Company Presentation January 2015
Company Presentation – January 2015
1
AGENDA
Group Overview & 2014 Outlook Draka integration Financial Results Appendix
Company Presentation – January 2015
2
Prysmian Group at a glance
LTM Q3’14 Results
Sales breakdown by geography
Sales breakdown by business Telecom 14%
APAC 12%
North America 15%
Utilities 31%
Other 2%
Latin America 8%
€ 6.7 bn
€ 6.7 bn
Industrial 25% EMEA 65%
T&I 28% Adj. EBITDA margin by business
Adj. EBITDA by business Telecom 19%
10.8%
10.3%
(16% excl. WL)
Other 2%
(2% excl. WL)
€ 526 mln
Utilities 43%
7.4%
(51% excl. WL)
(€ 609m excl. WL)
3.5%
Industrial 23%
(20% excl. WL)
7.8%
14.2% Excl.WL
T&I 13%
(11% excl. WL)
9.0% Excl.WL
Utilities
T&I
Industrial Telecom
Total
Company Presentation – January 2015
3
Long Cycle Businesses Vs. Short Cycle Businesses
Adj. EBITDA breakdown Long Cycle Businesses 68%
Short Cycle Businesses 32%
Utilities
Utilities
(Submarine, HV, Net. Components)
Short Cycle Businesses Adj. EBITDA (Combined Prysmian + Draka) • Profitability: stabilization of margins after the fall in 2009 • Potential upside from recovery in economic cycle
(Power Distribution)
44%
7%
€ mln
500
LTM Q3’14 ADJ. EBITDA € 609 mln
~(€ 260mln)
T&I 11% 400
(excl.WL)
300 Industrial
Industrial
200
Other Energy 2%
100
12%
(OGP & SURF, Renewables, Elevator)
8%
Telecom
(Optical Connectivity & Fiber, Multimedia & Specials)
16%
(Specialties & OEM, Automotive, Other)
Telecom (Copper)
0%
0 2007 2008 2009 2010 2011 2012 2013
Long Cycle Short Cycle
PD
T&I
LTM Q3'14
Industrial*
* Industrial includes Specialties & OEM, Automotive and Other segments
Note: 2012-2013 restated figures in application of IFRS 10-11 and reclassification of share of net income. 2007-11 according to old accounting criteria
Company Presentation – January 2015
4
9M 2014 Key Financials Euro Millions, % on Sales Sales -3.3%*
7,574
Excl. WL sub.project effect
+0.2%*
6,995
2013
9M'13
5,095
5,014
9M'14
9M'14
* Org. Growth
Adjusted Net Income 279
269
2013 3.8%
494
613 442
438
333
2013 8.8%
9M'13 8.3%
9M'14 8.6%
9M'14 7.1%
Operative Net Working Capital
(3)
465
9M'13 3.4%
801
191
9M'14 3.8%
332
355
2012 8.6%
249
2012 6.5%
2013 6.7%
9M'13 6.3%
441
9M'14 2.7%
2012 6.0%
9M'14 6.5%
9M'14 5.0%
Net Financial Position
(4)
1,193
909 888
134
(2)
Excl. WL sub.project effect
Excl. WL sub.project effect
179
2012 3.7%
650
Adjusted EBIT
(1)
Excl. WL sub.project effect
+1.7%*
5,297
2012
Adjusted EBITDA
1,292
805
392
2013 5.8%
9M'13 11.2%
9M'14 13.2%
2012
2013
9M'13
9M'14
Note: 2012, 2013 and 9M’13 restated in application of IFRS 10-11 and reclassification of share of net income (1) Adjusted excluding non-recurring income/expenses; (2) Adjusted excluding non-recurring income/(expenses) and the fair value change in metal derivatives and in other fair value items; (3) Adjusted excluding non-recurring income/(expenses), the effect of derivatives and of other fair value items, exchange rate differences, non-monetary interest on the convertible bond and the related tax effects; (4) Defined as NWC excluding derivatives; % of sales is defined as Operative NWC on annualized last quarter sales
Company Presentation – January 2015
5
Profitability in line with previous year excluding WL effect Positive organic growth in 9M despite slowdown in Europe and Brazil Organic Growth
Adj. EBITDA
% change on same period of previous year
Euro million
2013 2014
438
WL 5.3%
83
3.0% 1.9%
1.8%
1.7% 0.2%
163 -0.8%
-1.9%
-3.1%
37
-14.6%
Industrial
* 9M’14 Org.growth excluding WL submarine project effect 9M’13 Org.growth according to previous accounting criteria
Telecom
9M'14*
9M'14
9M'13
9M'14
9M'13
9M'14
9M'13
9M'14
9M'14*
9M'14
9M'13
9M'13
T&I
168 126
160 151
78
∆ Q1
∆ Q2
∆ Q3
∆ 9M
+5
+9
+9
+23
(3)
(4)
(6)
(13)
Industrial
-
(5)
(6)
(11)
Energy*
+3
-
(1)
+2
Telecom
(2)
(5)
+1
(6)
Total
+1
(5)
-
(4)
Utilities
Utilities
442 355
114
Project phasing in Submarine, OGP and SURF in Q3 expected to be reversed in Q4
9
37
115
-3.9%
-5.1%
160
Total
(ex WL)
T&I
* Total Energy includes Other Energy business: ∆Q1 +€1m, ∆Q2 =, ∆Q3 +€2m, ∆9M +€3m
Company Presentation – January 2015
6
Industrial Footprint Competitiveness
Moving from local…
…to regional supply chain
2014 Highlights Energy:
Optical Cables:
Optical Fiber:
• Footprint rationalization restarted: ongoing consultation processes in Europe to close 2 plants
• Largest factory by H1’15 (Romania)
• € 50m investment to reduce costs in 2014-15
• Doubled production output in the last 12 months
• Significant cost improvement through 2015 vs. 2013
• Relocate the needed capacity to existing plants
Company Presentation – January 2015
7
Utilities
Euro Millions, % on Sales Sales to Third Parties -1.4%*
2,278
Excl. WL sub.project effect
2,217
2013
DISTRIBUTION
-3.1%*
• Mid single digit organic decline in 9M. Stabilization of prices and volumes on H1 levels
+1.8%*
1,644
2012
Highlights
9M'13
1,616 1,535
9M'14
9M'14
•
Europe: weak demand in the Nordics and Eastern Europe, stabilization in Central Europe. Ongoing capacity rationalization to improve plants saturation
•
North America: stable volumes vs. previous year
•
South America & APAC: weak performance in Brazil partially offset by good trend in Argentina. APAC slightly down vs. 9M’13
• Gradual business stabilization in Q3; profitability impacted by overall lower volumes and FX
* Organic Growth
Adjusted EBITDA Excl. WL sub.project effect
275
287 195
135
2013
9M'13
9M'14
12.1%
12.9%
11.9%
13.5%
TRANSMISSION – HV
• Top line impacted by project phasing in Q3 expected to be fully reversed in Q4
• 9M broadly stable vs. previous year. In Europe, weak demand in Italy and France offset by positive trend in the UK, Spain and the Netherlands
• Double digit organic growth expected in FY14 excl. WL
218
2012
TRANSMISSION – Submarine
9M'14
• Western Link project on track: financial impact confirmed • New investment worth approx. €40m in Pikkala and Arco Felice to enhance the production capability to meet the order backlog requirements
• Sound demand in the US • Higher production in China to serve increasing local market and APAC countries (e.g. Australia, Singapore, HK) • Higher penetration in the Middle East markets
8.8%
Note: 2012, 2013 and 9M’13 restated in application of IFRS 10-11 and reclassification of share of net income
Company Presentation – January 2015
8
Utilities - Strengthening leadership in Submarine to match increasing demand in a fast growing sector Transmission – Sales & Adj.EBITDA (€m) CAGR 12% 1,500 ~1,050
1,250 1,000
~1,150
~1,250
~1,300
350 300
~850
250
750
200
500 250
150
0
100 FY 2010
FY 2011
FY 2012
FY 2013
LTM Q3'14
Sales (L axis) Adj.Ebitda (R axis)
LTM Q3’14 excl. WL effect
Pikkala & Arco Felice - New investment of €40m to increase production capability and sustain growth The plants will be fully equipped to manufacture and test large cross-section 3-core cables up to a voltage of 220 kV AC
Pikkala (Finland)
Arco Felice (Italy)
Company Presentation – January 2015
9
Trade & Installers Euro Millions, % on Sales
Sales to Third Parties
Highlights • Mid single digit organic growth in 9M, softening from Q2
-4.3%*
2,159
1,914
+5.3%*
1,470
1,434
• Europe: on-going volume recovery driven by Nordics and Eastern Europe, more than offsetting sluggish demand in Central Europe • North America: confirmed positive trend • South America: significant volume decrease vs. previous year mainly due to weaker construction activity in 2014. Profitability penalized by negative currency effect • APAC: single digit organic growth driven by China and ASEAN • 9M profitability penalized by pricing and FX effect
2012
2013
9M'13
9M'14
* Organic Growth
Adjusted EBITDA
Organic Growth % change on previous year period
81
12%
79 65
7.4%
8% 52
4% 0% -4%
-0.4% -4.9%
-8% 2012
2013
9M'13
9M'14
3.8%
4.1%
4.4%
3.6%
1.2%
0.2%
-8.5%
-12% H1'12
H2'12
H1'13
H2'13
H1'14
Q3'14
Note: 2012, 2013 and 9M’13 restated in application of IFRS 10-11 and reclassification of share of net income
