The factors in favour of a drop in the Nexans share price:
First of all, the cost of certain raw materials essential to the group's production must be taken into account. This is the case, for example, with the price of copper and currencies, which naturally influence the group's profitability, with a rather erratic evolution for some time.
The Group has also encountered certain problems in recent years with regard to the production of certain ranges of cables. This is particularly the case with the flexibility of the submarine cable production tool, which is causing problems for the Group. This is also the case for the land cable division, which is having difficulty adapting to the growing competition from Asia.
Other important risks must also be taken into account before assessing Nexans' profitability. For example, we know that the company's activities are closely linked to oil prices, which have been declining significantly in recent years. Nexans' activities are also highly exposed to geopolitical risk, which has led to high impairments and a significant net loss in 2015 in some specific markets such as the Brazilian market, the Australian market or the Russian market.
With oil and gas customers currently experiencing a decline in business, this represents a significant loss of revenue for Nexans, which has seen its annual revenues fall drastically since 2016.
It is also regrettable that the group has a very weak presence in the very specific but fast-growing field of telecommunication cables. This target represents only 5% of the group's sales, although it generates the highest margin.
Finally, investors and shareholders also deplore the fact that Nexans' management no longer communicates any numerical objectives for the current financial years, which makes visibility less good and the implementation of strategies based on results and objectives more complex.