Good morning, and welcome to the NKT Investor Day 2026. We have been looking very much forward to today and to welcoming you all here to Karlskrona. In the room today, we have representatives from both our analysts, investors, we also have banking relations and the media. I would also like to extend a warm welcome to everyone listening in via the live webcast. Just some practicalities before we start. I will ask you all to pay close attention to this disclaimer as the presentation and the related comments contain forward-looking statements. Then on safety, at safety here at this facility, there are no planned fire drills for today, so that actually means if you hear an alarm, we need to evacuate. It will be through the doors and the lobby where you came in, and the assembly point is just outside on the parking lot.
From NKT, we will make sure to have both headcount and name on all of you, so everyone stays safe in such a situation. Defibrillator is located right next to the main entrance in the lobby. Just a brief look at the agenda for today. We will start the morning here at Docks, where we will have presentations both from an overall strategic, from a business line, and also from a financial perspective. After lunch, we will have buses taking us to the factory and where you, with your own eyes, will be able to see what is soon going to be the world's largest offshore high-voltage cable factory. Let's dig into the content. Before that, we will play a short video.
Take a moment to consider all the things we take for granted. The joy of togetherness made possible by a complex grid of cables. The luxury of comfort delivered by clean energy solutions. The feeling of security built on decades of innovation. The safety of expertise enabled by mindful hands and caring minds. The strength of connection carried across land and sea. That is the power of power provided by NKT. Our cables and solutions are designed to be taken for granted, hidden above and below, out of sight, but ever present. For more than 130 years, you have relied on us to bring power to life and power to lives. No matter the global landscape, our commitment remains: connecting a greener world for generations to come. We are your partner from enabling a reliable grid to every single light switch. We are behind reliable connections. NKT.
Thank you. With this, I would like to introduce our first presenter, our CEO, Claes Westerlind.
Good morning, everybody. It's great to see you here. I was just talking to Kira, and it's so good to be in Karlskrona and to welcome you here. Because if you choose to come here, that means you really want to talk to us because it's not easy to get to this place. Ladies and gentlemen, I am Claes Westerlind. I am the CEO of NKT. I have the privilege to have served the industry for around 20 years, and I have been with NKT since 2017 when I joined over with the acquisition of ABB High Voltage Cables, ABB's high-voltage cables unit. It is my distinct privilege on behalf of NKT to welcome you to the Investor Day here in Karlskrona. Karlskrona is really a special place. It is a special place for Sweden. It has a very rich history.
It was established in the 17th century by King Karl XI, where he moved the Swedish Navy down from the icy and difficult Stockholm down to the beautiful, almost Mediterranean region of Karlskrona with an ice-free harbor, but also a very difficult archipelago that helped us to protect it and Sweden. It is a very special place for NKT. We have been present here. The cable factory has been present here for more than 30 years, and this is where a lot of the major innovations in the HVDC transmission industry has been made, just on the island, not too far from here. It is a very special place for me also personally, and also emotional to welcome you here. This is the city where my kids were born. This is the city where they go to school.
This is the city where my wife works, and this is the city where I live. Ladies and gentlemen, welcome to my hometown and also welcome to the capital of high-voltage cables. You will hear today from a number of presenters, and we very much look forward to taking you through the day. As Jacob said, we will spend the morning with some presentations to give you some context, both on the strategic direction from my side. We will listen to the business line heads with Darren, with Raphael, with Dennis, and Carlos presenting the strategy from their perspective for respective business lines. We will hear from Michael Young, our CFO, also summing this up from a financial perspective and also looking a little bit ahead. The key message we want to leave you with is relatively simple, actually.
We are and have become a focused power cable solutions provider with a strong market position, with a record backlog, and also a clear path defined towards 2030 and beyond. We also want to reflect about the opportunities out there from a market perspective and how we can use now the platform that we have built and that we are working with to also capture further opportunities also going in the future. With that, let me start by reflecting a little bit about the history. I should also mention perhaps on the previous slide that you will see here the business line heads presenting, but we also have the full GLT here with us today, and you met many of them, I am sure, as you entered the premises here. I just also want to say that what these people do not know about cables is not worth knowing.
Everything that you have tried to ask me, Michael and Jacob, and all the other representatives for NKT in the past, and we have been unable to answer, now make another try with these people because they will know the answer. Reflecting about NKT's history, we are just like the place we are at now, Karlskrona. We have a rich history. We are about a 130-year company that has a continuous develop from a technology perspective, from an industrial development perspective, and also from a number of strategic disciplined choices. You will see some of the technology milestones up here that have not only defined NKT as a company, but also the modern energy industry. The innovation of HVDC MI cables back in 1954, connecting the island of Gotland to the mainland of Sweden.
HVDC XLPE cables, which were invented here on Verkö and again was used for the first time in the world, also coincidentally on the island of Gotland, but then domestically on the island for that time. Also 2020 when the world's first 525 kV cables were commercialized with the award of the German Corridor projects following having been launched and invented. You know the answer, also here in Karlskrona back in 2014. There is a lot of technical innovation that stands as the foundation for what kind of company we are. It is also targeted investments, both organic and inorganic, like the acquisition of the Cologne factory, like the acquisition of the Velké Meziříčí plant, and of course, perhaps the most prominent and recent large one, which was in 2017, the acquisition of ABB High Voltage Cables.
That lended then the capacity here, of course, but also the HVDC capabilities of NKT. On top of this, also a lot of important installation assets and EPCI turnkey capability. Thirdly, it has also been a journey of strategic focus, where we have transformed the company from being a diverse industrial conglomerate into a focused, pure power cable systems provider. That has gone from a portfolio perspective, but to a certain extent, as you will hear, for example, Carlos speak about later, but perhaps also Darren to a certain extent, also focusing the factories inside of NKT to allow us to specialize and work on increased efficiency also inside NKT as a company among the factories. This journey and where we are today and the context for this day is that we have a clear strategic focus, and it goes without saying that this speaks into power cables.
It speaks into the trends that I will come back to, with electrification, with renewable transition, and also with grid modernization and digitalization of society. The focus as such is fundamental because it speaks also about how we use capital, how we use management focus, how we focus our technology development, how we work from an operational perspective. All of this is focused on the power cable segment, also a segment that enjoys not a cyclical or a temporary tailwind, but structural demand across the coming decades. I will also come back to that later. Reflecting a little bit what this transformation, and together with the strategic choices, have enabled from just a financial perspective, I wanted to show you this. Our financials, I think it is fair to say, have been restored and also significantly improved over the last couple of years.
If we take the measurement baseline of 2022, which is roughly when the last CMD was, our revenues at standard metal prices have nearly doubled during this time period. From EUR 1.45 billion until what we are guiding now for this year, around about EUR 2.7 billion. Our operational EBITDA, meanwhile, has more than doubled from EUR 155 million in 2022 to above EUR 400 million as we are guiding for this year. Thirdly, looking into our order backlog for the transmission business line, we have gone from EUR 4.7 billion and we are closing when we close the second quarter, this has almost tripled to EUR 13.0 billion. The key message here, ladies and gentlemen, is that we are now in a much, much stronger position as a company and our financial foundation and what we have as a base for the years to come is significantly different.
With improved earnings and also with a strengthened financial base foundation for the company, and also a very strong earnings visibility for the coming years. As you are well aware, a couple of years ago, when I spoke to some of you as we entered here today in 2023, we launched a massive investment here. Over the last couple of years, we have launched a number of organic growth initiatives, which is today something that we are labeling as the EUR 2 billion CapEx program from the period of 2025- 2028. These investments, and you can see a selection of them here, and at least one of these you will see in very much detail later today that I know that Darren and the team are very excited to show you about.
These investments, they aim to improve our capacity and improve our capabilities from a high-voltage perspective to address these markets, but also to increase our capacity from a medium-voltage perspective in the distribution segment. The high-voltage factory in Karlskrona is the obvious example, which is a big one. We also have the expansion in Cologne ongoing, and they are both expected to become operational during 2027. As you can see from the announcement this morning, we are now a little bit more articulate as to when the Karlskrona factory will come into operation. This is something that Darren will come back to more later. We remain firmly on track with these investments. We are also expanding not only the cable manufacturing capacity and capabilities, but also our installation capacity and capabilities.
Two good examples of that is NKT Eleonora and also our new subsea cable trencher, the NKT T-3600. These will help us to deliver on a turnkey basis the large projects in transmission. It is important from a risk management perspective, and it is equally important from a value creation perspective. If we then look further on into distribution, the business line there, we have also had a number of investment programs ongoing for a couple of years, where some of them now have been completed, which is the Falun investment and also the Velké Meziříčí investment. They have been fully completed and ramped up. The Asnæs investments, you will recall that we made a press release earlier this year in the end of Q2, where we have now completed this investment physically, and it is now ramping up in the coming months.
Then thirdly, for the SolidAl acquisition that we are now calling our Esposende site. Also there, we acquired that business, but we also expanded the capacity. This is something that is underway and will be completed towards the end of this year, and thereafter, it will ramp up. Above this, above transmission, above distribution, we are also expanding capabilities in both the accessories business line and also Grid Solutions business line. This is what you will hear more details from my colleagues during the course of the day. It is also clear that this investment program is a key enabler for us as a company. It is a key enabler also for the Charging Forward strategy. It is with this capacity and also capabilities that we will transform or transfer the market opportunity and also our backlog into revenues, into earnings, and into cash.
Of course, the ability to do so is also fundamental for the success of NKT in the coming years. But I also want to personally say, also being here in Karlskrona and almost seeing the factory through the curtains that were here, that we are, and I am super proud and pleased with the team of what they have been able to achieve across all business line. Keep in mind, these investment projects will be difficult to do if you only do this. But the team in front of you that you will meet today and also further on on the site out here, this is a team that have operated at very high pace across the business lines for the last couple of years. Meanwhile, on top of this, carried out these investment projects.
On top of this, put the supply chain ready to support these investments, hire the people that is needed to run the investments, train the people, and taking this into commissioning. So I just want to recognize the tremendous performance which is done by the team in getting to where we are. It is obviously now, as we come to the tail end of this, it is now about turning all this capacity into profitable growth and take it online in a successful way. It comes down to value creation. This is how it is.
Here, just reflecting a little bit about that, we cannot avoid to be pleased that it has been recognized by the market, the work that has been done over the last couple of years with the disciplined execution of the transformation, the selective triggering of large, also organic investments, carrying out this, and being able to also capture the market opportunity meanwhile. Our market capitalization measured from January 2020 has almost tenfold from EUR 0.7 billion- EUR 6.6 billion as we closed on last week. Meanwhile, our total shareholder return has been in excess of 600%. I hope you can agree, ladies and gentlemen, that that is significant value generation for our shareholders and something that we are proud of and also humble for the trust that you continue to show in us.
We are entering the next strategic phase in a much, much stronger and a different position than when we entered it. With a stronger financial profile, with a transformed business as we have gone through, and also with significant investments already underway. Looking ahead a little bit as well based on this. Now it is about also reflecting what opportunities is out there and how do we as a company aim to also capture these opportunities. Let me start, even though the business lines themselves will go into more detail in respective market for the business lines, I would like to just on a high level reflect on the market outlook. The market for NKT starts with one fundamental trend, and this trend is that the electricity demand continues to grow.
This picture here shows the expected growth from where we are today and looking towards 2050. There are many different data sources that you can look at, but I think they will all show you a similar direction. There is a fundamental growth expected in the coming decades from an electricity demand perspective. Our core market in Europe is expected to remain strong, but also to continue to grow. Also over and beyond where we are present today from a manufacturing perspective and the majority of our markets, also other markets show growth and show potential and opportunity. This includes, but is not limited to the MED region. It includes North America, and it also includes Asia. Electrification and the growth in electricity demand, together with renewable energy transition, together with grid modernization aspects, is of course pushing towards investments into the grids.
When we view that from a monetary perspective, that is expected to grow from EUR 350 billion in annual investments up to EUR 850 billion. It is not all cables, unfortunately, in those numbers, but of course, it is a significant lever towards pushing more demand for the products that we are providing. For us, it matters just because the EUR 850 billion, of course, does entail significant amount of both transmission and also distribution infrastructure. This trend here, ladies and gentlemen, creates a durable demand across the markets we are active in, but also shows opportunity for further growth. It reinforces the need of specialized players like NKT who are able to supply both products, but also complex projects in a reliable, in a safe way, and also at scale with what is needed by society.
If we take a look at what is driving the EUR 850 billion, there are three fundamental trends that I would just like to touch upon, and I am sure none is unknown to you. First and foremost, electrification, which is what you saw on the previous slide, where it is expected that this is to grow by 80% by 2050, so almost double in the next couple of decades. It is driven across society. It is driven by transportation, it is driven by industry, it is driven by buildings' need of electricity, and of course, lately also data centers and AI becomes also not an insignificant driver. All pushing for more grid investments. The energy transition, as well on top of that, where today the world is powered on roughly 34% of renewable energy sources.
This is expected to grow to 80% over the coming decades, requiring these generation facilities to be connected to the grid, but also the grid itself to be reinforced to handle intermittency and also transfer capability between regions. Last but not least, we as society have enjoyed our electricity grids for quite a while, and we have built up a debt to be paid from a maintenance perspective. I think you have heard the saying before that 40% of the distribution grids in Europe are more than 40 years old, and that is a debt that needs to be paid at the end of the day or we will face the music of blackouts and other topics. Of course, that creates also a demand for our products and systems.
I am sure this is not news to you, but I think it is important to state these trends, also recognizing that these are not short-term. They are not cyclical trends. These are structural, multi-decade trends that we expect, and I think society as a whole expects to be there for the coming decades. Obviously, this supports ultimately also the long-term outlook and growth across our business lines as to how we are formulated today as a company. Having established the fundamental mega trends or repeated them to yourselves, I also wanted to touch upon a couple of societal priorities and maybe the famous triangle, as we sometimes call it, with sustainability, with security, and also affordability or competitiveness. If you look to the right of this slide and you rewind the tape 5- 10 years, sustainability was a rather uncontested societal priority.