Company Presentation – January 2015
10
Trade & Installers Sales breakdown
Sales breakdown by geographical area
Total Construction Investments
LTM Q3’14
2013 = 100
120 N.A.
110 Eastern Europe 24%
Europe
100
Nordics 11%
90 80 A10
Central & Southern Europe 41%
A11
N. America 6%
€ 1.9 bn
Latin America 7%
E14
E15
E16
2013 = 100 Italy & Spain
120
Eastern Europe Other Europe
100 90
Nordics: Norway, Sweden, Finland, Denmark, Estonia Eastern Europe: Austria, Czech Rep, Slovakia, Hungary, Romania, Turkey, Russia
E13
140
110 Europe 76%
A12
Focus on Europe
130 Asia Pacific 11%
APAC Latam
Nordics
A10
A11
A12
E13
E14
E15
E16
Source: Euroconstruct, July 2014
Company Presentation – January 2015
11
Industrial
Euro Millions, % on Sales Sales to Third Parties
Highlights • Overall Industrial performance impacted by slow-down in the capital goods sector in Europe in the last months
+4.0%*
1,801
1,764
-1.9%*
1,339
1,228
Specialties & OEM • 9M performance impacted by continuous weak demand in Europe and Americas. Positive trend in APAC. Lower contribution from Infrastructure, Mining, Nuclear and Railway partially offset by expansion in Renewables, Rolling Stock and Marine OGP
2012
2013
9M'13
9M'14
* Organic Growth
SURF
Adjusted EBITDA
139
• Umbilicals: increasing order backlog to sustain growth in the coming quarters starting from Q4. Confirmed commitment to expand international presence. Flexible pipes: limited level of activity in line with previous year
133 97
• Business stabilization in Q3 after a weak start of the year, expected to further improve in Q4 supported by increased order book
86
• DHT: strong performance in North America and high visibility on sales for the next quarters Elevator • Double digit organic growth driven by a successful business development in Europe and Asia. Sound performance in the US Automotive
2012
2013
9M'13
9M'14
7.7%
7.6%
7.2%
7.0%
• Decreasing trend in Q3 after a stable H1 mainly due a tough global market in August and to increasing competition in Europe and North America
Note: 2012, 2013 and 9M’13 restated in application of IFRS 10-11 and reclassification of share of net income
Company Presentation – January 2015
12
Industrial
Sales breakdown Sales breakdown by geographical area
Sales breakdown by business segment LTM Q3’14
LTM Q3’14
Asia Pacific 22%
Latin America 8%
Elevator 9%
€ 1.7 bn
North America 26%
1) Includes Renewables business
EMEA 44%
OGP & SURF 21%
Other 4%
Specialties & OEM 1) 44%
€ 1.7 bn
Automotive 22%
Company Presentation – January 2015
13
Telecom
Euro Millions, % on Sales Sales to Third Parties
Highlights • Improving organic growth supported by strong demand in optical largely offset by lower average pricing and continuous decline in Copper. Continuous improvement in cost structure to support profitability
-15.4%*
1,202
+1.9%*
986 763
Optical / Fiber
745
• Europe: strong demand driven by long term FTTH and backbone investments in France, Italy, UK and Spain • North America: positive trend in FTTH/FTTA expected to continue in Q4 • South America: lower than expected impact of stimulus packages on demand in Brazil. Market still at low levels
2012
2013
9M'13
9M'14
* Organic Growth
• APAC: NBN project (Australia) pickup in Q3 after weak H1, expected to continue in Q4. Confirmed positive trend in China and Singapore • Fiber operations: ongoing process improvements and cost reduction plans
Adjusted EBITDA
Multimedia & Specials • Increasing profitability contribution thanks to selective strategy focused on high margin segments
149 106 81
75
Org. growth evolution (% change on previous year period) 10% 0% -10%
2012
2013
9M'13
9M'14
12.4%
10.8%
10.6%
10.0%
-20%
Note: 2012, 2013 and 9M’13 restated in application of IFRS 10-11 and reclassification of share of net income Org.growth from Q1’12 to Q4’13 calculated according to previous accounting criteria Company
Presentation – January 2015
14
Telecom - Leverage on lean cost base to benefit from ongoing market recovery Telecom Optical Volumes FKM
• Optical fiber demand expected to increase by 10.8%a in 2014 driven by Europe and India. Positive signals also from North America, ASEAN and China (which represents approx. 50% of the market)
+21%
(16%)
• Prysmian optical cable volumes increased by 21% in 9M’14 Q3
• Growing market trend foreseen also in 2015 (+ 4.8%a)
Q2
• Price stabilization expected in the coming quarters
• Prysmian focus on profitability: Q1
• Improving mix of customers and products • Introducing high value added products
9M 2012
9M 2013
a) Source: CRU, October 2014
9M 2014
• Improve cost structure
Company Presentation – January 2015
15
Telecom
Sales breakdown Sales breakdown by geographical area
Sales breakdown by business segment LTM Q3’14
LTM Q3’14
Other 5%
Asia Pacific 12%
Latin America 14%
North America 13%
Optical, Connectivity and Fiber 60%
Multimedia & Specials 22%
€ 1.0 bn
EMEA 61%
€ 1.0 bn Copper 13%
Company Presentation – January 2015
16
2014 Outlook – FY Target confirmed despite gradual worsening of market trend in Europe and Brazil FY 2014 Adj.EBITDA Target Vs FY 2013 (€ 613 m) Initial expected Adj.EBITDA FY Target
650
600
- €94m
Current Adj.EBITDA FY Target
Western Link FY 2014 effect
556
506
FY target confirmed in the low-part of the range, despite challenging market conditions, based on: • Strong contribution from Submarine • Continuous positive volume trend in the Telecom business • Q4 expected recovery in Industrial (OGP, SURF, OEMs) • Continuous focus on cost efficiencies
Company Presentation – January 2015
17
AGENDA
Group Overview & 2014 Outlook Draka integration Financial Results Appendix
Company Presentation – January 2015
18
Organization model
To strengthen leadership in all business segments leveraging on a global platform A matrix linking country and group functions Utilities T&I Industrial Telecom
Group Functions
Multimedia & Specials
Optical Fiber
Telecom
Telecom Solutions (Optical+Copper)
SURF
HV
Submarine
Elevator
Energy Projects
Automotive
Network components
Oil & Gas
Specialties & OEM
T&I / PD
Business
Energy Products
Country X Country Y
Country Z ...
