Strong results for the first half of 2019

• Sales at €5,849M (+1.9% organic growth), with strong growth in North America (+4.7%)
   

• Excellent performance in Telecom (+7.9%); positive trend in Energy & Infrastructure (+3.1%)
   

• Adjusted EBITDA increased to €521M (+26.2% vs H1 2018), 8.9% ratio to Sales (7.1% in H1 2018)
   

• Improved profitability: solid trend in Energy & Infrastructure; strong growth in optical cables and MMS
   

• Viking Project awarded to Prysmian for about €700M; projects awarded in the first 7 months worth €1.1BN
   

• Net profit has doubled to 192M (€80M in H1 2018)
   

• FY19 guidance confirmed (excluding the positive impacts of IFRS 16):

              -Adjusted EBITDA expected in the range of €950M-€1,020M

              -Free Cash Flows forecast at €300M ±10% after €90M restructuring costs

The Board of Directors of Prysmian S.p.A. has approved today the Group’s consolidated results for the first half of 2019*.

“One year after the closing of the General Cable acquisition, our results in the first half of 2019 highlighted the significant contribution by North America to the Group's sales growth and improved profitability," commented Chief Executive Officer Valerio Battista. “The integration has been yielding considerable benefits at the level of both operating synergies and the business, due to the cross-selling opportunities and the important role it allows the Group to play in serving strategic clients. These developments are particularly significant in the Optical Cables and Multi-Media Solutions businesses, as well as in the entire Energy & Infrastructure segment, and particularly in Power Distribution. There have also been positive signs in the Projects segment: following several important offshore wind farm projects such as Vineyard in the USA and Dolwin5 in Germany, the award of four of the five assigned lots of the Viking Link project for nearly €700 million brought the overall value of projects awarded in the first seven months to over €1 billion — the target we had estimated for 2019 full-year."       

*In line with the integration process began in the previous year, overall Group’s results are analysed as a whole (with no distinction between the two groups, Prysmian and General Cable) effective financial year 2019. The figures for the first half of 2019 are compared with the figures of the Consolidated Financial Statements. In addition, key operating indicators (sales and adjusted EBITDA) are compared with combined results, i.e., including General Cable’s results as if they had been consolidated as of 1 January 2018.

However, it should be noted that the combined data are not to be construed as pro-forma figures, even if they were restated by applying Prysmian Group’s main accounting standards and policies.

Financial results
 

Group sales amounted to €5,849 million with a +1.9% organic growth, mainly driven by the Telecom business (+7.9%), with a double-digit increase in optical cables and the excellent performance reported in Multi-Media Solutions, and by the solid trend in Energy and Infrastructure, with the double-digit performance reported by Power Distribution. The expected negative organic growth in the Projects segment was attributable to the 2018 low order intake, the timing of installation activities and several reworks that proved necessary within the submarine cables business, in addition to the phasing on some High Voltage Underground projects. 

Adjusted EBITDA amounted to €521 million (up +26.2% compared to €413 million in the first half of 2018), including €21 million arising from the positive effect of the application of the new IFRS 16, effective 1 January 2019. EBITDA margin improved as well, with a ratio of Adjusted EBITDA to sales at 8.9% compared to 7.1% for the first half of 2018. Profitability improved mainly driven by the good result reported by Energy & Infrastructure, particularly in North America and LatAm, and by Telecom, thanks to the positive performance that the optical cables and MMS businesses obtained thanks to increased productivity and industrial efficiencies. The solid performance of Power Distribution and Industrial & Network Components also generated a positive impact on profitability. With respect to 2018, the profitability of the Projects segment, excluding the Western Link impact, was affected by the aforementioned reworks required and the unfavourable timing of execution of various orders.

EBITDA grew to €492 million (€293 million in H1 2018, including General Cable as of 1 June 2018) and comprises net expenses for company reorganisation, net non-recurring expenses and other net non-operating expenses totalling €29 million (€46 million in H1 2018).

Operating income rose to €335 million, compared to €158 million in the first half of 2018. The significant improvement is mainly due to the enlargement of the Group’s corporate perimeter and the exchange rate effect.

Net profit grew sharply to €192 million compared to €80 million for the first half of 2018.

Net Financial Debt amounted to €2,819 million, or €2,678 million net of the €141 million impacts due to the application of the new IFRS 16, in line with expectations and with the business’ seasonal nature.

Comparing the figure relating to Net Financial Debt with that at 30 June 2018 (€3,014 million), the main factors that influenced said item in the past 12 months were:

-      positive operating cash flows (before changes in working capital) of €697 million;

-      an increase in net working capital amounting to €38 million;

-      cash outflows totalling €115 million due to restructuring, integration and ancillary expenses associated with the acquisition of General Cable;

-      €65 million referring to the Western Link project.

-      net operating investments totalling €263 million;

-      net finance costs incurred the amount of €112 million;

-      taxes paid amounting to €109 million;

-      a dividend pay-out of €120 million;

-      capital increase for €496 million;

-      a €159 million increase in financial liabilities following the adoption of IFRS 16;

-      other increases amounting to €17 million.

General Cable integration: €90M synergies already achieved vs FY 2019 target of €120M 
 

One year after the General Cable acquisition, the integration of the two groups continues to create significant opportunities for value creation both from an operating standpoint and in terms of business opportunities arising from cross-selling synergies and the strategic positioning achieved with respect to important customers.  

The integration launched in June 2018 allowed the Group to achieve synergies for €90 million at 30 June 2019 compared to target synergies of €120 million expected by the end of 2019 (€175 million by 2021). These results were mainly obtained through measures aimed at reducing fixed costs — following the organisational efficiencies achieved — and through savings in terms of material procurement (chiefly raw materials). The Group timely achieved its targets of working capital synergies (€200 million), mainly thanks to efficient stock management and the review of contracts negotiated with suppliers, as well as of financial synergies (€30 million), following refinancing of General Cable’s net debt effected immediately after the transaction closing.

In June 2019, costs for implementing the synergy plan amounted to approximately €105 million compared to total amount of €220 million expected by 2021.

Projects
 

- VIKING LINK AWARDED FOR APPROXIMATELY €700M. 2019 TARGET FOR PROJECTS AWARDED ACHIEVED AHEAD OF TIME

- EXTENSIVE TENDERING ACTIVITY CONTINUES IN H2 2019

- IMPORTANT TECHNOLOGICAL MILESTONES REACHED WITH THE QUALIFICATION OF THE 525 KV P-LASER AND XLPE