I think this obviously creates a lot of opportunity still for the renewable energy transition, as we touched upon the previous page. This trend or priority has also now been complemented by security and also competitiveness, also creating challenges with respect to climate ambitions and offshore wind farms roll-outs and pace of that same, and also what that can mean, especially in the short-term and perhaps less so in the medium to long-term. We have the security aspect, both from a broader reliability perspective. We as society are becoming very dependent on our electricity grids. We could see in the blackout in Portugal and Spain, I think most of us remember that, and how the lack of a reliable energy system paralyzes a society and threatens also life in a way that perhaps was not the case 50- 100 years ago.
Security is also an aspect, sadly, of the situation we have in the world, with conflicts being present in Europe again, and also where we recognize that conflicts, for example, in the Middle East, is putting a lot of emphasis on the dependence that Europe has on regions outside of Europe for our ability to supply ourselves with energy. Fact is that 40% of the energy we consume in Europe is produced in Europe, meaning 60% is imported. Almost 100% of the oil is imported. Yes, some comes from Norway, but from the grand scheme of things, not a lot, and 90% of the gas. There is a general political consensus, at least verbally, in Europe that that energy autonomy has to improve. If that is to be improved significantly from 40, let us say, to 60 or 80, the cheapest way to generate electrons today is through renewable energy.
Solar comes first, onshore wind, offshore wind, and of course, also from a long-term perspective and large scale, you can think also about nuclear from a clean perspective. All of that will push a good opportunity, and an opportunity that lies over and beyond on the market estimates that we are projecting. At the same time, security is also being now, of course, citing sustainability and grid investments. We can see countries, of course, increasing public funding towards defense, and that money needs to come from somewhere. So that can also constitute a challenge. Last but not least, also competitiveness following the Draghi report, following also the situation we have in some countries in Europe with the auto industry in Germany as maybe the most prevalent example. Also, affordability has come to the top of mind of politicians and also societies in Europe.
This could speak for industrial electrification to make energy, since energy is an important part of competitiveness, then further electrification could be one of the solutions giving an opportunity. But also from a challenge perspective, you can also look at slower grid build-outs, some countries reflecting about wouldn't it maybe be, at least from an optical perspective, looks cheaper from the beginning to build an overhead line versus doing it with underground cables. So I wanted to recognize these priorities and also to show this triangle to say that with this in mind, we remain confident about the long-term outlook for this company and for the markets that we see. The strategy that we will discuss, I will go through it, but especially the business line also in even more detail, has taken this into account and also reflected upon this.
What is necessary for us to be able to continue to compete effectively with this in mind? That, ladies and gentlemen, brings us into the strategy. The Charging Forward strategy. This strategy was launched last year and aims to guide us towards 2030, so towards the end of this decade. As I've said now during this presentation, we have completed the transformation. We are now a pure-play cable solutions provider, and with this strategy now, our focus is shifting from this transformation and an accelerated organic capacity build-out into execution, into value creation, and also into efficiency, and also on top of this, more selective growth. The strategy aims to reinforce our position as a leading power cable solutions provider in Europe and also beyond. I want to come back and emphasize the word value creation.
This is the mindset that this strategy has been built upon, and I hope that you will recognize the thesis of that throughout the day from the various presenters that you will meet. Let me touch upon the strategy as such. It's constitute of three pillars with the execute pillar being recognizing the biggest topic we have on the table for the moment and the outmost urgent priority we have. This is about executing our investment projects on time, on cost, on quality, and being able to take these into operation. It's about continuing every day to translate the market opportunity into revenue, into earnings, and into cash. It's about every day, as you will hear Darren talk about later, also continue to deliver on our customer promises in the EUR 13 billion backlog that we are fortunate enough to have as a company.
The excel pillar is about how we operate as a company. It is in essence here about continue to improve the way we deliver towards our customers, to improve the way we partner with our employees, with society in general, and ultimately to extract more value from the assets that we have. So to seek and sift out more value. Lastly, the evolve pillar is about two topics. One thing is to recognize what we are, and you heard me say it in the beginning. We are a technology company. We have always been, we are today, and we will continue to be. So the evolve pillar is to continue to invest in towards the technology discipline. But it is also, given the market picture, about recognizing the opportunities out there and continue to invest in those opportunities when that presents itself. Exercising discipline, but continue to invest.
These three pillars, they are not separate initiatives, but they are mutually reinforcing. Our strong execution converts our backlog into revenue and earnings. Efficiency programs, operational efficiency, and improving on the same, this strengthens our margins. Innovation and selective growth will help us to grow NKT even further as a company and will also continuously help us to protect the competitiveness of the company in 5- 10 years. That, ladies and gentlemen, is how the outset of this and the overall situation aims to transform the platform we discussed about before into sustainable value creation for the coming years. Going into pillar by pillar a little bit and reflecting here, as I said, execute is the most immediate priority, and it goes down to the backlog, and it goes down to the investments that we had.
Here it is very important, and we continue to focus every day on the fact that we are a product company. Our thesis is that we wake up worried, and we spend the day to be able to go to bed calm. We repeat this every day. This is in the mantra of Darren, his team, and the wide NKT. This is how we manage our investment programs, and this is also how we need to manage our products, and this is exactly what we are doing. But with this, we are coming into a phase where we are coming towards the tail end of the expansion programs, and then we shift focus into value realization.
When doing this, of course, quality becomes high on the agenda, and I will come back to this reliability in general for us as a company and also discipline around our customer expectations, as I mentioned before. Risk management and disciplined product execution has always been a key for us as a company. It has been an area which we have continuously focused on and also continue to improve on, and this will be the same thing going forward as well. I want to recognize, and Darren will take you through, this is a picture from the Champlain product, and he will speak more about that later. But I think the Champlain product that we finalized in the second quarter stands as a good testament to what we as a company are able to bring from a technology perspective to society.
It is also a good testament to what we are able to perform as a company, delivering a product in excess of EUR 1 billion ahead of plan, on budget, and as per the quality which is expected. This I want to give recognition and say that we are very proud of the teams that we were able to do this and at the same time carry out the investment program, as I said before. We come to the excel pillar, which goes back to the unlocking of value. As I said, this relates to how we operate as a company. It relates to that we want to continue or start now more diligently on the back of the massive transformation and the big investment programs to focus more on value extraction from what we have invested.
We owe this to ourselves, and we also owe it to the external market. Improve productivity to strengthen our profitability and ultimately increase the returns from the assets that we have now constructed. Two examples of this supply chain excellence. You are well aware that material cost is a significant part of our cost base, and this is important from a supply security perspective. It is important from a cost perspective, but having this under good control with long-term relationships is also imperative from a quality assurance perspective and also the way that we innovate and continuously innovate, both on our own but also with our suppliers.
Taking two examples, and I see will here in the room who is responsible for this area, KGHM, and also the Hydro agreements, which we have signed earlier this year and in recent times, are good examples where we manage to get closer to our suppliers and to extend the timeframe that we operate together with them. It gives certainty for them, but it also gives certainty and significant benefits for us. We have excellence programs. As I said, on the back of investment and heavy growth phases, it is also for us to continue to push the boundaries to extract more, to increase efficiency, to improve the quality aspect, to improve output of our factories. There are parts of NKT which has this written in the DNA, and there are parts of NKT that can do even more of this.
As we grow as a company, it is also evident that scalable processes, harmonized way of working on things becomes even more important. With the size we are becoming, this is something which we are good at today, but we also recognize we want to continue to grow even more so in the future. The excel pillar, it is not about cost savings. It is about transforming the platform we have discussed, transforming the asset state into even stronger profitability, stronger cash flow generation, and greater returns, and doing this in a structured and planned way across NKT as a company over the coming years. We come to the evolve pillar. I talked about technology leadership, and this is a big part of NKT as a company and continues to be an imperative part of this pillar.
I am looking for Anders, he is here, our CTO, which is managing this area. We are continuously making innovations with focus on higher power transfer in our cable, lower losses, looking for lower cost, looking for being able to entertain more adverse installation conditions from a resilience perspective and also environmental scoring perspective, and looking for solutions that are more healthy from a sustainability perspective. These attributes will continue to push boundaries for us as a company going forward. Just calling out two examples, superconductivity cables. Raphael will come back to that later on. It is one example. At CIGRE this year, we also launched the XLPE DC 525 kV cable, operating at 90 degrees. So a significantly elevated temperature, adding also great benefits for our ability to put competitive products and system towards the market. Another area is selective growth.
We talked about the opportunity before and what we can also do going forward. You hear us talk about discipline, or you have heard us talk about discipline quite a bit in the last couple of years, and I think you can expect to continue to hear that. Nothing in this pillar and nothing in what we are telling you today will compromise the ongoing operations and the focus we have on the immediate and most urgent priorities, which is the execution pillar. So that comes first and foremost. At the same time, we have a duty to ourselves with the money we have invested and also with the value we bring to the market and with the opportunity we see to continuously reflect on what can we do more and where can we do that.
Firstly, from an organic perspective, where there are different options that we can, for example, vertically integrate to a more extent than what we have today. I can mention installation as one example of vertical integration possibilities. You saw tools, you saw vessels that can be also thought about in the wider perspective. We have built in, as Darren will explain, and I urge you to ask questions when you move around in the factory today. We have built in modularity in the expansion you see out there, so we can do an incremental expansion should the structural demand or a mega product warrant for the same. Of course, last but not least, it is also the opportunity of greenfield factories and building that. Something that requires competence, of course, capital, and also a fair amount of risk and discipline.
This ability NKT has, and of course, again, coming back to the discipline part, will only be explored to the extent that the market demand warrants and can swallow new capacity. Giving examples of an HVAC land cable factory could be a C cable factory or could be a factory in the distribution business line as well. Then we have the inorganic option as well, where I think we have never not talked about it, but I think it is also fair to say that we have been a little bit more active talking about it lately, recognizing that NKT will, in a couple of years, become a different company from a cash flow generation perspective, from an organizational strength perspective. This gives us further opportunity also to start to reflect about also inorganic options in a more structured manner.
I was discussing with some of you out there. Again, just reaffirmed the word discipline remains key also in this, and that we want to underline. We will focus on power cable technologies and directly connected areas. In reflecting about this, we will always seek to leverage our industrial and commercial capabilities when we look at M&A. It is, of course, so that we will look for attractive segments and also geographies when we are entertaining these ideas. Any acquisition we do must strengthen our competitive position and, of course, must support our long-term value creation. The evolve pillar as such, while maybe less immediate and urgent than the other two, equally important for the future of NKT.
That, ladies and gentlemen, brings us to me also being happy especially in times like these, what we have the world around us, that with a firm hand, we reconfirm the 2028 and the 2030 guidance. You will hear it more, Michael, reflecting about the journey that we are taking towards 2028 and 2030 later. Looking at 2030, we confirm the CAGR that we have guided you on in average more than 7% up until 2030. We confirmed the more than EUR 900 million of EBITDA in 2030, and we are also happy to confirm our ROCE target of more than 22%. I want to say that these are built on the CapEx program of EUR 2 billion.
It also means if we look at the previous slide, if we are seeking further opportunity and make additional choices, then these choices will come on top from a CapEx perspective, but they will also come on top from a nominal value generation perspective. That, ladies and gentlemen, brings us almost to the end of my part. Then let me just sum up what I hoped that I have said to you now through also reiterating our equity story. We are NKT, a pure power cable system provider, and we are focused and, of course, delivering critical infrastructure to a society in need with strong structural demands for the need of our product and systems, not for the coming two, three years, but for the coming decades. We are happy to be differentiated by our technology stance.
This is evidenced by just our market position if you take HVDC as an example, but you can also see a number of technical innovation in the last couple of years that also proves the same. We enjoy a very solid order backlog that provides us with an operational strong visibility from a planning perspective, but also strong earnings perspective. When we reflect about 2028 and 2030 financial guidances, we do it from a different vantage point than many other companies. We are underpinned by a robust financial position. This provides us with security and comfort, but it also gives us flexibility when additional opportunities arise.
As I've said, I don't know, enough times or maybe too many times, we have an organization that done a formidable job in operating the assets we have over the last couple of years, improving these assets, and meanwhile, also taking opportunities to grow organically further. To promise hope and dream is one thing, but to carry out and deliver on plan is quite another one. I hope that this also instills trust in whatever we do next. We have proved that we can do it and we can master this. Last but not least, as you will hear from our distinguished CFO later on today, we also now have a clear capital allocation priority. Also sending the message here today that we are becoming a company that can continue to grow and also pay dividend at the same time.
With that, ladies and gentlemen, thank you again for being here and welcome to Karlskrona. I look forward to spend the day together with you and show you the factory.
Thank you, Claes. We will open up for a brief Q&A session now. If you want to ask a question, please raise your hand. We will have microphones walking around. Please state your company and your name. Via the webcast, there is a question tab, so please tap that and type in your question. We'll start here up front. The microphone comes.
Claus Almer from Nordea. Claes, good presentation. M&A, you are in a so strong position, and you had a slide showing 2050, strong growth on a global scale. Why are you not more precise on what you would like to acquire? Are they in country, technology and so forth?
Yeah, of course, your perspective, but I think we have been trying to be relatively clear around what opportunities we see and what geographies. We have reflected about the fact that NKT is a Northern European-focused company. We have reflected about further opportunity in the Med region. We have reflected also about the growth and need for products and system in North America, and we have also reflected about opportunities in Asia, where I guess the two first, it is maybe those that are closest to home and should be perceived as obvious reflections from our side. When it comes to the products and systems, we say that we want to remain a focused power cable system provider or directly adjacent areas, and that we are not more specific than that. It's also not to delimit ourselves or to create unfair expectations.
We want to look at this opportunistically, but I want to underline that M&A is not an objective, but it is an option for us.
But you also said less urgent.
I think less urgent than what we have from an execution perspective. The execution perspective, we have a EUR 13 billion backlog and 2.5 billion of booking commitments. We have a factory that you will get an impression today is very close to completion, but still requires a lot of work. With less urgent, I also underline not less important, but the first mentioned thing is something where we cannot drop the ball, and we would not go towards an M&A or an inorganic move with less than that we can feel 100% comfortable on the execution pillar.
Thanks.
Casper, could you just turn it on?
