Nexans Unsp/Adr

Ladies and gentlemen, good morning and welcome to Nexon's first quarter 2024 financial information conference call. As a reminder, this call is being recorded. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star 0 and you will be connected to an operator. I would now like to turn the call over to your host for today's conference call, Mr. Christopher Guiron, Nexon's CEO. Please go ahead, sir.

Thank you, and good morning, ladies and gentlemen. Thank you for participating to Nexon's conference call. For this first quarter, here is Chris Guiron, CEO of Nexon, with me, Jean-Christophe Julliard, Deputy CEO and CFO, Nino Cusimano, General Counsel of the Group, and Elodie Ramouillot, VP Investor Relations. Let me turn over to Elodie for the conference call rules.

Thank you, Chris. I would like to remind participants that statements made during the conference call, which are not historical facts, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Readers and listeners are strongly encouraged to refer to the disclaimers, which are an integral part of our URD, along with the audio replay of today's call that will be posted on our website, nexons.com. I now turn you over to Chris, who will go over the first quarter highlights.

Thank you, Elodie. So if we jump straight to page three, we can mention a pretty good start for the year for group sales and growth of 2.8% year-over-year. a pretty much increase coming from the electrification businesses that GC will comment. It's mainly from our generation transmission business linked to our capacity extension. In the course of quarter one, we as well issue a new bond of €350 million. You know that we have tabled our capacity in our flagship in Norway, Alden Plant, for the high-voltage business. We have been able to turn some firm orders into our backlog to reach 6.7 billion euros as of today, but still a very, very strong pipeline ahead. You know, we are fully loaded up to 2027 and get ready for potential new awards this year. Um, no, nothing new. We already announced the acquisition of, uh, in Italy was 800 million Euro, uh, revenue, uh, maybe, uh, a quick jump, uh, on the next page on page four. Um, it's, let me remind it's a 700, 700 people, um, company. Uh, we took over this company at a multiple of 5.6 times, press energy on 4.6 times, post energy, uh, financed by a mix of cash and debt. Maybe, as Nino, you're following this case every day. Can you give an update to the audience regarding where we stand, regarding the closing?

Sure. Thank you very much, Chris and Nino Cusimano. So, I think we can start with some good news on the process. As you know, It's subject to what we define customary closing conditions. The main two, the most significant two, are the antitrust and the golden power. We have received the golden power clearance, so we're halfway there. We are in line to get the full clearance from antitrust, and that's expected, as we've anticipated, towards the end of May, beginning of June. So everything is in order for an orderly closing, and we're all looking forward to that.

Thank you, Nino. In the meantime, all our integration team of 15 people is ready to move that into action. Thank you. Page five. Nothing new from what we have announced, except that, of course, we are now running production of the new lines in Norway. that has started in the last weeks. As we already mentioned, part of our strategic capex, we have launched the production of a third vessel, and the name of this vessel will be ELECTRA, following AURORA. On page 6, before I turn over to GC, Very proud about this achievement on the engagement part. We have done our Nexons Living Voice survey to all our employees in the group. We reached a record participation ratio of 90%, which is just fantastic. And as you can see, the employee engagement rate keeps improving year over year. We are making significant effort at all levels of the company. And our objective, my objective, is to reach 80% engagement rate by 2025. A last word regarding a new board of directors member. It will be Tamara De Grutter. Tamara has a very, very strong experience in the marine industry because She's president of the portfolio business of Varsila. So Varsila is a global leader in energy storage on marine solutions. So she's joining the board of directors of Nexens in the coming months. Now, maybe GC comments regarding the sales.

