Nexans in sell-off to focus on electrification

Nexans in sell-off to focus on electrification

Business news |
By Nick Flaherty

Nexans was hit by the Covid-19 pandemic, with sales in 2020 of €5.713bn, down 8.6 percent. The company is planning to sell off around a third of its business to become a pure-play electrical cable and systems supplier with revenue of €7bn by 2024.

“Despite the unprecedented global health and economic crisis, 2020 was a tipping point for Nexans, as we demonstrated our ability to accelerate the company’s transformation,” said Christopher Guérin, CEO of Nexans. “Our efforts, in the second semester, were focused on our long-term ambition, defining our new purpose to ‘Electrify the future’. It’s full steam ahead with our new strategic chapter up to 2024, and 2021 will be a year of acceleration of our new strategic moves on Electrification.”

The strategy is to move from a generalist cable manufacturer to the first pure electrification player, he says.

For the last 120 years, Nexans has played a major role in the world’s electrification. This market represents 65 percent of the world cable market and is expected to grow by 4.3 percent a year over the next 10 years driven by key growth trends: growing energy consumption, demand for sustainable energies, grid modernization and protection.

Guérin is convinced that remaining a generalist will be more a weakness than a strength, and says  intends to become a pure electrification player. This means moving from supporting 8 macro sectors, representing 34 subsectors, to 4 sectors, representing 12 subsectors.

“Nexans will become a unique fully integrated player covering the entire electrification value chain: from the very start of production of energy, to transmission and distribution of energy, all the way to usage of energy,” said the company.

One key area in generation is the Offshore Windfarms and Interconnection markets, with a €200m additional investment. In the energy Distribution market, Nexans will reinforce its turnkey solutions combining cables and accessories with installation, architecture design, smart systems and asset management. In the Usage market, the Group will focus on end-user electrical safety with a seamless supply chain for easy to handle and install products, and smart products integrated in a digital ecosystem, particularly for the increased power demands of Industry4.0 and industrial automation.

The company aims to have sales of €6bn to €7bn by 2024, with over half from the existing Electrification portfolio. This will include a ramp-up of its investments in the state-of-the-art Aurora cable-laying vessel and the expansion of its Charleston high-voltage subsea plant in the USA, as well as the additional capacity investments in High-Voltage & Projects business.

It will sell off various parts of the portfolio while also targetting transformative deals and bolt-on acquisitions to complete its electrification offer. This will come from the various sector such as railway and datacoms and telecoms.  However the aquisitios will come from free cashflow, as the company currently expects to be debt free by that 2024 target.

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