Earnings call transcript: Nexen’s Q2 2025 growth driven by innovation

Nexen (NEXO) reported its Q2 2025 earnings on July 30, showcasing robust financial performance with significant organic growth and strategic advancements. The company’s stock rose by 2% to $218.68, approaching its 52-week high of $226.93, reflecting investor optimism about its future prospects. According to InvestingPro data, Nexen has demonstrated impressive momentum with a 17.87% return over the past six months.

Key Takeaways

• Nexen achieved organic growth of 4.9% overall, with electrification growing nearly 8%.
• The company reported a record cash conversion ratio of 64% and net income of €374 million.
• Nexen’s liquidity stands strong at €2.8 billion, with net debt close to zero.
• Strategic acquisitions and divestments totalled €2.8 billion, enhancing portfolio strength.
• Full-year adjusted EBITDA guidance has been raised to €810-860 million.

Company Performance

Nexen’s performance in Q2 2025 was marked by strong organic growth and strategic initiatives in electrification and innovation. The company continues to focus on value-added solutions, improving margins through AI-driven pricing and operational efficiencies. As Nexen expands geographically, particularly in Southeast Asia, it maintains a strong competitive position in Europe, driven by its focus on grid modernization and renewable energy.

Financial Highlights

• Organic growth: 4.9% for the group
• Electrification organic growth: nearly 8%
• Adjusted EBITDA: 11.7% for the group, 13.7% for electrification
• Net income: €374 million
• Cash conversion ratio: 64%
• Return on capital employed: 21.6% for the group, 27.5% for electrification

Outlook & Guidance

Nexen has raised its full-year adjusted EBITDA guidance to €810-860 million, anticipating continued strong performance in the Grid and Connect segments. The company is optimistic about margin improvements through ongoing transformation initiatives and potential M&A activity by year-end.

Executive Commentary

CEO Christopher Gillangh emphasized the company’s focus on value-added systems over commoditized products, stating, "We are not competing only on volume on commoditized product. We are competing on value added system, on execution reliability." CFO Jean Christophe Julien highlighted the significant improvement in Connect margins, noting, "Six years ago, we were on average at 8% on Connect margin. We are at 15% today."

Risks and Challenges

• The automotive segment remains challenging, potentially impacting future growth.
• Market volatility and macroeconomic pressures could affect strategic initiatives.
• Supply chain disruptions may pose risks to operational efficiency and cost management.
• Seasonal factors could influence performance in the second half of the year.

Q&A

During the earnings call, analysts inquired about Nexen’s confidence in H2 performance despite potential seasonality. The company expressed optimism, citing active mitigation plans for the GSI project and ongoing exploration of strategic M&A opportunities in the Grid and Connect segments.

Nexen’s Q2 2025 earnings underscore its strategic focus on innovation and value-added solutions, positioning the company for continued growth in the evolving energy landscape.

Full transcript - Nexans SA (NEX) Q2 2025:

Conference Operator: Ladies and gentlemen, good morning, and welcome to Nexen’s Half Year twenty twenty five Earnings Conference Call. As a reminder, this conference is being recorded. Please note your lines will be on listen only for the durations of the call. However, you will have the opportunity to ask questions at the end of the call. I would now like to turn the call over to your host, Mr.

Christopher Gillangh, Nexon’s CEO, to begin today’s conference. Please go ahead, sir.

Christopher Gillangh, CEO, Nexen: Thank you. Good morning, everyone, and welcome to NEXON’s Half Year twenty twenty five Results Presentation. I’m joined today by Jean Christophe Julien, Deputy CEO and CFO and Elliot Rue, Executive VP for Power Grid and Accessories. I will turn you over to Audrey Bourgeois, our Investor Relations for the conference call rules.

Audrey Bourgeois, Investor Relations, Nexen: Thank you, Chris. I would like to remind participants that statements made during the conference call, which are not historical facts, are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Readers and listeners are strongly encouraged to refer to the disclaimers, which are an integral part of our universal registration document, along with the audio replay of today’s call that will be posted on our website, nexon.com. I now turn to you, Chris, who will go over the H1 twenty twenty five highlights.

Christopher Gillangh, CEO, Nexen: Thank you, Andre. We are very pleased to share with you what we believe, which is not just strong set of results, but the clear manifestation of a company that knows where it’s going and why. Our first R2025 performance is not the product of a momentum, it reflects the structural strengths of a model that we shape over the last years. Essential, focus, selective, recession proof, with very strong portfolio discipline, capital efficiency, operational simplification. As you can see, we keep delivering consistent performance in inconsistent times.

I will talk as well, we now entering in a new phase amplified by artificial intelligence that I will mention later in the presentation. So let’s go to page four. Let’s be clear, it’s not, as I said, a good set of results. It’s about transformation of the group, consistency on delivering. It’s about teams, Nexon’s teams across 41 countries, executing with discipline on facing global headwinds.

What we can say, of course, is a great organic growth of 4.9% for the group, but an exceptionally electrification organic growth nearly to 8% for Electrification. The group adjusted EBITDA is at 11.7%. GC will detail a bit more this, But the Electrification adjusted EBITDA reached 13.7%. Thanks to down payments, we had an exceptional cash conversion in the first semester with a 64% cash conversion ratio and as well a record return on capital employed, 21.6% for the group, 27.5% for Electrification. Of course, I will come back in a bit more details about our recent strategic acquisition, LCT, and as well, of course, the successful divestment of Linksio.

Let’s move to page five. I love that slide because you can see that steadily we keep outperforming semester after semester. So we reached EUR $441,000,000 of EBITDA, EUR $450,000,000 at constant scope and exceptional free cash flow at EUR $282,000,000 have been reached for the first semester. And as I mentioned, return on capital employed at 22%, which mark a record for the group. Constant scope is about 24% and as well as electrification that has been already mentioned.

Let’s go to Page six. I think it’s important to make a pause here because in the last four years and a half, we have been able to rotate an equivalent of EUR 2,800,000,000.0 of our activities, so EUR 1,400,000,000.0 of acquisition in one hand and EUR 1,400,000,000.0 of divestment on the other hand. So we are very, very close to the becoming a pure player of electrification. Some of course, some work still ongoing for Autolitriq, but as well, we are very active on the M and A part. It takes time, but because we want to make sure to target the right company profile for our long term growth.

But of course, we need to support Jean Christophe to spend a bit some money because as you will see, he’s full of liquidity. Let’s go Page seven. So in Page seven, Cable RCT is more than a transaction. It’s for us a fast track into a scalable growth in Southern Europe, EUR 133,000,000 in annual revenue and so on top of what we will do. But what is very interesting and has been as well a very attractive element for this acquisition is that we have already an equivalent of 25% of potential increase, thanks to production capacity that has been prefunded by the former owner, so ready to be loaded.

