Welcome to the 2025 full year results. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now, I will hand the conference over to the speakers, Julien Hueber, CEO, and Vincent Piquet, CFO. Please go ahead.
Thank you. Good morning, everyone, and thank you for joining us today for Nexans' full year 2025 result call. This is Julien speaking. Let's start as usual in slide two. Short disclaimer: noting that this presentation contains forward-looking statements subject to the usual risk and uncertainties. Moving to slide three. Before diving in the presentation, I would like to officially welcome and introduce Vincent Piquet, who, as you know, recently joined Nexans, our CFO. Nexans brings a wealth of experience from the automotive and industrial sectors and was previously CFO of Ampere at Renault Group. I am very pleased, and we are all very pleased to have you on board. He's fully already engaged with the teams and deeply involved in the preparation of this result and our outlook.
You will, you will, of course, have a chance to hear from him in a moment. So before we move into the result, just a brief technical clarification. So in compliance with IFRS 5, the industry and solution businesses are now classified as discontinued operation in the 2025 consolidated financial statements. This is reflected both in 2025 and in the comparative 2024 figures. Let me now walk you through the key highlights of our 2025 performance. Let's move to the result. 2 slides, yes. So 2025 was a pivotal year for Nexans, marked with an excellent financial performance. We have reached a major step in our portfolio rotation, fully refocusing the group on electrification, and we delivered a strong set of results across all key metrics.
The group standard sales, if I start by this, reached EUR 6.1 billion, with an organic growth of +8.3% year-on-year, well above our midterm guidelines on demonstrating strong momentum across all our electrification businesses. The adjusted EBITDA amounted to EUR 728 million, representing an adjusted EBITDA margin of 11.9% of standard sales. Excluding other activities, which mainly consist of Metallurgy, our electrification, organic growth and EBITDA margin were even stronger, with 11.6% organic growth on a 13.3% adjusted EBITDA margin. The cash generation was also very solid in 2025, with a cash conversion of a ratio of 47%, underlying the quality of earnings on strong cash discipline across the board. From a capital efficiency standpoint, ROCE reached 21.3%, confirming value creation power of our business model.
Finally, we ended the year with a sound balance sheet with a leverage ratio of 0.36 times. Vincent will come back on that later on. At the same time, we continue our M&A activities with two major acquisitions: the one in Canada, Electro -Cables, that we conclude in December last year, and the one in Spain, that we also concluded in June mid-year, 2025. Moving to page seven. This slide illustrates the consistency of Nexans' performance over time. The Adjusted EBITDA has increased steadily, reaching EUR 728 million in 2025, with a margin of 11%, as I just explained, compared to 10.3% in 2024. This result illustrate the group's strategic focus on operational excellence, selectivity and value growth driver.
The free cash flow reached EUR 344 million, with a cash conversion ratio of 47%, up significantly compared to the previous years and higher compared to our midterm guidelines. A strong performance that illustrates the cash generative nature of Nexans' business model, as well as the strong cash discipline across all business units on the working capital favorable evolution. The ROCE also continued to improve, reaching 21.3%, in 2025, compared to an 18% in 2024, on reflecting disciplined capital allocation and a strong operational execution. In a consistent manner over the years, Nexans' transformation is delivering sustainable growth, improving profitability on strong cash generation year after year. Now moving to page eight.
So as a reminder, during our Capital Market Day in November 2024, we clearly stated our ambitions to become a global electrification core player, fully focused on our three core businesses: transmission, grid, and connect. In 2025, this year marked the final step of our portfolio rotations, and as announced, we have entered into exclusive negotiation for the disposal of the last part of non-electrification, which is AutoElectric, our automotive wire harnesses activity. This transaction is expected to close mid-year 2026. With this transaction, Nexans completes its strategic refocus. Now it's fully dedicated to electrification with a simpler, more focused, more resilient business profile. Moving to page nine. So alongside with the divestment we just explained and you've seen in 2025, we continued to pursue targeted acquisitions to strengthen our electrification footprint.
In 2025, we complete 2 acquisitions, representing around EUR 260 million of cumulative full-year sales. The first acquisition, Electro Cables in Canada, reinforce our positioning in low-voltage cable on high-added solution. It brings attractive growth, a robust profitability profile, and supported by a strong industrial footprint in Canada. This acquisition fits very well with our connect strategy and offer clear opportunities to deploy our operational discipline. The second acquisition, RCT in Spain, in Zaragoza area, strengthens our expertise in flexible fire safety solutions, especially in data center and critical buildings. 2, fast-growing on high value-added segments that we're targeting. The new industrial capacity that was announced at the time of the acquisition is now up and running and delivering profitable, and we are very proud on the satisfy with the new team that have effectively put in place this new machine, and capacity increase.
What is critical in both cases is not only the asset acquired, but how value is created after closing. In line with our approach, synergies are being deployed for the rollout of our priority SHIFT program , ensuring smooth integration, execution discipline, and value creation. Taken together, this acquisition illustrate our Nexans' use of M&A to reinforce its electrification pure player positioning, expand selectivity in key geographies, and replicate its value creation model in a disciplined and repeatable way. Now, moving to slide 10 regarding the sustainability. So let me focus on sustainability, which is fully embedded in Nexans' operating model and group strategy.
In 2025, and especially on our decarbonization trajectory, Nexans pursued the same trend and exceed its midterm target for Scope 1 and 2, with -49% of CO2 emissions, mainly driven by energy efficiency solutions implemented on sites on significant level of renewable energy usage. In the meantime, the current performance on Scope 3 was reached following low carbon product innovations on circular material integration for our initiative, like Cable Loop, that was launched in France and Spain with our platinum customers, enable us to reach 880 tons of cable collection during the year. We will explain in the deep dive session how we will expand these solutions.
Through these initiatives, combined with the metallurgy project in Lens that will be commissioned in 2027, or another example on the partnership with RTE, the French TSO, where we have launched the first European closed-loop recycling system for aluminum. We are not only reducing our environmental footprint, but we are also reinforcing supply security and reinforcing a structural competitive advantage on the energy sector. Let's move to slide 12 on the go now deeper in the business level view regarding the year 2025 performance. So first, let me first focus on the fourth quarter, which was particularly strong. In Q4 2025, the group delivered an organic growth of 11.8%, or even 18%, excluding other activities, reflecting an exceptional high level of activity, notably in transmission and in PWR Connect.
This Q4 performance was well above our normalized run rate, supported by a combination of strong demand, high project execution intensity, and a favorable phasing effect. Of course, we anticipate a normalization of the first quarter of 2026, reflecting a more balanced phasing of projects. Beyond Q4 dynamics, the strong finish of the year further support the structural improvement of profitability, with the group-adjusted EBITDA margin reaching 11.9% on EUR 13.3, excluding other activities, which was mostly driven by power transmission and power grid, and supported by our selective approach on quality, quality of execution. Overall, 2025 clearly demonstrates Nexans' ability to translate long-term electrification trends into profitable growth. Now, let's, let's now move business by business, and I will start by power transmission, which delivered an exceptional level of organic growth in 2025.
Indeed, organic growth reached +29.8%, so almost 30% for the full year, accelerating at the 40% rate in the fourth quarter of 2025, reflecting a very high level of activity and a strong execution. Bear in mind that the last two years, we have registered an unusual high level of organic growth, thanks to capacity increase, and we should go now back to a normalized level in 2026. The standard sales of transmission amounted to EUR 1.6 billion, compared to EUR 1.2 billion in 2024. The adjusted EBITDA reached EUR 203 million, with an adjusted EBITDA margin of 12.3%, up from 11% compared to the year before.
This margin improvement was mainly driven by quality of execution on project and increased efficiency following a full year of operations at the expanded plant in Halden, in Norway. Finally, the adjusted backlogs stood at EUR 7.7 billion at year-end, including EUR 1.2 billion of the GSI project, still in phase of rescheduling with our customer. This adjusted backlog provide us a good visibility until 2028. Now moving to the power grid parts. Our grid business delivered a growth of 5.5% in 2025, in line with our midterm guidelines on confirming a favorable momentum. In the fourth quarter, organic growth was +3.5%, reflecting seasonal softness, particularly in winter-sensitive activities on project phasing. Standard sales amounted to EUR 1.3 billion, compared to the EUR 1.2 billion in 2024.
The adjusted EBITDA increased to EUR 217 million, which is up by 19% year-on-year, with an adjusted EBITDA margin of plus, sorry, of an EBITDA margin of 16.4%, which is an improvement of 226 points. This strong performance reflect our focus on operation al excellence, with the continued strength of our accessories activities, increased selectivity in high demand environments, as well as some one-off effect linked to some European renewable project that we had in the, in the last part of the year. The strong performance reflect our focus on operational excellence, the continued strength of our accessories activities, increased selectivity in a high-demand environment, as well as some one-off effect linked to some European.
Importantly, the business benefits with strong visibility, supported by multiple long-term framework agreement wins, with recent contracts such as Enedis, providing increased visibility going forward. And we, if you remember, we have communicated the wins in the contract with Enedis the coming seven years. Now let's move to slide 15, the PWR Connect business, which grow organically by 3.6% year-on-year, in line with our midterm guidelines. In the fourth quarter, organic growth accelerated by +10.9%, driven by delivery of large infrastructure on data center-related projects. Sales reached EUR 2.3 billion, which compared to EUR 2.2 billion in 2024.
The adjusted EBITDA amounted to EUR 289 million, compared to EUR 271 million in 2024, and it stood at 12.3%, compared to 13.1% last year. Margin performance reflects strong profitability in advanced offer on platinum customer, while the more conventional part of the business remain under pressure, particularly in Asia Pacific and in Oceania. Finally, the integration of La Triveneta Cavi in Italy, and the rollout of the SHIFT program continued as planned, with a strong focus on operational and industrial excellence. Again, let me remind you that PWR Connect is a contrasted segment where we have some very strong performer, both in top line and margin. Our objective is to make all business units catch up with the best in class.
We will now move to the key financial, and Vincent, welcome on board, and over to you now for the financial part.
Thank you, Julien, and good morning, everyone. Before going into the details, let me take just a brief moment to say that I'm honored to be here today. I want to thank Julien and the board for their trust. I've now been working closely with the teams for a few weeks, and I'm very excited about the fundamentals of the business and the road ahead. With that, let's start with the 2025 revenue bridge. As you can see, group standard sales increased by 10.1% year-on-year, reaching nearly EUR 6.1 billion. Growth was primarily organic, with a strong 8.3% increase, reflecting a solid underlying momentum across the group. Scope effects contributed a further 5.1%, illustrating the growing contribution from our recent acquisitions over the year, mainly RCT and LTC full-year contribution.
These positive drivers were partly offset by an unfavorable foreign exchange impact of 3.3%, mainly related to the Turkish lira and the Canadian dollar. On the profitability slide, Adjusted EBITDA increased by 27.3% year-over-year, reaching EUR 728 million in 2025, with the margin improving from 10.3% to 11.9% of standard sales. This evolution reflects the contribution of our electrification businesses, supported by growth and margin improvement. First, transmission delivered both growth and higher profitability, making it a strong contributor to the group's EBITDA improvement last year. Grid also recorded a positive year, with strong improvement in profitability year-over-year. In Connect, performance was more contrasted across regions and business units, as described by Julien.
Asia Pacific and the Nordics were slower, and the process of improving LTC's performance is ongoing, and we also have the impact of the full year versus a few months in 2024. That said, we are confident in our ability to bring LTC up to Nexans' standards. Overall, within Connect, our structural drivers performed well, while we remain focused on enhancing the profitability of the rest of the portfolio. The Connect segment includes EUR 26 million of scope effect in the full year of LTC, and the full year of LTC, versus only 7 months in 2024, and RCT with a 7 months contribution.
In other activities, the variance is mostly driven by negative one-offs recorded in 2024. As expected, Metallurgy was impacted by the U.S. tariffs effect in H2 after a strong H1, and accounts for a negative EUR 6 million of impact on a full year basis. Overall, this bridge illustrates strong operational leverage in 2025, with EBITDA growth clearly outpacing sales growth and translating into a meaningful margin expansion. Moving on to net income. As we've just seen, the starting point of the net income progression in 2025 is a very strong increase in adjusted EBITDA from EUR 571 million in 2024 to EUR 728 million in 2025, an increase of 27.3%, well above the 10.1% of growth of our top line and demonstrating our strong operational leverage.
