NKT A/S (NKT) Earnings Call Transcript & Summary

Good morning, and welcome to the NKT Investor Day 2026. We have been looking very much forward to today and to welcoming you all here to Karlskrona. In the room today, we have representatives from both our analysts, investors. We also have banking relations and the media. And I would also like to extend a warm welcome to everyone listening in via the live webcast. Just some practicalities before we start. I'll ask you all to pay a close attention to this disclaimer as the presentation and the related comments contain forward-looking statements. And then on safety, at safety here at this facility, there are no planned fire drills for today. So that actually means if you hear an alarm, we need to evacuate, it will be through the doors and the lobby where you came in and the assembly point is just outside on the parking lot. From NKT, we will make sure to have both headcount and name on all of you so everyone stays safe in such a situation. The filibrator is located right next to the main entrance in the lobby. Just a brief look at the agenda for today. So we will start the morning here at Box, where we will have presentations both from an overall strategic from a business line and also from a financial perspective. And after lunch, we'll have buses taking us to the factory and where you, with your own eyes, will be able to see what is soon going to be the world's largest offshore high-voltage cable factory. So let's dig into the content. But before that, we'll play a short video. [Presentation]

Thank you. And with this, I'd like to introduce our first presenter, our CEO, Claes Westerlind.

Good morning, everybody. It's great to see you here. I was just talking to Kira, and it's so good to be in Karlskrona and to welcome you here. because if you choose to come here, that means you really want to talk to us because it's not easy to get to this place. Ladies and gentlemen, I'm Claes Westerlind. I'm the CEO of NKT. I have the privilege to have served the industry for around 20 years, and I've been with NKT since 2017, when I joined over with the acquisition of high-voltage cables, ABB's high-voltage cables unit. And it's my distinct privilege on behalf of NKT to welcome you to the Investor Day here in Karlskrona. And Karlskrona is really a special place. It's a special place for Sweden. It has a very rich history. It was established in the 17th century by King Carl the Eleventh, where he moved the Swedish Navy down from the IC and difficult Stockholm down to the beautiful almost Mediterranean region of Karlskrona with an ice-free harbor, but also a very difficult archivalagio that helped us to protect it in Sweden. It's a very special place for NKT. We have been present here, the cable factory has been present here for more than 30 years, and this is where a lot of the major innovations in the HVDC transmission industry has been made just on the island, not too far from here. And it's a very special place for me also personally and also emotional to welcome you here. This is a city where my kids were born. This is a city where they go to school, this is a city where my wife works and this is a city where I live. So ladies and gentlemen, welcome to my hometown and also welcome to the capital of high-voltage cables. So you will hear today from a number of presenters, and we very much look forward to taking you through the day. As Jacob said, we will spend the morning with some presentations to give you some context, both on the strategic direction from my side. Then we will listen to the business line heads with Darren with Rafael, with Denis and Carlos presenting the strategy from their perspective for their respective business lines. And then we will hear from Michael Yong, our CFO, also summing this up from a financial perspective and also looking a little bit ahead. And the key message we want to leave you with is relatively simple, actually. We are and have become a focused power cable solutions provider with a strong market position with a record backlog and also a clear path defined towards 2030 and beyond. But we also want to reflect about the opportunities out there from a market perspective and how we can use now the platform that we have built and that we are working with to also capture further opportunities also going in the future. But with that, let me start by reflecting a little bit about the history. I should also mentioned perhaps on the previous slide that you will see here the business line heads presenting, but we also have the full GLT here with us today. And you met many of them, I'm sure, as you entered the premises here. And I also want to say that what these people don't know about cables is not worth knowing. So everything that you tried to ask me, Michael and Jakob and all the other represented for NKT in the past, and we have been unable to answer, now make another try with these people because they will know the answer. Reflecting about NKT's history. We are just like the place we are at now, Karlskrona, we have a rich history. We are about 130 years company that has a continuous develop from a technology perspective, from an industrial development perspective and also from a number of strategic disciplined choices. You will see some of the technology milestones up here that have not only defined NKT as a company, but also the modern energy industry. The innovation of HVDC was back in 1954, connecting the island of Gotland to the mainland of Sweden. HVDC XLP cables, which were invented here on the [indiscernible] and again, was used for the first time in the world, also coincidentally on the island of Gotland, but then domestically on the island for that time. And also 2020, when the first -- world's first 525 kV cables were commercialized with the award of the German Corridor projects following having been launched and invented. And you know the answer also here in Karlskrona back in 2014. So there is a lot of technical innovation that stands as the foundation for what kind of company we are. It's also targeted investments both organic and inorganic, like the acquisition of the Cologne factory, like the acquisition of the [indiscernible] plant, elmeserichi, and of course, perhaps the most prominent and recent large one, which was in 2017, the acquisition of ABB High Voltage Cables. That lended then the capacity here, of course, but also the HVDC capabilities of NKT. And on top of this, also a lot of important installation assets and EPCI turnkey capability. And thirdly, it's also been a journey of strategic focus, where we have transformed the company from being a diverse industrial conglomerate into a focused pure power cable systems provider. That's gone from a portfolio perspective. But to a certain extent, as you will hear, for example, Carlos speak about later, but perhaps also Darren to a certain extent, also focusing the factories inside of NKT to allow us to specialize and work on increased efficiency also inside NKT as a company among the factories. And this journey and where we are today and the context for this day is that we have a clear strategic focus, and it goes without saying that this speaks into power cables. It speaks into the trends that I will come back to with electrification, with renewable transition and also with grid modernization and digitalization of society. And the focus, as such is fundamental because it speaks also about how we use capital, how we use management focus, how we focus our technology development, how we work from an operational perspective. And all of this is focused on the Power Cable segment, also a segment that enjoys not a cyclical or a temporary tailwind, but structural demand across the coming decades. And I will also come back to that later. So reflecting a little bit what is transformation and together with the strategic choices have enabled from just a financial perspective, I wanted to show you this. Our financials, I think it is fair to say have been restored and also significantly improved over the last couple of years. If we take the measurement baseline of 2022, which is roughly when the last CMD was, our revenues at standard metal prices have nearly dealt during this time period from EUR 1.45 billion until what we're guiding now for this year, around about EUR 2.7 billion. Our operational EBITDA, meanwhile, has more than doubled from EUR 155 million in 2022 to about EUR 400 million as we are guiding for this year. And thirdly, looking into our order backlog for the transmission business line, we have gone from EUR 4.7 billion, and we are closing -- when we closed the second quarter, this has almost tripled to EUR 13.0 billion. So the key message here, ladies and gentlemen, is that we are now in a much, much stronger position as a company. And our financial foundation and what we have as a base for the years to come is significantly different. With improved earnings and also with the strengthened financial base foundation for the company and also a very strong earnings visibility for the coming years. And as you're well aware, a couple of years ago, when I spoke to some of you as we entered here today in 2023, we launched a mass investment here. And over the last couple of years, we have launched a number of organic growth initiatives which is today something that we are labeling as the EUR 2 billion CapEx program from the period of '25 to '28. And these investments, and you can see a selection of them here and at least one of these, you will see very much detailed later today that I know that Darren and the team are very excited to show you about. These investments, they aim to improve our capacity and improve our capability from a high-voltage perspective, traders markets, but also to increase our capacity from a medium voltage perspective in the Distribution segment. The high-voltage factory in Karlskrona is the obvious example, which is a big, big one. We also have the expansion in Cologne ongoing, and they are both expected to become operational during 2021. And as you can see from the announcement this morning, we are now a little bit more articulate as to when the Karlskrona factory will come into operation. And this is something that Darren will come back to more later. But we remain firmly on track with these investments. We are also expanding not only the cable manufacturing capacity and capabilities, but also our installation capacity and capabilities. And two good examples of that is NKT Eleonora and also our new subsea cable trencher, the T 3600. And these will help us to deliver on a turnkey basis, the large product and transmission. It's important from a risk management perspective and it's equally important from a value creation perspective. If we then look further on into distribution, the business line there, we've also had a number of investment programs ongoing for a couple of years, where some of them now have been completed, which is the Falun investment and also the Velke Mezirici investment. They have been fully completed and ramped up. And the Asnaes investments, you will recall that we made a press release earlier this year in the end of Q2, where we have now completed this investment physically, and it's now ramping up in the coming months. And then thirdly, for the [indiscernible] acquisition that we are now calling our Esposende site, also there, we acquired that business, but we also expanded the capacity. And this is something that is underway and will be completed towards the end of this year and thereafter it will ramp up. Above this, above Transmission, above Distribution. We are also expanding capabilities in both the accessories business line and also Grid Solutions business line. And this is what you will hear more details from my colleagues during the course of the day. And it is also clear that this investment program is a key enabler for us as a company. It's a key enabler also for the charging forward strategy. It is with these capacity and also capabilities that we will transform or transfer the market opportunity and also our backlog into revenues, into earnings and into cash. And of course, the ability to do so is also fundamental for the success of NKT in the coming years. But I also want to personally say also