Nexans S.A. (NEX) Earnings Call Transcript & Summary

Welcome to the Nexans' business deep dive. [Operator Instructions] Now I will hand the conference over to the speakers, Julien Hueber, CEO; Vincent Piquet, CFO; and Vincent Dessale, CCO. Please go ahead.

So thank you, and good morning, everyone, and thank you for joining us today. For the ones who were with us earlier for the full year 2025 result presentation, welcome back. And joining us now, welcome to this Nexans business deep dive. This session follows the Capital Market Day we held in November 2024. There are 3 reasons why we wanted to have today an update of our Capital Market Day. The first is Nexans has entered into a new phase of leadership. Second is, since early 2026, Nexans has become a pure play electrification with a planned disposal of auto electric. And the third, the external environment has evolved significantly over the past 15 months, becoming more complex and more volatile. Now that Nexans is fully focused on electrification with a simplified portfolio and a clear strategic positioning, we can fully leverage this model and scale what we do best. In this context, we felt it was the right time to step back and explain what differentiates Nexans and how our model allow us to adapt to a more demanding environment while staying fully aligned with our strategy and financial trajectory. Over the past few years, Nexans has gone through a profound transformation. We reshaped the portfolio, simplify the organization and strengthen our financial foundation. Our strategy has not changed. This session today is to explain how we will intensify execution, how we scale what already works across the group and how we continue to convert electrification growth into margin and solid cash generation. So let's now move to the today's agenda. I will start by setting the context where Nexans stands today after the transformation phase and why now is a good time to enter into a phase of intensification. Then part 2, together with Vincent Dessale, our Chief Market and Commercial Officer, we will then cover our 3 businesses: Transmission, Grid and Connect and explain the key levers we are deploying to intensify performance across the portfolio, building on the structural drivers of value creation in each business. Finally, in part 3, Vincent Piquet, our CFO, will come back to Nexans' value creation model and provide further insight into our financial trajectory towards 2028. For this session, we will explain how Nexans turned electrification megatrend into value creation with discipline and selectivity. So as I mentioned earlier, today, Nexans is now a global electrification player. This positioning did not happen overnight. It is the result of deliberate and disciplined choice made over several years. This slide illustrates very concretely the portfolio rotation we have completed to support the strategic shift. On the top of the slide, you see the acquisition we have made to strengthen our electrification footprint. This transaction were highly selective and fully aligned with our strategy. In total, they represent around EUR 1.5 billion of sales and contribute directly to electrification focus. Let's take some examples. Vincent will describe later in the presentation how fast we have integrated Reka in Finland and how we have been able to become the #1 in the Nordics, maximizing our grid capacity for these regions. As a second example, Air City in Spain is providing us today a brand-new industrial capacity that starts to contribute to the growth we see today to fire safety and data center vertical. On the bottom part of the slide, you see the divestments we have executed over the same period. It represents around EUR 2.2 billion of sales and divesting these companies took us a lot of time and resources, but the portfolio rotation is complete, and Nexans is now fully focused on electrification. Overall, M&A remains a key driver of growth for Nexans and is at the core of our strategy. We have a strong and active pipeline of opportunities, and we will replicate our value creation model in the same business we integrate with the same discipline in execution, integration and value delivery. As I just mentioned, while we have been actively progressing on our portfolio rotations, one of the most tangible outcome in our transformation has been simplification and the impact it has had on our performance. Since 2021, we have significantly reduced complexity across the group. We now have much fewer industrial sites, much fewer employees, and we have managed an important reduction of our market segments to address as well as a division by 2, and we have divided by 2 our technical processes. This was not simplification for the sake of cost cutting. It was about restoring focus, accelerating decision-making and improving industrial efficiency across the organization. As you can see, the financial impact has been very tangible. In 4 years from 2021 to 2025, our electrification adjusted EBITDA doubled, electrification ROCE was multiple by 1.2 and free cash flow almost doubled. This track record clearly demonstrates that the model of simplification works. Today, Nexans operates with a well-diversified profile with a balanced contribution from our 3 core businesses, Transmission, Grid and Connect as well as a balanced geographic footprint. But our resilience is not only about diversification. It is very much about selectivity. We have positioned our group towards the most resilient market. We focus on segments where demand is structurally stronger, investment cycle are more visible and customer value, both performance and [indiscernible] prices. This applies across sectors, geographies and customer profile. We are highly selective in the vertical we address, the geography we prioritize and the customer we serve. In particularly, we keep focusing on platinum customer where our differentiation, our expertise and our execution capability create the most value. So as a result, Nexans is positioned at the intersection of resilient markets, premium demand and [indiscernible] profitable growth. But before moving into the businesses, it's worth posing briefly on the broader context. So on this slide, you see a number of key indicators that illustrate the depth and the durability of electrification trends. The structural driver of electrification are stronger than ever. Just let's take 2 examples in this slide. Power grids required massive reinforcement after decades of underinvestments, and the energy transition continue to drive new transmissions and connection capacity. Over the next decade, EUR 80 million -- sorry, 80 million of kilometers of minimum voltage will have to be produced and installed, and that's the equivalent today of the existing grid worldwide capacity. Another example is the development of AI is driven by an unprecedented expansion of data center worldwide. This facility are extremely energy-intensive and require reliable, high capacity and resilient power infrastructure. To put this into perspective, data center are expected to increase their share of global electricity consumption from around 1.5% today to close to 3% by 2030. This is massive. And these investments are driven by technology, regulation and security of supply. So if we step back and look at our journey in Nexans over the past several years, 3 distinct phase clearly emerged. Between 2019 and 2021, Nexans went through a restructuring phase. The priority at that time was to restore profitability and strengthen the balance sheet and fix the fundamental of the group. From '21 to 2024, the focus shift to simplification. With reduced complexity, reshaped the portfolio around electrification. This was about building a simpler, more focused and more resilient group. Now as we enter the 2024, 2028 period, we move into a phase of amplification, amplifying profitable growth in electrification. The organic growth we have presented this morning for our 2025 results clearly demonstrate our capability to grow. But what is important today is that our positioning as a pure player in electrification will now allow us to enter into a phase of intensification. Now that the portfolio rotation is complete and that the group is fully focused, we are at a position to scale execution, replicate what works and deploy our value creation model with much greater intensity. Intensification is not a change of strategy. It's a mindset in the execution. It means building on what we have already put in place, doing things better at a greater scale and with more discipline. Let me pause a moment on this slide because it's captured very concretely how we are moving into the next phase of our value creation journey. Intensify means scaling what already works with disciplined focus on repeatability. This is done through 4 concrete pillars that I will describe. First, commercial excellence. We have spent the full year 2025 to understand deeply, vertical by vertical what -- where the customer needs, the expectation in terms of innovation, technology and services. This is what we have called growth pattern. So we are now in a position to scale high-value growth pattern in verticals such as data center, fire safety, renewable [indiscernible] factories. To do this, we have set a dedicated commercial teams to capture value across the full offering. The head of this sales business development is now part of our ExCom team. It gives the importance of this pillar. The objective is clear, increase the share of advanced offer, improve mix and strengthen pricing power. The second pillar is industrial excellence. This pillar is about to align the industrial footprint to renew requirements of our customer expectation. Let's take an example. The expectation of our customer in data center, for instance, or in grid project has evolved. And today, their focus is to secure enough capacity in a very short period of time to fit with their schedule. Therefore, we are adjusting our model, which used to be local-for-local model to now a model called local-to-regional in order to mutualize our industrial footprint and answer positively to our customer expectation. This is how we will secure profitable growth in the coming years. At the same time, using Advanced Industry 4.0 on automation process will generate structural competitiveness. The third pillar, operational excellence. This pillar is about scaling operational excellence across the group with a strong focus on cost competitiveness and organizational efficiency. We continue to deploy cost competitiveness initiatives targeting both direct and indirect costs while making the organization leaner and more agile. Shift that you know well is now -- is now amplified by AI, allowing us not only to improve process efficiency and accelerate decision-making, but also to enhance commercial effectiveness and profitable growth. A good illustration of AI deployment is in our AI-based inventory modeling tool, which helps optimizing stock level in order to capture revenue growth while maintaining our cash generation targets. These initiatives will structurally improve our cost base, strengthen competitiveness and support consistent performance across all businesses. I will now describe the fourth pillar, which is about M&A excellence. M&A is a key element of our strategy. Our approach to M&A is very disciplined and highly selective. But more importantly, our strength lies in how we integrate acquisition and turn them into value creation. We ensure that the businesses we acquire are quickly integrated into operational model commercially, industrially and operationally using the same tool process and discipline, including the shift. This allow us to replicate our value creation model quickly, accelerate synergies and ensure that acquisition contribute to margin, cash and return, not just the growth. So taken together, these 4 pillars define what we call intensify. They are how we raise performance across the portfolio and ensure that every business progressively catch up with our best-in-class performer. In the next slide, I will show how this framework applies very concretely to Transmission, Grid and Connect. So this slide captures the operational value creation model. At the heart of this model, you can see the 4 execution pillar we discussed just earlier. They form a common and robust foundation across the group. It is critical to understand that this framework is scalable, but not apply mechanically. So let's take transmission example. In this business, value creation relies far less on M&A and much more on industrial and operational excellence, strict backlog selectivity and quality of execution. In Grid and Connect, the same execution framework applies but with a different balance between the pillars, placing more emphasis on innovation, commercial excellence and targeted M&A. This slide concludes the first part of today's presentation, our positioning, our strategy and how we intend to intensify execution. I will -- let me now hand over to Vincent Dessale, who will describe how intensify will be cascaded to our 3 businesses.

