Operator : Welcome to the Nexans Half Year 2026 Earnings 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' First Half 2026 Results Call. I'm here today with Vincent Piquet, our CFO, and together, we'll take you through our H1 2026 performance. As usual, our disclaimer noting that this presentation contains forward-looking statements subject to the usual risks and uncertainties. Slide 3. So let me show you through the key highlights of our first half 2026 performance. Nexans delivered once again its strategy of profitable growth and further increased its exposure to the U.S. market. Starting with group performance. Standard sales reached EUR 3.2 billion, up by 1.5% organically, driven by a strong Electrification performance with organic growth up by 4.5%, more than offsetting the expected decline in other activities linked to metallurgy. The group delivered a solid adjusted EBITDA amounting by EUR 388 million, representing a healthy margin of 11.9% of standard sales, also driven by our Electrification business, which delivered a robust adjusted EBITDA margin of 13.2%. Let me highlight once again that this is a high level of margin supported by our positioning as a Pure Player Electrification bearing fruits. On cash generation, our cash conversion ratio stood at 42.7%, underlying the quality of our earnings. Turning to capital efficiency. The group ROCE stood at 15% in H1 2026 and Electrification ROCE was at 17.4%. The variation compared to last year was mainly explained by the goodwill added through our recent acquisition, notably Republic Wire in the U.S. With the completion of the acquisition of Republic Wire, Nexans further expand its North American footprint with now close to EUR 1 billion of current sales, and that is a platform to further continue the buy-and-build story in the U.S., but not only in the U.S. as we also remain opportunistic in our M&A pipeline. We also recently completed the divestment of Autoelectric on July 3, marking the successful completion of our transformation into a full-fledged Electrification Pure Player. Finally, on our H1 2026 on operations, our transmission MI line will be loaded until mid-2028 with a project of interconnection in the Mediterranean Sea that should start by the end of '26, reflecting sustained strong demand for cutting-edge high-voltage solutions leveraging our leading technological capabilities and engineering expertise. Electra, our third cable-laying vessel successfully enter into operation starting, as you know, in June 2026, further strengthening our fully integrated installation capabilities. I also would like to highlight on PWR-Grid that we expect our capacity in Europe to increase by around 40% between 2025 and 2028 to answer a buoyant market where demand still materially exceeds supply. These investments are part of our 28 guidance announced in '24. And again, the amount of work to be done in PWR-Grid worldwide is massive. The significant extension of duration of frame agreements with our customers -- our platinum customer is the best illustration of this. Moving to next slide. So before we deep dive in our segment performance, I really wanted to insist on a structural transformation that is reshaping our industry and creating unprecedented opportunities. This slide capture why our pure player model is so powerful. We are witnessing the emergence of a new market paradigm fundamentally reshaping our industry. Our customers are rapidly changing the way they work, and this is opening the door to entirely new type of partnership, new channel to market and new business opportunities. This SHIFT is particularly pronounced in fast-growing verticals such as data center, battery energy storage system and solar, where Electrification needs are surging and where being close to the end customer is becoming a real competitive advantage. This is exactly why our pure player positioning makes Nexans a preferred partner worldwide, thanks to our agility and strategy on 3 pillars. First, innovation. Our R&D center is dedicated to addressing the critical needs of end users and decision-makers directly, giving us a direct line into how these fast evolving markets are shaping the requirements and help us design solutions ahead of the curve rather than reacting to them. Second, industrial excellence. By mutualizing our industrial footprint across the group, we are structurally improving our time to market. And you know that this topic is important for me. And with our ongoing capacity expansion, we are positioning ourselves to capture a substantial share of demand growth. Third, M&A. We continue to consolidate our positioning across Electrification and the momentum speaks for itself. Three acquisitions in 12 months, we ramp up of their capacity expansion. You remember, we explained that RCT is increasing capacity as well as Republic Wire. We intend to keep pursuing external growth with a disciplined approach to further strengthen our Electrification activities. Put together, these 3 pillars are precisely what allow us to address our customer critical needs for reliable, efficient and sustainable solution with a speed to market that is essential to winning contract in this new paradigm. This is a full strength of Nexans pure player model. Moving to Slide 7, our H1 summary. So let me break down our H1 2026 performance between Electrification and other activities. Electrification remains a clear engine of our performance in H1 with organic growth of plus 4.5% in the upper range of our midterm guidance. The group adjusted EBITDA margin reached 11.9% of standard sales, flat versus 2025 margin per but slightly below compared to H1 '25. H1 2026 remained constrained by an adverse mix effect among the 3 segments of Electrification