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Nexans S.A. (NXPRF) Q4 2022 Earnings Call Transcript

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Nexans S.A. (OTCPK:NXPRF) Q4 2022 Earnings Conference Call February 15, 2023 3:00 AM ET

Company Participants

Christopher Guerin - CEO

Jean-Christophe Juillard - Deputy CEO and CFO

Vincent Dessale - COO of Nexans and Nino Cusimano

Elodie Robbe-Mouillot - VP, IR

Conference Call Participants

Sean McLoughlin - HSBC

Akash Gupta - JPMorgan

Miguel Borrega - BNP Paribas Exane

Jean-Francois Granjon - ODDO BHF

Rajesh Singla - Societe Generale

Massimiliano Severi - Credit Suisse

Eric Lemarie - CIC

George Featherstone - Bank of America

Operator

Ladies and gentlemen, bully morning, and invited to nan Nexans Full Year 2022 Earnings Conference Call. [Operator Instructions].

I would now for illustration to move nan telephone complete to your host, for today's convention call, Mr. Christopher Guerin, Nexans's CEO. Please spell ahead, sir.

Christopher Guerin

Thank you. Good morning, ladies and gentlemen, and convey you for participating successful Nexans Conference Call. Here is Chris Guerin, CEO of Nexans pinch Jean-Christophe Juillard, Deputy CEO and CFO. We person arsenic good Vincent Dessale, COO of Nexans and Nino Cusimano, General Counsel; arsenic good arsenic Elodie Robbe-Mouillot, VP, Investor Relations.

I will move complete to Elodie that will spell complete convention call, earlier we start.

Elodie Robbe-Mouillot

Thank you, Chris. I would for illustration to punctual participants that statements made during nan convention call, which are not humanities facts are forward-looking statements wrong nan meaning of nan Private Securities Litigation Reform Act of 1995. Readers and listeners are powerfully encouraged to mention to nan disclaimers, which are an integral portion of our URD, on pinch nan audio replay of today's telephone that will beryllium posted connected our website, nexans.com.

I'll now move complete - you complete to Chris, who will spell complete nan 2022 highlights.

Christopher Guerin

Thank you, Elodie.

Let's spell Page 5 regarding nan highlights. So grounds twelvemonth in grounds since 2001, very beardown profitable growth, all-time precocious EBITDA, normalized free rate travel and return superior employed performance. And I deliberation it's beautiful beardown accomplishment erstwhile you look astatine nan past 4 years. So fto maine congratulate nan team.

As you know, we are already focused connected maturation driven by value, much than measurement and our translator level astir SHIFT is, of course, generating awesome and structural results. Our enhanced liquidity and coagulated equilibrium expanse is maintained.

And we person arsenic good - we're very proud to denote this greeting that S&P standing revised Nexans outlook to affirmative that's confirming nan evidence, nan difficult activity of our squad to strictly show moving capital, which is simply a grounds debased and displacement to a rate procreation mindset successful enabling this robust equilibrium expanse and liquidity.

As good to springiness returns to our shareholders, we projected a dividend of €2.10 per share, which is up 75% versus past year. What you cognize already that has been announced. We person announced 1 caller acquisition successful nan electrification marketplace successful Finland to reenforce our Nordic activity position.

And we are preparing nan divestment of our telecom system, this announcement we've done pinch - successful parallel pinch Syntagma Capital. Record connected subsea backlog for procreation and transmission, supported by nan grant of Celtic Interconnected business. And arsenic well, we support amplifying our improvement into Industry 4.0. I'm very proud astir this result.

We are accelerating nan decarbonation. The truth that we are highly selective connected nan business broadside that we are really focused connected worth growth, much than measurement maturation helped america to transcend our SBTi target pinch a minus 28% of state emanation versus 2019, and, of course, make nan squad very, very proud.

We person arsenic good announced nan photovoltaic powerfulness installation installed successful Morocco. That's only nan first measurement to a overmuch bigger finance successful that respect successful different plants. And of course, our instauration is moving very, very well. We are expanding our fund to support improving nan lives of much than 2 cardinal habitants.

I will spell consecutive to Page 7 because regarding nan item of Page 6, everybody knows what person been announced successful nan past year. So arsenic you tin see, €599 cardinal EBITDA, a grounds successful Nexans' history. What is important is nan continuous advancement pinch a 9% ratio connected sales.

Normalized free rate travel supported arsenic good by immoderate down payments of nan grant that we've conscionable mentioned is reaching nan grounds arsenic good astatine €393 cardinal of free cash. But fto maine attraction your attraction connected nan rate conversion ratio, EBITDA to free rate travel of 6%. And arsenic well, nan return connected superior employed, this 1 is not normalized, truthful that this 1 includes nan CapEx that we are putting successful G&T mainly.

So we reached astatine group level 20.5%, which is I deliberation 1 of nan grounds successful nan sectors. But for nan electrification only, we are reaching 29% return connected superior employed coming from 9% successful 2018. So beautiful proud astir this result.

Page 8, we are moving connected nan implementation of nan statement to get REKA Cables successful nan Nordics, 1 of nan leaders successful Nordic countries. One arsenic good will thief america a batch connected nan sustainability standpoint because they are really nan first cablegram neutral c - sorry, first c neutral cablegram manufacturers successful Europe. So that's a awesome news. It's astir 270 people, 3 plants connected €160 cardinal of revenue.

We are entering an exclusive speech for nan divestment of nan Telecom Systems business. It's astir €180 cardinal gross connected 680 people. We recovered pinch Syntagma, a bully partner to support increasing this business and modernizing nan units and support investing successful innovation.

On Page 9, it's, of course, what mostly create nan singularity of Nexans versus others is our translator level astir SHIFT. We person been able, complete nan past 4 years, supporting this awesome consequence to move galore units from nan reddish area intends mediocre EBITDA and mediocre rate conversion into nan bluish zone.

On nan portion that are successful nan profit driver area, which is representing correct now astir 50% of our gross are moving to spell to nan greenish area. Being successful nan greenish area intends 15% EBITDA connected income and a minimum rate conversion of 70%, seven-zero, which is, of course, outstanding to beryllium there.

But much importantly, nan attraction of 2023 will beryllium to astir converting nan portion that stay successful nan translator campaigner worth burners area, truthful nan pinkish and nan reddish zone, which is astir about 30% of our electrification gross which is astir € 1 cardinal of sales, moving astatine 3% to 4% EBITDA.

Our purpose is to person it to 8% to 10%. So that intends a important caller imaginable leverage to amended our profitability connected nan structural insignificant without immoderate maturation factors aliases costs simplification factors. And what you spot successful nan structural consequence of nan group pinch nan SHIFT programme connected nan graph, you tin spot that astatine slightest nan 20 units that are already successful nan bluish area person powerfully improved complete nan years pinch constricted maturation and very important betterment connected some EBITDA and nan moving capital.

Next page, that's nan move from nan profit driver to invention drivers. So from nan bluish area to nan greenish zone. This is what we are doing connected nan SHIFT Prime. We are up of our translator pinch 7 innovation, important invention that person been launched complete nan past 24 months, bringing much than €27 cardinal further profit. Those innovations person been launched successful 17 countries wide connected each nan countries that person implemented those invention person been capable to make an betterment of 200 ground points of their gross margin.

Our gross supported by our work gross are up positive 14%. And we support improving by - constituent our customer satisfaction. Starting from zero, 2 years ago, we person now much than 540,000 connected users connected 37,000 connected object.

Beyond these numbers, location is simply a subscription exemplary improving our margin, nan potentiality of connected objects successful our perimeter will beryllium astir 4 cardinal connected objects. So you tin spot that we are only astatine nan opening of nan travel and we will support improving this number that will, of course, thief america to move from conjectural factors to structural factors connected mean and agelong term.

