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Investing.com -- Nexans ’ (EPA:NEXS) stock jumped over 7% on Wednesday after the company reported record 2024 results, boosting investor confidence in its long-term strategy due to strong revenue growth, improved profitability, and expansion initiatives.
The automation company reported €7.1 billion in standard sales for 2024, marking an 8.7% increase on a reported basis and 5.1% organic growth.
The company also posted an all-time high adjusted EBITDA of €804 million, representing a 21% year-over-year increase, with an improved EBITDA margin of 11.4%. Net income grew by 27% to €283 million, highlighting the strength of Nexans’ operations.
The company’s electrification-focused strategy played a major role in driving growth. The segment recorded an organic growth of 13.0% in 2024, benefiting from sustained demand for power transmission and grid infrastructure investments.
The power transmission segment stood out with a 50.3% organic sales increase, fueled by the expansion of Nexans’ Halden plant in Norway and a growing order backlog.
Nexans’ subsea-driven power transmission backlog reached a record €7.4 billion, securing multi-year revenue visibility.
Key projects boosting the backlog included the Gotland electricity connection, the East Anglia TWO offshore wind farm, and the LanWin 2 contract, part of Nexans’ €1 billion framework agreement with TenneT.
Nexans maintained a strong balance sheet, with net debt at €681 million and a leverage ratio of 0.85x adjusted EBITDA.
The company’s ability to generate cash remains robust, with a normalized free cash flow of €454 million, reflecting a 56% adjusted EBITDA-to-cash conversion ratio.
Debt financing activities played a role in shaping Nexans’ financial structure, with the issuance of €575 million in bonds maturing in 2029 and €350 million in bonds maturing in 2030.
The company’s net financial expenses rose to €116 million, reflecting the impact of these financing activities and currency fluctuations.
Beyond power transmission, Nexans’ other business segments also contributed to overall growth. The power grid segment saw a 3.1% organic growth, with an adjusted EBITDA margin of 13.6%.
The power connect segment posted 1.4% organic growth, with an adjusted EBITDA margin of 13.7%. While the industry and solutions (non-electrification) segment recorded a small decline of 2.5% in organic growth, profitability improved, with adjusted EBITDA rising 11.9% to a 12.2% margin.
Fueled by strong financials, Nexans proposed a 13% dividend hike to €2.60 per share and unveiled its 2025-2028 roadmap, "Sparking Electrification with Tech Solutions (OTC:TSCC)," focusing on growth, innovation, and sustainability, with 2025 targets of €770-€850 million in adjusted EBITDA and €225-€325 million in free cash flow.