Thank you. Casper Blom from Danske Bank. Actually, just a bit of follow-up to what Claes just talked about on the M&A agenda. Can you speak a little bit to the potential size of this? Is this something that if you were to go for M&A, do you want to finance it entirely on your own balance sheet now that you've become cash flow generative, or would you be willing to take a look at your debt targets, raise capital as you've done in the past? How far would you stretch yourself?
Yeah, I think we will remain disciplined. That's the key word, and it also applies to size and how we fund it, et cetera. You will see later when Michael goes through the capital allocation priorities, that these priorities could be temporarily suspended with reference to organic or larger organic or inorganic purchases, which would suggest that at least we are not upfront limiting ourselves to only sticking with the capital allocation priorities and our internal ability to fund the same.
Akash?
Yes. Hi, good morning. It's Akash from JPMorgan.
Yeah.
Thanks, Claes , for the presentation. My question is more on organic investments. I think when you present the growth opportunities, and this year we have seen high focus on energy security in Europe, and sooner or later, some of these noise that we see in political circles will translate into actions. When we look at your portfolio, you have growth opportunities across a broad range of products such as medium voltage, HVAC, HVDC, and these growth opportunities have different margin, different capital requirement. Maybe if you can walk us through the process internally, you have to evaluate how to invest, like what sort of KPI do you follow? Is it payback period so that one of the business units does not get a disadvantage over the others? How do you see further CapEx potential in all three broader categories, HVDC, HVAC, and medium voltage in the next three years?
Yeah. I think it is a question that we will enjoy, hopefully more clarity also, Akash, in the afternoon as we go through with Michael Young. I would hold maybe the detailed answer to it, but I will say that obviously we are prioritizing the capital allocation priority that you see here. There is also an internal variant of that. Also where we evaluate ourselves to put up opportunities against one another, with the agenda and with the abilities that we have. Things like the ROCE, things like payback time, of course, are all part of that evaluation criteria and matrix when we decide what to go for and not to go for. I will, though, just add the small one, that it is also about risk management. So some investments can also be to effectively manage our risks or to lower or limit our risks as well.
I do not want to take away that opportunity. That is not the large part. The larger part is what you say, of course, growth and further profitability.
Any other questions? Other than that, I think it is time for the first short break. Refreshments and coffee are served in the lobby, and we will continue at 10:00 A.M., so please be back in the room at that point in time. Thank you.
Thank you.
Welcome back. We will now continue with the business line presentation, but before that, we will start just a short video again. Please. Just before introducing the next presenter, I will just say we have a photographer walking around, so if anyone does not want to be present at pictures, please raise your hand and we will take care of that. Then I will introduce the next speaker, Darren Fennell, our Head of Transmission. Darren, please.
Thank you. Good morning, everybody. My name is Darren Fennell. I am Head of the Transmission business for NKT. I have been with the company since 2017 with the ABB acquisition. Claes said to me as I was about to get up, he said to me, "You hardly have to say anything. Your slides are just so good." I said, "Maybe I need to add a little bit." I also live in Karlskrona. I think you can hear by my Irish accent, I am maybe not as local as Claes is, but my kids are basically Swedish now, and it is a fantastic city to grow up in. I think it is important firstly if we look back. From 2022, what we really focused and set out to do, that was about improved performance.
It was about investing in the future regarding capabilities and capacity, and it was about increase in the backlog. I think you can see with what is reflected in these figures that we have achieved that. Revenue more than doubled, EBITDA even more so, and the backlog 2.5 times since where we stood in 2022. So much of this is down to our people, the skill and confidence across engineering, manufacturing, installation, project execution. To make it tangible outside of the financial figures, which I know are huge interest to people in this room, is what does this actually mean in people's everyday lives? By the time the projects now that we completed are in full operation, almost 8 million households will receive their energy through an NKT cable. From a society point of view, it really brings proudness of what we are doing.
That reflects to about 18 million people in total. The next slide really focuses on the key milestones of that strong performance, hand in hand with investments. As you can see here, from a footprint perspective, what we've achieved during this period. The second tower in Karlskrona has been put online. We're investing to increase the capacity in Karlskrona, and also, as you'll see later today, a brand-new factory in Karlskrona. Hand in hand with that is this turnkey philosophy, which is really in our hearts regarding both manufacturing and installation. That's why we invest so much money regarding NKT Eleonora, as an example. Also, NKT Isabella as a nearshore barge to facilitate those projects. On top of all the assets that we already had in-house, regarding burial as an example, we've added the Jet Plow, which has now been in operation in a number of projects.
I hear from the market that it looks quite simple for you from the outside. These assets, you seem to put them online, and they just work. I can tell you behind it, the amount of work that goes into doing this is really enormous. Then we have the NKT T-3600 trenching tool, which is about the size of an average size house, just to give you a feel of what we're talking about here. This is the most powerful tool on the market. It can bury cables to over 5.5 meter bury depth. Just to think of what that is regarding the length of this room, as an example. From a project perspective, I will go back on the technology later on, but I think it's important to emphasize, just as Claes did, we are a technology company first and foremost.
Innovation is really in our DNA, and as part of that is the investment we're doing in the test halls for the future, but also in the material lab that you will see today. It is really at the cutting edge regarding what's possible on the market. I'm really proud to say we do that, everything on the left, while we have a record backlog. We have taken in one of the biggest projects ever to be awarded in the cable industry with the Eastern Green Link 3.
We are performing very strongly regarding our execution, and we've completed the Champlain Hudson Power Express project, which is really a milestone project. That strong performance has really allowed us to build up the backlog that we have here. What you can see in front of you is really projects either completed since 2022 or in our backlog that we're working on at the moment.
From a client selection point of view, I think it's a fantastic achievement from our point of view that clients are not only selecting NKT regarding competitiveness. We know we need to be competitive on the market. They're selecting us, and they're giving us feedback because it's technology leadership, it's how we execute projects, and quite honestly as well, it's the relationship that we have with them. Historically, we have been a global player regarding where we execute the projects. I think more recent years, you've seen that it's more focused around Northern Europe, which has also really held us in really good stead. That is where the core market has been. You can see over the last few years, we have also started to expand again. Attica-Crete is a good example of a project in Greece.
The Champlain project connecting Canada and the U.S. is a good example. On top of that, the project that we're carrying out right as we speak regarding vessels is Bay of Biscay in Biscay Gulf, connecting Southern France to Spain. That has allowed us, with that relationship with our clients, to also build up a backlog. Claes touched on it already. We have offered over EUR 13 billion, with another EUR 2.5 billion in commitments. That really gives us long-term visibility regarding the future. Some of these projects, they reach out beyond 2030. That shows you what sort of view we have of the future. On the right side, you can see the average annual addressable market. Our estimation is over EUR 10 billion on average per year. That's driven by electrification, grid modernization, and also items such as energy security.
I think we can all see that short term, there are some challenges. Overhead lines in Germany is a good example of that. I think also in some cases, delayed permits coming is also another good example. But I think one of the fundamental items that we forget sometimes when we look at all these reports is that we're talking to our clients every day. We're talking about their plans for the future and what they want to do. It's our clients who are telling us what projects they want to execute, and that's why we can say that we have a solid market in front of us. The visibility, of course, becomes lower when you get beyond 2030. But I think the market dynamics, government ambitions, listening to our client plans for the future, it gives us confidence that it is a solid market to come.
I think primarily we will continue to be in Europe, but as you've seen with Champlain project, we will look at opportunities globally. That's for sure. On top of that, which is more a wild card, is mega projects. We have not included them in any market analysis or forecast for the future, but we do also keep an eye on them. This just gives you an idea of what we mean by a mega project to start with. So a mega project for NKT, that's a project with over 1,000-kilometer route length of cable. These are massive projects, and there's a lot of them that have been discussed and talked about worldwide, as you can see. NKT is one of few companies in the world that can carry out these projects. Long length cables, DC mature technology, being able to install them with the capabilities we have.
There are not many that can do this. From a realization point of view, the probability of these projects happening is low. We acknowledge that. It is low, but we also want to be there if it does happen. If you go back 10, 12 years, the Champlain project, everybody talked about it. It was a mega project at the time. Nobody thought it would happen. Here we are today with the project completed and actually energy flowing through it. Now, if we look at the strategy, again, if you think of the previous strategy, improve performance, increase the backlog, and invest in regarding capabilities for the future. Going forward, we're Charging Forward. It's around execution. It's around being competitive on the market and bringing long-term value creation to our clients. As Claes mentioned, we do this under three pillars. Firstly, execute. Execute on the backlog we have.
We need to ensure and not lose our focus that we actually are successful in completing that backlog and execute on the investments that we do hand in hand with that. Doing that with a disciplined approach, risk management, and really competent project execution. From an XL perspective, when we talk about and listen to our clients regarding affordability, we frame that in a word called sustainable competitiveness for the future. That is around leadership regarding technology. It is around turnkey approach regarding installation and project execution excellence. It is partnership with our client. More so than anything, it is ensuring we have a skilled, competent workforce for the future. Then if we look at evolve. Technology-wise, we will always continue to push the envelope regarding innovation. It is not just cable that we talk about here. We also talk about innovation regarding AI.
How do we use AI to benefit us for the future? We can already see, and we have it in use regarding planning in the factories, predictive maintenance, seabed analysis, all things to cut down time for our people and take away the complexity. What we hired them for is what they do and use their expertise and remove tasks that can be done by an AI support. From an installation capability. Here, we have always said that where it makes market sense, we will continue to look at critical scopes to see if we should bring them in-house. We analyze that on a continuous basis to see, does it make sense that we have it in-house or subcontracted? It also feeds into, do we have the utilization for it? Things like cable lay, you can see, yes. Things like rock placement, maybe not.
We may not have enough scope for rock placement for it to be continuous all year round to keep our vessels busy. Then to my pride and joy. This will be the world's largest cable lay factory when it is finished. I think Claes used really nice words. As far as we are concerned, this will be the capital of high voltage cable manufacturing into the future. It is built with the future in mind. Long lengths, bigger cross-sections, higher voltage levels, and done at a scale that makes it cost efficient for the future for our clients. It is not often that you get a chance to make an investment in both a factory and a vessel at the same time, and being able to optimize those two has been a huge benefit for the future.
From a point of view of commercial production, hear Claes mention it earlier on, we are really happy and proud to say that this will come into commercial operation in Q2 2027. It will be controlled ramp up and sequenced with the two lines that we have. Not all machines come online at the same time. It is controlled from where we start production to when we run through to final completed cable before load out. It is important to say this modularity we talked about, the optionality to be able to add further investments is there in the Karlskrona factory for the future. Then if we go from manufacturing, we then go over to the installing of this cable, and the critical asset in order to achieve that is NKT Eleonora. It is really building on the capabilities that we already had in Victoria.
It has three turntables, 23,000 tons of cable that can be carried, and it is ready regarding methanol for the future regarding sustainability. If you just think what 23,000 tons of cable is regarding to get from here to Copenhagen, where a lot of people made the journey, you are talking almost that distance to be able to be carried, and that is two cables for a route length of almost a distance to Copenhagen. It is really built, again, with the future in mind regarding long lengths, deep sea and also configurations. In some case, our clients want to add a metallic return. That is what the third turntable is for, to be able to do that. So we can bundle two or three cables during that installation.
Exact same as what we did for NKT Victoria, we have done for NKT Eleonora, and we do for all our offshore assets is, first, we design how the cable should be handled on board. How do we ensure the integrity of the cable? That is the first thing that we see on the drawings. After that, we design the vessel around it. So the vessel comes after. Everything that we do is around ensuring from design of the cable to manufacturing to installation is really a turnkey approach to ensure the integrity of the cable over its lifetime. Then if we talk about, you hear me say earlier, really, when we talk about technology, it really is our core regarding innovation. This gives you some picture of what we have achieved recently. Firstly, it should not be forgotten about. Claes talked about that we invented XLPE.
We were also the first to manufacture and test 525 kV cables, and that was back in 2014. So that is 12 years ago. We also shortly afterwards tested 640 kV LAN cable. From our point of view, this is a mature technology that we have had around for quite a long time. The 640 also allowed to show not only the innovation we have but the robustness of this technology as a whole. It increases the capacity that is possible for transmission of our clients by over 65%. If you add on top of that 90-degree cables, that can either increase the capacity even further, or what it can do is it can give our clients flexibility regarding how they plan the route. These areas along the route, there may be hotspots that create an issue for the cable. This means that they could use a cable that actually goes through there.
From a deep water cable perspective, we have qualified cables DC to 2,000 meters. We have qualified AC cables to 1,500 meters. Then when it comes to long lengths, the factory in NKT Eleonora can lay cable that is at longer lengths, which means less transits for the vessels. It means less joints out on the site. Both of them reduce cost, and they also reduce CO2 emissions regarding sustainability for the future. Then ultimately, it is our clients that really judge us. We have changed our approach quite a lot with our clients over the last four years, where we went from a company that went more a singular approach of tender to tender, and we just basically reinvented the wheel every time we came to a client again and the relationship to a much more partnership approach going forward.
I think that's evident by what you see behind me regarding what our clients think of us technology-wise, what they think of us reliability-wise, what they think of us regarding our turnkey approach, and also how these assets operate when they're actually installed. With that, I'd like for you to listen to a few words from Sandy Mactaggart, who's with SSEN Transmission, who's one of our key clients.
Here at SSEN Transmission, we are currently delivering an incredibly significant program of transmission infrastructure which will support the U.K.'s net zero ambitions, but also deliver a grid for the Highlands and Islands of Scotland for the next 50 years. A key partner in this endeavor is NKT, who we've been working with for many years. We value their professionalism, their incredible engineering capability, their delivery record, but as importantly, their values. The cooperative working in partnership with us, but with a real focus on integrity and a principle of values which we share.
Thank you, Sandy. Other than Sandy following the wrong football team, otherwise we get on really well. Then we come to Champlain Hudson Power Express. This is a milestone project, not just for NKT. This is a milestone project for the industry as a whole. It spans 600 kilometers from Quebec in Canada, down to the heart of New York City. It really is a true turnkey project. If we think about the route that this has taken, on land from Quebec, it goes to Lake Champlain. It then goes on land and in the river through the Hudson River, through the Harlem River, connecting into the heart of New York City in Astoria. It builds on the expertise and structures that we already have in place.
