Prysmian – Prysmian makes solid start to the year

Strong cash generation LTM & margin expansion sustained by market trends FY 2024 results expected in the upper end of the guidance range

• ADJ EBITDA AT €412M, WITH IMPROVING MARGINS AT 11.2% (10.7% IN 1Q23)
• MARGIN IMPROVEMENT IN TRANSMISSION AT 13.0%; OVER €18BN BACKLOG
• ADJ. EBITDA IN POWER GRID RISES TO €115M (+57%), MARGIN IMPROVED AT 13.5%
• GROUP NET PROFIT INCREASES TO €185M (€182M IN 1Q23)
• SOUND CASH GENERATION WITH FREE CASH FLOW LTM AT €827M1
• CLEAR PROGRESS ON CLIMATE AMBITIONS: -35% LTM SCOPE 1&2 GHG EMISSIONS
• ENCORE WIRE ACQUISITION WILL GROW PRYSMIAN’S NORTH AMERICA BUSINESS

Massimo Battaini, Chief Executive Officer (CEO), commented: “Prysmian has had an solid start to 2024. The first quarter results highlight an outstanding profitability, driven by the strong performance of the Power Grid and Transmission segments, while the order backlog stands at over € 18 billion. These achievements demonstrate that Prysmian’s commitment to accelerating the energy transition globally, together with its solutions which meet the highest environmental standards, are continuing to deliver positive results. My first year as Prysmian’s CEO is also marked by the signing acquisition of Encore Wire. This transaction is a unique opportunity to further grow and strengthen our position in North America, enhancing the diversification of our business and creating value for all stakeholders.”

FINANCIAL HIGHLIGHTS

1 FCF excluding Acquisitions & Disposals and Antitrust impact

Milan, 9 May 2024 – The Board of Directors of Prysmian S.p.A. have approved the Group’s consolidated results for the first quarter of 2024. 

Group Sales amounted to €3,687 million, with a -5.6% organic growth. The Transmission Business reported an organic growth of +1.0% thanks to a consistent execution of interconnection and offshore wind farm projects. Sales in the Power Grid continued to benefit from investments in the grid enhancement, with a robust growth in North America in particular. In Electrification, Renewables continued to post a double-digit growth, while in Industrial & Construction price normalization continued at a slower than expected pace in North America. Sales in the Digital Solutions sharply declined in line with expectation (-31.6% organic growth) mainly due to the US market. A volume recovery is expected in the second part of the year.

Adjusted EBITDA reached €412 million (€427 million in 1Q23), with improving margins at 11.2% compared to 10.7% in 1Q23. Solid improvement in the Transmission Business with adj. EBITDA up 15% at €62 million thanks to the smooth execution and improved project margins. Excellent performance confirmed in Power Grid with the Adj. Ebitda rising to €115 million (+57%) with significant margin improvement at 13.5% (8.6% at 1Q23). In Electrification Business, Adj. Ebitda stood at €203 million vs. €233 million in 1Q23. The improvement in Specialties (Adj Ebitda margin at 11.1% vs 9.8% in 1Q23) were offset by Industrial & Construction where price normalization continued at a slower than expected pace in North America. A sharp market decline, especially in the US, negatively impacted the Digital Solutions in line with expectation, with adj. EBITDA down to €32 million vs €67 at 1Q23, including also lower contribution from YOFC at €3 million (vs. €7 million in 1Q23).

EBITDA amounted to €393 million (€398 million in 1Q23), including net expenses for company reorganisations, non-recurring expenses and other non-operating expenses of €19 million (€29 million in 1Q23).

Net profit increased to €190 million (€187 in 1Q23). Net profit attributable to owners of the parent company amounted to €185 million (€182 million in 1Q23).

Free Cash Flow LTM rose to €827 million, up by 42.3% compared to €581 million in March 2023.

Net Financial Debt fell sharply to €1,693 million at March 2024 (€2,074 million at March 2023), driven by strong cash flow generation.