with a strong performance of Transmission, PWR-Transmission, PWR-Grid staying at a high level, while PWR-Connect still facing a mixed effect. Finally, on other activities, mainly metallurgy, the segment witnesses a minus 15% organic decline. And as you know, this is due to the strong comparison basis in H1 '25 as customers brought forward copper orders ahead of tariff implementation in the U.S. Moving to Slide 8. Let's walk through business by business and starting with PWR-Transmission, which delivered a strong improvement in adjusted EBITDA margin in H1 2026. Here, also I'm very happy to announce that our MI line will be loaded up to mid-2028 with a project in the Mediterranean Sea. This project will start to contribute our performance by the end of this year. Standard sales came in at EUR 777 million, up by 4%, which includes the growth of minus 0.1% organic growth as expected as we are lapping an exceptional comparison base after 2 consecutive years of a strong momentum and the growth pattern is now starting its normalization throughout the year with comparison basis that will become even higher in Q4, while margin improvements will continue on the trajectory. Adjusted EBITDA reached EUR 107 million, up by a strong 21% year-on-year with a margin up almost 200 basis points to 13.7% of standard sales. This confirms our strong operating leverage and that we are firmly on track towards our high teens margin trajectory by 2028. Our adjusted backlog stood at EUR 7.7 billion at the end of June, essentially flat versus December. The backlog remains subsea-driven and give us good visibility into our activity all the way to 2028. And as you know, our MI line, in particular, being now loaded until mid-'28. Moving to Slide 9 on Nexans Electra. As you know, our third cable laying vessel has successfully entered into operation in June this year 2026. Electra brings a real step-up in capabilities with a 3 turntables to a total cable capacity of 13,000 tons, which is up by 35% versus our Aurora vessels with the ability to lay up to 4 cable at the same time. Beyond the technical specification, what matters the most is what this vessel give us strategically, greater efficiency, lower energy consumption and above all, additional agility. Indeed, owning our own vessel means we control our execution capacity directly rather than depending on the charter market, which directly supports future profitable growth in PWR-Transmission. Moving to Slide 10. Let's move to PWR-Grid, where Nexans continued to build on its strong positioning in the buoyant global market. First, the standard sales reached EUR 702 million, which is up by 3.7%, including a solid 4.9% of organic growth in the range of our midterm targets. This was supported by strong underlying trends on the accessories business that remains particularly dynamic. All this driven by robust customer demand for high value-added solution linked to grid modernization and the ongoing expansion of power infrastructure. The adjusted EBITDA came in at EUR 108 million with a high margin of 15.4% of standard sales. This level is fully in line with our expectation. It's worth recalling the structural mix of this business. Around 2/3 is underpinned by frame agreements and the remaining 1/3 by project activity. Given the timing and execution profile of this project, some quarter-to-quarter margin can variate simply by a mechanical consequence of that mix. Overall, buoyant demand combined by a strong positioning in high value-added solutions continue to support pricing power. We are also seeing a strong momentum in North America in infrastructure project and data center. And Nexans is actively preparing to capture this business, and that has started in H1. Let me also touch briefly on inflation context. As we've explained before, we saw a slight lag effect in the early stage of the conflict, which was quite minimal and is now behind us. All our price are now fully indexed to the current price situation, and we passed inflation through to customers. So at this stage, we do not expect any further significant impact on the pass-through. That said, we remain cautious and continue to closely monitor the situation, both in the Middle East and at the macro level. And finally, a key point in that global demand is now significantly outpacing available industry capacity, which is why we're investing to expand our own capacity. On the next slide, Slide 11, illustrates just how attractive the market perspective are worldwide. I want to highlight 2 figures that really capture the scale of the opportunity. First, around 80 million of kilometers of cable will need to be built or replaced by 2040. This is the equivalent of rebuilding today's entire grid over the next 15 years. And second, close to 50% of the world PWR-Grid will not be fit for purpose to handle this renewable energy by 2030. So these needs are driven by structural force, modernization of aging grid, the rising share of renewable energy in the electrical mix, the need for greater grid capacity, and the growing importance of grid reliability. The reality today is that capacity is saturated globally and notably in Europe with demand materially exceeding supply. This is precisely why we are investing to expand our PWR-Grid capacity in Europe by around 40% between 2025 and 2028. These investments were included in our '28 guidance we presented at our Capital Market Day in November '24. We are simply executing on the plan we laid out to capture a demand environment that remains exceptionally strong and probably even stronger than expected at the time of our Capital Market Day last November '24. Let's go to Slide 12, PWR-Connect. So the business review with -- let's finish with the business