Nexans Transforming Nexans' value delivery model - Strategic update, Nov. 9th 2018

 
Nexans Transforming Nexans' value delivery model - Strategic update, Nov. 9th 2018
Nexans
Transforming Nexans’
value delivery model

            2018
                       Strategic update, Nov. 9th 2018
Nexans Transforming Nexans' value delivery model - Strategic update, Nov. 9th 2018
This presentation contains forward-looking statements which are subject to various expected or unexpected risks and uncertainties that could have a material impact on the Company's future performance.
   The uncertainty in the economic and political environment in Europe including the possible consequences of Brexit which could lead to lower growth ;
   The impact of protectionist trade policies triggered notably by the current US government as well as growing pressures to increase local content requirements ;
   Geopolitical instability including embargoes of Qatar and Iran, political instability in Libya and Ivory Coast, as well as persistent tensions in Lebanon, the Persian/Arabian Gulf and the Korean peninsula ;
   The continued uncertain political and economic situation in South America, particularly in Brazil, which is affecting the building market and major infrastructure projects in the region as well as creating
    exchange rate volatility and an increased risk of customer default ;
   Abrupt changes in non-ferrous metal costs that can impact short term customers’ purchasing patterns;
   A significant drop in metal prices leading to core exposure reevaluation and a direct impact on net income, though without impact on cash or operational margin;
   The impact of rising inflationary pressures, notably on raw material costs (resins, steel etc.) and labor costs which may impact competitiveness depending on the ability to pass them through into the selling
    prices to our customers;
   The impact of changes in exchange rates on the conversion of the financial statements of the Group’s subsidiaries located outside the euro zone.
   The sustainability of the high rates of growth and/or Nexans’ market penetration in the segments related to renewable energy development (wind and solar farms, interconnections etc.);
   The speed and magnitude of recovery in the LAN cabling markets in North America and the Group’s ability to take advantage of the strong growth in large data centers;
   The risk that the expected sustained growth in the automotive markets in North America and in the electric vehicle market worldwide does not materialize;
   The Group’s ability to adapt to changes in O&G customers’ investments in exploration and production in reaction to oil and gas price fluctuations;
   The risk that certain programs designed to improve the Group’s competitiveness such as programs of design to cost, fixed cost reductions, R&D and innovation programs, or certain business development
    plans targeting new markets, experience delays which can result from the speed in technology transfer on obtaining customer qualifications, or which otherwise do not fully meet their objectives;
   The risk in particular that the time and cost foreseen to return Land High Voltage activities to profitability will not be met;
   The risk that the timing of expected contract awards or entering into force of contracts in submarine cables are delayed, or accelerated, which can result in unused capacity, otherwise disrupt planning, or
    exceptional capacity utilization in any given year;
   The inherent risks related to carrying out major turnkey projects for submarine high-voltage cables. Those might be exacerbated in the coming years as this business becomes increasingly concentrated and
    centered on a small number of large scale projects (Beatrice, Nordlink, NSL, East Anglia One and DolWin6, which will be the first contract to supply and install HVDC extruded insulation cables), leading to
    a high capacity utilization rates of the plants involved;

   The inherent risks associated with major capex projects, particularly the risk of completion delays. These risks notably concern the construction of a new submarine cable laying ship and the extension of the
    Goose Creek plant in North America to add production of submarine high-voltage cables, two projects that will be instrumental to 2021 objectives.

   All figures presented in this document are not taking into account future application of IFRS/16
INVESTOR RELATIONS:
Michel GÉDÉON +33 1 78 15 05 41                  michel.gedeon@nexans.com
Marième DIOP    +33 1 78 15 05 40                marieme.diop@nexans.com

                                                                                                                                                                                                                     2
Nexans Transforming Nexans' value delivery model - Strategic update, Nov. 9th 2018
We h a v e c h a l l e n ge s …

                                                                   1        Undertake further transformation
                                                                             ▪ The potential of turnaround remains high
                                                                             ▪ Manage for growth the 50% of the Group that generates a very good return
                                                                             ▪ Transform the remaining 50% to unlock value

