NEXANS DELIVERS ROBUST PERFORMANCE IN 2023
NEXANS DELIVERS ROBUST PERFORMANCE IN 2023
_PRESS
RELEASE_
- 2023 standard sales of €6.5
billion, €7.8 billion current sales, strong profitability expansion
and excellent cash generation
- Nexans delivered on all its
objectives, which were upgraded last July, confirming the depth of
its transformation year after year
- Adj. EBITDA1 at a historic high of
€665 million, up +8% year-on-year, and adj. EBITDA margin at 10.2%;
EBITDA including share-based payments at €652 million,
outperforming target
- Focus on value added solutions
(SHIFT Prime) generating +€20 million incremental EBITDA in its
Electrification businesses
- Outstanding Normalized FCF at €454
million, reflecting strict management of working capital and
Generation & Transmission’s adjusted backlog growth
- Strong balance sheet
maintained with net debt at €214 million and a 0.4x leverage
ratio
- Proposed dividend up +10%
to €2.30 per share
- Electrification Pure Player
profile strengthened by M&A and investments
- Acquisition of Reka Cables in
Finland with integration progressing ahead of plan, finalization of
the divestment of Telecom Systems activity
- MoU signed to expand medium voltage
capacities in Morocco and serve the booming demand for the grid in
the region
- Halden high-voltage plant capacity
extension completed early 2024 and new cable-laying vessel
construction on track to deliver record Generation &
Transmission adjusted backlog of €6.1 billion
- Continued progress in CSR
performance: -36% decrease in Scope 1, 2 and 3 GHG
emissions ahead of SBTi targets
- Full-year 2024 guidance
announced:
- Adj. EBITDA of between €670 and 730
million
- Normalized Free Cash Flow of
between €200 and 300 million
- Capital Markets Day to be
held on November 13th,
2024
~ ~ ~
Paris, February 15, 2024 –
Nexans, a global leader in the design and manufacturing of cable
systems to power the world, announces its financial results for the
fiscal year 2023. The results were approved by the Board of
Directors on February 14, 2024. Commenting on the Group’s 2023
results, Christopher Guérin, Nexans’ Chief Executive Officer,
said:
“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. I would like to
thank all our employees, who are the driving force behind our
journey.
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.
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 agreement2 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.
Despite the ongoing macroeconomic uncertainties,
we are entering 2024 with confidence and expect another year shaped
by strong performance.”
2023 KEY FIGURES
(in millions of euros) |
2022 |
2023 |
Sales at current metal prices |
8,369 |
7,790 |
Sales at standard metal
prices3 |
6,745 |
6,512 |
Organic growth |
+6.3% |
-0.9% |
Adj. EBITDA4 |
616 |
665 |
Adj. EBITDA as a % of standard sales |
9.1% |
10.2% |
Specific operating items |
(16) |
(53) |
Depreciation and amortization |
(180) |
(179) |
Operating margin |
420 |
432 |
Reorganization costs |
(39) |
(49) |
Other operating items |
14 |
(9) |
Operating income |
395 |
374 |
Net financial income (loss) |
(57) |
(83) |
Income taxes |
(90) |
(68) |
Net income |
248 |
223 |
Net debt |
182 |
214 |
Normalized free cash-flow |
393 |
454 |
ROCE |
20.5% |
20.7% |
2023 BUSINESS PERFORMANCE
In 2023, sales at standard metal
prices reached €6,512 million. At constant scope and
currency, organic growth was -0.9% compared to 2022, and +3.0%
excluding Other activities, which are being scaled-down in line
with the Group’s strategy. Electrification businesses (Generation
& Transmission, Distribution, and Usage) declined by -1.5%
organically reflecting (i) the exit from the Umbilical activity in
the Generation & Transmission segment, (ii) the focus on
profitability and product mix toward higher value-added solutions
despite some normalization in the Usage segment, and
(iii) excellent momentum in the Distribution segment on the
back of buoyant utilities demand. The Non-electrification business
was up +13.7% reflecting new developments in Auto-harnesses,
recovery in Aerospace and solid momentum in Mining, while Other
activities continued to be downsized by a strong -17.9% organically
compared to 2022.