review with PWR-Connect, which showed very dynamic top line momentum with a resilient margin performance despite an adverse mix effect. First, on standard sales. They reached nearly EUR 1.4 billion, up by 15.4% in total. This breaks down into 7.3% organic growth, an exceptional high level, which supported a very dynamic trend in Latin America and several European countries, including growth from Italy, which illustrates our ability to proactively deploy our innovative solution in that market. On top of this acquisition -- recent acquisition added a 10% sales growth, reflecting the contribution of 5 months of Cables RCT in Spain, 6 months of Electro Cables in Canada and 1 month of Republic Wire in the U.S., 3 value-creative deals. Second, on profitability, our adjusted EBITDA came at EUR 162 million, representing a margin of 11.8% standard sales. As expected, this segment remains subject to a temporary adverse mix effect driven by 2 factors: The Nordic countries where our best-in-class operations are still constrained by market conditions and Italy where margins are still below the segment average. But the key message here is the sequential improvement. If you look the progression from H2 2025, our margin improved by 80 basis points from 11% in H2 '25 to 11.8% now in H1 '26. This was supported by synergies in Italy, improvement in Latin America and the continued expansion in high-value verticals such as data center across our different geographies. So the trend is moving in the right direction. And despite the mixed effect, we see our efforts bearing fruits. A quick word on inflation. As we discussed for Grid, the dynamic is similar here for Connect. With that, I will now hand over to Vincent, who will take you through the financial review.
Vincent Piquet : Thank you, Julien, and good morning, everyone. Let me start with the standard sales bridge, which walks you from the EUR 3,093 million in H1 2025 to EUR 3,249 million in H1 2026, representing a total sales growth of plus 5%. Organic growth is at plus 1.5%. As Julien mentioned, this reflects a solid Electrification performance, up 4.5% organically, partly offset by the expected decline in other activities linked to metallurgy down 15.6%, and that should mechanically recover in H2 2026. The second and largest contributor was scope at 3.8%. This is where our value-accretive acquisitions are really starting to bear fruit. It includes 6 months of Electro Cables, 5 months of Cables RCT and 1 month of Republic Wire, which we consolidated from June 1. On Republic Wire specifically, we'll have a 7 months contribution over the full year 2026. So you will see this Scope effect continue in the second half. I would also like to say a word on Republic Wire as its integration is off to a very good start. We are progressively bringing in our know-how, our culture of operational and industrial excellence, and we're already working on generating the first synergies. Finally, foreign exchange had a slightly negative impact of negative 0.3%. The U.S. dollar and the Canadian dollar weighted on our sales, though this was partly offset by the appreciation of the Norwegian krone. This brings us to EUR 3,249 million in standard sales in H1 2026. Let me now turn to how this translated into profitability with the adjusted EBITDA bridge. The bridge takes us from EUR 372 million in H1 2025 restated for IFRS 5 to EUR 388 million in H1 2026, an increase of 4.3%. Looking at the organic contribution by segment, growth was primarily driven by the strong performance of PWR-Transmission, which added EUR 16 million and was clearly the main engine of our profitability improvement this half year, thanks to the quality of execution and driving the strong operating leverage. PWR-Grid contributed a further EUR 2 million. Here, I'd note that unlike in some prior periods, there were no particular one-offs projects this half, but we remain at a very high level of margin, among the best-in-class performers, and we will continue to grow our margins gradually from here. Please keep in mind also the structure of the business, as reminded by Julien, 2/3 with long-term frame agreements and 1/3 with projects. PWR-Connect added EUR 3 million, including organic and scope. We have deliberately combined organic growth and scope effects as we increasingly optimize production flows between our existing and recently acquired plants whenever it makes strategic sense. This reflects our industrial mutualization strategy and our ability to adapt to the new market paradigm as previously highlighted by Julien. And we will keep mutualizing our plants to optimize our production capacity, improve our time to market and capture commercial opportunities. We're confident in our ability to extract value from this transformation of our footprint utilization and the benefits will progressively on time be fully reflected in our figures. On scope, acquisitions contributed around EUR 20 million, composed of 6 months of Electro Cables, 5 months of Cables RCT and 1 month of Republic Wire. Foreign exchange accounted for minus EUR 3 million and other activities weighted by a further EUR 2 million. All this brings us to a solid adjusted EBITDA of EUR 388 million for the first half. Let's now go through the P&L. Starting with our adjusted EBITDA that grew at plus 4.3%, as explained, with strong contribution for PWR-Transmission. We then have the impact of depreciation, mainly linked to PWR-Transmission recent strategic CapEx as well as the acquisitions. Positive Corex, mechanical effects of copper price increase over the period, offset by negative ForEx impact related to our hedging activities. Our income taxes remained broadly stable at circa EUR 60 million in H1 2026 compared to circa