Akash Gupta

Inquired about the underlying market conditions in the Usages and Distribution segments beyond Nexans' internal destocking, and asked about the demand-supply situation for high-voltage cables and potential capacity expansions.

Answer

Distribution demand remains very strong, supported by new CapEx announcements. The Usages segment sees weakness in European residential construction but strength in North American industrial markets. The high-voltage demand-supply situation is very strong, especially in Europe, and is expected to remain so until 2030. Details on capacity expansion will be deferred until the Capital Markets Day.

Akash Gupta of JPMorgan Chase & Co. inquired about the phasing and content of the company's zero-percent sales margin contracts.

Answer

Chief Financial Officer Laurent Martinez responded that the company is executing as per its target, moving from €2.3 billion of zero-percent sales margin contracts in the previous year to €1.7 billion in the current fiscal year. He noted that these sales are slightly front-end loaded in H1 versus H2 but confirmed that all commercial issues were settled back in May.

Akash Gupta from JPMorgan Chase & Co. asked about the expected phasing of the fiscal '24 margin expansion between H1 and H2 and sought clarity on the assumptions for contract liabilities within the multi-year working capital outflow guidance.

Answer

Chairman and CEO Henri Poupart-Lafarge indicated that while there is some seasonality in deliveries, the EBIT margin improvement should be 'relatively linear' throughout the year. He also confirmed the €900 million working capital normalization plan is consistent with prior guidance but noted it was complex to provide a precise forecast for contract liabilities over time.

Akash Gupta from JPMorgan Chase & Co. requested an update on the progress of settlement negotiations with customers on legacy Bombardier projects and the company's confidence in avoiding additional provisions.

Answer

CFO Laurent Martinez reported that meaningful progress on settlements continued in Q3, following the agreement on half of them in H1. He stated that negotiations are proceeding as planned and he does not see a need to update provisions based on current information.

Akash Gupta requested more detail on the building blocks for the positive free cash flow guidance in the second half and asked if a more specific range could be provided.

Answer

CFO Laurent Martinez explained that the positive free cash flow in H2 will be driven by an acceleration of deliveries, leading to progress payments, and a continued healthy order intake. CEO Henri Poupart-Lafarge reiterated the guidance for positive free cash flow but declined to provide a specific range due to the inherent volatility in their business.