With record high-voltage order backlog, NKT ups its 2023 financial outlook

NKT has set a record for its high-voltage order backlog in the second quarter of 2023, standing at €7.6 billion, an increase from €7 billion that was reported at the end of Q1 2023.

Around 8% of the high-voltage order backlog is expected to be executed in the second half of 2023 and the remaining around 92% in 2024 and beyond.

Speaking about projects that contributed to the success, NKT was awarded the turnkey 400 kV HVDC power cable project Biscay Gulf Interconnector to connect France and Spain in May, which has a value of above €600 million.

A month later, NKT confirmed the turnkey order for a 320 kV HVDC export power cable system for the East Anglia Three offshore wind farm under a contract valued at above €250 million, as well as finalized the contract for offshore export power cables for Baltic Power, the first major offshore wind farm in Poland. The order has a value of more than €120 million and comprises the design and production of 230 kV AC high-voltage power cables.

In addition, NKT was awarded three projects as part of TenneT’s multi-year framework agreement which are not included in the order backlog before the call-off dates. On the back of this, the company has launched a circa €1 billion investment program to support future growth.

In Q2 2023, NKT’s revenues grew by €87 million compared to Q2 2022, corresponding to 26% organic growth – an improvement said to be driven by increased revenues in all three business lines. Expressed in market prices, revenues in Q2 2023 were €631 million, against €578 million in Q2 2022. Revenues in the first half of 2023 amounted to €890 million, an increase from €700 million in the first half of 2022.

Correspondingly, operational EBITDA increased to a record-high €58 million in Q2 2023, up by €16.7 million from Q2 2022. Operational EBITDA for the first half of 2023 was €115 million, compared to €80 million in the first half of 2022.

According to NKT, the improved financial performance was broad-based. Utilization of the expanded capacity in Solutions increased earnings as the execution of the record-high order backlog continued. In Applications, the strong performance from Q1 2023 continued, driven by the performance in the power distribution segment. The improvement in Service & Accessories was achieved despite limited offshore repair work, reflecting solid performance in the remaining business.

“In Q2 2023, we built upon the strong first quarter of the year by continuing the substantial growth in revenues and earnings across all business lines. During the quarter, we grew our high-voltage order backlog to a new record level which demonstrated our leading market position,” said NKT’s CEO Claes Westerlind.

“We are proud to remain a key enabler of a safe and sustainable renewable transition and look forward to continue growing NKT in line with our strategic ambitions.”

Based on the financial performance so far this year, NKT updated its financial outlook for 2023 on 15 August. Revenues are expected to be approximately €1.8-1.9 billion and operational EBITDA is expected to be approximately €215-245 million, previously set at €200-230 million.

NKT recently announced its plans to boost its high-voltage power cable business with a €1 billion investment in a new factory in Sweden and a power cable vessel.

The company explained that the investment is driven by growing demand for high-voltage power cables, strong order intake, and the record order backlog at the end of 1Q 2023.