being here in Karlskrona and almost seeing the factory through the curtains over here that we are, and I am super proud and pleased with the team of what they have been able to achieve across all business lines. Keep in mind, these investment products will be difficult to do if you only do this. But the team in front of you that you will meet today and also further on on the site out here, this is a team that have operated at very high pace across the business lines for the last couple of years. And meanwhile, on top of this, carried out these investment projects. And on top of this, put the supply chain ready to support these investments, hire the people that is needed to run the investments, train the people and taking this into commissioning. So I just want to recognize the trend os performance, which is done by the team in getting to where we are. And it's obviously now as we come to the tail end of this, it is now about turning all this capacity into profitable growth and take it online in a successful way. And it comes down to value creation. This is how it is. And here, just reflecting a little bit about that, we are -- cannot avoid to be pleased that it has been recognized by the market, the work that has been done over the last couple of years with the disciplined execution of the transformation the selective triggering of large also organic investments, carrying out this and being able to also capture the market opportunity meanwhile. Our market capitalization measured from January 2020 has almost ten folded from EUR 0.7 billion to EUR 6.6 billion as we closed on last week. And meanwhile, our total shareholder return has been in excess of 600%. And I hope you can agree, ladies and gentlemen, that, that is significant value generation for our shareholders and something that we are proud of and also humble for the trust that you continue to show in us. So we are entering the next strategic phase in a much, much stronger and a different position than when we entered it. With a stronger financial profile, with a transformed business as we have gone through and also with significant investments already underway. So then looking ahead a little bit as well based on this. Now it's about also reflecting what opportunities is out there and how do we, as a company, aim to also capture these opportunities. So let me start, even though the business lines themselves will go into more detail in respective market for the business lines, I would like to just on a high level, reflect on the market outlook. And the market for NKT starts with one fundamental trend, and this trend is that the electricity demand continues to grow. This picture here shows the expected growth from where we are today and looking towards 2050. There are many different data sources that you can look at, but I think they will all show you similar direction. There is a fundamental growth expected in the coming decades from an electricity demand perspective. Our core market in Europe is expected to remain strong but also to continue to grow. But also over and beyond where we are present today from a manufacturing perspective and the majority of our markets, also other markets show growth and show potential and opportunity. This includes, but is not limited to the Med region. It includes North America, and it also includes Asia. And electrification and the growth in electricity demand, together with renewable energy transition together with grid modernization aspects is, of course, pushing towards investments into the grids. And when we view that from a monetary perspective, then that's expected to grow from EUR 350 billion in annual investments up to EUR 850 billion. It's not all cables, unfortunately, in those numbers. But of course, it is a significant lever towards pushing more demand for the products that we are providing. And for us, it matters just because the EUR 850 million, of course, does entail significant amount of both transmission and also distribution infrastructure. And this trend here, ladies and gentlemen, create durable demand across the markets we are active in, but also shows opportunity for further growth. And it reinforces the need of specialized players like who are able to supply both products, but also complex projects in a reliable, in a safe way and also at scale with what is needed by society. But if we take a look at what is driving the EUR 850 billion, there are three fundamental trends that I would just like to touch upon. And I'm sure none is unknown to you. First and foremost, the Electrification, which is what you saw on the previous slide, where it is expected that this is to grow by 80% by 2050, so almost double in the next couple of decades. It's driven across society. It's driven by transportation. It's driven by industry. It's driven by buildings need of electricity. And of course, lately also data centers and AI becomes also not an insignificant driver, all pushing for more grid investments. The energy transition as well on top of that, where today, the world is powered on roughly 34% of renewable energy sources. This is expected to grow to 80% over the coming decades, requiring these generation facilities to be connected to the grid, but also degrade itself to be reinforced to handle intermittency and also transfer capability between regions. And last but not least, we, as society, have enjoyed our electricity grids for quite a while, and we have built up a debt to be paid from a maintenance perspective. I think you've heard the saying before that 40% of the distribution grids in Europe or more than 40 years old. And that's a debt that needs to be paid at the end of the day or we will face the music of blackouts and other topics. And of course, that creates also a demand for our products and systems. And I'm sure this is not news to you. But I think it is important to state these trends also recognizing that these are not short term. They are not cyclical trends. These are structural multi-decade trends that we expect. And I think society as a whole expected to be there for the coming decades. And obviously, this supports ultimately also the long-term outlook and growth across our business lines, at how we are formulated today as a company. Then having established the fundamental megatrends or repeated them to yourselves, I also wanted to touch upon a couple of societal priorities and maybe the famous triangle as we sometimes call it, with sustainability, with security and also affordability or competitiveness? If you look to the right of this slide and you rewind the tape 5 to 10 years, sustainability was a rather uncontested societal priority. And I think this obviously creates a lot of opportunity still for the renewable energy transition as we touched upon the previous page. But this trend or priority has also now been complemented by security and also competitiveness, also creating challenges with respect to climate ambitions and offshore wind farms, rollouts and pace of that same and also what that can mean, especially in the short term and perhaps less so in the medium to long term. We have the security aspect, both from a broader reliability perspective, we, as a society, are becoming very dependent on our electricity grids. We could see in the blackout in Portugal and Spain, I think most of us remember that and how the lack of a reliable energy system paralyzed as a society and threatens also life in a way that perhaps was not the case 50 to 100 years ago. But security is also an aspect sadly of the situation we have in the world with conflicts being present in Europe again, and also where we recognize that conflict, for example, in the Middle East is putting a lot of emphasis on the dependence that Europe has on regions outside of Europe for our ability to supply ourselves with energy. Fact is that 40% of the energy we consume in Europe is produced in Europe, meaning 60% is imported. Almost 100% of the oil is imported. Yes, some comes from Norway, but from the grand scheme of things, not a lot, and 90% of the gas. There is a general political consensus at least verbally in Europe that energy autonomy has to improve. If that is to be improved significantly from 40%, let's say, to 60% or 80%, the cheapest way to generate electrons today is through renewable energy. Solar comes first, onshore wind offshore wind. And of course, also from a long-term perspective and large scale, you can think also about nuclear, from a clean perspective. All of that will push a good opportunity and an opportunity that lies over and beyond on the market estimates that we are projecting. But at the same time, security is also being now, of course, siding sustainability and great investments. We can see countries, of course, increasing public funding towards defense, and that money needs to come from somewhere. So that can also constitute a challenge. And last but not least, also competitiveness. Following the [indiscernible] report following also the situation we have in some countries in Europe with the auto industry in Germany as maybe the most prevalent example, also affordability has come to the top of mind of politicians and also societies in Europe. This could speak for industrial electrification to make energy since energy is an important part of competitiveness, then further electrification could be one of the solutions, giving an opportunity, but also from a challenge perspective, you can also look at slower grid build-outs, some countries reflecting about wouldn't it maybe be at least from an optical perspective, looks cheaper from the beginning to build an overhead line versus doing it underground cables. So I wanted to recognize these priorities and also to show this triangle to say that with this in mind, we remain confident about the long-term outlook for this company and for the markets that we see. And the strategy that we will discuss. I will go through it, but especially the business line also in even more detail has taken this into account and also reflected upon this, what is necessary for us to be able to continue to compete effectively with this in mind. And that, ladies and gentlemen, brings us into the strategy. The Charging Forward strategy. This strategy was launched last year and aims to guide us towards 2030, so towards the end of this decade. And as I've said now during this presentation, we have completed the transformation. We are now a pure-play cable solutions provider. And with this strategy now, our focus is shifting from this transformation and an accelerated organic capacity build-out into execution, into value creation and also into efficiency and also on top of this more selective growth. And the strategy aims to reinforce our position as a leading power cable solutions provider in Europe and also beyond. And I want to come back and emphasize the word value creation. This is the mindset that this strategy hasn't built upon. And I hope that you will recognize the thesis of that throughout the day from the various presenters that you will meet. Let me touch up on the strategy as such. It's constitute of three pillars with the execute pillar being recognizing the biggest topic we have on the table for the moment and the utmost urgent priority we have. This is about executing our investment projects on time, on cost, on quality and being able to take this into operation. It's about continuing every day to translate the market opportunity into revenue, into earnings and into cash. And it's about every day, as you will hear Darren talk about later, also continue to deliver on our customer promises in the EUR 13 billion backlog that we are fortunate enough to have as a company. The Excel pillar is about how we operate as a company. And it's in essence here about continue to improve the way we deliver towards our customers, to improve the way we partner with our employees with site in general and ultimately, to extract more value from the assets that we have. So to seek and sift out more value. And lastly, the Evolve pillar is about two topics. One thing is to recognize what you are, and you heard me say it in the beginning, we are a technology company. we have always been, we are today, and we will continue to be. So the Evolve pillar is to continue to invest in towards