Profitability target achieved: ADJ EBITDA euro 403 Million
Sales trend stabilisation in second half
Margins stable: ADJ EBITDA 10.8% of sales (10.5% in 2008)
High cash generation confirmed
•
Sales: euro 3,731 million (organic change -17.4%)
•
ADJ EBITDA : euro 403 million (euro 542 million in 2008; -25.6%)
•
ADJ OPERATING INCOME : euro 334 million (euro 477 million in 2008; - 30.1%)
•
NET PROFIT: euro 252 million (euro 235 million in 2008; +7.5%)
•
ADJ NET PROFIT : euro 206 million (euro 332 million in 2008; -37.9%)
•
FREE CASH FLOW : euro 183 million.
•
Net Financial Position improved to euro 474 million from euro 577 million in 2008
Dividend confirmed at euro 0.417 per share for a total pay-out of euro 74 million
The Board of Directors of Prysmian S.p.A. has approved today the Company's consolidated
financial statements and separate financial statements for 2009 .
"During 2009 Prysmian kept a prudent management approach while continuing to develop effective
growth strategies at the same time," explains CEO Valerio Battista. “We are particularly proud of
having achieved the initial Group profitability target even in a still weak market environment.
Furthermore, thanks to the strategy developed - continues Battista - we have been able to
strengthen the Group's financial solidity, with a significant improvement in our net financial
position. Looking ahead, we believe that the investments in high-tech businesses, combined with the
acquisitions made in high-growth markets like India, Russia and the Middle East, will allow us to
fully benefit from future market recovery."
FINANCIAL RESULTS
Sales amounted to Euro 3,731 million with a negative organic change of 17.4%, net
of metal price and exchange rate effects and changes in the group perimeter.
Adjusted EBITDA amounted to Euro 403 million (-25.6% on 2008), achieving the
target originally announced to the market, with the margin on sales rising to 10.8% from 10.5% at
the end of 2008. This improvement in margin is attributable to the greater weight of high
value-added businesses, which accounted for approximately 65% of adjusted EBITDA (approximately 50%
in 2008), and to the reduction in fixed costs.
EBITDA amounted to Euro 366 million, down 29.3% from Euro 518 million in 2008,
with a margin on sales of 9.8% versus 10.1% in the previous year.
Operating income , including the positive impact of Euro 91 million from the
change in the fair value of metal derivatives compared with a negative impact of Euro 68 million in
the prior year, was Euro 386 million compared with Euro 380 million in 2008 (+1.6%).
Adjusted operating income was Euro 334 million, down 30.1% from Euro 477 million
in 2008 and representing a margin on sales of 9.0%, down from 9.3%.
Net finance costs improved by Euro 45 million, going to a negative Euro 52 million
from a negative Euro 97 million in 2008. The decrease in finance costs reflects lower borrowing
costs, a reduction in net debt and a decline in net negative exchange differences to Euro 1 million
from negative Euro 32 million in 2008.
Net profit amounted to Euro 252 million, reporting a 7.5% increase from Euro 235
million in 2008 and a 6.8% margin on sales (4.6% in 2008).
Adjusted net profit came to Euro 206 million compared with Euro 332 million in
2008 (-37.9%), with a 5.5% margin on sales (6.5% in 2008).
Free cash flow (levered) came to Euro 183 million (Euro 320 million in 2008) after
Euro 106 million in operating investments, confirming the Group's strong cash generation even in a
difficult year like 2009.
At the end of 2009,
Net financial position improved to Euro 474 million from Euro 577 million at the
end of 2008, with a NFP/Adjusted EBITDA ratio of 1.2x.
FOCUS ON COST REDUCTION AND INDUSTRIAL/ORGANISATIONAL EFFICIENCIES
•
Reduction of Euro 39 million in fixed costs (-9% vs 2008)
The Prysmian Group reported Euro 388 million in fixed costs at the end of 2009, a
reduction of Euro 39 million on 2008. Cost reduction was mainly achieved through improvement of
plant productivity, rationalization of organisational structure and reduction of operational
costs.
•
Continuous generation of industrial efficiencies
The Group recorded around Euro 21 million in industrial efficiencies in 2009,
achieved by paying constant attention to the efficiency of materials, by optimising logistics and
production costs and by developing innovative production processes. Average annual industrial
efficiencies amounted to Euro 24 million in the period 2004-2008.
FOCUS ON INVESTMENTS IN STRATEGIC BUSINESSES AND M&A
•
Investments for Euro 63 million in high-tech businesses
The Group invested Euro 63 million (Euro 57 million in 2008) in developing its high-tech
businesses. In the high voltage business, a new manufacturing facility was opened in the USA while
in China the project to modernise and expand the Baojing plant was launched. Investments were also
made in cables for renewable energy, particularly those used by offshore wind farms. Lastly,
activities continued to build up the new flexible pipes plant in Brazil for offshore oil drilling
industry.