                                                                   2       Mindset change from volume to value growth
                                                                             ▪ More volume does not mean more profit, we need to scale more than to grow
                                                                             ▪ Move up the value chain rather than focus on growth at all cost
                                                                             ▪ Grow value by positioning Nexans as a service provider and conquer new white
                                                                               spaces

                                                                   3        Adjust organization structure to introduce more accountability and agility
                                                                              ▪ Higher discipline in execution
                                                                              ▪ Stronger focus on Return on Capital Employed and Free Cash Flow generation
                                                                              ▪ Simplified, leaner and more agile organization

The current strategic plan and the initiatives it describes are based on assumptions and scenarios used as hypothesis upon which the attached document is based. These assumptions and scenarios are exposed to all risk factors and main uncertainties
described in the 2017 Registration document and in the 2018 Half-year financial report of the Group. Moreover, certain scenarios considered in the current strategic plan will be further analyzed prior to deciding their implementation, and projects
resulting from those studies will be submitted to relevant legal bodies including to employee representatives bodies if applicable and when needed.
                                                                                                                                                                                                                                                          3
Nexans Transforming Nexans' value delivery model - Strategic update, Nov. 9th 2018
… a n d a g r e at p o t e n tial t o u n l oc k

                                                                   1     A turnaround method already proven and scalable
                                                                            ▪ Europe and Middle East Africa Areas, have succeeded their transformation
                                                                            ▪ A methodology called SHIFT has been designed by Nexans
                                                                            ▪ Our teams are already starting to deploy it in underperforming units

                                                                   2      A differentiation DNA
                                                                            ▪ Demonstrated capabilities to differentiate through deployment of services and use of
                                                                               marketing, creating value in very competitive markets such as Building & Territories
                                                                            ▪ Successfully managed to develop systems in segments such as wind turbines
                                                                            ▪ Our service team is being reinforced to scale this up

                                                                   3      Megatrends support our value chain move
                                                                            ▪ Capturing new services, building modules & systems to escape commodity traps
                                                                              and future intermediation risks
                                                                            ▪ Address the €120Bn market services with new offerings and strategic partnerships

The current strategic plan and the initiatives it describes are based on assumptions and scenarios used as hypothesis upon which the attached document is based. These assumptions and scenarios are exposed to all risk factors and main uncertainties
described in the 2017 Registration document and in the 2018 Half-year financial report of the Group. Moreover, certain scenarios considered in the current strategic plan will be further analyzed prior to deciding their implementation, and projects
resulting from those studies will be submitted to relevant legal bodies including to employee representatives bodies if applicable and when needed.
                                                                                                                                                                                                                                                          4
Nexans Transforming Nexans' value delivery model - Strategic update, Nov. 9th 2018
L E A D T H E V A L U E G R O W T H ( I N N O VAT I O N & S E R V I C E S )

      2030                                                                                       Long term perspectives are excellent and require a move alongside the value chain
                                                                                                 leading to value growth more than volume growth.
                                                                                                 By capturing new services, building modules and systems Nexans will:
              The World population will increase                                                 1- Deliver the best value for money for its clients
              by +20%, and urbanization by                                                       2- Escape the commodity traps and future intermediation risks.
              +40%                                                                               3- Address the €120Bn market services with new offerings and strategic partnerships

              Energy consumption will jump by
              +40%                                                                                                                                Big picture view of the Energy & data management market                                         Total ~€2,700Bn
                                                                                                                                                  Focus on Transmission & Distribution (power & data out of scope)                                First estimate

                                                                                                                                                    System management                                                                                 ~€20-25Bn
              Renewable energy will
                                                                                                                             +                                                                                                                        (fast growing)
              double
                                                                                                                                                   Operations                                                                   ~€1,100-1,400Bn

                                                                                                                    From basic to sophisticated
                                                                                                    Customer need
                                                                                                                                                   Asset management
              Energy transition bringing huge                                                                                                      (design, build and maintain equipment & infrastructures)
                                                                                                                                                                                                              ~€1,000-1,100Bn
              needs in Infrastructures and
              Networks                                                                                                                             Cable Services                                     ~€120Bn

              Cable & connectivity production will
                                                                                                                                                   Cable production                         €220Bn
              grow 3.9% per year to 2030                                                                                                           (Incl. accessories and cable assembly)
              System management will grow up to
              9.2% per year to 2030.