Yes, thank you, Chris. Page 7. So as Chris highlighted at the beginning of the presentation, We had a good start of the year organic growth for the group from Exxon's Q1 24 versus Q1 23 plus 2.8%. If you exclude, as we always communicate on that, the other activities, which mainly includes the metallurgy business that you know we have the objective of reducing the external sales of the business. So if you exclude that decrease of the metallurgy business, Organic growth of the company for the first quarter of 24 is 4.7%. Also interesting to note is that if you compare on the quarter-to-quarter, this is 24-23 versus Q1-24, organic growth is plus 5.4%. When you look at the split, the breakdown of this organic growth, you see that we experienced a very strong growth in the electrification businesses. And I will explain that on the coming slides. But very strong, 6.7%. And I would say a flattish top line for the non-electrification business, plus 0.3% year on year. And as I mentioned, a decrease of 8.2% after our strategy for the other activities. Turning to page 8 and having a look at the generation and transmission. Activities of Nexance, first of all, the backlog has reached, after the high level, the record level of December 23, 6.1 billion. We continue to see an expansion of our backlog, plus 10%, 6.7 billion euros at the end of March 24. Again, mainly coming from different size small orders that are complementing existing contract in the backlog. In terms of organic growth on the sales, plus 34%, it was expected as we communicated at the beginning of the year 2024, the new extension of the two lines in our Alden facility in Norway would start production and distribution execution of the high record level backlog, so plus 34%, mainly coming from these two new lines in Alden. The rest of the activities in the GNT segment is progressing as planned. Moving to page 9, having a look on the distribution segment, that was one of the highlights, if you recall, of last year. Very strong performance of the distribution business, both in terms of volume, but also in terms of margin. We continue to see that very positive trend with a year-on-year increase organic growth of plus 3%. And if we look on a quarter-to-quarter basis, plus 1.8%. So definitely driven by a strong, I would say, demand in Europe, where in other regions of the world was more stable, slight decrease in North America. in Canada for us, but Europe has been growing significantly and this is the largest part of the distribution business of Nexons. Moving to page 10, looking at usages, we've seen a normalization. I remind you that if you compare, so it's a minus 2% organic growth in usages, Q124 versus Q123, we had a In 2023, the normalization of the volume is mainly North America for us, and that started mainly in the second half of 2020. So when you compare the first quarter of 2024 versus a still very strong quarter of 2023, we continue to see that normalization that occurred during the third quarter and fourth quarter of last year. This, again, is coming from North America. Europe has been slightly decreasing, but I would say more or less stable, and strong growth in other regions of the world, mainly Middle East and Asia. And looking also on the quarter-to-quarter basis, Q4 23 versus Q1 24, we see a plus 11% growth on usages. And now I'll turn to the last page of the presentation, page 11. And with a good start of the year 24, we confirmed the guidance that we announced in February, beginning of the year, with an adjusted EBITDA of 670 to 730 million euros and a normalized free cash flow ranging between 200 and 300 million euros. That will conclude the presentation. Again, the following slide on page 12 is, again, the confirmation that we have our next capital market day on November 13 in London announcing the next equity story of Nexon for the next four years. Now, that being said, I turn now back the floor to Operator and Chris for the Q&A.

Thank you so much. Ladies and gentlemen, if you would like to ask a question, Please press star 1 on your telephone keypad. Thank you. We'll now take our first question from Daniela Custer of Goldman Sachs. Your line is open. Please go ahead.

Hi, good morning. Thanks for taking my question. Two questions from my end. So the first one may be just an update in terms of G&T on two topics actually. Euro-Asia and sort of the situation in terms of timeline and when do you expect to start execution there, given some of the news flow we're seeing around the contract. And then more broadly, big tenders which should watch in 2024. And the second point, just an update on the divestment processes, if you could talk us through that. Thank you very much.