On nan Page 11, very proud astir this result. The squad made awesome work. That's arsenic good nan consequence of our E3 model, which is aimed to really converge nan economical factors pinch nan biology factors and nan engagement factors. The truth that we put a batch of unit connected reducing nan complexity, reducing nan region focusing nan units connected nan radius of 800 kilometers region from their base.

And arsenic well, each nan actions we are doing successful decarbonizing upstream and downstream proscription person been an accelerator to our decarbonization, and this is why - we were expected to beryllium versus 2019 astatine minus 7% of state emission, and we are very proud to denote that we are minus 28%.

So that intends our target that was expected to beryllium achieved successful 2023 will beryllium 4 to 5 years ahead. And that's a bully news for nan institution and nan bully news for nan planet. We will reenforce our biology watercourse and to thief our head to return decision.

This is what you tin spot connected Page 12. Now we representation each our units connected nan different, I will say, capacity level, location is nan Y axis, which is astir nan structural discourse of nan unit. What is nan structural discourse is nan country. You person a state that's already very good precocious successful position of power decarbonization, which is not nan lawsuit of each nan others and arsenic good nan business model. Is it much aluminum and copper that person a beautiful important power regarding their biology performance.

So they tin do a spot connected that side, but pinch constricted effect because they cannot alteration their allocation, for example. But what we for them is to activity connected nan operational GHG capacity score, which is astir everything connected decarbonation connected logistics debased c contented merchandise connected thing that they tin do to trim their c footprint. What you spot connected nan large wind connected nan chart connected nan correct is nan electrification portion practice successful position of GHG emissions versus nan gross separator output successful 2021.

You tin spot that astatine slightest connected nan reddish zone, connected nan orangish zone, we are now implementing much and much c quota for our debased biology capacity successful making judge that you are not only bringing awesome margin, but arsenic good successful nan - you do it successful a very sustainable way. So that's nan purpose of our, I would say, programme and, I will say, capacity that we will way successful nan coming 2 years.

Let's now move to nan business overview connected Page 14. As you tin see, nan group is astatine positive 6%. I punctual that our purpose is to trim our outer vulnerability to metallurgy. So erstwhile we do exclude metallurgy revenue, nan integrated maturation is astir 12%, 12.1%, nan electrification business only is astir adjacent to 13%.

On nan non-electrification business adjacent to 10%, arsenic you tin see, pinch nan important betterment connected nan EBITDA separator for electrification moving from 10.2% to 11.9%. Regarding nan adjacent page connected procreation and transmission. Good integrated growth, a flimsy simplification connected nan reddish EBITDA separator ratio, which is owed to nan changing operation of gross successful 2022.

I'm judge you will person questions. So we will remark done nan questions. We had much offshore upwind workplace than interconnection, and this operation will germinate successful nan different broadside successful nan coming years. I punctual that 90% of our business is subsea driven and each nan announcements, further announcements that will beryllium announced successful position of one, will corroborate our very beardown position connected nan subsea part. Backlog is astatine positive 51%. But I deliberation everything connected that point.

On nan Page 16, we are spending a important CapEx to summation our capacity, some successful Charleston successful U.S., but arsenic good successful Halden, adding 2 caller lines present is simply a photography that person been taken a fewer weeks ago, it's connected progress. We are committed to beryllium fresh for early 2024. So far, truthful good. Everything is connected way regarding nan deployment of this caller CapEx, and that will beryllium fresh for nan task of Celtic and Borwin six.

Let's move to Page 17. This is what I told you already successful February 2021, and that numbers are confirming our prediction. The world needs to modernize nan powerfulness grid, nan electrical grids, specifically successful U.S., successful Europe and successful South America. The electrical grid successful those regions is much than 50 years old. And you cannot header pinch a large displacement from fossil fuels to renewable power connected 1 hand. On nan electrification of our regular life pinch successful nan middle, a very obsolete electrical grid.

So each nan DSO are putting a important finance to accelerate nan modernization and we person difficulties to header pinch their demand. Our factories are afloat loaded aliases overloaded successful 2022, and that's confirmed arsenic good successful 2023. But it is what I told you each time. Volume doesn't make profit systematically.

So it's important arsenic good to beryllium highly selective connected nan project, connected nan customer, connected nan merchandise that you want to manufacture, connected nan density of nan production. And this is each nan effort that we ran done pinch SHIFT programme connected this distribution marketplace that make america proud to denote that pinch nan 13% integrated growth, our EBITDA is up 51% and present it is nan structural change. So we support improving nan profitability of that business.

And successful parallel, our backlog is positive 33%. But wrong nan backmost you don't person nan 100% of nan request because we person arsenic good successful parallel reminding everyone that support pricing each six months, and this is why we person difficulties to header pinch a very, very precocious demand. And we stay highly selective, but beryllium judge that distribution sectors successful nan lawsuit of 2023, I would say, volatile situation is surely 100% recession proof.

Regarding usage. Usage, very precocious level of selectivity. As you've seen arsenic well, it's a 13% integrated growth. There is immoderate business that we person decided not to return for a mobility of profitability, but you tin spot that nan profitability is increasing, up 76%.

So you person immoderate structural effect. We told you successful afloat transparency, we told you that successful nan first semester of 2022. I will fto J-C coming backmost connected those elements. I cognize that a batch of analysts are bidding connected a very beardown illness connected nan usages successful 2023. I'm sorry to opportunity that we don't spot that astatine all. The first semester remained highly strong.

We person a flimsy slowdown of request successful North America, but it's much a SHIFT from residential marketplace to commercialized infrastructures and business infrastructure. So a flimsy simplification successful nan residential that effect nan backlog. But now we person a conversion of nan request to commercialized infrastructure and arsenic good information center. So we are beautiful optimistic connected nan request successful North America and pinch a very beardown carryover of nan pricing.

Pricing remained nan aforesaid than 2022. So very assured successful that area successful nan first semester and Europe is very strong. Europe, Middle East, Africa is very strong. So what was, I will say, nan large consequence of 2023 successful nan lawsuit of recession, astatine least, fto maine remark for nan first semester because commenting complete first semester will beryllium - but for nan first semester, we person almost each nan backlog that we request astatine slightest backlog aliases confirmation of nan projection from our cardinal partners that corroborate that usages will stay beardown successful some measurement and successful some pricing. And erstwhile again, we have, arsenic good successful parallel, launched a batch of actions to forestall immoderate lawsuit of recession that will support nan betterment of nan separator successful parallel of nan beardown request for nan first semester.

On nan Page 19, very proud arsenic good of nan Industry & Solutions results that springiness america a pridefulness to our automotive harnesses because successful nan discourse of a warfare successful Ukraine, they person done a awesome occupation to protect our 2,800 labor successful Lviv successful Ukraine but arsenic good arsenic to protect our relationships and business pinch our apical customer, namely Porsche, BMW, Volkswagen, Daimler.

Now nan situation management, nan outstanding situation guidance of nan team, bring them much measurement and we person an astonishing consequence of automotive harnesses successful spite of nan warfare successful 2022 pinch an integrated maturation of much than 20%. Automation and mobility remains highly beardown successful nan Industry business.

So 12% integrated growth, 14% betterment connected EBITDA, connected backlog, positive 41%, and we are nan grounds backlog connected nan Industry & Solutions truthful far. Regarding Telecom & Data. So 2 things. We are divesting nan LAN cablegram connected nan Telecom Infrastructure, a spot disappointing Q4. It was a spot much analyzable because immoderate countries are reducing their finance owed to nan truth that they are astatine nan extremity of their, I would say, semipermanent scheme of fibre optic finance and a flimsy contented of demand, but we judge that nan first semester was nan first clip is that are backmost connected track. So we are assured nan backlog is strong.

The reference of typical telecom is simply a spot much analyzable now to publication because typical telecom divert a large portion of its capacity to support our procreation and transmission business because you cognize that successful our high-voltage subsea cable, we are trading arsenic good fibre optic arsenic nan complexity of nan task and nan very precocious request connected G&T. We request this fibre optic capacity to support our business. So this is why this business will not beryllium divested because it's instrumental connected nan precocious contribution, technically speaking, to our - improvement of our G&T business. That's wide nan position of nan business.