the technology discipline, but it's also given the market picture about recognizing the opportunities out there and continue to invest in those opportunities when that presents itself, exercising discipline but continue to invest. And these three pillars, they are not separate initiatives, but they are mutually reinforcing. Our strong execution converts our backlog into revenue and earnings. Efficiency programs, operational efficiency and improving on the same, this strengthens our margins. Innovation and selective growth will help us to grow NKT even further as a company and will also continuously help us to protect the competitiveness of the company in 5 to 10 years. And that, ladies and gentlemen, is how the outset of this and the overall situation aims to transform the platform we discussed about before into sustainable value creation for the coming years. Going into pillar by pillar a little bit and reflecting here, as I said, execute is the most immediate priority. And it goes down to the backlog, and it goes down to the investments that we have. And here, it is very important, and we continue to focus every day on the fact that we are a product company. Our thesis is that we wake up worried and we spend the day to be able to go to [indiscernible] and we repeat this every day. This is in the mantra of Darren and his team and the wide rank NKT. This is how we match our investment programs, and this is also how we need to match our products, and this is exactly what we're doing. But with this, we are coming into a phase where we are coming towards the tail end of the expansion programs and then we shift focus into value realization. And when doing this, of course, quality becomes high on the agenda, and I will come back to this reliability in general for us as a company and also discipline around our customer expectations, as I mentioned before. And risk management and disciplined product execution has always been a key for us as a company. It's been an area which we have continuously focused on and also continue to improve on. And this will be the same thing going forward as well. And I want to recognize and Darren will take you through -- this is a picture from the Champlain project, and he will speak more about that later. But I think the Champlain project that we finalized in the second quarter stands as a good testament to what we, as a company, are able to bring from a technology perspective to society. It's also a good testament to what we are able to perform as a company, delivering a product in excess of EUR 1 billion ahead of plan, on budget and as per the quality, which is expected. And this, I want to give recognition and say that we are very proud of the teams that were able to do this and, at the same time, carry out the investment program, as I said before. Then we come to the Excel pillar, which goes back to the unlocking of value. And as I said, this relates to how we operate as a company. It relates to that we want to continue or start now more diligently on the back of the massive transformation and the big investment programs to focus more on value extraction from what we have invested. We owe this to ourselves, and we also owe it to the internal market, improve productivity to strengthen our profitability and ultimately increase the returns from the assets that we have now constructed. Two examples of this supply chain excellence. You're well aware that material cost is a significant part of our cost base, and this is important from a supply security perspective. It's an important from a cost perspective. But having this under good control with long-term relationships is also imperative from a quality assurance perspective and also the way that we innovate and continuously innovate, both on our own, but also with our suppliers. So taking two examples, and I see Will here in the room who's responsible for this area, KGHM and also the hydro agreements, which we have signed earlier this year and in recent times, are good examples where we manage to get closer to our suppliers and to extend the time frame that we operate together with them. It gives certainty for them, but it also gives certainty and significant benefits for us. Then we have excellence programs. As I said, on the back of investment in heavy growth phases, it's also for us to continue to push the boundaries to extract more, to increase efficiency, to improve the quality aspect, to improve output of our factories. And there are parts of NKT, which has this written in the DNA, and there are parts of NKT that can do even more of this. And as we grow as a company, it's also evident that scalable processes, harmonized way of working on things becomes even more important. With the size we are becoming, this is something which we are good at today, but we also recognize we want to continue to grow even more so in the future. So the Excel pillar, it's not about cost savings. It's about transforming the platform we have discussed, transforming the asset state into even stronger profitability, stronger cash flow generation and greater returns and doing this in a structured and planned way across NKT as a company over the coming years. Then we come to the Evolve pillar. And I talked about technology leadership, and this is a big part of NKT as a company and continues to be an imperative part of this pillar. And I'm looking for Anders here, our CTO, which is managing this area. We are continuously making innovations with focus on higher power transfer in our cable, lower losses, looking for lower cost looking for being able to entertain more adverse installation conditions from a resilience perspective and also environmental scarring perspective and looking for solutions that are more healthy from a sustainability perspective. And these attributes will continue to push boundaries for us as a company going forward. Just calling out two examples. Superconductivity cables. Rafael will come back to that later on. It's one example. And at Segre this year, we also launched the XLPEDC525KV cable operating at 90 degrees. So it's significantly elevated temperature, adding also great benefits for our ability to put competitive products and system towards the market. And another area is selective growth. And we talked about the opportunity before and what we can also do going forward. You hear us talk about discipline or you have heard us talk about discipline quite a bit in the last couple of years, and I think you can expect to continue to hear that. Nothing in this pillar and nothing in what we are telling you today will compromise the ongoing operation. The focus we have on the immediate most urgent priorities which is the execution pillar. So that comes first and foremost. But at the same time, we have a duty to ourselves with the money we have invested and also with the value we bring to the market and with the opportunity we see to continue to reflect on what can we do more and where can we do that? Firstly, from an organic perspective, where there are different options that we can, for example, vertically integrate to a more extent than we have today. I can mention installation as 1 example of vertical integration possibilities. You saw tools. You saw vessels that can be also thought about in the wider perspective. We have built in, as Darren will explain, and I urge you to ask questions when you move around in the factory today. We have built in modularity in the expansion you see out there, so we can do an incremental expansion, should the structural demand or a mega project warrant for the same. And of course, last but not least, it's also the opportunity of greenfield factories and building that, something that requires competence, of course, capital and also a fair amount of risk and discipline. But disability NKT has -- and of course, again, coming back to the disciplined part will only be explored to the extent that the market demand warrants and can swallow on new capacity. Giving examples of an HVAC land cable factory could be a C cable factory or could be a factory in the distribution business line as well. And then we have the inorganic option as well, where I think we have never not talked about it, but I think it's also fair to say that we have been a little bit more active talking about it lately, recognizing that NKT will in a couple of years, become a different company from a cash flow generation perspective, from an organizational strength perspective. And this gives us further opportunity also to start to reflect about also inorganic options in a more structured manner. I was discussing with some of you out there and again, just reaffirmed the word discipline remains key also in this and that we want to underline. We will focus on power cable technologies and directly connected areas in reflecting about this. we will always seek to leverage our industrial and commercial capabilities when we look at M&A. And it's, of course, so that we will look for attractive segments and also geographies when we are entertaining these ideas. And any acquisition we do must strengthen our competitive position and of course, must support our long-term value creation. So the -- sorry, the Evolve pillar as such, while maybe less immediate and urgent than the other two equally important for the future of NKT. And that, ladies and gentlemen, brings us to me also being happy, especially in times like these, what we have the world around us that we with a firm hand we reconfirm the 2028 and the 2030 guidance. And you will hear it more, Michael, reflecting about the journey that we are taking towards '28 and 2030 later. But looking at 2030, we confirm the CAGR that we have guided you on, an average more than 7% up until 2030, we confirm the more than EUR 900 million of EBITDA in 2030, and we are also happy to confirm our ROCE target of more than 22%. And I want to say that these are built on the CapEx program of EUR 2 billion. It also means if we look at the previous slide, if we are seeking further opportunity and make additional choices then these choices will come on top from a CapEx perspective, but they will also come up from a nominal value generation perspective. So that, ladies and gentlemen, brings us almost to the end of my part. And then let me just sum up what I hoped that I have said to you now through also reiterating our equity story. We are NKT purely pure power cable systems provider. And we are focused and of course, delivering critical infrastructure to a society in need with strong structural demand for the need of our products and systems, not for coming 2, 3 years but for the coming decades. We are happy to be differentiated by our technology stance. This is evidenced by just our market position if you take HVDC as an example, but you can also see a number of technical innovation in the last couple of years that also proves the same. We enjoy a very solid order backlog that provides us with an operational strong visibility from a planning perspective, but also strong earnings perspective. So when we reflect about '28 and 2030 financial guidances, we do it from a different vantage point than many other companies. We are underpinned by a robust financial position. This provides us with security and comfort, but it also gives us flexibility when additional opportunities arise. And as I've said, I don't know enough time for maybe too many times, we have an organization that has done a formidable job and operating the assets we have over the last couple of years, improving these assets and meanwhile, also taking opportunities to grow organically further. To promise hope and dream is one thing, but to carry out and deliver on plan, it's quite another one. And I hope that this also instill trust in whatever we do next, we have proved that we can do it and we can master this. And last but not least, as you will hear from our distinguished CFO later on today. We also now have a clear capital allocation priority. Also sending the message here today that we are becoming a company that can continue to grow and also pay dividend at the same time. So with that, ladies and gentlemen, thank you again for being here, and welcome to Karlskrona and look forward to spend the day together with you and show you the factory.