EUR 65 million in H1 2025, resulting in an effective tax rate of 32.7% in H1 2026, more or less in line with the full year 2025 rate that was at nearly 31%. Net income from discontinued operations decreased by EUR 17 million, reflecting the net losses generated by Autoelectric during the first half 2026, while H1 2025 benefited from the net gains on the disposals of Amercable and Lynxeo, partly offset by an impairment related to Autoelectric at the time. Let me now walk you through the net bridge for the first half -- net debt bridge, sorry, for the first half. The first item to highlight is the positive operational performance in EBITDA and working capital. On capital expenditures, spending was relatively high this half, mainly driven by the investment in Nexans Electra. And I want to flag here that H2 CapEx should be more or less in the same range as in H1 as we continue to finish the investment in transmission and metallurgy. This brings me to our free cash flow, which came in at EUR 165 million, representing a cash conversion ratio of 42.7%. Without transmission down payments this half, this is a solid performance, illustrating our discipline on cash management. On dividends and equity operations, the cash out was lower than last year because last year, we ran the successful ACT employee shareholding plan. Again, at Nexans, we believe it is important to associate our employees with the group's performance and long-term value creation. On M&A, this includes the acquisition of Republic Wire together with the earn-out and the transaction fees associated with that transaction. Putting it all together, we end the half year at a well-controlled leverage ratio of 1.4x. It gives us ample headroom to continue investing in our growth, both organically and through M&A. Let me finish the financial review with a word on our financial structure, which remains solid even after the acquisition of Republic Wire, giving us the flexibility we continue to -- we need to continue executing our investment plans. Our liquidity position remains very strong at around EUR 2.5 billion, including EUR 1.5 billion of cash and cash equivalents alongside our undrawn EUR 800 million revolving credit facility and EUR 250 million of undrawn EIB financing. In the context of the Republic Wire acquisition, we put in place a bridge to bond term loan of EUR 500 million with an initial 12 months maturity and two 6-month extension options. This is a temporary instrument indexed to Euribor that partially finances the acquisition while we prepare a bond issuance. Setting aside that bridge, 100% of our debt is at fixed rate and our nearest maturity is our EUR 200 million EIB financing due in April 2027. Our average cost of debt stands at around 4.1%, which is a very good level. Finally, on our credit rating, we remain BB+ with a stable outlook from S&P. This rating reflects the strength of our balance sheet and the discipline we apply in deploying our capital. With that, our leverage at 1.4x and its robust financial structure leaves us well positioned to keep investing in our growth. Let me now hand back to Julien.
Julien Hueber : Thank you, Vincent. So let me take you through now our 2026 guidance. So we expect an adjusted EBITDA for full year of 2026 to be between EUR 770 million and EUR 840 million and the free cash flow to range between EUR 235 million and EUR 325 million. So this guidance does not assume execution of the Great Sea Interconnector project in '26, as you know, but includes the load of the MI line at the end of 2026. This guidance takes into account the contribution of Republic Wire, the new acquisition in the U.S. starting from 1st of June '26 and excludes the contribution of any further acquisition. So all in all, the opportunities ahead are compelling, and we have all the capabilities to succeed as a pure player in Electrification. We'll continue to execute with discipline strengthening operational excellence and further leveraging our integrated industrial footprint. This transformation will be gradual, and we are confident in our ability to deliver sustainable value for our stakeholders. Nexans will continue to operate within a disciplined financial framework for benefit of its shareholders, employees and the broader economy. So with that, thank you all for your attention. And now with Vincent, we will be happy to take your questions.
Operator : The next question comes from Akash Gupta from JPMorgan.
Akash Gupta : I got 2, and I'll ask one at a time. My first one is on guidance. Previously, you said that you expect H1 to be softer, meaning H2 to be stronger. And given the H1 performance that shows year-on-year growth in EBITDA. My first question is that, does this comment still hold, i.e., should we expect a better H2 on an underlying basis before adding 6 months contribution from Republic Wire acquisition?
Julien Hueber : Okay. Thank you, Akash, for your first question. So yes, indeed, you've seen that we have raised our guidance by EUR 40 million, that is the low end of the guidance. A few things. First one, you have seen that our H1 is more dynamic than our initial hypothesis in terms of phasing of project, in terms of growth specifically in some area like Connect or Grid. We are very confident for second half backlog also. The backlog are both in Grid and Connect are very strong. So we see also a good H2. But we are -- as you know, we are living in a geopolitical environment with Iran that is when they're in, when they're out. We want to remain prudent overall. And clearly, we are not shooting for the end of the guidance. We are shooting for the midpoint of the guidance. So -- but clearly, we are very satisfied with our H1, which was stronger than our initial hypothesis.
