NEX Nexans

+6% organic growth and strong financial performance led by Electrification businesses in H1 2024

2024 guidance upgraded

_PRESS RELEASE_

• H1 2024 standard sales of €3.5 billion (current sales of €4.2 billion), up +6.1% organically and Q2 2024 standard sales of €1.9 billion, up +9.4% organically
• Acceleration in Electrification businesses, up +14.1% organically in H1 2024, thanks to continued focus on value-added solutions
• Record adj. EBITDA of €412 million, up +16.4% year-on-year, adj. EBITDA margin at 11.6% up +96bps
• Robust Normalized FCF at €189 million, reflecting strong operational performance
• Balance sheet strengthened with two successful bond issuances
• Completion of the La Triveneta Cavi’s acquisition, enhancing European footprint and product offerings
• Halden subsea high-voltage plant's extended capacity now operational, bolstering leadership in high-voltage solutions
• Full-year 2024 guidance upgraded, boosted by robust performance and integration of La Triveneta Cavi
  • Adjusted EBITDA of between €750 and €800 million (€670 - €730 million previously)
  • Normalized Free Cash Flow of between €275 and €375 million (€200 - €300 million previously)
• Capital Markets Day to be held on November 13, 2024 in London, and US investors day on November 20, 2024 in New York City

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Paris, July 24, 2024 – Today, Nexans, a global leader in the design and manufacturing of cable systems to power the world, published its financial statements for the first-half of 2024, as approved by the Board of Directors at its meeting on July 23, 2024 chaired by Jean Mouton. Commenting on the Group’s performance, Christopher Guérin, Nexans’ Chief Executive Officer, said:

“The record profitability we have achieved in the first half of 2024 evidences our value growth focus and the strategic direction we have set for Nexans. We have seen robust growth across our Electrification segments, particularly in Generation & Transmission where the strategic expansion of our Halden plant in Norway has already begun to yield benefits.

The successful finalization of the acquisition of La Triveneta Cavi in Italy early June marks a significant milestone in our journey. This strategic move expands our Usage capabilities and reinforces our commitment to providing comprehensive, high-quality solutions to our customers globally.

Innovation continues to be a driving force behind our success, and our pioneering work, such as the superconducting fault current limiter developed with SNCF Réseau, exemplifies our dedication to pushing technological advancements.”

H1 2024 KEY FIGURES

H1 2024 BUSINESS PERFORMANCE

Sales at standard metal prices reached €3,546 million in H1 2024. Demonstrating solid organic growth of +6.1% at constant scope and currency compared to H1 2023, the Group’s strategic initiatives are paying off. Excluding the Other activities segment, which is being strategically scaled down, organic growth stood at +9.0%. The Electrification businesses grew by +14.1% organically, driven largely by the Generation & Transmission segment's strong growth following the Halden plant expansion. Despite a challenging automation market and a high comparison base, the Non-electrification business proved resilient with a slight organic decline of -1.6%.

In Q2 2024, Nexans achieved organic growth of +9.4% compared to Q2 2023. Excluding the Other activities, the growth rate accelerated to +13.3%. Showcasing the strength of its core business focus, the Electrification businesses outperformed with +21.3% organic growth.

In early June, Nexans successfully completed the acquisition of La Triveneta Cavi, a leading Italian cable manufacturer, for an enterprise value of approximately €520 million. With a robust presence in thirty countries, La Triveneta Cavi's performance in 2023, with current sales of around €800 million underscores the strategic value of this acquisition. The Group is poised to unlock approximately €20 million in annual synergies post-integration, leveraging its unique SHIFT Performance and Prime transformation programs, enhanced operational efficiencies and cross-selling opportunities. Nexans' proven track record of successful integrations inspires confidence in its ability to seamlessly incorporate La Triveneta Cavi into its operations. This strategic move is expected to unlock substantial value, reinforcing the Group’s commitment to excellence in electrification.

In H1 2024 net acquisitions/disposals had an impact on standard sales of +€8 million reflecting i) the integration of La Triveneta Cavi into the Usage segment from June 1, 2024, ii) the acquisition of Reka Cables since April 2023 bolstering the Distribution and Usage segments, and iii) the divestment of the Telecom Systems business since October 2023 in line with Nexans' vision to become an Electrification Pure Player.

Adjusted EBITDA reached €412 million in H1 2024, up by a strong +16.4% versus €354 million in H1 2023. This performance underscored the profitability enhancements realized across all business segments. The adjusted EBITDA margin reached an all-time high of 11.6%, surpassing the previous year's strong performance of 10.7%. This achievement illustrates the Group’s strategic focus on operational excellence and value-driven growth. Notably, the €18 million contribution from the SHIFT Prime program and the €4 million contribution from the Amplify program to the Electrification businesses' EBITDA, as compared to H1 2023, exemplify the tangible impact of strategic initiatives on value-added solutions.