Thank you, Julien. We will indeed spend the coming minutes to address our 3 segments; Transmission, Grid, Grid, which is the distribution of energy, electricity, and the Connect. In other words, the usage, the consumption of electricity. And we will share with you the fundamentals of these 3 segments, but more important, how Nexans leverage the structural driver of value creation, in other words, our recipe. And last but not least, how Nexans will intensify this structural driver in the coming years. So let's start by Transmission. Transmission, it's a worldwide market, first element. It's a long-cycle business, good visibility, supported with very strong needs in terms of electrification. Julien spoke before about renewables, interconnection, energy transition. So in fact, the question is not whether the market is there. The question is how Nexans capture the value of this market and do so in a disciplined and repeatable way. And the first element is clearly the quality of execution. You are managing in this activity a set of projects on multi-years execution. You have to organize the sequence of all these different projects like a little bit, a big puzzle, if I can say this. So the quality of execution is a key and measured element. Of course, you have to do it with discipline coming back to this sequence, this puzzle. And you have also to do it with agility because in this business, you can have, from time to time, some adjustment to be done due to the execution of the project. And this ability to deliver safely on time and at scale is clearly a key differentiator on the market. The second is barrier to entry, and I will illustrate this point later on. The third one is about selectivity. Julien mentioned it. We have a chance to have a significant pipeline of projects, and we are very selective in the project that we try to win, taking into account the terms and condition, the profile of the customer, the technology and how it fits with our assets. The third one -- the last one, sorry, is mix improvement. You know that we had in the past a certain number of legacy projects. This legacy projects are step-by-step leaving the backlog. And we have now in front of us an increased share of, I will say, good and healthy project. And this evolution, the 3 factors that I've mentioned plus the mix improvement are seen in the evolution of our performance. You have seen this morning, and we share it again here today. We have this evolution steadily since 2023. And we are clearly -- thanks to the visibility that we have on our backlog, which is a healthy backlog, a trajectory where we are very confident to continue to improve this performance. Coming back now to the barrier to entry. Here, this point is quite important. Nexans has been, during many years, having a very strong record in terms of installation length, in terms of depth of installation, in terms of tension. We have -- we are doing this, thanks to our teams, our experts, the know-how that we have. We are doing this, thanks to the state-of-the-art assets that we have in terms of manufacturing, in terms of testing, in terms of installation, in terms of protection capabilities. And all these elements give us a technical leadership acknowledged by our customers. We were some years ago, for example, the first supplier to deliver the first dynamic solution for the first floating offshore wind farm in the world. And more recently, maybe you have seen in our press release, we have set a world record in terms of installation, in terms of depth of installation with 2,150 meters in a project called Tyrrhenian Links in Italy. And what I want to highlight is that this achievement, they are not symbolic. They represent Nexans' know-how and expertise. They represent our capacity to undertake complex projects, but deliver them with reliability. They represent, in other words, the trust of our customers. Under intensify, we will be scaling this model. And the coming Electra vessel, which will be delivered in the second quarter, will continue to help us to enhance this technological leadership, being able, for example, to lay 4 cables simultaneously, helping to improve the productivity and giving us a better flexibility in the execution. Now to conclude the transmission part, if we look forward, we have 2 elements. We have a solid backlog, and there is also a solid pipeline, which means that this business, basically, you need to manage at the same time, short term and medium long term. The short term is all about agility. So what I say before, you have plenty of projects. This project can have some request or change of sequence. You can have, for example, a bad weather when you are doing installation. So you have to rearrange your organization, your schedules. And this agility give us also some opportunity to integrate in our overall activities, some inspection, maintenance and repair activity. In other words, this agility help us to capture high-margin opportunities. And at the same time, we have to look medium, long term, which is about preparing the next wave of order intake, which will be the [indiscernible] our factory starting '28, '29 and beyond. And this, again, we will do it, thanks to this selectivity, this discipline and somehow, we will try to narrow the pipeline in order to make the right choice. And that's also the chance in this business is that the pipeline is very strong coming from the different usual sources of market. More or less, you have more than 120,000 of kilometers of cables, which are expected to be installed between '26 and 2040. In this 120,000, we consider that 95,000 are addressable according to our asset, our expertise and can be converted in a very high-quality backlog. So under intensify, we will continue to strengthen this approach, combining efficient processes, quality of execution, commercial agility, 3 reasons for what our customers select Nexans for the most complex project. And under intensify, this visibility, this selectivity will constantly translate into margin and cash and not only volumes. And now I will turn to Julien, who will go through the grid business.

