NEXANS: CONTINUED STRONG MOMENTUM, 2022 GUIDANCE UPGRADED

PRESS RELEASE 

NEXANS: CONTINUED STRONG MOMENTUM
2022 GUIDANCE UPGRADED
  

• Strong 9M 2022 sales growth reflecting sustained value growth and solutions new offering
• Record Generation & Transmission backlog with visibility further enhanced by recent awards
• 2022 guidance upgraded
  • EBITDA range of 580-600 million euros (from 560-590 million euros)
  • Normalized Free Cash Flow between 225 and 275 million euros (from 200-250 million euros)
• Nexans corporate responsibility and sustainability recognized with Platinum rating by EcoVadis

~ ~ ~

• Standard sales of 5,044 million euros in the first nine months of 2022, up +6.7% organically compared to the same period of 2021 and up +16.2% in Electrification businesses reflecting solid and structural value growth and an acceleration in electrification trends globally
• Third-quarter organic sales growth of +10.3% compared to third-quarter 2021, in line with the trends observed in the first half of the year and +16.0% in Electrification businesses. Auto harnesses sales up +37.1% in the third quarter supported by growing market shares despite the Ukrainian crisis
• Healthy backlog growth (+29% year-on-year) with a record Generation & Transmission adjusted backlog¹ of 2.4 billion euros up +55% compared to September 2021 providing visibility beyond 18 months and fully loaded plants for 2022 and 2023
• Accelerating growth in connected objects and users fostering a new recurring revenue model supported by premium products and services across the electrification value chain
• Successful cost pass-through and disciplined pricing management in an inflationary environment
• 2022 guidance upgraded, supported by selective sales growth and Nexans’ Transformation platform (SHIFT Performance, SHIFT Prime and Amplify programs)

Paris, October 26, 2022 – Nexans announced today its financial information for the third quarter of 2022. Commenting on the Group’s highlights, Christopher Guérin, Nexans’ Chief Executive Officer, said: “I am delighted to confirm, Nexans solid financial trajectory and topline momentum, supported by our disruptive SHIFT transformation program, and our solutions new offering.

Nexans’ Electrification businesses has generated an outstanding organic growth of +16.2% for the last nine months versus 2021 same period. Our E³ innovative model is now deployed across almost all units, in order to find the right business performance balance among Economic, Environment & Engagement. We continue to convert healthy,” risk-controlled” contracts for our Generation & Transmission backlog. In addition, as sole U.S based cable manufacturer, we remain a “top of mind” partner for the ever growing U.S. based offshore windfarms industry, like the new EPCI contract for Empire Wind 1 recently signed with Equinor and bp.

Today, our solid and structural performance is the bedrock upon which we have decided to upgrade, for the second time in 2022, our full-year financial guidance.”

CONSOLIDATED SALES BY SEGMENT

(in millions of euros) At standard metal prices Copper reference at €5,000/t	9M 20212	9M 2022		Organic growth 9M 2022 vs. 9M 2021	Organic growth Q3 2022 vs. Q3 2021
Generation & Transmission (High Voltage & Projects)	520	621		+17.2%	+4.3%
Distribution (Territories)	661	828		+14.9%	+15.9%
Usages (Building)	1,152	1,403		+16.5%	+22.0%
Industry & Solutions	1,007	1,163		+13.4%	+26.4%
Telecom & Data	241	253		+3.5%	-6.6%
Other Activities	913	776		-22.2%	-20.0%
Group total	4,494	5,044		+6.7%	+10.3%

I.   Q3 2022 HIGHLIGHTS

Executing Electrification Pure Player strategy

To unlock Nexans’ full potential, to deliver benchmark results at scale, and to become the most profitable company in the sector, the transformation platform is running at full speed for all units in the Electrification and Industry & Solutions businesses. This transformation platform (SHIFT Performance, SHIFT Prime and Amplify programs) enables Nexans to deliver sustainable results and has equipped the units to be recession-proof.

As part of its SHIFT Prime program, the Group is actively working on growing its connected objects and users to engineer a new recurring revenue model supported by continued innovation with added-value products and solutions. The Group now has more than 380,000 connected users and more than 30,000 connected objects globally.