Company Presentation – January 2015
19
First step of production footprint optimization completed 7 plants closed and 1 plant restructured since Draka acquisition Wuppertal (GER) Industrial cables - partial closure Hickory (US) Semi-finished products/wires
Eschweiler (GER) T&I/Industrial cables
Derby (UK) T&I cables
Sant Vicenç (SPA) Industrial cables
Angel (CHI) Industrial/control cables
Livorno Ferraris (ITA) Telecom cables
Singapore T&I cables
7 Plants closed since Draka acquisition
Company Presentation – January 2015
20
Synergies Plan: Procurement run-rate, Overheads almost completed Plants rationalization to be executed in line with customers requirements to preserve service level Synergies Plan Euro million
Overheads (Fixed costs)
~ 175
Procurement 150-160
Operations
~ 140 70 120 100 60
45
65 45
10
45
13
FY11 Achieved
60
30
6 7 FY11 Target
30
15
5 FY12 Target
FY12 Achieved
FY13 Target
FY13 Achieved
FY14 Target
FY15 Target
Run-rate target (2016)
Restructuring costs 46
120
170
~ 250
Note: Cumulated synergies figures are not audited. Calculation is based on internal reporting
Company Presentation – January 2015
21
AGENDA
Group Overview & 2014 Outlook Draka integration Financial Results Appendix
Company Presentation – January 2015
22
Profit and Loss Statement Euro Millions
9M 2014 excl. WL submarine project effect
WL Submarine project effect
9M 2014
9M 2013
(81)
5,014
5,297
Sales
5,095
YoY total growth
(3.8%)
(5.3%)
YoY organic growth
1.7%
0.2%
Adj.EBITDA % on sales
Non recurring items
EBITDA % on sales
Adj.EBIT % on sales
Non recurring items Special items
EBIT
438
(83)
8.6%
28
-
466
(83)
9.1%
332
(83)
6.5%
28 4
-
364
(83)
7.1%
Financial charges
(108)
-
256
(83)
EBT Taxes % on EBT
Net income Extraordinary items (after tax)
Adj.Net income
5.0%
(64)
26
613 8.8%
28
(34)
(50)
383 249
408 7.7%
333
563 8.1%
465
5.0%
6.3%
6.7%
28 4
(34) (30)
(50) (47)
281
269
368
5.6%
5.1%
5.3%
(108)
(114)
(150)
173
155 2.9%
1)
6,995
8.3%
3.5%
25.0%
442
FY 2013
7.1%
7.6%
% on sales
% on sales
355
1)
218 3.1%
(38)
(46)
(65)
22.0%
29.5%
29.9%
192
(57)
135
109
153
1
-
1
(70)
(116)
191
(57)
134
179
269
1) Final restated figures in application of IFRS 10-11 and reclassification of share of net income
Company Presentation – January 2015
23
Bridge Consolidated Sales Euro Millions
Total Consolidated 92
5,297
9M 2013
Org. growth excl.WL +1.7%
Org.Growth
( 81 )
(104)
(190)
Org. growth incl.WL +0.2%
WL effect
5,014
Metal Effect
Exchange Rate
9M 2014 L-f-L
5,014
Perimeter effect
9M 2014
Energy Cables & Systems Division 78
( 81 )
( 99 )
(163) -
4,534
9M 2013
Org. growth excl.WL +1.7%
Org.Growth
Org. growth incl.WL -0.1%
WL effect
Metal Effect
4,269
Exchange Rate
9M 2014 L-f-L
4,269
Perimeter effect
9M 2014
Telecom Cables & Systems Division 14
-
(5 )
( 27) -
763
9M 2013
745
Org. growth +1.9%
Org.Growth
WL effect
Metal Effect
Exchange Rate
9M 2014 L-f-L
745
Perimeter effect
9M 2014
Company Presentation – January 2015
24
Impact of currencies and WL project on Sales and Adj.EBITDA
Profitability decrease fully attributable to WL project and negative currency translation effect Sales
Adj. EBITDA
Euro million
Euro million
Of which: • Utilities • T&I • Industrial • Other • Telecom
Of which: • Utilities • T&I • Industrial • Telecom
36 72 52 3 27
2 5 5 3
453 5,285 190 81
5,297
9M'13
5,014
9M'14
15
FX effect WL Subm. Project effect
83
FX effect
WL Subm. Project effect
442 355
9M'13
9M'14
Company Presentation – January 2015
25
Extraordinary Effects Euro Millions
9M 2014 Antitrust investigation Restructuring Price adjustments Other EBITDA adjustments Special items
9M 2013 2)
FY 2013 2)
28 (16) 22 (6)
3 (32) (5)
6 (50) (6)
28
(34)
(50)
4
(30)
(47)
Gain/(loss) on metal derivatives Assets impairment Other
12 (5) (3)
(12) (9) (9)
(8) (25) (14)
EBIT adjustments
32
(64)
(97)
Gain/(Loss) on ex.rates/derivat.1 ) Other extr. financial Income/exp.
(27) (15)
(26) (9)
(35) (13)
EBT adjustments
(10)
(99)
(145)
11
29
29
1
(70)
(116)
Tax Net Income adjustments
1) Includes currency and interest rate derivatives 2) Final restated figures in application of IFRS 10-11 and reclassification of share of net income
Company Presentation – January 2015
26
Financial Charges Euro Millions
9M 2014 Net interest expenses of which non cash Conv.Bond interest exp.
Bank fees amortization Gain/(loss) on exchange rates Gain/(loss) on derivatives Non recurring effects Net financial charges
1)
9M 2013 2)
FY 2013 2)
(67)
(77)
(100)
(6)
(4)
(6)
(5)
(6)
(8)
(18)
(12)
(27)
(9)
(14)
(8)
(9)
(5)
(7)
(108)
(114)
(150)
1) Includes currency and interest rate derivatives 2) Final restated figures in application of IFRS 10-11 and reclassification of share of net income
Company Presentation – January 2015
27
Statement of financial position (Balance Sheet) Euro Millions
Net fixed assets of which: intangible assets
30 Sept 2014
30 Sept 20131)
FY 2013 1)
2,255
2,206
2,207
586
593
588
1,430
1,402
1,390
900
788
386
of which: derivatives assets/(liabilities)
(9)
(13)
(6)
of which: Operative Net working capital
909
801
392
Provisions & deferred taxes
(281)
(290)
(297)
Net Capital Employed
2,874
2,704
2,296
Employee provisions
333
335
308
Shareholders' equity
1,249
1,176
1,183
32
32
36
Net financial position
1,292
1,193
805
Total Financing and Equity
2,874
2,704
2,296
of which: property, plants & equipment
Net working capital
of which: attributable to minority interest
1) Final restated figures in application of IFRS 10-11 and reclassification of share of net income
Company Presentation – January 2015
28
Cash Flow Euro Millions
9M 2014
9M 2013
355 28 383 (65) (26) 292
442 (34) 408 (49) (21) 338
613 (50) 563 (76) (35) 452
Working Capital changes Dividends received Paid Income Taxes Cash flow from operations
(472) 12 (46) (214)
(410) 17 (45) (100)
(6) 16 (60) 402
Acquisitions Net Operative CAPEX Free Cash Flow (unlevered)
9 (106) (311)
(65) (165)
(107) 295
Financial charges Free Cash Flow (levered)
(88) (399)
(91) (256)
(124) 171
(408)
(256)
171
Dividends Net Cash Flow
(90) (489)
(91) (347)
(92) 79
NFP beginning of the period
(805)
(888)
(888)
Net cash flow Other variations
(489) 2
(347) 42
79 4
(1,292)
(1,193)
(805)
Adj.EBITDA Non recurring items EBITDA Net Change in provisions & others Share of income from investments in op.activities Cash flow from operations (before WC changes)
Free Cash Flow (levered) excl. acquisitions
NFP end of the period
1)
FY 2013
1)
1) Final restated figures in application of IFRS 10-11 and reclassification of share of net income
Company Presentation – January 2015
29
AGENDA
Group Overview & 2014 Outlook Draka integration Financial Results Appendix – Prysmian at a Glance
Company Presentation – January 2015
30
Key Milestones 1879
1998
1902
Establishment Company founded as “Pirelli Cavi” Establishment of first operations in Italy
8
Organic growth
Product range enlargement International -ization
2005
2001
Growth by acquisition
Acquisitions (Siemens, NKF, MM, BICC)
2011
2008
Restructuring process
Profitable growth
Managing the downturn
Closure of 11 plants Disposal of non core activities
Listing July 28, ‘05: GS May 3, ‘07: acquisition Listing and birth on the of Prysmian Milan Stock Group Exchange (IPO)
Strategic investments preparing for the economic recovery
Public Company March ‘10: Prysmian became a full Public Company
#1 Cable Maker February ‘11: Draka acquisition
25%
Energy
7.6
Telecom
7
Growth by acquisition
7.6 7.0
Adj.EBIT %
20%
Sales - € bn
6 5
5.0 4.6
4
4.6 3.7
3.9
3.5 3.1
2.8
3.4
10%
3.7 9.1%
9.3%
9.0% 6.8%
6.6%
6.3% 4.7%
2
15%
5.1
4.7
9.2%
3
5.1
4.6%
3.8%
5.6%
6.5%
6.7%
3.2%
0%
1.4%
1
5%
-0.8%
0
-5% 1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Source: 1998-2003 Pirelli Group Annual Reports, data reported under Italian GAAP; 2004-2011 Prysmian accounts, data reported under IFRS; 2012-2013 restated in application of IFRS 10-11 and reclassification of share of net income
Company Presentation – January 2015
31
The World’s Leading Cables & Systems Company N°1 in cable solutions for the energy and telecommunication business
7.0 6.0
€bn, 2013 Sales
4.6 3.9
3.8 3.4
3.2 2.7
2.6 1.7
Prysmian Group
Nexans
General Cable
Leoni
Southwire
Furukawa Electric
LS Cable & System
Hitachi Metals
Fujikura
Sumitomo Electric
1.4
Elsewedy Electric
1.2
NKT Cables
Source: Companies' public documents unless otherwise stated. Note: Prysmian Group restated figure in application of IFRS 10-11; Nexans excluding Other segment (mainly Electrical Wire); General Cable excluding Rod Mill Products; Southwire company-provided estimate (Source: Forbes, Feb ‘14); Furukawa Electric considering only Telecommunications and Energy & Industrial Products segments, LTM figures as of 31-Dec-2013; Hitachi Metals considering only Wires, Cables and Related Products segment, LTM figures as of 31-Dec-2013; Furjikura considering only Power & Telecommunication Systems segment, LTM figures as of 31-Dec-2013; Sumitomo Electric considering only Infocommunications and Electric Power Cables segments, LTM figures as of 31-Dec-2013; Elsewedy Electric considering only Wires & Cables, FY2012 data. All figures are expressed in € based on the average exchange rate of the reference period
Company Presentation – January 2015
32
Prysmian Group business portfolio Focus on high value added segments
PROFITABILITY
Extended business perimeter
SURF (Flexible Pipes + Umbilicals)
Network Components High
• Regional competition
Manage for Cash
Extra HV
Optical Cables & Fibre
High Voltage
• Focus on products and service • Limited product diversification within regions
Submarine
Look for Profitable Growth
Industrial Medium
Low
~ 80% of FY’13 Adj.EBITDA
Power Distribution
Copper Telecom Cables
Low
Trade & Installers
• Focus on solutions • Diversification and innovation
~ 20% of FY’13 Adj.EBITDA Medium
• Competition on a global basis
High
• Take selective M&A opportunities
LONG TERM GROWTH
Company Presentation – January 2015
33
Cash Flow generation as key priority to create value for shareholders Growing capabilities to invest organically/acquisitions and remunerate shareholders Cash Flow generation 2012 benefited from approx. €100m cash-in (submarine business) expected in 2013
€ mln
320
2.4x
240
2.0x
160
1.6x
80
Approx. €170m cumulated restructuring costs related to Draka integration in ‘11-’13
0
1.2x
0.8x
2006
2007
Dividends paid*
2008
2009
2010
2011 comb.
