CONSOlidaTEd FiNaNCial STaTEmENTS >
DIRECTORS’ REPORT
66
| 2012 aNNual rEpOrT prySmiaN grOup
FINANCIAL PERFORMANCE
Positive second-half sales trend with increased profitability due to fourth-quarter
performance.
Sales to third parties by the Utilities business area amounted
to Euro 2,287 million at 31 December 2012, compared with Euro
2,318 million pro-forma at the end of 2011, posting a negative
change of Euro 31 million (-1.3%) due to the combined effect of
the following main factors:
• negative change of Euro 52 million (-2.2%) in sales prices
due to fluctuations in metal prices;
• negative change of Euro 54 million (-2.3%) due to non-
consolidation of the sales of Ravin Cables Limited
(India) and Power Plus Cable CO LLC (Middle East – 49%
consolidated) since 1 April 2012;
• positive change of Euro 6 million (+0.2%) due to
consolidation of Global Marine Systems Ltd since 15
November 2012;
• organic sales growth of Euro 27 million (+1.1%);
• positive exchange rate effects of Euro 42 million (+1.9%).
The organic growth occurring since the third quarter of 2012
made it possible to absorb the negative result recorded in
the first half, and benefited every sector, except for Power
Distribution. The most significant contribution came from
the Submarine cables business line, thanks to the start of the
Westernlink project, and from the High Voltage business line.
Power Distribution sales in North and South America stabilised
after a first-half recovery.
Despite having suffered from a drop in demand on European
markets in the first six months of the year, the High Voltage
business line’s sales performance benefited from a second-
half trend reversal. This was thanks to the speed with which
Prysmian was able to respond to demand not only in markets
with growing energy infrastructure requirements such as
China, Russia and the Middle East, but also in respect of
projects for European utilities (in particular Tennet, Terna, EDF,
UK National Grid). The order book corresponds to about 12
months of sales and is stable compared with the level reached
in the third quarter of the year.
The Network Components business line reported increased
sales of medium and low voltage accessories on the major
European domestic markets and in North America, thanks to
demand generated by scheduled grid maintenance work and
to increased production capacity at the French plants, allowing
faster response to customer requests. The decline in demand
in the High Voltage sector penalised sales of high voltage
accessories until the third quarter. After a slight first-half
increase, even sales on the Chinese market stabilised in the
second half, primarily due to stiff price competition.
Sales by the Submarine business line increased on the prior
year, in line with forecasts for the major projects acquired.
The larger projects on which work was performed during the
period were Messina II (Italy), the Borwin 2, Helwin 1 and
Sylwin offshore wind farm projects in Germany, as well as the
Westernlink project in the United Kingdom, work on which
started during the third quarter.
The value of the Group’s order book reached a record level
of Euro 1,900 million at the end of the year, providing
sales visibility for a period of three years. This increase is
attributable to work on short-distance connections and/or
repairs (Alaska, Penang), the new contract for the Dardanelles
power line in Turkey and new contracts for offshore wind
farm connections. In order to satisfy the latter contracts,
investments have been made to expand production capacity
at the plant in Finland, already operational at the end of 2011,
while additional investments have been planned at the Arco
Felice plant in Italy.
Adjusted EBITDA of the Utilities business area went from Euro
264 million pro-forma at 31 December 2011 to Euro 270 million
at the end of 2012 (+2.3%). The recovery in this result was
achieved in the last quarter thanks to the contribution of the
high value-added business lines (High Voltage and Submarine)
which absorbed the negative effects of lower volumes for
Power Distribution and of persistent competitive pressures in
all the Group’s markets of operation.