So that’s an exceptional element for us, specifically in Spain because you’ve seen the news flow. Spain is extremely dynamic on resist from any form of recession. It’s important as well that you you can see that in the photo with the compounders. We have a very strong expertise with RCT on the fire safety cable, which is, of course, creating higher value on higher barrier to entry. So that’s for us, this acquisition is a financial win for Nexans.

Perfect strategic fit plug and perform. It’s important to mention that because it’s, of course, it’s an HR topic, but with the new employee ownership plan, we achieved a fantastic record of participation rate, 46%. The average of the SBF 120 companies is about 38%. So we had 46% participation rate. To be noticed that in the formal plan for our employee, we were at 33.

So that show that the engagement on the trust in the leadership team, vision, strategy of Nexans towards all our employee all across the globe. And I’m very proud now to announce that our employees hold almost 5% of Nexon’s capital, which is more than twice what we see in average in the SBF 01/2020. Hello, I know that this slide could be a bit abstract, complex to read, but believe me, demonstration will come live very, very soon, certainly for the full year publication. We are very advanced on the artificial intelligence like we did mention during our Capital Market Day. So our transformation program is not only a transformation program that is become a very intelligent operating platform amplified by AI and by generative AI.

So what we are doing with AI is, first, is all about costing. So automating multi variable costing simulation at plant level in real time to reflect raw material, labor, energy price fluctuation. So for us to result in a faster or more accurate cash flow generation and as well cost improvement. Dynamic pricing, we are in the sectors, we are not the king of pricing management, I would say, compared to other sectors. So here it’s about leveraging machine learning models to optimize price elasticity and detect margin leakage across thousands of SKUs and thousands of customers.

Advanced segmentation using clustering algorithm to reclassify clients and product dynamically, not only question of size or geography. Predictive demand planning, that’s a big, big topic specifically on grid and connect world. So it’s applying AI to detect the weak signal in order books, in market patterns, in customer patterns to enable early anticipation of demand swings, ups and downs, and of course, resource allocation, I’m talking here capacity on inventory. So with the integration generative AI, here we are going really a step further. So what you see in the slide that just my personal conviction because I’m the developer of Shift for years, I would say a traditional manager use only 5% of the data available in the system.

Shift model is using for the last years an equivalent of 20% of the data available in the system. Over that, it’s beginning too complex to analyze and the AI allow us to now run simulation across 90% of the data available in the system. And we are not using AI to replace people, we are using AI to enhance performance and to turn all these data that are truly gold into cash. Let me turn for all the macro views and business review turn to GC for the business overview and as well Elliot that will comment on Power Grid.

Jean Christophe Julien, Deputy CEO and CFO, Nexen: Thank you, Chris. So I’m now on Page 11. So if we deep dive a little bit on the performance of the first semester versus last year 2024, the semester of 2024, As Keith mentioned, you see a quite stronger group organic growth at 4.9%. But when you look at electrification, basically the improvement is much more significant, close to 8% organic growth. You see also that the margin is slightly improving in terms of percentage, but don’t forget that at group level, we have the versus last year, the divestment of AmerciBoard, which was accretive.

And we have the change in scope due to the addition of six months five months of latrifenetacavi that is under transformation, but it’s still, I would say, below the average in terms of margin for the group. If you keep the same perimeter, the margin is above 1.5% higher, so close to 13%, so which is a very strong performance, I would say, in terms of margin. Other activities, a nice growth to report also, 8.4%, mainly driven by the fear on the tariff on copper and the fact that some of our customer accelerated orders in case tariff was implemented by The U. S. So that, I would say, boosted the growth in metallurgy business.

And Non Electrification reported a negative organic growth on 2025, mainly again due to two main reasons. The first one is the Automotive segment, which is in the Automotive area still lagging behind. And the Automation business, the Robotics business in the Industry and Solution group, which is also still not recovering from the low point of last year. But again, globally speaking, a very strong organic growth. I will deep dive now into the businesses.

So if I move to Page 12 and you look at Power Transmission, as we reported in the first half, a strong organic growth above 20% in transmission. We continue to enjoy a strong boost, thanks to our high backlog, record level backlog in transmission, so 21.7% growth. Also, you can see an adjusted backlog versus June 2024, which is increasing by 16% to reach 7.8%. We are still contemplating a book to bill of one for the year of 2025, meaning that order intake will basically be in line with the revenue recognition. So a backlog that should remain at the end of the year above EUR 8,000,000,000, so a strong H2 in terms of order intake.

Very important because there is a lot of scrutiny here on the profitability of our transmission business. So we committed in 2024 that we will continue to ramp up the margin evolution on that business. And I said multiple times that the improvement will be gradual semester by semester. And when we will clean up from the low margin project, mainly in The U. S.

At the end of 2025 that you will see nice improvement But midpoint of 2025, you still see that we’re improving the margin by almost one point and plus EUR 20,000,000 of EBITDA of the business. So we are on track. We continue to improve the profitability of that business, which is critical for us to regain basically the level of 17% to 18% on which we were before 2023. If I move now to the next page and I will turn to Elliot, who will talk about Power Grids.

Audrey Bourgeois, Investor Relations, Nexen: Yes. Thank you, JC. So as we said in Q1, we have accelerated in the Power Grids growth with generating above 9% growth year on year in Q2, which rose to H1 at 5.6% year on year growth. This is based on acceleration both in North America, South America and the accessories business as well as, as we announced, the acceleration in Europe. So all the trends on the Power Grids are green for now in the question of grid modernization, extension, but also connections of renewables and data centers that is driving a structural trend for Power Grids business as well as we have continued to accelerate in our smart solutions, including services, high value products like accessories that I will present just in the next slide.

And this is enabling us to have a high level adjusted EBITDA to 15.9% for this semester with an increase of 2.4%. This level of EBITDA will remain high in the coming quarters. And just to remind you that we will continue to accelerate in Q3. So talking about acceleration and talking about record high for Power Grids, we are now this semester, coming semester, going to launch breakthrough innovation called EasyJoint powered by AI. So AI actually for our customers this time and thanks to SkillsPower.

So what it is about? First thing is that we are addressing the global market with this innovation. We are launching this system and solution into more than 40 countries, four zero. The main customers behind are of course the grid operators that needs to modernize and extend the grid. Just to mention some countries, not the names of the customers, but the main countries targeted first for this innovation are Germany, Poland and Morocco.