The EBITDA progression is also the main driver of the increase in net income from continuing operations, which reached EUR 219 million, up 31.1% compared to last year. Beyond EBITDA, a few additional elements are worth highlighting. First, financial expenses decreased significantly, mainly linked to hedging effects, in particular, the evolution of the forward spread on the Norwegian kroner. At the same time, depreciation and amortization increased to EUR 253 million in 2025, compared to EUR 175 million in 2024, mainly reflecting investments in our Norway transmission plant in Halden.
Net income from discontinued operations increased to EUR 138 million, reflecting gains on disposals linked to Amer Cable and Linxeo, as well as the operating performance of industry and solutions, partially offset by an impairment on Autoelectric as we moved it to discontinued operations. Overall, group net income reached EUR 358 million in 2025, up 26.6% year-on-year, illustrating the strong earnings conversion of the group's operational performance. Moving now to cash flow and net debt. 2025 was another year of solid free cash flow generation, which reached EUR 344 million, compared to a restated amount of EUR 177 million in 2024, translating into a 47% cash conversion rate above our midterm guidelines.
This level reflects first, the strong performance of Adjusted EBITDA, but also a strict cash discipline, as shown by working capital evolution and also helped by above average down payments in power transmission. CapEx amounted to EUR 383 million, mainly driven by power transmission as we continue to execute on the capacity expansions decided in prior years in both Norway and Charleroi, in Belgium. Dividend and others includes the cash impact of our employee share buyback program on top of the dividend payment, and the M&A column mainly reflects the contribution from the closed acquisitions of Electro Cable and RCT. It does not include the impact of AutoElectric, as the closing of this transaction is expected mid-2026.
Change in discontinued activities relates to the divestments of Linxeo and Amer Cable, as well as a reclassification of our automotive activity under discontinued operations in compliance with IFRS 5 standards. As a result of these transactions, combined with strong cash generation, net debt decreased significantly from EUR 681 million at the end of 2024 to EUR 266 million at the end of 2025. As you can see, overall, the company is in great financial shape. Let me now spend a moment on our financial structure. At the end of 2025, Nexans benefits from a very solid liquidity position. We have significant cash on hand, complemented by committed and largely undrawn credit facilities. This gives the group ample headroom to operate comfortably.
Our debt structure is well diversified and fully fixed rate, which protects us from interest rates volatility and provides good visibility on financing costs. Importantly, we have no material debt maturity before 2027. From a leverage perspective, Nexans remains very conservatively positioned, with a low financial leverage ratio of 0.636 times, 0.36 times. This trend is also reflected in our credit profile with an S&P BB+ rating with stable outlook. It confirms that the group has the financial firepower to pursue targeted M&A, growth CapEx, and continue to deliver shareholder returns. In fact, shareholder return is a core component of our value creation model. Over the past three years, Nexans has delivered a total shareholder return of 59% and 250% over the past six years. This performance reflects the consistency of our execution over time.
As shown here, the dividend per share has increased steadily over the past years, reaching a proposed EUR 2.9 per share for 2025, an increase of 11.5% compared to 2024, and another historical record. This dividend growth is anchored in the group's improved profitability, strong cash generation, and disciplined capital allocation. Our approach remains very clear. We aim to reward shareholders while preserving flexibility to invest in our growth and maintain a sound balance sheet. Looking ahead, this discipline remains a key focus area of focus. Our dividend policy is fully aligned with our financial trajectory, with a target payout ratio of at least 30% by 2028, while remaining consistent with our leverage and investment priorities. And with that, I now hand over back to Julien.
Thank you, Vincent. So let me now turn to our outlook for 2026. So we expect for 2026, the Adjusted EBITDA for a full year to be between EUR 730 million-EUR 810 million, and for the Free Cash Flow to range between EUR 210 million and EUR 310 million. We expect the first half of 2026 to be softer than the second half, mainly due to project phasing across different segments. This guidance exclude the contribution of a non-complete acquisition and does not assume the execution of a GSI project in 2026. Overall, and in conclusion, I think that you can see that from the combination of our 2026 guidance on the dynamic nature of divisional overview, that we are excited for the future.
We have successfully transformed into a high return business with a robust balance sheet, focused on electrification as a global pure player. Nexans will continue to operate with a discipline financial framework for the benefit of its shareholder, employee, and the broader economy. So before moving to the Q&A, I would like also to remind you that we will host our business deep dive sessions today, shortly after this session at 10:30 Paris time. We will go deeper into our value creation model, market and strategic priorities. We will provide you an additional insight into how we are executing on roadmap. So with that, thank you all for your attention, and with Vincent, we'll now be happy to take your questions.
If you wish to ask a question, please dial pound key five on your telephone keypad. Due to the high number of participants, please limit the number of questions. If you wish to withdraw your question, please dial pound key six. The next question comes from Daniela Costa from Goldman Sachs. Please go ahead.
Hi, good morning. Thank you for taking my questions. I was hoping to ask two related things, but the first one, just can you clarify in the guidance on EBITDA between the bottom and the top end? You're very clear that you've taken off GSI from it, but do you have any contract mitigating the undercapacity that you would potentially have from not executing that? How much is included in the bottom end and in the top end of guidance? I'll start there and then I'll ask the follow-up.
Hello, Daniela. Thank you for your question. Well, clearly, yes, GSI is not included into our guidance. Even though we are, as we have communicated early January, that this because this project is risk deal, that we are at the same time launching specific actions, both industrially speaking, but as well commercially, in order to offset partly the GSI element. So we are actually quoting different project on MI on a part of it. Of course, I cannot display precisely because we are still quoting, and we don't know precisely when it will start, but a part of it is inside the guidance.
Just to be very clear, on the EUR 730 at the bottom end of guidance, that includes part mitigation on things that are not yet in the backlog, but in tendering?
Exactly right. Yeah, we're still quoting on some MI projects on, on the, on those. We have considered some of them, we have a good chance to succeed, but the timing element is not yet clear, so we will... we have included some of it, but not fully.
The top end of the guidance is a full compensation of GSI or not, also not fully?
So the guidance is not only about transmission, it's also about different elements. Typically, the restart of the European business that you know has been relatively soft in 2025. We consider some elements of restart of activity, specifically in H2, softer in H1, stronger in H2, for restart of the business, and that's mostly impacting the connect business.
Mm-hmm. Okay, got it. And then just the follow-up also in transmission. You mentioned that you will have, I guess two other things, normalized level. Just wanted to clarify, what should we interpret it as normalized? Do you think transmission business, top line wise, can be up or given taking off GSI? And also, can you clarify your comment on the first half versus second half EBITDA? How should we think about the first half margin for transmission, given that's potentially the mitigations? I would imagine if you're still tendering fall more into the second half, what type of profitability should we think about for between the two halves?
Okay. So overall, we foresee an improvement of our EBITDA during the year 2026 in transmission, with indeed a stronger increase in second half due to the reason we just explained about still quoting for the MI parts. That's basically that, why we see a softer now in H1 and stronger in H2. That's basically maybe, Vincent, I don't know if you want to add anything.
No, no, I agree that the timing of the quoting makes it a bit second half loaded. And beyond transmission, also, the other businesses, we feel very good about Grid and Connect, is, as Julien mentioned, a bit dependent on the improvements of the European market. And we're being cautious in terms of what will happen in the second half. And then finally, I'll mention in terms of explaining the range of the guidance, there's a metallurgy which is quite impacted potentially by tariffs volatility in the U.S., and so we're trying to take that into account in the range we're proposing today.
Okay. And you can't comment on transmission first half versus the second half of 2025, for example, just to help us understand how much is underutilization in the first half could mean?
In 2026, you mean? The underutilization of the MI line will be manageable in H1, as we're basically working to do some cost actions. And then in the second half, we're planning on winning a number of short orders and new orders that will fill the line.
... Got it. Thank you. I'll go back into queue. Thanks.
The next question comes from Akash Gupta from JP Morgan. Please go ahead.
Yes. Hi, good morning. I have a few as well. The first one is on your cash flow bridge. So when I look at your full year cash flow bridge, you have -EUR 371 million for M&A and disposals, and if I compare it with H1, you had EUR 613 million in inflows from divestments. So I wanted to ask, this EUR 370 million, EUR 371 million is only what you paid for two deals and not the disposals, so now the disposals have accounted separately. So that's the first one, to ask what that EUR 371 million in the cash flow bridge is.
You got it right. We've separated the disposals from the acquisitions, and the way you explained it is the correct way.
Thank you. And then, my second one is on M&A. Clearly you have been quite vocal about your M&A ambition in the press release, but I wanted to ask what are the area of focus? Maybe if we can talk about the regions and business areas. And, can you also talk about the hurdles? Because some of the growth business could be quite expensive compared to where you trade. So, do you have any hurdle rate that you would like to highlight on which acquisition you want to go ahead and which you will not? Thank you.
So, so we, we will deep dive a lot on the M&A on the second part, on the deep dive session just after. But, but basically, our strategy remains very aligned what we said end of last year. So there is. It's based on three elements. One, one part, one pillar of the M&A strategy is linked to, let's mid-sized companies, small to mid-sized company in country where we're already here, you know, to create industrial synergies in some market we are already present. Second pillar of the strategy is based on, on, on slightly bigger size of M&As in new geographies. And the third one is based on, let's say, adjacent to cable, so basically could be anything like accessories. So that's our strategy, and we're fully in line with.
This doesn't change, it's the same strategy. Having said that, today, we are looking specifically at some geographies like North America. You know, the example of Electro we did in December is a good example, but we are looking for other type of target in North America, as well as other part of the world, could be Middle East or the other parts.
Thank you. And lastly, a housekeeping question. Depreciation and amortization last year was EUR 253 million, and I believe it might be including some one-off there. It was EUR 175 million in 2024. Can you tell us what shall we expect in 2026 for D&A? Thank you.
Yeah, it'll stay in line. We're continuing to see the impact of the investment we've made in Norway, especially, and that's hitting our P&L. From a cash standpoint, the major outlays on par, in line roughly with what we've had in 2025, are driven by the third vessel, as well as the investments in Charleroi, in Belgium, the land cable plant.
So roughly EUR 250 million EBITDA in 2026?
Roughly.
Thank you.
Thank you, Akash.
The next question comes from Lucas Ferhani from Jefferies. Please go ahead.
Thank you. The first one will be on the free cash flow. Just can you give us an idea of what do you expect the conversion could get to? You're still investing quite a bit in 2026, 2027, and it's running at 30%+ at the moment, but what could it get to the EBITDA conversion of free cash flow, you know, in the next few years as the CapEx kind of comes down a little bit? And, the second question was just on the grid margin. Obviously, it's very, very strong in the second half. Can you give us an idea of maybe what's the normalized level? You do talk about, you know, some kind of pull forward of activity or some one-off effect in there.
Kind of how should we think about that margin going forward? Is 17 something you can do again in H2 next year, or maybe that should normalize a bit? Thank you.
Thank you, Lucas, for your question. I'll take the first one on free cash flow conversion. So free cash flow conversion in general is improving on the flow businesses, but the transmission business, as you can see, is obviously big and lumpy, and it depends a lot on down payments. So we had a bit of a strong year in 2025. We will continue to improve progressively as we grow all of our businesses, but it's a bit dependent on the down payments we'll get from the different deals in the transmission business. And so we're committed to our 2028 guidance on the cash conversion, and we'll continue to drive that in 2026 and 2027 as well. And Julien-
Regarding your second question, yes, indeed, you have seen the jump in the margin for grid, moving 2 points up, 14%-16% EBITDA margin. We are very pleased with this business. The demand is very strong. We expect to, let's say, at the first stage, to maintain this level of margin. And it's driven by innovation, it's driven by accessories that is still growing at a higher margin event. So in order to continue to push, we will need to continue to develop specific verticals on the... I will explain that the deep dive session just after the importance of data center, that are a big driver of margin increase for the grid parts. But I would say-...
