2011 First Half-Year Results

Confirmed strong business upturn, improvement of the operating margin

  • Sales at constant metal prices1): 2.287 billion euros, up 8.2% in organic terms compared with the first half 20102)
  • Operating margin rate3) at 5.1% against 4.0% at June 30, 2010
  • Net debt at 366 million euros (against 277 million euros at June 30, 2010) due to increased business and rise in non-ferrous metals prices
  • Yearly targets confirmed: organic growth between 5% and 7%, operating margin rate around 5.5%
  • Reserve of 200 million euros relating to the EU proceeding for anticompetitive behavior


Paris, July 27, 2011 – The Nexans Board of Directors, chaired by Frédéric Vincent, met on July 26 to examine the Group’s consolidated financial statements for the first half of 2011.

Sales for the first half of 2011 come to 3.527 billion euros compared with 2.955 billion euros for the first half of 2010. At constant non-ferrous metal prices, sales amount to 2.287 billion euros compared with 2.100 billion euros for the first half of 2010.

At constant consolidation scope and exchange rates, sales are up organically 8.2% against the same period of 2010. All the businesses of the Group are growing and in particular, Industry and Building. All geographical areas report a positive organic growth, except the Middle-East, Russia and Africa area, which was penalized by political events in Northern Africa and Egypt.

Operating margin comes to 117 million euros being 5.1% of sales at constant metal prices, compared with 4.0% for the first half of 2010. The Group operating profitability benefits from the growth in volumes and margins which tend to improve despite the sharp rise in plastics and components prices and in spite of the recent events in Northern Africa and in the Middle-East, which have impacted the activities of the Group in the area.

The pre-tax loss comes to 133 million euros for the first half of 2011, compared with a profit of 5 million euros for the first half of 2010. It takes into account a 200 million euros reserve relating to the ongoing EU proceeding for anticompetitive behavior in the sector of submarine and underground power cables as well as the related accessories and services (please refer here), a restructuring charge for 13 million euros, asset depreciations of 6 million euros and a profit of 21 million euros (without any cash counterpart) from the revaluation of the Group’s copper inventory.

As a consequence, the net loss (Group share) is 151 million euros (compared with a loss of 17 million euros for the first half of 2010).

The consolidated net debt comes to 366 million euros at June 30, 2011 compared with 277 million euros at June 30, 2010 and 144 million euros at December 31st 2010. The growth in activity and the rise in the prices of non-ferrous metals explain most of this increase.


During the first half of 2011, the overall activity recovery momentum observed in the second half of 2010 was confirmed, particularly in specialty cables and cables related to building. In this context, sales are expected to further grow in the second half of 2011 but at a slower rate, compared with the growth in the first half of 2011, during which the activity level was significantly higher than in the first half of 2010. As a result, the Group targets an organic growth in revenues between 5 and 7% for the full year 2011.

Subject to continued pass-through of price increases in plastics raw materials and components and without any major new development in the Middle-East and Europe that would reduce activity below the levels of the first half 2011, the operating margin should further improve in the second half to reach an operating margin rate of around 5.5% on a full year basis.
At constant scope and metal prices, net debt should reduce to around 300 million euros at December 31st, 2011.

Commenting on the first half-year results for 2011, Frédéric Vincent, Chairman and CEO, said: « The first half-year was very encouraging in terms of activity and profitability. During that period, the Group has launched a certain number of major development projects, first in the high voltage segment in China and in the USA and secondly in the specialty cable business, with the creation of a joint-venture company dedicated to rolling stock harnesses in Morocco and a capacity extension in China. In addition, the Group has signed an agreement with its main shareholder, Madeco, according to which Madeco will reinforce its participation in Nexans’ capital.
In spite of an uncertain economic context, in particular in Europe given the sovereign debt crisis in certain southern European countries, the Group expects its sales to further grow in the second half of 2011. This should lead to an improvement in the operating margin allowing the Group to confirm its operating margin target rate in the order of 5.5% for 2011 ».

Nexans as well as its subsidiary Nexans France SAS received a Statement of Objections (*) on July 5 from the Directorate-General of Competition of the European Commission relating to anticompetitive behavior in the sector of submarine and underground power cables as well as the related accessories and services. As a result, the Group constituted a provision of 200 million euros in its consolidated half year accounts of June 30, 2011. Being an estimate, the definitive financial consequences for the Group may differ.