Let maine move astir nan mic to J-C for nan financials.

Jean-Christophe Juillard

Thank you, Chris.

So if we move to nan financials connected Page 21, we look astatine nan P&L of Nexans for nan twelvemonth 2022, you spot that income fundamentally guidelines astatine €8.3 cardinal successful position of income astatine existent metallic price, €6.7 cardinal modular metallic price, which is an integrated maturation of 6.3%.

Chris explained fundamentally nan item of nan maturation and nan very beardown capacity of nan electrification business and an integrated maturation excluding metallic of supra 12%. EBITDA is astatine grounds precocious since nan IPO successful Nexans successful 2001 astatine €599 million, connected nan apical portion of nan scope of nan guidance that we raised successful October - November, sorry, 2022 from €580 cardinal to €600 million.

You spot nan span twelvemonth explaining fundamentally nan maturation successful EBITDA. You spot that each businesses person contributed to nan maturation of EBITDA. We person besides nan effect here, obviously, connected nan acquisition of Centelsa that helped boost EBITDA successful 2022. It's a 30% maturation of EBITDA complete nan play versus past year.

Operating separator besides highly precocious versus past year, 6.2%. And past we conscionable said that we had a correct antagonistic effect this twelvemonth owed to nan alteration of nan copper value successful nan twelvemonth 2022 by astir €500 per ton connected average, impacting nan group P&L by €30 million, a nonaccomplishment of €30 million, wherever past year, we had a summation of €100 cardinal owed to nan summation of nan value of copper. Overall, nett income stands astatine €248 cardinal versus €160 cardinal past year, which is, again, for grounds precocious nett income.

If I move to nan adjacent descent and we look a small spot specifically connected nan electrification businesses because you cognize that successful our equity communicative of 2021, we committed to turn our EBITDA connected electrification by 2024 to adhd €150 cardinal of EBITDA successful Electrification. You spot present fundamentally nan advancement we person been making successful 2022 for Electrification segment, improving nan separator ratio from 10% to almost 13% which is simply a 39% maturation of EBITDA for Electrification. We person - and we person been very transparent connected that convertible effect that we communicated successful nan first half, which fundamentally pinch - one-off fundamentally represents €60 cardinal for fiscal twelvemonth 2022.

And nan maturation of EBITDA, is to [technical difficulty] not each effect would person been 20%. The main levers are Amplify, SHIFT, obviously, that you cognize good that we explicate each time, each nan initiatives successful moving to summarize nan product, services, innovations, and also, arsenic I said, fundamentally nan scope of Centelsa.

If I move to nan adjacent slide, we look astatine our - fundamentally our nett debt. You spot that we've had very beardown rate procreation from nan businesses from operation. Record precocious €451 million, driven evidently by nan beardown capacity and nan accrued separator of nan businesses. We had a very beardown besides alteration successful moving superior for nan twelvemonth 2022. This alteration of moving superior of €152 cardinal positively impacted nan rate flow.

In position of ratio, we moved from 3.9% successful 2021 of moving superior - operating moving superior connected income to a debased level of 29% successful 2022. We've had important CapEx besides successful nan year. You cognize that we person 2 years of EV CapEx owed to nan investments we are making and past adjusted for nan further lines of CapEx.

So this fundamentally represents astir half - a small spot much than half, €160 cardinal of nan €300 cardinal CapEx of nan year. We person different large twelvemonth successful 2023. And past aft that, nan strategical CapEx will spell to zero. And basically, nan CapEx will normalize. We had besides nan waste - nan divestment of LAN successful Hanover that brought immoderate affirmative cash, I mean beardown rate travel into nan year.

And past aft that, you person fundamentally nan acquisition of Centelsa successful Colombia, explaining why nan leverage fundamentally moved from 0.2 to 0.4 successful position of ratio. So a very beardown equilibrium sheet, I would say, pinch highly debased leverage, and we person already reduced leverage from June to December by astir €100 million, acknowledgment to nan beardown operating rate travel generation.

If I move to nan adjacent slide, connected Page 24, we person a speedy look astatine nan equilibrium expanse of Nexans. So present only to opportunity that fixed assets are increasing chiefly because of CapEx and nan acquisition of Centelsa. Working capital, I discussed are highly debased since because of nan very beardown capacity successful monitoring, fundamentally rate postulation arsenic good arsenic our inventory during nan twelvemonth and past fundamentally equity improving expanding successful 2022 because of nan nett consequence of nan year.

In position of ratio, we proceed to person very important room successful some our covenant whether it's a gearing aliases leverage ratio. And I person to - you mightiness person seen this greeting that we've sewage a bully news from our standing S&P that moved america from BB+ to a affirmative outlook for this morning. So basically, we are getting highly adjacent from nan nonsubjective of becoming finance grade, hopefully astatine nan adjacent closing.

Next slide, successful position of liquidity, erstwhile we look astatine nan liquidity, it continued to improve. Basically, we person now a liquidity astatine nan extremity of December 2022 of adjacent to € 2 billion. This is explained by 2 things. First of all, nan beardown rate procreation of nan year. We talked, I coming - I showed you that connected nan erstwhile slide, very beardown moving superior improvement. Lot of rate travel procreation successful nan twelvemonth 2022 and besides nan renewal and nan summation of our revolving in installments installation that was maturing this twelvemonth successful 2023 that we renewed for a play of 5 years and that we upsized to €800 million.

We person this twelvemonth 2023 owed successful maturing successful August enslaved for €325 cardinal that we will refinance to guarantee fundamentally nan liquidity of nan institution we person signed successful January of this twelvemonth of 2023, a backup installation statement pinch our halfway slope for €325 million, which is just, I would say, a backup statement successful lawsuit of nan financial marketplace being - closing aliases being difficult erstwhile we request to spell to refinance our bond, we'll person nan information of having a backup installation line, which is valid for 30 months and covering nan magnitude of fundamentally nan refinancing of nan bond, which is strengthening again our equilibrium sheet. So that's fundamentally for nan position of nan financial results. I will now move to nan outlook.

So if you move to Page 27 of nan presentation, we are guiding connected an EBITDA scope from €570 cardinal to €600 million, which is fundamentally a midpoint of €600 million, which is simply a unchangeable EBITDA versus 2022, and I will explicate you nan main rationale down that, but really we are converting fundamentally nan €60 cardinal of conjectural effect structural actions.

So we are not betting successful 2023 successful any, I would say, favorable conjectural effect connected our apical line. If it comes and please conscionable explicate you that nan first semester looks very good. This will beryllium connected apical of immoderate of our fundamentally guidance.

So it will beryllium very bully news. Normalized free rate travel scope from €150 cardinal to €250 million, somewhat beneath this past twelvemonth of 22%, chiefly owed to nan timing of nan large down costs we received. I punctual you, we grew our backlog connected subsea by much than 50%, and astir of nan large down costs came up astatine nan precocious December 2022.

So obviously, explaining partially why nan rate travel is highly precocious successful 2022 and obviously, a small spot little successful 2023, and we projected a dividend per stock arsenic explained by Chris of €2.10 per stock for 2022 paid successful 2023 if approved by nan wide assembly of May.

On nan adjacent slide, conscionable to springiness you a small spot of spirit erstwhile it comes to our EBITDA because I deliberation this is simply a cardinal point connected really we are targeting to execute fundamentally this midpoint of nan range.

As I said, we will toggle shape here, you spot connected nan waterfall connected Page 28, we will toggle shape a conjectural and ostentation effect that we person seen successful 2022 pinch structural actions based again, for illustration we person demonstrated successful 2022, action connected SHIFT Prime innovation, premiumization of our product, Amplify & SHIFT performance, SHIFT capacity being arsenic Chris presented each nan units that are still beneath nan mean successful position of EBITDA and rate conversion, moving them from nan reddish to nan bluish to nan green. Just pinch those 3 actions here, we will offset fundamentally immoderate conjectural that we've seen successful 2022 and inflation. Anything, arsenic I said, which is very important because first semester looks very bully correct now astatine nan aforesaid level of 2022 that will beryllium connected apical and will push america decidedly to nan precocious portion of nan guidance that I projected here.

