Group presentation April 2008
Safe Harbor This presentation contains forward-looking statements relating to the Group s expectations for future financial performance, including sales and profitability. The forward looking statements contained in this presentation are dependent on known and unknown risks, expectations and assumptions, uncertainties and other factors which may cause the Group s actual results, performance and objectives to be materially different from those indicated by the forward looking statements. These forward looking statements depend amongst others on the following assumptions and risks : (1) the rates of economic growth in the zones where Nexans is active remaining at current levels until 2009; (2) the continued strong demand of the energy infrastructure market in particular in developing countries and of the Oil & Gas sector; (3) the possibility to pass on to final customers increases in the costs of raw materials, energy and transport; (4) the management of risks associated with sales in turnkey projects; (5) the effect of currency fluctuations being neutral; (6) the Company being able to modify customer and supplier payment terms for metals; (7) the Company being able to reduce its cost base through realization of restructuring actions in the anticipated time frame; (8) the Company being able to achieve productivity improvements; and (9) the Company successfully integrating acquisitions. Investor relations : Michel Gédéon michel.gedeon@nexans.com Julien Catel julien.catel@nexans.com Angéline Afanoukoe angeline.afanoukoe@nexans.com Tel: 33 1 56 69 84 81 - Fax: 33 1 56 69 86 40 1
AGENDA I. Nexans in the Cable Industry II. Financial performance III. Strategy & MT Targets 2
A large and diversified industry A worldwide market of $150 bn in 2007 Three end-user markets Building Industrial, Public & Residential Buildings Medium & Low Voltage energy cables Data & communication private networks (LAN,..) Industry Automotive, Shipbuilding, Aeronautics Oil & gas and petrochemicals Automation, mining, handling, nuclear.. Infrastructures Energy networks (T&D) Telecom networks Transport infrastructures (Railway networks, airports..) 3
Industry dynamics Healthy long term drivers 4 9.6 12.3 30.4 47.3 19.6 2003 5.2% $123 Bn Worldwide Market (at 2007 metal prices) CAGR $150 Bn 5.5 7.7 16.3 40 2007 $176 Bn 7.7 7.6 19.2 47.2 58 66.7 23.2 4% CAGR 27.7 2011 Change 07-11 + 40 % Optical Fiber -2 % + 18 % + 18 % + 15 % + 19 % Telecom Infrastructure Telecom LAN & Industry Energy Infrastructure Energy Building & Industry Winding Wires Source : CRU January 2008, Nexans estimates Long-term drivers Energy networks : Need to replace aging lines and interconnect the networks Electrification programs in emerging countries New forms of energy production Oil & Gas Offshore, onshore Development of international trade and transportation Shipbuilding, aeronautics, handling.. Railways infrastructures Safety / Standardization Telecom : Favorable product mix evolution Strong growth in emerging countries 4
Nexans: the world-wide market leader 2007 Sales of 7,4 billion euro Full line player 2007 Sales in M, actual metal price main US & European players 7,412 Prysmian (ex Pirelli) 5,118 General Cable Draka 2,816 3,369 Superior Essex 2,185 Commscope Belden CDT Leoni 1,484 1,409 1,381 (excl. harnesses) Electrical Wires Energy Cables Telecom Cables Note : 1 = 1.35 USD Sources : Financial communication of corresponding companies, Nexans estimates 5
Nexans positioning : a full range approach Electrical Wires Energy Telecom END MARKETS Infrastructure Industry Wirerod (mainly) & Bare conductors 7 % of sales Energy Public Networks 37 % of Sales including HV insulated cables & Umbilicals Industrial Applications 18 % of Sales Copper & Fiber Networks, Accessories 5 % of Sales Special Telecom Cables 2 % of Sales Building MV and LV energy cables Private Networks / LAN (Data & Communication) 25 % of Sales 6 % of Sales N 1 Worldwide N 1 in Europe N 3 Worldwide Note : percentages based on Q12008 Sales at constant metal 6
A multi-regional strategy Our markets are of multi-regional nature with a need for local presence Europe 53 % of sales* Leader strategy Above 10% market shares North America 17 % of sales* Asia-Pacific 12 % of sales* Challenger position, present only in selected business segments : Strong positions in Canada (Energy) 15% of LAN market in the USA Selective approach in North-East Asia Profitable market shares on selected business (HV, Shipyards,..) Leading player in Australasia ROW 17 % of sales* Leading player on selected areas Middle East, Brazil * based on Q1 2008 Sales by geographic market, at actual metal prices 7
AGENDA I. Nexans in the Cable Industry II. Financial performance III. Strategy & MT Targets 8
