Italy: Prysmian Net Profit Drops 13 Pct to EUR 39 Million

The Board of Directors of Prysmian S.p.A. has approved the Group’s consolidated results for the first quarter 2013 (which are not subject to audit).

“The worsening of the crisis in Europe’s construction industry, the additional contraction in energy consumption and the uncertainties surrounding renewable energy and broadband stimulus plans in North and South America, are the main factors that have led to a drop in global cable demand,” explained CEO Valerio Battista. “The Group has managed to limit the impact of this negative context by focusing on high value-added businesses, such as power transmission cables and systems, which continue to perform well. With the goal of supporting medium-term profitability, the Group has also launched a series of commercial initiatives aimed at increasing sales in the most profitable segments of the Industrial and Telecom businesses, by leveraging the extensive product portfolio. Along with these measures we are stepping up our efforts to contain costs and rationalise organisational and manufacturing structure, allowing us to up the target synergies from integration with Draka to €175 million by 2015, from the original target of €150 million. Based on this scenario, we are forecasting full-year adjusted EBITDA in the range of €600-€650 million.”

FINANCIAL RESULTS

Group Sales amounted to €1,711 million compared with €1,874 million in the first quarter 2012. The Energy business suffered from the general decline in volumes for building wires (sold through the Trade & Installers channel) and for renewable energy, that was only partially offset by strong performance in the power transmission market, particularly by the submarine cables business line. The Telecom business recorded a drop in demand for optical cables in the American continent because of the ending of broadband stimulus plans in North America and the temporary suspension of similar plans in South America (expected to recover in the next few quarters). Assuming the same group perimeter and excluding metal price and exchange rate effects, the organic change was a negative 7.6%.

Adjusted EBITDA amounted to €115 million, compared with €130 million in the corresponding period of 2012 (-11.6%). The integration with Draka has enabled the Group to reduce its cost structure, and so limit the impact of poor performance by the Energy business’s lower value-added segments and by the Telecom business as a whole.

EBITDA4 amounted to €99 million, compared with €115 million in the first quarter 2012 (-13.9%), reflecting the impact of €16 million in non-recurring expenses particularly in relation to reorganisation and manufacturing efficiency projects.

Adjusted operating income amounted to €77 million, compared with €91 million in the first quarter 2012 (-15.8%).

Operating income was €44 million, compared with €89 million in first quarter 2012, reporting a decrease due to the decline in EBITDA and the fair value change in metal derivatives.

Net finance income and costs, including the share of income/(loss) from associates and dividends from other companies, reported a negative balance of €47 million, up from €28 million in the corresponding prior year period. The increase of €19 million is due to a number of extraordinary non-monetary effects, mostly connected with the partial refinancing of the Term Loan by issuing the convertible Equity-linked bond; in particular, bank fees relating to the early repayments against the Term Loan during the quarter were written off (impact of €5 million) and hedge accounting ceased to be used for the interest rate swaps that hedged the Term Loan’s repaid portion (impact of €14 million).

Adjusted net profit amounted to €39 million, compared with €45 million in the first quarter 2012 (-13%). The Net result recorded a loss of €2 million compared with a profit of €42 million in the first quarter 2012.

Net financial position at the end of March 2013 amounted to €1,213 million, compared with €918 million at 31 December 2012 (down from €1,273 million at 31 March 2012), having been particularly affected by the following factors:

– positive cash flow from operating activities (before changes in net working capital) of €72 million;

– negative impact of €351 million from changes in working capital, due to the seasonality in stock levels and strong growth in working capital in the submarine cables business;

– payment of €13 million in taxes;

– net operating investments of €24 million;

– receipt of €7 million in dividends;

– payment of €16 million in net finance costs.

Full Results

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Press release, May 13, 2013; Image: prysmian