What I think is important to say here is what you see in front of you is not unique to the Champlain project. These are the structures and the aspects and discipline that we've put in place for all projects, and it's built on not the last three years of the Champlain project. This is built on decades of carrying out these complex projects, learnings that we've taken, sometime painful ones, in order to reach this point. If we look at some of the aspects, complexity-wise, it is one of the most complex projects we have ever carried out. With a route length that goes through rivers, there is a lot of stakeholders. There is a lot of authorities. There's really tight permit constrictions, and there's a complex supply chain. Technology-wise, it was the commercial industrialization of 400 kV cables. Installation-wise, the complexity varied so much.
If we talk about barges to be able to get the cable up to Lake Champlain, these barges were designed to millimeter accuracy to fit through the lock system in order to bring the cable up to the lake. We've had the river of the Hudson frozen over in the winter period. We have currents that make it extremely difficult, not just to place the cable on the seabed, but also to bury it. We've need to ensure that we protect local wildlife, so we've had really tight restrictions in place on ourselves regarding bald eagles, as an example, and we worked with the motto during all of this project that we would work with the river and not against it, in particular in the Hudson, because it is so sensitive.
From a risk management point of view, this is something that's really close to my heart because risk management basically decides the success of a project. How you manage the risks is really the measure whether you would succeed or not, both from a manufacturing point of view, a technical point of view, and an operational point of view. I'm glad to say here that we delivered the project on time and on cost, and also not forgetting along the way that we had the small thing of also building a second tower in Karlskrona while producing these cables. It also really sends a signal both for ourselves and to you that what we're doing at the moment regarding these investments at the same time as the backlog, we will do it.
To finalize, we touched on the high order backlog and the solid market that we see of over EUR 10 billion a year until 2030, and the solid market that we see beyond with the added that we do not rely on it, but we would continue to keep an eye on these mega projects for the future. Significant investments, an increase in our production, and our installation capabilities and capacity going forward for the future. Regarding the aspect technology leadership, we want to ensure that we're always pushing the envelope and at the forefront. Turnkey project execution, including installation aspects. As you heard me say, the risk management of these projects is really key to ensuring that. This is really to ensure that our clients, they come to NKT when they want the projects, and they go nowhere else. Thank you. With that, yeah.
Good morning. My name is Raphael Görner, and I'm heading Grid Solutions.
My name is Denis Schuler, and I am the Head of the business line Accessories.
Let me start with a short recap of what we also built with Grid Solutions and Accessories as a base, also for our Charging Forward strategy, which is now live since beginning of the year with the new business line, Grid Solutions and Accessories. We have built that on our legacy activities of the well-established service and accessories business line and have combined it with the majority of our high voltage AC onshore project activities that were before positioned with solutions or the distribution part. By combining this, obviously, the rationale is straightforward. We have more and more customers that not just want an individual cable or an individual accessory, they want a complete solution provider that is, as Darren already mentioned, their partner of choice across the full cable life cycle.
Obviously, Grid Solution and Accessories brings a lot of opportunities and creates clear accountability, a streamlined customer interface, and strengthens our ability to participate with a bigger market share in that growing market environment that Claes has already referred to. Today, we want to show you a little bit more about Grid Solutions and Accessories, how it really creates value for our customers, but also for NKT with that integrated offering and the capabilities to execute product, project, and service business moving forward. If we look at that combined picture now, what we have created with Grid Solutions and Accessories, it is really the combination of the product focus, the service focus, and the project focus. Mainly, as said, built on our existing legacy service and accessories activities. There we can see how much the products also benefit from that combined business line.
We have a direct feedback coming to our world-leading medium voltage, high voltage AC, but also high voltage DC product portfolio, and it is really benefiting from that close connection and direct feedback from the ongoing project execution. For service, we have a strong capability, and we will touch on that later on a little bit more, to deliver services and to provide security also to our customers to keep their asset healthy and in operation. That combined and expanded to the project execution focus brings really these end-to-end capabilities that we can deliver now with Grid Solutions and Accessories for our high voltage AC project and solutions opportunities. That is really ensuring that we are, as this new business line has been formed, a fully integrated partner for our customers and really deliver with a very customer-centric approach to our ambitions.
This slide highlights the financial scale of Grid Solutions and Accessories. For 2025, the business line reports a revenue of EUR 461 million. This represents the combined contribution from products, project activities, and service capabilities. The operational EBITDA in the same period is EUR 67 million. Relative to revenue, it represents an operational EBITDA margin of approximately 14.5%. Grid Solutions and Accessories is not only growing its market presence, but also translating our position into tangible financial value. This is further supported by a strong commercial momentum. Over the past 12 months, we grew our order intake 30%, but also customer focus remains equally strong, with a customer net promoter score of 66 points. We are 23 points above the global industry benchmark. Over the past 12 months, Grid Solutions and Accessories delivered strategic milestones in the area of footprint, products, projects, and life cycle services.
We have achieved a lot, and we would like to highlight the strategic milestones we are especially proud of. In Alingsås, Sweden, our competence center and production facility for high-voltage accessories. We managed to complete our strategic footprint expansion. We added production capacity and production capabilities, and we opened a new test center for extra high-voltage tests, a test center catered for both HVDC and HVAC accessories. Nordenham is NKT's competence center and production facility for medium-voltage accessories. In Nordenham, we managed to create a zero carbon factory, the first zero carbon factory within NKT. Its implementation already shows benefits when working with our customers that are focused on reducing their scope three emissions.
Let us move to the product section. Here, I would definitely like to highlight what we have done as world's first to deliver also at 400 kV AC voltage level, also a temporary site cable that helps to be utilized on grid restructuring and reinforcement projects in a very easy and simple way because it comes as a preassembled solution with already the connectors being installed on the cable, and with that reduces the implementation time on site significantly. In addition, it is not just a one-time use, it can be reused also in different projects several times, in different configurations, and with that also helps to increase the sustainability of the efforts of our customers.
Looking then on the project side, I could of course highlight several of the recently completed projects, but as a German citizen in these days, of course, I need to look to Munich because Oktoberfest is ongoing there this week. We have signed beginning of the year, a letter of intent with the Stadtwerke München to implement the first commercial superconductivity cable system. That is really world's first then if we are coming to that operation. Starting already in 2001, we have seen in Claes' slides the first pilot project had been installed, and since then, technology has further matured that we are now ready to also look forward to that first commercial operation.
This will help Munich, obviously, to reconfigure its power grid, help also to save space because instead of installing five cable systems, this cable system can transport the same amount of power. At the same time, also reduce losses. It helps also to pay off very different aspects to strengthen the sustainable competitiveness also for our customers. Last but not least, in these days, obviously the repair capabilities are quite important because we need to support our customers when there is extreme weather damaging a cable, when there is external threats, sabotage, damaging a cable. We need to help our customers to be prepared, and we are also preparing ourselves to be prepared to help our customers with these services. There, just highlighting maybe the offshore wind repair with Beatrice, where we not just repaired our own cable, but also third-party cables.
It is also important to have the technology and the competence to work with different installed assets worldwide. Now, looking at what is supporting also the growth of Grid Solutions and Accessories and our ambition to grow further these activities on the AC side of life, that is actually then again referring to what Claes already said on electrification, on the energy transition, and the grid modernization. Let me first start with the electricity demand. Of course, most obvious, I guess, some of you have come already with an electric car, so that is the most obvious change, that we electrify our transportation. That is not just relevant for our individual transportation, but also mass transportation and commercial vehicles. The installed capacity that is required for charging these vehicles is increasing and increasing, and with that, additional grid connection capacity needed.
Industrialization, where we also turn off fuel gas to be replaced with electricity, and the same obviously goes for data centers. We have heard already about AI, so that is also driving the overall electricity demand in Europe moving forward. With that, also more and more cables being utilized for these activities. Looking then at the energy transition, it is really not just the decade, it is the century of renewables. We can see that that trend is unbroken, so solar capacity being added more and more, and the same goes for offshore and onshore wind activities. Also here, grid connections required and combined also with more energy storage systems being installed on a grid scale require high voltage AC solutions being ready and being helpful to connect these assets to the grid.
That of course then adds in the overall picture that is coming not from us, from external studies on the annual grid investments that will take up by 70% in the coming years from the base level of EUR 57 billion to around EUR 100 billion moving forward. That of course will support our activities in the center of our operation in Europe. As you can see, also the opportunities with the rest of the world, with up to EUR 500 billion annual spend in investments in grid capacity, should also trigger one or the other strategic activities that was already mentioned. Looking at the overall capabilities that we provide as Grid Solutions and Accessories to our customers, what is it that we really can deliver end-to-end?
That goes really across the full cable life cycle, starting from design, planning, production, installation, commissioning, operation maintenance, and the end of life. We really engage early with our customers because we have heard we are obviously a power cable expert, so we want to ensure that our capabilities, our competencies, are integrated already into the project planning phase, into the permitting phase. With that, we help to optimize the solutions that our customers, in the end, integrate into their grids. Looking then at the installation and commissioning, I think that is really very important to not just think about the cable, to not just think about the market-leading accessories, but also think about the integration of that overall cable system into the power grids, into the asset base of our customers.
There, obviously, the close connection also from the projects benefits also the product development and evolution. That is where we are ensuring that continuous improvement and continuous evolution of our offering by that close connection. But obviously we do not stop after we have commissioned, maybe with our own mobile test equipment, then the cable system. We continue also into the operation and maintenance phase. There we have built quite a portfolio of long-term service agreements to support our customers with spare parts, for example, but also with secured reaction times in case needed. Of course, to execute not just the installation and commissioning, but also execute later on repairs, you need qualified, you need trained, you need educated, and continuously qualified jointers to also execute these activities. All that is sitting with Grid Solutions and Accessories.
Looking then at the end of life, it is also important to recognize, as we have heard, the aging grid infrastructure, and that we need to also consider together with our customers how to replace these cable systems, how to also recycle it, how to also modernize the existing infrastructure. How are we doing this? Also on a regional scale, we wanted to visualize here, because I think you have heard now about our major factories in distribution and in transmission, and you will hear more from Carlos, obviously, about our assets there. What is important is that we are relying on one side on our factory footprint on accessory space, but also utilizing our factory assets in transmission and distribution, looking here at that picture and being close to our customers.
For Grid Solutions and Accessories, we have created regional sales and execution centers really close to our customers, obviously with quite a gravity in Europe, but also expanding into strategic markets like U.S., the United Arab Emirates. Sorry. India, and Australia. These are obviously markets that we are following quite closely and where we also consider how to further strengthen our presence. But being close to our customers, that is quite important because with that, we can ensure that we are really closely following the customer demands, but on the other side, that we can also rely on our global competence, on the global organization to support also the execution of these projects, of the service activities, or the deliveries of our product portfolio. All that, obviously, again, is standing on the three pillars around execute, excel, and evolve in line with our Charging Forward strategy.
Let me start with the execute part. Here, first, it is really about delivering on our commitments, also on the project, on the product, on the service side. Delivering on our customer commitments is the first priority, ensuring that we build this supply chain readiness also for the backlog that we have here to keep really the projects in focus and deliver them as Darren alluded to deliver them on time, on budget, on quality, and make sure that we really have there this customer-centric approach for our activities moving forward. On the other side, it is really about the excellence part, making sure that we are really positioning ourselves in a good spot with leadership positions in key segments like we have heard about superconductivity, where we really would like to see us moving forward with this first commercial project. Then also about strategic partnerships.
On one side with our customers, as we have heard already previously, but on the other side, also with our suppliers, to ensure that we have also here on the cable side, on the product side, but also on the installation side, reliable partners moving forward in executing our strategy. The last pillar, it is about evolve, making sure that we are ready with Grid Solutions and accessories for the future, to really consider what are relevant aspects to expand our footprint, what are relevant aspects also with the technical innovation, and of course, what can we do to provide more sustainable offerings also to our customers. These are the three pillars that you will also see moving forward for Grid Solutions in execution.
In the end, it is not about the number of projects that we are executing, it is really about the overall value that we generate for our customers.
Our value proposition is centered around enabling reliable power grid performance. The first two elements cover our broad portfolio with cable accessories, HVAC onshore cable systems, and turnkey projects. This basically allows our customers to work with one trusted partner across voltage levels, applications, and project phases. Tailored solutions increase reliability while reducing the project risks. In this element, our customers benefit from our engineering, testing, and application expertise. We help our customers to solve complex technical and operational challenges. The fourth element is our comprehensive service offering with end-to-end installations, maintenance, and repair capabilities. Combined with our service level agreements, Grid Solutions and accessories is a capable partner throughout the entire asset life cycle. Last but not least, we are a global business line, but a global business line with customer proximity.
We combine the strength of our European competence center with regional hubs, teams that understand local markets and our customers' needs. Together, these values create the seamless offering that helps our customers to manage complexity while enabling reliable power grid performance. Of course, the voice of our customers brings our values to life. Statements like, "NKT is setting the benchmark in grid reconstruction." "NKT is the partner for future-ready grids." "NKT provides rapid response when it matters most." Our customers highlight three consistent reasons why they continue to choose us, our technical expertise, our strong partnership with them, and the responsive support. Let's listen to Klaus Wewering on what he has to say on setting a new benchmark in grid reconstruction.
In NKT, we have a reliable market leader as our partner. In our long-term partnership, we developed and also deployed 400 kV temporary cable solutions. This gives us flexibility when it comes to the construction and development of our grid. For us, NKT is more than just a cable producer. NKT offers us a solution when it comes to the huge transmission projects and cabling for Germany. Amprion and NKT looking forward in the partnership future. Together with NKT, we want to be successful also for future projects to enable German energy transition.
Thank you, Klaus. Your feedback is highly appreciated. Let me summarize the key takeaways of today's presentation. We have an integrated life cycle offering, a life cycle offering throughout the full cable system life cycle. The second is our broad portfolio with power cable accessories, turnkey projects, and service capabilities. We are the trusted partner for our customers, a partner that allows our customers to work with us across voltage levels, applications, throughout the full cable system life cycle. We are a global business line with customer proximity. We combine the strength of our European competence center with our regional hubs. Our local teams support our customers where they are. We are the trusted partner for our customers throughout the entire cable system life cycle. Thank you.