                                                                                                                               -
      2018

 All third party trademarks (including logos and icons) referenced here remain the property of their respective owners. Unless specifically identified as such, Nexans’ use of third party trademarks does not indicate any relationship, sponsorship,
 or endorsement between Nexans and the owners of these trademarks.                                                                                                                                                                                                     5
Nexans Transforming Nexans' value delivery model - Strategic update, Nov. 9th 2018
D e l i v e r o n t r an s for m at io n t o b ui l d o u r f u ture
                      2018                                  2019                                                            2020                                                           2021

                                                                                                                                                 TRANSFORM OUR POSITIONING
                                                                                                                                                 Change Playfield to grow value
   Management focus

                                                                                                                                                                                                                                Scale up the new
                                                                                                                                                                                                                                     model
                             TRANSFORM OUR OPERATIONAL MODEL
                             Pay our performance Debt

                                 FOCUS                           SIMPLIFY                                   ADAPT                                  CONNECT                                  DIGITALIZE                                  DISRUPT

                        Reduce operation              Reduce organization                      Optimize operations &                     Develop new customers’                    Digital transformation to                Penetrate new white
                        complexity, be more           complexity, increase                     Shift the portfolio                       offering with partners                    capture higher returns                   spaces with less capital
                        selective                     efficiency                                                                                                                                                            intensity

                                                                           Agile organization, Talent Management, Corporate Social Responsibility

The current strategic plan and the initiatives it describes are based on assumptions and scenarios used as hypothesis upon which the attached document is based. These assumptions and scenarios are exposed to all risk factors and main uncertainties
described in the 2017 Registration document and in the 2018 Half-year financial report of the Group. Moreover, certain scenarios considered in the current strategic plan will be further analyzed prior to deciding their implementation, and projects
resulting from those studies will be submitted to relevant legal bodies including to employee representatives bodies if applicable and when needed.
                                                                                                                                                                                                                                                          6
Nexans Transforming Nexans' value delivery model - Strategic update, Nov. 9th 2018
O u r 2 0 2 1 o b j e cti ve s
Based on the current market conditions

 In Millions Euros                                                                          In % (Before taxes)                                                               In Millions Euros (Before M&A and dividends)

                       +175M€
                                                                                                                     +7.0 pts
                                    500 M€                                                                                                                                                                       > 200M€
                                                                                                                                   15.5 %
        ~ 325 M€
                                                                                                      ~ 8.5 %

                                                                                                                                                                                        -190 M€

           2018E                      2021P
                                                                                                           2018E                   2021P                                             2016-2018E               2019E-2021P

                    EBITDA                                                                                         ROCE                                                             FREE CASH FLOW
                                                                                                                                                                                                C U M U L A T E D

    •     Transform underperforming units towards greater profitability
    •     Focus profitable units on growth for value via differentiation and innovation
    •     Restore competitiveness through ambitious cost reduction plan
    •     Enforce more discipline in CAPEX management and ROI monitoring

EBITDA: Operating Margin (OM) before depreciations ROCE: 12months on end-of-period capital employed restated for antitrust provisions. Yearly depreciation amounting to approximately
140M€ in 2018 and 150M€ beyond, Operating Margin can be computed accordingly.
The current strategic plan and the initiatives it describes are based on assumptions and scenarios used as hypothesis upon which the attached document is based. These assumptions and scenarios are exposed to all risk factors and main
uncertainties described in the 2017 Registration document and in the 2018 Half-year financial report of the Group. Moreover, certain scenarios considered in the current strategic plan will be further analyzed prior to deciding their
implementation, and projects resulting from those studies will be submitted to relevant legal bodies including to employee representatives bodies if applicable and when needed.                                                            7
Nexans Transforming Nexans' value delivery model - Strategic update, Nov. 9th 2018
Transforming Nexans’ Value Delivery Model
 A new roadmap

