NEX.PA FY2026 Q3 Earnings Call Transcript
Date: 2026-10-22
Source: Financial Modeling Prep

Operator: Welcome to the Nexans' 9 Month 2026 Financial Information Call. [Operator Instructions] Now I will hand the conference over to the speakers, Julien Hueber, CEO; and Vincent Piquet, CFO. Please go ahead.
Julien Hueber: Good morning, everyone, and thank you for joining us today for Nexans' 9 Months 2026 Financial Information Call. I'm here today with Vincent Piquet, our CFO. And together, we will take you through our performance for the third quarter and the first 9 months of the year 2026. Today's update demonstrates that Nexans business model continued to deliver, supported by strong momentum across strategic verticals, the disciplined execution of our investment road map and the progressive integration of our recent acquisition keep us firmly on track to achieve our midterm objectives. As usual, I would like to draw your attention to our disclaimer. This presentation contains forward-looking statements, which are subject to the usual risks and uncertainties. Let me now walk you through the key highlights of our first 9 months of 2026. So Slide 4. Nexans maintained a high growth momentum during the quarter with electrification remaining the core drivers of the group performance. The group standard sales reached EUR 4,947 million in the first 9 months of 2026, which is up by plus 3.9% year-on-year organically. In Q3, standard sales reached EUR 1,698 million, which is up by plus 21.4%, including a strong organic growth of plus 9% and even more linked to the contribution of our recently acquired companies of a plus 9.6%. Electrification remains the main growth engine with organic growth of plus 5.3% over 9 months and a plus 7.1% in Q3, supported by high demand in strategic verticals across PWR-Grid and PWR-Connect with a favorable seasonality in PWR-Grid with Q2 and Q3 typically being the strongest quarter and the successful execution of large-scale projects while we continued to see the normalization of organic growth in transmission as planned. The integration of Republic Wire is progressing in line with our road map and is already delivering good results. We are also launching a multiyear brownfield investment at the Republic Wire facility in the U.S. for medium-voltage accessories production to capture growing demand for data center and grid application, while at the same time, expanding our accessories manufacturing capacity in Europe to expand our saturated production line. The third quarter was also marked by another step in strengthening our financial structure. In September, we successfully completed a EUR 500 million 5-year bond issuance, and Vincent in a moment, will get back on this in the presentation. Moving to Slide 5. So before turning to the segment performance, I would like to highlight how our previously announced investments are progressively translating into additional industrial capacity and future value creation. First, in PWR-Transmission, we have openly and we have inaugurated in October our new 525 HVDC high-voltage tower in Charleroi, Belgium. This investment strengthened our capacity in the next generation of 525-kilovolt land cable with an entry into service expected next year in 2027. In PWR-Grid, our new medium voltage greenfield site in Safi, Morocco will reinforce our ability to support electrification across Africa with a progressive ramp-up expected through 2027 and 2028. And finally, in Lens, France, our strategic rod facility dedicated to recycle copper will provide an additional 80,000 tons of processing capacity per year with a progressive ramp-up expected through 2027. This investment provides a competitive advantage and enhance our ability to offer a low-carbon product to customers increasingly focused on sustainability. So together, these projects illustrate our disciplined approach to scale value creation through industrial and operational excellence. Moving to Slide 6. Alongside organic investments, M&A remains a key pillar of our strategy. Our focus is not simply on adding capacity in key geographies, but on actively reallocating and mutualizing that capacity towards the most attractive strategic verticals. In North America, both Electro Cables and Republic Wire are accelerating output with a clear focus on attractive markets, including grid and data center verticals. Synergies are progressing in line with our road map and demonstrating the value of combining acquired assets with Nexans commercial reach on its real standards. In Europe and Latin America, both Cables RCT and Centelsa, respectively, are allocating capacity to data center and critical building, while Reka Cables is supporting data center growth in both in Finland and Norway. Our recent acquisitions have significantly strengthened our exposure to strategic verticals. Given their attractive growth profile and high value-added positioning, these markets will be important drivers of both growth and margin expansion over the coming years. Looking ahead, we'll continue to pursue M&A opportunities selectively within a disciplined strategic and financial framework. Let me now break down our performance between electrification and other activities. The group delivered strong growth in the third quarter of a plus 21.4%, of which plus 9% organically, but also plus 9.6% linked to scope with the integration of both Republic Wire in the U.S. and Electro Cables in Canada. The exceptional organic growth performance was driven mainly by both PWR-Grid and PWR-Connect, while PWR-Transmission continued to the expected normalization of its top line. Other activities declined by minus 5.2% organically over 9 months as planned and grew plus 24.7% in Q3 on a favorable comparison basis linked to the phasing of U.S. copper orders ahead of tariff in 2025. So while the group organic growth was exceptionally high in Q3, it's also benefiting from seasonal effects. We, therefore, expect organic growth for the group in Q4 to be slightly lower than in Q3. Let's now move to our segments. So Slide 8, starting with PWR-Transmission. As expected, the segment organic growth was in negative territory due to normalization after 2 consecutive years of high double-digit growth on an exceptionally high comparison basis. This effect is expected to be stronger in Q4 2026 as transactions grew at plus 40% organically in Q4 2025. Let me highlight that despite the normalization of top line growth, we continue to improve our margin. We expect further margin improvement for full year 2026, keeping us on track to deliver our '28 guidance. Standard sales reached EUR 1,155 million in the first 9 months, which is up by plus 3.6% on a reported basis and down minus 1.4% organically with a plus 5.1% positive foreign exchange effect related to the appreciation of the currency, Norwegian krone. In