So thank you, Vincent. Let me turn to the Grid part. So first of all, I really like this business and the turnaround that the team in Nexans have accomplished over the past years. And I'm even more excited when I see all the potential looking forward in the grid business. Let me remind you where we come from. Not so long ago, in 2021, 6.7% adjusted EBITDA margin to now more than 16% in 2025. This is a very significant step change in profitability, driven by disciplined execution and portfolio optimization, and that gives us the confidence of our strategy. Grid is structurally attractive, cash generative and relatively low in terms of capital intensity. It benefits from a long-term trends linked to grid modernization and the massive deployment and development of renewable that we are seeing since several years, and that will continue. But now let me explain how Nexans capture this value and why the grid is particularly well positioned going forward. First, the scaling of innovation. Grid is a business where value is driven by high added value solutions from advanced cable design to recycling offers. Nexans is scaling innovation across all its grid business across the world. Second, regionalization. We are regionalizing our industrial footprint to respond to stronger demand linked to grid modernizations. The proximity with customers improve our response times, reduce complexity and enhance service level, all of which support margin and execution quality. Third is the pricing power. Thanks to our ability to address complex customer needs with innovations, customers are willing to pay for performance, credibility and differentiated solutions, not just for volume. And finally, deployment of shift, our SHIFT program plays a key role in Grid by ensuring that best practice are consistently deployed. It allows lower performing units to progressively catch up with best-in-class performance, improving the overall margin of these plants, discipline on execution quality. So over the 3 years, several of our grid units have massively improved their profitability using these 4 drivers. In Grid, the value creation is driven by 3 main levers, and I will describe the 3 of them. The first lever is basically the expansion of share of wallet with grid operators. In Grid, expansion is driven by multiyear framework agreement with our DSOs, which provide visibility and recurring volumes. We tend to see more and more of the extension of duration of these framework agreements. A very good illustration of this is the recent 7-year agreement in the framework we have signed earlier in January with Enedis, the French DSO. More than EUR 600 million contracts support the modernization and expansion of the medium voltage network. We leverage our low carbon leadership, industrial backup and competitiveness to extend and secure the duration of these agreements and capture a significant additional volume over time. Second lever is the expansion into new verticals such as [indiscernible] renewable or data center. If I take the example of a data center, allowing us to capture large-scale projects and benefit from a booming market. This vertical will generate a meaningful growth and value driver for grid in the coming years. We have the same trend for project in renewable. Both these 2 elements are important for us. Third lever is the continuing expansion of innovation in accessories. Accessories are a fast-growing segment across geographies, illustrating the strong need for our customers for more added value solutions. We have developed solutions like EasyJoh, now powered by AI, significantly improving reliability and reducing installation complexity. This innovation strengthened differentiation, customer preference and pricing power. This is a type of solution that brings more value creation over time. Taken together, these 3 levers explain why and how Grid scales value creations by increasing share of wallet with existing customers, by expanding high-growth verticals and by innovating to deliver best-in-class customer experience. So let me start with the objective in Grid. Our ambition is to significantly increase the share of advanced offer in our revenue mix. By 2028, around 40% of our grid revenue will come from advanced solutions. This reflects a deliberate shift towards differentiation of customer experience and high-value creations. Second, let me explain how we will achieve this shift. In the business, value creation is driven by our ability to deliver customer experience such as best-in-class lead time or training customer workshops for accessories installation. Beyond the cable itself, Nexans leads low carbon offer with recycled aluminum in order to reduce up to 50% of the CO2 emission. This is already happening in some parts of the world with our customers. And finally, let me highlight how we will intensify this model. We scale advanced software through mutualization across business units, ensuring that innovation developed in one area can be deployed efficiently across the grid portfolio. And we also rely on dedicated what we call them commercial SWAT teams to support complex tender and accelerate penetration of advanced solutions with strategic customers. Where relevant, targeted M&A complement this approach by adding specific capabilities and accelerating the rollout of our high added value solutions. So under intensify, our focus is to scale this approach so that the shift towards advanced solutions translate into margin improvement and long-term value creation in Grid. Let's move now to Connect, Vincent.

Yes. Thanks, Julien. I will continue with Power Connect. And for this business, also you know it, short-cycle business, primary local market with a cash flow generative profile and quite limited capital intensity. But again, with a very strong dynamic supported to the electrification of our day-to-day needs. We see all of us in our day-to-day that we are increasing our consumption of electricity, could be, of course, the electrical vehicle, but could be also the day-to-day in our different activities. And here, I would like to start by a key element, and I would like to highlight that Connect is not only a commodity business, something that we heard on a regular basis, and it's not true. Our customers and the customer of our customers because in this market, we go often through distribution company. What they are looking for is not basic cable. They are looking for safety standard. They are looking for energy efficiency. They are looking for compliance with regulation, and they are also looking for productivity when we do the installation of the cables, which means that you can bring to this market advanced offer with higher margin profile. And this is clearly the first element of value creation for Nexans. We have worked a lot on this, and I will give you some examples in the next slide. We are scaling innovative and high added value solutions. The second is leading vertical technology. Julien mentioned in Grid -- some elements. When we speak about verticals in low voltage, we have also here the data center vertical. We have also the fire solution. We have, for example, the premium offer for electrician. These verticals that we call internally growth pattern are also an area that we have identified, and we will scale our solution in these verticals, which are providing a better margin, a higher margin profile. The third element, and you know it also very well, this is our backbone, the shift methodology where we are using not only for integration, but also to move our lower performing unit progressively to catch up with the best-in-class performers. We have mentioned already in some discussion with you that we still have a gap between the best-in-class and the lower in class, if I can say this. The last element is for sure, the replication of this model through the M&A acquisition, and Vincent will give you a concrete example with the acquisition of Reka that we did 2.5 years ago in Finland. Taking together, this level explains why Connect is a business where value creation is progressive and scalable. And if we look to our evolution of EBITDA over the last years, we came from 8%. Now we are in the range of 12%, and we are able to do this, thanks to this discipline in the transformation using the different levers that I have shared with you. Now I would like to give you a concrete example of value creation, and I have chosen the MOBIWAY case study. I could have selected other advanced offer like the cable loop, which is a specific offer dedicated to sustainability and recycling. I could choose also the Protect, which is our fire safety range of product or the [indiscernible] solution that we use in certain geographies. But let's move to the -- let's focus on the advanced offer of MOBIWAY. What is MOBIWAY? Basically, it's innovation which started initially in France some years ago. And step by step, we have completed this range of product. It's all about supporting the installation of cables. And you can say why we have so many solutions. The rationale is quite simple is that you don't install cables in buildings in the same way all over the world. The structure of the building are different between Europe, Australia, Nordics, Colombia, just to give some examples. So we design solution according to the pain point of the end users. And this gives us this full scale, this full range of solution that we are deploying all over the world in a very scalable and reputable way. And the last one that I want to mention is the one coming on MOBIWAY, what we call [indiscernible] Connect, which is having a layer of IoT. And here, we will bring with this solution, additional services through apps to the end user, allowing them to calculate the remaining length, allowing them to interface their orders with the web shop of our distributors. But the most important is probably the point regarding the dynamic of this repeatable growth model. If I take MOBIWAY, since '21 up to now, this range of product has delivered a strong growth with a double-digit CAGR on these 4 years, which is, of course, significantly higher the CAGR of this segment. So this development of advanced software, that's the way, of course, to deliver a better user experience, which, by the way, gives a stickiness to the end user to our solution. You have a kind of recurrent sales and it's improved the mix value and scale our model all over the world. In order to conclude Connect, let's see how we will continue to enhance this positioning in the business. Our mission is very clear. By '28, we want to have 30% of the Connect revenues, which come from this advanced solution, which means differentiation, pricing power and profitability. And we will do this, thanks to 3 elements. First one is customer experience. I have explained you in the previous slide, the MOBIWAY range. So it's all about solution, could be also supply chain solution, could be also services through digital platform. So quite large possibility of activities. The second is, of course, technology. I gave the example of the fire safety, for example. And last but not least, the life cycle solution where we create recurring revenue and we create value over time. In other words, what we are doing is that we are more and more customer and customer-centric. In other words, Nexans is acting for sure in a B2B business, but we are thinking B2C in terms of solution and in terms of customers. And this unique position, we will intensify it in the coming years, first of all, through the competitiveness by specializing our industrial footprint, thanks to the previous acquisition and the coming acquisition that we will do. We are creating more and more regional organization in terms of industrial footprint. We are creating also a regional supply chain hub in order to be faster in the delivery to have shorter lead time to our customers. And this ensure that this advanced offer are not only differentiation, but they are also competitive. And at the same time, we will scale, as I said before, these advanced offers across geographies and advanced offer through the targeted acquisition. So taking together, this is how Connect will continue to be premium in bracket and bring competitiveness. That's basically the overview of the 3 businesses that we have shared with Julien and how we intensify value creation across them. And now let me now hand over to Vincent Piquet, our CFO, who will take you through this execution framework under, I will say, a financial view and how we will move towards '28. Vincent, the floor is yours.

