Nexans (NEX) CMD 2024 summary

Strategic direction and market outlook

• Accelerating electrification with a focus on tech solutions, AI, and new verticals, leveraging early investments in capacity and digitalization to amplify growth over the next four years.

• Addressable cable market expected to grow from €108 billion to €160 billion, with a 7% CAGR, driven by global electrification, decarbonization, and five mega trends including AI and urbanization.

• Nexans is shifting from a component provider to an end-to-end solution provider, expanding into accessories, services, and digital/AI-enabled offerings, with digital and AI solutions expected to quadruple.

• Floating offshore wind, data centers, and grid modernization are identified as high-growth segments, with tailored solutions and major investments in capacity and technology.

• Sustainability initiatives include a 46% reduction in Scope 1 & 2 emissions by 2030, 25% recycling target, and new partnerships for copper recycling and traceability.

Financial performance and guidance

• Achieved a sixfold increase in market capitalization and a sevenfold increase in dividend per share since 2018, with total shareholder returns near 500%.

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

• 2028 targets: €1.15 billion adjusted EBITDA (±€75 million), 3%-5% organic CAGR in electrification, 45%+ cash conversion, and maintaining ROCE above 20%.

• Free cash flow generation of €1.4 billion over four years, with 50% normalized cash flow conversion and leverage consistently below 1x net debt/EBITDA.

• Capital allocation prioritizes M&A (up to €2 billion firepower), €1.2 billion CAPEX, and progressive shareholder returns, with a dividend payout ratio ≥30%.

Business transformation and innovation

• Completed major restructuring and portfolio simplification, reducing complexity by 40% and increasing productivity by 20%.

• Divestment of non-core businesses ongoing, with recent and upcoming sales and €1.3 billion in acquisitions since 2021.

• SHIFT transformation platform and AI integration to drive further margin and efficiency gains, with AI expected to utilize 100% of ERP data.

• R&D focus shifting to 50%-60% on digitalization, IoT, and smart connectors, with significant organic investment and selective tech M&A.

• Innovation is central, with 24+ new offers and 70+ patents annually, aiming for advanced offers to represent ~40% of revenue by 2028.