The scope effect included the positive
contribution of two acquisitions in the Distribution and Usage
businesses, partly offset by the divestment of the Telecom Systems
business, Aginode, finalized in October 2023. After successfully
acquiring Centelsa in Colombia in 2022, and achieving over
€12 million in synergies one year ahead of schedule thanks to
the SHIFT programs roll-out, Nexans is continuing its strategy of
expansion in Electrification markets. On April 26, 2023, the Group
completed the acquisition of Reka Cables in Finland. Nexans
anticipates €11 million in recurring synergies after full ramp-up,
meaning +€4 million run-rate synergies to be delivered 6 to 12
months ahead of the initial plan. These two acquisitions add €500
million current sales in Electrification and enhance Nexans' global
portfolio in key segments.
Adjusted EBITDA reached €665
million in 2023, up by a strong +8.2% versus €616 million in 2022.
Adjusted EBITDA margin was strong at 10.2% versus
9.1% in 2022, supported by cable businesses and illustrating
Nexans’ value-driven model and embedded focus on performance.
Electrification achieved a record adjusted EBITDA margin of 12.5%
in 2023 thanks to the product mix shift toward innovative, higher
value-added solutions, and structural profitability improvements in
the Distribution and Usage segments, more than offsetting the
decline in the Generation & Transmission segment affected by
one-offs in the first half of the year.
In 2023, specific operating
items included €13 million related to share-based payment
expenses, and €40 million in relation to additional costs on
long-term projects impacted by past reorganizations. These
additional costs led to subsequent losses at completion which are
not representative of the actual business performance. In 2022,
EBITDA included €16 million of specific operating items related to
share-based payment expenses.
EBITDA (including share-based
payment expenses) amounted to €652 million in 2023, above the
guidance upgraded in July, versus €599 million in 2022.
ROCE pursued its record-high
trajectory, reaching 20.7% for the Group (20.5% in 2022), and 26.4%
for the Electrification businesses.
Operating margin totaled €432
million in 2023, representing 6.6% of sales at standard metal
prices (versus 6.2% in 2022).
The Group ended 2023 with operating
income of €374 million, compared with €395 million in
2022. The main changes were as follows:
-
Reorganization costs amounted to €49 million in
2023 versus €39 million in 2022. In 2023, this amount mainly
included costs for the on-going termination of Umbilical projects
in Norway, restructuring actions to implement a leaner
organization, as well as costs related to new transformation
actions launched during the period.
- The core
exposure effect was a negative €12 million in 2023 versus
a negative €30 million in 2022.
- Other
operating income and expenses represented net income of €1
million in 2023, versus €46 million in 2022, of which:
- Net asset
impairment for €23 million in 2023, versus zero in 2022.
In 2023, the reversal of impairment was related to Australia and to
the Amercable unit in the United States, both on the back of the
continued stronger performance.
- Net losses
on asset disposals amounted to €9 million in 2023, mainly
related to the disposal of the Telecom Systems business and of an
equity investment. In 2022, the net gain of €54 million was mainly
related to the sale of the Hanover property in Germany.
The net financial expenses
amounted to €(83) million in 2023, compared with €(57) million
during the same period last year. The decrease is mainly related to
the higher cost of net debt, as well as a negative currency
impact.
Income tax expense stood at
€68 million, down from €90 million in 2022. The tax rate
amounted to 18% of operating income in 2023 as a result of higher
deferred tax assets recognition.
Net income thus amounted to
€223 million in 2023, versus €248 million in 2022,
representing €5.1 per share.
CASH FLOW AND NET DEBT AT 31 DECEMBER
2023
Normalized free cash flow grew
by a strong 16% year-on-year to €454 million, in line with the
Group’s solid operating performance and reflecting the strict
management of working capital. Cash from operations was a strong
€511 million in 2023. Change in working capital amounted to €287
million on the back of high Generation & Transmission project
related advance payments. Thus, operating working capital
represented 0.3% of the Group’s annual sales at December 31,
2023 (2.7% at December 31, 2022), below its normative level of ≤6%.
