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NKT invests in high-voltage power cable business to prepare for future growth and upgrades medium-term financial ambitions


Company Announcement

24 May 2023
Announcement No. 18


NKT invests in high-voltage power cable businessto prepare for future growth andupgradesmedium-term financial ambitions

Since March 2023, NKT has announced high-voltage project awards and firm commitments accumulating to approx. EUR 5bn. To deliver on this significant order intake as well as a continued strong market outlook, NKT will invest inadditional high-voltage production and installation capabilities and capacity. This leads to an upgrade of NKT’s medium-term financial ambitions.

The high-voltage power cable market has grown significantly in recent years and the outlook remains positive driven by the transition to renewable energy and electrification of societies. Several countries have ambitious offshore wind targets and Europe aims for at least 300 GW offshore wind generation by 2050.

NKT estimates that the value of projects awarded in its addressable high-voltage power cable market was around
EUR 5bn in 2021 and around EUR 8bn in 2022. For 2023 and 2024, NKT estimates the project awards in the market will be at least EUR 8bn on average per year, however, it could be significantly larger, depending on the development of several sizable projects including multi-year frame agreements.

The projects awarded in recent and coming years will be executed over a period of several years following the awards and will provide long-term backlog visibility for power cable suppliers. At the end of Q1 2023, NKT’s high-voltage order backlog increased to EUR 7.0bn from EUR 4.7bn at end-2022 and EUR 2.9bn at end-2021. This significant increase is a testimony of trust from customers in NKT as a long-term, reliable partner in large high-voltage projects.

As announced in Company Announcement no. 14 of 5 May 2023, NKT has initiated the investment in additional production and installation capacity and capabilities on the existing, market leading production site in Karlskrona, Sweden.

Investments in end-to-end HVDC factory and market leadingcable-laying vessel
The new high-voltage investments to improve turnkey capacity and capabilities, will include a significant expansion of the production site in Karlskrona, Sweden, and a new market leading vessel with record-high power cable-laying capacity compared to vessels in the existing world fleet. The production site expansion will entail building a new factory including a third 200m extrusion tower. The expansion will add end-to-end production capacity next to the existing facility and turn Karlskrona into the world’s largest high-voltage offshore cable production site. The expansion will further improve NKT’s abilities to meet the growing demand for especially long-length HVDC power cable solutions.

The investment program will expectedly amount to approx. EUR 1bn between 2023 and 2026 and will strengthen NKT’s market leading position significantly. The new assets will be operational from 2027. In addition, NKT will still have ongoing maintenance and less sizable investments in the business.

NKT President and CEO Claes Westerlind says:
- The order awards and commitments from our customers in recent months highlight our leading position within turnkey solutions, XLPE and high-voltage DC technology. Power cables are key enablers of the transition to renewable energy and current high-voltage production and installation capacity is not sufficient to meet the increasing demand in the market. We are excited to continue growing NKT in line with our strategic ambitions and to continue developing our turnkey power cable offerings to our customers.

Since 2020, NKT has expanded its high-voltage business including a second extrusion tower in Karlskrona. More than 300 new employees have joined the Karlskrona site since 2020 and NKT expects more than 500 new employees to join the site in Karlskrona towards 2027.

Upgrade of medium-term financial ambitions
In Company Announcement no. 21 of 22 September 2022, NKT announced updated medium-term financial ambitions for 2025. With the new RoCE1 accretive investment program and an improved high-voltage order backlog visibility and quality, financial ambitions are upgraded and extended to reflect NKT’s anticipated performance in the coming years.

Organic growth
NKT’s ambition is to grow revenues (measured in std. metal prices) organically with a CAGR above 12% from 2021-2028 which is a continuation of the current growth momentum. The previous ambitions were a CAGR above 12% from 2021-2025. NKT still expects to deliver on the 2025 ambition and continue to grow in the following years.

Operational EBITDA
NKT’s ambition is to deliver operational EBITDA above EUR 300m in 2025 and above EUR 550m in 2028, with further earnings upside in the following years which reflects a continued improvement in the profitability margins. The ambitions are mainly driven by the high-voltage investment program. The previous ambition was an operational EBITDA margin (std. metal prices) of ~12-16% by 2025 and with the updated absolute ambition, NKT expects to deliver in the upper half of the range. The margin is expected to improve further towards 2028.

NKT’s ambition is to improve RoCE to above 20% in 2028. The previous ambition was a RoCE above 12% by 2025, which is now expected to be above 15%. The increasing level expected in the next five years reflects NKT’s general operational improvements and value creation generated by the high-voltage investment program.