Thank you, Claes. We'll open up for a brief Q&A session now. [Operator Instructions] But we'll start here front.

Claus Almer, from Nordea. So, good presentation. M&A, you are in a so strong position and you had a slide showing 2050, strong strong growth on a global scale. Why are you not more precise in what you would like to acquire, either in country, technology and so forth?

Yes. I think we have been, of course, your perspective, but I think we have been trying to be relatively clear around what opportunities we see and what geographies. We have reflected about the fact that NKT is a Northern European focused company. We have reflected about further opportunity in the Med region. We have reflected also about the growth and need for products and system in North America, and we have also reflected about opportunities in Asia, where I guess the two first, it is maybe those that are closest to home and should be perceived as obvious reflection from our side. And when it comes to the products and systems we say that we want remain a focused power cable system provider or directly adjacent areas. And that we are not more specific than that, it's also not to limit ourselves so to create unfair expectations. So we want to look at this opportunistically. But I want to underline that M&A is not an objective, but it is an option for us.

But you also less urgent. So...

I think less urgent than what we have from an execution perspective. The execution perspective, we have a EUR 13 billion backlog and EUR 2.5 billion of booking commitments. We have a factory that you will get an impression today is very close to completion, but still requires a lot of work. And with less urgent, I also underline not less important, but the first mention thing is something where we cannot drop the ball and we would do not go towards an M&A or an inorganic move with less than that we can feel 100% comfortable on the execution pillar.

Casper?

Casper Blom, from Danske Bank. Actually, just a bit of a follow-up to what Claus just talked about on the M&A agenda. Can you speak a little bit to the potential size of this? Is this something that if you were to go for M&A, do you want to finance it entirely on your own balance sheet now that you become cash flow generative? Or would you be willing to take a look at your debt targets, raise capital as you've done in the past, sort of your -- how far would you sort of stretch this off?

I think we will remain disciplined. That's the key word, and it also applies to size and how we fund it, et cetera. You will see later when Michael goes through the capital allocation priorities that these priorities could be temporarily suspended with reference to organic or larger organic or inorganic purchases, which would suggest that at least we are not upfront limiting ourselves to only sticking with with the capital allocation priorities and our internal ability to fund the same.

Akash.

It's Akash from JPMorgan. My question is more on organic investments. I think when you presented like the growth opportunities and this year, we have seen high focus on energy security in Europe and sooner or later, some of these noise that we see in political circle will translate into actions. And when we look at your portfolio, you have growth opportunities across a broad range of products such as medium voltage, HVAC, HVDC. And these growth opportunities have different margins, different capital requirement. So maybe if you can walk us through the process internally you have to evaluate how to invest, like what sort of KPI do you follow is it payback period so that you don't -- like one of the business units don't get disadvantage over the others. And how do you see like further CapEx potential in all three broader categories, HVDC, HVAC and Medium Voltage in the next 3 years?

Yes. I think it is a question that we will enjoy, hopefully, more clarity also Akash in the afternoon as we go through with Michael Young. So I would hold maybe the detailed answer to it. But I will say that, obviously, we are prioritizing the capital allocation priority that you see here there is also an internal variant of that, also where we evaluate ourselves to put up opportunities against one another with the agenda, with the ability that we have. And things like the ROCE ceilings like payback time, of course, are all part of that evaluation criteria and matrix when we decide what to go for and not to go for. I will though just add a small one that it's also about risk management. So some investments can also be to effectively manage our risks or to lower or limit our risks as well. So I don't want to take away that opportunity. But that's not the large part. The larger part is what you say, of course, growth and further profitability.

Any other questions, other than that? I think it's time for the first short break. Refreshments and coffee is served in the lobby. And we will continue at 10:00, so please be back in the room at that point in time. Thank you.

Thank you. [Break]

Welcome back. We'll now continue with the business line presentation. But before that, we'll start just a short video again. Please. [Presentation]

Just before introducing the next presenter, I'll just say we have a photographer walking around. So if everyone don't want to be present at pictures, please raise your hand, and we'll take care of that. But then I'll introduce the next speaker, Darren Fennell, our Head of Transmission. Darren, please.

Hey, good morning, everybody. My name is Darren Fennell. I'm Head of the Transmission business for NKT. I've been with the company since 2017, with the ABB acquisition. Claes said to me, as I had to get up, he said to me, but, you hardly have to say anything, your slides are just so good. I said, maybe I need to add a little bit. But I also live in Karlskrona. I think you can hear by my [indiscernible], maybe not as local as Claes's is, but my kids are basically Swedish now. So it's a fantastic city to grow up. Okay. I think it's important, firstly, if we look back. From 2022, what we really focused and set out to do. That was about improved performance. It was about investing in the future regarding capabilities and capacity, and it was about increasing the backlog. I think you can see what's reflected in these figures that we have achieved that. Revenue more than doubled. EBITDA even more so and the backlog, 2.5x since where we stood in 2022. So much of this is down to our people, the skill and competence across engineering, manufacturing, installation, project execution. And to make a tangible outside of the financial figures, which I know our huge interest of people in this room is what does this actually mean in people's everyday lives. By the time the projects now that we completed are in full operation, almost 8 million households received our energy to an NKT cable. From a society point of view, it really brings proudness of what we're doing. That reflects to about 18 million people in total. The next slide really focuses on the key milestones of that strong performance hand-in-hand with investments. So as you can see here, from a footprint perspective, what we've achieved during this period. The second tower in Karlskrona has been put online. We're investing to increase the capacity in Cologne. And also, as you'll see later today, a brand-new factory in Karlskrona. Hand in hand with that is this turnkey philosophy, which is really in our heart regarding both manufacturing and installation. That's why we invest so much money regarding NKT Elanora as an example. Also, NKT Isabella as a nearshore barge to facilitate those projects. And on top of all the assets that we already had in-house regarding [indiscernible] as an example, we've added the jet plough which has now been in operation in a number of projects. And I hear from the market that it looks quite simple for you from the outside. These assets, you seem to put them online and they just work. But I can tell you behind it, the amount of work that goes into doing this is really enormous. And then we have the T3600 trench into which is about the size of an average size house, just to give you a feel of what we're talking about here. This is the most powerful tool on the market. It can vary cable to over 5.5 meter berry debt. Just to think of what that is regarding the length of this room as an example. From a project perspective, and I will go back on the technology later on, but I think it's important to emphasize just as Claes did, we are a technology company so for innovation is really in our DNA. And as part of that is the investment we're doing in the test holds for the future, but also in the material lab that you will see today. It is really at the cut-and-edge regarding what's possible in the market. And I'm really proud to say we do that, everything on the left, while we have a record backlog. We have taken in one of the biggest projects ever to be awarded in the cable industry with the EGL3. We are performing very strongly regarding our execution and we've completed the Champlain project, which is really a milestone project. That strong performance has really allowed us to build up the backlog that we have here. What you can see in front of you is really projects either completed since 2022 or in our backlog that we're working on at the moment. And from a client selection point of view, I think it's a fantastic achievement from our point of view that clients are not only selecting NKT regarding competitiveness. We know we need to be competitive on the market. Their selectiveness and they've given us feedback because it's technology leadership, it's how we execute projects, and quite honestly, as well, it's the relationship that we have with them. Historically, we have been a global player regarding where we execute the projects. I think more recent years, you've seen that it's more focused around Northern Europe, which has also really held us in really good stead. That is where the core market has been. But you can see over the last few years, we have also started to expand again. So [indiscernible] is a good example of a project in Greece. The Champlain project Connect in Canada and the U.S. is a good example. And on top of that, the project that we're carrying out right as we speak, regarding vessels is Bay Biscay in Biscay Gulf, connecting Southern France to Spain. That has allowed us with that relationship with our clients to also build up a backlog. Claes touched on it already. We have offered over [ EUR 30 billion ] with another EUR 2.5 billion in commitments. That really gives us long-term visibility regarding the future. Some of these projects, they reach out beyond 2030. That shows you what sort of view we have of the future. On the right side, you can see the average annual addressable market. Our estimation is over EUR 10 billion on average per year. That's driven by electrification, grid modernization and also items such as energy security. I think we can all see that short term, there is some challenges, overhead lines in Germany is a good example of that. I think also in some cases, delayed permits common is also another good example. But I think one of the fundamental items that we forget sometimes when we look at all these reports is that we're talking to our clients every day. We're talking about their plans for the future and what we want to do. It's our clients who are telling what projects they want to execute. And that's why we can say that we have a solid market in front of us. The visibility, of course, becomes lower when you get beyond 2030. But I think the market dynamics, government ambitions listening to our client plans for the future, it gives us confidence that it is a solid mark to come. I think primarily, we will continue to be in Europe, but as you've seen with Champlain project, we will look at opportunities globally. That's for sure. On top of that, which is more a wildcard is mega projects. We have not included them in any market analysis or forecast for the future. But we do also keep an eye on them. And this just gives you an idea of what we mean by a mega price to start with. So a mega project for NKT, that's a project with over 1,000 kilometer route length of cable. These are massive projects. And there's a lot of them that have been discussed and talked about worldwide, as you can see. NKT is one of the few companies in the world that can carry out these projects, long length cables, DC mature technology, been able to install them with the capabilities we have. There is not many that can do this. From a realization point of view, the probability of these projects happening is low. We acknowledge that. It is low, but we also want to be there if it does happen. If you go back 10, 12 years, the Champlain project, everybody talked about it, it was a mega project at the time. Nobody thought it would happen. And here we are today with the project completed and actually energy flowing through it. Now if we look at the strategy. Again, if you think of the previous strategy, improved performance, increase the backlog and invest in regarding capabilities for the future. Going forward, we're charging forward, it's around execution. It's around being competitive on the market and bringing long-term value creation to our clients. As Claes mentioned, we do this under three pillars. Firstly, Execute. Execute on the backlog we have. We need to ensure and not lose our focus that we actually are successful in completing that backlog and execute on the investments that we do hand-in-hand with that and doing that with a disciplined approach, risk management and really competent project execution. From an Excel perspective. When we talk about and listen to our clients regarding affordability, we frame that in a word called sustainable competitiveness for the future. That's around leadership regarding technology. It's around turnkey approach regarding installation and project execution excellence, its partnership with our clients. And more so than anything, it's ensuring we have a skilled competent workforce for the future. And then if we look at Evolve. Technology-wise, we will always continue to push the envelope regarding innovation, but it's not just cable that we talk about here. We are also talking about innovation regarding AI. How do we use AI to benefit us for the future? We can already see and we have it in use regarding planning in the factories, predictive maintenance, seabed analysis, all things to cut down time for our people and take away the complexity. So what we hired them for is what they do and use their expertise and remove tasks that can be done by an AI support. From an installation capability. Here, we have always said that where it makes market sense, we will continue to look at critical scopes to see if we should bring them in-house. We analyze that on a continuous basis to see does it make sense that we have it in-house are subcontracted. It also feeds into, do we have the utilization for it. So things like Cable A, you can see yes, things like Rock Placement, maybe not. We maybe not do have enough scope for rock placement for it to be continuous all year around to keep our vessels busy. And then to my pride and joy. So this will be world's largest Cable A factory when it's finished. I think Claes used really nice words. As far as they were concerned, this will be the capital of high-voltage cable manufacturing into the future. It is built with the future in mind. Long lens, bigger cross sections, higher voltage levels and done at a scale that makes it cost efficient for the future for our clients. It's not often that you get a chance of to make an investment in both factory and a vessel at the same time and being able to optimize those two has been a huge benefit for the future. From a point of view of commercial reduction, here Claes mentioned it earlier on, we're really happy and proud to say that this will come into commercial operation in Q2 2027. It will be controlled ramp-up and sequenced with the two lines that we have. So not all machines come online at the same time. It's controlled from where we start production to when we run through the final completed cable before load out. And it's important to say this modularity we talked about, the optionality to be able to add further investment is there in the Karlskrona factory for the future. And then if we go from manufacturing, we then go over to the installment of this cable and the critical asset in order to achieve that is NKT Elenora. It's really building on the capabilities that we already had in Victoria. It has three turn tables, 23,000 tonnes of cable that can be carried and it's ready regarding methanol for the future regarding sustainability. If you just think what 23,000 tonnes of cable is regarding to get from here to Copenhagen, where a lot of people made the journey. You're talking almost that distance to be able to be carried and that's two cables for a root length of almost a distance to Copenhagen. It's really built again with the future in mind regarding long length, deep sea and also configurations. So in some cases, our clients want to add a metallic return. That's what the [indiscernible] is for to be able to do that. So we can bundle two or three cables during that installation. Exact same as what we did for Victoria, we've done for Elanora and we do for all our offshore assets is First, we design how the case will be handled on board. How do we ensure the integrity of the cable? That's the first thing that we see on the drones. After that, we designed the vessel around it. So the vessel comes after. Everything that we do is around ensuring from design of the cable to manufacturing to installation is really a turnkey approach to ensure the integrity of the cable over its lifetime. And then if we talk about -- you hear me say earlier, really, when we talk about technology, it really is our core regarding innovation. And this gives you some picture of what we've achieved recently. Firstly, it should not be forgotten about Glass talked about it. We invented XLP. We were also the first to manufacture [indiscernible] cables and that was back in 2014. So that's 12 years ago. We also shortly afterwards tested 640 kV land cable. So from our point of view, this is a mature technology that we've had around for quite a long time. The 640 KV also allowed to show not only the innovation we have, but the robustness of this technology as a whole. It increases the capacity that's possible for transmission of our clients by over 65%. You add on top of that 90-degree cables that can either first increase the capacity even further or what it can do is it can give us our clients flexibility regarding how they plan the route. These areas along the route, there may be hotspots that create an issue for the cable. This means that they could use the cable that actually goes through there. From a deepwater cable perspective, we have qualified cables DC to 2,000 meters. We've qualified AC cables 1,500 meters. And then when it comes to long length, Elenora can reduce -- the factory in Elenora can lay cable that is at longer lens, which means less transit for the vessels. It means less joints out on the site, both of them reduce cost, and they also reduce CO2 emissions regarding sustainability for the future. And then ultimately, it's our clients that really judge us. We have changed our approach quite a lot with our clients over the last four years. Where we went from a company that went more a singular approach of tender to tender and we just basically reinvented the wheel every time we came to a client again and the relationship to a much more partnership approach going forward. And I think that's evident by what you see behind you -- behind me regarding what our clients think of us. Technology wise, what they think of as reliability-wise, what they think was regarding our turnkey approach and also how these assets operate when they're actually installed. With that, I'd like to listen -- for you to listen to a few words from Sandy McTaggart, who's with SSE, who's one of our key clients. [Presentation]