Akash Gupta : And my second question is for Vincent. I think when I look at the D&A expense in first half, it was EUR 153 million with just 1 month of Republic Wire consolidation. If we double this amount and add a few million more for Republic extra D&A, should we expect full year D&A to be around EUR 310 million? Or is there any one-off in H1 that we shouldn't expect to be repeated it in full year?
Vincent Piquet : Yes, you're right. Our H1 was the same level as H2 last year, and we expect due to specific items, our H2 2026 to come back to levels that are more in line with what we saw in H1 2025. So there will be a slowdown in H2 2026 versus H1 2026 on the depreciation rate.
Operator : The next question comes from Daniela Costa from Goldman Sachs.
Daniela Costa : I have one clarification on the answer just before, and then I'll ask my question. But just on the guidance on the sort of EUR 30 million to EUR 40 million of the change in the range, is that just Republic? Or is there anything else in it? Because I think if we look at the multiples you set for Republic, it seems like this is just Republic. Can you just clarify if there's anything else in the guidance change beyond Republic?
Vincent Piquet : No, it is more than Republic. So we've included the impact of Republic, and there is more than Republic in that EUR 40 million that reflects the strong performance of H1 and the positive outlook we have on H2.
Daniela Costa : Okay. Got it. And then just looking at the backlog you had in March was EUR 7.9 billion. Now you have EUR 7.7 billion. If we look at sort of like the sales you had during the quarter, that implies that you got some orders at around EUR 235 million. Is that the Mediterranean order or the Mediterranean order comes over and above that? And maybe just helping us understand how that then fills up the gap of GSI because if it is just a EUR 235 million, sounds like a much lower value than what one would have expected GSI to be in '26 and '27 and mid-'28.
Julien Hueber : Okay. So I will take this one, Daniela. So the backlog we have reporting end of June does not integrate the new MI order that we are adding with the Mediterranean Sea. So it does not include it yet. We have been winning some projects. You remember that we explained in H1 that we were winning some projects in order to progressively use the MI line, do MI, and we win also some medium-sized projects in the transmission. So that's explaining the EUR 7.7 billion of backlog. Regarding this MI project, we are now the preferred bidder, and we are in exclusive discussion with our customers. And as soon as the regulatory process will be finalized, it will be an official award and then it will become in the backlog. It's not yet in the backlog. In terms of size, it's using -- I'm sorry Daniela, in terms of size was your second question. It's using our capacity for 18 months. So it gives you an idea of the size of the order.
Operator : The next question comes from Scott Humphreys from Berenberg.
Scott Humphreys : Firstly, on Connect. So we saw some quite exceptional growth, organic growth in Connect in Q2. margins, as you say, were up some 80 basis points from H2 '25. Could you talk a bit about the different components of this sequential improvement in the Connect margin? And I'm thinking specifically as well about the sort of the margin differential between the Nordics and Southern Europe in particular and the extent to which that gap could close?
Julien Hueber : Okay. So Connect, so indeed, the geographies dynamic are different. We have explained already, if you remember, in Q1 that the Nordic market was sluggish. In fact, it has not restarted, which is for us, our biggest margin level for Connect. It's several points above the margin several points mean it's more than 5 to 6 points above the margin of Connect in the average. We are doing some growth. So Nordics is not growing, not yet. We estimate and we hope that it will recover progressively in H2, but in H1 it has not recovered. But at the same time, we have seen some other European countries going quite well. Italy, very strong growth with our Italian business we have there, pushing for innovation. So margins are approaching step by step, but the margin in Italy, as you know, are not yet at the average. So when we are pushing on getting more volume, extra activities for the Italian market, it has a negative mix impact on our margin. France is doing very well. Belgium is doing very well. Spain is doing very well. So we are extremely satisfied with the market recovery in this part of the world. We also have good dynamic sales in South America, extremely strong in South America as well as in North America coming up. So overall, our topics we need to solve and it's ongoing is really the Nordics that's hurting us and quickly continue to transform the business we have in new acquisitions to bring them typically Italy to bring them to the at least average of Nexans for Connect.
Scott Humphreys : Great. And if I can just ask a second as well. So on the MI production line, it sounds like you've got this long-term project sort of starting by the end of 2026. When we think about your 2026 guidance on H2, could you kind of confirm what that assumes in terms of maybe some of the shorter-term actions that you were talking about previously? Has anything changed in relation to those sort of smaller pieces of work and utilizing the line this year?
