Meeting, to re-appoint her as a Lead Independent Director and Chair of the Appointment and Corporate Governance Committee and the Compensation Committee.
VII. Significant events since the end of December
On January 1 2 - Nexans received the first order under the frame agreement to manufacture approximately 110km of high voltage subsea cables to South Fork Wind, a joint venture between Ørsted and Eversource.
On January 2 4 - Nexans supplied La Loma's solar farm with complete infrastructures to interconnect solar energy conversion systems. Led by the Enel Green Power Company, the solar farm will have a capacity of 187 MWdc and will generate 420.5 GWh per year for two decades.
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A webcast is scheduled today at 9:00 a.m. CET. Please find the access details:
Webcast
https://channel.royalcast.com/landingpage/nexans/20220216_1/
Audio dial-in
Confirmation code: Nexans
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Financial calendar
April 27, 2022: 2022 first quarter financial information
May 11, 2022: Annual General Meeting
July 27, 2022: 2022 half-year earnings
October 26, 2022: 2022 third quarter financial information
About Nexans
For over a century, Nexans has played a crucial role in the electrification of the planet and is committed to electrify the future. With around 25,000 people in 42 countries, the Group is leading the charge to the new world of electrification: safe, sustainable, renewable, decarbonized and accessible to everyone. In 2021, Nexans generated 6.1 billion euros in standard sales.
The Group is a leader in the design and manufacturing of cable systems and services across four main business areas: Building & Territories, High Voltage & Projects, Industry & Solutions and Telecom & Data.
Nexans is the first company of its industry to create a Foundation supporting sustainable initiatives bringing access to energy to disadvantaged communities worldwide. The Group pledge to contribute to carbon neutrality by 2030.
Nexans. Electrify the future.
Nexans is listed on Euronext Paris, compartment A.
For more information, please visit www.nexans.com www.nexans.com
Contacts:
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 invited to visit the Group's website where they can view and download the 202 1 financial statements and Nexans Universal Registration Document, which includes a description of the Group's risk factors .
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 (standard price at 5,000 €/t) and aluminum (standard price at 1,200 €/t).
The 2020 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 €38m and -€158m respectively.
12 months operating margin on end of period capital employed excluding antitrust provision.
Excluding M&A and equity operations.
Adjusted Subsea backlog including contracts secured not yet enforced.
Copper standard price at 5,000€/ton.
Adjusted Subsea backlog including contracts secured not yet enforced.
8 Free cash Flow excluding strategic capex, disposal of tangible assets, impact of material activity closures and assuming project tax cash out based on completion rate.
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