Thank you, Sandy. And then other than Sandy following the wrong football team. Otherwise, we get on really well. Then we come to Champlain, Hudson Power Express. This is a milestone project not just for NKT. This is a milestone project for the industry as a whole. It spans 600 kilometers from Quebec in Canada down to the heart of New York City. It really is a true turnkey project. If we think about the route that this is taken on land from Quebec, it goes to Lake Champlain. It then goes on land and in the river through the Hudson River, through the Harlem River connecting into the New York City in Astoria. It builds on the expertise and structures that we already have in place. What I think is important to say here is what you see in front of you is not unique to the Champlain project. These are the structures and the aspects and discipline that we've put in place for all projects. And it's built on not the last three years of Champlain project. This is built on decades of carrying out these complex projects, learnings that we've taken, sometimes painful ones in order to reach this point. If we look at some of the aspects, complexity wise, it is one of the most complex projects we have ever carried out with a root lent that goes through rivers. There is a lot of stakeholders. There is a lot of authorities. There's really tight permit constrictions and is a complex supply chain. Technology wise, it was the commercial industrialization of 400 kV cables. Installation-wise, the collect the vary so much. So if we talk about barges to be able to get the cable up to Lake Champlain. These barges were designed to millimeter accuracy to fit through the lock system in order to bring the cable up to the lake. We've had the river of the huts and frozen over in the winter period. We have currents that make it extremely difficult, not just to place the cable and the seabed, but also to bury it. We need to ensure that we protect local wild life. So we've had really tight restrictions in place on ourselves regarding Bald Eagles as an example. And we worked with [indiscernible] during all of this project that we will work with the river and not against it, in particular in the Hudson because it is so sensitive. From a risk management point of view, this is something that's really close to my heart because risk management basically decides the success of a project. How you manage the risk is really the measure you will succeed or not, both from a manufacturing point of view, a technical point of view and an operational point of view. And I'm glad to say here that we delivered the project on time and on cost and also not forgetting along the way that we had the smallest of also building the second tower in Karlskrona while reducing these cables. So it also really sends a signal both for ourselves and to you that what we're doing at the moment regarding these investments at the same time as the backlog, we will do it. To finalize, we touched on the high order backlog and the solid market that we see of over EUR 10 billion a year until 2030 and the solid market that we see beyond with the added that we do not rely on it, but we will continue to keep an eye on these mega projects for the future. Significant investments, an increase in our production and their installation capabilities and capacity going forward for the future and regarding the aspect, technology leadership we want to ensure that we're always pushing the envelope and at the forefront. Turnkey project execution include installation aspects. And then as you heard me say, the risk management of these projects is really key to ensuring that. This is really to ensure that our clients, they come 10 Kt when they want the projects and they go nowhere else. Thank you. With that, yes.

Good morning. My name is Rafael Goerner, and I'm heading Grid Solutions.

My name is Denis Schuler, and I'm the Head of the Business Line accessories.

And let me start with a short recap of what we also built with grid solutions and accessories as base is also for our Charging Forward strategy and which is now live since beginning of the year with the new business line, grid solutions and accessories. We have built that on our legacy activities of the well-established service and accessories business line and have combined it with the majority of our high-voltage AC onshore project activities that were before positioned with solutions or the distribution part. By combining this, obviously, the rationale is straightforward. We have more and more customers that not just want an individual cable or an individual accessory, one, to complete solution provider that is, as Darren already mentioned, their partner of choice across the full cable life cycle. And obviously, grid solution and accessories brings a lot of opportunities and creates clear accountability, a streamlined customer interface and strengthen our ability to participate with a bigger market share in that growing market environment that Claes has already referred to. So today, we want to show you a little bit more about grid solutions and accessories, how it really creates value for our customers, but also for NKT. With that integrated app offering and the capabilities to execute product, project and service business moving forward. If we look at that combined picture now, what we have created with grid solutions and accessories. It's really the combination of the product focus, the service focus and the project focus and mainly, as said, built on our existing legacy service and accessories activities. And there, we can see how much the products also benefit from that combined business line. So we have a direct feedback coming to our world-leading medium-voltage, high-voltage AC but also high-voltage DC product portfolio. And it's really benefiting from that close connection and direct feedback from the ongoing project execution. For service, we have a strong capability, and we will touch on that later on a little bit more to deliver services and to provide security also to our customers to keep their asset healthy and in operation. And that combined and expanded to the project execution focus brings really these end-to-end capabilities that we can deliver now with grid solutions and accessories for our high-voltage AC project and solutions opportunities and that is really ensuring that we are as this new business line has been formed or fully integrated partner for our customers and really deliver with a very customer-centric approach to our ambitions.

