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By keeping a constant focus on the market and our customers, we achieved the profit targets that we announced to the market.
This meant that we were able to reward our shareholders with a proposed dividend in line with 2013, despite the improvement in net financial position, albeit only symbolic.
In 2014, we kept our promise to add value to the businesses of our customers with our top end products and systems that satisfied, and exceeded, their requirements. .
The decisive contributions to our recent successes have been made from the strategic submarine cables and systems businesses. These business segments posted strong In 2014, Prysmian managed to maintain and possibly strengthen its leadership in the global cable industry: what was, in your judgement, the main factor behind your success?
By keeping a constant focus on the market and our customers, we achieved the profit targets that we announced to the market. This meant that we were able to reward our shareholders with a proposed dividend in line with 2013, despite the improvement in net financial position, albeit only symbolic. In 2014, we kept our promise to add value to the businesses of our customers with our top end products and systems that satisfied, and exceeded, their requirements. growth and the optical cables part of the business saw recovering volumes and profitability.
It is particularly significant that our encouraging results have been achieved in the context of economic conditions that remain challenging. Despite recovering demand for some business types, contrasting weakness remains in some of the more cyclical sectors. We also encountered technical issues over the course of the year, namely in the execution of the Western Link project, but managed to successfully overcome them by keeping in mind that the client always comes first. In this context, we have relentlessly pursued our growth strategy, by focusing on investments and on ongoing actions to improve efficiency. In other words, investing in the future.
I think that this is the right way to reward our shareholders and always protect our clients in terms of excellence, quality and state-of-the-art technology. Our strategy includes the awareness that what is good for our clients is good for us.
We are driving forward the process of putting clients even more at the centre of our strategy, establishing distribution channels that mirror their own. That means maintaining the widest possible geographical reach, in order to meet our clients’ needs locally, in every corner of the world.
That’s why we are creating regional centres of excellence with high levels of expertise, from which we believe the highest level of technological innovation can be achieved consistently, everywhere. More generally, our focus has always been one of pursuing greater manufacturing efficiency.
In 2014, we further increased the Group’s overall capital expenditure to €163 million.
Significant investment (around 30% of the total) was aimed at improving technological capabilities and our proposition mix, with a particular focus on increasing the Group’s footprint in Energy Projects and Telecom segments. The Energy Products segment gained tactical capital investments to support the development of promising markets.
A significant portion of capital spending was channelled to reduce fixed and variable costs, with a focus on product design and experimentation with new materials. Innovation is the key to leadership, value creation and clients’ satisfaction. It is also our main competitive advantage.
• Sales €6,840 Million
• Adj, EBITDA €509 Million - Guidance achieved
• Net Profit - €115 Million
• Net Financial Position €802 Million
Major contracts in submarine and offshore links - In 2014 the Energy Projects business segment secured major projects including: a 200km submarine link for Emirates Holdings; the Shannon River Crossing in Ireland; the high voltage link across the Dardanelles and, in the offshore wind farms; the connection in the North Sea for the Dutch-German operator TenneT and that of West of Adlergrund in the Baltic Sea for the German operator 50Hertz Offshore GmbH
Rail infrastructures and fire-safety spotted - The Energy Products business segment was awarded several rail infrastructure projects, such as the framework agreement with the Swiss Railways and others in Italy, France and Denmark; while the Trade & Installers business saw Prysmian’s fire-safety cables at the centre of a number of projects, including the MOSE flood barrier in Venice and two projects in the UK: the new Leeds Arena and the intriguing Sky Garden skyscraper in London.
New products introduced in Telecom - The Telecom operating segment gained the execution of many new projects and the renewal of ongoing partnerships with all the major global players, as well as intense technological innovation with the introduction of new products, including the Flextube® technology, in response to ever-increasing needs for cable miniaturisation.
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Prysmian Group is the world leader in the energy and telecom cables and systems industry.
It operates in the businesses of underground and submarine cables and systems for power transmission and distribution, of special cables for applications in many different industries and of medium and low voltage cables for the construction and infrastructure sectors.
For the telecommunications industry, the Group manufactures cables and accessories for voice, video and data transmission, offering a comprehensive range of optical fibres, optical and copper cables and connectivity systems
The Energy Projects segment scored headline growth due to strong results in its submarine cables business, while sales of high voltage underground cable also remained strong.
Sales made by the Energy Projects operating segment came in at €1,355 million in 2014, with organic growth of +1.7% (which, excluding Western Link, would have been €1,416 million, with organic growth of +6.1%). The profitability would have risen, excluding Western Link, with Adjusted EBITDA coming in at €248 million.
Sales for power transmission were highly buoyant, despite the delay in the Western Link project. The Group confirmed its market and technological leadership by winning several new projects for both energy interconnections and for offshore wind farms. High Voltage Underground power transmission cables maintained generally stable sales despite the impact of weak demand for new energy infrastructure in several major European markets. The order book for underground and submarine cables and systems stands at about €2.8 billion.
Organic sales within this operating segment were higher, reflecting volume recovery in Northern and Eastern Europe and growth in Asian countries.
The result was offset by exchange rate fluctuations and price reductions that brought sales made by this operating segment down 3.4% on 2013, at €4,491 million. Adjusted EBITDA came in at €239 million.
