Consolidated Financial Statements >
Directors’ Report
80
| 2012 annual report prysmian group
MARKET OVERVIEW
Demand for fibre cables remained stable in North America and Europe but grew in fast-
developing markets.
Higher sales accompanied by a sharp increase in profitability.
FINANCIAL PERFORMANCE
The market for optical fibre cables is a global one. Forecasts
at the start of the year predicted that the size of the global
market would have grown in 2012 although with large
regional differences. In fact, the first half saw demand grow
in fast-developing markets (China) and in those with high
communication infrastructure needs (India, Brazil, Turkey),
while markets in North America and Europe were basically
stable. During the second half of the year, demand was stable
or in slight decline in the USA, due to the ending of government
incentives, and in Brazil, where operators were waiting for the
government to introduce tax incentives for investment.
The Access/Broadband/FTTx market was stable in 2012,
with growth driven by the development of optical fibre
communication infrastructure, although the low maturity
Sales to third parties by the Telecom segment amounted to
Euro 1,466 million in 2012, compared with Euro 1,315 million
at the end of 2011, posting an increase of Euro 151 million
(+11.5%). Compared with the 2011 pro-forma figure of Euro
1,431 million, Telecom sales to third parties posted an increase
of Euro 35 million (+2.4%).
This change is attributable to the following factors:
• positive exchange rate effects of Euro 44 million (+3.1%);
• positive change of Euro 46 million (+3.2%) for the
line-by-line consolidation of Telcon Fios e Cabos para
Telecomuniçaoes S.A. as from the second quarter;
• organic decrease in sales of Euro 50 million (-3.5%), due to
the second-half downturn in demand for optical fibre cables;
• negative change of Euro 5 million (-0.4%) in sales prices due
to fluctuations in metal prices.
of these products implies different evolution in demand by
geographical area.
The copper cables market is experiencing a slowdown not
only because of the economic downturn in the past two years,
which has driven some major operators to revise their larger
investment projects, but also because of product maturity. The
downturn in demand was increasingly evident during the third
and fourth quarters of 2012 with soaring demand for internet
access leading major operators to opt to renew their networks
using optical fibre, rather than performmaintenance or upgrade
work on existing networks. xDSL cables have provided an
opportunity for product technological diversification in a market
that would have not otherwise significantly changed in recent
years.
The organic decrease in sales, especially pronounced in the
second half, primarily reflects the downturn in demand
for optical fibre cables in North and South America which
tempered the positive trend in preceding months, driven
not only by large-scale projects such as those started
for BT (United Kingdom), NBN (Australia) and Telefonica
(Brazil), but also by emerging markets and channels, such
as Eastern Europe, South America and India. The sudden
decline in demand in Brazil was due to growing expectations
about government incentives to support communications
infrastructure.
Adjusted EBITDA came to Euro 160 million at 31 December
2012, reporting an increase of Euro 39 million (+32.1%) on
Euro 121 million at the end of 2011, and an increase of Euro 32
million on the 2011 pro-forma figure.