Let's say, in the coming months, we should be at the, let's say, similar level of margin before we acquire new capacity, and we are working on it currently in order to continue to grow and develop this business. But it's a very solid, resilient business and a big part of the result of Nexans.
Thank you.
The next question comes from Sean McLoughlin from HSBC. Please go ahead.
Thank you. Good morning to all. Thank you for taking my questions. Firstly, Vincent, taking a maybe a fresh look at margin progression in transmission, how confident are you on the journey to high-teens margins by 2027, 2028? What, what in your view are the key steps to reaching that level? Thank you. That's the first question.
Yeah, thank you, Sean. It's a very important question. It's something we spend a lot of time on with the team. We see significant improvement. You saw it between 2024 and 2025, and we're still committed to the direction we've given historically of continuous improvement. It's driven by a few things. First, much better quality of execution. We've invested a lot in the team to drive that quality of execution and not have bad surprises during the execution phase of the project, and we are seeing that investment pay off in 2025. The margin improvement is driven by this better quality of execution. Second thing, the selectivity we've applied to the deals that we've taken into the backlog is paying off as well.
We're continuing to execute on historical, bad cholesterol, if I can say, deals that are hurting our profitability. The new deals we see ahead of us, the ones we're starting to execute on now, are much better in terms of margin accretion, and that gives us very much strong confidence in our ability to get to the high teens in terms of profitability for the transmission business.
Thank you. If I could touch also on Connect. You've talked about need for recovery in Europe. You've also talked down Asia Pac in Q4. Again, can you maybe just walk us through what are the main components of improvement in profitability in Connect in 2026?
Connect, and I will take this question. So, Connect, indeed, you've seen a lower margin in second half. It's... I mean, we understand very clearly, and we are working on it precisely. It's coming from three element, few elements. First one is indeed pressure on price in Oceania, specifically in Australia, second half of the year. That has impacted us negatively, and we are currently changing things to come back to a normalized level of profitability in this part of the world. Second is that one of the high contributor of a margin in Connect is the Nordics in the north of Europe. I mentioned that in Q3, but it remains in Q3 the same, that the market there has been softer.
So we have had less volume, not... We didn't lose any market share, in fact, we even win market share, but the overall markets has been very soft in this part of the world, and we expect to see, hopefully, an improvement, let's say mid-year, second Q2 or mid-year 2026. The third element is, you know, that our strategy we did in the M&As is clearly to buy, make some acquisitions at a low multiple, and therefore, the margin level of the company that we bought are lower than our average. They are not yet at the maturity of innovations, technology, verticalizations. On all our job is to transform them into a much higher level of profitability.
In the case of 2025, specific second half, we had a full year effect of LTC, which is not yet at our level we expect from them. They are working hard. We're very satisfied what they do, but the size of this LTC business has an impact on the overall margin of Connect. Having said that, all the other. And you know that we are clustering our businesses, different cluster, innovation driver, profit drivers. This business, you know, the top end of our business, which is a large part of our business, is doing very well, both in margin level, both in growth.
Thank you.
The next question comes from Scott Humphreys from Berenberg. Please go ahead.
Hi, thanks for taking my question. I have two, actually. I'll ask them one at a time. The first one on the high voltage demand out through the next decade. How have recent U.K. offshore wind auction results and some stronger pledges from the North Sea, North Sea companies around offshore wind influenced your view of supply and demand in high voltage into the next decade? That'll be the first question.
Okay, so I will start. So I guess you have seen in Hamburg a month ago a big meeting with the political energy ministers from seven countries, highlighting the need and the importance to deploy offshore wind businesses in from 2030, basically from 2030 to 2040, with an increase of capacity of offshore wind of 15 gigawatts per year for the coming 10 years. So the demand is there on income. It's supported by the, let's say, different states in north of Europe. So we see that this business will continue to grow. So 15 giga per year, it's huge because you need to keep in mind that currently we have 34 gigawatts already installed, so the ramp up of this business will be extremely important. Second, interconnections.
Here again, there's been a very supportive European Commission to accelerate the interconnection to links between countries, funded by the European Commission, and they have communicated, I don't know if you have seen this, but in December. So basically, both businesses of submarine, both wind offshore on the interconnections are basically positive in the outlook in the next 10 years.
Great. Thank you. And moving over to the metallurgy business, and other activities. How has the continued rise in metal prices influenced your view on kind of the pros and cons of vertical integration in bulk production? And maybe as a follow-up to that, why don't you think peers or why do you think peers might not be following your footsteps in this regard?
Yeah, thanks, Scott, for the question. The metallurgy business is strategic to us. We see a lot of advantages of this integration. It's security of supply, which is key. It's recyclability. We control prices much more. We have long-term agreements with mining firms that gives us a lot of stability in our supply. So we clearly think that strategically it's really important for us to keep this metallurgy business. We're driving it, and it's obviously quite impacted short term by the movements in the tariffs. It's adapted well. After a very strong H1, it had a tough H2, but net-net, overall, it's been quite neutral. We're managing it strongly and investing in that business. We think it's very important for us.
The rise in the copper price is obviously having an impact. We're quite protected. It actually, you know, we transmit that increase in price to our customers. We're protecting ourselves and protecting the financials very strictly. And we see maybe a long-term impact in terms of copper demand and evolution, but in total, for us, in the midterm and short term, it's really, really strategic, and having that integrated business actually gives us more levers to react and to adapt to the current volatility in the price and the tariffs.
And I will add one point. If you remember that four years ago, Nexans has clearly mentioned that by 2026-2027, there will be some kind of scarcity of copper supply. And now you start to see the impact on the basically tons of copper reaching $13,000 a ton. So we anticipate that a few years ago. That's why we have massively invested in our metallurgy and rod breakdown in Lance, because it give us a capability to recycle a scrap of copper. This project is well ongoing. It should be in operation by 2027, and we will access to the ability of scrap copper, scrap cables already on site in Europe.
It will also give us an additional security of supply.
Thank you.
The next question comes from Chris Leonard from UBS. Please go ahead.
Yeah. Hi, morning. Thanks for taking the question. Can I maybe go with 2 questions to start with? And the first is digging in again on the connect business. And maybe it would be helpful if you could give us, as you have previously, what the divisional margin might have been for 2025, if you were to exclude LTC? I believe you commented on that in first half results. And equally, could you also help us dig into how big the Asia exposure is, or Oceania, which you commented on being weak, when we're trying to judge, you know, how the margin in second half of the year was 11%, so the weakest since 2021.
Just trying to get a read if this is an aberration and short term? And then the second question... Actually, I'll wait for the second question. Thanks.
Okay. For sure, if you exclude the M&As on LTC, but LTC is the same, by the way, because it's just taking—we are just taking over this business. If you exclude the newly acquired businesses, which are ongoing in the transformation, the average of EBITDA would be much above, and we will not see any decrease of the percentage of EBITDA. So that's why we are putting a lot of effort on focus in order to accelerate the transformation of this business. We have launched in Q3 and Q4 some innovations for retail and market with a brand, Claro and so on. So we are on the way to transforming business. But clearly, it has an impact on the overall businesses.
On your second question regarding the businesses in Oceania, it's an important business for us, but it's not, let's say, it's less than 10% of our overall activities in Connect.
Maybe I would say, Chris, also, if you take a bit of a step back, we've taken the profitability of that business from mid-single-digit levels to strongly above in the double digits. And there are some ups and downs. We're integrating, as Julien mentioned, businesses that we're improving as we're bringing them up to the Nexans' level. So if you take a step back and look at the trend over time, clearly it's very positive, and we know how to do this. We've done it in the past, and we'll continue to do it.
We will present you just to this next session an example of Reka, which basically we acquired 2 years and a half ago, which is very, very exactly at the level we expect, above the average of Nexans in term of profitability.
Thank you. That's helpful. And the second question, Julien, is maybe related as well, but just looking at the 2028 EBITDA guidance range, that's remained unchanged. And I know that you guys are focusing industrially here, and maybe there could be some further synergies that come through. And I just wonder, on your look at the portfolio, if there's been any view as to where you think the possibilities are on the industrial angle for you guys looking into 2028? And then as a follow-up, could you also comment as to how much of the GSI contract is currently factored into that 2028 EBITDA guidance for the group? Thank you.
Okay. You are a little bit on the industrial part. You are already at the second session that I will describe just after, but basically, you're right. It's important for us. You know, our DNA are we are industrial people. Our DNA is industries. We will, and we have launched already several actions on the industrial excellence, on the operation excellence, that will provide us some competitiveness in order to help our business to grow, and to continue to grow our EBITDA margin. And that's connect is clearly one element in this. Regarding the guidance for 2028, indeed, we maintain the same guidance of EBITDA. No change in this. We are clear that we will achieve these targets.
We have in this guidance, 2028, some utilization of the MI line, of course. So either it will be GSI if this project resume, and we are good hope that it will come back, or we will use, and there are other ongoing large project to come in MI, as I think we have explained also recently, that could also replace. But we have the possibility to do either GSI or another one, but it's included in our number for 2028.
Just to clarify on that, in terms of other projects you're looking at, should we view this as a sort of, you know, previously discussed plan B for GSI? Or should we view this more as like sort of the multi-system contract that you signed last year as a small extension and a book to ship within the year or within 12 months? How should we kind of look at these projects you're looking to sign currently for the transmission business? Thanks.
So, regarding MI specifically, it's not nothing to do on the plan B. It's, in all, let's say, a deep water project requires MI technology. There are some projects queuing today that we will be able to quote now that we have announced, and this is why, basically, I've taken the decision to make this communication early January, was to officialize the fact that we have a MI line available, and that triggers some opportunity and discussion with some customer that know that we have now this line available for some time. And therefore, we are now discussing with them to basically quote on, win this project of MI. So, MI will be loaded by 2028. There's—I don't see any problem on that.
Wonderful. Thanks for that.
The next question comes from Nabil Najib from Deutsche Bank. Please go ahead.
Hi, yeah. Thanks for taking my questions. Just staying with GSI for a little bit. First off, and sorry if I didn't catch this, but what is the current status of GSI exactly? Is the rescheduling now done? And if so, what's the ultimate timeline that you have settled on? And, is the cable that has already been manufactured going to be stored until the customer then decides to restart work? And, is there any compensation that Nexans gets for the idle capacity in such cases?
Okay, so the situation regarding GSI is the same as what we have communicated early January, meaning that there's a rescheduling ongoing with customers. So we have some very close discussion with customers about different date to restart the project. So this is what we call rescheduling. So there's no date specific yet because there are things ongoing, and you know, I'm sure you understand this discussion are at a political level that I will not describe. What is for sure is that all the cable that we have produced on store today belongs to our customers, so Nexans has no financial impact on this matter. So today we are you know talking with customer about rescheduling, so this is basically it.
But there's been no specific news since the communication we did early January.
Yeah, well, just to be... All the cable produced has been paid for, so financially, we're completely covered. It's being stored. The customer is obviously working through its own processes and decisions, and we're working with them and to see when it can be installed. But financially, for us, it's fully neutral now.
Got it. Thanks. And my second question is, on the mitigation measures. I wonder if you could give us a bit more color on the various mitigation measures that you're considering. Specifically, which, if any, projects are you hoping to bring forward from the backlog? And I realize you have started some discussions on new projects, but are there any specific new projects that you are looking to win? And finally, how would the margin profiles for repair work differ from those for large interconnected projects?
So there's I would say the mitigation measure, there are three types of categories. The first one are purely industrial. So we are reallocating the workforce, we are reducing some expenses, we are doing what needs to be done in a plant when you have a line which is basically not running. So that's done, that's ongoing, on where the reactivity of our teams in Norway has been at a great level. Second is that we have already won some small orders for repairs, because the line is available. It you know, it's an important business of doing the repair. On what matters when you do a repair is the speeder.
So you need first to have a cable available to do repairs, as well as a vessel available. So we are setting in place an organization to be able to both produce on-- We are producing some cable for repairs with our customers, and who basically they own, they own the cable, so this is ongoing. On the way our, let's say, setting organization in order to be extremely reactive in case a cut of cable appears under the sea. And third is the commercial activities. So we are... And I'm not going to give you a name of a project because I guess and some of my competitors could hear what I'm saying but, but indeed, we are currently quoting for some project on MI.