During the quarter, the Group also made significant progress on its integration roadmap with Centelsa in Latin America with the announcement of the new brand to customers and partners.

Leading the way to a more sustainable future

For Nexans, sustainability encompasses continuous improvement of combined E³ (Economic, Environmental and Engagement) dimensions across the Group’s entire value chain and ecosystem. This holistic approach to sustainability was illustrated during multiple sustainability events hosted during the quarter:

• Nexans Suppliers day organized to share Nexans’ roadmap and amplify E³ impact together with key partners with a special focus on sustainability and innovation.
• Nexans’ third annual Climate Day held in New York City, as part of the Climate Week, with energy executives and experts to discuss offshore wind farms and the U.S. energy transition.
• “Change the Current” in Canada, where Nexans discussed global copper shortages and the circular economy, carbon neutrality, and renewable energy challenges with experts and customers.
  In the meantime, Nexans finalized the deployment of its E³ unique performance management tool to optimize the three Economic, Environment and Engagement dimensions in operations and in the investment decision-making process. As a result of the Group’s global corporate responsibility and sustainability efforts t, Nexans was awarded a Platinum rating by EcoVadis and ranked among the top 1% of companies in its sector globally.

II.   9M 2022 SALES PER BUSINESS GROUP

ELECTRIFICATION BUSINESSES: +16.2% ORGANIC SALES GROWTH IN 9M 2022

| GENERATION & TRANSMISSION (FORMERLY HIGH VOLTAGE & PROJECTS): Excellent momentum driving record healthy backlog

Generation & Transmission recorded organic sales growth of +17.2% over the first nine months of 2022 compared to the same period of 2021. The segment benefitted from the contribution of the Charleston plant, the only subsea high voltage manufacturing plant in the United States. During the third quarter, manufacturing and installation progress was made mainly on the Seagreen, Crete-Attica and South Fork projects.

The segment witnessed solid and healthy momentum in terms of orders, in line with its risk-yield analysis and selectivity policy. The adjusted backlog³ reached a record high of 2.4 billion euros at the end of September 2022 (up +55% compared to end-September 2021), with strong visibility and fully loaded Halden and Charleston plants until 2023.

Nexans was awarded several projects in energy transition markets, reflecting booming renewable energy trends as well as the Group’s turnkey capabilities and ground-breaking assets. These include a turnkey contract for the Borwin6 offshore wind farm in Germany and a manufacturing contract for the Revolution offshore wind farm in the United States as part of the frame agreement with Orsted.

| DISTRIBUTION (FORMERLY TERRITORIES): +14.9% sales growth in 9M 2022 reflecting value growth in all geographies

Distribution sales amounted to 828 million euros at standard metal prices in the first nine months of 2022, of which 41 million euros contributed by Centelsa. Over the period, the segment recorded +14.9% organic sales growth as a result of growing grid investments across North America and Europe.

Trends by geography for the first nine months⁴ were as follows:

• Europe was up +13.2% with the third quarter in line with the first-half trend reflecting contract renewals and robust demand.
• South America was up +9.9% thanks to continued momentum in Peru and Colombia.
• Asia Pacific was up +12.3%. Australia and New Zealand delivered sound growth supported by a recovery in demand, while China suffered from locally imposed lockdowns.
• North America was up by a sharp +57.4% thanks to continuous dynamic market demand.
• Middle East and Africa was down -4.2% reflecting a decline in Morocco in the third quarter which offset outstanding demand for the solar offer in Lebanon.
  
  

| USAGES (FORMERLY BUILDING): +16.5% value growth in 9M 2022 reflecting outstanding performances in all markets

Usages sales amounted to 1,403 million euros at standard metal prices in the first nine months of 2022, including 78 million euros contributed by Centelsa. Organic sales growth was +22.0% in the third quarter of 2022 compared to the previous year on the back of solid demand across all geographies mainly driven by conjunctural effects in some countries and deployment of solutions in others.