Q3, standard sales were EUR 378 million, which is up by plus 2.9%, including organic growth, at minus 4% against an exceptionally high comparison basis of plus 33% in Q3 2025. Operationally, our priority in PWR-Transmission remains very clear, disciplined execution and continued profitability improvement while securing the right projects. Our adjusted backlog stands at a solid EUR 7.8 billion and provides good visibility through the end of 2028. Looking ahead, we remain confident in the prospect of PWR-Transmission supported by a structurally growing market and a strong pipeline of opportunities. Slide 9. So moving to PWR-Grid. PWR-Grid delivered a high organic growth above our midterm guidelines. Standard sales reached EUR 1,066 million in the first 9 months, which is up by 7.5%, including 8.1% organically. In Q3, standard sales reached EUR 364 million, up by 15.8%, mainly through organic growth at plus 14.8%. Performance was supported by seasonally stronger activity in Europe in Q2 and Q3, the ramp-up of additional production capacity and continued operational efficiencies initiatives. If we look at our different regions, we saw strong demand from framework agreement with utilities and data centers in North America as well as a large-scale solar project in South America and Middle East and Africa. Once again, accessories maintained a strong momentum, fueled by customer demand for advanced offer. This performance is consistent with the structural strength of the market. Grid needs to be modernized, reinforced and expanded while ever industry capacity remains constrained worldwide. Nexans also continued to benefit from its strong position in medium voltage cable on the high-value service accessories. So commenting on this strong performance, this is the right opportunity for me to give you color on our new capacity expansion ambitions in medium-voltage accessories in the U.S. and in Europe. Moving to Slide 10. As you know, part of our '28 guidance will be achieved with the increase of our mix to nearly 40% of advanced offer in PWR-Grid, which includes accessories. So in order to achieve these targets, we are increasing our exposure to the highly profitable and dynamic medium-voltage accessories market with the objective of raising production capacity by around plus 39%, plus 39% between '26 to '28. Over the next few years, we plan to invest approximately EUR 62 million to the accessories capacity, both in U.S. and Europe. In the U.S., we plan to invest in a brownfield expansion at the Republic Wire facility. This will build a more resilient local supply chain, reduce the lead time to our customer by up to 60% and position us to capture growing demand from data center and grid application. Let me highlight that lead times are our customer top priority today, including in this business of accessories. The expansion in the U.S. will be deployed possibly from '27 to '28. And in parallel, we are also investing in Europe from '26 to '28 to expand the current saturated manufacturing capacity in order to scale up our advanced offers. Now moving to Slide 11. Let us finish the business review with PWR-Connect. PWR-Connect delivered an exceptionally high quarter with growth supported by both strong organic momentum and the contribution from recent acquisitions. Standard sales reached EUR 2,125 million over the 9 months, which is up by 21.9%, including an 8.3% organic growth and a plus 14.5% scope effect. In Q3, standard sales were EUR 750 million, up by 36% with a 10.5% organic growth and a 24.4% scope contribution from Republic and Electro Cables. Organic growth was driven by positive dynamics in our key geographies. First, Europe shows signs of recovery in several countries, but still with an effect on the profitable mix. North America benefit notably from data center demand. We'll come back, I'm sure on that in the discussion and South America was supported by solid activities on the higher residential demand. Middle East and Africa remained a strong momentum. The integration of Republic Wire is progressing in line with our road map with synergies starting to materialize on cross-selling underway. Our priority remains to progressively mutualize our industrial footprint, accelerate synergies and allocate capacity towards the most value-accretive opportunities. So with that, I will now hand over to Vincent, who will take you through the key financial development.
Vincent Piquet: Thank you, Julien, and good morning, everyone. On Slide 13, let me start with the standard sales bridge from EUR 4,492 million in the first 9 months of 2025 to EUR 4,947 million in 2026, representing a total growth of 10.1%. Organic growth contributed 3.9%, reflecting 5.3% growth in Electrification, partly offset by a negative 5.2% decline in other activities, mainly linked to metallurgy. Scope added 5.6% with the Republic Wire, Electro Cables and Cables RCT acquisitions, including about EUR 140 million of standard sales for Republic Wire on the period. Foreign exchange contributed for a further 0.6%, mainly reflecting a positive effect from the Norwegian kroner, partly offset by the U.S. and Canadian dollars. Let me talk about the Republic Wire integration. The integration of Republic Wire is progressing in line with our road map. The planned 30% capacity extension is being delivered on schedule and operations now running 7 days a week and 2 new production lines installed as planned. Since July 1, Republic Wire's product portfolio has been integrated into Nexans' data center offering. Procurement synergies are being delivered in line with plan, most notably through internalized sourcing of compounds. In parallel, further synergies are being captured through product design optimization. We're also seeing channel-to-market benefits with Republic Wire's established network of more than 250 sales agents across the U.S. now selling the Nexans' portfolio. Nexans also gave Republic access to its established relationships with its key distributors. Overall progress to date reinforces our confidence in the integration and in Republic's Wire's ability to create long-term value for the group. On Slide 15, turning now to an important financial milestone for the group. In September, we successfully completed a EUR 500 million senior unsecured bond issuance with a 5-year maturity to September 2031 and a fixed annual coupon of 4.25%. The proceeds were used to refinance the bridge term loan put in place for the acquisition of Republic Wire. Strong investor demand confirms the market confidence in Nexans' credit quality. S&P also confirmed Nexans BB+ rating with a stable outlook. This attractive fixed rate funding preserves our financial flexibility and capacity to continue investing in organic growth and targeted M&A with a disciplined leverage framework. And with that, I will hand the call back to Julien.