Thank you, Vincent. So in this section, I'll spend more time on how we're going to deliver our 2028 trajectory. I'll focus first on our value creation engine. The center of the slide, as you can see, is what Julien explained earlier. And it's the engine that we use to drive operational performance through the shift approach, the application of differentiated processes and focus on each of our businesses. And this is really the core of the discipline we apply. To feed that engine, on the left side, we fit it with growth. First, selective organic growth. We focus not just on volume, but on value and really trying to capture the most value-added parts of the businesses and the geographies and the businesses we're in. And then second, we do targeted M&A to accelerate that growth on top. Once you put that growth into the engine, the first outcome you get is adjusted EBITDA expansion. That expansion is the result of the discipline, the operational discipline we put into the engine, and it translates into pricing selectivity, rigor on the industrial aspects and the focus on value creation at every step of our processes. And then the second outcome is the generation of cash flow. Obviously, cash is critical for us, and we're very focused on the expansion and acceleration of the free cash flow generation. That cash is then used on the right for our capital allocation. First priority for us is targeted M&A, and I'll spend more time on what we prioritize. Shareholder returns. We've had great total shareholder returns performance over the last few years. And then obviously, growth CapEx as we reinvest into our selective organic growth through the expansion of our production capacity and the investment in our plants. This model in total is what drives the overall value creation in Nexans. And it may seem a little bit generic, but when we look at the specifics of how we apply the shift methodology and how we modify the intensity of each of the levers and selectively apply the focus on different parts of the business, it makes it unique, and this is how we transform growth into EBITDA, EBITDA into cash and cash into long-term value creation with Nexans. Let me zoom in a little bit on target on the M&A. We have a strong M&A focus. It's an essential part of our story. And now that the portfolio rotation and the divestments is completed, the brain space that this management has on the ability and the focus to do M&As going forward is only going to step up. We have 3 clear priorities in our strategy around M&A. The first one is consolidating and reinforcing our existing footprints. And this is where we're looking for bolt-on acquisitions that help us grow and accelerate in markets we know well to reinforce our positions and continue to expand. Second, it's expansion to new geographies. We're clearly looking at different markets around the world where we're not present today and we are looking to expand. There are a lot of attractive geographies in the U.S. and elsewhere that we're looking at today. And then the third is new technology, new expertise to our portfolio. We have now a global size and any new technology and accessories we can feed into that global network and global sales operation, we can accelerate growth of start-ups and small technology companies that can reinforce the offering that we provide to our customers. And most importantly of all, it's the ability to integrate the acquisitions that also makes a difference with Nexans. We have a proprietary approach derived from SHIFT. And we are very, very focused on successfully integrating the acquisitions we make to bring them into the Nexans family and bring them to the best levels of the Nexans performance in terms of value creation. And in fact, let me take one example, a very strong example that was referred to earlier today in the conversation. Reka is a business in the Nordics, that was a very strong business, very good business, but clearly underperforming its potential. What we did is, from day 1, apply our SHIFT methodology, bringing rigor and discipline to pricing to operations and really focusing on the value accretive parts of the business. Being part of Nexans gave Reka higher purchasing power, obviously. And we also focused on optimizing its footprint going from 3 plants to 2 and refocusing the priorities in terms of the industrial operations. All of that gives us a business that in 3 years, 2 years, doubled its EBITDA, a real success story. Reka inside the Nexans family is now one of the best-in-class in terms of performance, and we're now #1 in the Nordics, thanks to this acquisition. This is not just an exception or a good story. This is part of our process and the rigor we apply to our acquisition. This is one more data point and a great track record in the number of acquisitions that we've made over time. Now if I step back and bring this back to our financial trajectory. This is how we see and we recommit to achieving the CMD 2024 commitment for 2028 EBITDA. There is 3 -- our 3 businesses will contribute. The first one is Power Transmission. The growth of EBITDA in transmission is supported by the great backlog that we have. It's about backlog execution, quality of the execution of that backlog and continuing to capture for the future beyond 2028, the commercial deals and the new volume that will come through. For Grid and Connect, we see a normative underlying growth rate of these markets that will sustain the EBITDA expansion that we need to achieve. The focus in grid is really industrial excellence as we shift from a local-for-local to a local-for-regional approach as these markets are evolving fast, the demand is high, driven by, in part, data centers and other verticals that we focus on. And for Power Connect, a lot of volume as well, focusing on the mix premium and the operational excellence, and we're very focused with specific initiatives on driving the competitiveness of that business unit, integrating the acquisitions and driving into the next level as we continue to improve. And for both Grid and Connect, we'll obviously focus on targeted M&As, bolt-ons, geographic and accessories, as I mentioned before, to juice up the growth and accelerate things even faster and provide the right level of increase in our M&A profit rate in each of the business units. This road map is very clear for us, and we are very confident on our ability to achieve the 2028 objectives. And that's why we're able to reconfirm the CMD 2024 guidances on all the different levers. And with this, I'll pass it back to Julien for the conclusion.