And we will do that across the globe for one reason is that you remember we talked about securing the grid all around the globe, and this is thanks to increasing reliability of the grid with one very simple things in terms of results, very actually innovative in terms of making it happen. We are decreasing by five times the step to install connection into two cables together. Remember that during our CMD in November, I explained that 90% of the grid failures are linked to the connecting accessories. And also remember that the majority of all grid failures on the accessories are due to, you know, bad human installation. So that’s why we are combining this with AI.

So our AI solution has been learning from our own experience in the field. So as you know, we are owning training centers worldwide. And thanks to this knowledge and expertise, we have been able to train the AI to basically recommend the right installation of those joints worldwide for any type of customers. And we are combining it with certifying installation trainings to be able to deliver a license to operate to our grid network installers. So this is for September live, and we continue to follow-up on this great shift in technology for the grid.

Thank you, and back to you, JC.

Jean Christophe Julien, Deputy CEO and CFO, Nexen: Thank you, Elias. So let’s move on now to the next section, the financials on Page 17. So I will not comment the organic growth because we just did. But adjusted EBITDA at 11.7%, you see the contribution on the graph on the right part of the page. You missed Power Connect.

Christopher Gillangh, CEO, Nexen: Sorry. Sorry. I missed Power Connect.

Jean Christophe Julien, Deputy CEO and CFO, Nexen: Sorry, Chris. Thank you very much. So sorry sorry about that. Let’s move back to page 15. Power Connect.

So on Power Connect, we see, I would say, a nil organic growth. It’s more for us a phasing effect because we are expecting a very strong Q3. So overall, I would say we have a mixed performance across the region. Europe and APAC has been slightly down versus the first semester of last year. We have North America, South America and Middle East and Africa has been performing very well.

For instance, North America plus 19%, you know for us it’s Canada when we talk about North America and The Middle East and Africa plus 10%, where Europe has been down about 3.5% in terms of organic growth. We have been able to maintain the margin despite, I would say, the acquisition of LTC, which is, as I mentioned earlier, a little bit dilutive in terms of margin, but we remain at 13.7%. And just as I mentioned earlier, if you look at the same scope of 24%, the EBITA margin in H1 twenty twenty five, excluding LTC meaning is at 15.1%. So we’re moving from 13.6% in 24% to 15.1% excluding LTC. And LTC, we are working to bring the synergies to transform the business like we’ve done for other businesses and this is well on track.

So soon LTC will be back at the contribution level than the average of the Connect business. And again, what is important to retain from that is that we see at the July already almost halfway through the first the third quarter, a very strong organic growth in Q3 in Connect. So now let’s move to Page 17 on the financial section, and I will start with the profit and loss statement. I will not comment the organic growth. Adjusted EBITDA at 441%, 11.7%.

Record level, as Trif mentioned earlier, for adjusted EBITDA of the route, it’s above the twenty nineteen full year EBITA and much, I would say, higher than what we committed in the guidance in February. You see the contribution of the businesses to that increase in EBITA. A big chunk is a recovery of Power Transmission, as I mentioned, but also contribution from PowerGate and PowerConnect. One word maybe about the net income, looking at the other operating item, you see EUR $232,000,000, which is the capital gains that we’ve had on the divestment of Linxio and Amer Cable in the first half of the year and a small impairment on non electrification bringing EUR $243,000,000 I would say, exceptional one off gain in the net income. And the net income therefore reached EUR $374,000,000 at the end of the first semester.

Moving to the next slide and we look at our net debt on the cash flow generation, you see that consequently of the disposal of the asset, we have today no leverage on the balance sheet, net debt is close to zero. So no leverage, net leverage on the balance sheet of NEXONSE from 0.85x net debt to EBITDA to zero. You see the strong contribution obviously of the adjusted EBITDA. We also enjoyed a quite significant positive change in working capital, mainly coming from power transmission and the down payment we have received in the first half like contracts new contract like Malta Sicily, for instance, that we load the Charleston plant. That brings the cash flow from operation at EUR $478,000,000.

Capital expenditure CapEx remains a little bit higher than, I would say, the typical maintenance CapEx mainly due to the completion of our vessels, the last vessel of Power Transmission Electra that would come to operation in the first quarter of next year, but we still have some significant CapEx linked to that. And we have also started investment into our Nexa Green recycling facility in France to increase our recycling output in the next five, four years as we committed in the last equity story. And again, $613,000,000 coming from the cash received from the divestment of Linksio and Mercable less basically the payment the acquisition of the asset in Spain. Net is EUR $613,000,000. And again, at the June, no debt on the balance sheet.

If I move to Page 19 now and we look at our liquidity, so we have cash on the balance sheet in excess of EUR 2,000,000,000 versus EUR 1,200,000,000.0 at the December, again coming from the divestment. A very high liquidity level, if I add up to the cash on the balance sheet, the EUR 800,000,000 have already untapped revolving credit facility. So EUR 2,800,000,000.0, I would say, liquidity, which give us a lot of room for basically growing replacing the divestment with new M and A in the future. Leverage ratio, as I mentioned earlier, zero. And we are extremely well positioned to seek an upgrade in our guidance in our rating, sorry, seek an upgrade in our rating to investment aid, I would say, probably by the end of the year, early next year, ’26, with the cash on the balance sheet, the debt level and also the increased level of margin of the business, which is over performing.

If I move now to the last section, and I will talk a minute about the upgrade, I move to Page 21. So adjusted EBITA guidance with a very strong result of the first half, we’ve decided to narrow the guidance that was EUR 80,000,000 range. We narrow it to EUR 50,000,000 and we also increase it on the upper part of the guidance to come EUR $810,000,000 to $860,000,000 guidance, which is EUR $835,000,000 at midpoint. And we’ve increased the cash flow by €50,000,000 on the low point and the high point of the range. If I move now to the Page 22, just to give you a little bit of flavor to understand the margin, the guidance movement and the guidance evolution.

So obviously, in the new guidance, it’s EUR 60,000,000 to EUR 10,000,000, we have excluded the divestment of Linksio, which is EUR 45,000,000. Linksio, as you know, the transaction is now closed. The asset is outside of Nexon’s portfolio. So that’s reducing basically the impacting negatively the year by EUR 45,000,000. On the opposite of that, we have the acquisition of this little asset in Spain, which contributed EUR 4,000,000.

And then after that, we foresee EUR 66,000,000 roughly of improvement coming both from organic growth. And again, we foresee, as I mentioned earlier, very strong organic growth, both Indeed and Connect in the third quarter, very strong double digit as well as continuing to see a very strong organic growth in Power Transmission. So we will see I would say in the Q3 presentation, you will see some very strong organic growth performance in the business. And we continue, of course, as Chris explained, to work on our transformation with Shift and structural improvement will be significant in the second half. One of the key assets that will go through the transformation is LaTriVin et AcaVi, as I mentioned, which is still about 1.5 dilutive versus the average of Connect, and we are catching up on putting this business back on the track of the average of Connect and Exans.