Vincent Piquet : No, I think it doesn't change. We're preparing for the start of production towards the end of the year. And in the meantime, we're continuing to use the line with very short orders, the spares that we've talked about before. So it doesn't change. We now have certainty that the line will be full used starting at the end of the year for -- until mid-2028.
Operator : The next question comes from Nabil Najeeb from Deutsche Bank.
Nabil Najeeb : Just a follow-up on Connect. Obviously, a solid organic improvement in the quarter for Connect. Just wondering to what extent, if at all, demand was helped by extreme weather conditions, particularly as Europe experiences multiple heat waves and which, yes, we have seen that has supported HVAC demand for some. And if it did help, do you expect that to remain a tailwind into Q3?
Julien Hueber : So we do not see the demand has been positively impacted by the heat wave. We do not see that because we are -- the heat wave -- we might say the opposite because it could have slowed down some of the construction works outside during the day. So it didn't have any positive effect for us. It's really the fundamental market that is driving this growth. Commercial is picking up, industrial activity is picking up, of course, data center, but also battery storage and all this. So we also are quite satisfied on the solar. In solar, it's either grid and connect depending on the type of cable, medium voltage bringing the solar panel to the grid, but also we have ample of connect business in solar. So it's a mix of several elements. And we do see a continuation of a good momentum in the growth in the second half of the year.
Nabil Najeeb : Great. And my second question is on Republic Wire. Could you give us an update on the progress on the capacity build-out there and the progress made with increasing medium voltage sales in the U.S. using Republic Wire as a base?
Julien Hueber : So I was in Republic 3 weeks ago, I spent the time to meet, first of all, all the sales network, sales agents. I was very impressed by the quality, by the, I would say, the amount of sales guys across all states in the U.S. in the right location, California, Texas, Michigan, Florida and so on, pushing on selling our product there. So that's -- I was very impressed by the quality of the sales agents. So the integration is doing very well. We already have started the industrial synergies between our Fergus plant in Toronto and the Republic on different elements, compounds metallurgy. So the plants are supporting each other. So that has started from day 1. It's the actions. It's also very -- I'm very enthusiastic about the capability to extend our Nexans portfolio product to these Republic Wire sales agents willing to extend their range of portfolio. So that's also moving very fast at the right pace. We have already in place a very strong integration teams on site in order to review all the different stream we have. So it's cadenced weekly reviews and so on. So that's moving fast as well. Now regarding your question about LV. LV Expansion in the U.S. for the time being, at this day, we are doing it from the outside U.S. plant, so Canada and South America, as we have explained. And we are currently investigating different option of medium voltage capacity increasing for North America. But clearly, we will increase our capacity to sell more medium voltage in the U.S., either from the internal manufacturing or from the outside, but we are currently working on 2 options.
Operator : The next question comes from Lucas Ferhani from Jefferies.
Lucas Ferhani : The first one is just on transmission. How should we think about kind of the growth in the coming years? You're not adding any more capacity. I think you have the vessels now. You're adding a little bit in high voltage kind of onshore, but how do you see the growth? Is it mostly a margin story? Or is there more to get on the top line as well from here?
Vincent Piquet : Yes, I can start. So as we've said before, clearly, transmission is in transition. After 2, 3 years where the business doubled, we are going to see much lower growth rates going forward. And it's also dependent on the timing and the lumpiness of the projects in the backlog and their execution. So what you saw in H1 will probably continue in H2, and that's what we see. It doesn't have an impact importantly and to your point on the profitability expansion rate. The backlog is very healthy and very -- the execution is doing very, very well right now. So we're on track for the EBITDA expansion -- the EBITDA rate expansion.
Julien Hueber : I think maybe I will add one thing. Clearly, our focus today is profitability of transmission. This is clearly our main focus. You know where we want to land by 2028. We are on track. There's a trajectory. There's an action plan. It's about execution. This is where we push the team to focus on the H1 results demonstrate the capital team to deliver, but there's still a long way to go, and we are confident that the action ongoing will deliver results in H2 2026 and in 2027. So trajectory is there. The plan is there. We are pushing the team to execute on profitability.
Lucas Ferhani : Very clear. And then the second one was just on the -- on M&A, just the cadence of kind of potential further deals. I guess this leverage has gone up a little bit in the first half, but you're deleveraging. Do you want to wait to kind of further integrate Republic Wire? Or if you see opportunities, are you happy to kind of already start to do further deals? How do you think about the cadence of M&A?