We have started the production for Asia based on the down payment that we received uh at the end of uh 2020 and 23 but of course it's not a full down payment it's just a partial down payment and we're expecting the financial closings of all the terms in uh by by july but memo of course there was some recent news flow which is not something that we masters between the cypress and on grace maybe you know you want to comment sure um thank you chris

First of all, I'd like to say that, as Chris just mentioned, the project is very much operating. It's alive. Everything that we are doing on this project, the customary activities that we do on any project of this magnitude, of this nature, it's one of the largest projects, certainly the largest project we've ever had. The activities, like I said, are the standard one. So we're meeting the client. As you know, we received the confirmatory deposit. All the activities are going as you would expect. We have also seen the news flow. So we are, like everyone else, we've seen the news flows. And those are, I would say, activities that you would expect, exchange that you would expect, for a project of this magnitude with this geopolitical footprint. So it's happening among our customers, but from our perspective, from what we're seeing on the business standpoint, activities are as normal as you would expect for a project of this nature. So nothing to report.

I'm getting the second question, Daniela, on the divestment. A lot of progress has been achieved right now. We're getting the carve-out of our industry business, which is almost over. And we will launch very, very soon, in the coming weeks, the process of divestment. So nothing more to report on that.

Thank you. And regarding the key high-voltage tenders for 2024 that we should watch?

There are many, but I will not mention them because we are in a thundering activity. It's too early to say for the moment.

Okay, thank you.

Thank you.

Thank you. And we'll now take our next question from Alistair Leslie with Bernstein. Your line is open. Please go ahead.

Thank you. Good morning. Thanks. So maybe just the first question on distribution. I mean, we're seeing a number of U.S. utilities really significantly hike capex plans. So I was just wondering, maybe if you could expand a little bit on what you're seeing then in the European markets developments there, perhaps expand on how many more of these larger framework opportunities you see out there, similar to, I suppose, to the agreement you struck in Italy. And linked to that, I suppose, what do you think the real growth potential here is over the next five years? And I know you still include the reference to third-party forecasts there, you know, around 4% growth to 2030, but

of be interested in how conservative you think that maybe now is and and how much i suppose next songs could potentially outperform that thank you so regarding the utilities market i think we were one of the top first companies to talk about it in 2021 that there will be a significant uh investment in that medium voltage area supporting as well the development of high voltage you know it's a you have to take it as a complete value chain between high voltage, medium voltage, and low voltage. You cannot invest on one side of the value chain and not investing on the other side of the value chain. So I think the forecast could be a bit, or 4% could be a bit, I would say, conservative. What we know, the recent study showed that the world needs to shift from 85 million kilometers of cables to 140 million kilometers of cables just because of urbanization demand or new emerging demand coming from different businesses. But in the meantime, you need to replace potentially an equivalent of 40% of what is already installed. So yes, I think the 4% is conservative. Our equipment is fully saturated. We keep investing in that area. But growth doesn't mean systematically profit. So this is why we are extremely diligent and selective on the business, the type of customers, the type of product that we will inject in our process to make sure that we remain extremely productive in the output of production, but as well in terms of the lead time for our customers. But no magic, I would say, situation is what we say. We are entering in the hyper cycle. of demand for the electrification business, and that's only the beginning.

Excellent. Thank you. Could I ask a quick follow-up question maybe on the industrial solutions business? Some quite encouraging comments there about the divestment process, but maybe just on automation. I think you said at the last call that you were hoping to see a second half rebound in that business. Are you still confident you can see that? Is that still your projection? And then just in terms of kind of potentially a divestment. In terms of where we stand in that cycle, any limiting factors, I suppose, across either automation or any of your other sort of businesses within industrial solutions that might just have, you know, sort of be a limiting factor in terms of the timing of divestments? Thank you.