BUSINESS OVERVIEW

TRANSMISSION 

Consistent execution and improved projects’ margin drove solid growth. Sales amounted to €474 million, with +1.0% organic growth. Adjusted EBITDA rose to €62 million (€54 million at 1Q23) with solid margin improvement to 13.0% (11.2% in 1Q23).

Prysmian received the Notice to Proceed for Amprion Frame Agreement and EGL 2 (both projects awarded in 2023), bringing the total backlog up to over €18 billion. In the High Voltage Underground, the Group continued to produce the German Corridors cables in line with the plan and expect to start installation later this year.

POWER GRID 

Sales in Power Grid amounted to €852 million (€853 million at 1Q23), with organic growth of 1.5%. HVAC was particularly strong with double digit growth in EMEA and North America. Adjusted EBITDA leapt to €115 million (€73 million at 1Q23) with strong margin improvement at 13.5% (8.6% in 1Q23) sustained by structural markets trends (grid enhancement), in particular in North America.

ELECTRIFICATION

Industrial & Construction 

Sales in Industrial & Construction totalled €1,193 million with -5.8% organic growth vs. 1Q23, mainly driven by softening raw material prices, while total physical volumes grew marginally, with a more robust growth in North America. Adj. EBITDA declined to €114 million (€154 million at 1Q23) with a margin of 9.5% (11.8% at 1Q23). The slower-than-expected price normalisation in the US, was partly offset by margin improvement in the other regions, mainly in EMEA.

Specialties 

Sales of Industrial & Network Components amounted to €762 million with -2.3% organic growth. Renewables continued double-digit YoY growth, with strong performance in EMEA. Adj. EBITDA grew further to €85 million (vs. €78 million at 1Q23) with sound margin expansion at 11.1% compared to 9.8% at 1Q23, driven mainly by OEM and Renewables

DIGITAL SOLUTIONS 

As expected, sales declined sharply mainly driven by the US market. Sales amounted to €312 million (€460 million at 1Q23) with -31.6% organic growth. Adj. EBITDA also declined to €32 million (€67 million at 1Q23), with margin at 10.4% compared to 14.6% at 1Q23. The contribution from YOFC was €3 million, down from €7 million in the first quarter 2023.

The long-term growth drivers for the Digital Solutions Business remain unchanged, driven by massive data growth as well as the increase of FTTH, 5G coverage and datacentres. Prysmian is well positioned to seize the opportunities offered by digitalisation.

ESG UPDATE 

First quarter of 2024 confirmed that Prysmian’s GHG emission reduction trajectory is well-on track with the long term decarbonization trend and in line with 2025 targets. Last twelve months Scope 1 and 2 emissions are down 35% compared to the 2019 baseline.

The results of Prysmian’s commitment and initiatives on Green and Circular economy resulted in the percentage of revenues linked to sustainable products up to 41% year-to-date and the percentage of recycled content on PE jackets and copper for the first quarter of 2024 rose to 14.7%.

KPIs on the Social and Governance Dimension are also in line with the Ambition of the Group to reach at least 47% of desk worker women hired and 21% of Executive women in 2025.

SUSTAINABILITY TARGETS AT A GLANCE

OUTLOOK 

For FY 2024, Prysmian confirms the guidance announced in February 2024 and expects to achieve the upper end of the range: 

• adjusted EBITDA in the range of €1,575-1,675 million 
• free cash flow in the range of €675-775 million 
• scope 1&2 GHG emission reduction of 36% and Scope 3 reduction of 13% vs 2019

These goals assume no material changes in the geopolitical crisis relating to the conflicts in Ukraine and in Israel, in addition to excluding extreme dynamics in the prices of production factors or significant supply chain disruptions. The forecasts are based on the Company’s current business perimeter, assuming a EUR/USD exchange rate of 1.08, and do not include impacts on cash flows related to Antitrust issues.