So that fundamentally concludes nan financial presentation.

Christopher Guerin

Thank you, J-C.

And earlier opening for questions, conscionable a past descent connected Page 29, you person connected nan near portion of nan slide. Our integrated vision, nan maturation imagination of nan sectors to 2023, we are revising this number up because nan trends versus our February 2021 forecast is overmuch upward, specifically connected Generation & Transmission.

The geopolitical discourse positive arsenic good arsenic nan World decarbonation is connected pleasing nan request for interconnection subsea and offshore upwind farm. So nan task pipeline is immense for nan sectors. Nexans really to attraction connected nan subsea only pinch higher separator yield.

And of course, everything will beryllium astir mastering nan task calendars, executions connected installations connected our works ramp-up. Regarding distribution, I deliberation we person been surely excessively blimpish successful 2 years agone regarding this maturation ratio. All operators are waking up for nan grid modernization everyplace successful nan world.

So nan request will beryllium highly beardown for nan adjacent 5 years. No uncertainty astir it and will beryllium surely 100% recession proof. Nexans already signed a platinum customer statement for nan adjacent 2 years. We person - I'm conscionable backmost from Chile gathering our copper excavation producers and arsenic good we will reappraisal pinch our squad each our aluminum root of supply, and we person secured nan entree to earthy worldly for nan adjacent 5 years.

And judge me, scarcity is coming up very, very soon. And we are expanding arsenic good our capacity output. Regarding nan discourse of usages organization. It's still, I would say, aligned pinch nan inclination that we've foreseen 2 years ago, but location is an amplification of nan request for nan fireproof solution wrong nan building successful nan discourse of renovation. So our purpose is really to move from commodity to premium from conjectural to structural results for illustration J-C mentioned from passive components to progressive components pinch very precocious potentiality of inserting Internet of Things wrong our offer. That concludes our presentation. So grounds twelvemonth successful 2022, a very affirmative outlook for 2023.

Let's unfastened now for questions. Thank you very much.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] We'll now return our first mobility from Sean McLoughlin astatine HSBC. Your statement is open. Please spell ahead.

Sean McLoughlin

Good morning, tin you perceive me?

Christopher Guerin

Yes, Sean, bully morning.

Sean McLoughlin

Good morning. Thank you. Let maine commencement pinch G&T because I conjecture nan separator has travel successful arsenic a small spot of a disappointment. You opportunity it's conscionable down to mix. Can you corroborate that location weren't immoderate execution issues successful nan 2nd half. And also, it looks for illustration successful your 2023 guidance bridge, you're not factoring successful amended G&T profitability. Could you conscionable talk astir benignant of what separator expectations you person successful 2023 for G&T.

And secondly, connected buildings, you've mentioned person nan conjectural effect efficaciously continues into nan first half, it's upside to that guidance range. I mean really acold guardant is your visibility? Do you already person visibility to nan extremity of June? Or is it shorter than that?

Christopher Guerin

Thank you. I will springiness nan G&T mobility to Vincent because Vincent is pinch america connected nan line. I will return first nan mobility regarding usages, your past question. Yes, backlog-wise, we are afloat loaded for Q1. So our visibility is astatine nan extremity of March successful position of backlog but each nan speech that we had pinch our distributors partners past week confirmed that their imagination for nan first semester stay very strong.

So that's why we see that astatine slightest nan commencement of nan twelvemonth will beryllium supra our first expectation. And of course, is what we opportunity immoderate contractual effect will travel connected apical of nan guidance. Regarding nan G&T operation effect, Vincent, do you want to reply to Sean?

Vincent Dessale

Yes, for sure. Sean, first reply to your question, location has been nary execution rumor successful H2 2022. So business is moving successful position of execution arsenic per nan plan. Regarding indeed, nan margin, you person operation effect. So possibly to springiness a small spot of perspective, arsenic you know, we are moving on, I will say, 3 main segments, interconnections and offshore upwind farm, and we person a mini portion successful what we telephone caller energy, which is simply a definite number of links successful nan caller activities regarding to hydrogen, hydrocarbon and truthful on. And indeed, 2021 versus 2022, we had a alteration successful our operation of nan interconnection.

And arsenic you know, interconnection of this agelong region cables very often successful heavy water, truthful overmuch much technical, overmuch much installation and consequently, separator higher compared to, I would say, accepted offshore upwind farm.

So just, I will say, a phasing of projects. The backlog, arsenic mentioned by Chris, is still very sound, very balanced, very patient because erstwhile we look to erstwhile we are doing our pipeline management, acknowledgment to our SHIFT modeling program. We are balancing always, of course, successful nan backlog, nan interconnection and nan offshore upwind farm. So conscionable an effect moving pinch a little interconnection successful nan operation of 2022 versus 2021.

Sean McLoughlin

Regarding nan - conscionable successful position of past nan operation successful 2023 and your separator expectations?

Vincent Dessale

In 2023, nan interconnection will turn up again. We will person much activity. So we will beryllium so successful nan aforesaid range, I will say, arsenic 2022 successful position of wide operation pinch a flimsy increase. So it will dangle really connected nan phasing of nan task of this year, but I will opportunity nary interest for nan operation and nan separator successful 2023.

Christopher Guerin

What we tin adhd J-C.

Jean-Christophe Juillard

No. What I want to say, yes, I mean, evidently wholly concur pinch what Vincent is saying what we spot for 2023 is astir apt beryllium much connected nan statement of 2022 and not yet successful nan statement of 2021. We will spot nan betterment really erstwhile we commencement to execute nan largest task connected interconnections that we conscionable sewage into nan backlog, meaning nan Celtic for lawsuit and past DIO, EuroAsia. And that will travel beyond 2023, for nan astir portion and this is wherever you will commencement to spot really an betterment of nan margin. But I would opportunity 2023 will beryllium much successful statement pinch 2022 of what we spot today.

Christopher Guerin

Yes, because we're still awaiting nan last grant of EuroAsia. Maybe Vincent, you tin remark because we will person nan mobility later.

Vincent Dessale

Yes. In fact, arsenic you each know, we person been chosen arsenic a preferred supplier. We person signed nan corresponding agreement. This task is partially funded by EU and past by nan EuroAsia task company. So everything is ready. Now it's really nan wide financing of nan project, which is ongoing betwixt you, EuroAsia institution and nan method institution moving wrong nan project, which are successful Greece and Terna Energy, which is an engineering firm.

And this, I will say, connected nan Cyprus government, which is besides a cardinal partner successful this project. So I would say, technically, everything is ready. And now it's just, I will say, nan process of nan different partner to beryllium completed normally, I will say, successful nan extremity of Q1, opening of - successful nan people of Q2. So that's fundamentally our anticipation correct now.

Sean McLoughlin

Thank you.

Christopher Guerin

Thank you, Sean. Next question.

Operator

Thank you. We'll now return our adjacent mobility from Akash Gupta astatine JPMorgan. Your statement is open. Please spell ahead, sir.

Akash Gupta

Yes, hi, bully morning, everybody. I person 3 questions, please, and I'll inquire 1 astatine a time. The first 1 is connected nan span connected Page number 22. So I'm wondering if you tin supply a high-level breakdown of nan $61 cardinal and conjectural and one-off into really overmuch of that is U.S. versus Canada and wrong nan U.S. and Canada, really overmuch of that is resi versus non-resi, conscionable for america to understand what is going connected there. And connected nan aforesaid slide, wherever you person minus €22 cardinal nett cost. And really do you spot this number moving successful 2023, fixed nan precocious inflation? So that's mobility number one.