Julien Hueber: Thank you, Vincent. So let me take you through now our 2026 outlook. So Slide 17, we reiterate our full year 2026 guidance, including an adjusted EBITDA expected between EUR 770 million and EUR 840 million. as well as free cash flow between EUR 235 million to EUR 325 million. As previously communicated, this guidance does not assume execution of the Great Sea Interconnector project in '26, but include the load of MI line at the end of 2026. They also include the contribution of Republic Wire acquired from June 1, 2026, and exclude any contribution from future acquisitions. Overall, execution is our strategy which is on track. So the strategy is on track while we navigate in a highly unpredictable geopolitical environment. As we enter the final quarter of the year, we remain confident in the underlying strength of our businesses and in our ability to deliver our midterm outlook. Our priority remains to translate positive market trends into sustainable profitable growth through consistent execution and financial discipline, while continuing to create the long-term value for our shareholders. So with that, thank you all for your attention, and Vincent and I will now be happy to take your questions.
Operator: [Operator Instructions] The next question comes from Akash Gupta from JPMorgan.
Akash Gupta: I've got 3 questions, if I may. The first one is on this new MI order. I think you still have in your guidance that you might get a bit in end of Q4, but we are now in end of October. So maybe if you can provide an update on what is the likelihood of that happening? And also if there will be any risk to 2027 if there will projects. The second one is on grid business. So you announced this new investment of EUR 62 million today, which looks on top of a plan that was announced at the Capital Markets Day in 2024. So shall we expect some sort of upside on grid numbers compared to your original plan presented at Capital Markets Day for 2028. And last question that I have is on -- more on the mix side. I mean, you're not giving margins for Q3. But when we look at your Connect revenues and Grid revenues, is there anything that we need to be aware of when we look at H2 margins?
Julien Hueber: Thank you, Akash. So I will start by your first question on the MI. So indeed, so late July, we have announced the preferred bidder for the MI projects. So as you know, this is a public tender, and we respect and we have to respect, of course, the administrative process from our customers. We are very confident that this award will be announced, I would say, soon. It will also -- and we are very confident that we will start to manufacture this project by end of 2026. So no change for us. Do we have to expect the new protest. It takes the time that it needs to take, but we are confident that it will occur in the coming period, and it will start production by '26. There will be no change as what we have said late July regarding 2027. For your second question for the grid accessories. So that's -- first of all, I think it's a very good news for Nexans because we do have a great business in accessories, as you know, for medium voltage, we are extremely happy to see the growth. Remember, it was a double-digit growth in the last 3 years at a high margin level. That's why we decided to add capacity. And we were very -- we have seen some very strong sales also recently from our teams of accessories in the U.S. That's why we decided to increase capacity and use the platform of Republic for these activities of accessories. That will be part of the envelope of the overall CapEx that we have announced for the full Capital Market Day numbers until 2028. So -- but we will see that this business will be growing because it's extremely lucrative business. And then regarding your third question, the mix on the -- maybe you want to talk about it?
Vincent Piquet: Sure. Akash. So on the mix side on your question on the H2 margin, so we remain aligned with what we've communicated before. So we are pushing hard to make the grid business above 15%, and that's what we're working towards. And then on Connect, we continue to see -- we've seen strong growth, as you saw in the numbers. The mix of where this growth is happening is still not perfect, I would say. And so we continue to work to drive the mix above 12%. That's where we want to get that business. And so that's why we have -- we're not changing our guideline and the margins in H2 should be on track with what we've announced before.
Operator: The next question comes from Nabil Najeeb from Deutsche Bank.
Nabil Najeeb: Just on Q4 growth for Grid and Connect, how should we think about growth in Q4? In Grid, you've obviously got a very strong acceleration in Q3, and I get that Q4 is seasonally weaker, but you should still be able to capture just some growth from that new capacity ramp-up, correct? And also in Connect, the comps do get tougher, but you have some underlying improvement in several markets. And if you can just get some color around which markets have improved, that would be great as well.
Julien Hueber: Okay. So both Grid and Connect, we, of course, still expect some organic growth in Q4. As we have said in this presentation, Q3 was exceptionally high due to seasonality, due to large projects in data center, but also in solar activity that we had in this period, Q3. But we still do expect some growth in the Q4 coming from capacity coming from our positioning now in the U.S. that will trigger also this organic growth. For Connect, in terms of dynamics, well, we start really to take the benefit of North America, Republic Wire and Electro in this part of the world, that's driving both growth and improved margin. You know that we have said from day 1 that Republic and Electro will be accretive to our margin level. So we will see that also happening in Q4.
Nabil Najeeb: Got it. Secondly, on Grid, I get that you're expanding capacity and you said you're increasing European capacity by about 40% by '28. Just trying to figure out the cadence there. How much like incremental capacity will you see in H2 and going into '27, how should we think about the trajectory there?
Julien Hueber: So it's -- the organic growth we are doing in grid is a mix of different things. The first one is indeed coming from additional capacity -- but not only this, the second element. If you remember, I've explained during the year a few times that we are mutualizing our capacity worldwide. So we are now using any capacity we do have in some regions to fulfill a market in the regional level. So it's a combination of mutualization of footprint plus additional capacity. That's why it's difficult to explain specifically what comes from only capacity increase. But that will continue to happen in the next few years because, as you say and as you have noticed, we will increase and we're underway to increase capacity up to 40% from '25 to '28.