EVENTS AFTER 31 MARCH 2024 

For significant events took place after Mar. 31, 2024, please refer to dedicated section in the corporate website www.prysmian.com 

CONFERENCE CALL 

The results of first quarter 2024 will be presented to the financial community during a conference call today at 10:00 CET. Please find below the link to access the webcast:

Webcast link 

https://edge.media-server.com/mmc/p/pzo7p32u 

A recording of the conference call will be subsequently available on the Group’s website: www.prysmian.com. The documentation used during the presentation will be available today in the Investor Relations section of the Prysmian website at www.prysmian.com and can be viewed on the Borsa Italiana website www.borsaitaliana.it and in the central storage mechanism at www.emarketstorage.com.

Prysmian Group’s Financial Report at 31 March 2024, approved by the Board of Directors on 8 May 2024 will be available to the public by May 15th , 2024 at the Company’s registered office in Via Chiese 6, Milan. It will also be made available, by the same terms and conditions, on the corporate website www.prysmian.com, on the website of Borsa Italiana S.p.A www.borsaitaliana.it, and in the authorised central storage mechanism used by the Company at www.emarketstorage.com. This document may contain forward-looking statements relating to future events and future operating, economic and financial results of Prysmian. By their nature, forward-looking statements involve risk and uncertainty because they depend on the occurrence of future events and circumstances. Therefore, actual results may differ materially from those reflected in forward-looking statements due to a variety of factors. The managers responsible for preparing corporate accounting documents (Stefano Invernici and Alessandro Brunetti) hereby declare, pursuant to Article 154-bis, paragraph 2, of Italy’s Unified Financial Act, that the accounting information contained in this press release corresponds to the underlying documents, accounting books and records.

EBITDA means the operating result gross of the effect of the change in the fair value of derivatives on commodities, other items measured at fair value, amortisation, depreciation and write-downs. This indicator allows to present the Group’s operating profitability situation before the main non-monetary items. Adjusted EBITDA means the EBITDA described above calculated before charges and income relating to corporate reorganisations, charges and income considered to be of a non-recurring nature, as indicated in the consolidated income statement, and other nonoperating income and expenses. This indicator allows to present the Group’s operating profitability before the main non-monetary items, without the economic effects of events considered unrelated to the current management of the Group itself

Adjusted EBITDA before share of net profit/(loss) of equity-accounted companies: Adjusted EBITDA as defined above calculated before the share of net profit/(loss) of equity-accounted companies;

Adjusted operating income means the operating income before income and expense for business reorganisation before non-recurring items, as presented in the consolidated income statement, before other non-operating income and expense and before the fair value change in derivatives on commodities and in other fair value items. The purpose of this indicator is to present the Group’s operating profitability without the effects of events considered to be outside its recurring operations; •

Organic growth means the growth in sales calculated net of changes in the scope of consolidation, changes in metal prices and exchange rate effects.

Net financial debt is an indicator of the financial structure, determined by the: sum of the following items: – Borrowings from banks and other lenders – non-current portion – Borrowings from banks and other lenders – current portion – Derivatives on financial transactions recorded as Non-current derivatives and classified under Long-term financial receivables – Derivatives on financial transactions recorded as Current derivatives and classified under Short-term financial receivables – Derivatives on financial transactions recorded as Non-current derivatives and classified under Long-term financial payables – Derivatives on financial transactions recorded as Current derivatives and classified under Short-term financial payables – Medium/long-term financial receivables recorded in Other noncurrent receivables – Loan arrangement fees recorded in Other non-current receivables – Short-term financial receivables recorded in Other current receivables – Loan arrangement fees recorded in Other current receivables – Financial assets at amortised cost – Financial assets at fair value through profit or loss – Financial assets at fair value through other comprehensive income – Cash and cash equivalents.

ANNEX A 

Consolidated Statement of Financial Position

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Statement of Cash Flows

ANNEX B 

Reconciliation table between Net result, EBITDA and adjusted EBITDA of the Group

Statement of Cash Flows with reference to change in net financial position