NKT medium-term ambitionsUpdated
Organic growth (CAGR)>12% from 2021-2028
Operational EBITDAEUR >300m in 2025 and EUR >550m in 2028
RoCE>15% in 2025 and >20% in 2028

All business lines are expected to contribute to the improved financial performance with Solutions as the main contributor. Return from the investment is expected to be fully accretive once in operation from 2027. Further investment opportunities across the businesses will still be assessed and pursued if value accretive.

Delivering on the medium-term ambitions is based on several assumptions. Currently, the most critical are the following:

  • Market demand supporting continued favourable supply/demand balance
  • Ensure further high-voltage project awards securing high utilization of production and installation assets
  • Stable development of the global economy
  • Satisfactory execution of high-voltage investments and projects to deliver on expected profitability margin
  • Stable supply chain with limited disruptions and access to the required labour, materials and services
  • Stable development in metal prices

Update on capital plan
As informed in Company Announcement no. 10 of 23 March 2023, the authorisation of the Board of Directors to issue up to 50% new shares with pre-emptive rights for the existing shareholders was approved.

Based on its current evaluated capital requirements and pending market conditions, NKT intends to raise around
EUR 350m through a rights issue which will provide the required capital structure to drive the planned high-voltage investment program. Further, this will provide NKT additional balance sheet robustness to handle large high-voltage projects which are increasing in numbers and size and secure NKT’s ability to tender in the growing market.

To grow its high-voltage order backlog, NKT must be capable of issuing the guarantees, mainly performance bonds and advance payment bonds, required by its customers. Over the last month, NKT has obtained significant further commitments on guarantee capacity from banks and export credit agencies including Swedish Export Credit Agency (EKN) and Swedish Export Credit Corporation (SEK) in reflection of the company’s strong order intake recently.

The announced high-voltage investment program will continue growing NKT’s Solutions business and thereby the exposure to large high-voltage projects. This business model requires a robust capital structure and NKT will target a leverage ratio (net interest-bearing debt relative to operational EBITDA) of up to 0.0x (previous target was up to 1.0x). The solvency ratio (equity incl. hybrid capital as a percentage of total assets) target is maintained at above 30%.

Divestment of NKT Photonics
As informed in Company Announcement no. 13 of 2 May 2023, the divestment of NKT Photonics is not closed as the Purchaser has been denied the authorisation under the Danish Investment Screening Act. NKT awaits the Purchaser's further actions in response to the decision and, separately, NKT evaluates its options.

The Board of Directors still intends to divest NKT Photonics. The longer than expected process will not impact the targeted amount in the intended rights issue.

NKT A/S hosts a teleconference for investors and financial analysts at 14:00am CET on 24 May 2023. The presentation to be used during the call will be available before the start of the teleconference. To attend, please register and access on

NKT has engaged Danske Bank, J.P. Morgan and Nordea as joint global coordinators for the potential rights issue.

Investor Relations:         Michael Nass Nielsen, Head of Investor Relations, tel.: +45 2494 1654
Media Relations:             Louise W. Naldal, Head of Group Communications, tel.: +45 2982 0022

Important disclaimer
This announcement does not constitute an offering memorandum or a prospectus as defined by Regulation (EU) No. 2017/1129 of 14 June 2017 and nothing herein contains an offering of securities. No one should purchase or subscribe for any securities in the Company, except on the basis of information in any prospectus published by the Company in connection with a potential offering and admission of such securities to trading and official listing on Nasdaq Copenhagen A/S. Copies of any such prospectus will, following publication be available from the Company's registered office and on the website of the Company. This announcement is not an offer to sell or a solicitation of any offer to buy any securities issued by the Company in any jurisdiction where such offer or sale would be unlawful and the announcement and the information contained herein are not for distribution or release, directly or indirectly, in or into such jurisdictions.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America. This announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or the securities laws of any state or other jurisdiction in the United States, and may not be offered, pledged, sold, delivered or otherwise transferred, directly or indirectly, in the United States, except pursuant to an applicable exemption from, or in a transaction not subject to, registration. No public offering of securities is being made in the United States.

This communication is only addressed to and directed at persons in the United Kingdom who are (A) “qualified investors” within the meaning of Article 2 of the Regulation (EU) 2017/1129, as amended, as it forms part of domestic law in the United Kingdom by virtue of the European Union (Withdrawal) Act 2018, as amended and (B)(i) who have professional experience in matters relating to investments and who fall within the definition of “investment professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”), (ii) who fall within Article 49(2)(a) to (d) of the Order, or (iii) any other persons to whom it may otherwise be lawfully communicated (all such persons together being referred to as “relevant persons”). This communication must not be acted or relied on in the United Kingdom by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available in the United Kingdom only to relevant persons and will only be engaged in with such persons.

1RoCE definition: Operational EBIT for continuing operations as a percentage of average of the last five quarters of capital employed for continuing operations with capital employed defined as group equity plus net interest-bearing debt.


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