The Normalized free cash flow also included a reorganization cash
impact of €98 million in 2023, up year-on-year, mainly due to a
non-recurring loss at completion in a Generation & Transmission
project. Recurring capital expenditure amounted to €178 million
(€141 million in 2022), representing 2.7% of Group standard sales
in 2023. Normalized free cash flow also included financial interest
for €73 million (€48 million in 2022), and other investing impacts
for a negative €23 million (vs a positive €13 million in 2022).
Calculated based on normalized free cash flow,
the adjusted EBITDA to cash conversion rate was 68%.
Free cash flow before M&A
reached €234 million for the year (€271 million in 2022), and
included strategic capital expenditure in the Generation &
Transmission business of €199 million (€157 million in 2022),
corresponding mainly to the expansion of the Halden plant in
Norway, and the investment in a third cable-laying vessel. Thus,
for full-year 2023, total capital expenditure amounted to €377
million. On top of strategic capital expenditure, the other items
differing between normalized free cash flow and free cash flow
before M&A corresponded to Proceeds from disposals of property,
plant and equipment and intangible assets of €6 million in 2023
(€60 million in 2022) and normative project tax cash-out for €28
million (€25 million in 2022).
Net cash flow from M&A amounted to a net
outflow of €79 million in 2023 and mainly included the acquisition
of Reka Cables in Finland, as well as the divestment of Aginode. In
2022, this figure was a net outflow of €255 million related to the
acquisition of Centelsa.
Equity operations included the payment of the
2022 dividend of €2.10 per share for a total amount of €93 million,
and share buybacks for €6 million. There was a net outflow of €87
million related to unfavorable foreign exchange fluctuations and
new leases liabilities.
Net debt remained well under
control at €214 million at December 31, 2023, from €182 million at
December 31, 2022, representing a 0.4x leverage ratio as per
covenant definition5.
The Board of Directors decided that, at the
Annual General Meeting of May 16, 2024, it will recommend a
dividend payment of €2.30 per share in respect of
2023, a 9.5% increase versus the prior year, in line with the
policy of increasing progressively the dividend as a mark of its
confidence in the Group’s prospects.
SUSTAINABILITY
Committed to electrifying the future with
impact, the Group is recognized by rating agencies as one of the
best industry performers in terms of social responsibility. Nexans
improved its Ecovadis score which reached 80 out of 100 (Top 1%),
and increased its CDP Climate rating to A, joining the prestigious
Climate “A list”. The Group was also included in the CAC® SBTi 1.5
index. These results demonstrate Nexans’ commitments to
sustainability and the Group’s continued improvement over many
years. Notable developments in 2023 included:
-
The accelerated deployment of the E3 performance model to ensure
the convergence of Economic, Engagement and Environment pillars.
Some 300 managers were onboarded across the Group and for the first
time, business leaders for Electrification sites were set Economic
and Environmental targets.
-
The reinforcement of Nexans’ commitments to fight global warming
with the presentation of its updated Climate plan at its Annual
General Meeting. In line with the expectations of the Paris
Agreement to contain global warming at 1.5°C above preindustrial
levels by the end of the century, the Group has set itself an
ambitious target, based on the SBTi (Science Based Target
initiative) approach targeting a 46% reduction in Scope 1 & 2
GHG emissions by 2030 compared to 2019, and a 30% decrease in Scope
3 emissions by 2030. The company is also committed to achieving Net
Zero by 2050 for all scopes.
-
Expansion of the Group’s sustainable offering with the launch of a
new range of low-carbon medium voltage cables. By adopting a
holistic approach all along the value chain, the Group reduced the
greenhouse gas emissions of its low- and medium-voltage cables by
35% to 50% versus standard cables. Furthermore, the Group made
significant progress with Trimet in their joint development project
to improve the eco-balance of power cables by incorporating
recycled aluminum content in the production of aluminum rods
used.
2023 PERFORMANCE BY SEGMENT
| GENERATION &
TRANSMISSION (13% OF TOTAL GROUP SALES)
(in millions of euros) |
20226 |
2023 |
Sales at standard metal prices |
958 |
870 |
Organic growth |
+11.6% |
+0.8% |
Adjusted EBITDA |
159 |
83 |
Adjusted EBITDA as a % of standard sales |
16.6% |
9.5% |
Generation & Transmission standard
sales came in at €870 million in 2023, up +0.8%
organically compared to 2022, and +17% excluding the Umbilicals
activity which the Group is currently discontinuing. Business was
strong in the fourth quarter due to the execution of Sunrise Wind,
Empire Wind 1 in the United States and the Tyrrhenian Link
projects.