Jean-Christophe Juillard

So I will return nan question, Akash. So conscionable connected nan conjectural, truthful we reported fundamentally €40 cardinal successful nan first half, astir €40 cardinal of conjectural impact, therefore, we person astir €20 cardinal successful nan 2nd half of conjectural and one-off. I would opportunity astir 60% of that is coming from further measurement than supra nan norm, I would opportunity nan remainder is pricing. It's not U.S. because we don't person immoderate debased voltage activity successful nan U.S. So it's only and chiefly but only Canada for america that is impacting. The logic nan 2nd half is simply a small spot little than nan first half is because we get to nan extremity of nan twelvemonth and distributed fundamentally person been destocking for nan extremity of nan year.

And besides past year, successful 2021, that we twelvemonth before, we started to person besides affirmative conjectural operation effect successful Canada. We started to spot that astatine nan extremity of 2021. So therefore, obviously, erstwhile you span nan 2 years, nan effect connected nan 2nd half is simply a small spot little than nan first half. So that's - but again, nan inclination successful position of measurement and pricing, arsenic Chris mentioned, remained rather robust, particularly connected nan pricing side. When it comes to nan minus €22 cardinal of nan bridge, yes, definitely, this is simply a nett of nan full ostentation that impacted Nexans. So we're talking astir about €90 cardinal of ostentation effect successful nan twelvemonth 2022.

Most of that is pass-through because we person nan system of pass-through that we - that you cognize whether our pass-through nan statement aliases walk done updating our value list. But we have, I would say, a mini fundamentally effect chiefly connected our fixed costs that is not offset, I would say, by each nan prices and nan mechanism, and it's 2022. The measurement we spot it successful 2023 is that this number will not increase. We person beardown action. We person covered already truthful we person walk done for astir of nan situation.

And we person besides for nan 1 wherever we were impacted successful 2022, like, for example, power cost. We person hedged that successful 2023. So I would opportunity nan level of vulnerability we person is moreover lesser successful 2023 than successful 2022. So I'm not foreseeing this number to worsen successful 2023. We person reached, I would say, we judge besides we person reached a plateau successful position of ostentation successful astir of our costs categories.

And we are not worried and we person actions to that. A large portion besides of nan €22 cardinal was coming to circumstantial countries for illustration Turkey. Turkey that has been very powerfully impacted. Lebanon - Turkey and Lebanon powerfully impacted by two-digit ostentation complaint successful 2022. But again, we person mitigated that action for 2023.

Akash Gupta

And nan 2nd mobility is connected mean voltage aliases distribution segment. I mean here, request is very strong. You said you are afloat saturated connected capacity, and we perceive nan aforesaid comments from your competitors. When we look astatine nan capacity business and beardown request that you flagged successful your semipermanent outlook connected nan past slide, is location immoderate request for strategical CapEx successful this portion of nan business that you whitethorn foresee successful nan coming years?

Christopher Guerin

Yes, potentially, Akash. And I deliberation immoderate further announcement to travel successful nan people of 2023, we are moving connected it.

Akash Gupta

And my last 1 is connected European balanced of IRA. There were immoderate specifications retired earlier. Do you spot cablegram companies could beryllium imaginable beneficiary? And do you spot that you mightiness get subsidies to money immoderate of nan capacity description that mightiness beryllium needed successful nan mean word connected some mean voltage and low-voltage side?

Christopher Guerin

I deliberation it's a bully question. Maybe excessively early to say, but what we perceive is that for nan power transition, you person 2 factors that are a large awesome consequence of bottleneck. First, nan entree to earthy resources because Europe has a very beardown ambition, but don't person nan earthy resources compared to U.S. and China astatine least. So first constituent and that nan cablegram assemblage starts to beryllium arsenic good bottleneck.

So I'm judge that we are moving connected it, but I'm judge that successful nan discourse of nan ostentation astatine cablegram could beryllium portion of a imaginable subsidies. And astatine slightest Nexans is moving connected it because - sorry to adhd up - Nexans is moving because we are nan unsocial cablegram manufacturers being this vertical integration that gives america an advantage to summation our output for recycling copper successful nan future, and that tin springiness america other use versus our peers. Sorry, convey you.

Operator

Thank you. We'll now return our adjacent mobility from Miguel Borrega astatine BNP Paribas Exane. Your statement is open. Please spell ahead.

Miguel Borrega

Hi, bully morning, everyone. Two questions for me. The first one, I wanted to understand a small spot amended nan marketplace situation successful usage. I cognize you mentioned you're not counting connected immoderate conjectural effects, but truthful far, you've seen those continuing successful 2023? And past really do you quadrate that pinch Slide 28 because nan measurement I understand this span is you're fundamentally expecting those tailwinds from 2022 to reverse successful their entirety successful 2023, correct? Or americium I misunderstanding nan chart?

Jean-Christophe Juillard

No, you're not Miguel, misunderstanding nan chart. So correct now, we basal presumption and 1 would opportunity that pinch nan news we're having astir having continuous I would say, patient H1 decidedly make nan floor plan present a small spot blimpish because what we're assuming is evidently full disappearance of nan conjectural inflation, replaced by nan structural levers I mentioned, and that would put america astatine €600 million.

So obviously, pinch what we're seeing today, but who knows what will beryllium H2. I mean nan only mobility is that we're talking astir H1, we don't cognize H2. We don't person a crystal shot for H2. But pinch what we've seen successful H1 successful if H2 is fundamentally not a disaster, past definitely, we are already quite, I mean, positioned to opportunity that we will beryllium connected nan apical portion of nan guidance.

Christopher Guerin

Miguel, it's much a mobility of process is that. Our squad are afloat incentivized only for structural effect, not for conjectural effect. On nan clip of nan fund that bring nan guidance, it was betwixt September and December, and everybody was talking astir nan coming up of nan recession. So we person launched recession-proof actions. We person reinforced our structural actions successful parallel, and we opportunity to our team, we do not get astatine each connected immoderate conjectural factors. So that's why that this guidance it tin bring immoderate further upside if location is nary recession and request remains strong.

Miguel Borrega

That is interested. And past my 2nd mobility connected precocious voltage. You achieved your extremity of a backlog of adjacent to € 4 billion. Can you springiness america an update connected what to expect for 2023. Is this going to beryllium a twelvemonth of backlog execution? Or do you spot backlog expanding a small spot further and wherever to - compared to 2022? truthful really do you deliberation 2023 will fare successful position of awards?

Christopher Guerin

Yes, it's a bully question. First of all, it's not yet vanished because EuroAsia has not been - they person not closed their financing for illustration Vincent mentioned. So it's not yet awarded. We are nan preferred supplier. We person nan missive of intent. So we dream this been concluded successful coming weeks, months. It's now to beryllium - commencement to beryllium a very agelong story, but it's a awesome project. There is immoderate awards to travel successful U.S. successful coming weeks earlier nan extremity of Q1 and aft a important grant earlier July. So no, nan backlog will support expanding successful nan people of 2023, Miguel, significantly. Next question.

Operator

We'll now move connected to our adjacent mobility from Jean-Francois Granjon astatine ODDO BHF. Your statement is open. Please spell ahead.

Jean-Francois Granjon

Thank you. Jean-Francois Granjon speaking from ODDO BHF. I would conscionable travel backmost connected nan guidance. I understood that you are very assured nan usages businesses for 2023. So I'm conscionable wondering why we person truthful immense magnitude for nan guidance for nan EBITDA betwixt nan debased and nan high-end range. This is my first question. My 2nd mobility concerns nan CapEx, what do you expect for 2023 for nan normative CapEx and nan strategical CapEx. My 3rd mobility concerns nan normative separator expected for nan usages section aft nan exceptional level reached astatine 12% past year?

And my past mobility concerns nan target expected for 2024. When we spot nan capacity past year, for nan electrification businesses, we person reached astir 13%, one-three EBITDA margin. This is nan apical of nan scope expected for 2 if you are good remember. So do you expect nan aforesaid level? Or do you expect much than that successful 2024? You person already reached, successful fact, what we expected for 2024.

