Market Outlook

Market Outlook

Business Outlook

The macroeconomic environment in 2016 saw modest but mixed growth for Europe's major economies, partially eroded by the uncertainty generated by the outcomes of referenda held in the United Kingdom (23 June 2016) and Italy (4 December 2016).

In the United States growth was moderate although less intense than in 2015. Among the main emerging economies, Russia experienced a progressive stabilisation after almost two years of crisis, while the economic and political situation in Brazil has remained challenging, despite a slight improvement in the latter part of the year.

After a slow start, the Chinese economy benefited from the government's economic stimulus package for the housing market and from growing investments in infrastructure, with government growth targets achieved thanks to better-than-expected recovery in the second half of the year.

In such a context, the Group's expectation for FY 2017 is that demand in the cyclical businesses of building wires and medium voltage cables for utilities will be in line with the previous year, with a general stabilisation in prices.

With the Energy Projects segment seeing a growing market, the Prysmian Group expects to consolidate its market leadership and improve profitability in the Submarine cables business, while it expects a slight decline in the High Voltage underground business especially due to phasing of its manufacturing footprint in China.

In the Oil & Gas segment, the gradual strengthening of oil prices, if confirmed in 2017, should lead to a slight recovery in cable demand in the second part of the year.

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In the Telecom segment, the underlying growth in the Group's turnover is expected to remain strong in 2017, thanks to growth in the North American and European markets, while a gradual stabilisation in volumes is expected in Australia.

In addition, assuming exchange rates remain at the same level as at the time of preparing the present document, the effect of translating the results of other group companies into the reporting currency would not have a material impact on the Group's 2017 operating income.

Lastly, the Prysmian Group is continuing in 2017 to rationalise its activities with the objective of achieving projected cost efficiencies and greater competitiveness in all areas of its business.

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