50Hertz award brings NKT’s high-voltage order backlog to record €11 billion

Denmark-headquartered cable supplier NKT has reported a new record high-voltage order backlog of €11 billion for the third quarter of 2023, driven by the award of five firm projects under a larger framework agreement with German transmission system operator 50Hertz.

In Q3 2023, NKT’s revenues increased by €143 million compared to Q3 2022, corresponding to 44% organic growth, said to be driven by increased revenues in the Solutions and Applications businesses, where satisfactory execution and previous capacity and capability investments drove the majority of growth.

In Service & Accessories revenues decreased, reflecting lower service repair activity compared to Q3 2022, NKT said.

Expressed in market prices, revenues in Q3 2023 were €661 million, compared to €492 million in Q3 2022.

Revenues through the first three quarters of the year amounted to €1,391 million, an increase from €1,058 million compared to the same period in 2022, corresponding to organic growth of 35%.

Operational EBITDA amounted to €76.5 million in Q3 2023, an increase of €41.3 million compared to Q3 2022. Operational EBITDA for the first three quarters of 2023 was €191 million, an increase from €115 million in the same period last year.

According to NKT, this favorable development was primarily driven by improved profitability in Solutions and Applications, as well as greater capacity in Solutions compared to the previous period.

“For the fourth consecutive quarter, we achieved double-digit growth in revenues and operational EBITDA, driven by capacity expansions, satisfactory project execution and continued growth in our Solutions and Applications business lines,” said Claes Westerlind, President and CEO of NKT.

“Our leading position in the high-voltage power cable market was once again confirmed by significant project awards, including the largest order in NKT’s history from German Transmission System Operator 50Hertz. We are honoured by the trust that our customers continue to have in our ability to deliver leading power cable solutions and are proud that NKT continue to have a central role in connecting a greener world.”

Approximately 25-28% of the high-voltage order backlog is expected to be executed in 2024 and 2025, and the remaining balance in 2026 and beyond, with a smaller portion to be executed in Q4 2023. The composition of the order backlog divided by customer type was more than 75% with large European TSOs. Divided by application, the backlog consisted of around 50% interconnectors, around 45% offshore wind projects, and around 5% power-from-shore projects.

To deliver on this, NKT has launched an approximately €1 billion investment program to expand additional high-voltage production and installation capabilities and capacity. The investments are scheduled between 2023 and 2026, and the new assets operational from 2027.

The majority of the investment program is earmarked for a significant expansion of NKT’s existing production site in Karlskrona, Sweden. Preparations have begun on-site and contracts have been finalized with several suppliers, with significant investments ramping up in the coming years.

In August 2022, NKT announced a circa €90 million investment to increase its high-voltage production capacity further by adding additional production equipment in Karlskrona. This investment is on track and expected to be fully ready for production by the end of this year as planned.

In its financial outlook for 2023, NKT expects revenues to be approximately €1.85-1.9 billion (previously approximately €1.8–1.9 billion) and operational EBITDA to be approximately €240-260 million (previously approximately €215-245 million).

This is based on several assumptions, including the satisfactory execution of high-voltage projects, limited financial impact from the uncertain global macroeconomic and geopolitical environment, supply-chain challenges, and the high inflationary pressure.

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