Jean-Christophe Juillard

Yes. So I will commencement pinch nan range, Jean-Francois, I will commencement pinch nan mobility of nan range. Indeed, we accrued versus what we're doing - we've done successful nan past, nan scope is simply a small spot wider. We're talking a scope of €60 cardinal positive €30 million, minus €30 cardinal astir nan midpoint. I mean location was a batch of chat pinch Chris and our Board astir fundamentally wherever to group nan range. There was - obviously, location are still a batch of chat and mobility people astir nan twelvemonth 2023 erstwhile it comes to recession aliases nary recession. Yes, you're right. We commencement to person a very bully visibility connected nan first 4th for sure, moreover successful nan first half. We don't cognize astir nan 2nd half.

And pinch what we're seeing and that things that tin move 1 measurement aliases nan different very quickly successful this very volatile, we decided to somewhat increase. The idea, again, is to travel backmost successful nan mediate of nan twelvemonth successful July erstwhile we coming our first half numbers and travel backmost pinch a overmuch much reduced scope and perchance amended scope if we corroborate that H1 is arsenic beardown arsenic we commencement to spot it, and we don't spot signs for H2.

So we preferred possibly to beryllium a small spot much - I don't for illustration nan connection conservative, but a small spot much - yes, a small spot much cautious astir ups and downs and past travel backmost successful July and travel trim by €20 cardinal aliases moreover much and upwards. So that's basically...

Jean-Francois Granjon

The point is, past twelvemonth astir immoderate cautious astatine nan opening of 2022 and you improved.

Jean-Christophe Juillard

Exactly. It's precisely nan aforesaid akin approach, I would opportunity we came up pinch a ample €40 cardinal range, and past we came successful July and we narrowed nan scope and we, successful fact, accrued nan range. So basically, nan aforesaid attack we're looking for 2023 because you cognize that we are successful times which are highly unpredictable, and I mean...

Christopher Guerin

Yes, connected winning arsenic good nan signature of nan EuroAsia statement that will lend arsenic good to nan consequence of 2023 partly.

Jean-Francois Granjon

Yes. So basically, we are very assured EuroAsia statement we signed. The mobility is erstwhile nan EuroAsia statement will motion it will beryllium delayed by 1 month, 2 months, 3 months. And definitely, that could person a small spot of an effect arsenic good successful our range. Regarding nan CapEx?

Christopher Guerin

Can you punctual nan mobility is connected nan CapEx.

Vincent Dessale

I sewage nan question. So nan mobility connected nan CapEx was really overmuch of strategical CapEx for 2023. So fundamentally somewhat little than 2022 - successful 2022, we really had a divided of 50% of strategical and 50% of attraction CapEx. We are much - we person little strategical CapEx, astir €130 cardinal of strategical CapEx successful 2023 this twelvemonth and astir €160 million, €170 cardinal of, I would say, attraction CapEx. And adjacent twelvemonth successful 2024, it will only beryllium nan attraction CapEx. The nett CapEx were a small spot little successful 2022 because we had nan proceeds nan profit of nan divestment of nan onshore that fundamentally nett nan CapEx to a little level. But successful position of maturation CapEx, we don't person immoderate waste of disposal of assets successful 2023.

Christopher Guerin

The 3rd mobility was astir nan normative EBITDA ratio of nan usage. So wrong 2020, location is immoderate conjectural effect that we will offset structural nan potentiality of improving this ratio is still very precocious because connected twofold. The first is because we still person a large portion of our units that are worth burners aliases I would say, successful nan reddish area needs to beryllium converted successful profit driver.

And truthful our displacement programme is playing afloat correct now connected those units. I punctual you that representing a € 1 cardinal astatine 3% to 4% EBITDA. So this should beryllium astatine slightest request to scope nan minimum ratio of 2021, intends 8% wrong 12 months. So that's nan first betterment lever.

On nan 2nd I'm very, very happy and very satisfied connected each developments we spot connected nan innovation. Customers, our partners are asking for more. And of course, this is structurally contributing to nan betterment connected nan margin. So very affirmative connected nan improvement of nan ratio connected nan usage. Regarding nan past question, what connected nan truth that we are successful nan electrification reaching much aliases little nan 2024 - 2024 objective, JC?

Jean-Christophe Juillard

That's a reliable question. But you're right. I mean, you're correct that acknowledgment to nan conjectural affirmative effect successful 2022. Basically, we person already achieved nan target of 2024. I deliberation we consciousness very comfortable pinch structural actions without betting connected immoderate conjectural. We are very comfortable successful achieving nan target by 2024.

Christopher Guerin

Jean-Francois?

Jean-Francois Granjon

Normally, you person already reached this level, but if understood, truthful you are very assured for - to amended nan separator for nan G&T procreation businesses pinch betwixt 18% to 24%. So astir apt you should beryllium capable to beryllium supra astatine slightest level successful 2024 aliases aft that?

Christopher Guerin

Yes, sure. But I would opportunity let's make 2023. Let's spot really nan world is evolving. Every year, we person - each twelvemonth has a batch of crisis. After nan telephone of past twelvemonth successful February, Ukraine person been invited. So we are successful a imperishable situation mode. Now they are each piling up. So I'm not capable to foretell what is nan crisis.

So I will say, we stay prudent. We do successful 2023. What is important, Jean-Francois, I deliberation and that's for each nan connection is support moving connected nan simplification of assets. We had a batch of remark past clip you opportunity yes, but we don't spot immoderate divestment. It's underway for Telecom. We dream to person immoderate different divestment announcement successful 2023. At slightest we're moving hardly connected it and arsenic good immoderate moving connected acquisition for 2024. So nan retention of assets beyond nan axenic ratio is arsenic good a large nonsubjective of Nexans.

Jean-Francois Granjon

Perfect, convey you very much.

Christopher Guerin

Thank you.

Operator

We'll now return nan adjacent mobility from Rajesh Singla astatine Societe Generale. Your statement is open. Please spell ahead, sir.

Rajesh Singla

Yes, hi, bully morning. Thanks for taking my question. I conscionable person 1 mobility regarding nan normalized FCF guidance. So if you tin talk astir a spot of a span betwixt astir €600 cardinal of EBITDA and astir €150 cardinal to €200 cardinal normalized free rate flow, for illustration immoderate things which is having a antagonistic effect connected nan free rate travel conversion successful 2023 for you?

Jean-Christophe Juillard

Yes, it's a very bully question. You've seen that successful 2022, arsenic I presented, we person €152 cardinal of moving superior improvement. We are not seeing immoderate moving superior betterment successful 2023. Number one, because chiefly because nan ratio we person reached successful position of moving superior and income is highly low, and I don't spot it fundamentally getting further down.

So that's 1 thing. It's astir apt going to beryllium stabilizing aliases going backmost to 4% - 3%, 4%. So probably, we will see, I would say, a small spot of a reversal successful nan moving capital. We've sewage down payments, a large down costs that explains nan precocious normative free rate travel - normalized free rate travel successful 2022.

But astatine nan aforesaid time, we will beryllium consuming those down payments successful 2023. We besides - location is besides different effect that explains nan precocious level of rate travel - normalized rate travel successful 2022. It's because we acquired Centelsa, and we had a one-off rate summation of €60 cardinal erstwhile we acquired nan asset, conscionable to normalize nan moving superior connected nan plus and that's evidently now it's normalized, it will not repetition itself.

So nan - I would opportunity location is simply a conjunction of elements that fundamentally makes nan moving superior betterment and nan rate travel procreation successful 2022 rather high. That will not repetition themselves successful 2023. This is why you spot this quality betwixt nan two. In fact, nan bully measurement to look astatine it is would beryllium to look astatine nan mean betwixt nan 2 years to get a amended visibility connected nan rate conversion.