                                            8
Nexans Transforming Nexans' value delivery model - Strategic update, Nov. 9th 2018
Strategic scorecard : 2 Sequences, 6 Management streams

                                    2018                           2019                                                      2020                                                          2021
Management focus

                                                                                                                                                             TRANSFORM OUR POSITIONING
                                                                                                                                                             Change Playfield to grow value
                                      TRANSFORM OUR OPERATIONAL MODEL                                                                                                                                                      Scale up the new model
                                      Pay our performance Debt

                                             FOCUS                      SIMPLIFY                              ADAPT                                 CONNECT                                  DIGITALIZE                                DISRUPT

                                      Business Unit portfolio
                                                                    Cost reduction
                                      management – p10 to
     Zoom on selected initiatives

                                                                   initiatives – p11
                                               p11

                                             Transformation plan – p12 to p13

                                                                                                  KPI & Routines – p14                                Dedicated presentation in 2019

                                                                                                                          CSR priorities – p15

     The current strategic plan and the initiatives it describes are based on assumptions and scenarios used as hypothesis upon which the attached document is based. These assumptions and scenarios are exposed to all risk factors and main uncertainties
     described in the 2017 Registration document and in the 2018 Half-year financial report of the Group. Moreover, certain scenarios considered in the current strategic plan will be further analyzed prior to deciding their implementation, and projects
     resulting from those studies will be submitted to relevant legal bodies including to employee representatives bodies if applicable and when needed.                                                                                                       9
FOCUS              Strong business unit portfolio management

               NEXANS BUSINESS UNIT PORTFOLIO ANALYSIS                                                                                         BY 2021 WE TARGET A COMPLETE TURNAROUND OF
               A granular view                                                                                                                 VALUE BURNERS, ONE THIRD OF THE COMPANY WILL
                                                                                                                                               STILL BE IN TRANSFORMATION PHASE

                                                                                                                                               Split of the estimated 2018 turnover per Business Unit
                                                                                                                                               segment (Simplified and at iso-volume)
           EBIT
           % of Net                                                                                                                                                                2018E
                                                                                                                                                   Building &
           Constant                  Profitable
                                                         1                 Profit drivers                                                          Territories                     2021P
           sales                     cash tanks                                          Milk

                                                                                                                                                                                   2018E
                                                                                                                                                   High Voltage &
                                                                                                                                                   Projects                        2021P
                                                              Transformation
                                     Cash tanks          2    candidates
                                                                                                                                                                                   2018E
                                                                                                                                                   Telecom & Data
                                                                                                                                                                                   2021P
                                                                                                       3

                                                             ValueRestructure
                                                                   burners
                                                                                                                                                                                   2018E
                                                                                                                                                   Industry &
                                                                                                                                                   Solutions                       2021P

                                                                                  Net Constant sales                                               1 Profit drivers and Profitable Cash tanks
                                                                                  % of OWC                                                         2 Transformation candidates and Cash tanks
                                                                                                                                                   3    Value Burners

The current strategic plan and the initiatives it describes are based on assumptions and scenarios used as hypothesis upon which the attached document is based. These assumptions and scenarios are exposed to all risk factors and main uncertainties
described in the 2017 Registration document and in the 2018 Half-year financial report of the Group. Moreover, certain scenarios considered in the current strategic plan will be further analyzed prior to deciding their implementation, and projects
resulting from those studies will be submitted to relevant legal bodies including to employee representatives bodies if applicable and when needed.                                                                                                       10
FOCUS          Strong business unit portfolio management

                                                                                                                                                                                                                      ALL UNITS
    Our                                                                                    Turnaround                                  Restructure
                  1     Manage for Value Growth                                    2                                             3                                                                        Offset Price cost squeeze & labor
Strategy                                                                                   Manage for 2cash                            Manage for cash
                                                                                                                                                                                                                       inflation

      Our      Differentiate            Allocate                                                                                                          Freeze                  Sales
Initiatives                                                             Grow Value                                    Transform                                                                                   Cost reduction initiatives
               & Innovate               CAPEX                                                                                                             CAPEX                  Attrition