Despite the rebound initiated in the second half
of 2023, the segment’s adjusted
EBITDA reached €83 million in 2023, down -48%
compared to 2022. 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) came from improved project execution, and the
US-based Charleston plant being fully ramped-up, partially
offsetting the dilutive impact of the execution of legacy projects
and unfavorable currency effect.
Customer activity remained robust, and in line
with its risk-reward selectivity approach, the segment’s
adjusted backlog reached €6.1 billion at December
31, 2023, up by 74% compared to December 31, 2022, boosted by the
fourth-quarter order for the Great Sea Interconnector (formerly
EuroAsia) and the Orkney project in the United Kingdom. On December
22, 2023, Nexans received an advance payment from IPTO as part of
the First Notice to Proceed of the Great Sea Interconnector. This
marked the first significant step in the contract signed last
July.
The robust visibility of manufacturing and
installation asset loads has been extended through 2030. Strategic
investments continued as planned throughout the year, with the
completion of the Halden plant extension in Norway early 2024 and
the launch of an investment for a third cable-laying vessel to
address substantial backlog growth.
| DISTRIBUTION
(18% OF TOTAL GROUP SALES)
(in millions of euros) |
20226 |
2023 |
Sales at standard metal prices |
1,088 |
1,186 |
Organic growth |
+12.2% |
+4.5% |
Adjusted EBITDA |
88 |
156 |
Adjusted EBITDA as a % of standard sales |
8.1% |
13.2% |
Standard sales in the
Distribution segment 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, the Group
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.
| USAGE
(26% OF TOTAL GROUP SALES)
(in millions of euros) |
20226 |
2023 |
Sales at standard metal prices |
1,837 |
1,679 |
Organic growth |
+13.5% |
-6.3% |
Adjusted EBITDA |
221 |
229 |
Adjusted EBITDA as a % of standard sales |
12.0% |
13.6% |
Standard sales in the Usage
segment amounted to €1,679 million in 2023. Sales were down -6.3%
organically compared with the prior year, reflecting the
normalization of volumes mainly in Canada as anticipated. The Group
benefited from a continued product mix improvement toward higher
value-added solutions, driven by the accelerated pace of adoption
of fire safety cables and the launch of new products and solutions.
In this context, the Group announced the launch of a €40 million
investment program over the next three years at its Autun site in
France, in order to accelerate its industry 4.0 and fire safety
offer. Europe was resilient despite the construction slowdown in
some areas and destocking in the fourth quarter. Demand was weak in
Asia Pacific, while Middle East and Africa remained
well-oriented.
Adjusted
EBITDA reached €229 million, up by 3.7%
year-on-year, supported by sustained strength in pricing by higher
value-added solutions, and the contribution from Reka Cables
starting April 30, 2023, offset by a negative currency effect
mainly reflecting the depreciation of Canadian currency and the
devaluation of the Turkish currency. In this context,
adjusted EBITDA margin reached
the high level of 13.6% (vs 12.0% in 2022).
| NON-ELECTRIFICATION
(Industry & Solutions) (27% OF TOTAL GROUP
SALES)
(in millions of euros) |
20226 |
2023 |
Sales at standard metal prices |
1,559 |
1,750 |
Organic growth |
+12.3% |
+13.7% |
Adjusted EBITDA |
135 |
185 |
Adjusted EBITDA as a % of standard sales |
8.6% |
10.6% |
Standard sales in the Industry
& Solutions segment were €1,750 million in 2023, representing
strong organic year-on-year growth of +13.7% supported by solid
momentum in Auto-harnesses, Shipbuilding, Rail and Mining, as well
as a recovery in Aerospace. Automation witnessed a slowdown in the
second half reflecting weakening orders after a period of solid
execution.
