(AOF) – Nexans announced the finalization of the sale of its Telecom Systems business, renamed Aginode, to Syntagma Capital, a private equity fund based in Belgium. The cable specialist recalls that this transaction marks the final step in its exit from the telecommunications and data segment, in accordance with its strategy aimed at simplifying its activities to amplify its impact on the electrification markets.
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Key points
– Group created in 1901 specializing in cables intended for electrification;
– Turnover of €6.1 billion achieved 13% in energy production and transmission, 16% in distribution, 27% in construction, 23% in industry and solutions and 5% in telecoms and data;
– Distribution of sales at 45% in Europe, 31% in the Americas, 14% in Asia Pacific and 8% in the Middle East, Africa and Russia;
– “Electrifying the future” business model centered on the electrification value chain, from energy production to its transmission, distribution and consumption, favoring growth in value and the premiumization of offers and understanding the complexity via the “E3” performance measurement tool (Economy, Environment, Commitment);
– Capital split with 3 strong positions – the Chilean Invexans Pack for 28.8%, BPI France for 7.69% and employees for 6.3% –, Jean Mouton chairing the board of directors of 14 members, Christopher Guérin being general manager ;
– Very healthy financial situation, with a debt of €182 million at a high rating.
Challenges
– Strategic ambition 2022-24 “Winds of change”:
– concentration on 4 sectors and reorientation of the portfolio on electrification,
– €200 million investment in underwater high voltage by 2023 in Norway and the United States,
– deployment of the SHIFT Performance program
– financial objectives: €6 to 7 billion in turnover and operating margin between 10 and 12%;
Dynamic innovation strategy with €100 million invested in the 15 R&D centers (1,800 patents, 75 filed in 2022):
– serving customers and partners: intensification of the Platinum program, 540,000 users connected to digital platforms and services, such as ULTRACKER,
– deployment of solutions created within AmpaCity, a global innovation hub dedicated to cables for low-carbon electrification,
– development of fire safety technologies and doubling of connected objects
– internally, efficiency and intelligence: eco-design approach, Plug & Play cabling, use of digital twins to increase return on assets and limit working capital requirements;
– 2030 environmental strategy validated by the SBTi and accelerated in 2022:
– 46.2% reduction in scope 1 and 2 CO2 emissions by 46.2% vs. 2019 and 24% by 2030 for those emitted in scope 3 (suppliers),
– 2023 intermediate objectives: certification of 93% of industrial sites, 70 to 80% of sales of products contributing to the energy transition and 80% of connected and recyclable cables;
– Progress in the electrification pure player strategy: sale of Telecom Systems and acquisition of the Finnish Reka Cables;.
– Order book of €3.2 billion in energy production and transmission.
Challenges
– Diversity of profitability between branches, buildings & territories being the least profitable;
–
Inflation, particularly in the price of copper, offset by the SHIFT Performance and Prime and Amplify plans and increases in sales prices and launch of Ultracker against shortages of semiconductors and raw materials;
– Continued positive impacts from investments in distribution;
– After a 6.5% increase in revenues at the end of March, 2023 objective of an operating profit between €570 and €630 million, and cash generation between €150 and €250 million;
– Dividend of €2.1, up 75% and share buyback.
Find out more about the Telecom Equipment Manufacturers sector
Downgraded outlook for smartphones
Faced with a decline in consumer purchasing power, participants in the global smartphone market had to face sales falling by 14% in the first quarter of 2023 compared to the same period in 2022.
According to IDC, global sales will be lower than expected in the second half, showing a decline of 3.2% compared to 2022. A drop of 1.1% was previously estimated. The Gartner firm predicted from the start a decline of 4% in the market. Chinese brands are particularly impacted. Very exposed to their domestic market, Xiaomi, Oppo and Vivo have already lost market share in 2022 and the situation is expected to continue this year.
Apple and Samsung are doing better because, even if sales volumes drop, these players can play on prices and maintain their business more thanks to high-end positioning.
The market situation is expected to improve in 2024: growth is expected to become weak but continuous.