We expect to have some answers during, ahead of Q2 or during Q2, in order to see and hopefully win some business of this project.
Understood. Thank you. If I could squeeze in a short one, just on the MI workshop that you have in Futtsu, in Japan, what's the plan for that?
We have communicated, if you remember, I think it was September, October, the fact that we have basically sold this workshop to a company. We can use it, but it does not cost anything. So when it's idle, when the loads are not, when the machines are not loaded, it doesn't cost anything to us. It's, we sold the land, the building and the machine, but we are—it's available to us as soon as we have some load to do. So no cost for us in Futtsu.
That's great. Thank you very much.
The next question comes from Eric Lemarié from CIC. Please go ahead.
Yes, good morning. Thanks for taking my question. I've got two small question. A precision first, you mentioned when you talk about your backlog, you mentioned an adjusted backlog in your press release, and I was wondering what kind of adjustment are you talking about here? And when I look to the backlog, should I consider that the project within the backlog are 100% secure, or is there anything specific to know here? And a second question about the project you mentioned that—Well, you mentioned you are quoting on some new project to mitigate GSI. Are you talking about similar from...
Are you talking about Windshore or interconnection project or similar project in terms of profitability or really the larger project you are currently quoting? Just to have an idea of the profitability difference between this potential new project and GSI profitability.
Thank you, Eric. I'll take the first one. So the adjusted backlog is basically due to the nature of the type of contracts we enter into the transmission business. Everything that's in the backlog is executable. So it will convert into cash. That's why we put it into the backlog. But the timeline and the exact call offs by the customers, in terms of when it happens, have different levels of certainty. And so there are things that are extremely firm and certain. There are things where the timeline can move a bit more, which is why we use this notion of adjusted backlog.
Overall, what we report as adjusted backlog is, unless there's a major consolidation and change in contract, obviously, it's transferable, convertible into cash in the future to drive our cash and profitability.
And by the way, it's the same definition of the backlog, like we always did, so there'll be no change on that.
Yeah.
I will take the second, second question regarding the, let's say, other MI projects. So to answer your question, it is interconnection type of project, so specific to MI technology, so meaning it's a deep water, type of project. And in term of profitability, of course, we are quoting, so difficult for me to tell you a number, but we are in the similar type of profitability as the GSI. Yes, same technology, same type of margin.
Oh, that's very clear. Thank you. Thank you very much. And regarding the backlog, how much could be considered as extremely firm project within the backlog?
We don't really communicate on that. We just communicate on adjusted backlog.
Fair enough.
Sorry.
Thank you. That's right.
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Okay, so thank you all for your questions and for the discussion we had together. So we now look forward to continue this conversation with you in just a few moments during our business deep dive. We are together with Vincent Piquet and Vincent Dessale. We will go deeper into our value creation model, our markets, and how we are intensifying execution across the group. Thank you again, and hope to see you very shortly. Thank you.
In our daily lives, it is a simple gesture. A gesture that lights up, protects, and connects. A gesture that moves us forward. A gesture that sets the pace of our modern economy. Behind this simple gesture, performed billions of times every minute, lies an essential need: the ever-increasing demand for electricity in a world of limited resources. Behind this simple gesture, Nexans is there.... We are more than just cable manufacturers. We invent the solutions for a sustainable electric future. We are the pure player in electrification, focused on high value-added technologies. Faced with a climate emergency, we electrify the world using decarbonized energy. As digitalization and AI accelerate, we design the cables that ensure reliable power supply for data centers. As cities grow, we modernize and secure urban power grids. When safety is critical, we deploy fire safety cables in buildings that matter most: hospitals, airports, and schools.
As resources become scarce, we develop innovative copper recycling solutions, building a virtuous circular economy. For over 140 years, our cables have been invisible, yet essential to life and progress. Through our foundation, we extend this vital role by improving access to energy worldwide. From the most remote wind farms to economic hubs, from the depths of the ocean to the heart of local communities, from the most complex technologies to this simple gesture. Nexans is there. Nexans: electrify the future.
To the Nexans Business Deep Dive. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now, I will hand the conference over to the speakers, Julien Hueber, CEO, Vincent Piquet, CFO, and Vincent Dessale, CCO. Please go ahead.
Thank you, and good morning, everyone, and thank you for joining us today. For the ones who were with us earlier for the full year 2025 result presentation, welcome back. For the ones joining us now, welcome to this Nexans Business Deep Dive. This session follows the Capital Market Day we held in November of 2024. There are three reasons why we wanted to have today an update of our Capital Market Day. The first is Nexans has entered into a new phase of leadership. Second is, since early 2026, Nexans has become a pure player electrification with a planned disposal of AutoElectric. On the third, the external environment has evolved significantly over the past 15 months, becoming more complex and more volatile.
Now that Nexans is fully focused on electrification, with a simplified portfolio of clear strategic positioning, we can fully leverage this model and scale what we do best. In this context, we felt it was the right time to step back and explain what differentiates Nexans, on how our model allow us to adapt to a more demanding environment, while staying fully aligned with our strategy and financial trajectory. Over the past few years, Nexans has gone through a profound transformation. We reshaped the portfolio, simplified the organization, and strengthened our financial foundation. Our strategy has not changed. This session today is to explain how we will intensify execution, how we scale what already works across the group, and how we continue to convert electrification growth into margin on solid cash generation. Let's now move to today's agenda
I will start by setting the context where Nexans stands today after the transformation phase, and why now is a good time to enter into a phase of intensification. Then part two, together with Vincent Dessale, our Chief Market and Commercial Officer, we will then cover our three businesses: transmission, grid and connect, and explain the key levers we are deploying to intensify performance across the portfolio, building on the structural drivers of value creation in each business. Finally, in part three, Vincent Piquet, our CFO, will come back to Nexans' value creation model and provide further insight into our financial trajectory towards 2028. For this session, we'll explain how Nexans turn electrification mega trend into value creation with discipline and selectivity. So as I mentioned earlier, today, Nexans is now a global electrification core player. This positioning did not happen overnight.
It is the result of deliberate and disciplined choice made over several years. This slide illustrates very concretely the portfolio rotation we have completed to support this strategic shift. On the top of the slide, you see the acquisition we have made to strengthen our electrification footprint. This transaction were highly selective and fully aligned with our strategy. In total, they represent around EUR 1.5 billion of sales and contribute directly to our electrification focus. Let's take some example. Vincent will describe later in the presentation how fast we have integrated Reka in Finland, and how we have been able to become the number one in the Nordics, maximizing our grid capacity for these regions.
As a second example, RCT in Spain is providing us today a brand-new industrial capacity that start to contribute to the growth we see today to fire safety and data center vertical. On the bottom of part of the slide, you see the divestments we have executed over the same period. It represent around EUR 2.2 billion of sales. And divesting these companies took us a lot of time and resources, but the portfolio rotation is complete, and Nexans is now fully focused on electrification. Overall, M&A remains a key driver of growth for Nexans and is at the core of our strategy. We have a strong and active pipeline of opportunities, and we will replicate our value creation model in the same business we integrate, with the same discipline in execution, integration, and value delivery.
As I just mentioned, while we have been actively progressing on our portfolio rotations, one of the most tangible outcome in our transformation has been simplification and the impact it has had on our performance. Since 2021, we have significantly reduced complexity across the group. We now have much fewer industrial sites, much fewer employees, and we have managed an important reduction of our market segments to address, as well as a division by two, and we have divided by two our technical processes. This was not simplification for the sake of cost cutting. It was about restoring focus, accelerating decision-making, and improving industrial efficiency across the organization. As you can see, the financial impact has been very tangible. In four years, from 2021 to 2025, our electrification Adjusted EBITDA doubled, electrification ratio was multiplied by 1.2, and free cash flow almost doubled.
This track record clearly demonstrates that the model of simplification works. Today, Nexans operates with a well-diversified profile, with a balanced contribution from our three core businesses, transmission, grid, and connect, as well as a balanced geographic footprint. But our resilience is not only about diversification, it is very much about selectivity. We have positioned our group towards the most resilient market. We focus on segments where demand is structurally stronger, investment cycles are more visible, and customers value both performance and reliability above prices. This applies across sectors, geographies, and customer profiles. We are highly selective in the verticals we address, the geographies we prioritize, and the customers we serve. In particular, we keep focusing on platinum customers, where our differentiation, our expertise, and our execution capability create the most value.
So as a result, Nexans is positioned at the intersection of resilient market, premium demand, and structural profitable growth. But before moving to the businesses, it's worth pausing briefly on the broader context. So on this slide, you see a number of key indicators that illustrate the depth and the durability of electrification trends. The structural driver of electrification are stronger than ever. Just let's take two example in this slide. Power grids require massive reinforcement after decades of underinvestments, and the energy transition continue to drive new transmissions on connection capacity. Over the next decade, 80 million kilometers of medium voltage will have to be produced and installed, and that's the equivalent today of the existing grid worldwide capacity. Another example is the development of AI, is driven by an unprecedented expansion of data center worldwide.
These facilities are extremely energy intensive and require reliable, high capacity, and resilient power infrastructure. To put this into perspective, data centers are expected to increase their share of global electricity consumption from around 1.5% today, to close to 3% by 2030. This is massive. And these investments are driven by technology, regulation, and security of supply. So if we step back and look at our journey in Nexans over the past several years, three distinct phases clearly emerge. Between 2019 and 2021, Nexans went through a restructuring phase. The priority at that time was to restore profitability and strengthen the balance sheet and fix the fundamentals of the group. From 2021 to 2024, the focus shifted to simplification. We reduced complexity, reshaped a portfolio on electrification. This was about building a simpler, more focused, and more resilient group.
Now, as we enter the 2024-2028 period, we move into a phase of amplification, amplifying profitable growth in electrification. The organic growth we have presented this morning for our 2025 result clearly demonstrates our capability to grow. But what is important today is that our positioning as a pure player in electrification will now allow us to enter into a phase of intensification. Now that the portfolio rotation is complete, and that the group is fully focused, we are at a position to scale execution, replicate what works, and deploy our value creation model with much greater intensity. Intensification is not a change of strategy, it's a mindset in the execution. It means building on what we have already put in place, doing things better, at a greater scale, and with more discipline.
Let me pause a moment on this slide, because it's captured very concretely how we are moving into the next phase of our value creation journey. Intensify means scaling what already works, with discipline, focus on repeatability. This is done through four concrete pillars that I will describe. First, commercial excellence. We have spent the full year 2025 to understand deeply, vertical by vertical, what, where the customer needs, the expectation in terms of innovation, technology, and services. This is what we have called growth pattern. So we are now in a position to scale high-value growth pattern in verticals such as data center, fire safety, renewable, or data or gigafactories. To do this, we have set dedicated commercial teams to capture value across the full offering. The head of this sales business development is now part of our ex-comm team.
It gives the importance of this pillar. The objective is clear: increase the share of advanced offer, improve mix, and strengthen pricing power. The second pillar is industrial excellence. This pillar is about to align the industrial footprint to the new requirements of our customer expectation. Let's take an example. The expectation of our customer in data center, for instance, or in grid project, has evolved, and today their focus is to secure enough capacity in a very short period of time to fit with their schedule. Therefore, we are adjusting our model, which used to be local for local, to a model called local to regional, in order to mutualize our industrial footprint and ensure positively to our customer expectation. This is how we will secure our profitable growth in the coming years.
At the same time, using advanced Industry 4.0 on automation process will generate structural competitiveness. The third pillar, operational excellence. This pillar is about scaling operational excellence across the group, with a strong focus on cost competitiveness and organizational efficiency. We continue to deploy cost competitiveness initiatives, targeting both direct and indirect costs, while making the organization leaner and more agile. Shift, that you know well, is now amplified by AI, allowing us not only to improve process efficiency and accelerate decision-making, but also to enhance commercial effectiveness and profitable growth. A good illustration of AI deployment is in our AI-based inventory modeling tool, which helps optimizing stock level in order to capture revenue growth while maintaining our cash generation targets. These initiatives will structurally improve our cost base, strengthen competitiveness, and support consistent performance across all businesses.