I think nothing will affect the time of divestment. What, you know, there is plus and minus in that business. Shipbuilding industry, container ship is back to very, very high level of demand. We are fully booked there in parallel to cruise boats, unfortunately for the planet, if I may say. On the second, our aerospace business is as well booming. We are the main suppliers of Airbus, and Airbus is benefiting from the difficulties of Boeing. But that's right. To go back to your first point on automation, we are still at a very low point of demand. I think mainly driven by the difficulties of the automotive business. What is the projection for H2? Still too early to say. We don't see a strong rebound happen. If you look at the VDMA Association latest report regarding the automation sector, they say that 2024 will be a transition year. with a minus 2% overall for the European market. I think we are suffering from more than minus 2%, but we are talking about automation, we are talking about industry 4.0, so I think it's linked as well with the economical sentiment that we are in a potential recession. Many companies, with the exception of electrification, have slowed down drastically their investment in the last six months. But I'm confident in the long run because everyone needs to renew its robots, its machines for the next one year. So I think it's just a temporary downturn of demand and positive of the rebound. Is the rebound happening in H2 or quarter one next year? I don't know yet. Okay. Thank you very much.

Thank you.

Thank you. And we'll now move on to our next question from Miguel Borrega with BNP Paribas. Your line is open. Please go ahead.

Hi. Good morning, everyone. A couple of questions. In distribution first, obviously you had those new framework agreements that are boosting your sales and profitability. Just want to understand how long these usually last, whether you think you will have more. And so any expected re-acceleration of growth, maybe some color on why pricing of these new contracts is so much higher. Is it supply that is constrained and why now? Because it doesn't seem that volumes are that much higher. Correct me if I'm wrong, but isn't pricing stronger versus a couple of years ago? And is it because of less competition?

um or anything else just some color on the margins would be great thank you the color of the margin you you you got it already uh at the miguel at the at the full year uh result 2023 um a lot of analysts uh not you but considered it was again an exceptional year my remark is the following don't consider what is structural to be exceptional It's structural. There is, of course, a very, very strong dynamic. All nations are waking up at the same time. Some nations have a very, I would say, less obsolete grid than others. But today, our growth cannot go faster than what our equipment can deliver. We are extremely selective, as I mentioned on the question before, on the type of customers, on the type of demand, the batch size of the order. What I can tell you is that many frame agreements of that size, about 6,000 to 10,000 kilometers that we've signed in the last two years, the kilometers of cables have been consumed one year ahead before the end of the frame agreement. I think it's only the beginning. We have a lot of meeting with DSO right now, talking about capex, more lines to be open to follow the demand. You know, the market suffer from an overall capacity in that business from 2008 to 2020. Now it's changed completely. You have as well a lot of Turkish players that are close to bankruptcy, that are not part of the equation anymore. We don't see any emerging competitors from China arriving in that market. So, you know, and there is as well a question of lead time on the qualifications, quality of the product, where at least the European DSO play the European, I would say, game with their suppliers. And of course, it's just the price dynamic where you are fully saturated and you can choose your customers and your business. Of course, it's more equity for the margin. But let me remind that for the last 10 years, these sectors have heavily suffered from low demand and low prices.

Thank you. And then secondly, on high voltage, can you detail what was the organic sales growth if we exclude the impact of the sale of umbilical? And can we now assume that you're now on full capacity? So kind of to reach the full revenue capacity for the full year, I think you said last time about $1.2 billion. And if we look beyond that, how do you see that $1.2 billion increase? without more capacity being added? Do you think you can do more? That's basically on higher prices.

So, yeah, just to answer the question on biblical, it's very marginal. So, biblical revenue are very small in the first quarter. So, you won't make that of a difference on the organic growth of the business. That's definitely the new change.

Yeah, and now we will run on full capacity, but please keep your question on getting further investment to the capital market. I will not answer any questions that are linked to the next four years, the trajectory of the group. Sorry for that.

That's okay. And then if you allow me one last question on M&A. If I recall, you presented the big M&A plan a few years ago. So far, you've done three key acquisitions, none of them in the US. So just wanted your thoughts, Chris, how do you think about the US? No, you don't have to say if you're going to buy or anything, but whether that is of interest or Why haven't you done anything yet there? Is it a question of price or available assets? And it would be interesting getting your thoughts on what would be an expensive multiple for you in electrification, low and medium voltage. Thank you very much.