Yes. So thank you, Vincent. So to conclude, so let me take a step back and put everything into what we discussed today into perspective. What you have seen is, first and foremost, the continuation of the strategy. Nexans has been on a clear and constant path for several years now, focusing on electrification, prioritizing technology and selectivity and building a model design for long-term value creation. Today, Nexans is a pure electric player, simpler, more focused and structurally better positioned than ever before. We have completed the portfolio rotations, strengthened our foundation and built a resilient diversified platform across Transmission [indiscernible] Connect. This gives us clarity on scale. And this is why now we call it and it's time to intensify. It means intensifying selective growth through commercial and M&A excellence and intensifying our competitive edge through industrial and operational excellence. We enter this next phase with strong fundamentals, a strong financial structure and a clear framework to convert electrification growth into sustainable performance, strong cash generation and long-term value creation. So thank you for your attention. That ends this first part of the presentation, and now we are happy to take your questions.

[Operator Instructions] The next question comes from Sean McLoughlin from HSBC.

Just a question on integration. You've talked about speed of integration of M&A as being key. Maybe just coming back to LTC, that looks like it's been a drag on your margin in '25. Can you explain maybe what's happened there, what you've learned from this process? And are there other integration costs that we should look out for in 2026? That's my first question. And then just the second question quickly on data centers. If maybe you could give us your current data center exposure and the growth outlook for that segment.

Okay. Thank you. So I will start by your first part of the question regarding integration, speed of M&A in general , and you asked a question specifically about LTC. LTC is doing very well. I mean we are extremely satisfied with this integration phase. You understand that the scale of LTC is bigger than [indiscernible] we just explained. So it takes more time, and we do that from the start. We are very well on line with all the different steps of integrations, purchasing power, shift methodology, basically quitting the, what we call, the bad cholesterol of customers and implementing in terms of innovations, new product, new packaging into different markets. So we are completely aligned. And simply, the scale of LTC has a different impact compared to others. That's why we have mentioned that this morning. But we are completely in line with our integration plan that we said. And by the way, we didn't mention that there is other type of acquisition. We just explained Reka, but Centelsa, if you remember, we did in 2022, we have a similar result of Reka. So we have a recipe. We have a model. We do it in a disciplined manner, and we are extremely satisfied with the way it goes with LTC. LTC just starting, but the way it goes with the Italian new acquisitions. Regarding your second question, I will start maybe Vincent, if you want to add -- but data center is -- it's a very interesting market. It's very interesting because it basically changed -- it forced us to change our model if we really want to be in this market, and we really want to be in this market. The size of the orders, the magnitude of the size of orders, the speed to reply, the shorter lead time are different than the usual other type of verticals. It's a different business model. And therefore, that's why it give us the willingness to change our model from local to regional level because today, when you are winning a project and we are winning some large projects in data centers, you cannot just have one plant dedicated to this. You need to put in perspective a series of different manufacturing units. That's what we call it mutualization in order to be able to answer positively first in terms of capacity but as well in terms of shorter lead times. So you need these 2. And to do our exposure of data center, it depends really from geographies. Typically in the North America with our [ Canadian ] operations, it represents quite a high number of our business in the connect space, and this is growing extremely fast. It's -- I would say it's more smaller yet in Europe, but we see this coming and we are preparing regional organization to really enjoy this booming data center that will come in Europe within -- it's already there, but it will grow extremely fast in the next 2, 3 years. So our exposure is depending on geographies, but I consider that it will become a key element of our growth looking forward.

And maybe to add why it's difficult to answer precisely to your question is that, as mentioned by Julien, you have, I will say, the large-scale projects where we go directly with the contractors, the developers. So here, we can size the percentage, but you still have a major -- a big part of the business, which is going through distribution. And yes, clearly, we don't track and trust the sales of this product because it goes through the distribution organization. But indeed, as mentioned by Julien, we are prepared -- we have prepared this offer because now data center is low voltage, so it's connect product, but it's also grid product. And for some major hyperscale, it's also high-voltage product. So that's why we have to go through this overview.

The next question comes from Chris Leonard from UBS.

Just following up on the sort of local to local and then going local to regional. Presumably, if I understand that correctly that, that should have some sort of synergy benefit and margin tailwinds if you're reducing like -- across the plants, if you're reducing production and doubling production across different geographies to then supply regionally. Have I understood that correctly?

So first of all, the local organization we used to have before has a clear benefit that we will keep, which is the entrepreneurship, the closeness to customers that we will keep for sure. Now moving to regional, so local to regional, it means that we will basically integrate larger business units in order to mutualize faster in a more efficient way, all available production capacity. And for sure, it has a few benefits. The first one is clearly the capability to answer quicker and to take faster or large orders in some verticals that we see them extremely active, grid, for example, but as well as in the connect space. It will give us an opportunity also to be much more competitive because we will be able to select the best plants according to the type of portfolio of product that we will address in each of the tenders. So it has several benefits that we'll capture. And then we will -- it will also give us an opportunity to scale faster different technology that we have between plants to plants. So there's several, I would say, financial benefits in terms of competitiveness as well.

And you have another element, which is critical in this evolution, local to regional is that we take into account the customer needs because at the end, to create value, you need to take into account the customer experience. And in the case of the grid, for example, our local customers are more and more interesting to have backup solution, what we call internally sister plant. So we qualify different plant for one customer, which give, again, as mentioned by Julien, backup, but also short answer when it's needed and flexibility. And for connect, most of our customers are also moving now in a regional organization, so which means that we are somehow mirroring the organization in order to be the same scale in terms of discusion and in terms of solution to the market.

Maybe I will add also one more thing is we have done a lot of progress in terms of complexity reduction in terms of SKUs on customer level in the past several years. Moving to regionalization in our industrial footprint will also give us the capability to specialize further our industrial footprint. I will give you some example. Today, in some plants, I will take some example in France, but could be the same in other countries. We are producing a large portfolio of all the products for this specific country. Now moving to regionalization, we'll be able to further specialize the sites. One will be specific for, let's say, fire safety because it has the best fit in terms of industrial capabilities. And the one will be more specialized for, for example, solar markets. And that will drive competitiveness.

And maybe following up on Connect and just thinking about the margin evolution into 2026. Obviously, this year was pulled down by a weaker second half, but you commented that you're very happy with [indiscernible] and how that's going on with the integration there. And equally into the second half of the year, you expect European recovery. So what sort of level should we see in terms of margins on the top end? Obviously, last year, 2025, they reduced versus where consensus was. But should we be thinking you climb back towards sort of the high 13s levels, like 13.7% upwards as it was in 2024?

Yes, I'll take this one. So we don't really give specific guidance at that level, but what's for sure is that the underlying benefits of all the work that's happening on LTC and others will drive benefits. The part that will -- we don't really control is obviously how fast will the Europe and Nordics market kind of start to pick up again, and that can have a mix effect that will drive the number that you're looking for as well as some of those geographies we talked about Oceania and Australia in 2025. It remains to be seen what will happen in 2026. But all the work we described in terms of operational efficiency, scaling up this mutualization, the specialization of the plants, all of that will drive an underlying benefit in terms of profitability, and we hope to drive that all the way to the end and to show the strongest possible improvement next year.