This amount corresponds, at this stage of the proceedings, and by application of a principle of prudence, to the Group’s estimate of the fine which could be imposed taking into account the fining policy of the Commission and methodology and elements on which the Commission intends to base its fine, as well as certain challenges that Nexans intends to make.
The Group is also under investigation by the Competition Authorities of Australia, South Korea (in addition to an investigation into the domestic market), the United States, Brazil, and Canada, in the same sector of activity. The Group is unable to provide an analysis at this stage of these other proceedings and therefore did not make any provision in its accounts for these other investigations.

In its press release of February 12, 2009 and in its subsequent communications, the Group had indicated that an unfavorable outcome of these procedures as well as the associated consequences could have a material adverse effect on the results and thus the financial situation of the Group.

*A Statement of Objections is a procedural document in competition investigations whereby the European Commission informs parties concerned of its preliminary view in relation to a possible infringement of EU competition law.  The recipient of a Statement of Objections may respond in writing, by presenting all elements and information in its favor which may limit the accusations made by the Commission. The recipient may also ask to be heard to present its arguments on the investigation. The sending of a Statement of Objections does not prejudge the European Commission's final decision in the proceedings.

Key figures for the first half of 2011

 (in millions of euros)

At constant non-ferrous metal prices


H1 2010

H1 2011




Operating Margin



Operating Margin rate (% of sales)



Net income (Group share)



Diluted earnings (loss) per share (in euros)



Detailed analysis of activity by business segment

Sales by business segment


H1 2010

H1 2011


Organic growth

(in millions euros)

At constant non-ferrous metal prices

At constant non-ferrous metal prices


Energy business



     - Energy Infrastructure





     - Industry





     - Building





Telecom business





     - Telecom Infrastructure





     - Private Networks (LAN)










Sub-total : cable activities





Electrical Wires





Group total






Operating margin by business segment

(in million euros)

H1 2010

H1 2011

Energy business



     - Energy Infrastructure



     - Industry



     - Building



Telecom business



     - Telecom Infrastructure



     - Private networks (LAN)






Sub-total : cable activities



Electrical Wires



Group total




Sales posted by the Energy business rose 8.5% on an organic basis in first-half 2011, coming in at 1,906 million euros compared with 1,743 million euros in the first six months of 2010.

Energy Infrastructure

During the first half of 2011, energy infrastructure activities reported an organic growth of 4.8%, but performance was mixed across the various business sectors.

As far as low and medium voltage cables are concerned, the situation is uneven depending on the geographic areas. In Europe, certain countries – such as Germany – registered brisk growth, whereas in other countries sales levels remained stable (Italy and Scandinavia) or even contracted (France, Switzerland, Spain and the United Kingdom). The region’s overall relatively weak year-on-year rise in sales reflects the cautious relaunch of capital expenditure programs by the main operators. Despite an increase in business volumes, sales in North America also edged up only slightly, reflecting a continuing difficult competitive environment. In contrast, sales in the Asia-Pacific Area were boosted by an upturn in capital expenditure by power network operators in Australia, New Zealand and South Korea. The South America Area reported double-digit growth, fueled by strong demand as a result of power link projects in Brazil. Lastly, sales of medium-voltage cables in the MERA Area were weighed down during the period  by the geopolitical context in Egypt, which led to a considerable slowdown in Nexans’ business in that country, and more generally, by attrition in certain export markets. 

Despite the increase in business volumes, operating margin for low and medium voltage cables was negatively affected in the first-half 2011 by competition and a slump in business in the Middle East.

Sales of high voltage underwater cables were considerably higher than in first-half 2010, thanks to the advancement of contract performance during the period.

During the first six months of 2011 the Group felt the positive effects of the reorganization measures implemented at its Halden unit in Norway in 2010 in order to meet the demands of this rapidly-developing sector.
Operating margin was significantly higher than in first-half 2010 thanks to the ramp-up in production and enhanced performance levels for contracts.

The first half of 2011 also saw a steady number of invitations to tender, confirming the robust trends in this market.

