‘Good start’ to 2024 for Nexans with record subsea-driven backlog

Paris-headquartered cable systems designer and manufacturer Nexans has reported a record adjusted backlog of €6.7 billion for its Generation & Transmission segment, a 10.2% increase compared to December 2023, said to be mainly subsea-driven.

In its financial results for the first quarter of 2024, Nexans reported sales at standard metal prices of €1,692 million representing the strongest first-quarter level the company achieved. Organic growth was +2.8% compared to the first quarter of 2023, driven by Electrification businesses, and +4.7% excluding Other activities, which are being reduced in line with the group strategy.

The Electrification businesses (Generation & Transmission, Distribution and Usage) witnessed an organic sales increase of 6.7% thanks to the ramp-up of the Halden plant in the Generation & Transmission segment, the focus on product mix toward higher value-added solutions in the Usage segment, and good momentum in the Distribution segment, driven by strong utility demand.

The Non-electrification business remained stable at 0.3% organic growth supported by sustained growth in Auto-harnesses despite last year’s high comparison basis. Other activities experienced an organic decrease of 8.2% compared to Q1 2023.

“2024 is off to a good start with record first quarter standard sales. Our Electrification businesses drive growth, up +6.7% organically year-on-year, supported by double-digit growth in Generation & Transmission, coupled with sustained momentum in Distribution and Usage segments,” said Christopher Guérin, Nexans’ Chief Executive Officer.

“This quarter reflected strong trends in Electrification, the strength of our solutions, as well as the engagement of our teams reaching a record 78% rate, showing that Engagement leads to performance.”

Generation & Transmission standard sales came in at €257 million in Q1 2024, up 33.9% organically compared to Q1 2023, benefitting from the full contribution of the Charleston high-voltage plant in the U.S. and the ramp-up of the Halden plant expansion in Norway starting February.

Activity was strong in the first quarter mainly due to the installation campaigns for Barrow Umbilical and Moray West projects, together with testing progress on Tyrrhenian Link, Nexans said.

Customer activity was strong, supported by more than €20 billion subsea high voltage market pipeline in both subsea interconnection and offshore wind. In line with its risk-reward selectivity approach, the segment’s adjusted backlog rose to a record €6.7 billion on March 31, up by 10.2% compared to December 31, 2023, boosted by the first call-off under the TenneT framework agreement awarded in April 2023 for the turnkey BalWin3 and LanWin4 grid connection systems.

Nexans noted that strategic investment had continued as planned, with the completion of the Halden plant expansion early this year, doubling subsea high-voltage cables manufacturing capabilities in XLPE technology in Norway. The ongoing construction of a third cable-laying vessel (CLV), Nexans Electra, is expected to address substantial backlog growth.

Standard sales in the Distribution segment rose organically by 3.4% compared to Q1 2023 to €303 million, driven by high demand from electric utilities with grid investment being a priority in many countries, while standard sales in the Usage segment amounted to €465 million in first quarter 2024, down 2.5% organically compared with Q1 2023, and up 10.9% versus Q4 2023.

In the Industry & Solutions segment, standard sales reached €447 million in Q1 2024, representing an organic year-on-year growth of 0.3% on the back of a high basis of comparison last year. The Other Activities segment, primarily comprising copper wire sales, reported standard sales of €220 million in Q1 2024, down 8.2% organically year on year, mainly due to the strategy to reduce external copper wire sales through tolling agreements to mitigate their dilutive effect.

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

The French company said that the record risk-reward backlog in Generation & Transmission provides solid visibility and that it would benefit from the contribution of the ramp-up of the Halden plant in Norway starting in February.

In the context of the full year, Nexans expects to achieve an adjusted EBITDA of between €670 and €730 million and normalized free cash flow of between €200 and €300 million.

“We remain committed to delivering value to our shareholders and customers as we continue to execute our strategy and we are confident in our ability to achieve another year of performance,” Guérin concluded.

In terms of the most recent news coming from Nexans, the company signed a four-year contingency and preparedness contract with Equinor earlier this week, under which it will provide turnkey repair services for approximately 3,000 kilometers of the Norwegian state-owned energy giant’s various cable systems.