That's a good question. A tricky question, Miguel. Let me try to... Of course, North American market was part of our investment thesis. And it's a very... Very attractive market, obviously, because, you know, it's the size of Europe, but only one norm of products. So the scalability of the offer is bringing, of course, a significant advantage. But it's as well, you know, looking at me, it's good news, but there is a kind of consolidation already there in the market. There is a... You know, there is a company, a fantastic company that unfortunately the financial market has no access to, a company called SASWIRE, roughly a $12 billion company in the medium and low voltage businesses doing great, the key leader of that market. I would say, yes, we are always looking at that business, that geographical area, but not at the level of multiple that we have seen recently. Of course, I know very well EncoreWire. I know very well Daniel Jones, the CEO of EncoreWire. He's one of the top CEOs of the sector. He's a fantastic, great leader that knows all the business by heart, specifically residential markets, doing a lot of kind of shift methodology that we are applying in Nexance. I would say it's sad to see that this leader will leave in the future. But I will not pay, of course, I'm not sure that GC, I'm looking at GC, that will allow me to make a check of $4 billion for a company in the U.S. in low voltage into account that with the same amount you can buy Nexance. with a different level of synergy. But of course, we remain, I would say, attentive of what's going on in North America, because we are present as well in Canada. But we want to be extremely selective in the asset that we are buying. You have seen the range of multiple that we achieve in Italy. This is what we want to achieve with the others, not more.

Okay.

We will now take our next question from Lucas Farane of Jefferies. Your line is open. Please go ahead.

Thank you. I just wanted to ask on an update on what is happening in offshore wind when it comes to the projects you are executing and the ones that are coming, and especially on Empire Wind.

Thank you. But we'll say we had a very, very strong news flow last year with negative and positive. So far, no major change from the latest announcement. Empire win one has been confirmed. We are working actively with Equinor team. So I would say nothing new.

Perfect. Thank you.

Thank you. And we'll now take our next question from Akash Gupta with JP Morgan. Your line is open. Please go ahead.

Yes. Hi. Good morning. And thanks for your time. I have a couple of questions as well. The first one I had was on Trivenita Kavi. So thank you for giving us the EPA secretion in high single digit. I'm wondering if you can also comment about EBDA contribution that we should expect, which we have assumed in this high single-digit EPS accretion, and also for modeling purposes, this 800 million euros is in current sales. What would be the corresponding number in constant metal price that you use for the business? So that's the first one to start with.

Yeah, thank you, Akash. Good morning. Regarding the EBITDA, I'm sorry, I understand your question, but we cannot comment anything before closing, so... We'll revert to you as soon as it's done. Regarding the shift from current sales to standard sales, you can consider that 800 million euros of current is converting to 630 to 650 in standard, with our standards.

Thank you. And the second one I have is on usages. So when I read your commentary by geographies, it sounds everywhere you have positive development, with the exception of Canada, where you were down 21%. So I'm wondering if you can give us, excluding Canada, what was the growth in the business? And when we look forward, when do you expect this decline in Canada to normalize? I mean, I think you said earlier that it's the middle of last year when this normalization happened. Is it fair to expect some sort of contraction, a big contraction in Q2 as well, before it is leveling out in the second half of the year?

I would say contraction, I'm not sure. Rebound, neither. I think the North American market right now is more at a low point. Of course, it's difficult to be precise because it's a mixed picture between the residential market which is really down versus commercial and industrial infrastructure that are up, as well as some data centers' demands that are encouraging there. But I think it's a low point, and we will remain like that for Q2 from the perspective on the feedback that we will receive from the key distributors present in that sector. Regarding the questions on your organic growth without U.S., our team is computing. Tim?

We'll get back later in the call, but it should be positive without the normalization of Canada, but to be confirmed.

Zero plus.

Zero plus, yes.