2012
2013
75
74
75
35
44
89
Free Cash Flow (levered) excl. Acquisitions (L axis)
NFP / Adj. EBITDA (R axis)
Over € 200m average free cash flow per year
Almost €400m distributed to shareholders
generated in 2006-13
since IPO * By Prysmian SpA
Company Presentation – January 2015
34
Disciplined Capex to grow in high margin business and out of Europe Investments focused on business with long term drivers and high entry barriers CAPEX 2007-2013 (€ mln) Prysmian + Draka
Cap. Increase & Product mix Other
89
159 116
107
€ 27 million related to industrial
152
144
and R&D/HQ buildings
102 € 462 million cumulated
49
57
63
54
2007
2008
2009
2010
90
88
2011
2012
CAPEX 2007-13 to sustain
61 2013
growth in strategic high value-added segments
Note: Draka consolidated since 1 March 2011
2007-13 Main projects expected to drive benefits in the coming years
Utilities
• Telecom – Increase cost
Telecom 15%
competitiveness • Slatina (Romania – Optical cables)
• Battipaglia (Italy – Optical fiber)
T&I 2%
cables)
SURF 21%
€ 462 mln
• Vila Velha (Brazil - SURF)
• Arco Felice (Italy) • Pikkala (Finland)
• HV – Geogr. diversification , cost reduction and product capabilities • Abbeville (USA)
• Industrial – Develop high margin products
• Submarine – Capacity increase
• Drammen (Norway)
• Sorocaba (Brazil – Optical fiber) • Dee Why (Australia – Optical
Utilities 54%
• Rybinsk (Russia)
Industrial 8%
• Baoying (China) • Gron (France)
Company Presentation – January 2015
35
Metal Price Impact on Profitability Supply Contract
Main Application
Metal Influence on Cable Price
Metal Fluctuation Management
Impact
• Predetermined delivery date
Frame contracts
•
•
Projects (Energy transmission) Cables for industrial applications (eg. OGP)
Cables for energy utilities (e.g. power distribution cables)
•
•
•
Technology and design content are the main elements of the “solution” offered Pricing little affected by metals
Pricing defined as hollow, thus mechanical price adjustment through formulas linked to metal publicly available quotation
Impact
• •
Pricing locked-in at order intake Profitability protection through systematic hedging (long orderto-delivery cycle)
•
Price adjusted through formulas linked to metal publicly available quotation (average last month, …) Profitability protection through systematic hedging (short order-to-delivery cycle)
•
• • Spot orders
•
Cables for construction and civil engineering
Standard products, high copper content, limited value added
• •
Pricing managed through price lists, thus leading to some delay Competitive pressure may impact on delay of price adjustment Hedging based on forecasted volumes rather than orders
High Low
• •
Metal price fluctuations are normally passed through to customers under supply contracts Hedging strategy is performed in order to systematically minimize profitability risks
Company Presentation – January 2015
36
AGENDA
Group Overview & 2014 Outlook Draka integration Financial Results Appendix – Energy
Company Presentation – January 2015
37
Clusters of Cable Manufacturers in the Industry Competitive scenario – Energy Cables
Company Presentation – January 2015
38
Full package of solutions for Energy Business Utilities • Power Transmission
Trade & Installers • LV cables for construction
– Underground EHV, HV-DC/AC
– Fire performing
– Submarine (turn-key) EHVDC/AC (extruded, mass impregnated and SCFF) and MV
– Environmental friendly
• Power Distribution – LV, MV (P-Laser) • Network components – joints, connectors and terminations from LV to EHV
– Low smoke-zero halogen (LSOH) – Application specific products
Industrial • Specialties & OEM (rolling stock, nuclear, defence, crane, mining, marine, electro medical, railway, other infrastructure, renewables) • Automotive • OGP & SURF • Elevator • Other industrial (aviation, branchment, other)
Company Presentation – January 2015
39
Utilities – Overview SALES BREAKDOWN 2013
• 33% Transmission – Submarine
38% Power Distribution
• •
€ 2.2 BILLION
Submarine High Voltage Turnkey cabling solutions for submarine power transmission systems at depths of up to 2,000 meters Underground High Voltage Cabling solutions for power plant sites and primary distribution networks Network components Joints, connectors and terminations for low to extreme high voltage cables suitable for industrial, building or infrastructure applications and for power transmission and distribution
• Power Distribution 6% Network Components
23% Transmission – High Voltage
Medium voltage cables and systems to connect industrial and residential buildings to primary distribution grids and low voltage ones for power distribution and the wiring of buildings
OUR STRENGTHS Worldwide leader in Submarine
Partner in the most prestigious off shore projects
Consolidated relationship with major international grid operators and utilities
Leading position in Underground high voltage in Europe, North America and Latin America
KEY CUSTOMERS - Customer base drawn from all major national distribution networks
Company Presentation – January 2015
40
Utilities – Investing in submarine to increase ROCE Strengthening production and installation (GME acquisition) capabilities
Arco Felice (Italy)
Drammen (Norway)
Pikkala (Finland)
Main projects in execution/orders backlog: • Western Link • Balearic Islands • HelWin 1-2/ SylWin 1/ • Capri BorWin 2-3/ DolWin 3 / • Zakum Deutsche Bucht • Shannon River • US Offshore platforms • West of Adlergrund • Messina • Cyclades • Dardanelles 1 & 2 • Philippines • Mon.Ita
Giulio Verne
- Length overall: 133.2m - Depth moulded: 7.6m - Gross tonnage: 10,617 t
Cable Enterprise
- Length overall: 115m - Depth moulded: 6.8m - Gross tonnage: 8,328t
Company Presentation – January 2015
41
Sound orders intake boosting backlog at peak level Record visibility in Submarine and good coverage for HV sales
Transmission – Sales (€m)
Transmission – Orders Backlog (€m) Submarine
HV ~2,350
~1,550 ~900 ~250
~1,100
~650
~3,000
~2,800
~1,650
~1,700
~650
~650
~650
~2,450
~500
~2,500
~500
~2,850
~ 1,300 0.9x ~ 500
~450
~450
~550
3.0x
~300
~1,700
~650
~800
~900
~1,000
~1,050
Dec'09
Jun'10
Dec'10
Jun'11
Dec'11
~1,900
~2,300
~2,050
~2,500
~2,400
~ 800
Jun'12
Dec'12
Jun'13
Dec'13
Jun'14
Sep'14
LTM Q3'14
€ 1.3 bn submarine projects awarded in 2014 West of Adlergrund , Germany - € 730 m
(€730m including options for grid connections - € 250 million). HVAC 220 kV, 3-core extruded cables (including fibre optic cable system) along a route of approx. 90 km (submarine) and 3 km (land)
Borwin3, Germany - € 250 m
HVDC 320 kV extruded subm. and land power bipole connection, with associated fibre optic cable system, comprising of a 29km land route and of a subsea route of 130km
Shannon River Crossing, Ireland - € 40 m
HVAC 220 kV, 21 km double-circuit connection, comprising submarine cable including spare lengths and fibre optic connection, net.components and commissioning services
Dardanelles 2, Turkey - € 64 m
HVAC 380 kV insulated cable, double power transmission circuit of approx. 4 km with a rating of 1000 MW for each circuit
Cyclades Islands, Greece - € 95 m
HVAC 150kV extruded cables and associated fibre optic cable system along a total route of more than 110 km (108 km submarine and 2 km land)
Zakum offshore oil field, Abu Dhabi - € 30 m Design and supply of 200 km of XLPE (Cross-Linked Polyethylene) insulated MV submarine cables plus accessories and network components CNP-1 , Philippines - € 90 m
Three HVAC 230 kV single core cables with XLPE insulation and single wire armouring along a 22 km submarine route
Company Presentation – January 2015
42
Utilities – Off-shore wind development in Europe still at early stage High visibility on new projects to be awarded next quarters
Europe 2013 Cumulated Capacity by Country
Europe Offshore Wind capacity (GW)
Others 0.3 GW
Cumulated Offshore Wind capacity (L axis) Annual Additional capacity (R axis)
20 32
1.8
18 30
1.6
16 28
22
14
1.2
12
1
10 8
3
4
0
Germany 0.5 GW UK
6.6 GW
Belgium 0.6 GW
3.7 GW
Denmark 1.3 GW
0.8 0.6
6 2
1.4
Thousands
Netherlands 0.2 GW