I will now describe the fourth pillar, which is about M&A excellence. M&A is a key element of our strategy. Our approach to M&A is very disciplined and highly selective. But more importantly, our strength lies in how we integrate acquisitions and turn them into value creation. We ensure that the businesses we acquire are quickly integrated into our operation model, commercially, industrially, and operationally, using the same tool, process, and discipline, including The Shift. This allows us to replicate our value creation model quickly, accelerate synergies, and ensure that acquisitions contribute to margin, cash, and return, not just the growth. So taken together, these four pillars define what we call intensify. They are how we raise performance across the portfolio and ensure that every business progressively catches up with our best-in-class performer.
In the next slide, I will show how this framework applies very concretely to transmission, grid, and connect. So this slide captures the operational value creation model. At the heart of this model, you can see the four execution pillars we discussed just earlier. They form a common and robust foundation across the group. It is critical to understand that this framework is scalable, but not applied mechanically. So let's take transmission example. In this business, value creation relies far less on M&A and much more on industrial and operational excellence, strict backlog selectivity, and quality of execution. In grid and connect, the same execution framework applies, but with a different balance between the pillars, placing more emphasis on innovations, commercial excellence, and targeted M&A. This slide concludes the first part of today's presentation of positioning our strategy and how we intend to intensify execution.
I will let me now hand over to Vincent Dessale, who will describe how intensify will be cascaded to our three businesses. Vincent?
Thank you. Thank you, Julien. We will indeed spend the coming minutes to address our three segments: so transmission, grid, grid, which is the distribution of energy, electricity, and the connect, in other words, the usage, the consumption of electricity. We will share with you the fundamentals of this three segment, but more important, how Nexans leverage the structural driver of value creation, in other words, our recipe. Last but not least, how Nexans will intensify this structural driver in the coming years. Let's start by transmission. Transmission, it's a worldwide market. First element, it's a long cycle business, good visibility, supported with very strong needs in term of electrification. Julien spoke before about renewables, interconnection, energy transition.
So in fact, the question is not whether the market is there, the question is how Nexans capture the value of this market and do so in a discipline and a repeatable way. And the first element is clearly the quality of execution. You are managing, in this activity, a set of project on multi years, execution. You have to organize the sequence of all these different project, like a little bit a big puzzle, if I can say this. So the quality of execution is a key and major element. Of course, you have to do it with discipline, coming back to this sequence, this puzzle, and you have also to do it with agility, because in this business, you can have from time to time, some adjustment to be done due to the execution of the project.
This ability to deliver safely, on time, and at scale, is clearly a key differentiator on the market. The second is barrier to entry, and I will illustrate this point, later on. The third one is about selectivity. Julien mentioned it. We have a chance to have a significant pipeline of project, and we are very selective in the project that we try to win, taking into account the terms and condition, the profile of the customer, the technology, and how it fits with our assets. The third one, the last one, sorry, is mixed improvement. You know that, we had in the past a certain number of legacy project. This legacy project are step by step, leaving the backlog, and we have now in front of us an increased share of, I will say, good and healthy project.
This evolution, the three factors that I've mentioned, plus the mixed improvement, are seen in the evolution of our performance. You have seen this morning, and we share it again here today, we have this evolution steady since 2023, and we are clearly, thanks to the visibility that we have on our backlog, which is a healthy backlog, a trajectory where we are very confident to continue to improve this performance. Coming back now to the barrier to entry. Here, this point is quite important. Nexans has been, during many years, having a very strong record in terms of installation lengths, in terms of depth of installation, in terms of tension. We are doing this thanks to our teams, our experts, the know-how that we have.
We are doing things thanks to the state-of-the-art assets that we have in terms of manufacturing, in terms of testing, in terms of installation, in terms of protection capabilities, and all this element give us the technical leadership acknowledged by our customers. We were, some years ago, for example, the first supplier to deliver the first dynamic solution for the first floating offshore wind farm in the world. And more recently, maybe you have seen in our press release, we have set a world record in terms of installation, in terms of depth of installation, with 2,150 meters in a project called Tyrrhenian Link in Italy. And what I want to highlight is that this achievement, they are not symbolic. They represent Nexans' know-how and expertise. They represent our capacity to undertake complex project, but deliver them with reliability.
They represent, in other words, the trust of our customers. Under Intensify, we will scaling this model, and the coming Electra vessel, which will be delivered in the second quarter, will continue to help us to enhance this, technological leadership. Being able, for example, to lay four cables simultaneously, helping to improve productivity and giving us a better flexibility in the execution. Now, to conclude the transmission part, if we look forward, we have two elements. We have a solid backlog, and there is also a solid pipelines, which means that this business, basically, you need to manage at the same time, short term and medium long term. The short term is all about agility. So what I say before, you have plenty of project, this project can have some requests of change of sequence.
You can have, for example, a bad weather when you are doing installation, so you have to rearrange your organization, your schedules. And this agility give us also some opportunity to integrate in our overall activities, some inspection, maintenance, and repair activity. In other words, this agility help us to capture high margin opportunities. And at the same time, we have to look medium long term, which is about preparing the next wave of order intake, which will be the load of factory starting 2028, 2029, and beyond. And this, again, we will do it thanks to this selectivity, this discipline, and somehow we will try to narrow the pipeline in order to make the right choice. And that's also the chance in this business, is that the pipeline is very strong, coming from the different usual sources of market.
More or less, you have more than 120,000 kilometers of cables, which are expected to be installed between 2026 and 2040. In this 120, we consider that 95 are addressable, according to our assets, our expertise, and can be converted in a very high quality backlog. So under Intensify, we will continue to strengthen this approach, combining efficient processes, quality of execution, commercial agility, three reasons for which our customers select Nexans for the most complex project. And under Intensify, this visibility, this selectivity, will constantly translate into margin and cash, and not only volumes. And now I will turn to Julien, who will go through the grid business.
Thank you, Vincent. Let me turn to the Grid part. First of all, I really like this business and the turnaround that the team in Nexans have accomplished over the past years. And I'm even more excited when I see all the potential looking forward in the Grid business. Let me remind you where we come from. Not so long ago, in 2021, 6.7% Adjusted EBITDA margin, to now more than 16% in 2025. This is a very significant step change in profitability, driven by disciplined execution and portfolio optimization, and that gives us the confidence of our strategy. Grid is structurally attractive, cash generative, and relatively low in term of capital intensity.
It benefits from a long-term trends linked to grid modernizations and the massive deployment and development of renewable that we are seeing since several years, and that will continue. But now, let me explain how Nexans capture this value and why the grid is particularly well positioned going forward. First, the scaling of innovation. Grid is a business where value is driven by high added-value solutions, from advanced cable design to recycling offers. Nexans is scaling innovation across all its grid business across the world. Second, regionalizations. We are regionalizing our industrial footprint to respond to stronger demand linked to grid modernizations. The proximity with customers improve our response times, reduce complexity, and enhance service level, all of which support margin and execution quality. Third is the pricing power.
Thanks to our ability to address complex customer needs with innovations, customers are willing to pay for performance, reliability, and differentiated solutions, not just for volume. And finally, deployment on the Shift. Our Shift program plays a key role in Grid by ensuring that best practices are consistently deployed. It allows lower performing units to progressively catch up with best-in-class performers, improving the overall margin of these plants, discipline, and execution quality. Over the three years, several of our Grid units have massively improved their profitability using these four drivers. In Grid, the value creation is driven by three main levers, and I will describe the three of them. The first lever is basically the expansion of share of wallet with Grid operators. In Grid, expansion is driven by multi-year framework agreements with our DSOs, which provide visibility and recurring volumes.
We tend to see more and more of the extension of duration of these framework agreements. A very good illustration of this is the recent seven-year agreement in the framework we have signed earlier in January with Enedis, the French DSO. More than EUR 600 million contracts support the modernization and expansion of the medium-voltage network. We leverage our low carbon leadership, industrial backup, and competitiveness to extend and secure the duration of these agreements and capture a significant additional volume over time. Second levers is the expansion into new verticals, such as gigafactory, renewable or, or data, data center. If I take the example of a data center, allowing us to capture large-scale project and benefit from a booming market, this vertical will generate a meaningful growth on value driver for Grid in the coming years. We have the same trend for project in Renewable.
Both, both these two elements are important for us. Third level is the continuing expansion of innovation in accessories. Accessories are a fast-growing segment across geographies, illustrating the strong need for our customers for more added-value solutions. We have developed solution like EasyJoint, now powered by AI, significantly improving reliability and reducing installation complexity. This innovation strengthen differentiation, customer preference, and pricing power. This is a type of solution that brings more value creations over time. Taken together, these three levers explain why and how Grid scales value creations, by increasing share of wallet with existing customers, by expanding high growth verticals, and by innovating to deliver best-in-class customer experience. So let me start with the objective in Grid. Our ambition is to significantly increase the share of advanced offer in our revenue mix.
By 2028, around 40% of our Grid revenue will come from advanced solutions. This reflect a deliberate shift towards differentiation, customer experience, and high value creations. Second, let me explain how we will achieve this shift. In the business, value creation is driven by our ability to deliver customer experience, such as best-in-class lead time or training customer workshops for accessories installation. Beyond the cable itself, Nexans leads low carbon offer with recycled aluminum in order to reduce up to 50% of the CO₂ emission. This is already happening in some part of the world with our customers. And finally, let me highlight how we will intensify this model. We scale advanced offer through mutualization across business units, ensuring that innovation developed in one area can be deployed efficiently across the Grid portfolio.
And we also rely on dedicated, what we call them, commercial SWAT teams, to support complex tender and accelerate penetration of advanced solution with strategic customers. Where relevant, targeted M&A complement this approach by adding specific abilities and accelerating the rollout of our high added-value solutions. So under intensify, our focus is to scale this approach to so that the shift toward advanced solutions translated to margin improvement on long-term value creation in Grid. Let's move now to connect Vincent.
Yeah. Thanks, Julien. I will continue with PWR Connect. And for this business, it also, you know, it's a short cycle business, primary local market with a cashflow generative profile and quite limited capital intensity. But again, with a very strong dynamic supported by the electrification of our day-to-day needs. We see all of us in our day-to-day that we are increasing our consumption of electricity. Could be, of course, the electric vehicle, but could be also the day-to-day in our different activities. And here I would like to start by a key element, and I would like to highlight that Connect is not only a commodity business, something that we heard on a regular basis, and it's not true.
Our customers and the customer of our customers, because in this market we go often through distribution company, what they are looking for is not a basic cable. They are looking for safety standard, they are looking for energy efficiency, they are looking for compliance with regulation, and they are also looking for productivity when we do the installation of the cables. Which means that you can bring to this market advanced offer with higher margin profile, and this is clearly the first element of value creation for Nexans. We have worked a lot on this, and I will give you some examples in the next slide. We are scaling innovative and high added-value solutions. The second is leading vertical technology. Julien mentioned on Grid some elements.
When we speak about verticals in low voltage, we have also here the data center vertical. We have also the fire solution. We have, for example, the premium offer for electrician. These verticals, that we call internally growth pattern, are also an area that we have identified, and we will scale our solution in these verticals, which are providing a better margin, a higher margin profile. The third element is, and you know it also very well, this is our backbone, The Shift methodology, where we are using not only for integration, but also to move our lower performing unit progressively to catch up with the best-in-class performers. We have mentioned already in some discussion with you, but we still have a gap between the best-in-class and the, the, the lower-in-class, if I can say this.
The last element is for sure the replication of this model through the M&A acquisition, and Vincent will give you a concrete example with the acquisition of Reka that we did 2 years and a half ago in Finland. Taking together, this level explain why Connect is a business where value creation is progressive and scalable. If we look to our evolution of EBITDA over the last years, we came from EUR 8, now we are in the range of EUR 12, and we are able to do this thanks to this discipline in the transformation, using the different levers that I have shared with you. Now, I would like to give you a concrete example of value creation, and I have chosen the Mobiway case study. I could have selected other advanced offer, like the Cable Loop, which is a specific offer dedicated to sustainability and recycling.
I could actually choose also the Protect, which is our fire safety, range of product or the connectivity solution that we use in a certain geographies. But let's move to the advanced. So let's focus on the advanced offer of Mobiway. What is Mobiway? Basically, it's an innovation which started initially in France some years ago, and step by step, we have complete this range of product. It's all about supporting the installation of cables. You can say why we have so many solution. The rationale is quite simple, is that you don't install cables in buildings in the same way all over the world. The structure of the building are different between Europe, Australia, Nordics, Colombia, just to give some examples.
