Market Outlook of the Management

Global economic growth expectations for 2022, while remaining positive, have been revised downwards, primarily following the conflict in Ukraine and the related international tensions. After the 6.0% rebound in 2021, the global economy is expected to grow by 3.2% in 2022, according to the most recent estimates issued in October by the International Monetary Fund. In any event, there continues to be a high level of uncertainty regarding global macroeconomic performance, with risks of further downwards revisions of growth prospects, in view of a possible deterioration of the geopolitical crisis relating to Ukraine, a resurgence of the pandemic at the global level and a demand slowdown due to rising interest rates.

 

Prysmian Group’s 9M 2022 results once again confirm the Group’s exposure to medium/long-term growth drivers and its focus on proactively and seamlessly serving its customers, also by leveraging its efficient and geographically widespread industrial footprint. This approach is supported by the excellent results achieved by the Energy segment, which hit a record level in 9M 2022, by the Telecom business’ solid performance and the expected ongoing improvement of the Projects business, with €3.2 billion orders awarded YTD and a total order backlog of approximately €6.85 billion (an all-time high), with visibility of a further €4.1 billion expected to be converted in backlog by 2024.

 

As a result, for the full year 2022 Prysmian Group expects a moderate demand growth in the construction and industrial cables businesses after last year’s excellent performance, with results also supported by the ability to implement pricing policies to contain the inflation-driven cost pressures. In the high-voltage underground and submarine cables and systems business, the Group aims to confirm its leadership on the market, which is expected to grow sharply, driven by the development of offshore wind farms and interconnections to support the energy transition, as well as the start of a significant market uptrend in the United States, where the Group has decided to expand its production capacity and has already obtained the first construction permits for the new submarine cable plant at Brayton Point (Massachusetts). For this segment, the Group expects results to be up on the previous year, with a more marked acceleration in the Q4 2022. In the Telecom segment, volumes growth is expected in the optical business, mainly thanks to the North American market, where the Group is strengthening its commitment to meeting the country’s growing demand for broadband optical fibre connectivity.

Prysmian Group's long-term growth drivers are confirmed, mainly linked to the energy transition, the strengthening of telecommunications networks (digitalisation) and the electrification process. The Group can also leverage its broad business and geographical diversification, solid capital structure, efficient and flexible supply chain and lean organisation, all of which is enabling it to effectively seize growth opportunities.

 

In light of the above considerations and in addition to the solid performance achieved in 9M 2022, the Group has further revised its guidance for the FY 2022 upwards. For FY 2022, the Group expects an Adjusted EBITDA in the range of €1,425-1,475 million, up from the €1,300-1,400 million range announced in July.

 

Moreover, the Group has upgraded the cash generation target as it now expects to generate cash flows of €450 – 500 million. The target announced in July foresaw   a FCF in the range of €400-460 million.

These forecasts assume no material changes in both the geopolitical crisis relating to the military conflict in Ukraine and in the development of the health situation. The forecasts also assume that global supply chains will remain under pressure in the coming months, but there will not be any further tensions and extreme dynamics in the prices of factors of production. In addition, the forecasts are based on the Company's current business scope, assuming an annual average EUR/USD exchange rate of 1.05, and do not include impacts on cash flows related to Antitrust issues.