Julien Hueber : Well, our strategy is profitable growth. The profitable growth strategy is based on expansion, both organic and inorganic. So part of our strategy is to do M&A, and we will continue to push to discuss targets to execute this M&A. So we will not wait any time any opportunity which sounds good to us in line with our strategy, we will action that.
Operator : The next question comes from Sean McLoughlin from HSBC.
Sean McLoughlin : Just coming back to the Connect margin mix. What kind of time line should we expect to bring the LTC margins to the Connect average? Or is this just a structurally lower margin business compared to Nordics? Just thinking about how that margin mix evolve through the second half and the 80 bps that you mentioned, is this the kind of level that we should expect in terms of year-on-year improvement? Or what other moving parts should we consider there?
Julien Hueber : So when we have done the acquisition of LTC, the challenge on the strategy on that acquisition was to purchase -- to buy this acquisition at a low multiple, if I remember, it was around a 5 multiple. And of course, when you buy a low multiple, you get a lower margin at start. So all our challenge and all our strategy is to transform this low-margin business to a high-margin business. And this is what the team has been executing since now 2 years, it generate results. So we are, first of all, we have reduced the number of customers. We have done the SHIFT methods on these activities that a big part of it has been done. We have reallocated the capacity to the best verticals what we believe. And most important, we have injected innovations to the business, both to Italian operation to Italian business, but as well other country business because this is not only Italy, it's also covering other geographies. So the plan is there. The plan delivered according to exactly what we expect. We are still below the average, but we're making progress on our expectation for the second half on the years to come is not to be at 11.8% connect. We believe we can be above 12% and step-by-step raising this bar. So that will come from transforming some of this acquisition, but also acquiring different [indiscernible] in different geographies. And third, by developing ourselves to verticals which are providing -- that are having more appetite for innovations such as data centers, BESS, battery storage and so on. So the plan is -- we have a plan for LTC. It's moving in the right direction. It takes time because there's a big demand. And of course, when you have a nice industrial footprint, you want to use this capacity, which is what we are doing. So the growth of LTC is extremely dynamic in this first half. We will continue. It will remain dynamic in the second half, and we need to quickly inject more and more innovations to raise this margin level.
Sean McLoughlin : And the second question, just coming back to the guidance that includes the MI line loading by end of '26. So are we -- is the base assumption that you will secure more short-term work? Or are you already baking in this larger project win by end of '26 in that guidance?
Vincent Piquet : Yes. We're baking in a small portion of that new project into the number at the end of the year. So we're working on that. And in the meantime, if we have the ability to continue to execute on the spare orders that I mentioned, we will do that. So yes, there's some of it in.
Operator : The next question comes from Chris Leonard from UBS.
Christopher Leonard : Maybe 2 for me, actually. Could I start by going back to the Nordic region, and you mentioned that you hope to see that sort of recovery coming through in the second half. Has there been any signs of any sort of recovery in growth in early Q3 to date? And what would you -- which geographies in particular, would you be looking for to see an early recovery?
Julien Hueber : Well, first of all, Q3 in the Nordics is better in terms of volume than the Q1 this year, clearly. But the last several semesters, we had typically the Swedish business has been going down quite a lot in our mix, but also in top line sales because of the local economy. So we are not the only one facing this problem. So we do see some start of recovery in Q3. For us, our ambition is to go faster than that because we expect them to grow even faster. And this is, by the way, both in Grid and Connect because we are selling also Connect on Grid business to some of our distributors there. So -- but the recovery is coming, but it's still not at the level we expect.
Christopher Leonard : And second question on Transmission maybe. I mean you spoke about this new contract you're hoping to get in that would keep the MI line occupied for maybe 18 months. And I think previously, you stated maybe you're also seeing other inquiries for transmission on the MI line. And what sort of time frame might you expect for those discussions to get more mature? And if you were to confirm additional contracts for the MI line, would those take priority for delivery ahead of the current GSI contract?
Vincent Piquet : Yes. So we're actively working on different projects. There's clearly appetite for projects using this technology specifically. As we've mentioned before, there's only 2 actors in the world who actually can produce this MI technology, and the demand is strong because it's a requirement in many geographies Specifically Mediterranean, but not only. And the time line of -- and the sequencing of these projects is both our competitors and us, we are basically coming towards the end of the backlog that we have visibility at '28, '29. And so it's normal for the activity to start to pick up in '27 so that we start to refill the backlog and the projects will be executed in '29, '30 and beyond. So it's probably during the course of next year that some of these projects will materialize.