Nexans is growing faster than its markets organic growth of Cable activities+9.3% /year since 2003 vs +5.2% market CAGR (*) Sales (at constant metal prices) In M + 9.3% organic per year Cable activities 4,822 Organic growth by cable types 3,924 2003 2007 (*) Compounded Annual Growth rate 9
Strong improvement of profitability Operating Margin OM rate from 2.3% in 2003 to 8,5% of Sales (*) profitability restored both in Energy and Telecom cables In M +45 % per year 12% 10% 8% OM rate (*) by cable types 7,8% 9,7% 9,3% 91 2003 409 2007 6% 4% 2% 4,5% 4,3% 3,3% 5,9% 5,6% 4,4% 7,7% 8,5% 5,8% 0% 2004 2005 2006 2007 (*) Operating Margin on Sales at constant metal 10
Nexans : a company that has been transformed Massive restructuring (2001-2005) Selective M&A policy and organic development focused on: Higher added value segments Fast growing geographic areas Portfolio turnover Powerful operating leverage created Strong financial structure maintained 11
Geographic & business mix re-orientation Divestitures Winding Wires USA August 2004 Simcoe April 2007 Distribution Norway June 2005 Tianjin July 2007 Winding Wires Europe February 2005 January 2007 Agro May 2002 Distribution Suisse February 2006 Telecom Copper Santander February 2008 590 M yearly sales OUT 12
Geographic & business mix re-orientation Acquisitions & Joint Ventures January TVG 2007 PETRI June 2002 Liban Cables July 2004 Daesung Cable June 2001 Kukdong December 2002 Minority Repurchase in Korea November 2006 Viscas Japan (JV) July 2006 Furukawa cabos de Energia January 2003 Madeco Wire&Cables November 2007 1 Mds yearly sales IN Cabloswiss July 2004 Confecta Group January 2006 Nexans Polycab February 2008 LiOA Vietnam January 2006 Olex November 2006 13
Higher exposure to specialty products In M Specialty Product of which Priority segments: 1,730 327 362 661 + 18 % + 9 % + 11 % 1,932 386 393 734 2005 2006 + 23 % + 9 % + 22 % 2,328 476 430 893 2007 Specialty products in Sales : 41 % 43 % 48 % OEMs Naval Shipboard Automotive Robotics Nuclear Handling BUILDING LAN Safety Heating cables INFRASTRUCTURE High Voltage Umbilicals Energy accessories Railway xdsl FTTx Windmill Development plan in place for each priority segment Constant monitoring through Country organization Primary target of M&A operations 14
Higher exposure to fast growing areas Sales from high growth areas (*) at constant metal price (M ) X 6 in 5 years 30% through internal growth 70% through acquisitions in M + 140 % 218 522 + 65 % 860 + 42 % 1 220 2002 2005 2006 Pro-forma with Olex 2007 Pro-forma with Madeco (**) % of total Sales : 5 % 12 % 18 % 24 % (*) Including China, Vietnam, South Korea, Middle-East, Morocco, Australasia and Latin America (**) based on estimated 2007 Sales for Madeco, 1 = 1,47 USD 15
Strong financial structure protected (in Million ) Capital employed Dec. 31, 05 (*) Dec. 31, 06 Dec. 31, 07 Non-current assets 999 1,255 1,240 Working capital 1,093 1,465 1,222 Assets (net) held for sale 42 38 105 Total to finance 2,134 2,758 2,567 Financed by Net financial debt 374 633 290 Reserves 450 469 434 Other liabilities 33 67 85 Shareholders' equity and Minority interests 1,277 1,589 1,758 Total financing 2,134 2,758 2,567 (*) Restated for Core-exposure accounting change Gearing = 16% Leverage (Net debt / EBITDA) = 0.6 x 16
AGENDA I. Nexans in the Cable Industry II. Financial performance III. Strategy & MT Targets 17
Our medium term objectives A Nexans group: More Profitable Less Cyclical More Streamlined With more Synergies between businesses 18
A clear strategy Focus on four core businesses Energy infrastructures Industry (Energy & telecom) Building Telecom LAN Consolidating our leadership Commercial development Expanding the offer Enhancing the product mix Arbitrage within the Telecom activities Telecom Infrastructures Downsizing Telecom Copper activities, opportunistic attitude in Fiber Cables Down-sizing of high copper content activities Electrical Wires Refocusing on internal needs only 19
Energy infrastructure: greater visibility and improved profitability Solid fundamentals Position of co-leader in the world Powerful growth drivers : Network renovation New energy sources Emerging economies Increasing weight of High Voltage (12 % of Sales in 2007) ~ 390 M ~ 570 M + 45% Marked increase in order backlog 1 year 2004 2007 2 years' business in High Voltage and Umbilical Appropriate resources Capacity X 2 in two years for HV submarine Submarine & umbilical Underground Aerial 2005 2006 2007 In 2008 : - Sustained growth - Further improvement to margins 20
Industry: High potential for growth and profitability Appropriate resources Backed by growth sectors New sales organization for global markets Multi-site offering structure Capacity freed up by re-examining customer and product portfolios Oil & Gas : 2007/2011 Capex of this industry increased by 25% vs 2002/2006 period Shipyards : order backlog X 3 in 5 years (Hyundai, Mitsubishi...) in M Petrochemicals & nuclear 706 805 1,005 + 42% Other Transportation : Alstom : order backlog entries doubled in 2007 Airbus 5 years' order backlog Mining Industries Transportation Harnesses Other industries OP margin rate 2005 (*) 2006 (*) 2007 3 % 5.6 % 8.7 % In 2007 : Profitability up sharply In 2008 : - 6 to 7% growth - Continued margin growth - Divestiture of harnesses business (*) Restated for segmentation changes made in 2007 21
