Nexans profit warning sends shares tumbling

PARIS (Reuters) - French cable manufacturer Nexans NEXS.PA warned on Monday that full-year profit would fall short of previous expectations, prompting an 18 percent share price slide in early trading.

Nexans, which has yet to name a new CEO after Arnaud Poupart-Lafarge announced that he will step down at the end of September for personal reasons, forecast that 2018 core profit would be down nearly 15 percent from last year’s 411 million euros ($476 million).

The company said it expects an “abrupt deterioration” in its high-voltage activities in the second half of this year, citing project execution problems and a weaker order backlog.

In addition to its submarine and land-based high-voltage operations, Nexans manufactures telecoms and data cables as well products for the aerospace and construction industries.

The expected drop in earnings before interest, tax, depreciation and amortization (EBITDA) to 350 million euros, compared with previous guidance of stable earnings this year.

By 0759 GMT shares in the company were still down 16 percent at 30.56 euros, against a 2 percent decline for Milan-listed rival Prysmian PRY.MI.

Nexans said it had initiated corrective measures to offset the business slowdown and that it plans a share buyback of up to 500,000 shares.

The group’s five-year targets remain unchanged, it added. From 2018 to 2022 Nexans aims to raise EBITDA to about 600 million euros and revenue from 4.6 billion euros to about 6 billion euros.

“The strategic plan is maintained and 2019 should be more secure as the order book is filling up,” Chief Financial Officer Nicolas Badre told reporters on a conference call.

Reporting by Matthias Blamont; Editing by Geert De Clercq and David Goodman