3.8 2.1 3.0
5.0
6.6
0.4
Consented Offshore Capacity by Country
0.2
0
Others* 16%
Sweden
Germany
4%
30%
Estonia
22 GW
5%
• Capacity Increase: 1.6 GW in 2013 • Total capacity: 6.6 GW at end 2013 (+31% vs. 2012) • Under construction: 3 GW at end 2013 • Consented: 22 GW
Ireland 10%
Netherlands 13%
UK
22%
* Include Finland, Belgium, Greece, Italy, Latvia, Norway Source: EWEA (January 2014)
Company Presentation – January 2015
43
Utilities – Major transmission projects to be awarded Main subsea and underground projects of pan-European significance
List of main projects
Main power flow trends
1. Italy – France
Main subsea & underground projects in design & permitting
2. Germany (Borwin IV)
Main planned subsea & underground projects
3. Germany (Baltic Sea East)
4. Cobra (NL-DK) 5. France – UK (Eurotunnel) 8
6 14
6. Western Isles Link 7. Schwanden-Limmern
13 16
8. Västervik – Gotland
3
9. Tunisia – Italy
2
4
10. Marseille – Languedoc 11. Calan – Plaine-Haute
15 12
5
12. Belgium – Germany 13. Norway – Germany 14. Norway – UK
11 7
15. Nemo (UK-BE) 16. Denmark – Germany
1
10
Other Projects: Spain-France (sub), Ireland-France (sub), Israel-Cyprus (sub), Ireland-UK (sub), North-South Germany (underground), Italy-Slovenia (underground)
9 Source: ENTSO-E TYNDP 2012 (update July 2013)
Company Presentation – January 2015
44
Utilities – Submarine Systems Key success factors
•
Track record and reliability
•
Ability to design/execute turnkey solution
Dardanelles 2
TEIAS
2015-16
64
Cyclades
IPTO
2015-16
95
West of Adlergrund
50Hertz Offshore GmbH
From 2015
730
Shannon River Crossing
ESB
2014-16
40
Zakum offshore oil field
Emirates Holding
2014-15
30
BorWin3
TenneT
2014-17
250
Capri
Terna
2014-15
70
US Offshore platforms
ExxonMobil's
2014-15
$100m
Balearic Islands
Red Eléctrica de España
2014-15
85
Deutsche Bucht
TenneT
2014-15
50
DolWin3
TenneT
2014-16
350
Normandie 3
Jersey Electricity plc
2013-14
45
Mon.Ita
Terna
2013-16
400
New investment worth approx. €40m in Pikkala and Arco Felice to enhance the production capability to meet the order backlog requirements
Dardanelles
TEIAS
2012-14
67
Phu Quoc
EVNSPC
2012-14
67
Western Link
NGET/SPT Upgrades
2012-16
800
HelWin2
TenneT
2012-15
200
Leverage on strong off-shore windfarms trend
Hudson Project
Hudson Transm. Partners LLC
2012-13
$175m
SylWin1
TenneT
2012-14
280
HelWin1
TenneT
2011-13
150
BorWin2
TenneT
2010-13
250
Messina
Terna
2010-13
300
Kahramaa
Qatar General Elect.
2009-10
140
Greater Gabbard
Fluor Ltd
2009-10
93
Cometa
Red Eléctrica de España
2008-11
119
•
State-of-the-art cable laying ship Action plan
•
(1)
90
Product innovation
•
€m
2015-16
•
•
Period
NGCP
Quality of network services
•
Customers
Philippines
•
•
Latest Key projects
Cable Enterprise vessel conversion to improve installation capacity
Secure orders to protect long-term growth Focus on execution
(1) Prysmian portion of the project
Company Presentation – January 2015
45
Utilities – Western Link a milestone in the submarine sector Western Link route
Large Off-shore Wind investments planned in Scotland
Western Link milestones • The highest value cable project ever awarded, worth €800 mln • The highest voltage level (600kV) ever reached by an insulated cable • Currently unmatched transmission capacity for long-haul systems of 2,200MW • Over 400km of HVDC cable, bi-directional allowing electricity to flow north or south according to future supply and demand • First time HVDC technology with PPL (Paper Polypropylene Laminate) insulation has been used as an integral part of the GB Transmission System • The unique project with PPL technology Source: www.offshorewindscotland.org, www.westernhvdclink.co.uk
Company Presentation – January 2015
46
Western Link: a strong recovery to properly address the production issue and minimize the economic impact WL production process
Project Highlights
• Customers: National Grid-Scottish Power JV
Turntable
Stranding
• Awarded in February 2012 to PrysmianSiemens consortium
Impregnating vessel
Progress Status
Impregnating vessel
• Cable called back from UK successfully passed the test
Paper lapping
• Root cause investigation performed and critical phase identified
• Project value approx. €800m (cables) • Over 400km link (388km submarine, 36km land) of HVDC cable, bi-pole with PPL (Paper Polypropylene Laminate) insulation
Lead sheath extrusion PE sheath extrusion
Turntable Turntable
Joint Turntable
• First worldwide project with PPL technology
• Expected project delay 6 to 9 months
Armouring
• Unmatched voltage (600kV) and transmission capacity (2,200MW)
Financial Impact (€m) Adj.EBITDA 73
13 24
11
9 83
167 94
37 Cancelled Total project Positive margin Positive margin Total 9M'14 WL Positive margin Total FY'14 WL Positive margin Total WL effect margin in Q1'14 loss anticipation originally originally effect originally effect originally expected in expected in expected in expected in Q2'14 Q3'14 Q4'14 2015-16
Company Presentation – January 2015
47
Trade & Installers – Overview BUSINESS DESCRIPTION
KEY SUCCESS FACTORS
• Building wires, Low and Medium voltage cables for residential, commercial, industrial and infrastructure constructions • Partner of the World best Wholesalers, Installers, Contractors & Specialized Distributors; with a clear focus on their needs following a Customer Centricity approach • Complete product range of solutions for the construction world, including residential, commercial, industrial and infrastructure with focus on high performance products: best in class Fire Resistant cables, LSOH, Green cables, Easy to Install and Total Cost of Ownership reduction solutions
Global partner with strong local presence Full Product range
Technological leadership and product excellence Customer centric approach Capillary logistical distribution network and service Technical support Extra services Unique industry expertize
KEY CUSTOMERS Contractors & Installers
Wholesalers
Specialized distributors
Company Presentation – January 2015
48
Trade & Installers Offer overview RESIDENTIAL – COMMERCIAL – INDUSTRIAL - INFRASTRUCTURE
BEST IN CLASS FIRE RESISTANT AND LSOH CABLES -
-
Fire fighting systems
SAFETY
SAVING TIME
-
Easy to install solutions Smart Packaging Hybrid cables Energy + Data
Full range quality Building Wires, Low voltage, Medium voltage, Instrumentation & control
-
POWER SUPPLY EMERGENCY CIRCUITS CONNECTIONS MACHINERY (MOBILE OR NOT) SWITCHBOARD -
A MAJOR ROLE IN MILAN 2015 EXPO
LIGHTING (INTERIOR/EXTERIOR) BRANCHES CONTROL/DATA ELECTRICAL APPLIANCES
TAKING SAFETY TO NEW HEIGHTS
THE LIVES OF THESE PEOPLE DO NOT HANG BY A THREAD
QUALITY
SUSTANABILITY
-
Green products Recycled packaging Full life cycle assessment approach
Special fire safety and eco-friendly cables for the site hosting the Milan Universal Exposition of 2015: 50 km of medium voltage PLaser cables and 300 km of low voltage Afumex cables
Approximately 350 km of high-tech fireresistant cables for power distribution supplied within the Shard skyscraper, the tallest building in London and Western Europe. Prysmian chosen as global supplier of BASEC and LPCB certified cables and components, and of support and advice to the construction company on the best installation methods to use
Around 500 km of cables for Tele2 Arena, a new, ultramodern multi-purpose stadium in Stockholm. Prysmian Group has supplied halogen-free cables for the stadium’s power, telecommunication, and lighting systems, selected by the customer as the latest technology to guarantee safety
Company Presentation – January 2015
49
Industrial – Overview
Business description Integrated cable solutions highly customized to our industrial customers worldwide
Key customers Large and differentiated customer base generally served through direct sales