So between structural and organic growth, basically, we will more than offset the divestment on Linksieur and we will more than offset and therefore able to raise the guidance and increase the midpoint by EUR 25,000,000. That will conclude my presentation. I will now turn back to the operator for Q

Christopher Gillangh, CEO, Nexen: and Before we go to Q and A, I think you’ve seen that we announced as well the fact that Jean Christophe will leave the company in the coming months. So my dear Jean Christophe, it’s not easy to capture in words everything you’ve brought to an extent. Okay. To me personally and to the team over those seven years, you have been by far more than a CFO. You’ve been deputy CFO, but as well a good friend.

A very true companion on the journey. In every pivotal moment of our transformation. It has not been easy every day, but you have combined precision, perspective, operational discipline, strategic insight. I was just astonished by all the dynamism on this professionalism that you bring to Nexans. Together, we navigated into very high complexity.

We made together bold choices. We built a business model that now stand as a, I think, a benchmark of resilience, at least that’s seen in a number. Your loyalty, steadiness, and ability to embody high governance standards while while always sticking close to realities of the business have made you a deeply respected pillar for both, of course, inside the company and outside the company. So a big thanks, Christophe, for your trust, your dedication, and for everything you achieved with me side by side on the on the team. I wish you, of course, the very best for your next chapter, Jean Christophe.

But I have not know that it would be very exciting because given your profile, you are full of opportunities. Thank you, Jean Christophe. Thank you very much, Chris. Now we are ready for Q and A.

: Thank you.

Conference Operator: Thank you. We will take our first questions from Akash Gupta from JPMorgan. Your line is open. Please go ahead.

Akash Gupta, Analyst, JPMorgan: Yes. Hi. Good morning, and thanks for your time. I would also like to start with paying my tribute to JC. I think you have been quite remarkable in your performance at at Nixon and the turnaround that we have seen over five years.

So definitely, you will be missed going forward. The first question I have is on the guidance. And when I look at H1 versus H2, so you did $441,000,000 in first half, and that includes $45,000,000 from Linxio that will be no longer part of Nixon’s in the second half. And at the midpoint of the guidance, you’re implying $394,000,000 in the second half. So more or less, you are expecting a similar strong H2 on an underlying basis than H1.

So the question I have is that if you look at the normal years, we do see some seasonality where H2 is somewhat weaker than H1. So maybe if you can help us elaborate what is driving this strength, how much visibility do you have on this strength in second half? And how much is the optimism both on your internal areas, structural areas of improvement as well as, let’s say, demand? That’s the first one. Thank you.

Jean Christophe Julien, Deputy CEO and CFO, Nexen: Thank you, Akash. I will take the answer. So there’s a couple of elements that makes us quite comfortable about the raise of the guidance and our ability to have an H2 a strong H2. The first one is that when we did the first guidance in February, we had no visibility on GSI, and I’m sure you will have a question later on GSI. Right now, we covered on GSI through the, I would say, past the summer and the September, which give us already in the year of 2025, much stronger visibility.

And you know that GSI contribution in the year ’25 was from the beginning quite material, I would say. So that’s one of the big risk which is not completely over yet. Obviously, we still have some exposure, but it’s largely mitigated from the cash we’ve received to date on the project, which is again $250,000,000 and significant payment received in the first half that takes us through again at the end of the summer, September for 2025. The second thing is that we are in July. And as I mentioned, we foresee a very strong third quarter, both in Green and Connect.

When I say very strong, it’s really above, I would say, what we’ve reported and what we have seen so far in the past on the Q3 basis, so much, much higher, which give us obviously some very strong confidence on our top line. We foresee and when I say that we see double digit organic growth in both grid and connect. And we foresee also Q4, which is lower, but still good. So basically, we are optimistic on the top line performance of in and connect, and we continue to see growth also maintaining at the level in transmission. So again, an organic growth component, which is usually you know that we are always a little bit cautious when it comes to organic growth because we are not hiding the business based on volume but value.

But here, we foresee good signal for, again, for the second half. And last but not least, I mean, we have, as I mentioned also, we will start keeping the transformation benefits from the La Tribune eta Cavi, which is running still today roughly at 10% EBITDA margin when the average of Connect is at 15%. So we have and this is a EUR 700 to 800,000,000 business. So here, we have significant, I would say, room for improvement in terms of margin percentage. And we will start to see some quite nice benefits from that in the 2025.

And then we’ll continue the improvement. Hopefully, we’ll not be that strong yet in H2, but power transmission will at least maintain or slightly improve also its margin. So globally, I would say in Electrification, the trend of the activity of the business is stronger than the top line and we continue to do the transformation work within the business and the combination of both give us basically this quite optimistic view about the full second half and the full year.

Christopher Gillangh, CEO, Nexen: Yes, Kashy, if I may add just an element on GC comment is, we discussed that with some investors and yourself a few months ago, it’s our baseline, the legacy baseline of Nexans for Grid and Connect, so without acquisition, is structurally improving semester after semester, thanks to the transformation program. The M and A, recent M and A are not yet at their level of EBITDA, but of course, we’ll keep progressing. So this is why we are as mentioned, you see, we are confident in the profit generation in the coming semesters.

Jean Christophe Julien, Deputy CEO and CFO, Nexen: Yeah. And and we knew that when we acquired assets like LTC, we paid, we believe, rather low multiple level for for Connect European business. But obviously, because we we acquired assets with lower margin and lower growth level. But with the transformation ability that takes a couple of years bringing you the synergy, we can bring it back to the average and benefit from the low multiple we paid and at the same time get it in two years to the level of the average and create a lot of value. This So is a model and this is what you will see in the coming quarters.

Akash Gupta, Analyst, JPMorgan: Thank you. And my follow-up question is on recovery in Connect. So I think you had small decline in Q2 and you are expecting a strong Q3 with strong start in July. And maybe if you can elaborate on what is driving the strength in Connect and maybe provide some color on geographies. I think you did in for Q2 that you had decline in Europe and Asia and growth in Americas and The Middle East.

And maybe a follow-up to that connect. If this growth is driven by new product launches from you, which is helping you gain more market share? Or is it just simply the destocking, restocking cycles that your customers may have destocked and now they need to restock? So just to better understand what is driving strength in Connect? Thank you.