•
Acquisitions in Russia, India and the Middle East
In December 2009 the Group completed the acquisition of Rybinsk Elektrokabel in Russia, while
in January 2010 it completed the acquisition of a majority stake in Ravin Cables with operations in
India and the Middle East. These acquisitions are in line with the Group’s strategy to expand
activities in high-growth countries and lay a base to upgrade and complete the product range in
these countries.
PERFORMANCE AND RESULTS ENERGY CABLES AND SYSTEMS
•
SIGNIFICANT GROWTH FOR SUBMARINE CABLES; RECOVERY IN NEW HIGH VOLTAGE CABLE PROJECTS
•
DEMAND STILL WEAK FOR POWER DISTRIBUTION AND TRADE & INSTALLERS, WITH SALES TREND
STABILISATION IN SECOND-HALF
•
SIGNS OF UPTURN IN OGP DEMAND; STEADY GROWTH IN RENEWABLES
•
TOUGH MARKET FOR SHIPPING AND CRANE CABLES
Sales to third parties by the Energy Cables and Systems business amounted to Euro
3,328 million, posting an organic decrease of 17.0%. Profitability improved. Adjusted EBITDA
amounted to Euro 372 million (Euro 493 million in 2008), with margin on sales rising to 11.1% from
10.6% in 2008. Adjusted operating income came to Euro 309 million (Euro 435 million in 2008), with
margin on sales basically stable at 9.3% from 9.4% in 2008.
Utilities
Sales to third parties by the Utilities business amounted to Euro 1,598 million, reporting an
organic decrease of 13.9%. The higher value-added segment of power transmission accounted for 55%
of total sales, with an order book of approximately Euro 900 million at the end of 2009
(approximately one year sales). In terms of profitability, adjusted operating margin on sales
reported a significant improvement, rising to 14.7% from 12.6% in 2008, with a sharp acceleration
in the fourth quarter (16.2%) thanks to strong submarine cable performance.
Prysmian confirmed its worldwide leadership in the submarine energy cables and systems
segment, achieving a positive organic growth of around 10%. The Group is developing several major
projects like SAPEI in Italy, GCCIA in Bahrain, Transbay in the USA, Cometa in Spain and Doha Bay
in Qatar, and at the end of 2009 was awarded a new contract of Euro 300 million to develop the new
Sicily-Italian mainland submarine transmission system, one of the world's biggest projects of this
kind. New projects were also acquired in the fast expanding sector of renewable energy: in 2009 new
contracts to supply cables to the Ormonde and Walney offshore wind farms were secured, in addition
to projects currently under execution like Greater Gabbard and Thanet, among the largest in the
world. At the end of 2009 the order book for submarine cables covered production capacity for the
two subsequent years.
Demand for high voltage underground cables showed signs of recovery in the second half of the
year and the larger utilities restarted work on new projects that had been suspended during the
crisis. The order book provides sales visibility for the first part of the year. The acquisitions
in Russia and India will allow the Group to further consolidate its world leadership in this
sector.
Volumes in the power distribution segment reported a general stabilisation in the second half
of the year. Prysmian faced the persistent weakness in demand by continuing to focus on innovation,
with its revolutionary, high performance P-Laser cable which reached the final stage of
industrialisation and marketing: contracts were signed with major utilities and the first 1,000 km
of cable were delivered.
Trade & Installers
Sales to third parties by the Trade & Installers business amounted to Euro 1,020 million,
posting an organic decrease of 21.5%. Despite continued sector weakness, the second-half organic
change in sales, although still negative relative to the prior year, was considerably better than
in the first half of the year. Volumes also showed signs of recovery in the second half,
particularly in countries like Turkey, South America and Germany, while countries like Spain and
Great Britain continued to be depressed. Prysmian sought to limit the decline in sales volumes as
far as possible by selectively acting on the product portfolio, particularly through increased
penetration of higher value-added products: sales of LSOH/Afumex fire-resistant cables rose to
around 14% of the total. Adjusted operating margin on sales went to 2.5% from 6.1% in 2008.
Industrial
Sales to third parties by the Industrial cables business amounted to Euro 628 million,
reporting an organic decrease of 16.1% although with an improving trend in the fourth quarter.
Orders in the Oil & Gas segment recovered in the second half after a weak first part of the
year, while the renewable energy sector confirmed a steady upward trend. Small but positive signs
of improvement were also seen in the second half of the year in the automotive segment. Adjusted
operating margin on sales was 7.3% from 9.4% in 2008.