So we design solution according to the pain point of the end users, and this give us this full scale, this full range of solution that we are deploying all over the world in a very scalable and repeatable way. And the last one that I want to mention is the one coming on Mobiway, what we call Pop Connect, which is having a layer of IoT, and here we'll bring with this solution additional services, full apps to the end user, allowing them to calculate the remaining lengths, allowing them to interface their orders with the web shop of our distributors. But the most important is probably the point regarding the dynamic of this repeatable growth model.
If I take Mobiway, since 2021 up to now, this range of product has delivered a strong growth with a double-digit CAGR on these 4 years, which is, of course, significantly higher the CAGR of this segment. So this development of advanced software, that's the way, of course, to deliver a better user experience, which, by the way, give a stickiness to the end user to our solution. You have a kind of recurrent sales, and it's improve a mixed value, and it scale our model all over the world. In order to conclude, Connect, let's see how we will continue to enhance this positioning in the business. Our mission is very clear. By 2028, we want to have 30% of the Connect revenues, which come from this advanced solution, which means differentiation, pricing power, and profitability.
And we will do this thanks to three elements. First one is customer experience. I have explained to you in the previous slide, the Mobiway range. So it's all about solution. Could be also supply chain solution, could be as also services through digital platform, so quite large possibility of activities. The second is, of course, technology. I gave you example of a fire safety, for example. And last but not least, the life cycle solution, where we are create recurring revenue and we are create value over the time. In other words, what we are doing is that with we are more and more customer and customer centric. In other words, Nexans is acting for sure in a B2B business, but we are thinking B2C in term of solution and in term of customers.
This unique position, we will intensify it in the coming years. First of all, through the competitiveness by specializing, our industrial footprint, thanks to the previous acquisition and the coming acquisition that we will do. We are creating more and more regional organization in terms of industrial footprint. We are creating also regional supply hubs in order to be faster in the delivery, to have shorter lead time to our customers. This ensures that this advanced software are not only differentiation, but they are also competitive. At the same time, we will scale, as I said before, this advanced offers across geographies, and we will continue to roll out this differentiation and advanced offer through the targeted acquisition. Taking together, this is how Connect will continue to be premium, in bracket, and bring competitiveness.
That's basically the overview of the three businesses that we have shared with Julien, and how we intensify value creation across them. And now, let me now hand over to Vincent Piquet, our CFO, who will take you through this execution framework under, I will say, a financial view, and how we will move towards 2028. Vincent, the floor is yours.
Thank you, Vincent. Sorry. In this section, I'll spend more time on how we're going to deliver our 2028 trajectory. I'll focus first on our value creation engine. The center of this slide, as you can see, is what Julien explained earlier, and it's the engine that we use to drive operational performance through the Shift approach, the application of differentiated processes, and focus on each of our businesses, and this is really the core of the discipline we apply. To feed that engine, on the left side, we feed it with growth. First, selective organic growth. We focus not just on volume, but on value and really trying to capture the most value-added part of the businesses and the geographies and the businesses we're in.
And then second, we do targeted M&A to accelerate that growth on top. Once you put that growth into the engine, the first outcome you get is Adjusted EBITDA expansion. That expansion is the result of the discipline, the operational discipline we put into the engine, and it translates into pricing selectivity, rigor on the industrial aspects, and the focus on value creation at every step of our processes. And then the second outcome is the generation of cash flow. Obviously, cash is critical for us, and we're very focused on the expansion and acceleration of the Free Cash Flow generation. That cash is then used on the right for our capital allocation. First priority for us is targeted M&A, and I'll spend more time on what we prioritize. Shareholder returns.
We've had great total shareholder returns performance over the last few years, and then obviously, growth CapEx, as we reinvest into our selective organic growth through the expansion of our production capacity and the, investment in our plants. This model, in total, is what drives, the overall, value creation in, in Nexans. It may seem a little bit generic, but when we look at the specifics of how we apply the Shift methodology and how we, modify the intensity of each of the levers and selectively apply the focus on different parts of the business, it makes it unique, and this is how we transform growth into EBITDA, EBITDA into cash, and cash into long-term value creation with Nexans. Let me zoom in a little bit on target, on, on the M&A. We have a, a strong M&A, focus.
It's an essential part of our story, and now that the portfolio rotation and the divestment is completed, the brain space that this management has on the ability and the focus to do M&As going forward is only going to step up. We have three clear priorities in our strategy around M&A. The first one is consolidating and reinforcing our existing footprints, and this is where we're looking for bolt-on acquisitions that help us grow and accelerate in markets we know well, to reinforce our positions and continue to expand. Second, it's expansion to new geographies. We're clearly looking at different markets around the world where we're not present today and are looking to expand. There are a lot of attractive geographies in the US and elsewhere that we're looking at today.
And then the third is new technology, new expertise to our portfolio. We have now a global size and any new technology and accessories we can feed into that global network and global sales operation, we can accelerate growth of startups and small technology companies that can reinforce the offering that we provide to our customers. And most importantly of all, it's the ability to integrate the acquisitions that also makes a difference with Nexans. We have a proprietary approach derived from Shift, and we are very, very focused on successfully integrating the acquisitions we make to bring them into the Nexans family and bring them to the best levels of the Nexans performance in terms of value creation. And in fact, let me take one example, a very strong example that was referred to earlier today in the conversation.
Reka is a business in the Nordics that was a very strong business, very good business, but clearly underperforming its potential. What we did is, from day one, apply our Shift methodology, bringing rigor and discipline to pricing, to operations, and really focusing on the value, creative parts of the business. Being part of Nexans gave Reka higher purchasing power, obviously, and we also focused on optimizing its footprints, going from three plants to two, and refocusing the priorities in terms of the industrial operations. All of that gives us a business that in three years, two years, doubled its EBITDA. A real success story. Reka, inside the Nexans family, is now one of the best, best in class in terms of performance, and we're now number one in the Nordics, thanks to this acquisition.
This is not just an exception or a good story. This is part of our process and the rigor we apply to our acquisition. This is one more data point and a great track record in the number of acquisitions that we've made over time. Now, if I step back and bring this back to our financial trajectory, this is how we see and we recommit to achieving the CMD 2024 commitment for 2028 EBITDA. There are three—our three businesses will contribute. The first one is power transmission. The growth of EBITDA in transmission is supported by the great backlog that we have. It's about backlog execution, quality on the execution of that backlog, and continuing to capture for the future, beyond 2028, the commercial deals and the new volume that will come through.
For Grid and Connect, we see a normative underlying growth rate of these markets that will sustain the EBITDA expansion that we need to achieve. The focus in Grid is really industrial excellence as we shift from a local-for-local to a local-for-regional approach. As its markets are evolving fast, the demand is high, driven by, in part, data centers and other verticals that we're focused on. And for Power Connect, a lot of volume as well, focusing on the mixed premium and the operational excellence, and we're very focused with specific initiatives on driving the competitiveness of that business unit, integrating the acquisitions, and driving into the next level as we continue to improve.
For both Grid and Connect, we'll obviously focus on targeted M&As, bolt-ons, geographic, and accessories, as I mentioned before, to juice up the growth and accelerate things, even faster and provide the right level of increase in our M&A profit rate in each of the business units. This roadmap is very clear for us, and we are very confident on our ability to achieve the 2028 objectives, and that's why we're able to reconfirm the CMD 2024 guidances on all the different levels. With this, I'll pass it back to Julien for the conclusion.
Yeah. So thank you, Vincent. To conclude, let me take a step back and put everything into what we discussed today into perspective... What you have seen is first and foremost, the continuation of a strategy. Nexans has been on a clear and consistent path for several years now, focusing on electrification, prioritizing technology and selectivity, on building a model designed for long-term value creation. Today, Nexans is a pure electrification player, simpler, more focused, and structurally better positioned than ever before. We have completed the portfolio rotations, strengthened our foundation, and built a resilient, diversified platform across transmission, current, connect. This gives us clarity and scale, and this is why we now call it, and it's time to intensify. It means intensifying selective growth through commercial and M&A excellence, and intensifying our competitive edge through industrial and operational excellence.
We enter this next phase with strong fundamental, a sound financial structure, and a clear framework to convert electrification growth into sustainable performance, strong cash generation, and long-term value creations. Thank you for your attention. That ends this first part of the presentation, and now we're happy to take your questions.
If you wish to ask a question, please dial pound key five on your telephone keypad. If you wish to withdraw your question, please dial pound key six. The next question comes from Sean McLoughlin from HSBC. Please go ahead.
Thank you for this update, and thanks for taking my questions. Just a question on integration. You've talked about speed of integration of M&A as being key. Maybe just coming back to LTC, that looks like it's been a drag on your margin in 2025. Can you explain maybe what's happened there, what you've learned from this process, and are there other integration costs that we should look out for in 2026? That's my first question. Then just a second question, quickly, on data centers, if maybe you could give us your current data center exposure and the growth outlook for that segment. Thank you.
Okay, thank you. So, well, I will start by your first part of the question regarding integration speed of M&A in general, on you ask your question on specifically about LTC. LTC is doing very well. I mean, we are extremely satisfied with this integration phase. You understand that the scale of LTC is bigger than Reka, that we just explained, so it take more time, and we knew that from the start. We are very well online with all the different step of integrations, purchasing power, shift methodology, basically, quitting what we call the bad cholesterol of customers, on implementing in term of innovations, new product, new packaging into different markets.
So we are completely aligned, and simply the scale of LTC has a different impact compared to others. That's why we have mentioned that this morning. But we are completely in line with our integration plan that we said. And by the way, we didn't mention, but there is other type of acquisition. We just explained Reka, but Centelsa, if you remember, we did in 2022, we have a similar result of Reka. So we have a recipe, we have a model, we do it in a disciplined manner on the—we are extremely satisfied with the way it goes with LTC. RCT is just starting, but the way it goes with the Italian new acquisitions.
Regarding this, your second question, I will start maybe, Vincent, if you want to. But data center is, it's a very interesting market. It's very interesting, because it basically change, it forces us to change our model if we really wants to be in this market, and we really wants to be in this market. The size of the orders, the magnitude of the size orders, the speed to reply, the shorter lead time are different than the usual other type of verticals. It's a different business model.
Therefore, that's why it's give us the willingness to change our model from local territory to regional level, because today, when you are winning a project, and we are winning some large project in data centers, you cannot just have one plant dedicated to this. You need to put in perspective on a series of different manufacturing units. That's why we call it mutualizations, in order to be able to answer positively, first in term of capacity, but as well in term of shorter lead time, so we need these two. To do our exposure of data center, it depends really from geographies. Typically in North America, with our Canadian operations, it will present quite a high number of our business in the Connect space, and this is growing extremely fast.
It's, yeah, I would say it's more smaller yet in Europe, but we see this coming and we are preparing our regional organization in order to really enjoy this booming data center that will come in Europe within. It's already there, but it will grow extremely fast in the next 2-3 years. So our exposure is depending on geographies, but I consider that it will become a key element of our growth looking forward.
And maybe to add why it's difficult to answer precisely to your question is that, as mentioned by Julien, you have, I will say, a large scale project where we go directly with contractors, with developers. So here we can size the percentage, but you still have a major, a big part of the business which is going through distribution. And here, clearly, we don't track and trace the sales of this of this product because it goes through the distribution organization. But indeed, as mentioned by Julien, we have prepared this offer and where, because now data center is low voltage, so it's connect product, but it's also grid product, and for some major hyperscale, it's also high voltage product. So that's why we have to go through this overview.
... Thank you.
The next question comes from Chris Leonard from UBS. Please go ahead.
Yeah. Hi there. Thanks. [Foreign language] Presumably, if I understand that correctly, that, that should have some sort of synergy benefit and, and margin tailwinds if, if you're reducing like, you know, across the plants, if you're re-reducing production and, and doubling production across different geographies to then supply regionally. Have I understood that correctly? Thanks.