Good morning, everyone. I'm Carlos Fernandez. I'm leading the business line distribution. For those of you looking for the next coffee break, I have good news. I'm the last business line presenting, so I will try to be quick, but give you also an overview of what has been happening in distribution during the last years and what we are building for the future. Just to give a bit of context, we are not a project-based business line. We are a pure cable producing business line, and we take care of all the power cables that are below 220 kVs. In NKT, we consider above 220 kV extra high voltage, and that is Darren's place. So we take care for all what is the distribution network of the power.
Short overview, what has been happening in the last four years. I think that this is a journey of growth in our business line. It has also a quick growth. We have been increasing our revenue 1.5 times in this period of four years, going from EUR 550 million- EUR 850 million. It is not only growth, it is also a healthy growth because our profitability has been growing even more than the turnover. We have increased our profitability three times in the same period of time, from EUR 29 million EBITDA to EUR 89 million last year. This growth is not only size and volume growth, it is also an increase of profitability in the business.
There has been some reasons for that, of course. It is obvious to all of you that the market was there, but I always say that the market was there for everybody, also for our competitors. There were two additional drivers to the market to do that. Our focus on efficiency, I would say that is a key strategical choice for Distribution. We are a pure cable producer, so we need to be efficient, we need to be cost-effective, we need to be on time. We set our internal target that we want year- on- year be at least generating a 3% of operational efficiency, which is a number that is close to an average inflation rate that is growing. We try to compensate that through a real efficiency project. That has been helping also in this increase of profitability.
The last driver has also a strategical choice from our side. We are a pure power cable business line, so we do not have data cables, and 70% of our portfolio is medium voltage. Then we have a 30% of our portfolio that is the rest of the network, 1 kV and building wire. We have also some kind of niche products like the power to antenna and some kind of a telecom application for that. But mainly our activity is to give a clear choice to put capacity in place for the medium voltage expansion. In these years, we have not only growing and delivering the profitability, we have also been investing. We have been investing also to build a platform for the future.
I think the milestone, and Klaus mentioned that before, on this year was the acquisition of SolidAl, which is now our Portuguese affiliate. There we applied what we called our model of buy and build. We not only took over the company, but also we invested to double the capacity there. This is the capacity that also Klaus mentioned before will come in place at the end of this year and then will be there starting 2027. We have also, in terms of organic growth, investing in our factories. Velké Meziříčí in Czech Republic, Falun in Sweden. We have been putting in place during these years additional medium voltage capacity to support the growth and to support the demand from the market. Asnæs as well, which is coming now into motion, into action. The project was complete just before summer in terms of machine installation.
Now we are growing in terms of qualifications, in terms of ramp-up of the factory. Those investments are also bringing additional capacity to the business line to follow up our customers' demand and our frames with our utilities and our partners. Those investments are the main thing that we have been doing, investment in capacity, but not only. There are additional also investments that we have done for strategical reasons. There are two things on that. Verticalization of our supply chain. This is a strategical choice. We want to secure some key raw materials. One of them are the compounds, the compounds of our cables, especially flame retardant and fire-resistant compounds. There is a market demand, a market trend, which is moving from the traditional PVC cables to more safe cables in the concept of fire resistant and flame retardant.
We want to be the owners of the technology of that. We want to be the owners of our supply chain because this is a key product. We have been investing to have these capabilities that we have now in our plants in Poland and in U.K. With SolidAl acquisition, we took also a step in this verticalization on the supply chain. SolidAl brought us the internal production of aluminum, which was a knowledge that we did not have before as NKT, and now we have. This is again, a strategical advantage for us, which is not only from the technological point of view, but also from the supply point of view, where we have seen these years a lot of turbulence and disruptions on the Middle East. That is also a factor that it is giving us a more stable platform.
With all of these investments, we have been positioning the business line to capture the growth that you have been already listening before. I am not going to repeat the same, but it is just about, we are not talking about a short-term thing. We have a confluence, we have the coincidence of many factors that are going to be here for some years. The upgrade of the grids. We need to really transport much more amount of electricity. That means that the cross-sections that are today in place are obsolete. We need bigger cross-sections, and we need longer grids, and going with the grid to different places. This grid expansion is really a huge thing coming in the future, in the coming years. It is already happening, but it is here to stay. Electricity demand. You have more figures than me about that.
It is growing and it will continue to grow. Then of course we have the thing now, which is the data centers. Everybody talks about the data centers, but it is a reality that the data centers is about data, of course, obvious, but it is about power. If there is not enough power in place to supply these data centers, that is a showstopper for the development. It is about electricity again. Some figures about that. It is planned to be the twice investment from EUR 36 billion- EUR 70 billion in the coming years. All in all, we have been positioning the business line in order to capture this growth in the market and this increased demand. How we want to do that?
Of course, we are not going to bring anything new, which could be surprising that I come with a different strategy than the rest of the business line. It is Charging Forward. It is about execute, excel, and evolve. What does it mean for us? Execute is simply get the things done. We have been investing, we have been putting capacity in place for our factories, doubling capacity in some places, in Denmark and in Portugal. Now we need to get it done. We need to finish these investments, and we need to start to put the machine in motion. Of course, keeping the leadership on efficiency and service levels. I said before, we have a year-on-year target of efficiency, but this is not really a choice. This is our survival mode. We have to compete and we have to be better year- on- year.
Continuous improvement in being leaders on service level is what is giving us the success of these last years. On the excel is about the same concept. We need to continue focusing in this supply chain verticalization. I truly believe that this is one strategical choice for us, and we need to continue going that. Of course, the customer centricity, and we will talk a little bit more later on that. The way that we build trust for our customers, the way that we generate business with them is to become a clear, reliable partner. We can only do that if we are close to the request of our customers. Customer centricity and the tools that we are developing for that is something that we will have a look later. But we do not want to stop there. We have been building platform to capture.
We have the tools to develop that. What is next? Because we cannot stop there, because the rest of the world is not stopping. We want to strengthen our position in medium voltage even more. We consider ourself one of the market leaders. We can call three of them, and we are one of these three in Europe. We want to strengthen this position. We want to increase our market share because we have been put more capacity in place, but also we want to growth. We need to be selective on how to growth and how we go out or beyond our core markets. Our core markets is Europe, Central Europe, is Scandinavia. Now it is also South Europe with SolidAl. But we have a successful story with SolidAl moving to South Europe, moving to another geography that was not our backyard, let us say.
We want to do more on that. We need to be selective, we need to be smart, we need to find the way for our buy and build model, but we want to continue on that. We have a footprint today that is placed to support the growth. I connect now with what Raphael was saying before. We are covering, I would say in a decent way, what is the European market. We have a good distribution now, also covering the south part, very strong in Central Europe. Germany is the biggest market, the second one is France. We are close enough to the most important markets in Europe. We have a traditional strong presence in Scandinavia. We have also one small plant in U.K. that is allowing us to access also this important market.
Orange dots here are showing you the places where we have been investing in these four years, and you can see that is almost everywhere. It has been a challenging environment by growing the business, but investing a lot. The message of these dots is that we are ready for the next. These plants that we have seen before, they have been built on a concept of centers of excellence, meaning that we would like to specialize, or we like to specialize our factories in different segments of cables. We have the medium voltage specialty mainly in Czech Republic, and then we have capabilities here and there. We have a strong, medium high voltage capacity in Sweden and in Portugal.
These centers of excellence are giving us also the advantage to be more competitive in the products because we have more efficiency, we have more scale in those places. All this range of products that we produce in this footprint are covering the end-to-end of the distribution network. Here, maybe some of you have seen or have listened, in the cable world, that there is now a sentence that says that there is no energy transition without transmission. Darren knows that, and Darren likes that. I always add that there is also no supply solution without distribution, because you need to go to the end, you need to go to the users. This is what we provide. We provide from the connections to the grid, that is the part that you see here.
No matter what generation source there is, you need to connect to the grid. We are there. Then we go, let's call it down on the chain, reducing the voltages until the final user. In a simple concept, the lower the voltage, the smaller the cable. We go from high voltage, bigger cables, medium voltage to connect to the substations until the last mile, 1 kV, and until the final user, which is the building wire. We are covering this end-to-end. That is our offer to the market that we can be a one-stop shop for the distribution part. We deal with utilities and big DSOs, and we have frame contracts with them, but we also work with the wholesalers, which they resell to contractors. We have, of course, on the developers and OEMs that they are also developing some projects.
We don't do the project, but we supply the cables for those of them that have the capability to do it themselves. Let's spend one minute on the data centers, because it's the thing that everybody's talking about, right. There is a boom really on the data centers. Probably you are more expert than me, but you see the speed in the U.S. market is much higher than in Europe. Also in Europe, we see that this demand is growing and growing. We have experience delivering projects in Sweden, in Denmark and Germany, and we see this demand, something really, really strong and consistent. We can debate a little bit about the speed. The speed of execution can be faster or not that faster depending on permits, depending on discussions on water consumption or availability of the grid.
But what is out of discussion is that this demand is going to grow a lot in the coming years. There is a lot to install and there is a lot of power to deliver. As I said before, we are a pure power player here, so we do not deliver optical cables. So let's say that half of the story is not for us, but for the other half, we are delivering the full package there. So we can deliver from the grid connections until the super stations, until the power to the rack. And we are also very close to our customers, looking in how we can develop better solutions on that. It's not only about products. Products are extremely important of course, but I mentioned it before that one of the strategical choices that we make is about the customer centricity.
And what we are doing about that, beyond to be close to our customers and meet them and listen to them and improve together, is about to provide an environment where making business with NKT, making business with distribution has to be easy. And here we need to go through digital tools that we can develop and offer to our customers. We have developed the myNKT, m yNKT is the interface that we offer to our customers to do business. They can find all the necessary information there about the cables, about the applications, about the technology that we are doing, but they have also the opportunity to place orders through the interface. So if somebody is developing digital commerce, we are ready for that. We are not only on the screen side of the thing. We are also developing tools that are beyond the screen.
The Pin My Delivery or the Track My Drum, there are digital solutions that we offer to our customers that allows them, for example, to know exactly where is the drum in any moment of the delivery, from the moment that it's leaving the factory. And also the Track My Drum, and this is special useful for the people that are doing installations on the field. You can position your drum exactly where do you have it, and how much or how many cable remains in. If you have enough cable in the drum in that place in the middle of the mountains to finish the connection, or you need to deliver a new one. All these digital tools are available, and they are a way that we can be closer to our customers and provide easiness for the business. We are also busy with AI.
We are busy with AI, developing the tools that can allow us also to be present when AI will be a solution for the commerce. It's not happening yet, but it will be a moment where our customers will interact commercially also through AI, through agents, or through different solutions. We are developing also our side of the business that we are going to be ready to interact in this different way. A lot of work about digitalization and developing tools for our customers. And those customers, of course, they have an opinion about us. And we are happy that this opinion is in direction of this reliable partnership. So we want to be the one that they call. We have some colleagues that are calling that we want to be the last call.
I know that the customers talk to everybody, but we want to be the last call. We want to have the last one, and this is what we consider a reliable partner. We are going to listen now, José Ignacio Sánchez Galán, which is the CPO of Iberdrola. I think you know Iberdrola is one of the biggest utilities in the world, and we are very close to them. We are very good partners to them. But Ignacio is not going to talk about his only distribution business. He is going to talk about the partnership that Iberdrola has with NKT, because we have also having very important business on the transmission side. It is a global partner for us that gives here his testimonial.
During the last decade, NKT has become a strategic cable supplier and installation partner for Iberdrola. Today, NKT provides Iberdrola with a broad product range, strong technical expertise, and installation flexibility. Based on the many networks and offshore projects carried out together in the recent years, the relationship between the two companies has become significantly stronger. NKT is helping Iberdrola to deliver its EUR 58 billion investment plan focused on distribution networks, regulated transmission projects, and particularly offshore developments. One example is the installation of the HVDC cables for the East Anglia THREE offshore project in 2025. Together, we are driving the electrification of the future.
Thanks, Ignacio. Key takeaways from distribution. We are a key player on the distribution network in Europe. We are a key player on growing the grid in partnership with our utilities and our customers. We have put more production in place to be ready to follow up the market demand, and we keep the customer centricity as a core focus to develop together markets and solutions for our customers. That is it. I promised to be brief and to hit on the coffee break. Thank you very much, and I invite now Jacob for the Q&A.
Thank you, Carlos. Just another Q&A session before coffee, so you are not the last one. But I will ask the business line heads presenting, including Claes, to re-enter the stage. Again, we do the same procedure as last time. If you have a question, please raise your hand, state your name and company, and also you have the Question tab on the webcast where you can type in questions. I think we start up here in the front row. Kristian?
Thank you. Kristian Tornøe Johansen from SEB. On data centers, I follow your point of Europe being a bit slower than the U.S., but what we have seen recently is a pipeline in especially Sweden and Finland materializing quite nicely. I guess Google's announcement to build a EUR 13 billion data center in Finland is a good example. Considering your Nordic presence, can you elaborate what will that mean for you guys if that Nordic data center boom actually materializes?
Yeah, well, it's clear that when this investment materialize, I understand that we have clarity about the timeline and clarity about the locations of that and the power that is needed to be installed if we are talking about hyperscalers or more smaller data centers. For us, of course, it will represent saturation of our plants, a demand to be there through basically our wholesaler market, because this is how usually it's working in the Nordics. For us, it's representing a clear, very exciting future about that. But we need to see what is the pace of the execution. Google announced that for Finland. Now we need to continue looking into it and to see when it's happening.
Casper?
Thank you. Casper Blom from Danske Bank. A question to Darren, and maybe Claes, if he can't resist. The slide that we've now seen for the last couple of years about investments into high voltage, the +EUR 10 billion per year out towards 2030. You continue to stop the slide at 2030, but you also speak to how investments will continue towards 2050. If one was to guesstimate how those columns would look beyond 2030, would it be fair to have an assumption that we would see sort of the same trajectory, at least, as we have for the general investments into transmission?