Building: strength of Nexans business model A balanced product mix Residential Construction ~65% ~35% Industrial & Commercial Building residential US very limited : 30 M /year balanced breakdown in Europe (Maintenance & renovation = 43 % of the market) 2002/2007 : a different business model Significant changes: Development of product portfolios Geographic redistribution Industrial restructuring (Nexans = 26 M over 4 years) A geographical balance In % of Sales (*) France - Benelux 35 % Scandinavia 9 % Other Europe 24 % North America 15 % Asia-Pacific 7 % Emerging economies 10 % In 2008 : - Steady volume activity overall - Pressure on margins (observed in North America and likely in Europe) (*) at constant metal prices 22
Telecom: clarified positioning LAN Systems offering under development Progression of 10 Gigabit Confirmed in Core Business activity Fiber Optic Rollout in progress in Europe Technology and service offering Potential partnerships Growth opportunities Telecom copper Infrastructure Lack of critical size Divestiture project started (Santander plant) 23
Electrical Wires: ongoing down-sizing Faster down-sizing Weight in Nexans Sales (*) 37 % reduction in external sales in 2007 Improved margins (prices and costs control) 18 % 10 % of Sales 2006 2007 Optimized capital employed Capital employed reduced to ~180 M at December end 2007 Reduction program stepped up: Objective: minimal external sales in 2009 (*) at constant metal prices 24
2009 objectives Operating margin 8,5% ~10% under favourable economic environment 4,4% 5,8% ~ 7% under depressed economic environment Sales Organic growth of Cable activities +8,2% 2005 +12,1% 2006 2007 2008 2009 +6% /year Free Cash Flow excluding metal impacts (*) 2005 + 33 New targets including announced M&A operations Achieved results + 275 (74) 2006 2007 2005 2006 2007 2008 2009 (*) Free Cash Flow excl. metal = Cash from operations + WCR at constant metal Capex - Dividends 25
Q1 2008 trading update: top-line growth in line with objectives Q1 2008 Sales by business segment in M Organic growth Energy Infrastructure 441 16,4% Industry 237 3,8% Building 294-0,7% Telecom Infrastructure 58-8,5% North America + 5,7 % Rest of the World + 15 % Europe + 6,4 % Asia- Pacific + 1,2 % Private Networks (LAN) 72 2,5% Others 4 N/A Cable Activities (*) + 6,4 % organic Total Cable activities 1,106 6,4% Electrical Wires 86-31,4% Total Nexans 1,192 2,3% (*) excluding Electrical Wires 26
Half Year 2008 outlook: further improvement of profitability Under comparable economic conditions as in Q1 2008 Organic growth of Cable activities : above 6% Strong improvement of Operating Margin rate: between 8.5% and 9% vs 7.6% at HY 2007 Net Debt as of June 2008 : significantly below June 2007 level ( 533 M) 27
Appendices 28
Strong operating leverage created (in Million ) 2005 2006 2007 w/o E.W Sales at current metal price 5,449 7,489 7,412 5,920 Sales at constant metal price 4,263 179 4,442 380 4,822 4,320 Margin on variable costs 1,104 1,209 1,437 1,372 Margin on variable costs (%) 26 % 27.2 % 29,8% 31,8% Indirect costs (*) (823) (854) (927) (873) EBITDA 281 355 510 499 EBITDA margin (%) 6.6 % 8 % 10.6 % 11.6% Depreciation (95) (95) (101) (98) Operating Margin 186 74 260 149 409 401 OM rate (on constant metal Sales) 4.4 % 5.8% 8.5% 9.3% 41% 39% (*) Includes factory indirect costs excluding depreciation + R&D + SG&A 29
Energy Σ: Sales (M ) (*) at constant metal and exchange rates 3 104 3 780 Σ : Operating margin (M ) 242 365 956 1 355 1 132 1 643 793 1 005 Building Infrastructures Industry 2006 2007 2006 2007 100 97 45 126 152 87 (*) Organic growth =+ 12.1 % 30
Telecom Sales (M ) (*) at constant metal and exchange rates Operating margin (M ) Σ: 472 529 Σ : 40 49 248 282 Private Networks (LAN) Infrastructures 24 31 224 247 16 18 2006 2007 2006 2007 (*) Organic growth = + 12 % 31
Electrical Wires Σ: Sales (M ) (*) at constant metal and exchange rates 787 502 Σ : Operating margin (M ) 8 Electrical Wires -4 2006 2007 2006 2007 (*) Organic growth = - 33 % 32
Investment case Growth Potential Business Model Operating Margin Financial Structure Electrification needs worldwide Leadership positions High level of profitability Strong & steady cash flow Emerging countries Oil & Gas infrastructures Datacom private networks Exposure to fast growing economies Industry in consolidation Rebalancing Resilience across the cycle Dividend pay out Financial leverage opportunity Nexans : a promising return on investment 33
34