First of all, the local organization we used to have before has a clear benefit that we will keep, which is the entrepreneurship, the closeness to customers, that we will keep for sure. Now, moving to a regional, so local to regional, it means that we will basically integrate larger business unit in order to mutualize faster in a more efficient way all available production capacity. And that for sure it has a few benefits. The first one is clearly the capability to answer quicker and to take faster large orders in some verticals that we see them extremely active. Grid, for example, but as well as in the connect space.
It will give us an opportunity also to be much more competitive because we will be able to select the best plant according to the type of portfolio of product that we will address in each of the tenders. It has several benefits that we will capture on them. It will also give us an opportunity to scale faster different technology that we have between plant to plant. There is several financial benefits in term of competitiveness as well.
You have another element which is critical in this evolution, local to regional, is that we take into account the customer needs. Because at the end, to create value, you need to take into account the customer experience. In the case of the grid, for example, our local customer are more and more interesting to have backup solution, what we call internally sister plant. So we qualify different plant from one customer, which give, again, as you mentioned, Julia, backup, but also short delivery, short answer when it's needed, and flexibility. For Connect, most of our customers are also moving now in regional organization, so which means that we are somehow mirroring the organization in order to be to the same scale in term of discussion and in term of solution to the market.
Maybe I will add also one more thing is, we have done a lot of progress in terms of complexity addition, in terms of SKUs on customer level the past several years. Moving to a regionalization in our industrial footprint will also give us the capability to specialize further on industrial footprint. I will give you some example. Today, in some plants, we'll take some example in France, but could be the same in other countries. We are producing a large portfolio of all the product for this specific country. Now, moving to regionalization, we'll be able to further specialize the sites. One will be specific for, let's say, fire safety, because it has the best fit in terms of industrial capabilities, and the one will be more specialized for, for example, solar markets.
On that will derive competitiveness.
Thank you. Maybe following up on Connect and just thinking about the margin evolution into 2026. Obviously, this year was pulled down by a weaker second half, but you commented that you're very happy with La Triveneta Cavi and how that's going on with the integration there, and equally into the second half of the year, you expect European recovery. So what sort of level should we see in terms of margins on the top end? Obviously, last year, 2025, they reduced versus where consensus was. But should we be thinking you climb back towards sort of the high thirteens levels, like 13.7 upwards, as it was in 2024? Thanks.
Yeah, I'll take this one. So we don't really give specific guidance at that level, but what's for sure is that the underlying benefits of all the work that's happening on LTC and others will drive benefits. The part that we don't really control is obviously how fast will the Europe and Nordics market kind of start to pick up again? And that can have a mixed effect that will drive the number that you're looking for, as well as some other geographies. We talked about Oceania and Australia in 2025. It remains to be seen what will happen in 2026.
All the work we described in terms of operational efficiency, scaling up this mutualization, the specialization of the plants, all of that will drive an underlying benefit in terms of profitability, and we hope to drive that all the way to the end and to show the strongest possible improvements next year.
I think to add is what also we said in the session this morning on the result of 2025. Despite indeed this evolution of margin, what we call internally the best-in-class, they have not moved in term of performance. So we still have, I would say, these best-in-class in excellence, which are the one which have applied all the recipe, if I can say this, and this one has been very resilient in term of percentage of EBITDA, which give us confidence in our model and our capacity, as mentioned by Vincent, to scale the new entrants, the newcomers to the family, and the ones which are currently under, I would say, some pressure, like Oceania, mentioned this morning also.
I think, I think let's not forget that in 2025, the European markets in the residential was a little bit challenged, huh? I think everybody understand this, and that was basically putting some pressure on some of our businesses. We start to see some progressive recovery, some signals of recovery in Europe that which should help us also in the year 2026.
... Thank you. And sorry to labor this, but last question from me would be, maybe over to Vincent on the solution side, saying, you know, how focused you are on selectivity of contracts. And clearly at the moment, the market is relatively well booked out for your competitors, but you have availability in 2028 to 2030 for slots, or you've also supposed this year in 2026 got some MI availability after the rescheduling of GSI. So how are you feeling on the pricing for these contracts? What kind of color can you give on sort of the backlog margin development that you could see versus what's currently in the backlog? Thanks.
You have several elements to answer to your question. The first one is that the backlog is mechanically healthier year after year because you have this legacy project which are exiting the backlog. So by definition, we have a trajectory which will continue to go to high tens % of EBITDA. So that's basically the first element with the actual backlog. When you look at the pipeline, it's true that we have some capacity available starting 2028. I think here there is no big change because, you know, the customers on the market, the one we are currently working, are the same one as the last 20 years, and hopefully, I hope they will be the same one for the next 20 years.
Which means that we have in front of us experts, we know what the technical content, and basically, here we come back to the selectivity, what I explained in this session. Nexans has the capability to take high technical content project, where usually brings more added value because they are more complex. And when I look to the pipeline, typically what Julien said this morning, you have MI project to come. This MI project is by definition very ultra-depth technology, so usually coming with indeed a good margin compared to the average of this business. And when I look to the XLPE parts, so mainly the offshore wind farm, here you have a little bit of different type of project, and that's why here again, we come to selectivity.
You have some projects in the pipeline where you have typically high tension, long lengths, so in other words, offshore wind farm, far away from the coast. And this type of a project, that's the one that we try to select, because we know by definition that we are bringing more added value in the pipeline. So far, I would say we don't see negative element in the pipeline, but we have exactly the right type of project to select and continue to bring to the backlog, healthy performance in terms of EBITDA and good profile in terms of cash.
Thank you for the color. That's it for me. Thanks.
The next question comes from Akash Gupta from JP Morgan. Please go ahead.
Yes. Hi, thanks for the question. So my question is on your 2028 target. So when I look at slide number 28, and let's say if we take the midpoint of 2026 guidance, that doesn't assume any further M&A, and we are at EUR 770 million, and we are aiming for EUR 1,150 million, so approximately EUR 400 million kind of increase over next couple of years. Can you give us how much contribution you are expecting from M&A, and how much is organic? So for us, then it will be easy to figure out what could be the organic increase. Thank you. That's the first one.
No, thank you, Akash. I won't give you an exact split, but for sure, we see a path from an organic standpoint to get to a very strong level, and we are using M&As as a way to give us comfort and accelerate the growth. So, I would say we need both. And it also depends on the environment and the growth in our markets, which over the next three years can be variable. So, we're very focused on M&As. It's a key part of our story, and we've been doing quite a few in the past and will continue to be at the right level.
Thank you. My second one is on a couple of data points that you mentioned in Grid and Connect. I think you said about 40% of segment revenues in Grid will come from advanced offering in 2028, and for Connect, that was more than 30%. Can you give us some reference baseline for 2025? What was the starting point, or if you have for 2024, so we can compare where what sort of growth you are aiming from these categories?
So I will take this one, Akash. So basically, these targets are new, that's the same target that we, if you recall, announced during the November 2024 Capital Market Day. We are, I would say, halfway, so we are still have three years to go, 2026, 2027, 2028. We are halfway, so we are quite well advanced in this ratio. I would say slightly more advanced in Grid than Connect. And hence you see also the level of margin that we have in Grid, and that we have reported this morning for 2025. So on accessories is part of it, the way the type of, let's say, offers we are doing with accessories is also reinforcing that.
A bit more at halfway, I would say, without giving you a precise number, because it's of course depending country to country, but well-positioned, slightly ahead in Grid and Connect.
My last one is on data centers. So I guess the market is quite excited about U.S. data center opportunity, given we hear from other companies that U.S. is seeing by far the highest level of growth. When we look at your footprint, you have some gaps in U.S., but you have very strong Canadian footprint. Can you elaborate, like, what kind of opportunities can you address in the U.S. through your Canadian footprint, or will this be an area of bolt-on acquisition to get some exposure down the line?
I think you're right, Akash, for sure. So we are already addressing some of the data center market in the U.S. from our Canadian operation, so it's already working. But to go faster, to grow faster, and this is our ambition in this verticals, adding a footprint in the U.S. will for sure help, and we are working on it currently. But for sure, this is, Canadian are really in the driver's seat today. You know, when we announced the, not so long ago, last December, the closing of Electro is ready to fit with this market. Not only, but it was a big driver, was to go and develop and grow ourself and take the benefit of this segment also in the U.S. from our Canadian operation, including the Electro.
Thank you.
The next question comes from Jean-François Granjon from Oddo BHF. Please go ahead.
Yes, good morning. Just a question around the M&A. You mentioned that the M&A remains key for the company. And you mentioned the US, North America. What do you expect in this region? Do you expect some or are there some lots of opportunities in this market, in which segment, Grid and Connect? And what about the valuation? I think that the pricing is quite high in the US. So, how do you appreciate that? So could you give us some more color about your strategy for the M&A in North America, and most specifically for the US? Thank you.
Sure. Thank you, Jean-François. I'll start. So, so essentially, you're right, we're focusing on the U.S. We see a number of opportunities there. There's the number of acquisitions we could do that would be a perfect fit for us in terms of our track record of integrating and bringing them scale, bringing them scale of purchasing, scale of offering. So, so the market is quite wide and we're pretty, pretty confident that we'll be able to find opportunities soon. The focus will be Grid and Connect, to specifically answer that part of your question. And the last thing, in terms of the multiples, you're right. Multiples in the U.S. tend to be higher, but also profitability, and that's driven by profitability, so it's a bit of a chicken and egg.
We're aware of this. We're looking at it. That's something that makes sense in terms of strategically and driving the right level of synergies and scale further down the road. So multiples will be higher, but if it's the right fit and the right target, we think it's worth the investment.
Okay. Thank you.
The next question comes from Eric Lemarié from CIC. Please go ahead.
Yes, good morning, and thanks for the presentation. I got a first question on CapEx. You mentioned in one of your slide, the regionalization of your industrial footprint. Does it imply, does it imply some additional CapEx to be done? And in general, in term of CapEx, could you give us maybe an update on what we should expect in term of capital expenditures going forward? And has it changed since the last capital market day?
Okay. So one of the driver of regionalization is also to maximize and utilize the full, industrial footprint we have. So when you regionalize an individual footprint, you tend not to, generate any CapEx. You don't need CapEx for that. This is exactly the opposite. You are maximizing all footprint available in your own regions for all different market. So regionalization will not require specific CapEx. Then regarding the looking forward CapEx, I think, you know that in 2026 we have to basically finish our strategic CapEx around transmission. You know, that the Charleroi capacity extension with the TenneT project is ongoing in 2026, so we should be reduced by 2027.
The boat, the third vessel that we have for transmission, we will receive it by Q2, so that will be also ending. So looking forward, there will be less strategic CapEx for transmission, as we have said, and that's exactly we are aligned with what I said, I think, during the last Capital Markets Day in November 2024. But we will, let's say, refocus more on Grid and Connect. But regionalization does not, will not cost anything, it's just maximizing the already industrial footprint we have. On also, you know, the orientation on getting industrial excellence is also a way to maximize the output, better speed, less scrap level, higher quality, and so on. That's also a way to generate more output with existing machine we have.
So, is it reasonable to expect less intensity in terms of CapEx relative to revenues in the future for the group as a whole?
2027, I would say yes. We are not yet done the full exercise, but for sure there will be less CapEx in transmission, because now we need to basically use the capacity we installed with the double capacity in Aalst, the double capacity we will have in Charleroi, the third vessel. So now we have already spent some CapEx. Time for to maximize the return, but the focus. So overall, yes, there will be some kind of reduction, but we have... We are working on it. And I, of course, cannot give you exact number today.
Of course. Thank you, that's very clear. I've got a follow-up one on, on M&A. So you mentioned your ambition in M&A. Could you, could you give us, maybe, a target in term of leverage, in term of net debt on EBITDA? What could be your, your maximum ratio or maximum acceptable ratio in term of net debt on EBITDA?
Yeah, so, so, that's, it's an important element, but it's not what will decide what acquisitions we make. We wanna stay in a normal leverage for the kind of rating we're at and the size of our company. So we'll be prudent, but we have ample capacity and headroom today to actually do quite a bit. Our balance sheet today, as you saw, has low leverage and is underlevered, I would argue, so we are going to use that firepower on the right targets. And then we'll keep the leverage in total within what's acceptable on the market today for a company our size and our rating.