                Seed for
                                         400M€
              value growth
                                     focused on a                                                                                                                             No volume
                   New                                                                                       Incremental 100M€ EBITDA                 CAPEX freeze                                        210M€ fixed and variable cost reduction
      Our                                 limited                                                                                                                             growth or
                offerings,                                    Focused & profitable growth                          run rate by 2021                      Except                                                        run rate by 2021
   targets                             number of                                                                                                                              attrition to
                  Smart                                       targeting 55M€ EBITDA run                       Reduction of 190M€ OWC                  maintenance                                          To offset the Price cost squeeze & Labor
                                       initiative of                                                                                                                             target
                products                                              rate by 2021                             through SHIFT and other                 safety and                                         inflation, estimated at ~190M€ over the
                                     which Aurora                                                                                                                            margin ratios
              Turnkey, new                                                                                             initiatives                    environment                                                            period
                                         new HV                                                                                                                                increase
               capabilities
                                      subsea boat

              ▪       Deploy Service & Innovation task forces                                            ▪    Deploy transformation task force                                                        ▪     Industrial Footprint optimization
              ▪       Carry out Differentiated offers methods                                            ▪    Focus KPIs on cost control and free cash flow                                           ▪     Indirect spend reductions
   Status
              ▪       Focus KPIs on growth and free cash flow                                            ▪    Favor attrition of the activities to target margin ratios increase                      ▪     LEAN manufacturing implementation
              ▪       Boost value growth                                                                 ▪    Optimize Industrial footprint                                                           ▪     Support functions optimization

              The current strategic plan and the initiatives it describes are based on assumptions and scenarios used as hypothesis upon which the attached document is based. These assumptions and scenarios are exposed to all risk factors and main
              uncertainties described in the 2017 Registration document and in the 2018 Half-year financial report of the Group. Moreover, certain scenarios considered in the current strategic plan will be further analyzed prior to deciding their
              implementation, and projects resulting from those studies will be submitted to relevant legal bodies including to employee representatives bodies if applicable and when needed.                                                            11
                                                                                                                                                                                                                                                          11
FOCUS &
 ADAPT              Transformation plan

                               Squad turnaround forces transforming Data into Actions and Actions into Results.

                                                                                                                                                                     CASE STUDY – European Activities – 2014-2016
            €                  The transformation project is split into Business Units that correspond to
                               existing profit centers.
                               Make KPIs simple: EBITDA, OWC, FCF                                                                                                    What has been done?

                                                                                                                                                                       Rethink business portfolio
                                                                                                                                                                       Reduce complexity, enhance density
                               The mission is organized in project mode for 12 to18 months with a weekly                                                               Break silos, become systemic, and holistic
                               tempo under direct supervision Nexans top management.
                                                                                                                                                                      Results

                               A task force fully dedicated to support and drive the transformation is                                                               10 Business Units have been covered between
                               being deployed on sites. Composed of consultants & Nexans leaders.                                                                    December 2014 and December 2016 on a Sales
                                                                                                                                                                     perimeter of 0,9Bn€ (Constant metal prices) :
                                                                                                                                                                     •      An additional 20M€ EBITDA has been generated in
                                                                                                                                                                            2016 vs. 2014.
                                More than 30 transformation levers have been codified and adapted to                                                                 •      The OWC decreased of 70M€ on the period.
                                the cable industry covering sales, logistics and operations into a holistic
                                approach.

The current strategic plan and the initiatives it describes are based on assumptions and scenarios used as hypothesis upon which the attached document is based. These assumptions and scenarios are exposed to all risk factors and main uncertainties
described in the 2017 Registration document and in the 2018 Half-year financial report of the Group. Moreover, certain scenarios considered in the current strategic plan will be further analyzed prior to deciding their implementation, and projects
resulting from those studies will be submitted to relevant legal bodies including to employee representatives bodies if applicable and when needed.
                                                                                                                                                                                                                                                          12
                                                                                                                                                                                                                                                          12
FOCUS &
 ADAPT                 Transformation plan

             We will stick with a time-tested approach that generates big returns from dramatic improvements
             in operations.

