Paris, May 3, 2017 -
Today, Nexans announced that its sales for the first quarter of 2017 amounted to 1,570 million euros (versus 1,433 million euros for first-quarter 2016). At constant metal prices
the sales figure came to 1,137 million euros, representing organic growth of 1.2% year on year and 5.5% compared with the fourth quarter of 2016.
This performance reflects the trends described at the end of 2016:
Commenting on the Group's performance for the first quarter of 2017, Arnaud Poupart-Lafarge, Nexans' Chief Executive Officer, said:
Our business performance during the first quarter of 2017 was globally in line with expectations. Against the backdrop of persistently weak low-voltage markets, the upturn we anticipated for our project-based business has started to materialize and to drive growth for the Group as a whole. We remain confident that the Group's operating margin will continue to improve in 2017, particularly in the second half of the year.
|Q1 2016||Q1 2017||Organic growth Q1 2017 vs. Q1 2016||
Q1 2017 vs. Q4 2016
|(in millions of euros)||At constant metal prices||At constant metal prices|
|Distributors & Installers||279||280||-3.0%||-0.6%|
|Transmission, Distribution & Operators||449||485||+5.9%||+8.7%|
|o/w Distribution & Operators||-||-||-6.5%||+1.3%|
The Distributors & Installers division posted sales of 280 million euros for the first quarter of 2017. After the moderate organic growth achieved by this division for full-year 2016, this figure represents a slight 3% organic decrease compared with the first quarter of 2016.
Sales of LAN cables and systems (which represent approximately one quarter of the division's business) decreased by 11.8% on an organic basis in first-quarter 2017 compared with a strong organic growth figure in the first quarter of 2016. The firstquarter 2017 contraction therefore reflects an unfavorable basis of comparison as distributors and installers in the United States reduced their inventory levels during the period whereas they increased them during the first three months of 2016. Overall market trends are still positive, however.
Sales of low-voltage power cables retreated 0.1% year on year on an organic basis. All geographic areas experienced a decrease in business volumes during the period except for the Middle East/Africa Area, where sales surged 20.5% thanks to a particularly strong start to the year in Turkey and Lebanon.
The Group continued to roll out its measures to optimize its customer/product portfolio in all of its geographic areas, with a view to focusing on higher value-added solutions, especially in Europe where the Group is preparing its offering of fire-resistant products for the introduction of the new EU Construction Products Regulation (CPR). Margins were up compared with the second half of 2016.
Sales for the Industry division amounted to 295 million euros in the first quarter of 2017, down 0.7% year on year on an organic basis but up 4.7% compared with the fourth quarter of 2016.
After stabilizing at a high level in 2016, sales of automotive harnesses grew again, advancing 4.9% in the first quarter of 2017.
The morose Oil & Gas sector (which reported an overall 38.7% organic sales decrease) continued to weigh on sales of cables to Asian shipyards and AmerCable sales, although the pace of new orders has picked up since the beginning of 2017.
The other segments in the Industry division recorded 3.2% growth led by buoyant momentum in the aeronautical, robotics, medical and rail infrastructure sectors. Business in the wind farm segment stabilized at the high level achieved in 2016.
The Group's different measures to enhance operational performance, reduce fixed costs, optimize margins and move towards a more favorable product mix means that margins are more stable.
Sales generated by the Transmission, Distribution & Operators division came to 485 million euros in the first quarter of 2017, representing organic growth of 5.9% compared with the same period of 2016 and 8.7% versus the fourth quarter of 2016.
With lower business volumes in all geographic areas apart from North America - where there was a sharp 27.8% upturn - sales of distribution cables retreated 11.3% on an organic basis in the first quarter of 2017.
This trend was particularly pronounced in South America, where the falloff was 26.4%, reflecting the effect of the natural disasters in Peru and Chile and the fact that there were no overhead power line contracts in Brazil.
The Middle East/Africa Area also saw a sales decrease (down 24.7%), mainly in Morocco where the pace of exports slowed and there was an unfavorable basis of comparison with the first quarter of 2016 when sales were boosted by high demand for power transformers.
In Europe, after a very poor fourth quarter in 2016 (when sales fell 26.1%), business gradually began to recover, with organic growth coming in at 7.8% versus the fourth quarter of 2016. However, compared with the first quarter of 2016 (which was characterized by high sales levels), the figure for the first three months of 2017 represented an organic decrease of 17.3%.
Sales in the Asia-Pacific Area edged back just 2.6% on an organic basis, as the significant 22.7% rise in New Zealand almost offset the 25.7% contraction in South Korea caused by low levels of capital spending by energy operators in that country.
Sales to telecommunications operators continued the growth trajectory that began in the second quarter of 2016. This business remained dynamic thanks to the Group's offering of optical fiber cables and accessories, and year-on-year organic growth came to 22%.
Momentum was also positive in North America and the Middle East/Africa Area, despite lower sales volumes.
This segment continued its recovery that began in the second quarter of 2016, fueled by a strong order book for European and US plants and despite weak order levels in China.
Overall, year-on-year organic growth for the land high-voltage segment totaled 6.7% in the first quarter of 2017 and this upward trend is expected to continue throughout the year.
Sales for the submarine high-voltage segment were 31.7% higher than in first-quarter 2016 on an organic basis.
This figure reflects the fact that NordLink and Beatrice - two major contracts won by the Group in 2015 and 2016 - have now entered production. As expected, sales of submarine high-voltage cables (excluding umbilicals) increased sharply, climbing 70.6% on an organic basis, as deliveries began for these contracts.
Sales of umbilical cables were adversely affected by lower capital expenditure levels in the Oil & Gas sector, which resulted in a 45.7% organic decrease. The Group does however expect to report a recovery in these sales over the rest of the year on the back of several orders taken in the second half of 2016.
The Group anticipates further strong growth over the coming quarters for all of its project-related business.
The "Other Activities" segment - which essentially corresponds to external sales of copper wires - reported sales of 76 million euros, down 3.6% on the first quarter of 2016.
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2 - To neutralize the effect of fluctuations in non-ferrous metal prices and therefore measure the underlying sales trend, Nexans also calculates its sales using constant prices for copper and aluminum.
(in millions of euros)
|Sales at current metal prices by division|
|Transmission, Distribution & Operators||513||562|
|Distributors & Installers||396||446|
|Sales at constant metal prices by division|
|Transmission, Distribution & Operators||449||485|
|Distributors & Installers||279||280|
|First-quarter 2016||Currency effect||Organic growth||Effect of changes in scope of consolidation||First-quarter 2017|
|Transmission, Distribution & Operators||449||15||27||-6||485|
|Distributors & Installers||279||9||-9||1||280|