First-half 2011 was a difficult period for high voltage terrestrial cables. The first three months of the year were marked by delays in the launch of various projects in the Gulf countries as well as by the suspension of two major projects in Libya. These factors led to lags in revenue recognition and had an adverse effect on operations at the Group's manufacturing facilities. Business levels picked up at the end of the second quarter of the year, however, thanks to new orders in Europe, Russia and the Middle East. Consequently, the outlook for the second half of 2011 is more encouraging, although the Group does not expect business in Libya to start up again in the short term.

All of these factors had a negative impact on the sector’s operating margin for first-half 2011.

The number of quotes issued remained steady during the period and at end-June 2011 the sector’s order book represented around one year’s worth of sales, on a par with the figure at December 31st, 2010.

Overall, operating margin for the Energy Infrastructure segment amounted to 58 million euros, or 6.1% of sales at constant metal prices, compared with 61 million euros, or 6.8% of sales for the first six months of 2010.


Based on constant exchange rates and a comparable scope of consolidation, sales of industrial cables were up over 15% on first-half 2011, reflecting the following:

Cable harnesses – primarily aimed at German high-end automakers – once again turned in very strong growth. On the back of a more than 50% jump in sales in 2010, the sector reported a further increase of over 30% in first-half 2011.

The other sectors in the Industry segment posted growth of close to 10%. The energy resources sector was boosted during the period by an upturn in capital expenditure projects in the oil and gas industries. The upswing in business levels observed in the sector in the second quarter of the year was illustrated by a steep increase in the volume of quotes issued. Sales of cables for the mining industry continued on the growth track with a sharp rise in business in Australia and South America. Momentum also remained robust in the robotics sector, where the Group felt the positive effects of the strong positions held by the Italian company Intercond, which Nexans acquired in 2008. 

In the transport market, sales performance was mixed across the railway, aeronautical and shipbuilding sectors. Business levels in the shipbuilding sector retreated due to a temporary downturn in demand for Floating Production, Storage and Offloading units (FPSO) for the offshore oil industry as well as heightened competition in the traditional shipbuilding market. However, the outlook is still favorable with a substantial order book which the Group expects to generate greater sales volumes but lower margins than in the past. Meanwhile, the railway sector was able to deliver a much healthier showing in first-half 2011, once again posting double-digit growth. Lastly, sales of cables for the aeronautical sector rose sharply thanks to a ramp-up in production programs for new aircrafts. 

Overall, operating margin for the Industry segment totaled 18 million euros, or 3.6% of sales at constant metal prices, versus 7 million euros, or 1.6% of sales in the first half of 2010.


Sales of cables for the Building sector were up almost 10% on the first-half 2010 figure, with all geographic areas other than the Middle East contributing to the increase.

Business in Europe – which accounts for half of the Building segment’s sales – was buoyed by a rise in the number of capital expenditure projects as well as a recovery in the residential building market. The situation varied, however, across the segment's different geographic areas. France – which is still the Group’s main market – saw a sharp upturn in business levels. Trends in the United Kingdom were also favorable, whereas performance was stable in Scandinavia, which had remained relatively unaffected by the industry’s overall falloff in demand in 2009 and 2010. Sales edged down in Benelux due to the postponement of certain infrastructure projects, although these are expected to go ahead in the second half of the year. After a solid first three months, the pace of business slowed in the second quarter in Spain and remained weak in Greece.

In North America, the situation improved considerably in first-half 2011, with organic sales growth coming in at almost 25%. This performance was driven by the Group’s strong commercial positions in Canada and its niche-player status in the US market. 

The Group also recorded double-digit growth in the Building segment in South America, propelled by highly buoyant markets in Peru, Chile, Colombia. Demand was led by the combined impact of a recovery in the residential building market and major capital expenditure programs carried out during the period.

In Asia-Pacific – where the segment suffered a particularly difficult year in 2010 – the Australian market continued its recovery and the Group gradually regained some of the positions that it had lost in 2010.
Only the MERA Area suffered a contraction in sales compared with first-half 2010, reflecting difficult market conditions in Turkey in particular.

