Letter from CEO
Letter to the Stakeholders
For our company, 2022 was a year that can certainly be described as a record year following a difficult time marked by exceptional impact events such as supply chain disruption, the energy crisis and the shortage of raw materials, as well as inflationary pressures and a changing macroeconomic and market scenario
Technology innovation, our efficient and effective supply chain and a customer-centric focus allowed us to fully seize the opportunities offered by the current energy transition, electrification and digitalisation trends, enabling us to report results that exceeded all our expectations.
The strong sales growth was accompanied by the jump of over 50% in net profit and cash generation and debt reduction. The best performances were recorded above all by the businesses and segments most exposed to secular energy transition, electrification and digitalisation trends, such as submarine cables and systems for power interconnections and offshore wind farms links, cables for energy grid hardening, cables for the renewables and electric mobility sectors, data centres, cables for non-residential constructions and optical cables.
Excellent results were also reported in profitability terms: Adjusted EBITDA jumped by +52.5%, improving also compared to the upper part of the guidance, revised at €1,475 million in November 2022. Margins also improved sharply, with the ratio of Adjusted EBITDA to Sales at 9.3%, increasing by 160 bps compared to 7.7% for 2021.
Cash generation continued to be a distinctive trait of our Group, with a Free Cash Flow up +53.2% that allowed to significantly reduce net financial debt, bringing the ratio of net debt to Adjusted EBITDA to below 1x. The solidity of our financial structure allows us to keep a balanced position while sustaining the significant investments planned for the coming three years to further strengthen our positioning and our ambitions to become a global benchmark for energy transition, electrification and digitalisation: production capacity adjustments and the new submarine cable plant in the USA, a new cable-laying vessel alongside the Leonardo da Vinci, and technology innovation.
Moreover, I would like to underscore that, in a year of record results such as 2022, we also paid close attention to the adoption of new policies and tools for redistributing the value generated to all our stakeholders and for engaging all our employees, not only top managers.
Last, but not least, worth of mention is our ESG performance. The reduction of our emissions and the improvement of the main environmental and social impact KPIs testify to our commitment to improving our business sustainability. During 2022, the Group pledged even more ambitious climate target than the previous ones, committing with the Science Based Target initiative to further reduce its Scope 3 emissions, aligning with the “Well Below 2°C” trajectory, and updating the goal to 2030 from - 21% to -28%. Furthermore, all social performance KPIs showed a strong improvement, thanks to the projects and initiatives carried out by Prysmian in all its regions. Yet, our climate and social ambitions would not be feasible without the sustainability leadership model that we have built over the years, and that today allows us to say that we do not “pursue sustainability” rather “we embody sustainability.” To consolidate the commitment we undertook with our Social Ambition, in 2022 we inaugurated the Prysmian Sustainability Academy, with the aim of training the sustainability leaders of tomorrow, promoting inclusion and enhancing diversity.
The focus of Prysmian on all ESG topics is also highlighted by the increase of ESG investors in the Group’s shareholding structure, which reached over 48% of the total in 2022. My personal thanks go to them for the trust put in our company, our sustainability strategy and action plans.
In view of this very goal of ensuring a thorough, integrated disclosure of our financial and ESG performance, this year, in advance of the new regulatory requirements, we have prepared our first Integrated Annual Report.
All in all, the positive start to 2023 confirms the competitive positioning achieved and enables us to set the goal for 2023 of consolidating our 2022 record performance, continuing to generate value for our shareholders and for all of our stakeholders.
Chief Executive Officer, Prysmian Group