February 16, 2024 - NXPRF
Nexans: Electrifying the Future Beyond Offshore Wind
While the U.S. offshore wind market grapples with uncertainty, European cable giant Nexans is whispering a secret: a strategic shift towards a different, and arguably more predictable, energy boom – the electrification of everything else. Nexans’ Q4 2023 earnings call and recent acquisition of La Triveneta Cavi offer intriguing clues to this strategic pivot.
Nexans' "secret weapon" is its "SHIFT" transformation program, a comprehensive initiative to boost profitability and shed low-margin businesses. This program is yielding remarkable results, as evidenced by the company's confident projection of margin expansion in its Distribution & Usages segments, despite anticipating flat organic revenue growth.
This strategic shift is further underscored by Nexans' acquisition of La Triveneta Cavi, a specialist in low-voltage cables for building applications and infrastructure. This move strengthens Nexans' position in a rapidly growing market fueled by the global push for energy efficiency and decarbonization.
Nexans is projecting an adjusted EBITDA of €670 million to €730 million for 2024, excluding La Triveneta's contribution. Conservatively assuming a €50 million EBITDA contribution from La Triveneta in H2 2024, the potential adjusted EBITDA range increases to €720 million to €780 million, significantly exceeding analyst expectations.
Nexans' management has hinted at further capacity expansions in its Distribution segment, indicating a clear intention to capitalize on the growing demand for grid modernization and renewable energy integration. The company is also pursuing a global electrification strategy, with projects like a new greenfield facility in Morocco aimed at tapping into the growth potential of emerging markets.
Nexans' cables are used in some of the world's most iconic structures, including the Eiffel Tower, the Burj Khalifa, and the Panama Canal.
Nexans' "SHIFT" Transformation
Nexans' Strategic Acquisitions: A Closer Look
| Acquisition | Target | Year | Synergies Achieved |
|---|---|---|---|
| Centelsa | Leading cable manufacturer in Latin America | 2021 | +20% run-rate synergies (achieved in the first year) |
| Reka Cables | Finnish cable manufacturer specializing in low and medium voltage cables | 2023 | +50% run-rate synergies (achieved in the first year) |
| La Triveneta Cavi | Italian specialist in low-voltage cables for buildings and infrastructure | 2024 (expected closing in June) | Targeting +27% pre-synergies EBITDA margin by 2027 |
Financial Projections and Outperformance
Capacity Expansions and a Global Outlook
Nexans' EBITDA Margin Evolution
"Fun Fact: Nexans' cables are used in some of the world's most iconic structures, including the Eiffel Tower, the Burj Khalifa, and the Panama Canal."