Thank you. And my final word is on copper price movement. So in the last month or so, we have seen a big jump in copper prices. I'm just wondering how it may impact your free cash flow guidance because it might increase the value of your working capital as you need to do mark to market on copper. And is there a level where we may see some sort of risk, which is pure mechanical risk than anything else, but just wanted to talk about how should we think about impact of copper prices on your free cash flow guidance?

So, I mean, as long as I would say the copper price does not go above $11,000 a ton or $11,500, it would be meaningless in terms of impact to our working capital. We've reached already the $10,000 level last year, and it was not that significant. You're right, it has a little bit of an impact, but you know that our working capital is so small right now it's working capital on sales is close to zero percent I mean slightly slightly positive so it has a little bit of an impact but it's not material and and we need to be higher much higher level of of pricing prices before it really impact our our cash flow well I think it's a fundamental questions for the for the long run Akash because

Now, we can say from the information that we have from over there that the Chinese energy transition has started. We've seen a very high demand for copper supplier in China those times that generate some ups on the copper price. That's only the beginning. I think the big topic will be in the next two to three years when copper price will be between $12,000 to $14,000 per ton. Here there will be, of course, an important impact on the free cash of the cable manufacturers because of the scarcity of supply versus very, very high demand. It's what we say since two years now, for two years. and that's starting to be confirmed from the latest forecast. I'm a bit concerned as well on the aluminium in different aspects because aluminium has less, I would say, more reserve in terms of capacity of extraction of the bauxite on the alumina, but the recent news of the European Commission to ban the aluminium of Russia, even if we have been able to divert our supply from Russia to different countries, will create a potential shock of supply in coming months. So the natural resources topic will be fundamental for the next years, both in terms of supply, but as well in terms of value that may impact the free cash of the cable manufacturer.

And just to rebound on the impact, the mark-to-market, so there's very limited impact on the cash flow at today's price level, as I mentioned earlier, where you will see an impact, though, like you said, on the mark-to-market in our P&L below EBITDA in our net income, definitely if copper price maintained at the level it is today. through the end of the quarter, the second quarter, definitely when we do a mark-to-market in our half-year closing, we'll have a positive impact to our net income.

Thank you. I'll go back in the queue now. Thank you.

Thank you. And we'll now move on to our next question from Luigi de Bellis with Equitasim. Your line is open. Please go ahead.

Yes, good morning to everybody. Two questions for me. The first one is on the generation and transmission. So can you elaborate on the expected improvement in sales and EBITDA for full year 2024 if the plus 40% is confirmed? Elaborating on the expected contribution of Eurasia for 2024 and if profitability trend as of today is in line with your initial expectations. and the second question on the distribution and usages so you are seeing a very encouraging trend considering the tough comp so what is your outlook for the coming quarters for volumes and prices and can you elaborate the trending margins to as of today thank you so i will yes i will take the first question the first part of the of the question or the question which is related to the margin on gnt so we remain on the course

on the growth of the sale. So definitely the growth of the sale is happening because of the high backlog and the additional capacity. You see that in the first quarter and that will continue obviously through the end of the year. And I remind you that, as you rightly mentioned, we have a 39 to 40% top line growth when you compare it forecasted for 24 versus 23 on that business. In terms of margin themselves, we continue to have the legacy project that, as I said, will be executed in 2024. It will exit the backlog by the end of the year, beginning of 2025, which means that in the first half of 2024, we will be at the lower level of margin we've experienced in the second half of 2023. And then when Euro-Asia or Gates interconnection, which is the name of the contract now, is finally confirmed and signed, financial close being done, which is expected, as Chris said, sometime over the summer of this year, then we should recognize the margin, the revenue and the margin on the contract, which is quite attractive, I would say, to the P&L of the business, and therefore margin will go up. So this basically is a story that... the way we foresee 2024 in modern evolution for that business. And we have not changed our view since February.