In H1 2024, specific operating items amounted to €(12) million in H1 2024. They included €(9) million related to share-based payment expenses, and €(4) million related to additional costs on long-term projects impacted by past reorganizations.

EBITDA including share-based payment expenses - as per the 2021 Capital Markets Day definition -amounted to €404 million in H1 2024, versus €347 million in H1 2023. The Group’s EBITDA margin stood at 11.4% in H1 2024, in line with the Group’s 2021 Capital markets day target of 10%-12%.

ROCE pursued its strong trajectory, reaching 19.7% for the Group, and 22.5% for the Electrification businesses, reflecting the acquisition of La Triveneta Cavi.

Operating margin totaled €300 million in H1 2024, representing 8.4% of sales at standard metal prices (versus 7.2% in H1 2023).

The Group ended H1 2024 with operating income of €291 million, compared with €217 million in H1 2023. The main changes were as follows:

• The core exposure effect amounted to €25 million in H1 2024, versus €6 million in H1 2023 reflecting the increase in copper prices in the first half of the year
• Other operating income and expenses was €14 million expense in H1 2024, versus €6 million expense in H1 2023, of which:
  • Acquisition-related costs of €12 million in H1 2024, mainly related to the acquisition of La Triveneta Cavi. In H1 2023, acquisition-related costs of €6 million was mainly related to the acquisition of Reka Cables in Finland.
  • Net asset impairment had no impact in H1 2024. They included a reversal of €7 million on Amercable activities in H1 2023.

The net financial expense amounted to €44 million in H1 2024, compared with €38 million during the same period last year. The increase primarily reflects the successful issuance of bonds for €575 million in May maturing in 2029 and €350 million bond in March 2024 maturing in 2030.

Income tax expense stood at €71 million, up from €45 million in H1 2023. The tax rate amounted to 29% of income before tax in H1 2024.

Net income amounted to €176 million in H1 2024, versus €134 million in H1 2023, representing €3.98 per share.  

CASH FLOW AND NET DEBT AT JUNE 30, 2024

Normalized free cash flow stood at €189 million in H1 2024, reflecting the Group’s solid operating performance. Calculated based on normalized free cash flow, the adj. EBITDA to cash conversion rate was 46%.

Cash from operations was a strong €315 million in H1 2024, up +48.1% compared to H1 2023. Change in working capital amounted to €(7) million, versus €142 million in H1 2023 which was supported by the positive impact of cash collection in the Generation & Transmission segment. Thus, operating working capital represented 2.3% of the Group’s annualized second quarter sales at June 30, 2024 (1.7% at June 30, 2023), below its normative level of ≤6%.

Normalized free cash flow also included a negative reorganization cash impact of €30 million in H1 2024. Recurring capital expenditure amounted to €87 million in H1 2024, representing 2.5% of Group’s standard sales. Normalized free cash flow also included financial interest for €42 million, versus €33 million in H1 2023, and other investing impacts for a positive €5 million, versus a negative €3 million in H1 2023.

Free cash flow before M&A and equity operations was €79 million in H1 2024, versus €171 million in H1 2023, and included strategic capital expenditure in the Generation & Transmission business for €105 million, corresponding mainly to the finalization of the expansion of the Halden plant in Norway, and the ongoing investment in a third cable-laying vessel. The other differing items between Normalized free cash flow and Free cash flow before M&A corresponded to normative project tax cash-out for €5 million (€22 million in H1 2023).

Net cash flow from M&A amounted to a net outflow of €533 million in H1 2024, primarily related to the acquisition of La Triveneta Cavi in June. In H1 2023, this figure was a net outflow of €70 million related to the acquisition of Reka Cables.

Equity operations represented a net outflow of €118 million including the payment of the 2023 dividend of €2.30 per share for a total amount of €101 million, and share buybacks for €17 million. There was a net outflow of €24 million related to unfavorable foreign exchange fluctuations and new lease liabilities.

Net debt increased to €810 million at June 30, 2024, from €214 million at December 31, 2023, representing a 0.7x leverage ratio as per the covenant definition2.