The trends by geography⁵ for the first nine months of 2022 were as follows:

• Europe grew +6.2% versus the first nine months of 2021 supported by robust demand, new product launches and amplified solutions as well as disciplined pricing across the region.
• South America was up +3.1% with strong volumes and adequate pricing adjustments.
• Asia Pacific was up +7.2% benefitting notably from the performance in Korea.
• North America was up by an outstanding +54.7% thanks to a still very dynamic market and Nexans’ solid positioning.
• Middle East and Africa was up +41.7% boosted by a sustained performance in West Africa and a catch-up in Lebanon and Turkey.
  
  

 NON-ELECTRIFICATION BUSINESSES: +11.5% ORGANIC SALES GROWTH IN 9M 2022

| INDUSTRY & SOLUTIONS: +13.4% in 9M 2022 reflecting sustained growth despite headwinds

Industry & Solutions sales amounted to 1,163 million euros at standard metal prices in the first nine months of 2022, up +13.4% organically year-on-year, supported by outstanding demand in Auto-harnesses and Automation markets. Sales were up by a strong +26.4% in third-quarter 2022 compared to third-quarter 2021.

Automation remained robust (up +18.8% year-on-year), boosted by demand in Southern Europe and Asia and the launch of the SHIFT Prime program. In Mobility sales grew by +2.6% supported by strong trends in Shipbuilding, while Rolling Stock was negatively impacted by lockdowns in China and Aerospace pursued its recovery.

Automotive Harnesses was up by a strong +22.8% organically in the first nine months of 2022. Sales were up +37.1% in the third quarter reflecting growing market shares despite the Ukrainian crisis. This outstanding performance by the business has been recognized by customers. Its long term perspectives have been strengthened by the duplication of manufacturing activities to ensure business continuity and major contracts for full cabling of electrical vehicles.

| TELECOM & DATA: +3.5% in 9M 2022 on the back of softer Special Telecom in Q3 2022

Telecom & Data sales amounted to 253 million euros at standard metal prices in the first nine months of 2022, up +3.5% organically compared to the first nine months of 2021 and down -6.6% in the third quarter of 2022, reflecting a declining third quarter in Special Telecom following solid backlog execution.

LAN cables and Systems reported good momentum in Europe while Asia was affected by lockdowns.

Telecom Infrastructure was up +3.1% organically in the first nine months of 2022 with European operations supported by sound business momentum in the United Kingdom, offsetting the soft start to the year on the French market. The third-quarter performance is reflecting customer inventories in Europe.

Special Telecom (Subsea) sales were up +12.5% compared to the first nine months of 2021. Business was down -19.5% in third-quarter 2022 reflecting strong backlog execution during prior quarters while return to growth is expected in the fourth quarter.   

OTHER ACTIVITIES (MAINLY METALLURGY): -22.2% ORGANIC SALES GROWTH IN 9M 2022

| OTHER ACTIVITIES

The Other Activities segment – corresponding for the most part to copper wire sales – reported sales of 776 million euros at standard metal prices in the first nine months of 2022, down -22.2% year-on-year in line with Nexans’ strategy to scale down this business and focus on internal needs. The segment was down -20% in the third quarter.

III.   SIGNIFICANT EVENTS SINCE THE END OF SEPTEMBER

On October 26 – Nexans signed a new 800 million euro multi-currency revolving credit facility agreement with a group of 13 banks to replace the existing undrawn credit facility agreement signed on December 12, 2018 for 600 million euros. The facility continues to strengthen Nexans’ financial liquidity and has a term of five years with two one-year extension options.

On October 26 – Invexans Limited UK renewed its commitment to remain a long-term partner and a reference shareholder of Nexans.

On October 6 – Nexans received final order for phase one of the Empire Wind Project being developed by a 50-50 partnership between Equinor and bp. This follows the Preferred Supplier Agreement signed in March 2021, which prompted several months of collaborative work to negotiate a turnkey contract, covering the design and manufacturing, as well as the laying and protection of export cables for the project.

   

IV.   2022 OUTLOOK

Against an uncertain geopolitical and economic backdrop, the Group is confident in the continuation of its performance momentum and will maintain a policy of cost control and selective investment. Nexans’ strategy will remain focused on value growth over volume to keep unleashing profit from its unique transformation platform, as well as its investments in the growing Generation & Transmission market. Nexans is only at the beginning of its journey towards premiumization through the development of value added systems and solutions for its end-users.