Jean Christophe Julien, Deputy CEO and CFO, Nexen: Yes. I will start and I will let, obviously, Trish, who knows the business by heart, elaborate on the product and the business itself. Well, the low point definitely in terms of organic growth has been reaching Q2. We had in Europe funds I’m talking Europe, sorry, Connect Europe, we’ve had almost close to minus 4% organic growth, which is basically since this is a larger size, it represents about 40% of our Connect business worldwide. So therefore, it pushed back down basically the average of Connect and get to 0.2% that you’ve seen in the first half.

But Europe and the key countries in Europe, we see a quite nice rebound in the third quarter and fourth quarter, which helped basically driving the overall performance when other areas that are strong like North America and South America and MEHRA, Middle East and Africa will remain very strong at double digit. So basically that basically rebound of Europe and the maintaining of the other one will explain how see we this top line increase. And then there is all the factors.

Christopher Gillangh, CEO, Nexen: Yeah. So some some some element on the on the margin performance because we we know that some some area are a bit in downturn situation like in Europe. But I think what is important is that Power Connect in H1 is not the financial result is not the result of a destocking effect or short term swings. It’s really structural improvement that, of course, we implement for several years. The first is the innovation on the optimized product portfolio.

We phase out low margin references and we really now focus more and more on value added solution on premiumization through energy efficiencies, critical buildings, building connectivities. Second, we’ve rolled out more almost almost everywhere, not yet there, but disciplined pricing strategy supported by shifts. And now AI will allow us, as I mentioned, to better, I will say, analyze the the the profit leakage in details to really capture a greater margin. And of course, operational performance, unusual performance, a lot of improvement in manufacturing as well, thanks to the Industry four point zero deployment. So overall, it’s margin gains that have been structural and sustainable.

And of course, as mentioned this year, revenue growth will reaccelerate progressively.

Conference Operator: Thank you. Thank you. We will take our next questions from Daniela Costa from Goldman Sachs. Your line is open. Please go ahead.

Daniela Costa, Analyst, Goldman Sachs: Hi, good morning. Thank you so much for taking my questions. I have two as well. I will ask them one at a time. But maybe actually for JC, starting out with sort of the balance sheet and there was a couple of mentions, obviously, and A is still in your agenda.

Can you update us a little bit about how active is the pipeline at the moment? You’ve done some things already this year. So should we expect that cash redeployment to happen already this year? Or is it more of a longer run process? And should we assume the balance sheet will go or the new cash will go all into M and A or there is also a possibility of considering increasing cash to shareholders?

I’ll start with this.

Jean Christophe Julien, Deputy CEO and CFO, Nexen: Yes. I’ll take the question, Daniela. Thank you. We are active on M and A. We have multiple, I would say, targets that we are progressing on.

I am quite we are quite comfortable that we should be signing something by the end of the year and maybe closing beginning of next year. So part of the cash allocation will go to that M and A and definitely not to the level of the total cash available we have because we have a lot. And the second part of your question is, would we consider basically special dividend payment or share buyback to return cash to shareholders? The answer to the question is, yes, it’s a possibility to be discussed and agreed by the Board. But it always remains a possibility.

But for sure and this is what we said in our equity story and our Capital Market Day equity story anyway. But the main purpose and the main objective of cash allocation will remain M and A, and this is what we want to deploy our capital for.

Daniela Costa, Analyst, Goldman Sachs: Got it. Thank you. And then just a more broader question, you’ve Chris said backlog to to be above eight by the end of the year. Just, with within this point, can you talk through a bit of the areas where you see more active tendering, any jurisdictions in particular? And also on that on that point of visibility that you have for next year, how relevant was GSI into next year makeup of numbers versus 2025?

How sizable will will the the capacity that you will have to allocate and keep available for GSIB?

Christopher Gillangh, CEO, Nexen: Yes. Today, I would say there is still a very, very strong dynamic in terms of tendering activity. I will say mainly mainly in Europe for offshore wind farms. So we we we expect to to win some significant deals in the in the coming months that will push your backlog above $8,000,000,000 So I will say no much concern. I was no main news flows in regarding pondering activities for power transmission, ABGC on the GSI for the allocation for 2026?

Jean Christophe Julien, Deputy CEO and CFO, Nexen: So GSI, definitely, for 2026 is a key element of our financial trajectory. It continues to ramp up from ’24, ’25, ’26, as as we said. So it’s it’s I will not give you exact numbers, but I can tell you that it’s meaningful. But you know that if it does not materialize in the coming weeks or before September, we are working with the authority on the plan B, which is to switch to the cable and the production to another project with Ipto that will basically replace the impact and the production of GSI. So between the plan a, which is getting where we want to go with GSI and the plan b, which is in focus right now in cases, we are, I would say, quite confident about our ability to deliver twenty six one way or the other.

Daniela Costa, Analyst, Goldman Sachs: Got it. Very clear. Thank you

Xin Huang, Analyst, Barclays: so much, and good luck, JC.

Christopher Gillangh, CEO, Nexen: Thank you very much, Daniel. Thank you, Daniela.

Conference Operator: Thank you. We will take our next questions from Chris Leonard from UBS. Your line is open. Please go ahead.

Chris Leonard, Analyst, UBS: Yes. Hi there. Can I please ask three questions, I’ll take them in turn? Maybe starting on the Graty Internet contracts, which you just mentioned, Christophe. Could could you maybe update us on how your discussions are going currently with with the customer, if so, as to whether or not the work will continue, on plan a, let’s say, after August or or early September?

How confident are you currently that, that you might see that being extended, and go ahead with plan a? I’ll start there. Thanks.

Christopher Gillangh, CEO, Nexen: Yeah. I I will say that, what I can tell you is that we maintain full operational focus on executing GSI as planned. There is no delay in terms of production, I would say. So the project remains very active. Manufacturing continuing in Aden and in Futsu in Japan.

So of course, we acknowledge the geopolitical context, but it too has confirmed no change in the corporate commitment. So the moment, our exposure is secured by the advanced payment on strong margin. So as cannot say comment much more is we have some plan B in case of, but the plan A is still on.

Chris Leonard, Analyst, UBS: Okay. That’s clear. And second question is on Grid and then speaking in the release about margins still have further to go here. And is that in reference, to second half? Or is that in reference to, looking at outer years after 2025?

Audrey Bourgeois, Investor Relations, Nexen: Yes. So like I said just earlier, we will continue to increase the level of EBITDA. So you’ve seen that there was a slight difference versus last year performance, which was phasing and mix effect. So nothing structural behind. And like I said, I repeat, it will continue to increase in the coming semester and years.

Chris Leonard, Analyst, UBS: Okay. Thank you. And last question just on M and A. Obviously, you just discussed it there, but you’ve got the firepower and clearly leverage can be used if the right deal comes along. Maybe it’d be helpful if you could just talk through sort of the hurdles and what you’re looking at in terms of targets financially, what you’d need to see to add these acquisitions in across grid and low voltage connect.