Oil & Gas Addressing the cable needs of research and refining, exploration and production. Products range from low & medium voltage power and control cables to dynamic multi-purpose umbilicals for transporting energy, telecommunications, fluids and chemical products Surf (Subsea umbilical, riser and flowline) SURF provides the flexible pipes and umbilicals required by the petro-chemicals industry for the transfer of fluids from the seabed to the surface and vice versa Elevator Meeting the global demand for high-performing, durable and safe elevator cable and components we design manufacture and distribute packaged solutions for the elevator industry
Automotive Standard and specialist cables for the automotive and transport industry, collaborating with the sector’s leading international manufacturers Specialties & OEM Products for mining, crane , marine, railway, rolling stock, nuclear, renewables, defense and other niches
Company Presentation – January 2015
50
Industrial – Off-shore oil exploration Oilfield structure
Flexible Pipes
Fixed Platform
Floating Platform (FPSO)
Floating Platform (SEMI-SUBMERSIBLE)
Umbilical Injection control
Umbilical (Power) Flexible Pipes
Umbilical For control
Christmas Tree
Manifold
Petrol Well
Company Presentation – January 2015
51
Industrial – Off-shore oil exploration
Cross selling opportunities driven by the new Downhole technology business contributed by Draka Downhole Technology (DHT)
HYBRID ELECTRO-OPTIC
FIBER OPTIC
ELECTRICAL
GAS & FLUID TUBING
PACKAGED GAS & FLUID TUBING
Company Presentation – January 2015
52
Macro-structure of Energy Cables
Product macro structure
Outer jacket (Polyolefine, PVC, …)
Production process
WB yarns
Insulation (XLPE, EPDM) Conductor (Cu, Al)
Conductor production (drawing, stranding)
Insulation
Screening Lay up
Armouring Sheathing
Final quality inspection
Building Wire (T&I) Low Voltage (T&I+PD)
Cu tape
Internal Semiconductive External Semiconductive
Medium Voltage High voltage (PD+HV) Industrial Cables (Industrial)
Company Presentation – January 2015
53
AGENDA
Group Overview & 2014 Outlook Draka integration Financial Results Appendix – Telecom
Company Presentation – January 2015
54
Major Players within the Telecom Industry
Continental
YOFC
Local
Market Presence
Global
Competitive scenario
Niche
Focused
Wide
Product Portfolio Range Company Presentation – January 2015
55
Telecom – Overview
Business description Integrated cable solutions focused on high -end Telecom
Key customers Key customers include key operators in the telecom sector
Telecom solutions
Optical cables: tailored for all today’s challenging environments from underground ducts to overhead lines, rail tunnels and sewerage pipes Copper cables: broad portfolio for underground and overhead solutions, residential and commercial buildings Connectivity: FTTH systems based upon existing technologies and specially developed proprietary optical fibres
MMS
Multimedia specials: solutions for radio, TV and film, harsh industrial environments, radio frequency, central office switching and datacom Mobile networks: Antenna line products for mobile operators Railway infrastructure: Buried distribution & railfoot cables for long distance telecommunication and advanced signalling cables for such applications as light signalling and track switching
Optical Fiber
Optical fiber products: single-mode optical fiber, multimode optical fibers and specialty fibers (DrakaElite) Manufacturing: our proprietary manufacturing process for Plasma-activated Chemical Vapor Deposition and Licensed OVD Technology (600 unique inventions corresponding to > 1.4K patents) positions us at the forefront of today’s technology
Company Presentation – January 2015
56
Optical cables Global overview
Market trends
•
Demand function of level of capital expenditures budgeted by large telecom companies (PTT/incumbents as well as alternative operators) for network infrastructures, mainly as a consequence of: • Growing number of internet users data traffic • Diffusion of broadband services / other hightech services (i.e. IPTV)
Key success factors
• • • •
Strategic value of fibre
• •
•
Fibre optic represents the major single component cost of optical cables Fibre optic production has high entry barriers: • Proprietary technology or licenses difficult to obtain • Long time to develop know-how • Capital intensity When fibre optic is short, vertically integrated cable manufacturers leverage on a strong competitive advantage
Continuous innovation and development of new cable & fibre products Cable design innovation with special focus on installation cost reduction Relentless activity to maintain the highest quality and service level Focus on costs to remain competitive in a highly price sensitive environment
Action plan
• • • • • • • •
Maintain & reinforce position with key established clients Further penetration of large incumbents in emerging regions Optimize utilization of low cost manufacturing units Expand distribution model in Domestic & Export Streamline the inter-company process Fully integrated products sales Refocus on export activities Increase level and effectiveness of agents
Company Presentation – January 2015
57
Telecom Cables Main Applications
BACKBONE
METROPOLITAN RING
ACCESS NETWORK
Company Presentation – January 2015
58
Telecom – Solid drivers in optical confirmed after weak 2013 Growing investments expected in Europe, Americas and Asia Optical Cables
22% +17%
+21%
51% Prysmian Sales*
2015 vs. 2013 Market Growth
Prysmian Sales*
North America
2015 vs. 2013 Market Growth
16%
EMEA +14%
+28% 11%
Prysmian Sales*
Prysmian Sales*
2015 vs. 2013 Market Growth
APAC 2015 vs. 2013 Market Growth
Latin America * % calculated on FY2013 Restated Sales of Optical, Connectivity & Fiber (FY2013 total sales approx. € 0.6bn)
Market growth: source CRU, October 2014
Company Presentation – January 2015
59
Telecom – Market trend
Growth opportunities coming from the development of broadband in Europe Evolution of NGA (Next Generation Access) coverage and high-speed (>30Mbps) / ultrafast (>100Mbps) take-up (% of homes) in the EU
Opportunities coming from national plans to achieve EU 2020 Digital Agenda targets Consumption of fiber optic cable (‘000,000 fiber km)
100%
Spain
80%
• 4G mobile broadband availability at 47% in 2013 Vs EU average of 59%
5 4
60%
3
• Incentives by local Government to support investments and reach 75% coverage in 2015
2
40%
1
20%
0 2013
2014E
2015E
0% 2010
2011
2012
2013
EU 2020 Target
France
6
• Coverage of NGA in France (41%) well below EU average (62%) at end 2013
NGA coverage High speed (>30Mbps) take-up Ultrafast (>100Mbps) take-up
• Coverage of NGA technologies doubled since 2010, but further efforts are requested to meet 2020 target of 100% coverage
• Take-up of ultrafast (>100Mbps) broadband remains marginal (3% of homes) still faraway from 2020 target (50%) Source: European Commission Digital Agenda Scoreboard 2014
5 4 3 2 2013
2014E
2015E
• THD plan to attract €20bn public/private investments in 2012-22 to develop high speed and ultrafast infrastructures
Source: CRU, October 2014; European Commission Digital Agenda Scoreboard 2014
Company Presentation – January 2015
60
Telecom – FTTA as key driver of optical demand
4G and Long Term Evolution (LTE) deployments require Fiber-to-the-Antenna (FTTA) Global LTE Growth Forecast Millions of users
Roof top antenna towers for urban applications
Antenna towers used by 4G and LTE networks
Source: Informa Telecoms & Media, WCIS+, March 2014
Distributed antenna systems for dense mobile populations areas
Company Presentation – January 2015
61
Macro-structure of Telecom Cables
Product macro structure Fibre optic
Production process
Primary Coating (250 Micron) Cladding (125 Micron) Core (10 Micron)
Pre form deposition
Consolidation
Drawing
Final quality inspection
Main Technologies: OVD - VAD - MCVD Aramid Yarns
Optical cables
(Tracking resistant) Sheathing Compound
Copper cables
Loose tubes Optical fibres
Buffering
Lay up
Conductor production
Insulation
Twinning
Central Fillers strength Sheath member Ripcords
Screen/Armour
Outer sheath
Colouring
Armouring (yarn or metal)
Sheathing
Final quality inspection
Stranded pairs core
Lay up
Final Armouring Sheathing quality inspection
Insulated Conductors
Company Presentation – January 2015
62
AGENDA
