NKT Elevates Financial Goals for a Sustainable Future

NKT Revamps Financial Targets for Sustainability and Growth

Company Announcement

NKT, a leader in power cable solutions, has recently updated its medium-term financial ambitions as part of its strategy known as ReNew BOOST. This update aims to provide a clearer picture of the company’s path towards 2028, especially in light of its substantial investments and the growing profitability from a robust high-voltage order backlog. The operational EBITDA target for 2028 is now set at exceeding EUR 700 million, an increase from the previous expectation of over EUR 550 million.

Strategic Expansion and Investments

This living document was initially set forth in Company Announcement No. 28 when NKT unveiled plans for significant expansions, including a new high-voltage factory adjacent to its current facility in Karlskrona, Sweden, and a second cable-laying vessel. Such moves are transformative, aiming to position Karlskrona as the largest offshore cable production hub worldwide, thus enhancing NKT's capability to cater to the surging demand for long-length high-voltage DC (HVDC) solutions.

Investing in Capacity Enhancements

Throughout 2024, NKT has consistently pursued investments focused on boosting capacity in its high-voltage factory situated in Cologne, Germany, along with medium-voltage factories located in Denmark, Sweden, and the Czech Republic. Additionally, the successful acquisition of SolidAl, a Portuguese power cable manufacturer, consolidated NKT's market presence and supported the establishment of a new site in Portugal.

These strategic investments are poised to positively influence NKT's organic revenue growth as well as its operational EBITDA. The robust high-voltage order backlog is also expected to yield more predictable earnings moving forward.

Updated Financial Ambitions

The revised financial outlook for 2025 will be disclosed alongside the Annual Report 2024, marking the end of the earlier financial ambitions set for that year. For 2028, NKT's aspirations for organic revenue growth and operational EBITDA have been updated, while the ambition to maintain a return on capital employed (RoCE) above 20% remains steady. NKT is committed to sustaining a solid capital structure with a targeted leverage ratio of not exceeding 0.0x, firmly aligning its financial strategy.

Projected Financial Milestones for 2028

The updated financial ambitions for NKT by 2028 are as follows:

• Organic revenue growth (CAGR): Expected to surpass 14% from 2021 to 2028, an increase from the prior expectation of over 12%.
• Operational EBITDA: Revised to exceed EUR 700 million as opposed to the previous target of more than EUR 550 million.
• RoCE: Maintains an ambitious target of over 20%.

The ongoing electrification and transition to renewable energy will continue to fuel the demand for power cable solutions. NKT anticipates that all its business segments will contribute to improved financial performance, with Solutions leading the growth trajectory for the foreseeable future.

Assumptions Underpinning Growth

Achieving these medium-term ambitions rests on several key assumptions:

• A supportive market demand that upholds a favorable supply/demand balance.
• Earning further high-voltage project awards to ensure optimal utilization of production and installation assets.
• Satisfactory execution and advancement of high-voltage projects to achieve desired profitability margins.
• Successful execution of medium-voltage investments.
• A stable supply chain free from significant disruptions, ensuring access to essential labor, materials, and services.
• A consistent global economic outlook and stable prices for foreign currencies and metals.

Investment Initiatives for Future Growth

To realize its growth ambitions laid out in the ReNew BOOST strategy, NKT plans to execute a series of investments over the upcoming years. These initiatives are crucial for achieving NKT’s medium-term financial targets, including RoCE exceeding 20%. The anticipated benefits of these investments are expected to realize fully after 2028. Key among these are expansions of high and medium-voltage sites and enhancements to offshore installation capabilities.

As NKT progresses with its investment program in Karlskrona focusing on high-voltage capacity, additional opportunities and challenges have emerged, alongside the effects of general cost inflation. Consequently, related investments are expected to escalate by approximately EUR 300 million yet remain instrumental for achieving future ambitions. The timeline for these developments remains unchanged, with new assets projected to be operational by 2027.

Investment Expectations for 2025-2028

In total, for the period 2025-2028, NKT expects capital expenditures (capex) to accumulate to around EUR 2 billion, of which approximately 75% is allocated to growth investments aimed at production capacity and capabilities, and the remaining 25% for repair and maintenance.

During this timeframe, 2025 is anticipated to witness the highest investment levels, with 2026 remaining significant but below the levels of 2025. By 2028, a normalized level of repair and maintenance capex is projected to return.

Continued Financial Updates

NKT’s financial outlook for 2024 remains consistent with prior announcements. Investors and analysts eager to dive deeper into these updates are encouraged to join NKT A/S's teleconference, scheduled for 10:00 am CEST on December 3, where the presentation materials will be accessible beforehand.

Contact Information

Investors
Jacob Johansen, Head of Investor Relations
+45 2169 3591
Press
Louise Westh Naldal, Head of Group Communications
+45 2982 0022

Frequently Asked Questions

What are NKT's updated financial goals for 2028?

NKT has set a target of exceeding EUR 700 million in operational EBITDA and aims for organic revenue growth greater than 14% from 2021 to 2028.

What investments is NKT making to achieve its goals?

NKT plans to invest approximately EUR 2 billion from 2025 to 2028, focusing primarily on enhancing production capacity and capabilities.

How will NKT's expansion impact its market position?

The expansion in Karlskrona aims to establish it as the world's largest high-voltage offshore cable production site, meeting growing demand effectively.

What key factors will influence NKT's success in reaching its financial ambitions?

NKT's success hinges on market demand, project awards, execution of investments, and stability in the supply chain.

How can investors access more information about NKT?

Investors can attend the teleconference scheduled for December 3 to learn about NKT's strategies and financial updates. Registration will be available on their website.

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