NKT Boosts Ambitions: New Financial Targets for 2028
Monday, Dec 2, 2024 1:47 am ET
4min read NKT, a leading manufacturer of power cables, has recently announced updated medium-term financial ambitions, aiming to capitalize on the growing demand for power cable solutions driven by electrification and renewable energy transitions. The company's revised targets reflect its ongoing investments and the profitability of its high-voltage order backlog.
NKT's updated financial ambitions include an operational EBITDA target of above EUR 700m for 2028, up from the previous target of above EUR 550m. This significant increase reflects the company's confidence in its ability to deliver on its growth strategy and meet the growing demand for power cable solutions. NKT's organic revenue growth target for 2028 remains at a CAGR of above 14% from 2021, demonstrating the company's commitment to sustainable growth.
The company's revised financial ambitions are supported by several strategic investments and acquisitions. NKT has announced expansions of its high- and medium-voltage sites, including a new high-voltage factory in Karlskrona, Sweden, and the acquisition of Portuguese power cable manufacturer SolidAl. These investments are expected to contribute positively to NKT's organic revenue growth and operational EBITDA, while also improving the company's earnings visibility.
NKT's updated financial ambitions are underpinned by several assumptions, including market demand supporting a favorable supply/demand balance, further high-voltage project awards, satisfactory execution of investments, and a stable supply chain with limited disruptions. The company's investments in growth and maintenance are expected to support its medium-term financial ambitions, including delivering a return on capital employed (RoCE) above 20%.
NKT expects accumulated capital expenditures (capex) of around EUR 2bn over the years 2025-2028, with around 75% allocated to growth investments in production capacity and capabilities. The company anticipates that 2025 will be the year with the highest investment level, followed by a slightly lower level in 2026. A normalised repair and maintenance capex level is expected to be approached in 2028.
The financial outlook for 2024 remains unchanged from the previous announcement. NKT A/S will host a teleconference for investors and financial analysts on 3 December 2024 at 10:00 am CEST, providing further details on the company's updated financial ambitions.
In conclusion, NKT's updated medium-term financial ambitions reflect the company's confidence in its growth strategy and the growing demand for power cable solutions. The company's strategic investments and acquisitions, coupled with its robust capital structure, position NKT to deliver on its revised financial targets and maintain its competitive edge in the power cable market.
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