Julien Hueber : I just want also to highlight the strong agility of the transmission team in Nexans that managed to basically reposition this production MI line to this new project. You can imagine that in this world of transmission, you normally have long cycle of projects. When we understood that the GSI was postponed to a different date, it was not so long ago. It was more or less 6 months ago and the beginning of the year. And the team has done a great job to quickly find out in the market talking to customers. And you explained that customer was eager to also use this capacity to make it happen in 6 months' time. So I think this is quite impressive in terms of cycle time. And it gives -- it only shows the agility that the team has been doing. So I think that's something to highlight.
Vincent Piquet : And one complement for me, sorry, Chris, to answer specifically your question. As we've just done with this new deal, if GSI doesn't move fast enough and we find another deal, then we will do that other deal before GSI.
Operator : The next question comes from Akash Gupta from JPMorgan.
Akash Gupta : It's just on transmission business. When I look at various moving parts, I mean, I think MI was the last piece of bottleneck you had in saturation of your production, capacity, but you do have some installation offsets, including the new vessel. So the question is that like when we look at all of your production and installation assets in transmission business, by when should we expect you would be fully saturated on that? Is it by end of the year when you start executing on this new MI project? Or do we need to wait for a few months until you have produced the cable and you start installing it? So just curious, when should we be in 100% utilization of your -- all of your assets in transmission?
Julien Hueber : So it's -- we've got different plants in the world. So I would say the answer would differ from one plant to another. We are still, at this moment, building capacity in Charleroi land high-voltage. This capacity will be up and running by end of the year, not before. So -- and of course, the consequences on the saturation of equipment will differ from each of these. So overall, we are well loaded until 2028. Charleston and Halden submarine plants are loaded. And to improve also our profitability, we also -- the team is also improving the industrial efficiencies and that also creates some capacity availability that maybe we didn't have a few years ago. And that gives me the willingness to also go after other smaller size deal. So in the industrial world, I mean, our job is to keep on improving, working on the efficiency, execution, selectivity of our project. But -- so I think that overall, our equipment is well loaded, but the improvement in the industry give us also still some room to keep on developing extra sales in '27 and '28 and the year after. And for the case of Charleroi, Charleroi is we just have this new equipment. It will be loaded for the big TenneT project that we will be starting some of it already started. That will load our plants in terms of land high voltage. But we keep pushing because industrially speaking, we need to keep on improving our efficiency, the speed of line to capture extra miles of capacity.
Operator : The next question comes from Scott Humphreys from Berenberg.
Scott Humphreys : Apologies. A couple of other companies with exposure to the solar space have reported recently, and they've seen some pretty strong growth in that market. Could you please provide a bit of color on the scale of solar within Grid and Connect and the extent to which sort of these are current dynamics due to the energy markets, government incentives that are sort of driving this segment versus a structural longer-term trend?
Julien Hueber : It's a very interesting question because it's a vertical one of our strategical verticals we really want to go in. It's extremely dynamic perspective in terms of growth looking forward. It's very much active in South America, where we are currently producing, building and selling large solar projects. The same for Mediterranean Sea countries like Morocco on the south of, I would say, of Europe. So there is plenty of activity that I should mention Australia as well. And by the way, because we also are currently producing for larger activities. So the long-term perspective are extremely dynamic. It is part of the growth we are having both in Connect and Grid, as I explained previously, we do produce the low-voltage cable for solar that are between 2 panels, solar panels, but we are also, of course, producing medium voltage to link this solar farm to the grid. So the 2 market segments, Grid and Connect benefiting from this dynamic. It's already a significant part of Nexans sales growth, and it will continue because we are innovations, capabilities, different type of packaging that fit completely with this market.
Operator: [Operator Instructions]
Julien Hueber : Okay. So since there are no more questions, let me close by a few words. So the first half of 2026 was another strong demonstration of our profitable growth strategy in actions. We delivered solid Electrification growth, a resilient EBITDA margin and the cash generation, all while further increasing our exposure to the attractive U.S. market. So we completed our transformation with the divestment of Autoelectric that you know we finished by early July. Nexans is now officially a global Electrification player, a simpler, sharper and more resilient business, backed by a solid balance sheet that gives us the flexibility to keep investing in our growth. And the perspective of us are truly exciting. We operate in markets where demand structurally outpace supply, whether in grid modernization, in subsea interconnections or fast-growing verticals like data center, battery energy storage and solar. With our innovation, our industry-leading scales and our disciplined approach to M&A, we are exceptionally well positioned to capture these opportunities and to keep creating value for all our stakeholders. I want to thank you all for joining us today. This concludes our first half '26 results call. Thank you, and see you very soon.