Do you want to go for it? Yeah.
Please.
I can start with saying, if you look at beyond 2030, you heard me say already the visibility is lower. We are talking to the clients a lot, so we have a pretty good idea what their plans are. But in our view as well, at the moment, and leaving mega projects to the side, the supply and demand balance will be about right beyond 2030. It will take either a trigger of a major project, such as a mega project or a step change regarding backlog volume, at least before we would make the decision on another investment. I do not know if you want to add more.
No. I think that basically covers it. I think if we were to verbally project, there is nothing in what we see beyond 2030 that does not support the market expectation that we have up until 2030. What there is, with reference to the third slide that I had on the market, on the opportunity side, for example, energy autonomy, and maybe that is to your point as well. That opportunity going from something like 40%- 50% or 60%, if there is a significant political will that decides to take a strong step further there, then that can represent also a significant opportunity over and beyond the current estimates. But I would also maybe like to just invite Michael, if you have any reflections, so we can hear also from the real expert on the market side.
I do not know what I can really add to what you say. I think you hit the nail right on the head here. Obviously, visibility gets a little bit blurred when we look further out. We lack the real names of the projects, which we have on a shorter term level. But then we look into the overall macro, the global trends, and we see nothing really that suggests that we should not maintain an activity level close to what we have seen in recent years and what we see towards 2030. I think that gives us some comfort. I will say, we work a little bit with a triangle, a trilemma, where we have three things that we always try to put in context. We have sustainability, has been there for quite some years. We have affordability, and we have resilience.
What has happened in that triangle is that things have moved a little bit. I would say affordability is very much at the agenda right now. You have heard the people in the business lines say how they work a lot with sustainable competitiveness, improving the basics. NKT continues to take its fair share of the market, whatever that market is. I think that is a very important takeaway. Resilience is now also very much, because of the geopolitical situation, a very important aspect. We see that in the market discussions that TSOs and DSOs are looking on the activity level, not only say how much should they invest, but also where should they invest and how should they invest and what should their partners of choice be in the future.
I would say on the market side, yes, we do expect it to remain a very healthy market. We do not see any real dark clouds out there, but of course, it is also impossible to really predict if you go 10, 20 years ahead. There we need to look at macro trends.
Up here. Claus.
Claus Almer from Nordea. Darren, regarding your slide about the new factory. That should be fully operational in 2029. I guess there will be no growth going into 2030, meaning that you should be able to reach your 2030 target already in 2029. Would that be a fair assumption?
When we said firstly that the factory will not be fully operational in 2029, I would say what we are saying is it is steady state because it is also a full flow between the factory and the installation of those cables, where you will see the full effect will be in 2029 from that perspective. It is not that the factory will continue bit by bit all the way up to 2029 coming online. It will be up and running basically within 2027.
Yeah, sorry. The meaning is that if it is fully ramped up-
Yeah.
In 2029-
Yeah.
Not a lot will happen from 2029- 2030.
I guess if that's this minimum EUR 900 million EBITDA for 2030, if nothing happens between those two years, you should be able to do at least EUR 900 million already in 2029.
But remember, even though he's a very important part of NKT, he's not EUR 900 million out of NKT.
But still.
Yes. But still, it's a very big part. And of course, you are correct from the perspective we have said we will commence ramp up next year. There will be a couple of months between the two factory flows, and you will see that later and hear people describe it. It takes time between feeding the dragon with copper in one end and get a ready cable, which is trenched more than five meters down to the sea bottom on the other end. Doing that two times with a couple of months between creates a ramp-up phase, which will stretch until 2029, until we get full revenue generation. Then, as we are all well aware, EBITDA, of course, that's from a revenue perspective. EBITDA, and to a certain extent, revenue depends on project mix, of course. It goes down to the cost absorption.
It also goes down to the margin mix as well of the projects. So this is why for the full company, we are looking at 2030 for the medium-term ambitions. And understanding where you come from, but we will not provide guidance for the year in between 2028, 2030.
It's not a guidance I was looking for, Claes.
Yeah.
It was just more about the building blocks.
Yeah. From an operational perspective, the machines will turn, and we will have full utilization there from that perspective at 2029. That we manifest with.
Thanks.
Akash.
Yes. Hi, Akash from JPMorgan. Two questions from my end. One is for Darren. I think so far we have seen organic growth strategy and plans. Can you talk about prospects for any inorganic growth that could happen in transmission segment? Secondly, I think it's for all the people on stage maybe, is on DC export opportunities in the U.S. We have heard the demand there is very high and local capacity is not enough. We see Asian companies are capitalizing on this opportunity, but we haven't heard from NKT on potential export opportunity in the U.S. So maybe if you can talk about what could be possible and what can't be possible. You are only talking about Europe, but maybe some color on U.S. as well. Thank you.
Data center by DCX? You mean data center?
Data center, yes.
If we start with the first question, I think we've already said beyond 2030 that we see the balance really particularly from a manufacturing perspective between supply and demand. When it comes to organic growth, there is no plans beyond that regarding manufacturing. I think you could hear in my slides when it comes to strategic investments on the installation side, I think we will continue to look. Again, there's no plans in place, but we've continued to look at the utilization on what we're spending across all sectors of installation. Where we see that it makes sense to take some of that in-house from either a criticality point of view, ensuring supply chain stability, or that we can make money out of it, then we will look at doing it and we'll take that discussion. But no plans are in place at the moment for that.
But this in-house will be organic or inorganic? Or both?
It could be either.
Yeah. I think on the wider perspective, of course, in the transmission side, considering that we are a significant player in the industry, inorganic opportunities do not lend themselves perhaps as easy. But same with everything, we will stay opportunistic. Also not to try to provide any expectations that an inorganic move on the transmission side is the most obvious one. That would be wrong from our side. I do not know, data center. Present there also with the reputation of NKT on the Champlain project. So we are aware about the growth there, and it is a point of attention for us, and we are developing also technologically our cables to the U.S. standards. We are a Northern European-focused kind of business where the majority of our customers are, the majority of our assets are. We buy the majority of our material there.
Historically, we have also invested the majority of our capital in these regions. But with that, we also clearly wanted today to paint that there is further opportunity with our capabilities and with the performance and platform we have built in Southern Europe, but also in North America. So this is also something that we would like to recognize here today.
It is more difficult regarding it gets further out in time, looking at the backlog that we have to start with. We have a backlog, as you hear me say, that already stretches into 2030. But I think the market dynamics are there. There is huge discussions with the clients, not only on government ambitions, but also as we talked about things like energy security. So I think that will continue to be really prevalent, and which goes across not only transmissions, but it goes across grids too, regarding sensors, regarding being able to monitor the cables and the protection of cables. I do not know if that fully answers the question.
We have seen the growth in overall grid investment over the years from 60 to roughly EUR 100 billion annual spend, and there, obviously, a fair share should also end up on the cable system side, with that increase of 70%. We see also that more and more projects, grid infrastructure projects, are also seeing on the AC side, partial cabling aspects or also complete cable solutions. With that, as product supplier, project and service provider, obviously, we will be able to capture also a fair market.
Both, because that could be a little bit of crystal ball exercise. The only thing I can say is that all the drivers of growth are there. If we look on the last five years, how many things has happened? COVID, Ukrainian war, Middle East disruption, and with all of this, every year, the growth has been there due to the demand. I think that for the coming years, we should trust on a very stable growing scenario. Figures for that, you have also supply from the experts. Only on half of the data center business. We are not touching the optical part. It's a little bit difficult when we look at the big figures of investment to translate that on a proportion to that because we should take out all of the optical part of it.
It's mainly a business driven in Europe by wholesalers and contractors, and this is around 40% of our business. Inside this 40%, I think that a good relevant percentage of that could be related to the data centers and is a growing thing in the coming years.
Just if I may add. Around about 50 gigawatts. It is a massive number for Europe, and it's a massive growth also from where it is today.
No, that-
It's a good point. I can start and then both Michael and Darren can also complement. I think you're giving the ingredients for the answer there, where affordability, of course, continues to push on us. We need to invest. We need to do technical innovation to be able to deliver in a more affordable and competitive way. We have always, with the market growth that we have seen for the last 10 years, you can see the figures from Darren, which stipulated that basically the market in the transmission segment has five-folded across the last 10 years. We have not multiplied our capacity by five. So the expectancy that capacity has to come up, more players needs to come in, has been with us for that entire time.
Let's also remember together that in the last three to five years, we have seen a tremendous market pickup, but we have also seen a positive market sentiment in an environment where also cable contenders from Asia has been part of this. This is what we have seen and what we are seeing. The example that you refer to, I don't think takes us with surprise, but is something that we have expected. But of course, with what we are building and with what we are pushing and what we are presenting with you here today, you should also know that we feel comfortable in our ability to compete also going forward.
Coming to the security angle, I think there is a realization that critical infrastructure in Europe, while 10 years ago you could buy it from anybody, anywhere without concerns, if I take it to the extreme. That same situation, people today are much more vigilant, and that we can see from several TSOs in Europe where it can be contagious to buy something from very far away, both from just potential impact on the grid as such, but also from a maintainability, reliability, and repairability perspective. But looking at-
When affordability started to really become a topic on the market over sustainability, we also had to have a discussion in the management team of Claes on what we stand for as a company and the core values we stand for, and sustainability is one of them. So it is something we are committed to the future. Regarding affordability, we also understand that the TSOs, the governments, they also have the taxpayers that they need to come back to and report to who need to pay these bills at the end of the day. So from our perspective, we only help ourselves not also in winning the projects, but making sure these projects are realized by the fact of really focusing on our competitiveness for the future. Michael, anything you want to add?
How important it is that we are competitive in the overall picture, and that goes without saying. We have to be able to justify being chosen for this or that project. But I will say what has happened in recent years and maybe reinforced with what happened in 2022 with this so-called special operation in Ukraine is obviously that Europe as a continent has realized that being dependent upon external sourcing of energy is not a real long-term sustainable situation, and something needs to be done about it. What we see now is there is a real fast emerging realization that security policy is also industry policy. I think NKT as a company has been quite open in explaining how we see also the competition from Asia, unfair competition. That all ties in together with the security situation in Europe.
Here we would like to offer in NKT that we actually invest as a European company heavily into increasing the European supply chain. You have seen in the presentation EUR 2 billion. I think we take our fair share of the responsibility in investing into the European supply chain. I think it is about EUR 4 billion + EUR 4 billion being invested. So I think you also see a company that is very mature in taking the responsibility to be offering for the future, a reliable partner.
Reliability is very important. I think you have seen it in the presentation. It is a word that keeps coming back. It is of course, reliability in terms of the functionality of the electrical power transmission systems, the distribution systems, but it is also reliability in terms of being the partner of choice. I think we also heard that. So this is a theater we really play into.
It is something that we think is going to be increasingly important going forward, and it ties into the so-called non-price criteria in an evaluation of a project. So all our clients are looking obviously at the price at the end of the day, but there is a whole sequence of things that they look through before the price becomes the decisive factor. Therefore, we need to check all the boxes to be the right partner, and then we also need to be competitive on the price. I hope that tells you a little bit about how complex that whole theater is, and we try to play on all the keys of the piano.
Actually aligned rather than conflicting from a certain perspective. I think it was mentioned here somewhere that politicians, we will translate that into meaningful plans, and I think this is what we as a company are also waiting to happen. If that happens as it is spoken, for example, by the commission president before summer, then that can constitute a significant opportunity on top of the market that we were discussing here just a moment ago.
Okay. Welcome back from a hopefully well-deserved coffee break. We are ready to continue with the agenda. Anne, as we have seen several times, let's play a short video. With this, I would like to introduce the last presenter of this morning's program, our CFO, Michael Young. Michael, please.
Thank you, Jacob. Good morning, everybody, from my side. I am in a happy place this morning because I get to say hello to you and welcome you on our home turf. I have met some of you, quite a majority of you, in your home turf at your bank, in London, in Zurich, and in Copenhagen. But a warm welcome from my side. For those who have not yet met me, my name is Michael Young. I am the Chief Financial Officer of the company since April 1st. I joined in 2021, and I was responsible for strategy and M&A. I have been in the industry since 2008, whether strictly with a cable maker or around the electrical substation.
Today, I will try to wrap up the good story that you heard from my colleagues on our journey till now, on our growth journey, and the growth journey that lies ahead to deliver our ambitions in 2028 and in 2030. As you heard Klaus say, we are confirming those today. I will also give a little bit of color of what are the elements from the business lines that are stacking up to the quality of revenue and EBITDA. We will cover how the backlog fits into that, what type of returns we are targeting with our ambition, the generation of cash, which will be important because we are becoming a different type of company, and also give some qualitative comments about how we look at investments moving forward.
Last but not least, as Darren just said, core to our values, a brief update on our sustainability efforts this year. Let's start with the revenue line. As you have already seen in previous slides, we have had a very strong growth. It predates 2022, so even comparing to 2020, if you would take the full strategic period of the ReNew's area there, we stand today 2.5 times bigger on revenue at standard metal prices than we did at that time. I will be using the 2022 reference point, the last time we had a capital markets day, as the colleagues' slides have also included, to show the relevance of the journey and the ambition. If we look at 2030, we will be growing in this period from 2022 at 13%.
This year, and we just updated by narrowing our guidance in August, we are guiding at EUR 2.65 billion- EUR 2.75 billion of turnover this year. You will notice that it is a relatively flat year in this multiple year picture. We take a look at it as a consolidation of the investments that taken in the past. So the investments, opportunities, acquisitions that are not part of the EUR 2 billion investment program that the colleagues have already alluded to.
You now see that we have reached an order of magnitude that have consolidated these investments, this capacity, this market presence, both on revenue, and I will touch upon it in a moment in EBITDA, that now, as Klaus has said, has strengthened us, has made us into a different type of company that can start looking at opportunities in a different way with more confidence, but possibly also more optionality.