Rajesh Singla

Thank you.

Jean-Christophe Juillard

Thank you.

Operator

Thank you. We'll now move connected to our adjacent mobility from Massimiliano Severi astatine Credit Suisse. Your statement is open. Please spell ahead.

Massimiliano Severi

Yes, hi, convey you for taking my questions. I had two. So nan first 1 would beryllium connected nan Amplify and SHIFT programs. basically, you person now achieved successful beforehand nan targets that you had group successful nan 2021 Capital Markets Day, which were astir €90 cardinal from both. I was wondering really overmuch of nan worth burners and translator candidates do you deliberation you tin move to profit drivers successful 2023? And possibly also, what do you deliberation for nan adjacent years Is it everything? Or do you expect that location are immoderate niches that you will request to exit aliases support it arsenic a little separator business than nan wide group?

Christopher Guerin

Yes, Massimiliano. So integrated Amplify and SHIFT is really those 2 programs are chiefly focused connected moving nan profit driver into invention driver. So it intends business that are already successful nan scope of 8% to 12% EBITDA and nan nonsubjective is to move them from 12% to 15% EBITDA. So that's nan purpose of nan program.

Regarding worth burners, it's each nan techniques that we usage nether displacement performance, which is astir complexity reduction, making judge that you person nan bully pat of your customers connected merchandise portfolio connected reducing whether nan costs overall. So here, nan purpose is to execute their move from worth burners to profit driver successful Q4 2023. So to person a afloat tally complaint of betterment successful 2024.

Massimiliano Severi

And do you expect to beryllium capable to move everything that you have? What do you expect that portion of it will request to beryllium exited aliases not emphasized anymore.

Christopher Guerin

Yes, 100% assured that everything will beryllium backmost to profit - not backmost will beryllium turned to profit higher. I deliberation what I mean arsenic Massimiliano is that location is nary exogenous facet that make them worth burner today, conscionable a mobility of guidance decisions and really we negociate these businesses. So we person precocious changed immoderate managers moving this unit, and we person our translator squad moving pinch them. So 100% confident. We don't request to divest.

Jean-Christophe Juillard

And conscionable to springiness you a small spot of numbers, what we're expecting to make from that translator successful 2023 is astir €60 cardinal further EBITDA.

Massimiliano Severi

Okay. Okay. And my 2nd mobility would be, again, connected Generation & Transmission. I admit nan rumor of nan operation betwixt offshore upwind and interconnection. I was wondering, would you beryllium capable to springiness immoderate much granularity connected nan quality betwixt offshore upwind and ample subsea interconnection.

Because if I deliberation astir your 24% precocious extremity of nan target for 2025. Even successful 2025, astir of nan orders from nan U.S. will beryllium offshore wind. Yes, you will person EuroAsia, Celtic interconnector and different ample interconnections but offshore upwind will still beryllium portion of nan mix. So I was wondering, tin you possibly springiness immoderate further clarity connected this separator differential betwixt offshore upwind and subsea interconnections.

Jean-Christophe Juillard

Yes, I will not springiness you a precise number, but you person for watercourse successful nan precocious voltage, and that explains nan operation effect. You person nan indebtedness precocious voltage, which is simply a little separator successful wide versus each nan precocious voltage business. After you person short region upwind offshore connected AC technology, which is medium-sized separator up because nan title strength is overmuch higher. After you person a agelong region offshore upwind farm, which are shifting to DC exertion and here, separator importantly upward.

And aft you person nan astir analyzable portion of nan precocious voltage we spot nan subsea interconnection. So from LAN interconnection to subsea interconnection you tin beryllium successful nan scope from 0% EBITDA up to 25%, 26% EBITDA. So that's why nan operation effect is paying fully. The only point that we tin mention again is that we are - we person constricted vulnerability to nan LAN precocious voltage, but we still person successful nan mix, short region of having workplace and successful nan future, will displacement to a agelong region offshore upwind farm.

Christopher Guerin

And to springiness possibly immoderate further colour to understand nan dynamic, arsenic you know, we are investing presently successful nan hold of our mill successful Norway and besides nan aforesaid successful U.S. So arsenic you decently said, nan U.S. description capability, capacity, we'll beryllium capable to reply to nan move nan U.S. market. And Chris has mentioned earlier that we are so expecting immoderate move up this twelvemonth connected this marketplace and nan hold of Halden is from a capacity position is an extension, which would beryllium fresh by early adjacent year, which tin reply some to interconnection and offshore upwind farm.

So which intends that we will beryllium again starting 2024 successful capacity to summation nan operation towards nan interconnection, acknowledgment to this extension. And for example, nan mentioned Celtic award, we tally connected this which is an interconnection, we tally connected this description successful our mill successful Halden. So that's why nan 2024, 2025, arsenic mentioned by J-C, we are assured successful this improvement of operation having, again, nan correct equilibrium betwixt interconnection and offshore upwind farm.

Jean-Christophe Juillard

And I deliberation besides to reply your mobility connected really we ramp up connected margin, what is important is nan hold that Vincent conscionable mentioned, had unchangeable fixed costs. So basically, nan operation effect of adding this gross will summation nan wide separator of nan business because, again, we're adding 2 caller lines that we make much than €300 cardinal of gross but has a overmuch much charismatic EBITDA separator because nan fixed costs will not move from nan plant. So successful fact, it will person a mixed effect very positive. What are.

Christopher Guerin

Next, you person different question.

Massimiliano Severi

Yes, no, that was it. Thank you, very clear.

Christopher Guerin

Thank you. Next question.

Operator

Thank you. Your adjacent mobility from Eric Lemarie astatine CIC. Your statement is open. Please spell ahead.

Eric Lemarie

Hi, bully morning. Thanks for taking my question. I sewage 2 actually. First one, astir this Sunrise Wind task successful nan U.S., I understand that Orsted has announced immoderate impairment owed to nan costs ostentation of nan project. And I understand Nexans some successful this task what could beryllium nan consequences for Nexans. This is my first question. And I sewage a 2nd 1 connected copper. You mentioned you've sewage visibility connected nan supplies for copper for nan adjacent 5 years, but I understand it was astir it was for T&D, and wonderment if you sewage this 5 years visibility arsenic good for nan remainder of nan world?

Christopher Guerin

Vincent, you want to return nan mobility regarding Sunrise?

Vincent Dessale

Yes, I deliberation rather easy. Sunrise is presently ongoing and nary effect for us. As you know, we person a semipermanent statement pinch Orsted successful U.S., this statement is organized pinch indexes and truthful on. So nary effect for us, task moving arsenic planned and connected time.

Jean-Christophe Juillard

And regarding nan copper, nan copper is 60% of nan copper proviso successful nan world is coming from China, Chile and Peru. So erstwhile I mentioned Chile is not astir - for our Chilean need, it's for our worldwide need. We are our cardinal suppliers, namely Codelco is supplying copper for Nexans everyplace successful nan world.

So we person signed semipermanent contracts and privileged entree for nan - astatine slightest we'll say, for nan adjacent 5 years successful lawsuit of world scarcity for copper, make judge that we are capable to support producing our cables and unafraid nan proviso for our cardinal customers. So it's Chile for nan world.

Christopher Guerin

And you person whitethorn spot this past week that we person announced besides a akin statement pinch KGHM, which is different mining companies. So we are extending this semipermanent statement to our cardinal strategical supplier successful position of copper worldwide.

Vincent Dessale

That's correct because connected this will beryllium nan aforesaid for aluminum. So either location is to autumn later it's nan entree securitization aliases arsenic well. Anything we tin do connected the, I would say, earthy worldly decarbonation. So having debased c aluminum, debased c copper, truthful we're moving hardly connected it. What conclusion is that nan request is secular, it's very strong.