This slide highlights the financial scale of Grid Solution and accessories. For 2025, the business line reports revenue EUR 461 million. This represents the combined contribution from products, project activities and service capabilities. The operational EBITDA in the same period is EUR 67 million. Relative to revenue, it represents an operational EBITDA margin of approximately 14.5%. And Grid Solutions and accessories is not only growing its market presence, but also translating our position into tangible financial value. This is further supported by a strong commercial momentum. Over the past 12 months, we grew our order intake 30%, but also customer focus remains equally strong. With a customer Net Promoter Score of 66 points were 23 points above the global industry benchmark. Over the past 12 months, Grid Solutions and accessories delivered strategic milestones milestones in the area of footprint, products, projects and life cycle services. We have achieved a lot, and we would like to highlight the strategic milestones we are especially proud of. In Arling South Sweden, our competent enter and production facility for high-voltage accessories we managed to complete our strategic footprint expansion. We added production capacity and production capabilities. And we opened a new test center for extra high-voltage tests a test center catered for both HVDC and HVAC accessories. Norton Hume, is NKT competent center and production facility for medium-voltage accessories. In Norton Hume, we managed to create a zero carbon factory, first zero carbon factory within NKT Its implementation already shows benefits when working with our customers that are focused on reducing their Scope 3 emissions.

Yes. Let's move to the product segment. Here, I would definitely like to highlight what we have done as world's first to deliver also at 400 kV AC voltage level, also a temporary site cable that helps to be utilized on grid restructuring and reinforcement projects in a very easy and simple way because it comes as a preassembled solution with already the connectors being installed on the cable and with that, reduces the implementation time on site significantly. In addition, it's not just a onetime use. It can be reused also in different projects several times in different configurations. And with that also helps to increase the sustainability of the efforts of our customers. Looking then on the project side, I could, of course, highlight several of the recently completed projects. But as a German citizen in these days, of course, I need to look to Munich because October is ongoing there this week. So we have signed beginning of the year a letter of intent with a [indiscernible] to implement the first commercial superconductivity cable system, and that is really world's first then if we are coming to that operation. Starting already in 2001, we have seen in Claes's slides, the first pilot project had been and [indiscernible] and since then, technology has further matured, that we are now ready to also look forward to that first commercial operation. And this will help Munich, obviously, to reconfigure its power grid help also to safe base because instead of installing 5 cable systems, this cable system can transport the same amount of power and on the same time also reduce losses. So it it helps also to pay off very different aspects to strengthen the sustainable competitiveness also for our customers. And last but not least, in these days, obviously, the repair capabilities are quite important because we need to support our customers when there is extreme weather, damaging a cable when there is external threats, sabotage, damaging and cable. So we need to help our customers to be prepared, and we are also preparing ourselves to be prepared to help our customers with these services. And there, just highlighting maybe the offshore wind repair with Beatrice where we not just repaired our own cable, but also third-party cable. So it's also important to have the technology and the competence to work with different installed assets worldwide. Now looking at what is supporting also the growth of Grid Solutions and accessories and our our ambition to grow further these activities on the AC side of life, and that is actually then again, referring to what Claes already said on electrification on the energy transition and the grid modernization. Let me first start with the electricity demand. So of course, most obvious, I guess, some of you have come already with an electric car. So that's the most obvious change that we electrify our transportation. And that is not just relevant for our individual transportation, but also mass transportation and commercial vehicles. So the installed capacity that is required for charging these vehicles is increasing and increasing. And with that, additional grid connection capacity needed. Industrialization where we also turn off fuel gas to be replaced with electricity. And the same, obviously, goes for data centers. We have heard already about AI, so that is also driving the overall electricity demand in Europe moving forward. And with that also more and more cables being utilized for these activities. Looking then at the energy transition, it's really not just the decade, it's the century of renewables. And we can see that, that trend is unbroken, so solar capacity being added more and more and the same goes for offshore and onshore wind activities. Also here, grid connections required and combined also with more energy storage systems being installed on a grid scale require high-voltage AC solutions being ready and being helpful to connect these assets to the grid. And that, of course, then adds in the overall picture that is coming not from us from external studies on the annual grid investments that will take up by 70% in the coming years from the base level of EUR 57 billion to around EUR 100 billion moving forward. And that, of course, will support our activities in the center of our operation in Europe. But as you can see also the opportunities with the rest of the world with up to EUR 500 billion annual spend in investments in grid capacity should also trigger one or the other strategic activities that was already mentioned. Looking at the overall capabilities that we provide as grid solutions and accessories to our customers, what is it that we really can deliver end-to-end. And that goes really across the full cable life cycle. Starting from design, planning, production, installation commissioning of operational maintenance and the end of life. And we really engage early with our customers because we have heard, we are obviously a power cable expert. So we want to ensure that our capabilities, our competencies are integrated already into the project planning phase into the permitting phase. And with that, we help to optimize the solutions that our customers in the end, integrate into their grids. Looking then at the installation and commissioning I think that is really very important to not just think about the cable to not just think about the market-leading accessories but also think about the integration of that overall cable system into the power grids into the asset base of our customers. And there, obviously, the close connection also from the project benefits also the product development and evolution, and that is where we are ensuring that continuous improvement and continuous evolution of our offering by that close connection. But yes, obviously, we don't stop after we have commissioned maybe with our own mobile test equipment, then the cable system, we continue also into the operation and maintenance phase. There, we have built quite a portfolio of long-term source agreements to support our customers with spare parts, for example, but also with secured reaction times in case needed. And of course, to execute not just the installation and commissioning, but also execute later on repairs. You need to qualify it, you need trained, you need educated and continuously qualified joiners to also execute these activities and all that is sitting with grid solutions and accessories. Looking then at the end of life, it's also important to recognize, as we have heard the aging grid infrastructure and that we need to also consider together with our customers how to replace these cable systems, how to also recycle it, how to also modernize the existing infrastructure. How are we doing this? Also on a regional scale, we wanted to visualize here because I think you have heard now about our major factories in distribution and in transmission. And you will hear more from Carlos, obviously, about our assets there. And what is important is that we are relying on one side on our factory footprint on accessory space, but also utilizing our factory assets in transmission and distribution, looking here at that picture and being close to our customers. For Grid Solutions and Accessories, we have created regional sales and execution centers really close to our customers, obviously, with quite a gravity in Europe, but also expanding into strategic markets like U.S. the United Emirates, India and Australia. And these are obviously markets that we are following quite closely and where we also consider how to further strengthen our presence. But being close to our customers, that is quite important because with that, we can ensure that we are really closely following the customer demands. But on the other side that we can also rely on our global competence on the global organization to support also the execution of these projects of the service activities or the deliveries of our product portfolio. And all that, obviously, again, is standing on the three pillars around execute, Excel and Evolve in line with our Charging Forward strategy. And Again, let me start with the Execute part. So here, first, it's really about delivering on our commitments also on the project, on the product, on the service side. delivering on our customer commitments is the first priority, ensuring that we build these supply chain readiness also for the backlog that we have here to keep really the projects in focus and deliver them as also Darren diluted to deliver them on time, on budget, on quality and make sure that we really have their this customer-centric approach for our activities moving forward. On the other side, it's really about the excellence part, making sure that we are really positioning ourselves in a good spot with also key leadership positions with leadership positions in key segments like we have heard about superconductivity where we really would like to see us moving forward with this first commercial project and then also about strategic partnerships. On one side with our customers, as we have heard already previously, but on the other side, also with our suppliers to ensure that we have also here on the cable side, on the product side, but also on the installation side, reliable partners moving forward in executing our strategy. And the last pillar is about Evolve, making sure that we are ready with grid solutions and accessories for the future. to really consider what are relevant aspects to expand our footprint, what are relevant aspects, also with the technical innovation and of course, what can we do to provide more sustainable offerings also to our customers. And these are the three pillars that you will also see moving forward for grid solutions in execution. And in the end, it's not about the number of projects that we're executing. It's really about the overall value that we generate for our customers.