SUSTAINABILITY

As a global leader in the electrification, Nexans is dedicated not only to powering the future but also to ensuring that its operations and activities embed and promote sustainability and safety at every level. In alignment with its core values and pledge to achieve Net-Zero emissions by 2050, three key initiatives took place during the first half:

• Nexans celebrated its annual Internal Planet Week, a company-wide event that brings together employees from all corners of the globe to engage in activities and dialogues centered around environmental sustainability. This initiative reflects ongoing efforts to reduce carbon footprint, conserve resources, and foster a culture of eco-consciousness within the organization. During the week, various workshops, seminars, and interactive sessions were held to educate and inspire Nexans’ workforce on the importance of environmental stewardship.
• Electrification sites were awarded their E3 performance scores based on 2023 data. This scoring provides each site with a clear understanding of their systemic performance and helps to reinforce and drive their respective action plans.
• Nexans also observed Global Safety Day across all units, reaffirming its unwavering commitment to the health and safety of its employees. This day serves as a reminder of the critical importance of maintaining a safe work environment and the role each individual plays in achieving this objective.

H1 2024 PERFORMANCE BY SEGMENT

| GENERATION & TRANSMISSION (18% OF TOTAL STANDARD SALES)

Generation & Transmission standard sales came in at €622 million in H1 2024, up +64.0% organically compared to H1 2023, propelled by the completion of the Halden plant expansion in Norway at the beginning of the year, which doubled XLPE technology capacities and bolstered production capabilities.

The segment’s adjusted EBITDA reached €68 million in H1 2024, up +125% compared to the same period last year. The adjusted EBITDA margin showcased a significant uptick to 10.9% in H1 2024, versus 7.8% in H1 2023. As expected, the gradual margin upturn was supported by extended capacity utilization, and the successful installation of projects and execution of IMR3 campaigns, which helped to mitigate the impact of executing lower-margin legacy projects.

Customer activity remained robust, and in line with its risk-reward selectivity approach, the segment’s adjusted backlog reached €6.7 billion at June 30, 2024, up +29.9% compared to June 30, 2023. This growth was notably fueled by initial call-offs from TenneT's frame agreement for the BalWin3 and LanWin4 offshore wind projects in the first half of the year. During the second quarter, Nexans signed a four-year contingency and preparedness contract with Equinor.

The robust visibility of manufacturing and installation asset loads has been extended through 2030. Construction of Nexans’ third cable-laying vessel, the Nexans Electra, is ongoing. This state-of-the-art vessel is a strategic asset that will significantly enhance capacity to address the substantial growth in the business’ backlog.

| DISTRIBUTION (18% OF TOTAL STANDARD SALES)

Standard sales in the Distribution segment rose organically by +2.4% compared with H1 2023 to €635 million. Demand was solid, driven by robust market conditions and strategic contract wins. In Europe, the segment benefited from increased demand and the securing of new frame agreements, including a major contract in Italy. The Near East and Africa was boosted by a series of renewable energy projects, reflecting the Group’s strategic alignment with global sustainability trends, while North America and South America encountered project delays.

Adjusted EBITDA rose by a sharp +20% year-on-year to €99 million supported by new frame-agreements, operational excellence and the contribution of the Reka Cables acquisition completed in April 2023. The adjusted EBITDA margin reached an unprecedented 15.6% in H1 2024 compared with 13.7% in H1 2023, reflecting robust demand and increased selectivity in project engagement.

| USAGE (28% OF TOTAL STANDARD SALES)

Standard sales in the Usage segment amounted to €989 million in H1 2024, up +1.0% organically, underpinned by market stabilization in North America (Canada). While Europe faced softer demand in certain residential markets, the Near East and Africa, and South America regions delivered a strong performance, contributing positively to the segment’s trajectory.

H1 2024 reflects the contributions of La Triveneta Cavi, starting from June 1, 2024, and Reka Cables, since April 2023. These acquisitions are integral to Nexans' Electrification strategy, expanding the Group’s capabilities and reinforcing its market position in key regions.

Aligned with the Group’s value-added and prime approach, the number of active and engaged users on digital platforms has doubled year-on-year. The increase in digital engagement, and the introduction of innovative packaging like Mobiway Boost in Asia Pacific and the penetration of fire safety solutions are clear indicators of Nexans’ proactive approach to value growth and innovation.

Adjusted EBITDA reached €139 million in H1 2024, up +1.4% year-on-year. Adjusted EBITDA margin was a robust 14.1%, thanks to structural performance improvement initiatives, selectivity, and a focus on delivering value-added solutions. These efforts have effectively balanced the normalization in North America compared to the previous year exceptional performance.

| NON-ELECTRIFICATION (Industry & Solutions) (25% OF TOTAL STANDARD SALES)

In the Industry & Solutions segment, standard sales for H1 2024 amounted to €890 million, reflecting a marginal organic year-on-year decline of -1.6%. This was primarily attributed to a slowdown in Automation in Europe, which was partially offset by robust growth in the Shipbuilding and Aerospace markets, as well as a slight increase in the Auto-harnesses business. Notably, Nexans announced a strategic investment of €4.5 million in France during the quarter to double its medical cable production capacity, in response to surging demand in this sector.

