In response to this crisis, the International Monetary Fund, among the major financial institutions, significantly reduced its economic growth estimates for 2020. According to its forecasts as updated in April 2020, the global economy is expected to decline by 3.0% in 2020, compared to the expected growth of 3.3% forecast at the beginning of January. In any event, these forecasts are subject to a high degree of uncertainty, in view of the lack of visibility regarding various factors, such as the duration of the pandemic, the intensity and efficacy of the containment measures, progress in the health arena, the volatility of commodity prices and the pace of the recovery of demand.
The extraordinary impacts of the Covid-19 pandemic began to affect Prysmian Group’s results, albeit still to a limited degree, already as of the end of the first quarter. Production and market demand in China were severely influenced throughout the first quarter, while in the second week of March the impact began to be felt in the geographical areas mainly affected by the pandemic (South Europe and the UK) and the businesses mainly related to the construction sector (e.g., Trade & Installers).
Prysmian Group’s long-term growth drivers, mainly related to the energy transition to renewable sources, telecommunications infrastructure projects and electrification processes, remain unchanged.
The Group may also rely on broad diversification by business and geographical areas, a solid financial structure, an efficient, flexible supply chain and a lean organisation.
In light of the above considerations on COVID-19, and above all of the persistent uncertainty regarding the scope and duration of the pandemic, the impacts of the containment measures and the present inability to predict the speed and conditions of the recovery of market demand, the Group has decided to withdraw its guidance for the current year, as previously communicated to the market on 5 March. As soon as market conditions so permit, i.e., when there is greater visibility regarding the course of the pandemic, the containment measures taken by the various national governments and the speed of recovery of market demand in the main businesses and geographical areas, the Group will promptly update its forecast Adjusted EBITDA and cash flows for financial year 2020.