CONSOLIDATED FINANCIAL STATEMENTS >
DIRECTORS’ REPORT
104
| 2013 ANNUAL REPORT | PRYSMIAN GROUP
The Group’s manufacturing operations are carried out
through a highly decentralised model, involving 91 plants in
33 different countries. The widespread distribution of plants
is a strategic factor in allowing the Group to react quickly to
different market needs worldwide. Over the course of 2013 the
Prysmian Group continued to implement an industrial strategy
based on the following factors:
(i) focus on higher value-added products;
(ii) maintenance of a widespread geographical presence to
minimise distribution costs;
(iii) concentration of high-tech product manufacture in a
limited number of plants in order to focus technological
expertise and benefit from economies of scale, thus
improving manufacturing efficiency and reducing capital
employed.
The process of integrating Draka’s industrial activities, started
in 2011, carried on during the year with the gradual extension
of best practices to the respective organisational models and
management systems used in manufacturing operations; at
the same time, major strategic investments continued to be
made in Submarine cables, High Voltage cables, Optical cables
and Fibre.
Gross investments amounted to Euro 144 million in 2013,
down from Euro 152 million the previous year, as a result
of further optimising capital employed after the transition
period following Draka’s acquisition. Investments to
increase production capacity accounted for 43% of the total.
Production capacity increases mostly referred to the Utilities,
Industrial and Optical Fibre businesses.
Utilities.
Work carried on during the year to increase capacity
at the Arco Felice Submarine cables plant in Naples to allow
it to fulfil the contract for the Western HVDC Link between
England and Scotland. Also with regard to the submarine
cables business, investments were made at the Drammen
plant to prepare production lines for the manufacture of
cables to connect some of ExxonMobil’s offshore platforms
off the coast of the United States to the mainland. At the
same time, the new medium and high voltage cable factory
was completed and inaugurated in Rybinsk, Russia: the
inauguration of this new facility is a key stage in the Group’s
expansion plans for a high-potential, strategic market like
Russia, also in view of the recent agreement signed with the
local operator “Rosseti” for the purpose of developing high
and extra high voltage transmission systems up to 500 kV.
INDUSTRIAL ACTIVITIES
Once again in 2013, Prysmian Group’s focus was on higher value-added products and on
concentrating technological expertise to benefit from economies of scale, and so improve
manufacturing efficiency and reduce capital employed.
Industrial
. In the Oil&Gas sector, major investments were
made in the Santo André and Sorocaba plants in Brazil serving
the Oil&Gas projects acquired by the Group from Jurong and
Keppel Fels shipyards in Singapore, and in the Schuylkill Haven
factory in the United States, where it was decided to expand
capacity for the production of Airguard cables, used in special
applications requiring very high performance cables in terms of
resistance to chemicals and mechanical stress.
Telecom
. In the Optical Fibre business, there were continued
investments in efficiency, especially at the European optical
fibre plants in Battipaglia (Italy) and Douvrin (France), with
the goal of reducing fibre manufacturing costs. In particular,
work was started at the Italian plant to build a trigeneration
plant intended to reduce energy costs. During the year, the
new optical cable factory was inaugurated in Slatina, Romania,
thereby becoming one of Europe’s centres of excellence for
optical telecom cables.
Investment expenditure on achieving efficiencies to reduce
fixed and variable costs, particularly in relation to materials
usage and product design, accounted for approximately 14%
of the total: this expenditure included major investments
in making the metallurgical area more efficient, after
deciding that some of the Group’s plants (Durango in Mexico,
Schwerin in Germany and Emmen in The Netherlands) would
complete the process of verticalisation by expanding their
manufacture of conductors in order to improve the business’s
competitiveness in sectors such as automotive and power
distribution.
Some 12% of investment expenditure was for ongoing
development of information systems and, to a lesser extent,
for research and development. In particular, there was
continued spending on rolling out the “SAP Consolidation
project”, aimed at standardising the information system in all
the Group’s operations over the next few years: in 2013, the
new ERP system was rolled out to the Czech Republic, Norway,
Sweden and Denmark.
Capital expenditure for structural maintenance work or for
worker safety accounted for about 12% of the total, in line
with previous years.
Lastly, the category of other investments (19% of the total)
included the acquisition of an industrial building in Santa
Perpetua (Spain) as well as two other particularly important