Operator: The next question comes from Lucas Ferhani from Jefferies.
Lucas Ferhani: It was just on North America and specifically on Republic Wire. Just I think when you did the deal, you talked about 30% increase in capacity that was already kind of funded and was going to happen. Is that already materializing there? And does that 30% include kind of new lines and also moving to more shifts.
Julien Hueber: So you're right. So this is what we said at the moment of the acquisition of Republic. This is currently happening. So the new line has been installed. And now we are ramping up this additional capacity. So it takes a few months, but we are on a good way. In fact, we are even in advance compared to what we thought in the initial plan. So the ramping up is happening currently. You see some of it in the numbers that we published today. And at the same time, we also increased the number of production days. This business used to run on a 5 days basis. We are now moving progressively to 6 days and 7 days manufacturing. So we really want to maximize the output of this new acquisition.
Lucas Ferhani: Perfect. And then when we think about the margin at Republic Wire, obviously, you have some best-in-class like Canada, for example, or the Nordic on a certain level and then the group level, can you tell us roughly where is it closer to kind of group? Or is it closer to this kind of best-in-class? And how much kind of improvement could you see on the margin at Republic Wire?
Julien Hueber: So Republic Wire is accretive to our margin from day 1. It's not yet at the level of Canada, but it's already a very good level compared to the average of Nexans. So it's really accretive. We don't precise -- and you can imagine why the margin per country, but this is a positive element. And with the additional capacity that we are operating currently, that will also drive the margin up. So very strong positive element on the value creation in Republic in the only -- let's say, it's only 3 to 4 months that we did the execution. So we are extremely positive about this business on this market of the U.S. Overall, Connect, it's -- as you know, it's a very contrasted segment. Nordics are indeed best-in-class in terms of margins, such as Canada. You know that I've mentioned several times that this year, the Nordics are I would say, volume-wise, not at the level that we expect. The local economy is not that strong. What we see in Q3 is that 2 countries out of the 3 start to really pick up. It's basically Norway and Finland, mainly due -- partly due to data center activities. There's plenty of activity of data center in Finland currently, and we are well positioned, thanks to the acquisition we did in 2023. Sweden remains still not there, and that's for us our biggest business in terms of size. So it's still flattish, has not yet restarted. So that's why I'm saying that's a contrasted market segment.
Operator: The next question comes from Scott Humphreys from Berenberg.
Scott Humphreys: I've got a couple, if I may, and I'll ask them one at a time. Just on data centers in North America. So you've talked about how you saw remarkable performance in Connect in North America, and that's supported by hyperscale data centers. Could you help us understand to what extent this is associated with the legacy Nexans business in Canada versus the Republic Wire business in the U.S. It feels like this would be more the former given this is only the first full quarter since you completed the acquisition, but I'd be interested to know if you're seeing some pretty immediate benefits in delivering for data center projects in the U.S. That's the first one.
Julien Hueber: Okay. So first, just a reminder, so data center for Nexans today is only 5% of our total sales. So 95% of our sales are not data center oriented. So we are very diverse, solar, critical building and so on. And that's also true still today in North America. So we are growing data center. This is a strong growth but it's still representing 5% of our total sales. Specifically now in North America, so the fundamental of Republic, you remember, they were not exposed to data centers. So we are on the way to push them to open their portfolio of products towards data center, and that's just starting. So they are just at the early beginning. So that means that the rest of the business, which are construction and commercial is also dynamic. There is the level of service of Republic, the reputation, the strength of the agent network, as we said, 250 agents across, let's say, the attractive states in the U.S. drives also the good results of Republic, which are not only related to data centers. So data center is coming for Republic. We are emerging the portfolio. We are connecting them with our traditional Platinum customers, but that's only the beginning. But we are extremely enthusiastic about what it will generate for years to come, specifically from '27.
Scott Humphreys: Great. And then just in terms of customer behavior in Grid and Connect, you mentioned at H1 that you saw a strong backlog for Grid and Connect in the second half. And we've obviously seen that come through into the sales numbers here. Some of your peers have talked about some data center customers starting to sign long-term supply agreements in the low-voltage space as well. I mean, could you describe what you're seeing in terms of changing customer behavior in Grid and Connect outside of the sort of traditional utilities business? And does there begin to be a trade-off between visibility and margins here? Or are you still very much focused on profitability over just growth at all costs?
Julien Hueber: Okay. So our strategy remains the same. It's a selectivity of customers and products. It's about profitable growth only. So we are not aiming to grow volume for a low margin. We are extremely disciplined on price. That's a big priority for us. You are right. We see on the discussion we're having with customers, both Grid and Connect is about long term, it's about partnership. It's about allocating capacity to specific segments, specific verticals. So we have this type of discussion with some of our key customers, key partners, supporting them in their growth. So that's coming. It's getting very, let's say, concrete in the U.S., thanks to the undercapacity, structural undercapacity for some segment or some portfolio of products. So that's really mature. But we are also engaging our customers in the other part of the world to have a similar approach. So I believe that when we'll be looking from, let's say, in 1 year, 2 years from now, we will allocate positively more capacity to long-term customers even in the Connect business, which used to be more a short-cycle market. This market is also moving. So that's the direction, and that will not be at the cost of the margin. Margin will remain for us a critical driver of performance.