Okay. Thank you very much. And if I may, can I ask you a last one? Just for precision on your slide number 6, or maybe I missed something during your presentation, but you've got a split on the right of this slide 6, of your 2025 standard sales by end markets. And how should we read it? Should we consider that the larger part correspond to critical buildings? I am right? Just like to have an idea of your exposure to data centers, grids, et cetera, with this chart.
So no, it doesn't mean that it's... No, it's not in the order of magnitude. So we decided not to give precise split of the market, so you cannot use it as an order. It's not to be related. The big part of us is clearly a grid business. It's a large part of our business. And then you have inside the different elements, but you cannot read it this way.
The goal is more to show the diversity of our revenue sources and our markets, which makes our profile more resilient. So...
Understood. Fair enough. Thank you.
The next question comes from Lucas Ferhani from Jefferies. Please go ahead.
Good morning, and thanks again for the time. So I'll have to maybe we start with the first one. It's just on the Shift, kind of model. Obviously, it started for a few years now. Do you have any numbers to give in maybe how much is left? Let's take out the recent deals that have made where you, you're working on getting them to kind of best in class. How much is left of maybe the legacy business in grid and connect that still needs to go towards the best performers? 'Cause already quite a bit of work has been done under kind of the previous management team, so just to see how much can that move the needle still. Thank you.
Okay. So I will start to answer to this question. So yes, indeed, we are deploying The Shift methods since several years across different organizations. The way we did in the past years was really to basically send a team of six experts for I don't know, several months, deep diving with the teams, detail by detail, you know, really doing a lot of crunching of data, putting in place pricing discipline, then, and then support the team to transform the business, and then drive the show afterwards. And then move the team to a different country or different organization again and again.
When you do this with firepower, it took us some times to do it because you don't have 200 people doing this. I mean, it's specific teams doing one by one. What is new here is that we are deploying a Shift AI. So what does it mean? It means that now, systematically, without sending a team on site in each of the business, we can have, and this is what we are currently expanding, we can have automatic online constantly a capability to detect if the business is moving the right directions, is following the right price engine, is really pricing up innovation and so on, on not adding complex business, complex product, complex customers.
So using the AI, basically, it's an accelerator in order to cover much faster, all the different units and countries. We have, and you know that because we have communicated quite a lot in the past, past years about the, how we cluster each other business with innovation driver, profit driver, and then core performer. I would say, let's say half to two-thirds of our business are already covered by this, and one-third needs to be, let's say, develop and push. On every business we had, LTC, RCT, Electro, needs to also add on. So every time we keep on integrating businesses, we need to also transform them into one make sure that we are using the same model.
It's a constant work, but for sure, the AI will help us to accelerate and make sure that all the, all the countries are really up to speed in terms of model.
And maybe to give some additional color on it, you have to think that The Shift is not a one-shot action, because as we have explained in some previous call, The Shift is a kind of modernization of financial element, industrial element, commercial element. Which means that according to the years, this element can change. Imagine that you make an investment in one factory, it will change the industrial parameters. You are launching new product, it will change your range of performance-
... in your portfolio. So that's the importance of what Julien mentioned. This Shift AI will allow us to be much more dynamic each time. All this parameter, and I can tell you it's quite a lot of parameters that we put in the modelization, are moving in order to be sure that the setup that we have from industrial, commercial, and financial perspective is always the best in class for each unit. So it's more a kind now of continuous improvement that we are doing thanks to the Shift AI.
Thank you. Just to confirm that one third that is kind of still need to be lifted would include the recent deals, they would be in that bucket, LTC and RCT?
We'll get more deals, more M&As that it will keep on increasing, up to us to quickly integrate and use the model, so then we, we at a certain point of time, we will have less and less business that needs to be going through this model of Shift.
Perfect. Thank you. And then the second one is just on the margins in transmission. Can you comment a little bit on the legacy projects? How much is really left there? I would have thought because offshore wind projects are done and they would be there, and now we're getting to orders, to execute on orders that were signed maybe in years post the deflation kind of era, that should have, let's say, better pricing in them. So is it still a meaningful part of 2026, and should we assume 2027 is completely kind of clean in terms of those legacy orders? Thank you.
Yes, I think here there is no change. We say it in previous communication. We say that 2026 will be the last year with the legacy project, and that you will have a kind of increase in 2027, significant, to reach the high 10% of EBITDA. So we are exactly in this progression, 2023, 2024, 2025, 2026, linear, if I can say this, and then a jump, if I can say this, in 2027, 2028 to reach the high 10% that we have shared with you previously. So we are on track with the approach, and you can say, see in a simple way, no more legacy at the end of 2026.
Thank you. So just a small one on just on Charleston and what is happening in the U.S. I mean, you show in the slide on the overall market that there are opportunities in the U.S. that are relatively small versus other markets. But can you highlight a little bit what is behind that? Is it something else than kind of subsea offshore wind? And is still the plan to use Charleston mostly for European project, and how do you feel about the factory load there, kind of short term and medium term? Thank you.
So, Charleston is a loaded plant, and as you know, we have been agile to reallocate European project to this plant as soon as the Trump administration has modified basically the project that we planned to initially produce for the U.S. market. So today the plant is loaded, and they will remain loaded because we have backlog for that. At the same time, what is interesting to see is the quality of the market in the U.S. is also changing in high voltage, and I will here mostly talk about land high voltage. So we are today investigating capabilities also take some benefit of shifting some of the load to the land high voltage.
So we're currently investigating these opportunities. You know that this is, will be relatively easy to do for us, because initially this plant of Charleston used to be a plant for land high voltage, and then some years after, we transformed it into submarine. So we will put in competition both submarine project on the, or land for the US, and we'll see which basically fits better, both the profitability and the capability to do. So we will investigating also this opportunity.
Great. Thank you.
Hello, can you hear me?
Hello?
Hello, can you hear me?
Now we can hear you, yes.
Yeah, yeah, sorry. Yes, thanks for the follow-up. I, I have one question on copper prices. Since the last CMD, we have seen big increase in copper prices. I mean, in November 2024, we were at $9,000-$9,500 per ton, and now we are at $13,000, and potentially it could move higher, by the time we get there in 2028. So the question I had was that when it comes to impact of copper price movements, especially when they are going up, can you help us understand impact on EBITDA working capital? Could there be something positive given you are vertically integrated into rod? So, would higher copper prices would be positive for EBITDA that you will generate in that processing, or it has a neutral impact?
Basically, the question is that: How should we think about copper price impact on your EBITDA, going forward? Thank you.
... Yeah, no, it's an important question. So, and you're right, the prices are continuing to go up. The good thing is, it's fully passed through for us, so every time we lock into a deal with a customer, we basically pass through the price variations to our customers. So, no direct impact on EBITDA, and, there's no lag. So clearly we're very well protected, and that's a clear point of attention for us in all of our contracts for a long time now. And then on the cash side, we're working in terms of, you know, obviously, it has an impact on just the value of the same amount of stock that you have to process.
But the cycle time is such that it's temporary and, you know, we also get more payables and—sorry, payables inventory and, and the receivables, so all of that works kind of in sync. And, and we're pretty much okay from a cash standpoint as well. And we're working through the different aspects in terms of credit lines with our customers and so on. So, so, so in total, it's very neutral for us.
And because we're vertically integrated and the comfort it gives us in terms of access to mines, access to the rods themselves, as well as the recycling capabilities that we're developing, we think that over time, as prices continue to go up, this will become an increasingly differentiating factor versus the rest in terms of our ability to secure copper sourcing, and making sure that we're able to fulfill our customer needs in terms of cables and wires.
I think this is a very important element. So the increase of copper put some scarcity and some difficulty of sourcing from in the market. Our customers know that we are strategically covered with our industrial different rod breakdown that we have in, because we got four in worldwide. And therefore, it's a way for us to benefit from gain of share wallet, because they know that in a tension moment, with Nexans, they will secure their supply. So that's a, let's say, indirect element, which is positive from the copper increasing.
And we've just to illustrate, of course, it was an exceptional period, but during the COVID period, in many countries, we have been the last company to operate, thanks to this verticalization. Because this verticalization give us success to the full supply chain, control of the supply chain, and, yeah, as I said, in many countries, we are the last company to operate, and then at that time, indeed, having a significant number of market share. So this verticalization is key.
So basically, we can say that there is no financial upside from vertical integration, through copper processing, in times when copper prices are going up?
There's no additional upside, short term, because that's been the case historically. We control our costs probably better. We control our supply better, so that existed before and price is not a direct impact. Longer term, as scarcity increases, this will be a differentiator because we'll be able to secure activity, business, markets, customers, in a more, secure way than, than the competition.
Here, again, I want to add, there is some positive of being vertically integrated. Once again, security of supply, we gain market share, we gain volume, we gain contract because we secure. Second, that we are also investing on, you know, into low carbon copper into our rod breakdown in France. That give us capability to innovate, to provide something which is a technical product that our peers are not able to do, and we are able to price it, we're able to get the premium out of it. So, so, so it has a benefit in our strategy to be vertically integrated, and it's coming from innovation, it's coming from secure supply, and we are able to monetize it.
Thank you.
The next question comes from Scott Humphries from Berenberg. Please go ahead.
Hi. Just a quick follow-up on M&A, if I may. So you've reaffirmed your 2028 adjusted EBITDA target, and you've said that M&A is obviously going to be an important part of getting there. We're now in 2026, and you've acknowledged the time that it takes to transform some of these larger acquisitions like LTC. How are you thinking about the balance between hitting that EBITDA number by 2028 through these acquisitions and hitting the return on capital employed target in that year? Would you be willing to let that ROCE maybe shift out into the future, if you're... which may be a result of making some of these acquisitions in the higher margin, higher multiple spaces. Thanks.
Thanks for the question, Scott. Clearly, for us, what's important is to find the right targets that strategically drive us to the next level. We're committed to the EBITDA target and the ROCE target, and we'll find the best way to balance these financial objectives in the context of making the right strategic acquisitions to position the company for the medium and long term. And the speed at which we can integrate and drive the acquired businesses to Nexans' levels also varies on their size, their geography, so there's many, many factors to take into account. EBITDA is kind of the primary objective that we put in terms of guidance, but we are not losing sight on ROCE as well and the use of our capital.
We've delivered so far, and we're going to try to continue to deliver on ROCE as well.
If I can add one amendment, typically, the acquisition we did in December on Electro in Canada is a very high level of margin, so we'll have immediate and direct positive impact into our profitability when we're targeting also some M&As in the grid segments. I mean, grid, we know on the need for capacity, and we know that we can immediately use this capacity to some segments, some verticals using our technology, low carbon, recycled aluminum and so on, to transform that into value creation. So M&As, even though we are in 2026, we believe that we are the right time to transform into value creation for to hit our number by 2028.
Thank you.
The next question comes from Eric Lemarié from CIC. Please go ahead.
Yes, thank you for the follow-up question. You mentioned land high voltage opportunity in the U.S., and you mentioned this framework agreement with Enedis in France as well. So my question is, should we expect any framework agreement with RTE in France in the high voltage business?
We have two topics for RTE. Today, the way this customer is acting on the market, we have indeed a long framework agreement, which is currently ongoing. It's ongoing, if I remember well, for the next two or three years. After, you have indeed the subsea part. So what they have done last year, and Nexans won the significant part of it, they did a framework agreement with several offshore wind farms in this framework agreement. So that's the first one. And indeed, with a recent approval of a PPE decree, I think it was last Thursday, officially, they are now ready to engage the next RFQ.
Apparently, I will say, they will go in the same direction with, again, a framework agreement on the subsea part with, again, different offshore wind farm within the same RFQ.
Including land high voltage.
Land is always on a specific area, so...
Okay. Okay. Thank you. Thank you very much.
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Well, so thank you all for your questions and for the quality of the discussion today. So I'm glad that we had this opportunity to walk you through our business and share our conviction about the strength of our positioning in electrification, now that we are a pure player in electrification. As you have seen today, our strategy is clear: the structural drivers of business continue to strengthen and our execution remains disciplined. So this gives us confidence and ability to deliver on the group financial trajectory in the years ahead, ahead of us until 2028. Thank you again for your time and continued interest, and I look forward to speaking with you again when we report our first quarter results of 2026. Thank you all.