Looking at our ambition, taking the reference of 2024, we have the ambition of growing in the latter part of this period, still at a respectable 7% year-over-year on average. Let's take a look at EBITDA. If our revenue story, our revenue journey, was already quite strong, I would argue that our EBITDA one is even a little bit stronger, a little bit more remarkable. What is interesting, and Carlos also mentioned it from a distribution perspective, if not only have we grown presence and volumes, but we have grown the quality of our EBITDA. We are delivering more value per unit of sales than in the past.
We are now at a level that is almost three to four times where we began at the beginning of the decade, almost three times where we are from 2022, and still a little under halfway of our ambition of EUR 900 million by 2030. What we are guiding on for this year, also updated in August, narrowed and also lifted, is EUR 400 million- EUR 430 million of EBITDA. Let's take a look at what is stacking up, both on the revenue and on the EBITDA side. What is a main driver? It has been alluded to already by many colleagues. Klaus, first of all, in the macro, a big part of the EUR 2 billion program. Also here we have stacked up all of the investments across all of the business lines. It is an impressive point of view.
I just want to echo the words that Klaus gave, that this is not an insignificant effort. You will be hard-pressed to see a company in our sector that is doing so many investments at so many different places across so many parts of the portfolio. We are investing practically at every factory. Not all of them, but practically. We are investing at the extra high voltage level, the high voltage level, and the medium voltage level. We stop there because that is the focus of our strategic intent. We are adding assets. We are adding installation tools. We are adding labs and know-how. We are even helping a partner do a greenfield on the other side of the world by licensing our know-how.
More importantly, in this period, we are also adding 25% of a population, which is the basis of the know-how that is so important for the type of complex projects that we deliver. What you see besides the fact that we are doing a lot at the same time, we are going to see that the majority of these investments will come online in 2027. As we have been discussing in different forums, 2027 really is going to be an inflection point for many reasons. I will come back on that and touch upon it in just a moment. We heard about the Asnæs expansion and also the ones that have happened in Sweden and Czech already completed, already online, and particularly the Danish one now ramping up. You heard Dennis talk about in Alingsås, the high voltage part coming on. Those are the ones that have been complete.
Finally, just repeating what the colleagues have anticipated, the expansion that is happening now in Esposende after the acquisition of SolidAl will come online by the end of the year and will ramp up in the first half of next year. These investments, as already mentioned by Claes, are part of a EUR 2 billion CapEx program. If you look at the quality of the EUR 2 billion, the vast majority are the stack-up of those growth investments that we just took a look at. There does remain a certain amount that is, let us say, the part that we need to continue to invest on the efficiency side, on the technology innovation side, and includes buckets such as safety, R&D, maintenance, sustainability, and IT.
When we pair this up, the investment program, with also our midterm ambition, then we are projecting that once the investment program is completed, we can assume that there is going to be more or less 4% of this type of base CapEx that you can count on as part of the financial simulations to remain in the company. Having looked at the investments, let us revisit the revenue and see to what degree the investments are stacking up. When we look at the bridge between where we are guiding this year and our 2030 ambition, we see that all three business lines are contributing to the revenue line. This will be also the same story for EBITDA. You see volume, volume all across the board here. The big reason is the investment program we had.
This is growth adding to the economics of the business, to the revenue of the business. Beyond that, we also have some other elements. There is an element of project mix on the transmission side. It is a bit more internalization of the installation scope, and it is the ability to deliver those projects in a good way. When we see Grid Solutions and Accessories, as we heard from both Raphael and Dennis, it is about being closer to the customer. It is also about having more reach with a broader sense of the full capabilities that we have of our portfolio along the cable service value chain that is allowing us to grow extra sales in customers that we already have and allows us to get better penetration also with the same customers and in new markets.
If we are looking at Distribution, as we heard Carlos say, there is more capacity coming, but what he also mentioned in there, as we are bringing more capacity, we want to gain market share with existing customers, but we are qualifying products for close and adjacent markets. More customers in the U.K. and in Ireland, and more into the distribution networks in countries like Spain, France, that have been a little bit outside of the action radius of the past due to our capacity and the customer legacy. Very important to the revenue line here, certainly on the transmission side, Grid Solutions also supported, is the backlog picture. The transmission backlog that we have is, as Klaus and Darren have attributed to, stands at EUR 13 billion as of the June 30th.
You may recall that in the first quarter, we had EUR 4.2 billion of new orders, and that was a record quarter for NKT, and we stood also at a record balance of EUR 13.5 billion. So the EUR 13 billion is very close to that. You see very well the development over years. When we look at this EUR 13 billion backlog, we say when we look at, for example, the 2028 ambitions, we are very confident of being able to deliver on that. When we look at the 2030 ambitions, we are very confident, but we are not quite sold out. So there is still a little bit to top off there, but we have plenty of time to do so.
What this backlog also gives us is visibility that is starting to allow us to plan and to think about how to enter the next decade because the backlog also has turnkey projects well into 2034, as Darren has mentioned. Not just on the revenue side, of course, this backlog gives us confidence on the execution side, like Klaus also mentioned, and therefore on the earnings side of the equation. If you look then at the quality of the EBITDA and the bridge again between 2026 and 2030, then there are several other elements beyond just the volume and market approach that we saw on the revenue line. Here we see some impacts that are transversal across all three business lines, all three business lines contributing to it.
But you see in this graph, obviously, that the transmission business line has an order of magnitude which is much higher than the others. That is something that obviously we know, we did with also with intention, and is part of what is supporting the EUR 900 million. But if you look across all three, the addition of capacity has a certain volume effect. We are also, as all three business lines reported, working under the Excel umbrella with a lot of excellence programs that help with the efficiency and managing our costs in a better way, making our costs more visible and planning to them. The combination of these two things creates a lot of economies of scale.
What is also inherent in how we have invested and chosen to invest it, and Carlos alluded to it, is that we are investing in our own factories. We are also getting, within these economies of scale, economies at site. So we have, through also the way that we are focusing the portfolio in the factories, we are looking for a more limited part of the portfolio to have a higher degree of throughput through the same real estate than maybe we have had in the past. Okay? All three of those effects contributing across the business lines. Then Darren also mentioned installation part.
Eleonora, not just the scale of her, but the capabilities of her transiting faster, loading faster, being able to bundle at times, gives you not just a competitive advantage at the time of tendering, but at the time of execution, the ability to be able to plan your operating days, your stages, your voyages, to the points that you can find efficiency from the original sold plan. Right? So maybe we can cut down 10%, 20% of ship days. We can maybe compensate for weather events in a much better way. Ultimately going to this concept that we live every day of how we manage risk. The colleagues have mentioned that.
It is in our philosophy, it is also in our works process, but it is also from a financial point of view, what we are managing in terms of looking at visibility towards what is the result that comes out of the projects. So it is our duty as a function to identify. Our worry is to put the data so that the worry can be conceptualized in a financial way, and then what are we going to do about it? What is going to compensate one effect with another? What are the opportunities that are going to outweigh the risks that unfortunately have passed into actual cost? This is the discussion, not just that our function has, but that having more capabilities allows you to have a more broader type of optionality going on.
Very important also, and Darren mentioned it, within our backlog, we also have a richer mix, on the price side, than maybe we have had in the past, having to do with the phenomena that happened 2023, 2024, of an acceleration of the energy transition, where we built our backlog. Being ready with the capacity also allowed us to have a way of having an improved economic position at the time of the tendering. Those are the effects there. If you also look for Grid Solutions and Accessories and Distribution, for different reasons, the market expansion and the proximity to the customers we are seeing does translate into a bit more pricing power. A bit more selection of the planning of what products go to the customer to optimize, over a cycle, the profitability of your assets.
Now, let me turn to the returns that we have achieved and we are targeting. This is a metric that as a CFO, I am particularly pleased that we have had a laser focus on in recent years, and that is the return on capital employed. Let me take you to 2022. At that time, we were delivering a return on capital of 7%, below our cost of capital. No one can be happy with that. With the visibility that we had at that time, and at that time we were at a Capital Markets Day, we were launching the ReNew BOOST strategy, and we said, "Okay.
In the journey that we have ahead, we think we can target 12% return on capital for 2025." Quite frankly, I think we have said it before, honestly, we did not expect the energy transition acceleration on the transmission side for which we had plans for, to have to be triggered so quickly. I think that is a little bit the nature of having that ambition that today maybe does not look so lofty. At that moment in time, that was the next step for us. What I am happy to say, report, and you see it here in the graph, is the performance that we have had since. Not only did we already pass that target in the first year, but we also actually delivered two times the target at 24%.
Of course, you see also that we peaked here at 35%, and I will show it in the next slide, that has to do with the phenomenon of a heavy prepayment scheme, where a few customers with long-term frame agreements leaned in to help what already Klaus and Michael Yong mentioned, a way to help us lean in into the European acceleration of the supply chain for the energy transition. That is a working capital phenomenon that we do not count on to be a recurring event. What you will see is that we, of course, are confirming above 20% ambition for 2028, above 22% ambition for 2030. For us, this is, going back, I think, to one of the questions already posed, this is an indication of the type of business cases and the type of future return on capital that we want to target for the company.
We have the effect here of the shape of the curve. This is really now the EUR 2 billion investment program and the scale of that compared to the scale of the company, where you see it visualized. Again, with the working capital effect at the beginning, then a trough where a lot of investments in 2027 are going to come online. Therefore, on the fixed asset side, a lot of assets coming online, then with the required ramp-up that has to happen from the productivity and the returns then coming to a level of above 20, 22%. Let's take a look at the cash flow. This is, I have to say, where going back to the comments of Klaus, where we're becoming a stronger company.
From a cash flow point of view, we also have to say we're going to start soon a new chapter of cash generation for the company. That is excluding any other type of investments besides what we've already announced in part of the Charging Forward strategy. Let me walk you through why we say that. The green line represents EBITDA and the reasons, the target itself, and the reasons behind it, I've already covered. The blue line is our CapEx, with the bulge being the EUR 2 billion program. What you have here on the right side of your screen is the working capital profile, where we have been releasing cash from working capital for quite a long time, actually, for almost six years.
Which is in itself remarkable. This is not something you should become accustomed to because we do need a healthy level of working capital to do so. A big part of this has been part of us just getting fitter. Particularly on the distribution side, we've tightened our belts on the working capital side. The order of magnitude and the effect here is really driven by the transmission business. You've probably heard us say a lot on the working capital side of transmission, it really plays on the mix of the backlog, the mix of the projects and execution, and the milestones that they're in, and how they may move. Every milestone is not the same scale. So this is something that can be a bit choppy, from a quarter-to-quarter perspective and over the years.
But if you bring the working capital here into the effect and you say that we are at a generally healthy level moving forward, you will see that the big delta that is growing between our EBITDA is much higher than our CapEx. This is where we see that we will be generating significantly more cash flow than we have been doing in the past, in the periods ahead. Let's look at the discipline we will have in deploying capital and how we're going to address the additional free cash flow that we're going to see in the future. As we released this morning, we are also today declaring four capital allocation priorities. These for us are we look at these, that they have to be absolutely aligned with the strategic direction that we have to take in the company.
Before I get into the details of this, we are, as Klaus said, a pure power cable company with intention, with a focus to serve electrification of society with the three main fundamental economic drivers. If there is a trigger event on Darren’s side, if there is another acceleration of the TSOs in Europe, they are asking for more volumes. Our first instinct will be to invest. Yes? But as we look at the opportunity cost of investments and potentially also the M&A pipeline ahead of us, we will always start with the discipline of our capital structure. We are confirming and re-emphasizing a target leverage of 6.0 times debt over EBITDA. We also will strive to maintain an investment-grade perception with our banking partners.
This is not a rating, but it is under the same exact considerations that go into a rating that we will stay within an investment-grade level. We will continue to enjoy the strong balance sheets that we have today, a robust balance sheet to cater for the project business, potentially working capital swings that may come from them, because even though we wake up worried and we manage risk, and let's say we've learned to manage risk at a high level, at a professional level, it remains a risky business. Therefore we want to have a strong economic foundation on which to stand for, to have all operational options in front of us. We will then look at value-enhancing investments, both organic and M&A. Here I underline the words used by Klaus. We will remain very disciplined. We will sell it before we build it.
We will be selective in the type of investments we will make. They have to have a clear earnings view, and we will favor those that have a strong cash or de-leveraging profile. If these investments stack up just a bit more than the zero leverage we may have for the year or over a two-year period, we will also look to take an exception from a capital structure as long as we have a very fast de-leveraging profile. Also with a relatively low risk perception from our side, it will bring us back into the guardrails of a capital structure in a quick and swift way. For those years, we feel that we are going to generate enough of a free cash flow that now we have to look at reactivating our dividend policy.
We will start at a minimum of 20%, and we will look for when we are generating meaningful free cash flow that under today's point of view, can be as earliest as 2028. In those years where maybe the stacking up of investments is maybe a bit lower than we would expect, and we have quite a bit of cash sitting on our accounts, we will look to give that cash, which is the shareholders' cash, back to the shareholders. But maintaining the or extraordinary dividends. All this with yet another disclaimer, that if we have a very, very large investment ahead of us, whether organic and the EURO 2 billion program, if you looked at the scale of NKT, in fact, rewind the tape to 2022, would fit the bill for that.
Today may be a bigger number, or if it is M&A, we will apply to that, but we will not neglect the opportunity only because of our principles here. Now, I mentioned M&A, so let me touch upon that just a little bit more. Opportunistic and discipline, two key words that Klaus has mentioned, and that is the starting point. I will add, it has to also have a clear value creation path. It is not that Klaus neglected, he left me to say it with a little bit more emphasis. We will stay selective. We will look at targets that allow us to deploy what we do best. In the heart of our portfolio, potentially a very close adjacency. Darren mentioned potentially installation. It could be in that area.
Somewhere where we can leverage our industrial prowess, our ability to add capacity, to optimize capacity, and chase efficiencies, like Carlos mentioned. Potentially, we are also looking at vertical integration. Again, there to better manage our end product and offering to our customers, but also to de-risk and potentially also have better pricing and inflationary control on certain aspects of our supply chain cost. Carlos mentioned the buy and build concept, of which SolidAl is an example, and I will go into that in a second. We like that concept. It has worked for us. It can be another model that we pursue in growth. One absolute must is harvesting synergies. With any M&A that we do, we will give the target, but we must deliver on that.