Group Overview & 2014 Outlook Draka integration Financial Results Appendix – Financials
Company Presentation – January 2015
63
P&L Statement – Application of IFRS 10-11 Vs previous accounting Euro Millions
Sales
9M 2013 Restated 1)
9M 2013 Reported
FY 2013 Restated 1)
FY 2013 Reported
FY 2012 Restated 1)
FY 2012 Reported
5,297
5,488
7,574
7,848
6,995
7,273
YoY total growth
(7.7%)
(7.3%)
YoY organic growth
(3.3%)
(3.1%)
Adj.EBITDA % on sales of which share of net income
Non recurring items
EBITDA % on sales
Adj.EBIT % on sales
Non recurring items Special items
EBIT
442 8.3%
444 8.1%
613 8.8%
612 8.4%
650 8.6%
647 8.2%
21
-
35
-
31
-
(34)
(34)
(50)
(50)
(101)
(101)
408 7.7%
333
410 7.5%
329
563 8.1%
465
562 7.7%
457
549 7.2%
494
546 7.0%
483
6.3%
6.0%
6.7%
6.3%
6.5%
6.2%
(34) (30)
(34) (30)
(50) (47)
(50) (47)
(101) (20)
(101) (20)
269
265
368
360
373
362
% on sales
5.1%
4.8%
5.3%
4.9%
4.9%
4.6%
Net financial charges Share of net income
(114) -
(114) 8
(150) -
(153) 15
(134) -
(137) 17
EBT % on sales
Taxes
155 2.9%
159 2.9%
218 3.1%
222 3.1%
239 3.2%
242 3.1%
(46)
(49)
(65)
(68)
(71)
(73)
29.5%
30.7%
29.9%
30.4%
29.8%
30.2%
Net income
109
110
153
154
168
169
Extraordinary items (after tax)
(70)
70
(116)
(114)
(111)
(111)
Adj.Net income
179
180
269
268
279
280
% on EBT
1) Final restated figures in application of IFRS 10-11 and reclassification of share of net income
Company Presentation – January 2015
64
Stat. of fin. position (BS) – Application of IFRS 10-11 Vs previous accounting Euro Millions
Net fixed assets of which: intangible assets
30 Sep ’13 Restated 1)
30 Sep ’13 Reported
31 Dec ’13 Restated 1)
31 Dec ’13 Reported
31 Dec ’12 Restated 1)
31 Dec ’12 Reported
2,206
2,215
2,207
2,190
2,301
2,300
593
639
588
623
608
644
1,402
1,464
1,390
1,441
1,484
1,539
Net working capital
788
855
386
444
433
482
of which: derivatives assets/(liabilities)
(13)
(13)
(6)
(6)
(8)
(7)
of which: Operative Net working capital
801
868
392
450
441
489
Provisions & deferred taxes
(290)
(300)
(297)
(297)
(355)
(361)
Net Capital Employed
2,704
2,770
2,296
2,337
2,379
2,421
Employee provisions
335
335
308
308
344
344
Shareholders' equity
1,176
1,189
1,183
1,195
1,147
1,159
32
44
36
48
35
47
Net financial position
1,193
1,246
805
834
888
918
Total Financing and Equity
2,704
2,770
2,296
2,337
2,379
2,421
of which: property, plants & equipment
of which: attributable to minority interest
1) Final restated figures in application of IFRS 10-11 and reclassification of share of net income
Company Presentation – January 2015
65
Cash Flow – Application of IFRS 10-11 Vs previous accounting Euro Millions
9M 2013 Restated 1)
9M 2013 Reported
FY 2013 Restated 1)
FY 2013 Reported
FY 2012 Restated 1)
FY 2012 Reported
442 (34) 408 (49)
444 (34) 410 (51)
613 (50) 563 (76)
612 (50) 562 (80)
650 (101) 549 (1)
647 (101) 546 (1)
(21)
-
(35)
-
(31)
-
338
359
452
482
517
545
Working Capital changes Dividends received Paid Income Taxes Cash flow from operations
(410) 17 (45) (100)
(435) (48) (124)
(6) 16 (60) 402
(19) (64) 399
69 16 (72) 530
75 (74) 546
Acquisitions Net Operative CAPEX Net Financial CAPEX Free Cash Flow (unlevered)
(65) (165)
(73) 8 (189)
(107) 295
(114) 11 296
(86) (129) 2 317
(86) (141) 8 327
Financial charges Free Cash Flow (levered)
(91) (256)
(91) (280)
(124) 171
(126) 170
(126) 191
(129) 198
Free Cash Flow (levered) excl. acquisitions
(256)
(280)
171
170
277
284
Dividends Other Equity movements Net Cash Flow
(91) (347)
(92) (372)
(92) 79
(92) 78
(44) 1 148
(45) 1 154
NFP beginning of the period
(888)
(918)
(888)
(918)
(1,026)
(1,064)
Net cash flow Other variations
(347) 42
(372) 44
(1,193)
(1,246)
Adj.EBITDA Non recurring items EBITDA Net Change in provisions & others Share of income from investments in op.activities Cash flow from operations (before WC changes)
NFP end of the period
(
79 4 (805)
(
78 6 (834)
(
148 (10) (888)
(
154 (8)
(
(918)
1) Final restated figures in application of IFRS 10-11 and reclassification of share of net income
Company Presentation – January 2015
66
Energy Segment – Profit and Loss Statement Euro Millions
9M 2014 excl. WL submarine project effect
WL Submarine project effect
9M 2014
9M 2013
Sales to Third Parties
4,350
(81)
4,269
4,534
YoY total growth YoY organic growth
(4.1%) 1.7%
Adj. EBITDA % on sales
Adj. EBIT % on sales
363
FY 2013
1)
6,009
(5.8%) (0.1%)
(83)
8.3%
288
1)
(83)
6.6%
280
361
507
6.6%
8.0%
8.4%
205
284
402
4.8%
6.3%
6.7%
1) Final restated figures in application of IFRS 10-11 and reclassification of share of net income
Company Presentation – January 2015
67
Energy Segment – Sales and Profitability by business area Euro Millions, % on Sales
Adj. EBIT
Adj. EBITDA
Sales to Third Parties
9M 2014
9M 2013 1)
Total growth
Organic growth
Utilities
1,535
1,644
(6.6%)
(3.1%)
Trade & Installers
1,434
1,470
(2.5%)
5.3%
Industrial
1,228
1,339
(8.3%)
(1.9%)
72
81
n.m.
n.m.
4,269
4,534
(5.8%)
(0.1%)
9M’14 % on Sales
9M’13 % on Sales
Others Total Energy
Utilities Trade & Installers Industrial Others
135 52 86 7
195 65 97 4
8.8% 3.6% 7.0% n.m.
11.9% 4.4% 7.2% n.m.
Total Energy
280
361
6.6%
8.0%
Utilities Trade & Installers Industrial Others
105 35 60 5
166 46 71 1
6.9% 2.4% 4.9% n.m.
10.1% 3.1% 5.3% n.m.
Total Energy
205
284
4.8%
6.3%
1) Final restated figures in application of IFRS 10-11 and reclassification of share of net income
Company Presentation – January 2015
68
Telecom Segment – Profit and Loss Statement Euro Millions
Sales to Third Parties YoY total growth YoY organic growth
Adj. EBITDA % on sales
Adj. EBIT % on sales
9M 2014
9M 2013 1)
FY 2013 1)
745
763
986
75
81
106
10.0%
10.6%
10.8%
(2.3%) 1.9%
44
49
63
5.9%
6.4%
6.4%
1) Final restated figures in application of IFRS 10-11 and reclassification of share of net income
Company Presentation – January 2015
69
Financial Structure Euro Millions
30.09.2014 (€m)
Debt structure (€m)
30.09.14
30.06.14
31.12.13(1)
Used
Available Funds (3)
Maturity
-
-
183
-
-
-
-
-
-
-
-
-
Eurobond 5.25%
409
404
414
409
-
04/2015
Term Loan 2011
400
400
400
400
-
03/2016
Revolving 2011
150
100
-
150
250
03/2016
Convertible bond 1.25%
270
268
264
270
-
03/2018
30
30
-
30
70
02/2019
Revolving 2014 in pool
150
-
-
150
850
06/2019
EIB Loan
100
100
-
100
-
02/2021
Other Debt
193
261
177
193
-
-
Total Gross Debt
1,702
1,563
1,438
1,702
1,170
3.0 y(4)
Cash & Cash equivalents
(311)
(255)
(510)
(311)
311
Other Financial Assets
(88)
(88)
(114)
(88)
73
NFP Vs third parties
1,303
1,220
814
1,303
1,554
(11)
(11)
(9)
1,292
1,209
805
Term Loan 2010(2) Revolving
2010(2)
Revolving 2014
Bank Fees NFP
(1)
Final restated figures in application of IFRS 10-11 and reclassification of share of net income
(2)
Original maturity December 2014, canceled in advance in June 2014
(3)
Defined as Cash and Unused committed credit lines
(4)
Average maturity as of 30 September 2014 excluding other debt
Note: Compound average spread on used committed credit lines equal to 2.1%
Company Presentation – January 2015
70
Dividends
Dividend per share in line with previous year supported by sound cash generation Dividend approved by the last Shareholders’ Meeting
•
•
Dividend Per Share
€ 0.420
Total Shares
•
Total payout:
€ 89 millions
•
Ex-dividend date:
22 April 2014
•
Payment date:
25 April 2014
Dividend Yield:
2.2%
214,591,710
(3)
Shares with dividend right (2)
DPS evolution Euro per share
0.417
0.417
(1)
211,563,210 0.420
0.417
0.420
0.210 0.166
Dividend Per Share € 0.420
2007
2008
2009
2010
2011
2012
2013
(1) Outstanding as of April 22, 2014 (2) Shares with dividend right: Total shares outstanding (214,591,710) – Treasury shares owned by the Company (3,028,500) (as of April 22, 2014) (3) Based on 2013 year end closing price
Company Presentation – January 2015
71
Prysmian Historical Key Financials Euro Millions, % of Sales – Pre Draka acquisition Sales Sales
5,007
5,118
4,571
+4.2% *
2008
2009
+3.2% *
+8.2% *
2007
-17.4% *
+9.3% *
2006
2010
* Organic Growth
403
387
477
330
334
309
265 171
2005
2006
7.1%
8.1% 10.3% 10.5%
1 AdjustedNet EBIT Adjusted Income (3)
299
464
407
3,731
1 Adjusted (2) Adjusted EBITEBIT
