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Cable Companies Prove Industry Profitability
added: 2007-06-25

Wire and cable revenues for the leading companies continue to grow, boosted by rising costs of raw materials. The 2007 Wire and Cable Financial Insight, a study of the world's 100 largest wire and cable producers published by Integer Research, has revealed the leading 100 companies have combined cable revenues of US$90 billion in 2006, growing by 47.5% year-on-year.

"The total industry reported revenues greater than US$124 billion in 2006, this is up from US$97 billion in 2005." says Integer Research Director, Philip Radbourne. "The three major players, Nexans, Sumitomo Electric, and Prysmian clearly dominated the industry in 2006, each reporting wire and cable revenues of more than US$6 billion. Nexans has extended its position as world market leader by increasing its market share in Asia, with further investments in China, and the acquisition of Olex in Australia and New Zealand in 2006."

Revenues were boosted by the sharp increase in raw materials prices during 2006. Indeed, copper prices on the LME hit an historic nominal record high in the second half of 2006. "The higher copper and energy prices, combined with increased aluminium and polymer prices, meant that these inflationary pressures boosted the whole cable market through 2006," says Integer Research Analyst, Sebastian Chu Ti. "However, despite these increased prices, the industry is still profitable.

"The Wire and Cable Financial Insight shows that the net profit margin for the world's 100 leading wire and cable producers is 4.4% in 2006, up from 2.6% in 2005, and a huge increase from -2.6% in 2002. One of main drivers of this profitability has been the continued growth in demand in Asia. China has led the way here, cementing its position as one of the leading cable markets worldwide over the last five years. In addition, there has continued to be rationalisation and consolidation on the supply side of the market, as leading producers have continued to look for acquisitions opportunities in the leading 200 cable makers worldwide."

Radbourne continues, "Nexans, Leoni, General Cable and Belden CDT have been particularly active buying up a number of second tier niche producers globally. Belden CDT has concentrated on acquiring LTK, whilst Nexans, Leoni and General Cable have been looking at various power wire and cable producers globally, either in the specialty or utility power cable sectors."


Source: PR Newswire

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