In this context, Nexans upgrades its guidance for 2022, excluding acquisitions and divestments:

• EBITDA between 580 and 600 million euros (between 560 and 590 million euros previously)
• Normalized Free Cash Flow⁵ between 225 and 275 million euros (200 and 250 million euros previously).

~ ~ ~

A conference call is scheduled today at 9:00 a.m. CET. Please find below the access details:

Webcast
https://channel.royalcast.com/landingpage/nexans/20221026_1/

Audio dial-in

• International switchboard: +44 (0) 33 0551 0200
• France: +33 (0) 1 7037 7166
• United Kingdom: +44 (0) 33 0551 0200
• United States: +1 212 999 6659

Confirmation code: Nexans

~ ~ ~

Financial calendar

February 15, 2023:                 2022 full-year earnings

Appendices (in millions of euros)

		Third-quarter			First nine months
		2021 published	2021 constant scope	2022	2021 published	2021 constant scope	2022
Sales at current non-ferrous metal prices by segment
Generation & Transmission		176	176	194	524	524	646
Distribution		254	254	334	762	762	1,002
Usages		516	488	640	1,566	1,471	1,932
Industry & Solutions		339	339	440	1,078	1,078	1,287
Telecom & Data		84	84	80	247	247	263
Other Activities		344	372	305	1,271	1,366	1,206
Group total		1,712	1,712	1,994	5,448	5,448	6,336
Sales at standard non-ferrous metal prices by segment Copper standard of €5,000/t
Generation & Transmission		175	175	186	520	520	621
Distribution		213	213	281	661	661	828
Usages		381	364	479	1,210	1,152	1,403
Industry & Solutions		310	310	401	1,007	1,007	1,163
Telecom & Data		81	81	77	241	241	253
Other Activities		223	240	219	854	913	776
Group total		1,382	1,382	1,644	4,494	4,494	5,044

Impact of changes in the scope of consolidation and exchange rates on sales at standard non-ferrous metal prices
Copper standard of €5,000/t

	Third-quarter 2021   constant scope	Currency effect	Change in scope	Organic growth	Third-quarter 2022
Generation & Transmission	175	4	0	8	186
Distribution	213	10	22	35	281
Usages	364	(5)	41	79	479
Industry & Solutions	310	8	0	84	401
Telecom & Data	81	1	5	(5)	77
Other Activities	240	27	0	(53)	219
Group total	1,382	45	69	147	1,644

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 around 25,000 people in 42 countries, the Group is leading the charge to the new world of electrification: safe, sustainable, renewable, decarbonized and accessible to everyone. In 2021, Nexans generated 6.1 billion euros in standard sales. The Group is a leader in the design and manufacturing of cable systems and services across five main business areas: Energy Generation & Transmission, Distribution, Usages, Industry & Solutions and Telecom & Data. 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 pledged to contribute to carbon neutrality by 2030.

Nexans. Electrify the future.

Nexans is listed on Euronext Paris, compartment A.
For more information, please visit www.nexans.com
www.nexans.com

Contacts:        

Investor relations Elodie Robbe-Mouillot Tel.: +33 (0)1 78 15 03 87 elodie.robbe-mouillot@nexans.com

Communication Emmanuel Guinot Tel.: +33 (0) 6 75 02 20 73 emmanuel.guinot@nexans.com

NB: Any discrepancies are due to rounding

This press release contains forward-looking statements which are subject to various expected or unexpected risks and uncertainties that could have a material impact on the Company’s future performance.

Readers are invited to visit the Group’s website where they can view and download the 2022 half-year report and 2021 Universal Registration Document, which include a description of the Group’s risk factors. 

---

¹ Adjusted backlog including subsea and land contracts secured but not yet enforced in the former High Voltage & Projects segment.
² At constant scope on sales at standard non-ferrous metal prices. Detailed impact of changes are available in appendix.
³ Adjusted backlog including contracts secured but not yet enforced
⁴ Organic growth
5 Free Cash Flow excluding strategic capex, disposal of property, plant and equipment, impact of material activity closures and assuming project tax cash out based on completion rate rather than termination.

 

Attachment

• Nexans_Third quarter 2022 Press release_Final