Group Annual Report

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Group Annual Report 2021

GROUP ANNUAL REPORT 2021

Strong growth in 2021; guidance exceeded record €4.8 billion project orders secured in 2021

Group sales grew to a record €12,736 million, with an organic change of +10.9% (+13,6% in Q4); excluding the Projects segment, the organic change was +11.0%. The Energy business segment confirmed its resilience, with organic growth of +10.7% compared to 2020 and +3.8% compared to 2019, exceeding pre-pandemic levels. Trade & Installer and cables for renewable energy performed particularly well while Power Distribution demonstrated a strong recovery during Q4 in North America. The Telecom segment also benefited from the favourable trends within the US market, reporting +12.7% organic growth. Prysmian’s comprehensive execution in submarine cable projects was the main driver for the Projects segment, sharply accelerating in Q4 with a +34.7% increase over the same period of 2020, exceeding the Group’s expectations.

Adjusted EBITDA rose by +16.2% to €976 million, exceeding the Group’s upper range of expectations and revised guidance of €920-€970 million. There was also a strong acceleration in Q4, with Adjusted EBITDA reaching €251 million (the best fourth quarter performance ever in the Group’s history). Exchange rates generated a negative impact of approximately €11 million during 2021. The Group result, net of the cumulative exchange rate effect in the two years (equal to €55 million) was higher than in 2019. Margins remained substantially stable, despite the impact of increasing metal prices, with the ratio of Adjusted EBITDA to Sales at 7.7% (8.6% restated at 2020 metal prices) compared to 8.4% in 2020. The Energy segment confirmed its resilience, particularly in terms of profitability, driven by the Trade & Installers’ crucial contribution, with Power Distribution also showing signs of a recovery in Q4, driven by US demand. Margins remained stable across the Telecom segment, due to efficiency-building measures and an enhanced product mix. The Projects segment recovered markedly, reporting an increased Adjusted EBITDA mainly driven by a record Q4 performance.

EBITDA was €927 million (€781 million in 2020), net of costs for company reorganisations, non-recurring expenses and other non-operating expenses totalling €49 million (€59 million in 2020). These adjustments mainly included non-operating costs for €26 million and reorganisation charges for €21 million.

Operating income amounted to €572 million, compared to €353 million in 2020.

Net profit attributable to owners of the parent rose to €308 million compared to €178 million in the previous year.

Free Cash Flow before acquisitions and divestments stood at €365 million (also excluding antitrust related flows), exceeding the guidance.

Environmental performance improved as a result of the efficiency actions undertaken:

CO₂ emissions amounted to 678,000 t eq. in 2021 (870,000 t eq. in 2019, down -22,1% on the 2019 baseline) - Scope 1 and Scope 2 market based;
total recycled waste was stable at 69%;
20.9% of cables assessed using ECO CABLE CRITERIA (vs 1% in 2020).

“The recovery trend gained pace at the end of the year, allowing the Group to close 2021 with sharp growth in revenue and exceed the guidance previously announced to the market,” CEO Valerio Battista. For the first time, sales exceeded €12 billion, a record milestone, and Adjusted EBITDA grew sharply, with stable margins despite significant rises in commodity prices. In particular, our results were driven by the resilience of the Energy business segment and the recovery in Telecom. Flawless execution of submarine cable projects in progress, also led to a recovery in the Projects segment, a business positively exposed to the energy transition, where the Group has reaffirmed its technological and market leadership, acquiring record orders worth approximately €4.8 billion in the year. With the aim of consolidating our position in the US market, we are also planning to build a new submarine cable plant in the USA. We have started 2022 with the same conviction and determination, which includes setting ambitious new targets for the year, with an expected Adjusted EBITDA in the range of 1,010 million to €1,080 million and a free cash flow target of €400 million ±15%”.

Valerio Battista
Chief Executive Officer
Prysmian Group

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