There has been high market activity in the cable market in the beginning of 2024, with cable group NKT further expanding its order book of high-voltage cable contracts to EUR 11.5bn with a gigantic contract worth EUR 1.2bn. 

Looking ahead, the market also looks promising, says NKT CEO Claes Westerlind in an interview with MarketWire. 

”There’s a lot of activity out there across pretty much all segments, including offshore wind, and interconnectors. And it’s both framework agreements that are currently in tender and individual projects,” says Westerlind following the company’s first quarter results on Wednesday morning. 

He adds that the company is always cautious about measuring activity on quarter-on-quarter - or even year-on-year - basis, as it is difficult to predict the timing of orders, which are often very large deals. 

”But market activity continues to be strong,” Westerlind says. 

After a record high level of market activity in 2023, NKT estimates that the value of awarded projects in the addressable high-voltage cable market exceeded EUR 9bn in the first quarter of 2024. 

”That said, a large part of this figure is also orders that have been converted from capacity reservations made last year into firm orders this year.” 

”And in general, we have said that on average we believe that the high-voltage market in the period from 2024 to 2030 will be ”more than” EUR 1bn per year. So it’s fair to say that the market has shown a very good start to 2024,” says Claes Westerlind. 

Still a high level

Bidding activity in the high-voltage cable market continues at a high level, and Claes Westerlind points to some of the areas where there are big battles to be fought in the coming period. 

”As has been the case in recent quarters, Europe continues to see the most activity. Of course, there are also promising prospects in the US, but this has yet to be confirmed and translated into real order volumes.” 

”And in Europe, it’s across several countries. I can mention, without going into details, that there are a couple of TSOs that are in the process of offering frames at the moment, and it’s also common knowledge that the contract for difference, the CFD auction process, will take place in the UK later this year,” says Westerlind in an interview with MarketWire. 

What is the timing of the contracts that network operators would like to agree on?

”I don’t want to go into too much detail because the timing is always uncertain in these cases. Even if they plan something, it can slip a quarter or two. But it’s clear that not all European TSOs that aim to secure frameworks have done so.” 

”A lot of them did it last year, but there are some left this year or even next year,” says Westerlind. 

So what is the timing of the deliverables on the deals being negotiated?

”If we start by looking at our own order book, the last delivery we have in it at the moment is towards 2034-2035. That shows the length or horizon of the current projects that are being planned.” 

”And it’s very similar to what’s also being offered on the market. We’re talking about 5-8 years into the future,” says Westerlind. 

Good visibility

The large order book also provides good visibility of future earnings development, according to the CEO. 

”Due to our large order book, we currently have good visibility of earnings development,” says Westerlind. 

NKT has maintained its guidance range for the full year. 

The forecast for revenue remains at EUR 2.21-2.36bn and an operational operating profit, EBITDA, of EUR 285-335m. 

”We are continuously evaluating how we can best guide the market. But we are sticking to the current forecast with nine months left in the year,” says Westerlind. 

When asked whether the Solutions business has the opportunity - through new orders - to achieve even better capacity utilization at the factories, he replies: 

”I would never say that we have full capacity utilization, but we have very limited opportunities to take additional orders beyond what is planned for this year,” he says about the activities in the high-voltage business.

(Translated using DeepL with additional editing by Catherine Brett)