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PRYSMIAN GROUP | DIRECTORS’ REPORT
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INDUSTRIAL ACTIVITIES
During the year Prysmian Group continued to invest in the higher value-added business of submarine
cables, confirming once again its world leadership in this segment.
The Prysmian Group's manufacturing activities are carried out through a highly decentralised model,
involving 88 plants in 31 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 2015 the
Prysmian Group continued to implement an industrial strategy based on the following rationale: (i) output of
higher value-added high-tech products by a limited number of plants that become centres of excellence with
high levels of technological expertise, where it is possible to benefit from economies of scale, with
consequent manufacturing efficiency and reduction in capital employed; (ii) ongoing pursuit of greater
manufacturing efficiency in the commodities area by maintaining a wide geographical presence to minimise
distribution costs.
Capital expenditure totalled Euro 210 million in 2015, up from Euro 163 million the previous year, mainly
reflecting the major resources invested in manufacturing footprint projects, as well as the usual level of
investment in the submarine cables business (for both offshore and onshore sections) and in the optical
cables business. Investments to increase production capacity and change its mix accounted for 44% of the
total. In addition, the process of rationalising production capacity proceeded throughout the year: in fact, the
plants in Ascoli (Italy) and Aubevoye (France) were both closed, resulting in the transfer of their machinery to
other factories within the Group. The purpose of concentrating production sites was to optimise cost
structure and to rationalise the Group's manufacturing footprint, thereby ensuring an adequate level of
capacity utilisation within the various countries.
Energy Projects
. Significant investments were made during the year in the Group's submarine cable plants in
Arco Felice (Italy) and Pikkala (Finland) to increase capability for the "50 Hertz" contract, worth more than
Euro 700 million and awarded to the Group in 2014; this contract involves the design, supply and installation
of high voltage submarine systems between offshore wind farms in German territorial waters. Also in the
submarine business, conversion work started on the new cable-laying ship known as "Pacifique", thereby
adding a third vessel to the existing fleet comprising the "Giulio Verne" and the "Cable Enterprise". Within the
High Voltage business, the two major investments initiated in 2014 were brought to a conclusion: i) at the
Abbeville plant (United States) for the construction of a second vertical insulation line for Extra High Voltage
extruded cables, in order to intercept the volume growth in this continuously expanding market; ii) at the
Slatina plant (Romania), to satisfy growing demand in the markets of South-East Europe. Lastly, investments
were made in the Delft plant (Netherlands) after winning a project from TenneT to construct a high voltage
power line in the Netherlands.
Energy Products
. Capital expenditure in this segment continued to focus on countries with the best growth
potential: in China, the Suzhou and Tianjin plants had their production capacity increased for Trade &
Installer, Rolling Stock and Elevator cables; in Estonia, the Keila plant was the subject of investments to
create a manufacturing hub for LV cables to serve the growing North European market; in Malaysia, the