Cable Cluster Q1 Earnings

Intro

Cable companies have become a core sub-theme of my Portfolio, tying into the broader themes of Electrification, AI, and Renewable Energy. My first investments into the theme were $PRY.MI - the global leader in cable manufacturing, and Encore Wire a smaller US cable company that was acquired by Prysmian in 2024, driving shares higher for both companies - a great win for my portfolio at the time.

It’s been a while since I’ve really talked about them or the industry more broadly, so I wanted to give an update now that Prysmian Group alongside the two newer positions ($NEX.PA and $NKT.CO) have all reported their Q1 2026 Earnings.

Why Cables?

I’ve written at length about the thesis, and you’re welcome to read through some of my older posts like this one: https://etoro.tw/3ze5MIz for more depth, but here’s the short version.

Cables are one of the best picks and shovels investments for exposure to the three themes I mentioned in the introduction - Electrification, AI and Renewable Energy.

Electrification is a very broad trend, but essentially comes down to reducing fossil fuel consumption and shifting to new electric alternatives. Heat pumps instead of gas boilers, electric vehicles instead of internal combustion engines. It’s not just about reducing emissions, it’s about efficiency - electricity is faster and more efficient to get to where you need it, it’s more flexible in its applications, and because of renewables, it’s now cheaper than fossil fuels in most cases.

AI is a massive growth industry, and as explained in this post: https://etoro.tw/4nuQzbn it’s incredibly energy intensive and is driving demand for electricity. That power not only needs to get to the data centers, but also needs to be distributed to the thousands of server racks within each data center.

Renewables are the final puzzle piece - More relevant than ever now that Oil and Gas from the middle east is facing disruption, they are still trending down in pricing. Their more decentralized nature means that not only are large cables needed to connect wind and solar farms, but grids are being upgraded to handle growing residential solar alongside electrification demands.

What Happened in Q1: Prysmian

• Revenue: €5.2bn (+9.4% YoY)

• Net Profit: €253m (+63% YoY) 

• Order Backlog: ~€17bn (+0% YoY)

• Stock Reaction: +10%

Prysmian had strong earnings again, reaffirming their 2026 guidance and maintaining their strong order backlog. Unlike Nexans and NKT, Prysmian also holds a leading market share in fibre-optic cables, which plays an increasingly large role in the company’s growth.

• Digital Solutions (Fibre-optics & submarine telcom) EBITDA margins grew from 13.2% to 20.6% YoY, driven by demand from Data Centers & the boost from their recent $950m Channell acquisition in 2025.

• In March, Prysmian unveiled their new (world’s first) carbon-negative cable, which uses new patent pending engineering with recycled and low-carbon materials in a cable that doesn’t compromise on performance for its green credentials. As more companies focus on scope 3 emissions targets, this product could find a sizable market if the price premium isn’t too high.

• The massive +63% YoY net profit growth was largely driven by improved financing costs and the lower than normal 2025 numbers, but the growth in fibre-optic demand should not be underestimated

• The company is starting to benefit from their ability to offer both power and data solutions to huge datacenter projects, benefitting directly from AI by offering something their competitors can’t.

• They have also continued slowly paying down debt from the Encore Wire acquisition, which is further boosting margins for the long-term.

What Happened in Q1: Nexans

• Revenue: €1.5bn (1.3% YoY)

• Net Profit: N/A (Published at H1) 

• Order Backlog: ~€7.9bn (-2.5% YoY)

• Stock Reaction: +7.5%

Nexans reported a slightly slower quarter, and we’re missing Net Profit data, which won’t be released until their H1 earnings, but their slower quarter is partially due to legacy products and services that management has been steering away from product for several years.

• Nexans remain on track in shifting away from their non-electrification business, which declined 24.1% organically this quarter

• The weaker order backlog is my only slight concern with Nexans vs NKT and Prysmian, but it’s hard to judge too harshly given the nature of the industry where major orders run into billions of euros.

• A major highlight was the announced acquisition of Republic Wire for €680m - Republic Wire is a US company focused on low-medium voltage cables. Essentially this Nexans trying to expand their footprint and build a stronger base in the US and an attempt to compete with Prysmian’s acquisition of Encore Wire a few years earlier, which will help win revenue from large manufacturing facilities, commercial buildings and most importantly - data centers.

• Their 3rd cable-laying ship will be ready this summer. Submarine cables are a growing and important segment for all 3 companies, so additional vessels will help them scale, bid for larger projects and work through their backlog more quickly.

What Happened in Q1: NKT

• Revenue: €864m (+3.2% YoY)

• Net Profit: €61m (+7% YoY) 

• Order Backlog: ~€13.5bn (+26% YoY)

• Stock Reaction: +6%

NKT is the most focused of these 3 companies, specifically on high voltage DC cables, so while Nexans and Prysmian have increasingly been looking to build exposure in low-medium voltage and the opportunity with data centers, NKT have benefitted from the still growing demand for major submarine HVDC cables driven by large renewable and interconnector projects.

• The big story for NKT was securing huge UK contracts for major HVDC connections to strengthen the UK grid, the largest being Eastern Green Link 3 with a contract value of €2.2bn. These major deals significantly boosted their order backlog.

• There are also more major projects in the pipeline meaning NKT’s backlog is in reality not far behind Prysmian’s - an incredible achievement for a company so much smaller.

• Their cash position is the best of the 3, and with both Prysmian and Nexans aggressively seeking out Merger and Acquisition opportunities in recent years this could be something management are considering, although the didn’t mention it in their earnings.

• NKT remains attractive as an extremely focused cable company with heavy exposure to the European market and dedication to the HVDC market above anything else - this was more original core motivation for investing in this industry at the start, and as Prysmian and Nexans start to diversify slightly, NKT is playing an important role in exposure to major HVDC projects.

The Big Picture

Overall this has been another fantastic earnings season for the industry as a whole and continues to validate itself as one of the major themes of my portfolio.

All 3 companies are growing in a healthy way that I still believe is being largely overlooked by most investors. With all 3 companies based in Europe, there were some FX headwinds that impacted all 3 companies, not to mention US tariffs, but I still believe this the best route for exposure to the theme.

Backlogs are still growing across the board even as all three companies continue investing in scaling their operations, driven largely by the electrification mega-trend. The picture is improving further as AI growth shows little signs of slowing and major renewable and interconnector projects in Europe are being pulled forward as a response to the ongoing situation in the Strait of Hormuz adding to the existing issues around Houthi and Russia/Ukraine disruptions.

The scale of the order backlogs offers security that’s difficult to find in companies that are still growing at a good pace, and I still believe we’re in the early phase of the electrification and renewables mega-trend as a whole, so I expect to maintain high exposure for several years to come.

Closing Comments

That’s it for this post, I have a couple more planned for the tail-end of the month on similar topics, but as always I’m open to suggestions on content. If you have any insights of your own in this industry I’d love to hear them in the comments.

Thanks for reading, please give the post a like if you found it useful, and consider following or copying my portfolio if it aligns with your financial goals and objectives. I look forward to hearing your opinions in the comments section.