France - June 18, 2018 – energiesdelamer.eu - French cable manufacturer Nexans (NEXS.PA) on Monday warned that an “abrupt deterioration” of its high-voltage activities in the second half of 2018 was likely to translate into lower profits for the full year.
Nexans said it was now forecasting a stable level of sales this year and earnings before interest, tax, depreciation and amortization (Ebitda) of 350 million euros ($406 million), down from 411 million euros in 2017.
- For submarine high voltage, the Group is faced with the postponement of projects initially scheduled in 2018 of which some were already in Nexans' backlog. The current implementation of major projects underway is satisfactory and perspectives remain solid;
- For land high voltage, following 2017 strong performance fuelled by the successful execution of submarine connections, the weak sales backlog for the first half of 2018 suggests a lower than planned level of activity for the second half of the year;
- Additionally, the high voltage project activities recorded an exceptional cost of around ten million euros, principally due to an unfavourable court judgment ;
- In this context the forecast for full year 2018 as concerns Project activities is re-evaluated downwards taking into account an organic sales decrease of approximately 160 million euros and a decrease in EBITDA for this activity
of 50 million euros compared to 2017.
The Group has already initiated corrective actions to mitigate the negative impact of this sales reduction.
In addition, the Group's EBITDA at June 30 is expected to mark a low point in view of the decline in the volume of activity in the high voltage projects area, the negative impact of the application of IFRS 15 norms for the project activities, as previously announced, and the negative impact of raw material inflation.
In this context, the Group anticipates a slight contraction of sales for the first half of 2018 and an EBITDA close to 150 million euros versus 211 million euros in the first half of 2017.
Nexans has decided to launch a share buyback program for a maximum number of 500,000 shares.
The objectives of this program are first to cancel up to a maximum of 400 000 shares in order to limit the dilutive effect of the capital increase underway for the 2018 International Employee Shareholding plan named Act 2018, and second to use in other share based employee plans for up to a maximum of 100,000 shares.
This program is made pursuant to the authorization granted by the 18th resolution of the General Shareholder's meeting held on May 17, 2018. Nexans will appoint an investment services provider for its implementation.
Sources : Nexans - Reuters