If you could give any sort of framework or rationale for what you’re looking for potential targets, would be super helpful. Thanks.

Jean Christophe Julien, Deputy CEO and CFO, Nexen: Yeah. Sure. I I can do that. So typically, our investment in many cases remains the one we explained in detail in our Capital Market Day in in November. Grid and Connect will be the focus.

No M and A in transmission, of course, due to the high CapEx level and the fact that it’s a saturated market, consolidated market. Grid and Connect, we like both. We’re looking at geographies whether we remain in geographies where we are already present and we just increase our market share by becoming number one, becoming number two. That’s something we’ve done for instance with ECA in Finland. We’re doing in Spain and Europe.

So we are very present in Europe and we are increasing basically our strength in Europe. Or we other cases would be to move to a new country. So we’re looking, for example, in countries like in Southeast Asia, where we are not present. We are in China. We are in Oceania, but we are not in Southeast Asia.

So definitely, this could be a very interesting investment for us. In that case, we would seek a larger player because we want to make sure that we have sufficient footprint to be, I would say, a leader in the country. Other opportunities could be U. S. We are not present in medium and low voltage.

So typically that’s the second thesis. So moving in a new geography, I would say, but with a sizable investment. And the last thesis we have on M and A is moving basically slightly outside of cable, pure cable manufacturing. We call it internally adjacent to core, adjacent to the core business, could be and that’s to to basically offer more complete bundle services to the customer, not just through cable, but through packaging, through IoT, through services, connectors, accessories. So basically, enlarging, I would say, our offer by bringing something more than just a just a a cable to the customer.

So that’s basically that would be smaller size, probably smaller size in terms of revenue investment, probably slightly higher in terms of margin and if especially if you start to see digital in in the acquisition, but would be a perfect fit for basically the solutions we want to bring to our customers.

Chris Leonard, Analyst, UBS: Thank you. And then maybe a follow-up on that, just thinking about the margin trajectory into 2026. If you do do a big acquisition, obviously, you’ve spoken about La Trivia de Cavey in the Connect business being a sort of margin headwind before synergies come through. Would you expect a similar story to be there, if there’s a sizable acquisition that happens in second half this year being a sort of headwind to some margin near term, before synergies come through on those acquisitions for 2026 or 2027?

Jean Christophe Julien, Deputy CEO and CFO, Nexen: So, yes, sure. So we don’t foresee any similar, short term, any similar big size acquisition at lower margin level like the one we’ve done last year for Natuzzi Netacavy. We have some target in that area, but they are not the one we are focused on right now. So the type of acquisition we are looking at more mid sized we are looking at a more mid sized today between EUR 200,000,000 and EUR 400,000,000. A bunch of them are more adjacent to the core product.

So we’re not foreseeing the situation we’ve seen in ’24 with a big acquisition in connect low voltage with lower margin, low multiple and takes two years to bring the synergies. This is not what we are actually foreseeing the moment. So we should see no impact in 2025 for sure and 2026 margin in the plan.

Chris Leonard, Analyst, UBS: Thanks very much. I’ll leave it there. Thank you.

: Thank you.

Conference Operator: Thank you. We will move to our next questions from Nabil Najib from Deutsche Bank. Please go ahead, sir.

Chris Leonard, Analyst, UBS: Hi, yes. Thank you for taking my question. I’ve just got one, please. Can you comment on the impact of copper tariffs in The U. S.

For you, particularly as it relates to your facility in Charleston, which I guess, sources its copper from Canada?

Christopher Gillangh, CEO, Nexen: Yeah. Yeah. So first of all, all the copper for all the, I will say, contract have been already booked. And there is, you know, there is an exemption if it’s exportable. That means if the cable produced in US will be export, and that will be that that will be what will happen in the in the coming years because the the project that we we will we will do manufacturing Charleston will be for the European market.

So you get the copper from Canada and you will have the exemption of the tariff because it’s export to Europe.

Conference Operator: Got it. Thank you.

Christopher Gillangh, CEO, Nexen: Thank you, Nabil.

Conference Operator: Thank you. Our next question comes from Lukas Verhani from Jefferies. Your line is open. Please go ahead.

: Good morning. Thanks for squeezing me in. So I have a couple, maybe just to start on the acceleration of of growth in Grid and Connect. I think you talked about in in the past, you know, growth could be dilutive to margin, and so you’re not you’re not necessarily trying

Jean Christophe Julien, Deputy CEO and CFO, Nexen: to push growth. Are you

: able now to combine kind of growth and and margin? Does that growth come also at, you know, good margin levels?

Christopher Gillangh, CEO, Nexen: Yes. Of course. Let let me refer on if you can have a look to our Capital Market Day. We we we say that the two first equity story was about transformation, cleaning up our portfolio base, both customers on SKUs is what we have been able to achieve between 2019 and 2024. Now we say that our portfolio of customers on SKUs is full of good cholesterol, good fat, and now it’s good to grow with those customers.

So as we mentioned as well is, we have been challenged by the fact that by some investors say, I mean, you can grow up to 7% in average for growth for Grid and Connect, that’s true. But we consider that in average, three to five is the optimum point to ensure growth that will not be dilutive to EBITDA and cash. So that’s always this kind of sensitivity table that we are using, making sure that all point of growth are accretive to EBITDA or does not dilute the average. That’s the logic.

Jean Christophe Julien, Deputy CEO and CFO, Nexen: You take the example of LaTriVineta that we acquired last year. We we we think Connect will grow in Q3, LaTriVineta will not grow because we need to transform that three minutes before it grows. Whereas other assets that are now, I would say, profit driver or innovation drivers, Northern Europe or even countries in Central Europe are That was not the case maybe a year or two years ago because they were not transformed. So the growth every point of growth will come with a d t a creative t level of margins.

So we combine both. But you’ll never see a 10% or 12% growth, I would say, on the run rate basis for a full year. But we’ll have good growth with good margin improvement.

: Perfect. Super clear. Then the second one is on on the industry. Where where do you see roughly the the EBITDA for just the the auto harness business next year? And, you know, what’s the the latest down on the disposal?

Jean Christophe Julien, Deputy CEO and CFO, Nexen: So disposal is progressing. So I I I said that already. Last time we had last time we had a call in the first quarter. So we are progressing. This is something we’re targeting to see happening by the end of the year or early next latest.