                                                                         Since 2014                           HY 2018                                  2019                                    2020

                                   Building &                             Deployed on 5                     6 Business Units                      14 Business Units                     6 Business Units
                                   Territories                            Business Units                    covered                               covered                               covered                              The full
                                                                                                                                                                                                                             transformation
                                                                                                                                                                                                                             program targets a
                                                                                                                                                                                                                             contribution of
                                                                         Deployed on 2                                                                                                                                       100M€ EBITDA
                                   Telecom & Data                                                           1 Business Units                      1 Business Units
                                                                         Business Units                     covered                               covered                                                                    and 190M€ OWC
                                                                                                                                                                                                                             reduction by 2021

                                                                                                                                                                                                                             Estimate is based
                                   Industry &                                                                                                                                                                                on the results of
                                                                          Deployed on 3                                                          2 Business Units                       2 Business Units
                                   Solutions                              Business Units                                                         covered                                covered                              our ‘financial
                                                                                                                                                                                                                             stress test’ ran in
                                                                                                                                                                                                                             Q3 2018, and
                                                                                                                                                                                                                             our past
                                                                                                            The Land HV business unit is currently going through a special                                                   experiences.
                                   High Voltage &
                                   Projects                                                                 transformation plan, covering sales, OWC and industrial
                                                                                                            performance

The current strategic plan and the initiatives it describes are based on assumptions and scenarios used as hypothesis upon which the attached document is based. These assumptions and scenarios are exposed to all risk factors and main uncertainties
described in the 2017 Registration document and in the 2018 Half-year financial report of the Group. Moreover, certain scenarios considered in the current strategic plan will be further analyzed prior to deciding their implementation, and projects
resulting from those studies will be submitted to relevant legal bodies including to employee representatives bodies if applicable and when needed.
                                                                                                                                                                                                                                                          13
                                                                                                                                                                                                                                                          13
ADAPT            New management routines, new kpi, Central control tower

                                                                                                                 Accountability for results
                                                                                                                         Switch the culture from Understanding to Acting
                                                                                                                         Foster a results-oriented mindset by creating repeatable processes that
                                                                                                                          spur performance improvements again and again.
                                                                                                                         Develop managers hard skills on turnaround practices

                                                                                                                 Indicators & targets
                                                                                                                         Stronger weighting of ROCE & Free cash flow
                                                                                                                         Adapt KPIs to the business cluster (Growth vs. Turnaround)
                                                                                                                         Align management variable remuneration

                                                                                                                 Pace & routines
                                                                                                                         Increase the pace: from quarterly routines to monthly & weekly ones
                                                                                                                         Actions & projects linked to financial result
                                                                                                                         Increase routine frequency when results deviate from target
                                                                                                                         Central control tower to lead and monitor weekly all initiatives

The current strategic plan and the initiatives it describes are based on assumptions and scenarios used as hypothesis upon which the attached document is based. These assumptions and scenarios are exposed to all risk factors and main uncertainties
described in the 2017 Registration document and in the 2018 Half-year financial report of the Group. Moreover, certain scenarios considered in the current strategic plan will be further analyzed prior to deciding their implementation, and projects   14
                                                                                                                                                                                                                                                          14
resulting from those studies will be submitted to relevant legal bodies including to employee representatives bodies if applicable and when needed.
CSR as a value creation lever
Our TOP 4 priorities

                        Safety
                        Ensure health and safety at sites                                                                                                                      CSR ranking                 2014                   2017
                                                                                                                                                                                                                           C+
                         Leverage safety rules enforcement to reinforce our discipline in execution                                                                                                          D
                                                                                                                                                                                                                           ‘Prime’

                                                                                                                                                                                                              D                      B

                        Trainings
                                                                                                                                                                                                           63/100          2017: 72/100
                        Build people who build business
                         Reinforce Nexans employees hard skills (finance, sales & marketing, lean manufacturing)