And I think to add, it's what also we said in the session this morning on the result 2025, despite indeed this evolution of margin, what we call internally the best-in-class, they have not moved in terms of performance. So we still have, I will say, the best-in-class in Nexans, which are the ones which have applied all the recipe, if I can say this. And this one has been very resilient in terms of percentage of EBITDA, which give us confidence in our model and our capacity, as mentioned by Vincent, to scale the new entrants, the newcomers to the family and the one which are currently under, I will say, some pressure like Oceania mentioned this morning also.

I think let's not forget that in 2025, the European markets in residential was a little bit challenged. I think everybody understand this. And that was basically putting some pressure on some of our businesses. We start to see some progressive recovery, some signals of recovery in Europe that should help us also in the year '26.

And sorry to labor this, but last question from me would be maybe over to Vincent on the solutions side saying how focused you are on selectivity of contracts. And clearly, at the moment, the market is relatively well booked out for your competitors, but you have availability in '28 to '30 for slots or you've also suppose this year in '26 got some MI availability after the rescheduling of GSI. So how are you feeling on the pricing for these contracts? What kind of color can you give on sort of the backlog margin development that you could see versus what's currently in the backlog?

You have several elements to answer to your question. The first one is that the backlog is mechanically healthier year after year because you have this legacy project, which are exiting the backlog. So by definition, we have a trajectory which will continue to go to high teens percentage of EBITDA. So that's basically the first element with the actual backlog. When you look after to the pipeline, it's true that we have some capacity available starting '28. I think here, there is no big change because the customer on the market, the one we are currently working are the same one as the last 20 years. And hopefully, I hope they will be the same one for the next 20 years, which means that we have in front of us experts. We know what are the technical content. And basically, here, we come back to the selectivity, what I explained in this session. Nexans has a capability to take high technical content project where usually brings more added value because they are more complex. And when I look to the pipeline, typically what Julien said this morning, you have the MI project to come. This MI project is, by definition, very ultra-depth technology, so usually coming with indeed a good margin compared to the average of this business. And when I look to the XLPE part, so mainly the offshore wind farm, here, you have a little bit of different type of project. And that's why here, again, we come to selectivity. You have some projects in the pipe where you have typically high tension, long length. So in other words, offshore wind farm far away from the cost. And this type of project, that's the one that we try to select because we know by definition that we are bringing more added value in the pipeline. So, so far, I would say we don't see, I would say, negative element in the pipeline, but we have exactly the right type of project to select and continue to bring to the backlog healthy performance in terms of EBITDA and good profile in terms of cash.

The next question comes from Akash Gupta from JPMorgan.

So my question is on your 2028 target. So when I look at Slide #28 and let's say, if we take the midpoint of 2026 guidance that doesn't assume any further M&A, and we are at EUR 770 million, and we are aiming for EUR 1,150 million, so approximately EUR 400 million kind of increase over next couple of years. Can you give us how much contribution you are expecting from M&A and how much is organic? So for us, then it will be easy to figure out what could be the organic increase? That's the first one.

Thank you, Akash. I won't give you an exact split. But for sure, we see a path from an organic standpoint to get to a very strong level, and we are using M&As as a way to give us comfort and accelerate the growth. So I would say we need both, and it also depends on the environment and the growth in our markets, which over the next 3 years can be variable. So we're very focused on M&As. It's a key part of our story, and we've been doing quite a few in the past, and we'll continue to be at the right level.

My second one is on a couple of data points that you mentioned in Grid and Connect. I think you said about 40% of segment revenues in grid will come from advanced offering in '28 and for Connect, that was more than 30%. Can you give us some reference baseline for 2025? What was the starting point or if you have for 2024, so we can compare what sort of growth you are aiming from these categories?

So I will take this one, Akash. So basically, so these targets are new that the same target that we, if you recall, announced during the November '24 Capital Market Day. We are, I would say, halfway. So we still have 3 years to go, '26, '27,'28. We are halfway. So we are quite well advanced in this ratio. I would say, slightly more advanced in grid Connect. Hence, you see also the level of margin that we have in grid and that we have reported this morning for 2025. So accessory is part of it, the way the type of, let's say, offers we are doing with accessory is also reinforcing that. So a bit more halfway, I would say, without giving you a precise number because it's, of course, depending country to country, but well positioned, slightly ahead in Grid and Connect.

And my last one is on data centers. So I guess the market is quite excited about U.S. data center opportunity given we hear from other companies that U.S. is seeing by far the highest level of growth. When we look at your footprint, you have some gaps in U.S., but you have very strong Canadian footprint. Can you elaborate like what kind of opportunities can you address in the U.S. through your Canadian footprint? Or will this be an area of bolt-on acquisition to get some exposure down the line?

I think you're right, Akash, for sure. So we are already addressing some of the data center market in the U.S. from our Canadian location. So it's already working. But to go faster -- to grow faster, and this is our ambition in these verticals, adding a footprint in the U.S. will for sure help, and we are working on it currently. But for sure, this is -- Canadian are really in the driver seat today. And when we announced the -- not so long ago, last December, the closing of Electra is really to fit with this market not only, but it was a big driver was to go and develop and grow ourselves and take the benefit of this segment also in the U.S. from our Canadian operation, including Electra.

The next question comes from Jean-Francois Granjon from ODDO BHF.

Yes. Just a question regarding the M&A. You mentioned that it remains key for the company. And you mentioned the U.S., the North America. What do you expect in this region? Do you expect -- are there lots of opportunities in this market in which segment, Grid and Connect? And what about the valuation? I think that the pricing is quite high in the U.S. So how do you appreciate that? So could you give us some more color about your strategy for the M&A in North America and more specifically for the U. S.

Sure. Thank you, Jean-Francois. I'll start. And so essentially, you're right, we're focusing on the U.S. We see a number of opportunities there. There are a number of acquisitions we could do that would be a perfect fit for us in terms of our track record at integrating and bringing them scale, bringing them scale of purchasing, scale of offering. So the market is quite wide, and we're pretty confident that we'll be able to find opportunities soon. The focus will be Grid and Connect to specifically answer that part of your question. And the last thing in terms of the multiples, you're right, multiples in the U.S. tend to be higher, but also profitability, and that's driven by profitability. So it's a bit of a chicken and egg. And we're aware of this. We're looking at it. That's something that makes sense in terms of strategically and driving the right level of synergies and scale further down the road. So multiples will be higher, but with it's right fit and the right target, we think it's worth the investment.

The next question comes from Eric Lemarie from CIC CIB.

Yes. I got a first question on CapEx. You mentioned in one of your slides the regionalization of your industrial footprint. Does it imply some additional CapEx to be done? I mean in general, in terms of CapEx, could you give us maybe an update on what we should expect in terms of capital expenditures going forward? And has it changed since the last Capital Market Day?