So we’ll we’ll comment on the on the progress, and we we are able to do that. We can’t really disclose too much at that stage, but this is progressing. In EBITDA, I mean, it’s obviously, I will not give you percentage because that’s also something we don’t disclose. But typically, you can understand this is in line with the average of the automotive business, which is very dilutive I mean dilutive versus the average of Nexans, I would say. But I would not comment specifically on the margin.

: Okay. Thank you. And the last one is just on the other line. It’s much stronger in the first half. It’s usually kind of breakeven, sometimes slightly negative.

So I want to kind of get the impact of that benefit from yourself. And also, is there just a lower level of kind of internal costs with kind of the link sale separation? And on that point, on The US tariff, kind of what what are you expecting in h two, Do you think, you know, this will come down? Obviously, there’s still uncertainty, but should should we see maybe a different shape or actually the h the h two, sorry, contribution from other is actually weaker than than h one?

Jean Christophe Julien, Deputy CEO and CFO, Nexen: Yeah. I mean, I I understand that this line is difficult to read because it’s it’s it’s a mix of different things. You have the contribution of the metallurgy business and as you rightly said, the non allocation of some of the overhead cost. Overhead costs roughly are lower globally speaking in 2025 than in 2024 because as you mentioned rightly, there was some reorganization cost and some separation cost and transformation cost that happened to prepare our asset for divestment ’24 of that do not repeat in 2025. So that’s one element.

Also, margin of the metallurgy business has been higher by a couple of points versus last year, mainly because again, there was so much fear about tariffs in North America that some of our customers who stand we’re willing to pay higher pricing to make sure they had the secured copper in the first quarter or at least in the first half. So the combination of that explain also why we have a good growth and a good number in other and that’s more than offsetting compared to last year’s corporate costs that are not in charge. For the second half, you should see basically similar level in other lines than what we see in the first half.

: Great. Thank you very much. And well well done on

Jean Christophe Julien, Deputy CEO and CFO, Nexen: the past few years, JC, and and good luck for you. Next adventure.

Christopher Gillangh, CEO, Nexen: Thank you very much. Appreciate.

Conference Operator: Thank you. Our next question comes from Miguel Borreka from BNP Paribas. Please go ahead.

Miguel Borreka, Analyst, BNP Paribas: Hi, good morning everyone. Thanks for taking my questions. I’ve got two. The first one, just trying to understand the strength in the power grid margin. Some of your competitors are obviously flagging increased competition, with renewable OEMs, more capacity out there, and margins should contract somewhat.

Your first half was obviously very strong, but last year, you had a lot of seasonality first half versus second half. So how do you see margins going forward? And I know you’re confident about your margin performance, but can you talk about some of the risks of this margin normalizing down? Or you just don’t see that happening?

Audrey Bourgeois, Investor Relations, Nexen: So for now, we don’t see a risk of going down on this margin. Like I said, the opportunities for it to go up for one reason that has been mentioned by Chris and JC, which is that we have been working structurally on our portfolio backing what is behind the profitability of our grid. So we continue to come with volume at higher profitability, thanks to solutions that you see including accessories. And this is what is enabling the structural growth of EBITDA in the next semester and coming years.

Christopher Gillangh, CEO, Nexen: Yeah. I will say, Ninguala, we have this Chris, I will add that. I think the remark is understandable from from our competition on the rise rise of capacity can generate a structural margin contraction. But I would say that that I did I not I I not disagree with them, but I would say that Nexans is positioned differently. First, we are not competing only on volume volume on on commoditized product.

We are competing on value added system, on execution reliability. We are launched a lot of bunch of innovation in the last four years, and that that really help us to uplift our margin. So I would say three reasons that support margin stability, product and service mix evolution on easy joint presented by Elliott is an element that will improve the margin. First, discipline associated with artificial intelligence based pricing tool. It’s it’s progressing, it’s starting, but we see already the benefit on, of course, a very high level of selectivity of project screening on capacity allocation, making sure that we position our capacity on the high return customers and sectors.

Miguel Borreka, Analyst, BNP Paribas: Thank you. Kind of a similar question also on Connect. Can you maybe talk about where your margins are stronger versus where they are weaker? Maybe touch on how Europe compares to the rest of other regions and maybe give some color on specific segments. And then can you give us your views on how you compare to your peers on profitability terms?

Because, obviously, you don’t have any US exposure, which is typically higher. So interested in understanding the reasons behind the step change versus historical levels and then comparing to your peers, which I I believe are obviously higher.

Christopher Gillangh, CEO, Nexen: I will say the the peers comparison, Miguel, I leave it to you. I leave it to you to make the analysis, because you will certainly be more credible in the island based on myself. Please make this exercise by geography and you will have the answer. I would say, once again, it’s not only a topic of volume cost geographies. Of course, we understand that some geographies are already fully consolidated and can generate higher margin, that’s the case of US.

But today, in Europe, we have units for the last two years in Power Connect that are generating above 20% EBITDA margin, thanks to the shift transformation program innovations on the capacity allocation, which is really perfectly managed through a price discipline. So I I mean, before where we where we we were not in such detail on quality of transformation, the geography we’re making the result, it’s not the case anymore because we are shifting slowly but surely from Power Connect from a commodity based, I would say, market pattern to a premium pattern. It takes time, but you can see the result of this structural margin. As I mentioned, the NexSens baseline, the one that you need that were there in 2019 have been tripled in terms of profitability over the years.

Miguel Borreka, Analyst, BNP Paribas: Maybe a quick follow-up. Is there what’s the likelihood of you entering The US market in in low and medium voltage?

Christopher Gillangh, CEO, Nexen: It’s I would say it’s it’s it’s I mean, the intention is very high, but we don’t want to enter in a market that will cost a fortune for us and that will be diluted for our return capital employed. And once again, I think if I link the two questions together, mean, well, because I think you have a very important point. We are not making acquisition to uplift the EBITDA ratio, okay? Because EBITDA improvements come from our transformation program, not by doing M and A. We want to make sure that it’s a good M and A for our portfolio and accretive for the long term.

Miguel Borreka, Analyst, BNP Paribas: Great. Thank you very much, JC. All the best and good luck in the future.

Christopher Gillangh, CEO, Nexen: Thank you, Miguel. Thank you very much.

Conference Operator: Thank you. We will take our next questions from Xin Huang from Barclays. Your line is open. Please go ahead.

Xin Huang, Analyst, Barclays: Hi. Thank you for taking my questions. So the first one is, Power Grid. Your grid margin declined on a like for like basis from 16.2% in ’24 to 15.9% in ’25 despite better mix as you continued to move towards more accessories and service sales, as you said. Can you maybe elaborate on why?