And then the questions on medium voltage, on low voltage. On medium voltage, I think we have very, very strong sales. The difficulties of our customers is access to labor to install the cable on making the junctions. But no concern on the medium voltage. I already extensively answered that question before. Regarding usages, we were ready for a big drop a few months ago because in case of recession, I would say that, first of all, different dynamic per region, a low point in North America that will be unchanged in the coming quarter. a strong rebound in Australia, Asia, Asia-Pac overall. But in Europe, of course, we suffer of a lower volume, but not as we could have expected in the case of a recession on the downturn. So we believe that 2024 will be, I would say, a potential mild recession in that sector, a bit better than expected. But I'm remaining prudent, Luigi, because, you know, our visibility on the order book is limited. So we will be extremely, I would say, attentive of what the main players in that sector would say, like Legrand or Rexel in their calls.

Thank you. If I may, just a very quick follow-up on the consolidation in the sector, because we are seeing an acceleration from the market leader, from you. So, do you expect an improvement in price dynamics in distribution and usages, generally speaking, as a result of this consolidation in Europe and in North America? Thank you.

I would like to answer. but my general counsel is looking at me with very big eyes. I think you have the question in your answers, but it's not only a matter of margin, which is a matter of medium-sized companies start to have difficulties of access of raw materials, specifically copper, because they don't have the fire powers of procurement that the big names have. So that starts to be a big topic for them. The second big topic as well is the digitalization of the offer. We are very, very active on that demand at the request of our distributors like Sonepar, Rexel, and Wesco. And it requires a significant amount of investment both in materials but as well in terms of skills and competence. And that's what... medium-sized player, family-owned business, I would say, have difficulties to cope with. So this is why that, you know, I had the question recently, say, yes, there is a good trend in electrification, so why selling? I think, you know, it's what we saw with that Reveneta is access to copper, digitalization accelerations, new investment required to follow the demand. It could be a bottleneck for for this kind of company, and this is why we need to be a bit stronger as cable suppliers, but we need as well to mention that our customers are getting bigger and bigger as well. So I would say we are just following the consolidation of the value chain in this specific part of the business. Thank you very much. You know, are you satisfied with my answer? Thank you, Luigi. Thank you. Bye. We are learning Italian, Luigi, you know.

Thank you. And we'll now take our next question from Bastian with Berenberg. Your line is open. Please go ahead.

Good morning, Bastian from Berenberg. Thank you for taking my question. You've experienced a double digit growth sequentially in low voltage. Should we assume that it is coming from better pricing or higher volume for the whole division? Thank you.

It's coming from both. You have a volume effect, you have a price effect, you have a mix effect that contribute to this ratio.

Okay, perfect. So we should assume that the end of the margin normalization that happened in H2 2023 should probably be over in H1 2024. Sure. Confirmed. Okay, thank you very much.

Thank you. And we'll now take our next question from Eric Lamari of CIC. Your line is open. Please go ahead.

Hi, good morning. Thanks for taking my question. I got three. First, could you remind us the self-generated with fire safety cables today at Nexon, including with La Trivenita and what could be your mid-term objective there? I've got a second question on copper. You mentioned this issue, I think, but could you remind us the percentage of recycling copper used in your processes today? And again, what would be your objective. And last question, I don't know if you can answer that. Would you, do you consider that you would need further strategic capex in the next years to deal with your current order book? Thank you.

Okay. We're getting, thank you, François. We're getting fire safety. There is, in Latrivineta, some part of fire safety, but I would say most of their production is in PVC cables, so um that of course our aim is to shift to a fire safety kind of polymers uh for matter of premiumization and that's part of our uh synergy roadmap uh regaining the but i i will give more detail in the capital market day so i don't want to go further in that topic rogan in copper um We are close to 12% to 14% of ability to use recycled copper in our output today. And today we are working on making additional investment to turn this 12% to 14% into a 50% 5-0 in the coming years. And we will be able as well to offer to customers a new generation of cable that will be manufactured by 100% recycled copper and 100% recycled polymer. And that, for us, will give us a green advantage, if I may say, versus competition. OK. And running strategic capex? Do you have other strategic capex in terms of demand?