That goes not just obviously to bring the economics here and preserve the long-term return on capital target, but it will go to our credibility. Potentially, we may do more in M&A, and if we do that, then we have to deliver every time. Lastly, we will look at target that will be of value to if that target can give us a platform for growth, can give us a pathway to meaningful market position. This is something that also comes into the equation. A good example of applying these principles is the SolidAl acquisition. Let me touch upon that in just a few moments here. I think you have picked up by now we are quite pleased with this acquisition. SolidAl acquired in the summer of 2024 and fully integrated by the end of 2025, and it is now our Esposende site.
Very strong strategic fit, covered also by Carlos. It added medium voltage and high voltage capacity at a moment that the grid demand was really growing, and it allowed us to activate the optionality of building it. That came in that we believed in the market, we know how to do it, but also it came because the good colleagues of SolidAl we found were very good cable makers. So we have teamed up with actually very few people from NKT and many people from SolidAl to actually do this acquisition. In a way, we came in a little bit as owners that said, "We recognize your talent. We recognize the opportunity in the market. Let us trigger this expansion in a very quick way." Then on the performance, which I am very pleased about, we gave ourselves a recurring EBITDA synergy target of EUR 7 million.
By the end of this year, we will have accomplished EUR 9 million, and that EUR 9 million is what we expect now as a conclusion of the acquisition. That is a 29% improvement over our target. Most importantly, if you look at the economics from the beginning to the end, including the buy side, and by the way, that came into the decision, how we would approach this acquisition and the potential value potential of the acquisition. If you look at the buy and build, we acquired at 9.4 times, as you may recall, an enterprise value of EUR 192 million.
We are now, upon the ramp-up of the volume there, per the business case, going to deliver 4.4 times that enterprise value over the new EBITDA, and the enterprise value adjusted for the cost of the investment. So a model that we've practiced, we like, we may use in the future.
Now let me just take a few words on sustainability. I think you all know that our purpose, and you see it in our logo, our purpose is that we connect a greener world. That's very important for us. It's part of our values. It's very important actually for being competitive in the work and labor market, and the retention, and making sure that the good experience that we have in the company feel a sense of belonging. Because our people actually are our greatest assets, even though we don't quantify them on the balance sheet. We're also proud that we have a good performance today. We've been recognized by many of these certification bodies. But in 2026, we got also an extra special award from the Corporate Knights, an organization that is judging companies across the globe on their sustainability efforts.
Not only did we make the top 100 list, but we made it on the position number 13. Yes, we checked, we read through the list, and we see if we could recognize other names. Maybe far down the list there might have been another cable maker. So we're also very proud that in our industry, we are leading the way. But on top of the rankings and recognitions, we have a meaningful progress in 2026, both on the handprint side and on the footprint side. On the handprint side, maybe explain a little bit what we mean from that. It is the positive impact that is created by our cable systems in enabling green energy.
That is, for example, the Champlain Hudson Power Express that we've mentioned several times, connecting hydropower to a demand, which is New York City, offering 20% of those citizens hydropower. The Dogger Bank Wind Farm. Wind farms by its nature, renewable, but our export cables are bringing that to land and connecting it to the grid, enabling it to connect to 2.4 million U.K. households. This 7.7 million households, and I think you interpreted it in population of people, and I Googled it last night. It's like if we had power to the Netherlands, Morocco, or Malaysia, one of those three countries. That's how much our cable systems are leaving a handprint on the world. On what is in our scope of responsibility of the value and supply chain, it is our footprint.
Here, just stressing what Dennis already introduced, we have a first zero carbon factory in Nordenham. The colleagues tease me because I said, "Well, why is this such a big deal?" Because I had read it as net zero, that maybe we had covered our carbon footprint with other compensating measurements, but actually this factory's producing zero emissions itself. Something that does hit the pride. As already mentioned by Claes, under the good labor of our procurement team, under Will Hendrikx, we have secured meaningful long-term agreements where there is a strong decarbonization element to it. All of our factories are now being fed with renewable energy, and a big part of our copper and aluminum supply chain with our main partners also come from lower carbon sources. As I wrap up, I would like to offer some takeaways here.
First and foremost, we are confirming our ambitions for 2030. This is 7% growth year-over-year, starting in 2024 until 2030. We have the ambition of delivering more than EUR 900 million of EBITDA for NKT and achieve a return on capital of 22%. Our backlog gives us confidence, visibility in achieving this ambition. It gives us the ability to plan, the ability to execute, and to plan also financially around the earnings. As it comes online, as I already mentioned, it will start a new chapter of cash generation for the company, one that we will now look at with more emphasis along the principles, the capital allocation principles that we published this morning, making sure that we fund growth in a disciplined way, we maintain a strong balance sheet, and we reward shareholders with excess cash.
Finally, before I leave you, I want to touch again on the equity story that Klaus introduced. Again, we are a fully focused power cable systems company serving the needs of society on electrification with a strong customer affinity, as we heard from the customer testimonials, and with good long-term fundamentals with the need for more electrification adoption by society, the renewable of the grid, and the rollout of renewable energy. We have a focused portfolio that is differentiated with technology and our project capability, including our way to install. The project capability is not just on the transmission side, as we heard also from Raphael and from Dennis. The lean project approach at the substation, at the grid, on the high voltage and medium voltage portfolio makes a difference. We have a solid order backlog giving us a lot of confidence.
We sit on a robust financial position, as I've already mentioned, and more importantly, we're powered by more than 6,500 experienced professional and risk-adverse colleagues. Also importantly, we build it and we deliver ongoing homework. This is a company that can do both at the same time, and maybe we're particularly good at that. We deliver. Last but not least, with the discipline of a clear capital allocation policy. All these points following under our Charging Forward strategy, so an aligned strategy and plan internally to deliver our 2030 ambitions. Clear, compelling, and disciplined value creation. Thank you very much.
Thank you, Michael. We are ready for the final Q&A session, so I will ask Claes also to reenter the stage. We follow the same procedure. Raise your hand, state your name and company, and through the webcast you are able to wire the question tab to ask a question as well. I think we start with Kristian up here.
Kristian Tornøe Johansen, SEB. Two questions. The 22% target, return on capital employed, does that also apply for your M&A targets or should we interpret it as, say, a hurdle rate? The second question on potential vertical integration as part of your M&A strategy. Can you elaborate a bit on what areas makes the most sense?
Sure. Absolutely. I think the 22%, that is something that we look over the cycle, over a strategic period with a mix of investments. As you well know by the nature of acquisitions, adding goodwill and the timing of cash flow that comes back from an acquisition, timing plays a big role on whether an acquisition can give to a certain return on capital target at a certain moment in time. I would say that on a standalone basis, just looking at acquisitions and the typical synergy package, that is going to be tough to do. We are not going to be limited by that, but we are not only going to do that. We will look for a package of investments, including M&A, that should, on the cycle, give us that long-term return on capital.
On your second question on the vertical integration, I think we will look at where we can get the most meaningful economics, but also risk management, inflationary control power from the package. I think metals is becoming much more interesting than in the past, so we are taking a look in that direction. But it can be something maybe smaller, maybe more critical to maybe a very specific technology that we already acquire. It may be part of the subcontracting world that installation is managing or even certain aspects in the Grid Solutions space. I do not know if you want to add anything.
Claus.
Claus Almer from Nordea. Michael, I think you said dividends as early as 2028. Was that correct, you heard?
I did, yes.
You already net cash, so are you planning to do something big in 2027?
Nice challenging question for a rookie. Look, I think it is more directed at the discipline of our planning than anything else. Yes, we sit on cash today, but a lot of that cash that we sit on today is still owed to our projects. It is still, let us say, a working capital effect. We are really guided by can we support CapEx profile moving forward today's EBITDA and cash generation? We will not get to that point until safely said 2028, right? Now 2028 dividend can be on the back of a 2027 result, right? I think we are more months away than years away from that potential.
Okay, then your 2028 and 2030 targets, which is a minimum target.
Yes.
Which means significant upside potential obviously. What will be a triggering event for you being more precise on those targets than just that open-ended structure?
Also a good question. I think 2028 is something that obviously when we are talking about guidance in a few months for 2027, I think we will have to give a little bit more color to 2028 for you. But still today, with the confidence that you can expect that as the target and the minimum today. I think that is a good question. I think it really depends on the evolution of future backlog, the evolution of the delivery of the business lines. While we are confident that we execute, it is still the first pillar of our strategy. It is still not 2027. We need to see how we come out and how we ramp up the production along those lines.
I think giving confidence on that basis, we will then shore up our planning towards 2030 and then see what is meaningfully to give more color and upgrade than what we are saying right now.
Thanks.
Akash. Just behind Claus.
Yes. Hi. Akash from JPMorgan. A couple of questions from me. First one is just a follow-up of dividend question. I think you also talked about share buyback in today's press release. Given you are not going to pay dividend before 2028, could share buyback come before dividend or will it be after dividend?
Not likely. The reason I refer to the capital allocation principles and priorities that we have. We will first look to reinitiate our dividend and have it stable before we are going to look at extraordinary dividends or buybacks.
Thank you. Secondly, maybe an update on this EUR 2 billion CapEx plan for 2025- 2028. If I recall correctly, there was some inflation issues back then, and I think you had some unexpected development on foundation, and there was some extra need for CapEx in constructing this new tower. Now we see inflation coming back after this crisis in the Middle East. Some prices of diesel are going through the roof. Just focusing on this EUR 2 billion, is there any upside risk that for the same amount of machinery and physical work, you might need to end up paying more than EUR 2 billion?
No, more than. We are at a stage right now of the developments of the projects themselves, of the procurement of what is required to address that spending, that I think we are very confident that that EUR 2 billion is a ceiling for us on the capacities and ideas that are known to you today. I was smiling because our head of investment, that you will hear for in a second, is in the room and he might have a little bit of a different target.
No, I just want to confirm what you said, Yong, and you can speak to him also as we go around, but of course, the EUR 2 billion CapEx program is more than only what we have here. Just looking at the majority of this, both are the projects looking at the Esposende expansion, but also on the Karlskrona expansion, are in a state that the open ends of this from a planning perspective and the choices to be made do not speak for any extensions or different choices. This was part of the, let's say, up adjustment of the original investment as well.
Secondly, I think this is what you said as well, from a contracting perspective, we are in a firm enough position and the pace and the progress point of view right now, so that the variation risk towards coming above the EUR 2 billion remains very small.
Casper?
Casper Blom from Danske Bank. A question regarding working capital. Michael, as you showed, you had a lot of tailwind in the last couple of years from prepayments especially. Now we look to you guys ramping up activity on all of these new investments. Should we expect that requires that you put some capital at work and that we should see negative working capital developments the next couple of years? Related to this, the very large backlog that you have today, it is my impression that it is so big that it can almost be a little bit of a challenge from a commercial point of view to pick up shorter-term projects.
If the backlog was to come down to, I am looking at Claes now, to maybe his sort of sweet spot in terms of having commercial agility, should we then sort of expect that there could also be a negative impact on the working capital here as prepayments are a smaller part of the balance sheet going forward?
I think the effects that you are suggesting with potential these developments commercially are happening, that is the reality that we have to manage. So that could happen. I do not exclude that. I think that is also part of why in our approach to the capital structure, we do have to cater for the flexibility that to win commercially, we may have to take different types of cash profile structures in the projects. So I think that is how I would comment on that. I think on the ramp-up of activity, which was the beginning of your question, I think if you would look at only our, for example, Carlos' investments on the distribution, yes. As you ramp up activity and volume and you have to hold to be responsive to a customer a certain amount of inventory days, then there is a buildup of working capital.
Now, if you are looking at it from the big picture of NKT, the order of magnitude now of the effects of the transmission business line and the working capital movements with those projects are at such an order of magnitude that, with all due respect, Carlos, the movements of working capital coming from the distribution business, not only are they more manageable, but they are in sort of the zone of the flexibility that we anyways have to keep for the transmission business. So that does not move the needle. So it is really a story about how we are going to manage the working capital on the transmission side.
While there could be a logic that customers really leaned in at the moment that they needed half a decade or more capacity to be locked in based on their own plans, and we saw this effect that there was a leaning in to help us invest on the prepayments it also does not suggest that it will go completely back to zero or how it was in the previous decade. I think it really depends on, and I think here is where the power of that we will be the first and last call because of our ability to deliver complex projects, that maybe there will be still the possibility of a richer prepayment scheme there than one might expect. And in responding to you, I am also kind of giving a message to Darren to make sure they stay up.
Yeah.
I do not know if you want to add anything.
No, but I agree. Also under the control of Michael, of course, it is true that we are at times victims to our own success in terms of order intake. With the backlog that we enjoy for the moment, also capacity is therefore also limited. Obviously if that backlog comes down just in nominal terms before we get the next order intake, I think you could see an effect on net working capital along the lines that you said there, which is entailed into the comments by Michael. This is also the natural fluctuation. It goes up when you have order intake. We enjoyed that in the first quarter. I think Michael was misquoted in the second quarter with the order drought for NKT in the second quarter. These are always the normal swings up and down.
Maybe the last question here is from the webcast. It is from Marco Melo from Nordea, and the question is: What is your view on the hybrid bond? Will it remain as part of the capital structure in the future?
That is a good question. The hybrid bond, if we are going to have over a long cycle, let us say, not as high investment program as we had very recently, then you would argue the hybrid bond does not make much sense. On the other hand, it gives us some flexibility in our planning overall. It could also be a tool for potential, a briefer strengthening of our capital structure. I am not going to give you a very clear answer on it because we do not want to take a firm position on it because we preserve to keep the flexibility of some of the benefits that tool provides for us. Strictly speaking, it is not that we need it for the health of the company.
Okay. Thank you. Thank you, Claes. Thank you, Michael. You are welcome to leave the stage now.
Yeah. Thank you.
I really take the honor. I think my job turns really now into the master of ceremony. This also then concludes the Q&A. It actually also concludes this morning presentation, and this also concludes the live webcast. So I would like to thank every one of you who had listened in via the live webcast.