Operator: The next question comes from Sean McLoughlin from HSBC.
Sean McLoughlin: My first question is just around the unchanged EBITDA range, which obviously implies a pretty broad range of outcomes for the second half. Just thinking about your confidence around the midpoint, the upper half of that range. You talked about a measured approach in the release around Q4. Just wondering how much, let's say, this MI line is weighing. Is there anything else in the mix that you want to flag, particularly as we look into Q4 and think about margins later in the year?
Julien Hueber: So I will start and maybe Vincent will continue. So -- Well, first of all, as you know, recently, just 3 months ago, we have increased our guidance for the year 2026. That was late of July. So it was not that long ago. And we knew at that time already how Q3 was going to look like and what the numbers you see today. Historically, Q3 is always a seasonal high level of demand because specifically in some markets like Grid, this is a time where it's easier to bury cable under the ground. So that drives higher activities in the Grid aspect specifically. We knew also that in Q3, we were going to deliver the large project, both solar but as well hyperscale. If you remember, I mentioned in late Q1 that we won a hyperscale large project in the U.S. It has been delivered, of course, on time in Q3. But also that's -- I'm also careful on the geopolitical uncertainties that we are facing. The world is uncertain. I mean the oil price is still moving up and so. So that's -- I am taking all these elements into account. That's why we consider that this guidance is the right guidance to have. But we are working very hard to be better than the midpoint. That's our target. This is our engagement, but this is where we are today. Maybe, Vincent, you want to add a few points?
Vincent Piquet: No, no, not much to add. I mean I think you've summarized it. Uncertain times, a lot of volatility. We talked about the impact of tariffs in our initial guidance at the beginning of the year. And as we've seen this summer, it's been volatile. So we have to take into account the current geopolitical volatility and the impact it could have on our business, which is why we decided not to change the guidance. But as Julien said, we're confident, the team is working. The teams are working and the goal for us is to get to better than midpoint. That's the ambition. That's what we're driving to.
Julien Hueber: And specifically on your question on getting the MI line, so that does not trigger any change. That's -- we are still confident to have this project to start by end of the year. We've said it will be by the end of the year. We still consider that we are on the plan that we thought initially.
Sean McLoughlin: That's helpful. If I can just maybe follow on the point about the MI line. So should we also assume that this project covers you for MI capacity for 2027 as well?
Vincent Piquet: So the project will start at the end of the year and we we'll fill the MI capacity completely next year and until 2028.
Julien Hueber: Mid-year '28.
Operator: The next question comes from Jean-Francois Granjon from ODDO BHF.
Jean-Francois Granjon: Two questions from my side. Could you just come back on the Accessories business and you mentioned strong growth. Could you more quantify that? And what is the growth for the Accessories business currently for the 9 months? And do you expect also double-digit growth for the accessories for the coming years? And could you give us the amount of the sales made with the Accessories business? And the second question concerns more 2028. So I don't ask you for sure current guidance for next year, but could you give us some trend expected for the 3 main business for 2027?
Julien Hueber: Okay, Jean-Francois. So accessories, what I can tell you is that it's 20% of our grid business that you should be able to reconcile the numbers. 20% plus because this is growing faster than the cable part. It's a double-digit growth year-on-year over the last 3 years on the sales, we do see the trend in a very granular manner. And the reason why we have decided to really invest in this business is because we are -- we see more opportunities. It's a technical product. You know that our customer, when they invest massively into renew a grid, electrical grid, the part of accessories is a small part in the cost on its -- but at the same time, even though it's a small part of the total cost of the grid, it is the most, let's say, fragile part. This is the part which usually where you start to have breakdowns. So they don't want to purchase low product, low-quality products. So they go for the high premium products, and this is exactly the segment where Nexans is high technology, high reputation, high quality. And for me, it's important that this additional capacity will give me the opportunity to also offer the high service in terms of lead time reduction because today, the market overall is saturated as well. You have long lead times. So important to be present, important to really position ourselves in the best-in-class in the accessories world. So we'll continue. And the fact that we take the benefit of Republic Wire, Republic Wire, we said it will be a platform for growth in the U.S., and that's the first example. We'll come back with other projects we have in our ambitions. But the first example of platform is using this platform, their network of agents to grow this accessories business in U.S. There's plenty of opportunities there.
Vincent Piquet: On the -- maybe I'll take the second question. So on the 2027 trends for growth, we're not going to communicate, obviously, detailed numbers now. But generally, the Grid and Connect businesses will continue to follow on the same trends. The big question will be restart -- a more frank restart of the key markets for us globally. And then on transmission, as we've communicated before, we should see -- we're seeing a normalizing of the business, the growth of the business after 2 years of extremely high growth. And so we should be single-digit positive next year for transmission.
Julien Hueber: Just Grid on Connect. Q3 is an exceptional level of organic growth. Remember that what we have as a strategy is to be between the brand, the level of plus 3% to plus 5%. That's our commitment overall. When we do have opportunities to grow faster, we take these opportunities, but not at the cost of margin. So it remains our strategy in the bandwidth of organic growth that we have set and we have explained during the last Capital Market Day.
Jean-Francois Granjon: Okay. Perfect. Just perhaps a last question from my side. Recently, Prysmian announced a new acquisition in the U.S. with Atkore, and they mentioned the fact that they are more positioned the more global solutions, not only cable. What do you think? And do you have the same strategy to be a more global supplier, not only on the cable, you mentioned for sure, the growth expected for the accessories, but do you expect a more also solutions strategy, as mentioned by Prysmian?
