Nexans, an industrial cable manufacturer, has increased its financial outlook for 2024 following a 32% rise in net profit in the first half of the year, reaching €174 million compared to €132 million in the previous year.
Upgraded Earnings Projections
For the fiscal year 2024, Nexans anticipates its adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) to be between €750 and €800 million, up from the previous range of €670 to €730 million.
Additionally, the normalized free cash flow is projected to be between €275 and €375 million, an increase from the prior forecast of €200 to €300 million.
Historic Profitability Milestone
“In terms of profitability, the group achieved in six months what it used to accomplish in a year back in 2019,” commented Nexans CEO Christopher Guérin on BFM Business Wednesday, describing the group’s profitability as “historic.”
Strategic Shift Towards Electrical Cables
Nexans, which manufactures and installs cables globally, has shifted its focus in recent years to electricity transmission.
This shift is driven by the surge in renewable energy connections to major grids. The company has gradually phased out digital and data cables and streamlined its client base to focus on more strategic partnerships.
Revenue Growth in the First Half
In the first half of the year, Nexans reported a 6.5% increase in revenue, amounting to €3.54 billion compared to €3.32 billion in the first six months of 2023, on a standard basis that neutralizes the impact of metal price fluctuations.
Metal Price Benchmarks
Since January 1, 2020, these references are set at €5,000 per tonne for copper and €1,200 per tonne for aluminum. At current metal prices, Nexans’ revenue grew to €4.22 billion from €4 billion.
Increased Net Debt Due to Acquisition
Net debt rose to €810 million as of June 30, from €214 million on December 31, 2023, following the acquisition and integration of Italian company Triveneta Cavi.
Strong Investment Capacity
“We still have a very, very strong investment capacity,” stated Guérin, who anticipates that the group will further “increase its debt.” “However, it will quickly return to very low levels in the coming years due to very, very positive cash generation,” he added.
Upcoming Major Investment in Recycling
Lastly, Guérin mentioned that the group will “soon announce a major investment” to “expand” its recycling capacity. Nexans operates the largest copper recycling plant in France, located in Lens.