No, no other strategic capex.

Not for the moment.

Only the vessel, which is... Yeah, only the completion of the current vessel, which will be ready by 26, where we still have about 150 million euros of coming capex between this year and next year.

Okay. Okay. Thank you. The last one.

Thank you. We'll have our next question from Jean-Francois Granion with OdoBHF. Your line is open. Please go ahead.

Yes, thank you, Chris. Thank you. First question, do you expect to integrate La Triveneta during the second half this year after the closing? And do you confirm the accretive impact for the next six months? The second question concerns the harnesses business. You mentioned a growth Could you give us the percentage growth of this business during the first quarter? My third question concerns the usages business. You mentioned some value-added products. What is the percentage of high value-added products currently on the usages business? And my last question, regarding the high-value-added business, what is the percentage of the legacy or old contract with some lower margin on the current backlog for the high averages. Thank you, Chris.

Thank you, Jean-Francois. So, Nino, I booked my flight for June. So, waiting to get the keys. What can you say, Nino, specifically?

I said, you know, the only obstacle between right now where we are in closing is the clearance of the antitrust. And like I said, we're expecting that for the end of May, beginning of June. Everything is in line for an orderly closing after that.

So right now, what we've done in our forecasting, we have included revenues and margin contributions starting July 1st.

Okay. We're going to harness this.

I don't know. Wait, wait. So wait, wait. There was four questions. So harnesses. Gross ratio of harnesses for Q1?

Ah, gross ratio for Q1 is slightly up. It's not to the magnitude of what we've seen in 2020, but 2% gross rate in harnesses for the first quarter.

And organic usages, your third question, organic usages, value-added. So we are very active on what we call shift prime, which is a big work on premiumization of the product, shifting to fire safety, higher brand product, plus as well, as I mentioned, digitalization. Once again, I don't want to elaborate more because that will be a cornerstone to our capital market day. And regarding the question was on, the last question was about G&T. Do we have a sufficient... capacity to run the backlog, the answer is yes.

So I think the question is how much of a legacy project we have in the background. So it's around 10%, 10 to 12%. Okay.

Okay, thank you. Thank you.

Thank you. And now we'll take a follow-up question from Akash again from JP Morgan. Your line is open. Please go ahead.

Yes, hi, thanks for the follow-up. I had a clarification question to what Eric asked on G&T. So, Chris, when I look at the statement, you say that you are fully loaded for 2027 and expecting potential award this year. When we look at the statement, you say you have strong visibility for manufacturing and installation extending through 2030. I'm just trying to get, are you hinting that you are open for further increasing capacity as some of your peers are doing if you get the orders or you are not on that path and you want to basically utilize your existing resources and still no to further capacity expansion? Thank you.

Yeah, I would take that because I had yesterday when I was reviewing the material, I had the same comment. 2027, we have almost 100% of the revenue of the backlog today that takes us to the end of 2027. This is why we're saying fully booked until 2027. The visibility point is that we have some of the recent projects that we just booked into the backlog in 23. That will take us through revenue recognition through 2030. This is why we talk about visibility through 2030 and about full booking until 2027. So we do have Indeed, capacity available starting in 2027. And as we said earlier, as of today, except for the completion of the existing vessel, we are not planning on spending any further CapEx, new CapEx, I would say, for capacity growth.

Thank you.

Thank you. I think it's ending now.

Yes, thank you, Darren. No further questions, thank you. I will now hand it back to Christopher for closing remarks. Thank you.

No closing remarks. I wish you everyone a very great day and I think a very busy week with all the publications going on. Thank you very much for your attention.

Thank you. Ladies and gentlemen, this concludes today's call. Thank you for your participation. Stay safe. You may now disconnect.