PERFORMANCE AND RESULTS TELECOM CABLES AND SYSTEMS
•
DEMAND RECOVERY IN SECOND-HALF FOR OPTICAL CABLES
•
INCREASED PRESENCE WITH LARGE INCUMBENT IN CHINA AND USA
•
GROWTH OF THE BROADBAND AND FIBRE TO THE HOME APPLICATIONS
Sales to third parties by the Telecom Cables and Systems business amounted to Euro 403
million, reporting an organic decrease of 20.7% on 2008. The reduction was primarily attributable
to the copper cables segment, while the optical cables showed signs of volumes recovery in the
second-half, particularly in the growing Chinese market, where Prysmian signed important contracts
with the largest local telecom operators, and in the USA, where Prysmian increased its presence
with large incumbents. Adjusted operating income came to Euro 25 million compared with Euro 45
million in 2008, with the margin on sales decreasing to 6.1% from 8.4% of sales.
The FTTx segment proved fairly lively in 2009, particularly thanks to investments by
alternative operators. Prysmian has entered an important agreement with Cabelte Cabos Electricos e
Telefonicos S.A., a Portuguese company, to develop and sell FTTx solutions in Portugal, Angola and
Mozambique.
Telecom
PERFORMANCE AND RESULTS BY GEOGRAPHICAL AREA
The Group's sales in
EMEA (Europe, Middle East and Africa) reported an organic decrease of 15.0%,
mainly due to lower volumes in the Trade & Installers, Power Distribution and Telecom
businesses. The downward trend in sales showed signs of stabilization in the last quarter, even if
not strong enough to mark a real trend of recovery. EMEA accounted for 70.6% of total sales in the
year.
Sales in
North America posted an organic decrease of 40.3%, principally due to the drop in
Power Distribution sales, and accounted for 9.4% of the Group's total sales in the year.
Latin America posted an organic decrease in sales of 13.4%, primarily attributable to the
Trade & Installers segment, while sales volumes in the OGP cables segment showed signs of
improvement in the second half of the year. The region accounted for 9.8% of total sales in 2009.
Asia Pacific reported an organic decrease in sales of 9.7%. This contraction
mainly concerned the Power Distribution segment in the Southeast Asia markets (Malaysia and
Indonesia). High voltage sales increased in China. Asia Pacific accounted for 10.2% of total sales
in 2009.
BUSINESS OUTLOOK
The economic context in 2009 confirmed the weakness already experienced during the previous
year and which became considerably worse from September 2008 due to the crisis affecting certain
international financial institutions. Following intervention by national governments and central
banks, the fall in demand and in industrial output stabilised in the second part of 2009 at record
lows for recent years.
Given this economic scenario, in 2010 the Group expects demand stabilization, at the minimum
levels reached in 2009, for the Trade & Installers and Power Distribution businesses and for
certain products in the Industrial segment more exposed to cyclical trends, with a possible gradual
recovery towards the end of the year. While orders for power transmission projects and for optical
fibre cables are expected to recover during the year.
The Group also continues to rationalise and improve efficiency in its industrial footprint
and to optimise its cost structure, while confirming its investment plans already started in the
high value-added businesses to further strengthen its presence in the most profitable, high-growth
segments.
FURTHER RESOLUTIONS BY THE BOARD OF DIRECTORS
The Board of Directors gave management the authority to be able to go ahead, depending on
market conditions - with the issue in 2010 and in several individual stages if necessary - of a
bond reserved for institutional investors. The bond issue has the purpose of diversifying the
Company's sources of financing and lengthening the average maturity of its debt. The Board of
Directors has approved the issue for up to a maximum nominal amount of Euro 400 million, and set
the maximum term for individual issues at 7 years. The bonds will be quoted on the Luxembourg Stock
Exchange and/or another regulated or unregulated market other than Luxembourg. The final terms and
pricing of the individual issues will be set according to existing market conditions and published
accordingly.
Directors independence
Based on statements made by the directors, the Board of Directors reports that it has
reviewed their independence requirements, in accordance with the Self-Regulatory Code for listed
companies, and confirms that the directors Wesley Clark, Fabio Labruna, Giulio Del Ninno and Udo
Günter Werner Stark continue to satisfy these requirements.
Calling of shareholders' meeting
The Board of Directors has given the Chairman and the CEO several authority to perform all
the formalities required to call the Shareholders' Meeting on 13 April 2010 (first call in ordinary
session and extraordinary session) or 14 April 2010 (second call in extraordinary session) or 15
April 2010 (third call in extraordinary session and second call in ordinary session).
Based on the results for 2009, the Board of Directors will recommend to the forthcoming
Shareholders’ Meeting that a dividend of Euro 0.417 per share be declared, with a total pay-out of
Euro 74 million.
If approved, the dividend will be paid out from 22 April 2010 to those shares outstanding on
the ex-div date of 19 April 2010.