542
529
5,144
3,742
2005
Adjusted EBITDA (1)
2007
2008
2009
2010
2005
2006
2007
2008
2009
2010
10.8%
8.5%
4.6%
6.6%
9.1%
9.3%
9.0%
6.8%
Operative NWC (4)
332
Net Financial Position
525
892
879 716
206
175
173
451
440
465
577
457
2006
2007
2008
2009
2010
2006
2007
2008
2009
2010
3.5%
5.8%
6.5%
5.5%
3.8%
8.6%
10.6%
9.5%
12.2%
9.2%
2005
2006
2007
2008
474
459
2009
2010
(1) Adjusted excluding non-recurring income/expenses; (2) Adjusted excluding non-recurring income/(expenses) and the fair value change in metal derivatives and in other fair value items; (3) Adjusted excluding non-recurring income/(expenses), the fair value change in metal derivatives and in other fair value items, exchange rate differences and the related tax effects; (4) Operative Net Working capital defined as Net Working Capital excluding the effect of derivatives; % of sales is defined as Operative Net Working Capital on annualized last quarter sales. Note: 2005 Adj. Net Income and 2005 Operative NWC figures are not available
Company Presentation – January 2015
72
Historical Key Financials by Business Area – Utilities and T&I Euro Millions, % of Sales – Pre Draka acquisition Sales Vs Third Parties
+12.1% *
2006
2007
2008
-13.9% *
1,598
1,445
2005
287
2,028
2009
1,790
237 143
2010
2005
* Organic Growth
2006
215
107
2005
2006
9.9% 10.6% 12.5% 14.2% 16.7% 14.0%
7.4%
8.4% 11.0% 12.6% 14.7% 12.0%
1,465
2007
2008
2009
2010
* Organic Growth
(1)
237
157
2006
2007
2008
2009
Adjusted EBITDA (1)
+6.6% *
-5.0% *
2005
208
119
2007
2008
2009
2010
Adjusted EBIT (2) 137 101
113
100
1,020
+7.1% *
T&I
1,189
250
155
1,629
-21.5% *
1,802
256
266
2010
Sales Vs Third Parties 1,645
Adjusted EBIT (2)
197 +1.5% *
1,894
+3.3% *
Utilities
1,853
Adjusted EBITDA (1)
Adjusted excluding non-recurring income/expenses; (2)
62 41
36
38
2005
2006
2007
2008
2009
2010
2005
5.2%
7.2%
8.6%
6.9%
4.0%
2.4%
3.2%
2006 6.1%
26
20
2007
2008
2009
2010
7.6%
6.1%
2.5%
1.4%
Adjusted excluding non-recurring income/expenses, the fair value change in metal derivatives and in other fair-value items
Company Presentation – January 2015
73
Historical Key Financials by Business Area – Industrial and Telecom Euro Millions, % of Sales – Pre Draka acquisition Sales Vs Third Parties 850
629
2006
2008
-16.1% *
2007
2009
2010
2005
2006
8.0%
7.2%
Sales Vs Third Parties 536
424
2005
2006
2007
48
450
2010
2005
2006
2007
2008
2009
2010
9.8%
8.3%
5.1%
5.3%
9.0%
9.4%
7.3%
5.7%
Adjusted EBIT (2) 44
49
39
2008
-20.7% *
2009
45
35
36
29
25
19 1
2010
* Organic Growth
(1)
10.6% 10.9%
42
34
2009
31 +5.2% *
+6.3% *
Telecom
403
2008
Adjusted EBITDA (1)
+1.2% *
535
46 25
2007
80
61
46
39
* Organic Growth
506
71 62
-1.1% *
2005
Adjusted EBIT (2)
93
628 +5.0% *
489
84
742
+21.1% *
Industrial
795
Adjusted EBITDA (1)
Adjusted excluding non-recurring income/expenses; (2)
2005
2006
2007
2008
2009
2010
2005
2006
2007
2008
2009
2010
4.4%
7.2%
8.6%
9.0%
7.6%
7.9%
0.3%
6.6%
7.9%
8.4%
6.1%
6.3%
Adjusted excluding non-recurring income/expenses, the fair value change in metal derivatives and in other fair-value items
Company Presentation – January 2015
74
AGENDA
Group Overview & 2014 Outlook Draka integration Financial Results Appendix – Cable Industry Reference Market
Company Presentation – January 2015
75
The Global Cables Reference Market World-Wide Cable Reference Market Size, 2013 2013 Global Cables Reference Market
€ 112 bn
Latin America 4%
Energy Cables Reference Market (~€89bn) Latin America 4%
North America 16%
EMEA 31%
APAC 52%
EMEA 31%
APAC 49%
Telecom Cables Reference Market (~€23bn ) Latin America 5%
Energy Cables Reference Market ~€89bn
Telecom Cables Reference Market ~€23bn
•
•
• •
Trade and Installers Utilities Industrial
• •
Optical cables and fiber Copper Cables MMS
North America 13%
North America 26%
APAC 40% EMEA 29%
Source: Company analysis based on CRU data – October 2014. Prysmian reference markets are obtained by excluding from the global cable market the segments where the company does not compete (winding wire for energy business). Energy = Low Voltage and Power Cable; TLC = External Copper Tlc Cable, Fibre Optic, Internal Telecom/Data
Company Presentation – January 2015
76
Market Volumes Trend Energy Cables Reference Market
•
Million Tons Conductor
9.5 8.5 9.0 7.8 7.4 6.5 6.7 6.9 7.1
10.3 10.7 10.1 10.8
11.3
13.0 13.6 11.7 12.0 12.5
14.2
CAGR: 4.3%
Long term growth driven by: •
Energy consumption
•
Investments in power grid interconnections
•
Investments in power transmission and distribution
•
Infrastructure investments
•
Renewable energy
CAGR: 4.2%
'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 12
13 '14E '15E '16E '17E
Telecom Cables Reference Market Optical Fiber Cables
Copper Cables
Million Km Fibre
Million Km Pair 301 310 315
45
'98
66
91 95
'00
70 55 54 57
'02
'04
92
287 259 242 218 188 171 142 116 CAGR: 5.0%
253259275268 205211207196 172 157 136 106102 93
CAGR: 12.4%
'06
'08
'10
12
CAGR: -7.8%
'14E
'16E
Market growth driven by increased investment in fibre access networks (FTTx) and LTE
'98
'00
'02
'04
'06
'08
'10
CAGR: -6.9%
84 74 69 64 60 56
12
'14E
'16E
Steady decline of copper cables expected to continue
Source: Company analysis based on October 2014 CRU data. Energy = Low Voltage and Power Cable; TLC = External Copper Tlc Cable, Fibre Optic, Internal Telecom/Data
Company Presentation – January 2015
77
Reference Scenario Commodities & Forex Brent
150
Brent $/bbl Brent €/bbl
Copper
12,000
Aluminium
Copper $/ton Copper €/ton
3,500
Aluminium $/ton Aluminium €/ton
3,000
125
10,000
100
8,000
75
6,000
50
4,000
25 J-08 J-09 J-10 J-11 J-12 J-13 J-14
2,000 J-08 J-09 J-10 J-11 J-12 J-13 J-14
2,500 2,000
EUR / USD
1.60 1.50
1,500 1,000 500 J-08 J-09 J-10 J-11 J-12 J-13 J-14
EUR / GBP
EUR / BRL
3.60
0.95 0.90
3.20
0.85 1.40
2.80
0.80 1.30 1.20 J-08 J-09 J-10 J-11 J-12 J-13 J-14
2.40
0.75 0.70 J-08 J-09 J-10 J-11 J-12 J-13 J-14
2.00 J-08 J-09 J-10 J-11 J-12 J-13 J-14
Based on monthly average data Source: Nasdaq OMX
Company Presentation – January 2015
78
Disclaimer • The managers responsible for preparing the company's financial reports, A.Bott and C.Soprano, declare, pursuant to paragraph 2 of Article 154-bis of the Consolidated Financial Act, that the accounting information contained in this presentation corresponds to the results documented in the books, accounting and other records of the company.
• Certain information included in this document is forward looking and is subject to important risks and uncertainties that could cause actual results to differ materially. The Company's businesses include its Energy and Telecom cables and systems sectors, and its outlook is predominantly based on its interpretation of what it considers to be the key economic factors affecting these businesses.
• Any estimates or forward-looking statements contained in this document are referred to the current date and, therefore, any of the assumptions underlying this document or any of the circumstances or data mentioned in this document may change. Prysmian S.p.A. expressly disclaims and does not assume any liability in connection with
any inaccuracies in any of these estimates or forward-looking statements or in connection with any use by any third party of such estimates or forward-looking statements. This document does not represent investment advice or a recommendation for the purchase or sale of financial products and/or of any kind of financial services. Finally, this document does not represent an investment solicitation in Italy, pursuant to Section 1, letter (t) of Legislative Decree no. 58 of February 24, 1998, or in any other country or state.
• In addition to the standard financial reporting formats and indicators required under IFRS, this document contains a number of reclassified tables and alternative performance indicators. The purpose is to help users better evaluate the Group's economic and financial performance. However, these tables and indicators should not be treated as a substitute for the standard ones required by IFRS.
Company Presentation – January 2015
79