So our value proposition is centered around enabling reliable power Cree performance. The first two elements cover our broad portfolio. with cable accessories, AC, onshore cable systems and turnkey projects. This basically allows our customers to work with one trusted partner, across voltage levels, applications and project phases. Tailored solutions increased reliability while reducing the project risks. In this element, our customers benefit from our engineering, testing and application expertise. We help our customers to solve complex technical and operational challenges. The fourth element is our comprehensive service offering, with [indiscernible] installations, maintenance and repair capabilities. Combined with our service level agreements, Grid Solutions and accessories is a capable partner throughout the entire asset life cycle. But last but not least, with a global business line. With a global business line with customer proximity, we combine the strength of our European competent center with regional hubs, teams that understand local markets and our customers' needs. Together, these values create a seamless offering that helps our customers to manage complexity while enabling reliable power grid performance. And of course, the voice of our customers brings our values to life statements like NKT is setting the benchmark in grid reconstruction. NKT is the partner for future ready grids and NKT provides rapid response when it matters most. Our customers highlight three consistent reasons why they continue to choose us. Our technical expertise our strong partnership with them and the responsive support. But let's listen to Claes Weber on what he has to say on setting a new benchmark in grid reconstruction. [Presentation]

Thank you Claus. Your feedback is highly appreciated. Let me summarize the key takeaways of today's presentation. We have an integrated life cycle offering, a life cycle offering throughout the full cable system life cycle. The second is our broad portfolio with power cable accessories, turnkey projects and service capabilities. We are detracted partner for our customers, a partner that allows our customers to work with us across voltage levels, applications throughout the full cable system life cycle. And we are a global business line with customer proxy. We combined the strength of our European competent center with our regional hubs. Our local teams support our customers where they are. And we are the trusted partner for our customers throughout the entire cable system life cycle. Thank you. [Presentation]

So good morning, everyone. I'm Carlos Fernandez. I'm leading the Business Line Distribution. For those of you, looking for the next coffee break. I have good news. I'm the last business line presenting. So I will try to be quick. But give you also an overview of what has been happening in Distribution during the last years and what we are building for the future. Just to give a bit of context, we are not a project-based business line. We are a pure cable producing business line. And we take care of all the power cables that are below 220 kV. And in NKT, we consider above 220 kV extra high voltage and that is Darren's place. So we take care for all the -- what is the distribution network of the [indiscernible] Short over what has been happening in the last 4 years. And I think that this is a journey of growth in our business line. It has also a quick growth. We have been increasing our revenue 1.5x in this period of 4 years, going from EUR 550 million to EUR 850 million. But it's not only growth, it's also a healthy both because our profitability has been growing even more than the turnover. So we have increased our profitability 3x in the same period of time, from EUR 29 million EBITDA to EUR 89 million last year. So this growth is not only size volume growth. It's also an increase of profitability in the business. And there has been some reasons for that, of course. And it's obvious to all of you that the market was there. But I always say that the market was there for everybody, also for our competitors. There were two additional drivers to the market to do that. Our focus on efficiency, I would say, that is a key strategical choice for distribution. We are a pure cable producer. So we need to be efficient. We need to be cost effective. We need to be on time. We set our internal target that we want year-on-year be at least generating a 3% of operational efficiency, which is a number that is close to an average inflation rate that is growing. So we try to compensate that through a real efficiency projects. So that has been helping also in this increase of profitability. And the last driver has also a strategical choice from our site. So we are a pure Power Cable business line. So we don't have data cables. And 70% of our portfolio is medium voltage. Then we have 30% of our portfolio that is the rest of the network, 1KV and building wire. And we have also some kind of niche products like the power to antenna and some kind of a telecom application for that. But mainly, our activity is to give a clear choice to put capacity in place for the medium voltage expansion. In those years, in these years, we have not only growing and delivering the profitability. We have also been investing. And we have been investing also to build the platform for the future. I think the milestone and Claes mentioned that before on this year was the acquisition of SolidAl, which is now our Portuguese affiliate. And then we apply to what we called our model of buy and build. So we not only took over the company, but also we invested to double the capacity there. This is the capacity that also Claes mentioned before, will come in place at the end of this year and then we'll be there starting 2027. We have also in terms of organic growth, investing in our factories. Welcome [indiscernible] in Czech Republic, Falun in Sweden. We have been putting in place during this year's additional medium voltage capacity to support the growth and to support the demand from the market. Asnaes as well, which is coming now into motion, into action, so the project was complete just before summer in terms of machinery installation. Now we are growing in terms of qualifications in terms of ramp-up of the factory. So those investments are also bringing additional capacity to the business line to follow up our customers' demand and our frames with our utilities and our partners. Those investments are the main thing that we have been doing, investment in capacity. But not only, there are additional also investments that we have done for strategic reasons. There are two things on that: verticalization of our supply chain this is a strategical choice. We want to secure some key raw materials. And one of them are the compounds. The compounds of our cables, especially flame return and fire-resistant compounds. There is a market demand, market trend, which is moving from the traditional PVC cables to a more safe cables in the concept of fire resistant and frame retardant. We want to be owners of the technology of that. We want to be the owners of our supply chain because this is a key product. So we have been investing to have these capabilities that we have now in our plants in Poland and in U.K. With SolidAl acquisition, we took also a step in this verticalization on the supply chain. SolidAl brought us the internal production of aluminum, which was a knowledge that we didn't have before as NKT and now we have. And this is, again, a strategical advantage for us, which is not only from the technological point of view, but also for the supply point of view, where we have seen this year a lot of turbulence interruptions on the Middle East, and that is also a factor that is giving us a more stable platform. With all of these investments, we have been positioning the business line to capture the growth that you have been already listening before. So I am not going to repeat the same. But it's just about -- we are not talking about a short-term thing. We have a confluence, we have the confidence of many factors that are going to be here for some years. The upgrade of the grids. So we need to really transport much more amount of electricity. That means that the cross sections that are today in place are obsolete. We need bigger cross sections, and we need longer grids and going to the grid to different places. So this grid expansion is really a huge thing coming in the future in the coming years. It's already happening, but it's here to stay. Electricity demand, okay, you have more figures than me about that. So is growing and will continue to grow. And then, of course, we have the thing now, which is the data centers. So everybody talks about the data centers. But it's a reality that the data center is about data, of course, obvious, but it's about power. So if there is not enough power in place to supply these data centers, that is a showstopper for the development. So it's about electricity again. [indiscernible] about that. So it's planned to be twice investment from EUR 36 billion to EUR 70 billion in the coming years. So all in all, we have been positioning the business line in order to capture this growth in the market and this increase in demand. How we want to do that? Of course, we are not going to bring anything new. It could be surprising that they came with a different strategy than the rest of the business lines. So it's Charging Forward. It's about Execute, Excel and Evolve. What does it mean for us? Execute is simply get the things done. We have been investing. We have been putting capacity in place for our factories, doubling capacity in some places in Denmark and in Portugal. So now to get, we need to get it done. We need to finish these investments, and we need to start to put the machine in motion. Of course, keeping the leadership and efficiency and service levels. I said before, we have a year-on-year target of efficiency, but this is not really a choice. This is our survival mode. So we have to compete and we have to be better year-on-year, continued improvement in being leaders on service level is what is giving us the success of these last years. On Excel, it's about the same concept. We need to continue focusing in the supply chain verticalization. I truly believe that this is one strategical choice for us, and we need to continue growing that. And of course, the customer centricity. And I will talk a little bit more later on that. The way that we build trust for our customers, the way that we generate business with them is to become a clear reliable partner. And we can only do that if we are close to the request of our customers. So customer centricity and the tools that we are developing for that is something that we will have a look later. But we don't want to stop there. So we have been building a platform to capture. We have the tools to develop that. But what's next? Because we cannot stop there because the rest of the world is not stopping. So we want to strengthen our position in medium voltage even more. So we consider ourselves one of the market leaders. We can call three of them, and we are one of these three in Europe. We want to strengthen this position. We want to increase our market share because we have been put more capacity in place, but we want to grow. And we need to be selective on how to grow and how we go out or beyond our core markets. Our core market is Europe, it's Central Europe, is Scandinavia. Now it's also South Europe with SolidAl. But we have a successful story with SolidAl moving to South Europe, moving to another geography that was not our backyard, let's say. We want to do more on that. And we need to be selective. We need to be smart. We need to find a way for our buy and build well, but we want to continue on that. We have a footprint today that is placed to support the growth. I connect now with Rafael was saying before. So we are covering, I would say, in a decent way, what is the European market. We have good distribution now also covering the south part, very strong in Central Europe. Germany is the biggest market. The second one is France. So we are closing off to the most important markets. In Europe, we have a traditional strong presence in Scandinavia. We will have also one small plant in U.K. that is allowing us to access also this important market. Orange dots here are showing you the places where we have been investing in these 4 years, and you can see that it's almost everywhere. So it has been a challenging environment by growing the business but investing a lot. And the message of these dots is that we are ready for the next. These plans that we have seen before. They have been built on a concept of centers of excellence, meaning that we would like to specialize or we like to specialize our factories in different segments of cables. So we have the medium voltage specialty mainly in Czech Republic, and then we have capabilities here and there. We have a strong, medium high-voltage capacity in Sweden and in Portugal. And these centers of excellence are giving us also the advantage to be more competitive in the products because we have more efficiency, we have more scale in those places. All this range of products that we have in this -- we produce in this footprint are covering the end-to-end of the distribution network. And here, maybe some of you have seen or have listened in the cable world, there is now a sentence that says that there is no energy transition without transmission. And Darren knows that and Darren likes that. But I always add that there is also no supply solution without distribution because you need to go to the end, you need to go to the users. And this is what we provide. We provide from the connections to the grid, that is the part that you see here. So no matter what generation source there is, you need to connect to the grid. So we are there. And then we go, let's call it down on the chain, reducing the voltages until the final user. And in a simple concept, the lower the voltage, the smaller the cable. So we go from high-voltage, bigger cables, medium voltage connect to the substations until the last mile, 1KV and until the final user, which is the building wire. And we are covering this end-to-end. So that is our offer to the market that we can be a one-stop shop for the Distribution part. Deal with utilities and big DSOs, and we have frame contracts with them, but we also work with the wholesalers which I resell to contractors. And we have, of course, on the developers and OEMs that they are also developing some projects. We don't do the project, but we supply the cables for those of them that have the capability to do in themselves. Let's spend 1 minute on the data centers because it's the thing that everybody is talking about, right? So there is a boom really on the data centers. And probably you are more expert than me, but you see the speed in the U.S. market is much higher than in Europe. But also in Europe, we see that this demand is growing and growing. We have experience delivering projects in Sweden, in Denmark and Germany. And we see this demand something really, really strong and consistent. We can debate a little bit about the speed. So speed of execution can be faster or not that faster depending on permits, depending on discussions on water consumption or availability of the grid. But what is out of discussion is that this demand is going to grow a lot in the coming years. There is a lot to install and there is a lot of power to deliver. As I said before, we are a pure power player here. So we do not deliver optical cables. So let's say that half of the story is not for us. But for the other half, we are delivering the full package there. So we can deliver from the grid actions until the super stations until the power to the rock. And we are also very close to our customers looking at how we develop better solutions on that. It's not only about products. Products are extremely important, of course, but I mentioned it before that one of the strategic choices that we make is about the customer centricity. And what we are doing about that beyond to be close to our customers and meet them and listen to them and improve together. It's about to provide an environment where making business with NKT making business with distribution has to be easy. And here, we need to go through our digital tools that we can [indiscernible] and offer to our customers. We have developed a MyNKT. MyNKT is the interface that we offer to our customers to do business. They can find all the necessary information there about the cables, about the applications about the technology that we are doing, but they have also the opportunity to place orders through the interface. So if somebody is developing digital commerce, we are ready for that. But we are not only on the [indiscernible] side of the thing. So we are also developing tools that are beyond the screen. So the pin made or the truck might ramp. There are digital solutions that we offer to our customers. that allows them, for example, to know exactly where is the drum in any moment of delivery from the moment that is leaving the factory. And also the truck might run. And this is especially useful for the people that are doing installations on the field. You can position your drum exactly where do you have it? And how much how many cable remains in, if you have enough cable in the drum in that place in the middle of the mountains to finish the connection or you need to deliver a new one. So all these digital tools are available. And a way, they are a way that we can be closer to our customers, provide easiness for the business. And also, we are busy with AI. We are busy with the developing the tools that can allow us also to be present when AI will the solution for the commerce. It's not happening yet. But it will be a moment where our customers will interact commercially also through AI, through agents or through different solutions. We are developing also our side of the business, that we are going to be ready to interact in this different way. So a lot work about digitalization and developing tools for our customers. And those customers, of course, they have an opinion about us. And we are happy that this opinion is in direction of this reliable partnership. So we want to be the one that they call some colleagues that are calling that we want to be the last call. So I know that the customers talk to everybody, but we want to be the last call. We want to have the last one. And this is what we consider a reliable partner. We are going to listen now in [indiscernible], so which is the CPO of Iberdrola. I think you know [indiscernible] as one of the biggest utilities in the world. And we are very close to them. We are very good partners to them. But Insis not going to talk about only distribution business. He's going to talk about the partnership that Iberdrola has with NKT because we have also having very important business on the transmission side. So it's a global partner for us that gives here his testimonial. [Presentation]