Julien Hueber: So our strategy for acquisition, they got 3 levels. The first one is acquisition into geographies where we do see, let's say, dynamic in terms of vertical, in terms of market. And typically, North America is one of this focus for acquisition in this first play of our acquisition. Second play is really to reinforce our position into a country where we are already present to have industrial synergies, procurement synergies, but also synergies in the market. And the third one is what we call adjacent to cable. So this is accessories, but we are also open to other type of products. So this -- the action you just mentioned could reflect the third play of our strategy. Today, we are very much -- we like the accessories business because we do know the margin. We do know the level of the percentage. We will not go for adjacent to cable where the low margin typically may take part because we have seen that sometimes this margin could be lower. So we will remain selective in the adjacent to cable part, but it's part of the plan #3.
Operator: The next question comes from Uma Samlin from Bank of America.
Uma Samlin: My first question is on the transmission side. So you announced a new interconnection project today for the Mallorca and Menorca project. Would you be able to perhaps comment what is the size of the project? And also what are the tendering pipelines that you have in the coming months for transmission? Yes, that's my first one.
Julien Hueber: Okay. So I'll start. So indeed, we are pleased to announce today the preferred bidder for this project. It's a customer we know very well. We had in the past some good projects with this customer. It's a small to medium-sized project for us in terms of size. So we don't display the numbers, but it's -- we qualify it as small to medium. It's an HVAC project, and it will be -- we will be able to really work on it engineering first, but also manufacturing second phase by midyear 2027. So that's why -- and this is how we will proceed. Regarding the pipeline of project, as you know, 2026 doesn't provide large projects, where there is no billion euro large project in 2026. That will come in 2027 -- late second part of '27, and there will plenty of large projects also to occur in 2028. So the phasing of large billion euro project will be more second part '27, '28. But in the meantime, we do participate to tenders to this small, medium-sized project, and this one we announced today is one of them. There will be others, but this one is one of them.
Uma Samlin: That's super clear. Just a follow-up on that. So if you -- if the tender activities will pick up like more towards the end of next year, and I think you said in the slides that your backlog is fully booked until end of 2028. Is there any risk of any air pocket in terms of utilization between what the project you can take by the end of next year and what you can do in the plant?
Julien Hueber: No, we do not see any concern or problem. We do have today, when we say we are loaded into 2028, this is in general because the project, for example, TenneT that we have started and we have announced LanWin2, we load some of our machines in '29 as well. It's not just -- not all projects will stop in '28. There is already projects which are also using our capacity in '29. But we do flag to the market that we have some part of our capacity available from '29 onwards. So we are confident that the amount of pipeline of projects coming will be able to fulfill our line from '29 onwards.
Uma Samlin: Yes. That's super helpful. My second question is on the Grid and Connect side. You had obviously a very, very strong Q3. It sounds like you see that as more of an exceptional quarter due to the seasonality in the larger projects. What would you say was a more sort of normalized or underlying growth for these 2 segments in Q3? I'm just trying to understand how should we think about the medium terms of growth expectation you have, especially into 2027, where you say like both Grid and Connect are following the same trend as this year?
Julien Hueber: So first of all, our commitment remains the one in Capital Market Day. We want to grow in a selective manner, 3% to 5%. This is what we said, and this is the direction we have. Some quarter, specifically this one in Q3, there are some additional projects that we consider as attractive accretive to margin, important for us to also position the brand of Nexans, work with our key customers also by anticipation and typically here, I have in mind a large project data center in the U.S., what is important for us to position ourselves in order to prepare also the business for the wave of data center to come in Europe. But also there is some very large and very interesting projects in solar. We do see the activities in battery storage growing very fast in some part of the world, specifically Australia. So looking forward, we are realigning the company to the verticals we consider the most attractive to us. These verticals have, let's say, a dynamic organic growth to come. That's why you have seen these numbers in Q3. But overall, I would say, long term, '27, '28, we are still committing on 3% to 5% organic growth year-on-year.
Uma Samlin: Yes. That's super helpful. My last one is just a follow-up on your comments earlier that the Transmission business should -- the growth should be positive into next year. Would you be able to help us to give us a bit more of a building block of that comment? How much is from the MI deal? How much is from the increase in utilization of the new vessels? And how should we think about that growth that you mentioned?
Vincent Piquet: Yes, I'll take that one. So it's a mix of everything, Uma. That business drives its revenues from its manufacturing, from its installation campaigns with the boats, from the timing of the execution of the backlog depending on each project and how they fall into the calendar. So it's a mix of everything, unfortunately, and I can't really give you the specific details, but all 3 factors building on the back of the 2 years of significant capacity expansion overall for the business lead us to guide to something that will be single-digit positive next year.
Operator: The next question comes from Aurelien Joubert from Goldman Sachs.
Daniela Costa: It's actually Daniela here. Just wanted to ask 2 things. But the first one, I think originally, you had mentioned in prior calls earlier in the year then some of your peers as well that you expected another size of large tenders in Transmission to maybe come in '27 and '28. But I was wondering if on the back of the recent changes in Germany, where they seem to be prioritizing now overhead lines instead of underground cables for the next set of awards, if anything changes in your view in terms of that likelihood that we will get another big tendering season in '27, '28? And what -- how do you see the size of the market in high voltage going forward? That's my first question. Then I'll ask a follow-up.
