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Gross capital investment amounted to
Euro 152 million in 2012. Investment in
additional production capacity accounted
for 58% of the total, mainly in the
Utilities and Industrial businesses and
the Optical Cables segment.
The Prysmian Group's manufacturing operations are highly
decentralised, with 91 factories in 33 countries. This wide
geographical distribution is a strategic asset, allowing the
Group to respond relatively quickly to different market
requirements. Once again during 2012 the Prysmian Group
continued to implement an industrial strategy based on:
(i) focus on higher value-added products, while maintaining
a well-diversified geographical presence to minimise
distribution costs;
(ii) concentration of high-tech product manufacture at a
limited number of factories to leverage the economies of
scale, increase manufacturing efficiency and reduce net
capital employed.
The purchase of Draka in 2011 has enabled Prysmian to
achieve recognised world leadership and further diversify
the product/customer portfolio, principally in the Telecom,
Industrial and T&I segments, while also increasing the
capacity of the Group and the number of production
locations. The process of integrating Draka's industrial
activities started in 2011 and has continued throughout the
year, with the gradual extension of the Prysmian Group's
organisational models and systems of control to the acquired
production facilities. At the same time, significant strategic
investment has continued in relation to submarine cables,
HV cables, optical cables and optical fibres.
The following factory closures were completed during the
year: Derby in the United Kingdom, Hickory in the USA,
Eschweiler in Germany, Livorno Ferraris in Italy, Sant Vicenç
dels Horts in Spain and Singapore. The related machinery
was transferred to other factories within the Group. This
focus on the concentration of production was designed
to optimise the cost structure within each country and
rationalise manufacturing activities, in line with the plan
for the release of synergies announced to the financial
community during 2011.
OPERATIONS
Gross capital investment amounted to Euro 152 million
in 2012, just slightly lower than in the prior year (Euro 159
million). This reflects optimisation of the use of capital
following a transitional phase after the acquisition of Draka.
Investment in additional production capacity accounted for
58% of the total. Production capacity was mainly increased
in relation to the Utilities and Industrial businesses and
the Optical Cables segment. In particular, investment in
additional capacity commenced during the year at the Arco
Felice (Naples) factory, in preparation for work on the HVDC
Western Link. This guarantees additional flexibility in view
of the increased backlog of orders. There was also significant
investment at Sorocaba (Brazil), Durango (Mexico) and
Liverpool (Australia) to meet the growth in local demand
from, respectively, the energy distribution, automotive
and mining segments. At the same time, investment has
continued in the production of HV cables in Rybinsk (Russia),
DC submarine cables in Pikkala (Finland) and HVDC terrestrial
cables in Gron (France).
In the Telecom business, work to increase optical fibre and
cable production capacity has continued at the Sorocaba
factories in Brazil, in order to satisfy the growing demand
for optical cables in South America. In view of Australia's
massive nationwide investment in broadband, further
investment has been made in the local production of cables
using ribbon technology. Lastly, investment has continued
at the European optical fibre plants in Battipaglia (Italy) and
Douvrin (France), with a view to reducing fibre manufacturing
costs.
Capital investment to maintain capacity or enhance worker
safety amounted to about 14% of the total.
Substantial investment - around 12% of the total - was
also dedicated to R&D and the constant improvement of
IT systems. In particular, investment on implementation
of the "SAP Consolidation" project continued throughout
the year. This is designed to harmonise IT systems across
the Group in the coming years. Additionally, the new ERP
system was extended to Estonia, Finland, Germany and
the Slovak Republic during 2012. Lastly, 16% of investment
was dedicated to achieving efficiency improvements and
reductions in fixed and variable costs, especially in relation to
the use of materials and the design of products.