Okay. So one of the drivers of regionalization is also to maximize and utilize the full industrial footprint we have. So when you regionalize an industrial footprint, you tend not to generate any CapEx. You don't need CapEx for that. This is exactly the opposite. You are maximizing all footprint available in regions for all different markets. So regionalization will not require specific CapEx. Then regarding the looking forward CapEx, I think you know that in 2026, we have to basically finish our strategic CapEx around transmission. You know that the [indiscernible] capacity expansio with the TenneT project is ongoing in 2026. So we should be reduced by '27. The boat, the third vessel that we have for transmission, we will receive it by Q2. So that will be also ending. So looking forward, there will be less strategic CapEx for transmission, as we have said, and that's exactly we are aligned with what I said, I think, during the last Capital Market Day in November '24. But we will, let's say, refocus more on Grid and Connect. And [ regionalization ] does not -- will not cost anything. It's just maximizing the already industrial footprint we have. And also the orientation are getting industrial excellence is also a way to maximize the output, better speed, less scrap level, higher quality and so on. That's also a way to generate more output with existing machine we have.

So is it reasonable to expect less intensity in terms of CapEx relative to revenues in the future for the group as a whole?

2027, I would say, yes. We have not yet done the full exercise. But for sure, there will be less CapEx in transmission because now we need to basically use the capacity we installed with double capacity in Ireland, the double capacity we'll have in [indiscernible], the third vessel. So now we have already spent some CapEx, time for -- to maximize the return, that's the focus. So overall, yes, there will be some kind of reduction, but we have -- we are working on it. And I, of course, cannot give you an exact number today.

That's very clear. I've got a follow-up one on M&A. So you mentioned your ambition in M&A. Could you give us maybe a target in terms of leverage in terms of net debt on EBITDA? What could be your maximum ratio -- maximum acceptable ratio in terms of net debt on EBITDA?

Yes. So that's it's an important element, but it's not what will decide what acquisitions we make. We want to stay in a normal leverage for the kind of rating we're at and the size of our company. So we'll be prudent, but we have ample capacity and headroom today to actually do quite a bit. Our balance sheet today, as you saw, is low leverage and is underlevered, I would argue. So we are going to use that firepower on the right targets. And then we'll keep the leverage in total within what's acceptable in the market today for a company our size and our rating.

Okay. And if I may, can I ask you a last one, just for precision on your Slide #6 or maybe I missed something during your presentation, but you've got a split on the right of this Slide 6 of your 2025 standard sales by end markets? And how should we read it? Should we consider that the larger part correspond to critical buildings, I am right? Just like to have an idea of your exposure to data centers, grids, et cetera, with this chart.

So no, it doesn't mean that it's not in the order of magnitude. So we decided not to give precise split of the market, so you cannot use it as -- in the order. It's not to be related. The big part of us is clearly a grid business. It's a large part of the business. And then you have inside the different elements. But you cannot read it this way.

The goal is more to show the diversity of our revenue sources in our markets, which makes our profile more resilient. So...

The next question comes from Lucas Ferhani from Jefferies.

So I'll have 2. Maybe we'll start with the first one. It's just on the SHIFT kind of model. Obviously, it started for a few years now. Do you have any numbers to give and maybe how much is left? Let's take out the recent deals that have made where you're working on getting them to kind of best-in-class. How much is left of maybe the legacy business in Grid and Connect that still needs to go towards the best performers? Because already quite a bit of work has been done under kind of the previous management team. So just to see how much can that move the needle still?

Okay. So I will start to answer to this question. So yes, indeed, we are deploying the SHIFT methods since several years across different organizations. What -- the way we did in the past years was really to basically send a team of 6 experts for, I don't know, several months, deep diving with the teams detail by detail and really doing a lot of crunching of data, putting in place price engine discipline and then support the team to transform the business and then drive the show afterwards. And then move the team to a different country or a different organization again and again. When you do this firepower, it took us some time to do it because you don't have 200 people doing this. I mean it's specific teams doing one by one. What is new here is that we are deploying a SHIFT AI. So what does it mean? It means that now systematically, without sending a team on site in each of the business, we can have, and this is what we are currently expanding, we can have automatic online constantly a capability to detect if the business is moving in the right direction, is following the right price engine, is really pricing up innovation and so on and not adding complex business, complex product, complex customers. So using the AI, basically, it's an accelerator in order to cover much faster all the different units and countries. We have -- and you know that because we have communicated quite a lot in the past years about how we cluster each of the business with innovation driver, profit driver and then core performer. I would say, let's say, half to 2/3 of our business are already covered by this and 1/3 needs to be, let's say, developed and pushed on. Every business we had, LTC, [ RCT, ] Electra needs to also add on. So every time we keep on integrating businesses, we need to also to transform them into and make sure that we are using the same model. So it's a constant work. But for sure, the AI will help us to accelerate and make sure that all the countries are really up to speed in terms of model.

And maybe to give some additional color on it, you have to think that SHIFT is not a one-shot action because as we have explained in some previous calls, SHIFT is a kind of modernization of financial element, industrial element, commercial element, which means that according to the years, this element can change. Imagine that you make an investment in one factory, it will change the industrial parameters. You are launching new product. It will change your range of performance in your portfolio. So that's the importance of what Julien mentioned. The SHIFT AI will allow us to be much more dynamic each time all these parameters, and I can tell you, it's quite a lot of parameters that we put in the modernization are moving in order to be sure that the setup that we have from industrial, commercial and financial perspective is always the best-in-class for each unit. So it's more a kind now of continuous improvement that we are doing, thanks to the SHIFT to AI.

And just to confirm that 1/3 that is kind of still need to be lifted would include the recent deals that would be in that bucket, LTC and RTC?

We'll get more deals, more M&As that we will keep on increasing up to us to quickly integrate and use the model. So then at a certain point of time, we will have less and less business that needs to be going through this model of SHIFT.

Perfect. And the second one is just on the margins in transmission. Can you comment a little bit on the legacy projects? How much is really left there? I would have thought because offshore wind projects are done and they would be there. Now we're getting to orders -- to execute on orders that were signed maybe in years post the inflation kind of era that should have, let's say, better pricing in them. So is it still a meaningful part of 2026? And should we assume 2027 is completely kind of clean in terms of those legacy orders?

Yes. I think here, there is no change. We said it in previous communication. We said that '26 will be the last year with the legacy project and that you will have a kind of increase in '27 significant to reach the high 10 percentage of EBITDA. So we are exactly in this progression, '23, '24, '25, '26 linear, if I can say this, and then a jump, if I can say this, in '27, '28 to reach the high [ 10 ] that we have shared with you previously. So we are on track with the approach. And you can say in a simple way, no more normal legacy at the end of '26.

And so just a small one on just on Charleston and what is happening in the U.S. I mean you show in the slide on the overall market that there are opportunities in the U.S. They're relatively small versus other markets. But can you highlight a little bit what is behind that? Is it something else than kind of subsea offshore wind? And is still the plan to use Charleston mostly for European project? And how do you feel about the factory load there kind of short term and medium term?