Thanks, Ignacio. So key takeaways from distribution. We are a key player on the distribution network in Europe. We are a key player on growing the grid and partnership with our utilities and our customers. We have put more production in place to be ready to follow up the market demand. And we keep the customer centricity as a core focus to develop together market solutions for our customers. So that's it. I promise to be brief and to hit on the coffee break. So thank you very much, and I invite now Jacob for the Q&A.

Thank you, Carlos. Just another Q&A session before coffee. So you are not the last one, but I'll ask the business line heads presenting including Cleas to reenter the stage. And again, we do the same procedure as last time. [Operator Instructions] I think we start up here in the front row Kristian.

Kristian Tornoe from SEB. On data centers. I follow your point of Europe being a bit slower than the U.S., but what we have seen recently is a pipeline in especially Sweden and Finland materializing quite nicely. I guess, Google's announcement build EUR 13 billion base in Finland is a good example. So considering your sort of Nordic presence, can you elaborate what will that mean for you guys if that Nordic data center boom actually materializes.

Yes. Well, I mean it's clear that when this investment materialize, I understand that we have clarity about the time line and clarity about the locations of that and the power that is needed to install if we are talking about hyperscalers or more smaller data centers. For us, of course, will represent a situation of our plans, demand to be there through basically our wholesalers markets because this is how it usually is working in the Nordics. And then for us, it's representing a clear very, very exciting future about that. But we need to see what is the the pace of the execution. So Google announced that for Finland. Now we need to continue looking into it and to see when it's happening.

Casper.

Casper Blom from Danske Bank. A question to Darren and maybe Claes, if you can't resist. The slide that we've now seen for the last couple of years about investments into high voltage, the plus EUR 10 billion per year out towards 2030. You continue to stop the slide at 2030, but you also speak to how investments will continue towards 2050. If you -- if one was to guestimate how those columns would look beyond 2030, would it be fair to have an assumption that we would see sort of the same trajectory at least as we have for the general investments into transmission?

I can start with saying, If you look at beyond 2030, you heard me say already, the visibility is lower. We are talking to the clients a lot. So we have a pretty good idea of what their plans are. But in our view as well, at the moment and even mega projects to the side, the supply and demand balance will be about right beyond 2030. So it will take either a trigger of a major project, such as a mega project or a step change regarding backlog volume at least before we'd make the decision on another investment. I don't know if you want to add more.

No. I think that basically covers it. So I think if we were to verbally project, there is nothing in what we see beyond that doesn't support the market expectations that we have up until 2030. What there is with reference to the third slide that I had on the market on the opportunity side, for example, energy autonomy, and maybe that's to your point as well, that opportunity going from something like 40% to 50% or 60%, if that -- if there is a significant political will that decides to take a strong step further there, then that can represent also a significant opportunity over and beyond the current estimates. But just I would also maybe like to just invite Michael, if you have any reflections we can hear also from the real expert on the market side.

I don't know what I can really add to what you say. I think you hit the nail right on the head here. Obviously, visibility gets a little bit blurred. When we look further out, we lack the real names of the projects, which we have on a shorter term level. But then we look into the overall macro the global trends. And we see nothing really that suggest that we should not maintain an activity level close to what we have seen in recent years and what we see towards 2030. So I think that gives us some comfort. I will say we work a little bit with Trilemma, where we have three things that we always try to put in context. So we have Sustainability has been there for quite some years. We have affordability, and we have resilience. And what has happened in that triangle is that things have moved a little bit. So I would say, affordability is very much at the agenda right now. And you've heard the people in the business lines say how they work a lot with sustainable competitiveness, improving the basics. So NKT to take its fair share of the market, whatever that market is. So I think that is a very important takeaway. And resilience is now also very much because of the geopolitical situation, a very important aspect. And we see that in the market discussions that TSOs and DSOs are looking on the activity level, not only say how much should they invest, but also where should they invest and how should they invest and what should their partners of choice be in the future? So I would say on the market side, yes, we do expect it to remain a very healthy market. We don't see any real dark clouds out there, but of course, it's also impossible to really predict if you go 10, 20 years ahead there, we need to look at macro trends here.

Claus?

Claude. Darren, regarding your slide about the new factory, that should be fully operational in 2029. So I guess there will be no growth going into 2030, meaning that you should be able to reach your 2030 target already in 2029. Would that be a fair assumption?

When we said first that the factory will not be fully operational in '29, I would say what we're saying is it's steady state because it's also a full flow between the factory and the installation of those cables where you will see the full effect will be in '29 from that perspective. So it's not that the factory will continue a bit by bit all the way of the '29 coming online. It will be up and running basically within '27.

Yes. So the meaning is that if it is fully ramped up in 2029. Not a lot will happen from '29 to 2030. So I guess if that's this minimum EUR 900 million EBITDA for 2030, if nothing happens between those 2 years, you should be able to do at least EUR 900 million already in 2029?

But remember, even though he's a very important part of NKT, it's not EUR 900 million a lot of NKT. Still -- but it's a very big part. And of course, you are correct from the perspective we have said we will commence ramp-up next year. There will be a couple of months between the two factory flows, and you will see that later and hear people describe it. It takes time between feeding the dragon with copper in one end and good get the ready cable, which is tranched more than 5 meters down to the sea bottom on the other end. Doing that two times with a couple of months between creates a ramp-up phase, which will stretch until '29 until we get full revenue generation. Then as we are all well aware, EBITDA, of course, that's from a revenue perspective. EBITDA and to a certain extent, revenue depends on project mix, of course. It goes down to the cost absorption. And it also goes down to the margin mix as well of the projects. So this is why we are -- for the full company, we are looking at 2030 for the medium-term ambitions. And understanding where you come from, but we will not provide guidance for the year in between '28...

Its not the guidance I was looking for, Claes. It's just more about the building blocks.