We are entering successful a hyper-cycle of electrification, everybody, each nations are waking up for ambiance alteration and each institution wants - aliases each nations want everything astatine nan aforesaid time. So 1 time connected nan surely 2024, 2025, specifically One China will beryllium afloat boost for its power modulation successful parallel to India and U.S. Just nan 3 countries together tin devour nan afloat copper worldwide. So that will beryllium a monolithic bottleneck coming up. That's for sure.

Eric Lemarie

And possibly a follow-up, and you're not - you're not acrophobic that nan scarcity will mean well, immoderate value summation for nan value summation for copper and possibly immoderate antagonistic effect connected immoderate projects because for illustration a sunrise, an rumor connected nan costs of immoderate ample projects owed to copper inflation. You don't spot that?

Christopher Guerin

Of course, scarcity intends inflation. And this is what we opportunity to our customers. There will beryllium a structural ostentation connected nan earthy resources that will beryllium a carryover for nan adjacent year. There is nary uncertainty astir it. Of course, you tin opportunity that tin put immoderate unit connected nan separator of nan task and tin hold nan project, but nan pipeline is truthful immense connected each federation going connected nan aforesaid guidance of shifting from fossil fuels to renewable energy.

You will ever find customers aliases task aliases countries that will beryllium capable to sorb this ostentation aliases to make their task happen. So no, we are assured connected nan truth that astir of nan projects will beryllium confirmed. Of course, it will beryllium astatine a different cost. And erstwhile again, successful nan sectors nan metallic effect is 100% pass-through. So that gave us, I would say, a very precocious shield of protection against inflation.

Eric Lemarie

Thank you.

Christopher Guerin

Are we vanished pinch nan question?

Operator

You'll person a past question. One past question, comes from George Featherstone astatine Bank of America. Your statement is open. Please spell ahead.

George Featherstone

Good morning, everyone. And acknowledgment for squeezing maine astatine nan end. A fewer questions for me. First one, conscionable a explanation connected nan free rate travel guidance. Obviously, you mentioned that nan strategical CapEx level was going to beryllium somewhat little than 2022. So does that connote that benignant of took a much accepted position connected free rate flow, astatine nan debased extremity of your guidance would beryllium zero aliases is location immoderate of nan missing pieces that I'd person to consider?

Jean-Christophe Juillard

No. The normalized does not see nan strategical effects but you're talking astir free rate flow, each free rate flow. No, we are fundamentally - we person a wide range, arsenic you spot connected nan guidance because we are talking evidently €150 cardinal to €250 million. We are not targeting to beryllium astatine nan little portion of nan guidance. We are much targeting to beryllium midpoint aliases supra portion of nan guidance. Definitely, free rate travel altogether, including strategical CapEx will beryllium little than it was successful 2022, but it will not beryllium zero.

George Featherstone

Okay. Great. Then conscionable possibly pursuing connected from nan anterior mobility conscionable going back, nan benignant of contented per gigawatt of cablegram successful nan high-voltage segment. I deliberation you've fixed a scope successful nan past of €250 cardinal to €400 million. I conscionable wondered really that's evolved successful nan existent costs ostentation environment. And fixed nan value increases you astir apt put done successful that too.

Christopher Guerin

It's a bully question, but I'm not judge that we person nan answer. Vincent, you had nan reply successful - nan worth of cablegram per gigawatt evolution.

Vincent Dessale

To beryllium honest, I deliberation for nan - arsenic you know, successful a turnkey, you person astir usually accepted turnkey will beryllium for offshore upwind workplace astir 50% to 60% of cables and nan remainder is installation. And wrong nan cable, nan large portion is nan copper of aluminum. So I would opportunity it's difficult to reply 2 questions because nan aluminum and nan copper, nan non-sales metallic are already moving ups and downs, arsenic mentioned by Chris.

On nan rest, if I tin opportunity this, nan plastic, nan alloy and truthful on, nan ostentation past twelvemonth has been successful nan scope of - depending connected nan worldly betwixt 10% to 15%. So it's 10% to 15% and astir apt 10% to 15% of nan wide component. So it's not massive. Of course, nan copper and aluminum tin make large impact, but this 1 is related.

Christopher Guerin

So nan value rising is chiefly coming from nan region to shore. We are overmuch longer region to short, and that has a important effect. And arsenic well, we are shifting to much and much supply-only to turnkey mode. So that's affected arsenic good to nan afloat worth of nan project.

George Featherstone

Okay. Understood. Just trying to understand benignant of really we quadrate that pinch your comments connected possibly a structural shortage of proviso of copper present and nan pass-through system you person successful your contracts. Does that yet mean that we request to benignant of alteration nan measurement we deliberation astir nan €250 cardinal constituent of that range. Perhaps it's not ever going to beryllium that debased again.

Christopher Guerin

I didn't get nan question. Can you refresh your questions? I didn't get it.

George Featherstone

Sorry. I understand. So I mean, best, if you're getting much to proviso only and therefore, astir of that scope is dictated by nan underlying value of nan metals that you're passing through, and they are structurally successful short proviso to your anterior comments. Do we request to deliberation past that GBP250 cardinal to GBP400 cardinal needs to conscionable structurally displacement higher successful position of nan benignant of nan cablegram gross per gigawatt that we're seeing successful immoderate of these projects?

Christopher Guerin

Sure. Maybe Vincent, you person a comment?

Vincent Dessale

I deliberation you person 2 views connected your question. You person a marketplace view, if I tin opportunity this, that's for judge that if you person scarcity arsenic we scheme successful position of nonferrous metals, truthful typically aluminum and copper, you will person astir surely an summation successful position of actual. But arsenic you know, we are reporting each our income successful Standard.

So which intends that successful position of capacity for Nexans it's a different part. So nan extremity personification will spot for judge an summation of worth per kilometer because you person an inflation, but for an expense, I will say, successful position of performance, successful position of margin, it's a different communicative because we are doing this pass-through.

I deliberation nan past constituent that you - which is possibly - I will not participate excessively overmuch successful method details, but what you person to cognize besides is that complete nan past 10 aliases 15 years, we person worked a batch besides pinch our customers successful bid to trim step-by-step nan costs of nan cable. So we are working, for example, immoderate years back, a cablegram for offshore upwind farm, wherever chiefly copper.

Now we are doing aluminum. We are capable to do immoderate portion of nan conception successful copper, immoderate portion of nan conception successful aluminum. So we are trying to find ever caller solutions, technical. We person launched immoderate years back, a caller type of armoring. So you person nan improvement of ostentation by itself.

And aft you person each nan method solution that we are finding. Just again to springiness an example, nan caller alloy Aurora is capable to laic 2 cables astatine nan aforesaid time. So of course, this is an advantage successful position of timing, successful position of costs for our customers. So yes, you person nan ostentation connected 1 hand, but connected nan different hand, you person nan method improvement of nan solution connected nan turnkey, which is helping someway to counterbalance this ostentation trend.

George Featherstone

Okay. Final mobility for maine past would beryllium connected nan distributed destocking commentary you mentioned. I conscionable wondered erstwhile you speak to them, whether you deliberation they've sewage nan correct level of inventory now for nan forward-looking demand.

Christopher Guerin

Yes. We asked them nan questions connected nan - but I deliberation location will beryllium immoderate position of Rexel successful coming days, but we telephone it was Sonepar, we telephone our North American partners and yes, they see that they are level from each nan feedback that we received from 7 distributors that nan level of inventories are normal, I would opportunity abnormal normative correct now.

And location is nary not foreseen immoderate destocking effect coming up successful coming months. I deliberation location was immoderate destocking effect successful Q4 and now they are restocking because nan request is astatine slightest foreseen for nan moment, higher than expected and a recession apparently delayed aliases more, I will say, soft than what was planned primitively arsenic of.

George Featherstone

Okay. Thanks very much.

Christopher Guerin

Thank you. Thank you everyone. Thanks for your attendance. Thanks a lot. Have a bully day.

Operator

Thank you. Ladies and gentlemen, this concludes today's call. Thank you for your participation. Stay safe. You whitethorn now disconnect.

Editor: Naga



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