So Charleston is a loaded plant. And as you know, we have been agile to reallocate European project to this plant as soon as the Trump administration has modified basically the project that we plan to initially produce for the U.S. market. So today, the plant is loaded, and they will remain loaded because we have a backlog for that. At the same time, what is interesting to see is the quality of the market in the U.S. is also changing in high voltage. And I will mostly talk about land high voltage. So we are today investigating capability also take some benefit of shifting some of the load to the land high voltage. So we're currently investigating these opportunities. You know that this is -- will be relatively easy to do for us because initially, this plant of Charleston used to be a plant for land high voltage. And then some years after, we transformed it into submarine. So we will put in competition both submarine project on our land for the U.S., and we'll see which basically fits better, both the profitability and the capability to do. So we will investigate most of this opportunity.

I have one question on copper prices. Since the last CMD, we have seen big increase in copper prices. I mean, in November 2024, we were at $9,500 per tonne. And now we are at $13,000 and potentially, it could move higher by the time we get there in 2028. So the question I had was that when it comes to impact of copper price movements, especially when they are going up, can you help us understand impact on EBITDA, working capital? Would there be something positive given you are vertically integrated into rod? So would higher copper prices would be positive for EBITDA that you will generate in that processing or it has a neutral impact? So basically, the question is that how should we think about copper price impact on your EBITDA going forward?

Yes. It's an important question. So -- and you're right, we -- the prices are continuing to go up. The good thing is it's fully passed through for us. So every time we lock into a deal with the customer, we basically pass through the price variations to our customers. So no direct impact on EBITDA, and there's no lag. So clearly, we're very well protected, and it's a clear point of attention for us in all of our contracts for a long time now. So -- and then on the cash side, we're working in terms of -- obviously, it has an impact on just the value of the same amount of stock that you have to process. But the cycle time is such that it's temporary, and we also get more payables and -- sorry, payables inventory and the receivables. So all of that works kind of in sync, and we're pretty much okay from a cash standpoint as well. And we're working through the different aspects in terms of credit lines with our customers and so on. So in total, it's very neutral for us. And because we're vertically integrated,and the comfort it gives us in terms of access to mines, access to the rods themselves as well as the recycling capabilities that we're developing, we think that over time, as prices continue to go up, this will become an increasingly differentiating factor versus the rest in terms of our ability to secure copper sourcing and making sure that we're able to fulfill our customer needs in terms of cables and wires.

I think this is a very important element. So the increase of copper put some scarcity and some difficulty of sourcing from -- in the market. Our customers know that we are strategically covered with our industrial different breakdown that we have in -- we got worldwide. And therefore, it's a way for us to benefit from gain of share of wallet because they know that in a tension moment with Nexans, they will secure their supply. So that's, let's say, indirect element, which is positive from the copper increasing.

And we -- just to illustrate, of course, it was an exceptional period. But during the COVID period in many countries, we have been the last company to operate, thanks to this verticalization because this variation give us access to the full supply chain, control of the supply chain. And as I said, in many countries, we are the last company to operate and then at that time, indeed having a significant number of market share. So this [ variation ] is key.

So basically, we can say that there is no financial upside from vertical integration through copper processing in times when copper prices are going up?

I would say there's no additional upside short term because that's been the case historically. We control our costs probably better. We control our supply better. So that existed before and price is not a direct impact. Longer term, as scarcity increases, this will be a differentiator because we'll be able to secure activity business markets, customers in a more secure way than the competition.

And again, I want to add, there is some positive of being vertically integrated. Once again, security of supply, we gain market share. We gain volume, we gain contract because we secure. Second, that we are also investing into low carbon copper into [indiscernible] in France. That gives us capability to innovate to provide something which is a technical product that our peers are not able to do. And we are able to price it, we're able to get a premium out of it. So it has a benefit in our strategy to be vertically integrated. And it's coming from innovations. It's coming to secure supply, and we are able to monetize it.

The next question comes from Scott Humphreys from Berenberg.

Just a quick follow-up on M&A, if I may. So you've reaffirmed your 2028 adjusted EBITDA target, and you've said that M&A is obviously going to be an important part of getting there. We're now in 2026, and you've acknowledged the time that it takes to transform some of the larger acquisitions like LTC. How are you thinking about the balance between hitting that EBITDA number by 2028 through these acquisitions and hitting the return on capital employed target in that year? Would you be willing to let that ROCE maybe shift out into the future if you're -- which may be a result of making some of these acquisitions in the higher margin, higher multiple spaces?

Thanks for the question, Scott. Clearly, for us, what's important is to find the right targets that strategically drive us to the next level. The -- we're committed to the EBITDA target and the ROCE target, and we'll find the best way to balance these financial objectives in the context of making the right strategic acquisitions to position the company for the medium and long term. And the speed at which we can integrate and drive the acquired businesses to Nexans' levels also varies on their size, their geography. So there's many, many factors to take into account. EBITDA is kind of the primary objective that we put in terms of guidance, but we are not losing sight on ROCE as well and the use of our capital. We've delivered so far, and we're going to try to continue to deliver on ROCE as well.

If I can add one, I mean, typically, the acquisition we did in December on Electra in Canada is a very high level of margin. So we will have immediate and direct positive impact in our profitability. And when we're targeting also some M&As in the grid segment, I mean, grid, we know the need for capacity, and we know that we can immediately use this capacity to some segments, some verticals using our technology, low carbon recycled aluminum and to transform that into value creation. So M&As, even though we are in 2026, we believe that we have the right time to transform into value creation to hit our number by '28.

The next question comes from Eric Lemarie from CIC CIB.

You mentioned land high voltage opportunity in the U.S., and you mentioned this framework agreement with Enedis in France as well. So my question is, should we expect any framework agreement with RTE in France in the high-voltage business?

We have -- you have 2 topics for RTE. Today, the way this customer is acting on the market, we have indeed a long frame agreement, which is currently ongoing, and it's ongoing, if I remember well, for the next 2 or 3 years. And after you have indeed the subsea part -- so what they have done last year and Nexans won a significant part of it, they did a frame agreement with several offshore wind farm in this frame agreement. So that's the first one. And indeed, with the recent approval of the PPE 3. I think it was last Thursday day officially, they are now ready to engage the next RFQ. And apparently, I will say they will go in the same direction with, again, a frame agreement on the subsea part with, again, different offshore wind farm within the same RFQ, including land high voltage. Land is always on a specific area. So okay.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Well, so thank you all for your questions and for quality of discussion today. So I'm glad that we had this opportunity to walk you through our business and share our conviction about the strength of our positioning in electrification, now that we are a pure player electrification. As you have seen today, our strategy is clear, the structural driver of business continue to strengthen and our execution remains disciplined. So this gives us confidence in our ability to deliver on the group financial trajectory in the years ahead of us until 2028. Thank you again for your time and continued interest, and I look forward to speaking with you again when we report our first quarter results of 2026. Thank you all.