Julien Hueber: Okay. So first of all, specifically for the case of Germany, we do have a good discussion with customers in Germany for land high voltage and underground high voltage. So we do not see a massive change from land high voltage to grounded high voltage to our share. We do see that in the land high voltage, they are still in intensive discussion about volumes for this to come. So that's not a concern for us. We do also see that in this activity of large project, we -- in Transmission, there are also, let's say, new market coming up. And typically, what we do see in the U.S. exactly the opposite. They used to -- it used to be a market very much overhead line oriented that they start now to possibly move to underground high-voltage project as well. So no concern about that.
Daniela Costa: So we expect a reacceleration of large tenders in high voltage next year?
Julien Hueber: Yes. Yes, yes. As I said, on the -- and there are public information. You know that there will be some large projects in Germany is one of them, but also in France, there will be also -- there is some MI large project to also start in Italy. So there is a project between Morocco to France. So there's plenty of large projects to come. As I said, I believe it will be more in second half of '27 and 2028. But we do see the pipeline of large projects to come.
Daniela Costa: Got it. And then just a follow-up in terms of there's so much news flow constantly on the GSI. And I think there's been news flow about the seabed survey potentially starting the end of this month. I think yesterday, there were talks about a EUR 25 million payment potentially. Wondering if this -- how this relates to you, would you start to receive cash from them again once the seabed survey restarts? Or what implications would that have for you in terms if that effectively happens on profit recognition and utilization?
Julien Hueber: So regarding GSI, I want to be very careful about that because I don't want to repeat the problem that we faced, if you remember, a year ago or by 2025. So I will be very careful. Today, there are ongoing discussion on the political side, diplomatic side. And I will let these politics to work on it. And when it will be time for Nexans to position and to communicate, we will communicate. But at this moment, discussion is at political and diplomatic level.
Operator: The next question comes from Chris Leonard from UBS.
Christopher Leonard: Could I maybe look at the grid outlook and the capacity growth? Obviously, you've spoken on today. And as you said, industrial capacity worldwide is very constrained. So you're looking to add capacity organically here. Can you speak through how material the Morocco Safi expansion is looking into next year? And maybe even is it a 2-year ramp? Does it also impact 2028? And then could you also speak to, obviously, the EUR 62 million for accessories, how much we should sort of be seeing in terms of what that can mean for volume growth into the next 2 years? That would be super helpful.
Julien Hueber: Okay. So sorry, the line was not that easy to understand. But basically, if I understand correctly, your question is about the consequences of the additional CapEx for both grid and accessories. So what I could say, Chris, on this is -- what I said is '25, '28 is a 40% plus additional capacity, 39% for accessories. That will trigger year after year. You've seen the impact -- the positive impact it has on Q3. We -- the additional volume we could generate both in Grid and Accessories is a combination of additional capacity, and we have some of our capacity to come in '27. That's why in one of the first slides of the presentation, I highlighted Safi, Morocco plant to start to produce from midyear '27. Progressively, there will be 4 CV lines. So there will be 2 to start in '27, then the rest will come late in '27. So that will be a progressive ramp-up. This is a greenfield. So it will ramp up, but it will have a full impact on '28. And for the specifically accessories, so we have started in '26 today to increase our capacity in the European plants, specifically in Belgium. And that's why we are able to continue to have a double-digit growth in '26. But the main volume increase for accessories will be some part in '27, the big part will be in '28. So that's the best I can tell you in terms of how we will split and how we will benefit from this additional capacity.
Christopher Leonard: And sorry if the line wasn't clear. Hopefully, it's a bit clearer now. But also a follow-up on the Connect business and what you're speaking to earlier in terms of the organic growth and how data centers have contributed here. Maybe there was a one-off big hyperscale contracts. But could you also just drill into that U.S. geography and whether or not Republic Wire has yet seen any sort of step-up in their exposure into data centers that would land in the Connect business? And if not, do you expect that then to come in Q4? Could you just speak to how they're doing in that U.S. geography transitioning more towards data center customers for Republic, which I think were underexposed previously?
Julien Hueber: So first of all, we have a very strong integration team for Republic. We have weekly reviews. We have 10 work streams. We have a real strong team, a strong dynamic also from the Republic management team, really embarked in this. And we have also a strong sales agent network that are eager to sell not only Republic, but other type of products. So that drives extremely the synergies that -- and we are very satisfied with the first 4 months of its activities. Specifically about data center. So that was one of our, let's say, ambition is to transform progressively this business from a more, I would say, residential industrial and commercial focus to progressively to more data center. So this is what is happening today. So with this business, with the sales network, we are now in the quoting phase of allocating some of capacity. And we have additional capacity of Republic to the data center. So we did have already some gains in Q3, but the majority will really come in Q4 and in 2027 because it needs to adapt some manufacturing capabilities towards data centers, towards the type of product portfolio that are needed and expected in data centers. So that will have some impact, positive impact in Q4, but I would say the real synergies related to data center from Republic will happen in '27.
Operator: The next question comes from Eric Lemarie from CIC CIB.
Eric Lemarié: I've got 3, if I may. The first one, could you remind us your exposure to France today? And how do you see your business in that country? What kind of risk do you see for Nexans in France? Second question, you mentioned some signs of recovery in Europe for Connect. You already mentioned Finland and Norway, but I don't know, is there any region worth mentioning beyond these 2 countries? And last question on data center. I was wondering whether super conductivity cables could be a good solution for data center, especially in the future with very high-density data center. Could it be a good opportunity for you?
