In terms of adjusted EBITDA ambition, the Group is targeting around €2 billion in 2027, with an intermediate target of around €1.775 billion in 2025. This is compared to €1.49 billion in 2022, which means the EBITDA is expected to grow from 2022 by over half a billion euro. Moreover, the Company is expecting an EBITDA compound annual growth rate (CAGR) of 5-7% between 2022 and 2027.
It is important to stress that these EBITDA targets are purely organic with no acquisitions planned and are also based on a substantially stable assumption in terms of US dollars to EUR exchange rate at 1.08.
EBITDA targets differentiation among the new segments
Overall, organic growth is expected to be very much differentiated by segment, with total sales in 2027 at over 19 billion (compared to about €16 billion in 2022). In particular:
- Renewable Transmission is – together with Power Grid – the main growth pillar, almost tripling EBITDA by 2027 to €600 million. The segment will, in fact, experience a high double-digit organic growth in sales, driven by the execution of €20 billion order portfolio and by an effective and timely execution of the capacity expansion (both manufacturing and installation), especially in the EU.
- Power Grid is the second main growth pillar, as it will see a mid-single digit organic growth in sales. The EBITDA is in fact expected to double by 2027 reaching €410 million. The growth of the segment will be mainly driven by grid enhancement in Europe and by volume growth in North America.
- Electrification is the segment in which the Group expects a drop in EBITDA of €100 million by 2027. The decrease derives from the assumption of a -€225 million price effect in Industrial & Construction North America in 2023-2025 compared to the 2022 baseline.
- The Digital Solutions segment will go through a decline in sales in 2023 followed by a recovery from 2024 through to 2027, reaching an expected €290 million EBITDA.
Prysmian Group – as CFO Pier Francesco Facchini reassures – is confident that the €2 billion EBITDA target is in its reach. This growth is also expected to result in a new scale of free cash flow, seen at €900 million to €1 billion in 2027, and of Return on Capital Employed (ROCE), which is seen at 25-28% in 2027.
So where is this expected strong cash generation going to be allocated?