Adjusted
EBITDA rose by +37% to €185 million, with an
adjusted EBITDA margin of 10.6%, versus 8.6% last
year, reflecting operational improvements and product mix.
| OTHER ACTIVITIES
(16% OF TOTAL GROUP SALES)
(in millions of euros) |
20226 |
2023 |
Sales at standard metal prices |
1,302 |
1,026 |
Organic growth |
-13.6% |
-17.9% |
Adjusted EBITDA |
13 |
13 |
The Other Activities segment –
corresponding for the most part to copper wire and telecom sales,
and including corporate structural costs that cannot be allocated
to other segments – reported standard sales of
€1,026 million in 2023. Sales were down -17.9% organically
year-on-year, mainly linked to the Group’s strategy to reduce
copper wire external sales through tolling agreements in order to
mitigate their dilutive effect.
The segment’s adjusted
EBITDA was stable at €13 million in 2023, versus
€13 million in 2022, reflecting profitability enhancement within
the Metallurgy activity, more than offsetting the divestment of
Aginode which marked the exit of the Group from the Telecom System
business. Starting 2023, the segment’s adjusted EBITDA excluded
share-based payment expenses amounting to €16 million in 2022 and
€13 million in 2023.
2024 OUTLOOK
In 2024, Nexans 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. The Distribution market is currently entering a hyper
cycle of investment. The record risk-reward backlog in Generation
& Transmission provides solid visibility, and the Group will
benefit from the contribution of the ramp-up of the Halden plant in
Norway.
At the beginning of the year, the macroeconomic
context is marked by ongoing weak demand in some geographies in
construction. Countries affected in 2023, proved to be resilient
thanks to value-added offers, customer selectivity and the strong
focus on cash generation. In this demanding context, some
initiatives are already in place and Nexans will draw on the
agility and commitment of its teams to adapt to changes and
continue to focus on cash generation. A progressive improvement is
expected throughout the year and datacenters, industrial and
mobility markets are expected to remain resilient.
In this context for 2024, assuming there are no
conjunctural effects and excluding non-closed acquisitions and
divestments, Nexans expects to achieve:
- Adjusted EBITDA of
between €670 and 730 million;
- Normalized Free
Cash Flow of between €200 and 300 million.
Moreover, the Group is confirming its 2024
Capital Markets Day targets and will continue the implementation of
its strategic roadmap and priorities.
The full-year 2023 press release and
presentation slides are available in the Investor Relations Results
section at Nexans - Financial results.
A conference call is scheduled today at 9:00
a.m. CET. Please find below the access details:
Webcast
https://channel.royalcast.com/nexans/#!/nexans/20240215_1
Audio dial-in
- International
switchboard: +44 (0) 33 0551 0200
- France: +33 (0)
1 70 37 71 66
- United Kingdom:
+44 (0) 33 0551 0200
- United States:
+1 786 697 3501
Confirmation code: Nexans
~ ~ ~
Financial calendar
April 24th, 2024:
2024 first-quarter
financial informationMay 16th, 2024:
Annual General Meeting July 24th, 2024:
2024
first-half earningsNovember 13th, 2024: Capital Markets
Day
About Nexans
For over a century, Nexans has played a crucial
role in the electrification of the planet and is committed to
electrifying the future. With approximately 28,500 people in 41
countries, the Group is paving the way to a new world of safe,
sustainable and decarbonized electricity that is accessible to
everyone. In 2023, Nexans generated €6.5 billion in standard sales.
The Group is a leader in the design and manufacturing of cable
systems and services across four main business areas: Power
Generation & Transmission, Distribution, Usage and Industry
& Solutions. Nexans was the first company in its industry to
create a Foundation supporting sustainable initiatives, bringing
access to energy to disadvantaged communities worldwide. The Group
is recognized on the CDP Climate Change A List as a global leader
on climate action and has committed to Net-Zero emissions by 2050
aligned with the Science Based Targets initiative (SBTi).
Nexans. Electrify the Future.
Nexans is listed on Euronext Paris, compartment
A.For more information, please visit
www.nexans.com
Contacts
Investor relations |
Communication |
Elodie Robbe-MouillotTel.: +33 (0)1 78 15 03
87elodie.robbe-mouillot@nexans.com |
Mael Evin (Havas Paris)Tel.: +33 (0)6 44 12 14
91mael.evin@havas.com |
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