Adjusted EBITDA for the segment increased by +4.2% to reach €114 million, resulting in an adjusted EBITDA margin of 12.8% in H1 2024, compared to 12.0% in the previous year. This improvement reflects the positive impact of operational enhancements and a favorable product mix.

| OTHER ACTIVITIES (12% OF TOTAL STANDARD SALES)

The Other Activities segment – corresponding for the most part to copper wire sales and corporate costs that cannot be allocated to other segments – reported standard sales of €410 million in H1 2024. Standard sales were down -11.8% organically year-on-year, mainly linked to the Group’s strategy to reduce copper wire external sales through tolling agreements in order to mitigate their dilutive effect.

The segment’s adjusted EBITDA was stable at a negative €7 million in H1 2024, versus a negative €5 million in H1 2023.

2024 OUTLOOK

As the world continues to embrace electrification, Nexans is well-positioned to harness buoyant market demand, supported by global megatrends and the Company's commitment to delivering value-added solutions. Nexans' Generation & Transmission segment boasts a record risk-reward adjusted backlog, ensuring solid visibility. The Group is poised to reap benefits from the expanded capacity of the Halden plant in Norway, positioning Nexans to meet the growing global demand for high-voltage solutions. Looking ahead, the Generation & Transmission business is on a trajectory of gradual improvement anticipated to be more pronounced in 2025. This progress is contingent upon the successful execution of projects and the completion of legacy contracts. The Distribution market is entering a significant hyper cycle of investment, presenting Nexans with opportunities for growth and enhanced profitability. Despite weak demand in certain geographies within the construction sector, Nexans’ Usage segment remains resilient, with strategic initiatives in place to mitigate the impact of these macroeconomic conditions. Seasonality impacts are anticipated in H2 2024, as in previous years. Nexans will continue to leverage the agility and dedication of its teams to adapt to market changes and maintain a steadfast focus on cash generation.

Reflecting the strong performance in the first half of the year and the successful integration of La Triveneta Cavi, which is expected to add around €40 million to EBITDA in 2024, Nexans is upgrading its financial outlook for the full year of 2024. The Group expects to achieve the following targets, excluding the impact of any non-closed acquisitions and divestments:

• Adjusted EBITDA of between €750 and €800 million (€670 - €730 million previously);
• Normalized Free Cash Flow of between €275 and €375 million (€200 - €300 million previously).

Nexans reaffirms its commitment to the 2021 Capital Markets Day targets and will continue to execute its strategic roadmap and priorities.

The H1 2024 press release and presentation slides are available in the Investor Relations Results section at Nexans - Financial results.

A conference call is scheduled today at 9:00 a.m. CEST. Please find below the access details:

Webcast https://channel.royalcast.com/landingpage/nexans/20240724_1/

Audio dial-in

• International switchboard: +44 (0) 33 0551 0200
• France: +33 (0) 1 70 37 71 66
• United Kingdom: +44 (0) 33 0551 0200
• United States: +1 786 697 3501

Confirmation code: Nexans

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FINANCIAL CALENDAROctober 30, 2024:         2024 third-quarter financial informationNovember 13, 2024:         Capital Markets Day, London November 20, 2024:         US investors day, New York City February 19, 2025:         Full-year 2024 earnings

About Nexans

For over a century, Nexans has played a crucial role in the electrification of the planet and is committed to electrifying the future. With approximately 28,500 people in 41 countries, the Group is paving the way to a new world of safe, sustainable and decarbonized electricity that is accessible to everyone. In 2023, Nexans generated €6.5 billion in standard sales. The Group is a leader in the design and manufacturing of cable systems and services across four main business areas: Power Generation & Transmission, Distribution, Usage and Industry & Solutions. Nexans was the first company in its industry to create a Foundation supporting sustainable initiatives, bringing access to energy to disadvantaged communities worldwide. The Group is recognized on the CDP Climate Change A List as a global leader on climate action and has committed to Net-Zero emissions by 2050 aligned with the Science Based Targets initiative (SBTi).

Nexans. Electrify the Future.

Nexans is listed on Euronext Paris, compartment A.For more information, please visit www.nexans.com

Contacts

Attachment

• Nexans_H1 2024 earnings Press release

Grafico Azioni Nexans (EU:NEX)
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Da Ott 2024 a Nov 2024

Grafico Azioni Nexans (EU:NEX)
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Da Nov 2023 a Nov 2024