Amendment of the stock option incentive plan and amendment of the by-laws
Having heard the favourable opinion of the Compensation and Nominations Committee, the Board
of Directors has resolved to adopt an amendment to the incentive plan approved by the Shareholders'
Meeting on 30 November 2006. This amendment - which will be submitted for the approval of the
forthcoming Shareholders’ Meeting in accordance with art. 114-bis of Legislative Decree 58/98 -
will introduce new four option exercise periods, solely for beneficiaries still in the Group's
employment. If approved by the shareholders, this amendment will make vested but unexercised
options and options that will vest in future, exercisable until the thirtieth day after publicly
announcing the approval of the Company's separate financial statements for the year ended 31
December 2012. All the other terms of the plan remain the same.
The proposed amendment of the incentive plan will be accompanied by a proposal to extend the
term of the capital increase by Prysmian S.p.A. relating to this plan, involving a consequent
revision of article 6 of the Company's by-laws.
The information memorandum relating to the plan and report on the amendments to the by-laws
will be published within the required deadline.
Change in financial calendar for 2010
By way of partial amendment to the financial calendar published on 20 January 2010, the
meeting of the Board of Directors to approve the interim management statement at 31 March 2010 has
been moved from 6 May 2010 to 13 May 2010. The dates of all the other corporate events in 2010
remain the same.
The Annual Report at 31 December 2009 will be filed at the Company's registered offices in
Viale Sarca 222, Milan and with Borsa Italiana S.p.A. in compliance with relevant regulations. It
will also be available on the corporate website at www.prysmian.com.
This document may contain forward-looking statements relating to future events and
operating, economic and financial results of the Prysmian Group. By their nature, forward-looking
statements involve risk and uncertainty because they depend on the occurrence of future events and
circumstances. Therefore, actual future results may differ materially from what is expressed in
forward-looking statements as a result of a variety of factors.
Mr. Pier Francesco Facchini, manager responsible for preparing corporate accounting
documents, hereby declares, pursuant to par. 2 art. 154-bis of Italy's Unified Financial Act, that
the accounting information contained in this press release corresponds to the underlying documents,
accounting books and records.
This Press Release is not an offer for the purchase of bonds in the United States. The bonds
have not, and will not, be registered as per the United States Securities Act of 1933, as modified
("Securities Act"), or in the terms of any financial regulation in any of the states of the United
States, or on behalf or to the benefit of a "U.S. person", as per the definition given by
Regulation S of the Securities Act, unless within the limits of applicable exceptions, i.e., an
operation not subject to registration requirements under the Securities Act.
This Press Release is not a public offer of financial products in Italy, as per art. 1,
para. 1, letter. t), of Legislative Decree 58 of 24 February 1998 ("TUF"). This Press Release is
not an offer of sale or an invitation to invest in financial products. The documentation relating
to the offer will not be subject to the approval of CONSOB.
Moreover, bonds may not be sold in any country or jurisdiction in which such an offer might
be considered illegal. No action has or will be taken to permit a public offer of the bonds under
any jurisdiction, including in Italy.
Save for the obligations of the Issuer pursuant to article 114 of TUF, this Press Release is
exclusively aimed at subjects (i) outside the United Kingdom; (ii) with professional credentials in
maters pertaining to financial investments, as per art. 19(5) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005, as modified ("Order") or (iii) covered by the definition
of art. 49, second para. from a) to d) of the Order or (iv) those to whom this Press Release may be
sent without violating the terms of article 21 of the Financial Services and Markets Act 2000
(collectively identified as "relevant persons"). This Press Release is aimed solely at such
relevant persons who may not pass it on to others. All forms of investment referred to by this
Press Release are exclusively reserved to relevant persons and may only be effected by relevant
persons.
This Press Release (and the information contained herein) is not for publication or
distribution, either directly or indirectly, in the United States.
Prysmian
A leading player in the industry of high-tech cables and systems for energy and
telecommunications, the Prysmian Group is a truly global business with more than Euro 3.7 million
in sales in 2009 and a strong position in higher value-added market segments. With its two
businesses, Energy Cables & Systems (submarine and underground cables for power transmission
and distribution, for industrial applications and for the distribution of electricity to
residential and commercial buildings) and Telecom Cables & Systems (optical cables and fibres
and copper cables for video, data and voice transmission), Prysmian boasts a global presence with
subsidiaries in 39 countries, 56 plants in 24 countries, 7 Research & Development Centres in
Europe, USA and South America, and around 12,000 employees. Specialising in the development of
products and systems designed to customer specification, Prysmian's key strengths include: a focus
on Research & Development, the capacity to innovate products and production processes, and the
use of advanced proprietary technologies. Prysmian is listed on the Milan Stock Exchange in the
Blue Chip index.
Media Relations
Lorenzo Caruso
Marketing & Corporate Communications Director
Ph. 0039 02 64491
lorenzo.caruso@prysmian.com
Investor Relations
Luca Caserta
Head of Investor Relations
Ph. 0039 02 64491
luca.caserta@prysmian.com
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