                                                                                                                                                                                                   KPI                           Target 2021
                        Energy transition                                                                                                                                    Safety
                        Engage with customers to contribute to a more sustainable economy                                                                                    Workplace accident frequency rate
Transforming Nexans’ Value Delivery Model
A financial New Deal

                                            16
2 0 1 8 - 2 0 2 1 B r i dge
Overall Trajectory – Waterfall from Baseline to 2021 EBITDA

  EBITDA
   In million €
                                                                                                                                                                                                                      500
                                                                                                                                                                                  55

                                                                                                                                           100
                        ~ 325

                                                                 190                                  210

                         2018E                       Price cost squeeze                      Cost reduction                   Transformation Plan                     Organic Growth                                2021P
                                                      & labor inflation                        initiatives                                                            & Value Growth
                                                                                                                                                                         Initiatives

EBITDA: Operating Margin (OM) before depreciations ROCE: 12months on end-of-period capital employed restated for antitrust provisions. Yearly depreciation amounting to approximately
140M€ in 2018 and 150M€ beyond, Operating Margin can be computed accordingly.
The current strategic plan and the initiatives it describes are based on assumptions and scenarios used as hypothesis upon which the attached document is based. These assumptions and scenarios are exposed to all risk factors and main uncertainties
described in the 2017 Registration document and in the 2018 Half-year financial report of the Group. Moreover, certain scenarios considered in the current strategic plan will be further analyzed prior to deciding their implementation, and projects   17
resulting from those studies will be submitted to relevant legal bodies including to employee representatives bodies if applicable and when needed.
2 0 1 8 - 2 0 2 1 t r aj e ct o r y

      EBITDA                                                                                                                                                                                                                 500
      In million €
                                                                                                                      350 to 390
                                                                     ~ 325

                                                                        FY18E                                            FY19P                                             FY20P                                            FY21P

                                     Transformation Plan                                                                  20-30%                                           60-70%                                            100%
        Actions
        financial                    Organic growth & value growth init.                                                   5-15%                                           55-65%                                            100%
        impact
        (Cumulated
        % of 2021                    Cost reduction init.                                                                 30-40%                                           60-70%                                            100%
        Run Rate)
                                     Price cost squeeze & labor inflation                                                   33%                                              66%                                            100%

EBITDA: Operating Margin (OM) before depreciations ROCE: 12months on end-of-period capital employed restated for antitrust provisions. Yearly depreciation amounting to approximately 140M€ in
2018 and 150M€ beyond, Operating Margin can be computed accordingly.
The current strategic plan and the initiatives it describes are based on assumptions and scenarios used as hypothesis upon which the attached document is based. These assumptions and scenarios are exposed to all risk factors and main uncertainties
described in the 2017 Registration document and in the 2018 Half-year financial report of the Group. Moreover, certain scenarios considered in the current strategic plan will be further analyzed prior to deciding their implementation, and projects
resulting from those studies will be submitted to relevant legal bodies including to employee representatives bodies if applicable and when needed.                                                                                                       18
2 0 1 8 - 2 0 2 1 t r aj e cto ry
   ROCE                                                                                                                                                                                                            15.5%
   Before taxes
                                                                                                                     9% to 11%
                                                                         8.5%

                                                                         FY18E                                         FY19P                                         FY20P                                          FY21P

     Sales                                                                                                                                 ~3% CAGR
     Constant metal prices                                              4.4 Bn€

                                                                         FY18E                                         FY19P                                          FY20P                                          FY21P

EBITDA: Operating Margin (OM) before depreciations ROCE: 12months on end-of-period capital employed restated for antitrust provisions. Yearly depreciation amounting to approximately 140M€ in
2018 and 150M€ beyond, Operating Margin can be computed accordingly.
The current strategic plan and the initiatives it describes are based on assumptions and scenarios used as hypothesis upon which the attached document is based. These assumptions and scenarios are exposed to all risk factors and main uncertainties
described in the 2017 Registration document and in the 2018 Half-year financial report of the Group. Moreover, certain scenarios considered in the current strategic plan will be further analyzed prior to deciding their implementation, and projects
resulting from those studies will be submitted to relevant legal bodies including to employee representatives bodies if applicable and when needed.
                                                                                                                                                                                                                                                          19
2 0 1 8 - 2 0 2 1 t r aj e cto ry
      Cumulated Free Cash Flow 2019P-2021P
      Before dividends and M&A

