Cenergy: Profitability at all-time highs

By | May 17, 2023

Cenergy Holdings posted record high profitability for the first quarter of the current year, which also speaks to a strong financial outlook for the full year.

More in detail, the company’s revenue increased by 27% compared to the first quarter of 2022 and amounted to 381 million euros. This increase was mainly driven by the steel pipe segment, which is executing projects from orders won during 2022. Demand for cable products remained strong with improved margins, while cable project activity continued to support profitability of the entire sector.

Adjusted EBITDA increased to €44.0 million (+95% YoY) as both segments improved their margins while continuing to focus on high value-added products, which in turn led to a more favorable sales mix. The Group’s αEBITDA margin reached a double-digit rate (11.5%), significantly higher than that reached in the first quarter of 2022.

The successful execution of energy projects continues to be the main driver of operating profitability, as it provides a solid foundation in a challenging global macroeconomic environment.

The main projects carried out during the reporting period were the following:

– Cables: The execution of the “turnkey” interconnection projects, Lavrio – Serifos / Serifos – Milos (4th phase of the interconnection of the Cyclades in Greece, with a total cable length of 170 km.) and Zakynthos – Kyllini progressed significantly, as final batches of 66 kV inter-array cables for Phase II of the Doggerbank offshore wind farm in the UK.

– Steel Pipes: Production started at the beginning of the year for the supply of a natural gas transportation pipeline in Western Macedonia on behalf of DESFA (163 km) and the Alexandroupolis FSRU project for Saipem (28 km), while production continues for the Fenix ​​Submarine Gas Pipeline in Argentina commissioned by TotalEnergies and expected to be completed by the end of 2023.

Increased sales combined with the timing of payments (“milestone payments”) for ongoing projects requires high working capital needs and consequently also keeps net indebtedness high. In addition, higher interest rates have led to higher net financial costs for the first quarter of the year, equivalent to 16.2 million euros compared to 6.8 million euros in the corresponding quarter of the previous year.

Despite higher financial costs, pre-tax profit increased by more than 50% compared to the first quarter of 2022 to EUR 18.5 million (EUR 12.3 million in the first quarter of 2022). Profit after tax followed the same path and amounted to EUR 15.4 million (EUR 9.6 million in Q1 2022), representing 4.0% of revenues (vs. 3.2% last year ).

Finally, in the first quarter an investment program in the cable sector of approximately 80 million euros was launched with an execution horizon of two years, to respond to the increasing demand for electrification as a result of the rapid transition to a low carbon economy. This program includes a major expansion of the state-of-the-art submarine cable factory in Corinth that will double its production capacity, provide additional storage capacities, as well as extensive port facility upgrades.

For this program, the cable sector obtained a co-financing from the EBRD with the Recovery and Resilience Fund of Greece (TAA) of 88 million euros. The loan agreement provides for financing of €25.2 million as a TAA loan through the Greek Ministry of Finance, while the EBRD will make funds of €62.8 million available to finance a broader set of investments from 110 million euros that will cover, in addition to the expansion of the aforementioned factory in Corinto, the additional working capital when the new productive capacity becomes available, as well as the financing of research and development (R&D) programs for the next years. The remaining 22 million euros will be covered by own funds.

Commenting on the Group’s performance, Mr. Alexis Alexiou, Chief Executive Officer of Cenergy Holdings, said: “The new year started very well with a full production schedule across all plants and several new project assignments. This enabled us to record the best times in the first quarter of history”. in terms of results while, at the same time, the order book stabilized above the €2 billion mark, and the growing demand for electrification remained the key driver of the Group’s growth. The necessary expansion of submarine cable production capacity is fully supported by a strong financial partner, such as the EBRD while, at the same time, the orders already secured allow the Group to expect strong operating profitability, in terms of adjusted EBITDA, for the financial year 2023 of 180 – 200 million euros.

The order book increases to 2,270 million euros

Hellenic Cables and Corinth Pipeworks continued their bidding successes, keeping the total order book at more than €2 billion. Projects commissioned during the first quarter include:

• the supply of approximately 260 km of 66 kV inter-assembly cables and all related components for the South Fork Wind and Revolution Wind projects in the northeastern US states.

• the supply of approximately 155 km of 20-inch straight submerged arc welded (SAWL) steel pipe for the Tamar natural gas pipeline in the south-eastern Mediterranean;

• the supply and installation of 400kV and 150kV underground terrestrial cables within the framework of the assignment by ADMIE of two turnkey projects to be carried out in Greece,

• the supply of approximately 16 km of 20-inch diameter high-frequency welded (HFW) steel pipe for the N05-A platform;

• the supply of approximately 30 km of 110 kV high-voltage submarine cables, components and related services as part of a Croatian Transmission System Operator (TSO/HOPS) project to replace aging cable lines in the Adriatic Sea .


The cable segment expects to maintain the improved sales mix and satisfactory profit margins in the cable products business unit, while the projects business unit expects a correspondingly high level of orders. All factories maintain high capacity utilization rates throughout the year and, in combination with the above, support the profitability of the sector by 2023. At the same time, the electrification dynamics in Europe and the increasing demand for electrical interconnections are expected to fuel further order book Finally, as a continuation of previous announcements, discussions continue regarding collaboration with Ørsted regarding the construction of an inter-arrangement submarine cable factory in Maryland, USA.

In the steel tube sector, the dynamic demand for natural gas is expected to continue, in line with the main directions of the energy transition. The need for energy security coupled with today’s high energy prices are driving the development of new and existing natural gas reserves and increasing demand for new interconnections, while new pipelines, certified for the new age of hydrogen, and capture and Carbon storage (CCS) projects are going strong. As market conditions improve, orders increase, hence the positive outlook for 2023.

Given the strong order book for both sectors and the growing demand for energy infrastructure products around the world, Cenergy Holdings expects adjusted EBITDA for fiscal year 2023 of €180-200 million. These prospects assume: (a) smooth project execution in both sectors, (b) strong demand for cable products, and (c) limited economic impact of an uncertain global geopolitical and macroeconomic environment, high inflationary pressures, or/and challenges, and/or Potential supply chain disruptions.

See Cenergy’s first quarter results in the “Related Files” column on the right.

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