Julien Hueber: Okay. So first question regarding France exposure to Nexans. So it's below 10% more or less of our total sales. Very confident about the business. You know that for the Grid part, it's -- we have a long-term 7 years frame agreement with Enedis for the grid part. So with a strong, let's say, increase committed numbers, committed increase from our customers. We are currently finishing Bourg-en-Bresse additional capacity extension for the grid part. So no concern at all. Regarding the Connect part, there is -- we are -- there are plenty of projects in the health care in industrial application, but as well in data center. There's a strong pipeline of hyperscale, some of them are public, the [ compusay ] and so. So we do not see any impact of France volume today. The business is growing. It's the same for us. You see -- I'm sure you will see some of our peers in this market. So no concern about that. The recovery of Connect in Europe, so I mentioned the Nordic, which is for me, half-half. Indeed, Finland, Norway improving, Sweden is still not. The rest of the European countries is relatively the same as what I said late July. So France, the 7 countries in Europe, France, Spain, Italy has recovered. So we do see that happening. And we do not see a major change in this market configuration. So we are still -- we do not see specific risk on that. And then your third question regarding superconductivity for data center. This is a very good question. And this is a very good focus for us. The more we talk with customers exposed to data centers, the more we see attractions. And as you know, Nexans has 20 years of experience in superconductivities initially in other segments like grid applications in the U.S., both in U.S. and in Europe. So we have allocated R&D team to this project because we really do see opportunities to -- for this new technology. Customer in data center are customers which are ready to pay for this technology. And this is what we're doing today. So it will not have an impact in Q4. It's a medium, long-term technology, but extremely positive with the key players of the data center world.
Operator: The next question comes from Alessandro Cecchini from Equita.
Alessandro Cecchini: The first one actually is still on Connect. So you had a very strong growth in the third quarter, plus 10%. Last year, in the fourth quarter, you had a very strong acceleration, plus 10%, roughly speaking. So just if you can elaborate a little bit more, which are your expectation for organic growth for Connect in the fourth quarter, considering this tougher comparison, but also the messages that you are providing on improving trends in Europe. This is my first question. My second question is about M&A contribution. So you had close to EUR 140 million of sales in the third quarter from M&A in the Connect. So just wondering if we need to assume some seasonality or some elements just to plot to estimate M&A contribution for the last quarter of the year.
Julien Hueber: Okay. So your first question regarding the organic growth of Connect. I think a different way to answer to this question. First one is -- the reason that we have reduced our exposure to more traditional construction residential activities to reallocate our sales force, our marketing offers or advanced service to verticals we believe are strategic for us typically solar activities, typically battery storage, critical building for fire safety, but as well data center is one of the reasons why we have this type of growth in Connect. But in these verticals, it's also mainly driven by large projects. So that's why we have seen this 10% organic growth in Q3. We do have other projects in Q4, but we don't see that the same level of amplitude at this moment for Connect. So the -- normally, there is not such a seasonality effect in Connect. This is much more in the Grid part. But the more we reallocate our business, the more we will also drive to large projects in the Connect in these 4 strategic segments. Keep in mind that Connect is a contrasting segment. So the dynamic in the markets from around mediterranean to South America to North America or to Europe countries are very different. So it's for us, how do we allocate capacity, how do we, let's say, develop let's say, a push of our marketing offers to the right segment that will drive the growth. But some markets remain, let's say, still in our 3% to 5% bandwidth of Capital Market Day expectation. M&A contribution for Republic, you've seen the numbers. Vincent has said the numbers, just to give you a little bit the insight about this, how that was, let's say, took part in the Q3 numbers. We do not see such a seasonality element in the U.S. in Connect business, which is more regular flow business. So today, we do not see that much of, let's say, seasonality elements.
Alessandro Cecchini: Okay. My final question is about -- sorry to ask you again on GSI, but just to have an overall picture. So you are with the new coming project in Mediterranean to fully load MI line until 2028. So just to understand, if things for the GSI are recovering, I don't know when, basically, GSI could contribute -- restart to contribute starting from 2028 to 2029. So just to understand, given your allocation capacity, allocation to MI technology.
Julien Hueber: Okay. So the first message regarding MI technology is that we have derisked the GSI project because we are underway, and we expect the customer administrative process to start production of this new MI project by end of the year that will load our plant until mid of 2028. In the case -- and then that gives us time for 2 things. One is to keep working with other projects on MI that are under preparations in the Mediterranean Sea to, let's say, load the plant after mid-2028 because there are several projects under discussion. Or give us the time for the GSI if the GSI will restart to first do the survey bed because it's several months of survey plus engineering plus financing on the project in order to restart the project by '28. So I think what matters the most is that we have derisked this project of MI. With GSI with that, that will not change the picture of our financial projection by 2028. And we have now 2 options on the MI, things are on a diplomatic discussion, but we're also in parallel to this, working on other alternatives in case.
Operator: [Operator Instructions] There are no more questions at this time. So I hand the conference back to Julien Hueber, CEO, for any closing comments.
Julien Hueber: Okay. So very good. So thank you all for your questions and for attending this webcast today. As we enter the final quarter of the year, our priority remains very clear, execution of our backlog with discipline, ramping up our new industrial capacity and capturing the full potential of our recent acquisitions. We remain focused on delivering our '26 objective and preparing Nexans for its next phase of development. Thank you all for joining us today. Thank you.
Vincent Piquet: Thank you.