Nexans outperforms 2023 target, makes considerable progress on sustainability agenda

In the year in which it saw “considerable progress” on its sustainability agenda, Nexans has reported a “historic high” adjusted EBITDA of €665 million for the 2023 financial year, a +8.2% increase year-on-year, outperforming the target.

Nexans’ EBITDA including share-based payment expenses amounted to €652 million in 2023, above the guidance upgraded in July, versus €599 million in 2022, while the operating margin totaled €432 million, representing 6.6% of sales at standard metal prices, versus 6.2% in 2022.

The company ended 2023 with an operating income of €374 million, compared with €395 million in 2022, due to reorganization costs, a negative core exposure effect, and other operating income and expenses which represented net income of €1 million, versus €46 million in 2022. Net income thus amounted to €223 million in 2023, versus €248 million in 2022.

“Nexans’ robust performance in 2023 once again demonstrated the scale of our disciplined transformation since 2019. We delivered a record adj. EBITDA margin, and exceeded normalized free cash flow generation expectations,” said Christopher Guérin, Nexans CEO.

“On the acquisition front, we finalized a high-quality acquisition, with Reka Cables in Finland, and exited the Telecom Systems business, strengthening the Group’s profile, now resolutely focused on sustainable Electrification. The recent announcement of the signed agreement to acquire  La Triveneta Cavi in Italy, with recognized excellence within the European low-voltage segment, is an additional milestone in our journey to become a global Electrification Pure Player.”

In the Generation & Transmission segment, which represents 13% of total group sales, standard sales came in at €870 million, up +0.8% organically compared to 2022, and +17% excluding the Umbilicals activity which Nexans is currently discontinuing. Business was strong in the fourth quarter due to the execution of Sunrise Wind, Empire Wind 1 in the U.S. and the Tyrrhenian Link projects.

Despite the rebound initiated in H2 2023, the segment’s adjusted EBITDA reached €83 million, down -48% compared to 2022, while the adjusted EBITDA margin was 9.5% in 2023, versus 16.6% in 2022. The gradual margin upturn in the second half of 2023 to 10.8% (versus 7.8% in the first half) is said to have come from improved project execution, and the U.S.-based Charleston plant being fully ramped-up.

The segment’s adjusted backlog reached €6.1 billion on December 31, up by 74%, boosted by the fourth-quarter order for the Great Sea Interconnector (formerly EuroAsia) and the Orkney project in the UK. On December 22, Nexans received an advance payment from IPTO as part of the First Notice to Proceed of the Great Sea Interconnector.

According to Nexans, strategic investments continued as planned throughout the year, with the completion of the Halden plant extension in Norway in early 2024 and the launch of an investment for a third cable-laying vessel (CLV) to address substantial backlog growth.

Standard sales in the Distribution segment, which represents 18% of total group sales, rose organically by +4.5% compared with 2022 to €1,186 million. Demand was solid reflecting secular megatrends, including grid modernization and renewable energy projects in Europe and North America. South America and Asia Pacific were slower due to the timing of orders, while the Middle East and Africa remained strong. In this context, Nexans announced the signing of an MoU to build a new plant in Morocco the expand its production capacities.

Adjusted EBITDA rose by a sharp 78% year-on-year to €156 million, supported by new frame agreements, operational excellence and the contribution from the Reka Cables acquisition completed in April 2023. In this context, the adjusted EBITDA margin reached a record 13.2%, compared with 8.1% in 2022.

For 2023, Nexans also reported it had made continued progress in CSR performance, including a -36% decrease in Scope 1, 2 and 3 GHG emissions ahead of SBTi targets, and improved its Ecovadis score which reached 80 out of 100 (Top 1%), as well as increased its CDP Climate rating to A, joining the prestigious Climate “A list”. The company was also included in the CAC SBTi 1.5 index.63542

“We made considerable progress on our sustainability agenda with GHG emissions at –36% versus 2019 (Scopes 1, 2 and 3), extending the deployment of our E3 performance model across our units,” Guérin said. “Despite the ongoing macroeconomic uncertainties, we are entering 2024 with confidence and expect another year shaped by strong performance.”

In 2024, Nexans said it expects to benefit from continued buoyant market demand, supported by global megatrends in electrification, as well as its structural transformation and value-added solutions to support its growth and profitability improvements.

Assuming there are no conjunctural effects and excluding non-closed acquisitions and divestments, Nexans expects to achieve an adjusted EBITDA of between €670 and €730 million and a Normalized Free Cash Flow of between €200 and €300 million.