Christopher Gillangh, CEO, Nexen: Of course, we can comment some evolution at the comma level, but I will say that I will let Elliot comment. But it’s really a question that go in the very tiny level, if you allow me, to comment from 16.2% to 59% business of $2,000,000,000 Ediette, I prefer that you answer.

Audrey Bourgeois, Investor Relations, Nexen: Just to complement what you said, Chris, I explained that there were two effects. So you mentioned the mix, but there is also the phasing effect with two stronger one off that we had last year. And basically, that’s just a phasing effect that is adding to the mix. Indeed, for 0.3%, I will not comment more on this. You need to just believe that we are confident on the fact that our EBITDA will continue to increase

Christopher Gillangh, CEO, Nexen: our Yes, we expect to stay in the range of 15% to 16.5%. That’s a good range. And of course, keep keep pushing our accessories business, which is a very incremental material in terms of improvement of the margin for the for falling stocks.

Xin Huang, Analyst, Barclays: Okay. That’s very clear. Thank you. My next question is on Connect. So MobiWay has been the driver for some time now as in the margin performance driver.

Are you now at a position to provide what proportion is MobiWay sales and and what premium or any targets that you have so that we can model this?

Christopher Gillangh, CEO, Nexen: Yeah. It’s a good question. What what I would say is that we have changed a bit our logic in terms of growth. We are launching growth patterns because it’s not only MobiWay, it’s as well associated with fire safety product or premium products. So now our growth pattern has been redesigned in the first semester in a very professional way to make sure that we are combining attribute together and we will deploy a repeatable model from one geography to another, but not only launching one innovation.

So it’s a combination of customers, combination of services, a combination of packaging and associated with product that will make a pattern altogether. But we will elaborate a bit more, I think, in the next quarter with much details. It’s a very strong work we did for Connect and as well for Grid, by the way. For example, Elliot is working in-depth on the on on data center’s offer, and we will come back to you in next quarter with more detail.

Xin Huang, Analyst, Barclays: Okay. Thank you. And then on Shift AI as well, would you maybe give some color on the financial impact? Because I think the chart you’re showing, the 20% by end of this year and the 90% is only the progress. It’s not the financial impacts.

Christopher Gillangh, CEO, Nexen: It it is indeed. It it is the the progress. We are not yet. Maybe next year, we will talk about the financial impact of AI. But today, the topic is is making the platform live.

You know, it’s data lake. It’s making sure that the data are are truly clean, that we can benchmark all unit together because we we mentioned that with you at the Capital Market Day. Shift was managed unit by unit. And with the AI platform, now we will have we will be able to to do live benchmark from one unit to another in the world. So it takes time, but, of course, I’m a I’m a true believer that data is really gold and get can really generate a fantastic margin on the long run.

But it will have an intense financial impact, but I think a bit more color in ’26, not in ’24.

Xin Huang, Analyst, Barclays: Okay. Thank you very much. And then I just wanna follow-up on your strategy to increase accessories sales as well. We’ve been talking to some of your customers. They don’t really want more joints and accessories because that’s where failure happens, and and and that’s also what you alluded to.

Ninety percent of failure happens on the joints and accessories. So I wonder if you get any pushback in trying to push more accessory sales.

Audrey Bourgeois, Investor Relations, Nexen: As we are communicating, there is no pushback at all from our customers. Actually, if you remember, we presented in the CMD that our customers are facing big time from structural trends like climate impact. I could, for instance, since you are talking about our customers, mention one of our platinum customer in Italy that is facing, because of the heat wave, unprecedented failures of connecting accessories. And this is not only pushing for more accessories consumption, but also more cables consumption because the cables are, as you know, outdated for now many, many years. So this is not at all what we see from our customers, and I will say

Christopher Gillangh, CEO, Nexen: Because that because the main point of failure than when you have a climate event is the accessories. So this is the the first element that the DSO needs to replace. So it’s not a question, do they want to have more or not? They have no choice.

Xin Huang, Analyst, Barclays: Okay. Got it. And then last one is the housekeeping. The asset impairment of 43,000,000, can you explain what this is related to? Is that a one off?

Jean Christophe Julien, Deputy CEO and CFO, Nexen: Well, I mean, it’s it’s basically the the low the I would say the lower margin of the business in 2025 versus last year, which is following again the difficulty as I mentioned in my presentation about the automotive sector and the fact that the entire sector today is struggling. Our margin has been decreasing. Therefore, that triggered an impairment test and we had to take an impairment into our financials for h one. We believe the right number. We’re not foreseeing anymore, but, you know, the future depends also how the automotive industry will will behave in the in the coming quarters and semesters before

Christopher Gillangh, CEO, Nexen: we can decide. That’s the situation. It’s a consequence, I would say, of the market in general.

Xin Huang, Analyst, Barclays: Okay. That’s very clear. The last thing I wanna confirm is I think you said the LTC margin is below the margin for group. I think when you met or announced the acquisition, you said LTC margin is is margin accretive immediately, or did I remember wrong?

Christopher Gillangh, CEO, Nexen: No. I I think LTC or CT. LTC. LTC.

Jean Christophe Julien, Deputy CEO and CFO, Nexen: LTC was, I would say, slightly below the average of the group. But since then, that’s now a year and a half. We we we closed in June ’24, but we’ve been working in the we announced it to signing that was at least six months, so that was the ’23. So the the the connect business in the accounts have really improved significantly. So today, LTC is below the average of connect.

And then we said that we are hitting 20,000,000 recurring synergy on the business. It will take three years on average to get to that level. When we get there, we will be at the level of the group, but it takes three years to get there. And right now in the environment where we have moderate growth or slow growth, we are focusing on the transformation of the business. But you will will see see the improvement of the margin, as I said, starting to come in the second half that will contribute to the strong H2 in EBITA we want to show and also continue next year.

Christopher Gillangh, CEO, Nexen: Yes. Think it’s a you should see LTC, which is below our average today as a reservoir of improvement for the next year because all our transformation team shift are on LTC right now, and they will start as well their city in Spain

Jean Christophe Julien, Deputy CEO and CFO, Nexen: and Parle. Don’t forget that six years ago, we were on average at 8% on Connect margin. We are at 15% today.

Xin Huang, Analyst, Barclays: That’s very clear. Thank you very much.

Conference Operator: Thank you. It appears that’s all the time we have for questions. So I will hand back to you to Mr. Christopher Girang for any additional or closing remarks. Please go ahead, sir.

Christopher Gillangh, CEO, Nexen: Thank you very much, everyone, for your great questions. Now we go on the roadshow, to meet our investors. And, good luck to GC, of course, but it will be there in the coming months. And, thank you for your attention. Bye bye.

Conference Operator: This concludes today’s call. Thank you for your participation. You may now disconnect.

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