                             1.3 to 1.4Bn€

                                                                                                                                                                                                                       >200M€

                                   EBITDA                 CAPEX               Delta OWC              Delta OWC            Cost reduction CF Before Taxes                      Cash              Debt interest Cumulative CF2
                                                                               (Growth)               (Transf.)             One-offs        & Interest                        Taxes             & pensions1

  •     Cost reduction one-offs estimated at ~250M€ on the period will be self financed within 2 years.
  •     CAPEX : Includes 400M€ focused on a limited number of Profit Drivers segment initiative such as Aurora new HV subsea boat and North
        America

EBITDA: Operating Margin (OM) before depreciations ROCE: 12months on end-of-period capital employed restated for antitrust provisions. Yearly depreciation amounting to approximately 140M€ in
2018 and 150M€ beyond, Operating Margin can be computed accordingly.

The current strategic plan and the initiatives it describes are based on assumptions and scenarios used as hypothesis upon which the attached document is based. These assumptions and scenarios are exposed to all risk factors and main uncertainties
described in the 2017 Registration document and in the 2018 Half-year financial report of the Group. Moreover, certain scenarios considered in the current strategic plan will be further analyzed prior to deciding their implementation, and projects
resulting from those studies will be submitted to relevant legal bodies including to employee representatives bodies if applicable and when needed.
                                                                                                                                                                                                                                                          20
Conclusion

21
Wa l k t h e t a l k
The communication agenda on our initiatives

                                                                                                                                                                           TRANSFORM OUR POSITIONING

    TRANSFORM OUR OPERATIONAL MODEL

Full Year 2018 results                                     Half Year 2019 results                                    Full Year 2019 results                                     Half Year 2020 results

   New group operational organization

                                                              Cost reduction initiatives – Follow up and results

                                                             SHIFT– Status and results

                                                                                                                       Transform Our Positioning – Strategic update

The current strategic plan and the initiatives it describes are based on assumptions and scenarios used as hypothesis upon which the attached document is based. These assumptions and scenarios are exposed to all risk factors and main
uncertainties described in the 2017 Registration document and in the 2018 Half-year financial report of the Group. Moreover, certain scenarios considered in the current strategic plan will be further analyzed prior to deciding their
implementation, and projects resulting from those studies will be submitted to relevant legal bodies including to employee representatives bodies if applicable and when needed.                                                            22
Transforming Nexans’ value delivery model

                         Fact based                                             Comprehensive review
                         Snapshot                                               We have gone deeper than ever before to understand our strengths and weaknesses
                                                                                building a view of the Nexans’ future based on a clear understanding of where we can
                                                                                succeed and how we must change to get there.

                         Sequential                                             Continued Transformation Focus
                         Transformation                                         We have a clear, concise and actionable plan forward rooted on the past success of SHIFT. The
                                                                                turnaround we proved for 50% of Nexans’ will now be the focus for the rest of the company as
                                                                                we ramp up our value drivers delivering cash and building our future potential. Changing the
                                                                                company culture and structure from one of understanding to acting.

                         Future proof                                           Future based on customer success
                                                                                Delivering on a future not based on wishful thinking but on the fundamental market trends
                         Positioning                                            driving our customers of today and those of tomorrow. Constructed on the market megatrends
                                                                                that spell out the future growth cycles, Nexans’ after its transformation will be uniquely
                                                                                positioned to drive customer and shareholder value.

The current strategic plan and the initiatives it describes are based on assumptions and scenarios used as hypothesis upon which the attached document is based. These assumptions and scenarios are exposed to all risk factors and main uncertainties
described in the 2017 Registration document and in the 2018 Half-year financial report of the Group. Moreover, certain scenarios considered in the current strategic plan will be further analyzed prior to deciding their implementation, and projects   23
resulting from those studies will be submitted to relevant legal bodies including to employee representatives bodies if applicable and when needed.
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