Nexans (NEX) CMD 2024 summary

Strategic vision, context, and market outlook

• Accelerating electrification globally, driven by renewables, urbanization, and data center growth, with the addressable cable market expected to grow from €108bn to €160bn at a 7% CAGR.

• Five mega trends—electrification, energy transition, sustainability, AI revolution, and urbanization—are shaping demand, with risks like grid aging and resource shortages amplifying these trends.

• The company is shifting from component provider to end-to-end solution provider, expanding advanced offers, digital, and AI-driven solutions, with partnerships enhancing operational efficiency.

• Major investments in capacity, digitalization, and sustainability, including €900m in Power Transmission, a €90m recycling facility, and increased recycled copper content.

• Floating offshore wind, data centers, and grid modernization are identified as high-growth segments, with tailored solutions and digital platforms to enhance recurring revenue.

Financial performance and guidance

• Adjusted EBITDA reached €723m (June 2024), with a 300bps margin increase since 2021 and 56% margin improvement in Power Grid and Power Connect.

• 2028 targets: adjusted EBITDA of €1.15bn (±€75m), 3–5% organic CAGR in electrification, and >45% cash conversion, with incremental EBITDA of +€350m.

• Market capitalization increased sixfold from €1bn to €6bn and dividends per share rose sevenfold from 2018 to 2024.

• CAPEX of €1.2bn planned, with balanced allocation across Power Transmission, Grid, and Connect; 60% of cash flow to growth/M&A, 40% to shareholders.

• Return on capital employed to remain above 20%, with leverage ≤1.0x and a progressive dividend payout ratio ≥30%.

Business transformation, innovation, and capital allocation

• Completed a three-phase transformation: restructuring, simplification, and now amplifying profitable growth (2024–2028), with innovation and AI as central pillars.

• Lifecycle solutions, low-carbon products, and recycling (targeting 25% recycled copper by 2026/2028) to drive sustainability and price premiums.

• Disciplined M&A strategy with €2bn firepower and a €20bn pipeline, focusing on cable, accessory, and tech entities; non-core divestments ongoing.

• Customer-centric innovations (e.g., Mobiway POP, IoT-enabled solutions) and digital platforms to enhance experience and recurring revenue.

• Implementing share buybacks to avoid dilution and support shareholder returns, while maintaining a robust business model and balance sheet.