Total operating margin for the Building segment came to 30 million euros, or 6.5% of sales at constant metal prices, versus 9 million euros, or 2.1% of sales in the first half of 2010. This sharp upswing was due to both higher sales volumes and margins. 

Although business levels in the first six months of 2011 for the various markets of the Building segment were still well below the record level of first-half 2007, the segment’s profitability has been substantially enhanced thanks to streamlining measures implemented in Europe since then, particularly in Ireland and Germany.


Local Area Networks (LAN)

Sales of LAN cables amounted to 120 million euros in the first six months of 2011, on a par with the first-half 2010 figure on a like-for-like basis.

Sales stabilized during the period in both Europe and North America, which are the Group’s principal markets in the segment. In North America, first-half 2011 saw a slowdown in data center projects while the LAN market related to commercial real estate started to trend upwards. Asia-Pacific was the only Area to report growth in the period, fueled by an upturn in sales in South Korea.

Operating margin for the LAN segment came to 6 million euros, representing 5.1% of sales. The year-on-year contraction compared with first-half 2010 was partly due to a less favorable product mix in the North American market.

Telecom Infrastructures

Sales of cables for the Telecom Infrastructure market came to 101 million euros, representing organic growth of 17%. Both copper and optical fiber cables contributed to this upward trend.

Growth was particularly strong during the period in South America and the Asia-Pacific Area but was more moderate in Europe, except for the copper and optical components market which was buoyed by robust demand in France. Thanks to the measures it put in place the Group did not experience any negative impacts concerning its supplies of optical fiber following the earthquake and tsunami in Japan.

The rise in business volumes pushed up the segment’s operating margin to 7 million euros or 7.4% of sales, versus 1.6% in the first half of 2010.


External sales recorded by the Electrical Wires business totaled 144 million euros for the first six months of 2011, up 4% on first-half 2010. During the period the Group pursued its strategy of filling up the capacity of its production equipment through sales generated outside the Group when this capacity is not filled by internal demand.

Operating margin for the Electrical Wires business came to 10 million euros, or 6.7% of sales, compared with 4.7% in first-half 2010.

Financial calendar:

  • October 27, 2011: third quarter 2010 financial information
  • November 23, 2011: Individual shareholder meeting in Toulouse*

* Provisional date subject to change

This press release, the analyst presentation of the half-year results, the half year accounts and the interim activity report are available in French on the Group’s web site www.nexans.com. The half-year financial report will be available in French and English at the end of August on Nexans website.

The reader is also invited to consult the 2010 Registration Document, available on the Group’s website, which includes the risk factors of the Group and notably those related to the competition investigations launched in January 2009 in Europe and in other countries in relation to anticompetitive behavior in the sector of submarine and underground power cables as well as the related accessories and services.

Appendices (PDF. 108 Kb)

1. Consolidated income statement
2. Consolidated statement of comprehensive income Bilan consolidé IFRS
3. Consolidated statement of financial position
4. Consolidated statement of cash flows
5. Information by reportable segment

1) 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.
2) Presentation of 2010 sales on the basis of comparable data corresponds to constant non-ferrous metal sales, recalculated after adjustments for comparable scope and exchange rates. The exchange rate effect on sales at constant non-ferrous metal prices amounts to 17 million euros, and the scope effect to -3 million euros
3) A management indicator used by the Group to measure its operating performance. The operating margin rate is expressed as a percentage of the sales at constant non-ferrous metal prices.

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About Nexans

With energy as the basis of its development, Nexans, worldwide expert in the cable industry, offers an extensive range of cables and cabling systems. The Group is a global player in the infrastructure, industry, building and Local Area Network markets. Nexans addresses a series of market segments: from energy, transport and telecom networks to shipbuilding, oil and gas, nuclear power, automotives, electronics, aeronautics, material handling and automation. Nexans is a responsible industrial company that regards sustainable development as integral to its global and operational strategy. Continuous innovation in products, solutions and services, employee development and engagement, and the introduction of safe industrial processes with limited environmental impact are among the key initiatives that place Nexans at the core of a sustainable future. With an industrial presence in 40 countries and commercial activities worldwide, Nexans employs 23,700 people and had sales in 2010 of 6 billion euros. Nexans is listed on NYSE Euronext Paris, compartment A. For more information, please consult www.nexans.com