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Consolidated Financial Report |
DIRECTORS’ REPORT
2014 Annual Report
Prysmian Group
120
BUSINESS OUTLOOK
The macro environment in 2014 was marked by a gradual
strengthening of the US economy but continued overall
weakness in Europe, despite tentative signs of recovery,
especially in the first part of the year. Growing geopolitical
tensions emerging in the Middle East and Russia, combined
with slowdown in some economies like China and Brazil,
nevertheless raise further uncertainty over the short and
medium-term outlook for the world economy.
In such an economic context, the Group's expectation for
FY 2015 is that demand for medium voltage power distri-
bution cables used by utilities will remain weak, while the
building wires business is likely to see a continuation of the
stabilising trend observed in the second half of 2014. In the
Industrial Oil & Gas and SURF cables business, the sudden
drop in oil prices could affect investments and thus the busi-
ness's order book over the medium term. The Group confirms
a generally stable trend for its high value-added power
transmission businesses, with potential growth areas in the
submarine business, although offset by weak demand in the
high voltage underground market, also penalised by growing
competition in several geographical areas. With reference
to its submarine cables business, the Group expects that
the impact of the Western HVDC Link project posted in
2014 (€94 million on Adjusted EBITDA) will be significantly
lower in 2015. In the Telecom business, demand for optical
fibre cables is expected to carry on recovering in the coming
quarters, especially in Europe and the United States, albeit
at a slower pace than in 2014.
During 2015 the Prysmian Group will continue to integrate
and rationalise activities with the goal of achieving its
projected cost synergies and of further strengthening its
presence in all areas of the business. Lastly, it is conceivable
that exchange rate effects, which had an adverse impact of
about €14 million on Adjusted EBITDA in 2014, will have a
positive impact on the 2015 results, assuming constancy of
the rates at the start of the year, through the pure effect
of translating profits expressed in other currencies into the
Group’s reporting currency.
OTHER INFORMATION
Related party transactions
Related party transactions do not qualify as either atypical or
unusual but fall into the normal course of business by Group
companies. Such transactions take place under market terms
and conditions, according to the type of goods and services
provided. Information about related party transactions,
including that required by the CONSOB Communication dated
28 July 2006, is presented in Note 33 to the Consolidated
Financial Statements at 31 December 2014.
Atypical and/or unusual transactions
In accordance with the disclosures required by CONSOB Com-
munication DEM/6064293 dated 28 July 2006, it is reported
that no atypical and/or unusual transactions took place
during 2014.
Secondary offices and key corporate information
The list of secondary offices and key corporate information
of the legal entities making up the Group can be found in
Appendix A of the Explanatory Notes to the Consolidated
Financial Statements.
Financial risk management
The management of financial risks is discussed in the Ex-
planatory Notes to the Consolidated Financial Statements, in
Section D. Financial risk management.