Energy & Infrastructure business sales grew organically by 2.7% but contracted by 2.6% due to exchange rate fluctuations and price reductions. Against weakness in infrastructures and energy consumption in Europe, it was able to benefit from growth opportunities in Asia and North America. The Industrial & Network Components business saw a negative change in sales too, while demand for renewables improved considerably. The Elevator leadership was consolidated in North America and expanded into the Chinese and European markets.
This operating segment saw higher sales at €994 million with adjusted EBITDA up more than 10% to €116 million, also thanks to Yangtze Optical Fibre and Cable.
This operating segment saw higher sales at €994 million with adjusted EBITDA up more than 10% to €116 million, also thanks to Yangtze Optical Fibre and Cable.
The main driver of the recovery for the Telecom segment was the demand for optical fibre cable, which offset lower demand for copper cables and OPGW products, in turn due to the postponement of investment projects in areas affected by geopolitical turmoil, such as Iraq and Libya. In all the major markets there was a strong upsurge in demand for optical cables, while the general price pressure seen in the first part of the year seemed to stabilise. The Group won contracts for major projects for the implementation of network backbones and FTTH connections in Europe for leading operators, from BT in the UK, to Telefonica and Jazztel in Spain, Orange in France and Telecom Italia in Italy.
Energy – Worldwide leader in High Voltage & Submarine; partner of the major Utilities.
Telecom – Global market leader (# 1 in Brazil, Australia, North America and Western Europe); 19 dedicated manufacturing plants.
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Slide to the right to see some of our most significant events and projects during 2014.
In line with its growth strategy, the Group performed well in high value-added businesses, while focusing its investments in the same business areas.
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The macro environment in 2014 was marked by a gradual strengthening of the US economy but continued overall weakness in Europe, despite tentative signs of recovery, especially in the first part of the year.
In this context Prysmian stock reduced its value by 19% in 2014 mainly due to the technical problems encountered in executing the Western Link project. Despite this extraordinary event, Prysmian stock continued to outperform its main cable industry competitors, who were faced with the stagnant demand and major restructuring processes. It is important to note that in the period between mid October and end of December Prysmian stock has posted a performance of 16%.
Prysmian Group is a genuinely Public Company: its free float is equal to 100% of the shares, with more than 75% of its capital held by institutional investors.
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The Prysmian Group confirmed its commitment to sustainability during 2014 by renewing investment in the search for sustainable products, strengthening the process for developing its human resources and participating actively in projects and initiatives carried out in the public interest, as well as by reducing where possible the environmental impact of its products and production activities.
As part of the process of continuous improvement, Prysmian has prepared its Report in conformity with the new «G4 Sustainability Reporting Guidelines», applying the Core option. Adoption of these guidelines, defined in 2013 by the GRI – Global Reporting Initiative, increases the breadth and depth of the topics covered and confirms Prysmian’s constant commitment to making the reporting process ever more complete and effective.
People are the most important resource for creating, within a global company such as Prysmian, the cohesion needed to compete at the highest level in the business sectors addressed, while also pursuing the objective of generating lasting and sustainable value.
Human capital is a determining factor for a Group called upon to compete at the highest level in such a challenging environment, while maintaining market leadership and creating lasting and sustainable value.
During the year, Prysmian Group consolidated its employee training and development programme based on the following four initiatives: Graduate Program, Prysmian Group Academy, Talent and Succession Management and Performance Management.
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Prysmian Group has always given key strategic importance to Research & Development to maintain its market leadership. 2014 was an intense year for several research and development projects.
The R&D department worked on several projects, particularly in the submarine cables area, but also in Extra High Voltage underground and P-Laser cables, on Oil & Gas cable product development, and on technology transfer between Group factories. The Telecom business segment introduced innovations to optical fibres and to its optical cables and connectivity.
Spending on R&D and Innovation was some €70 million in 2014, confirming the Group’s steadfast commitment to and focus on longterm sustainable growth. The Group now has 17 Centres of Excellence, with headquarters in Milan, and over 500 skilled professionals. With around 5,800 patents granted or filed and partnerships with major universities and research centres in many countries, Prysmian Group intends to stay as industry leader in R&D.
Prysmian Group constantly strengthens relations with strategic suppliers, centralising procurement and leveraging a global approach marked by a single organisational model, common processes and a system for the management of commodities.
Aware of the effect that our suppliers and their activities have on the environment and on the company, the Group has decided to adopt a Code of Business Conduct. This will spread responsible business practices by defining principles of economic, environmental and social responsibility to be applied throughout the entire value chain.
The Group’s commitment to safeguarding the environment and conserving natural resources is expressed not only by the intrinsic characteristics of our products, but also by how the production systems are managed. In particular, the prevention and reduction of their environmental impact is achieved, for example, by the efficient use of natural resources, the optimisation of logistics flows and the responsible management of waste.
In terms of energy efficiency, in 2014 the Group has participated once again in the Carbon Disclosure Project (CDP) which seeks to contribute to the pursuit of the objectives agreed in the Kyoto Protocol regarding the global reduction of greenhouse gas emissions.
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