Western Link Cuts Prysmian’s 2014 Profit Projections
The Board of Directors of Prysmian S.p.A. has approved the Group’s consolidated results for the first half of 2014.
Group Sales amounted to €3,287 million compared with €3,504 million in the first half of 2013, posting organic growth of +1.3%, assuming the same group perimeter and excluding metal price and exchange rate effects. Without the negative impact of the Western Link project, organic growth would have been +3.4%, confirming the slight uptrend in volumes already seen in the first quarter after several quarters of organic decline.
The growth in volumes and sales was attributable not only to the performance of the power transmission business, whose order book reached a record figure of €3 billion, but also to the recovery in sales in the Trade & Installers market.
First-half sales for the Industrial business were weaker than expected. The Telecom business, which had already reported the first signs of trend reversal in the first quarter, posted a positive performance in volumes.
Adjusted EBITDA amounted to €204 million (€282 million in the first half of 2013) before €40 million in net non-recurring income. Excluding the adverse impact of the Western Link contract, totalling €74 million in the first half of 2014, as well as €14 million in negative exchange rate effects, Adjusted EBITDA would have been €292 million (+3.5% on the first half of 2013).
With the aim of preserving its levels of profitability, the Group has maintained its focus on reducing costs and rationalising its manufacturing footprint. EBITDA amounted to €244 million (€256 million in the first half of 2013), including €40 million in net non-recurring income mainly attributable to the price adjustment of €22 million against the acquisition of Global Marine Systems Energy Ltd. and to the net release of €32 million from the antitrust provision, following the European Commission’s ruling early in April.
Adjusted operating income came to €133 million. Excluding the Western Link impact, it would have been €207 million (in line with €208 million in the first half of 2013). Operating income was €176 million. Excluding the Western Link impact, it would have been €250 million (a significant increase on €138 million in the first half of 2013).
Net finance income and costs reported a negative balance of €74 million, down from €82 million in the first half of 2013, thanks to the improvement in financial structure and in the cost of Group debt and also to early refinancing of the Term Loan due to mature on 31 December 2014. Adjusted net profit amounted to €59 million.
Excluding the negative impact of the Western Link project, adjusted net profit would have been €111 million, slightly down from €115 million in the first half of 2013. Net profit was €80 million, almost double the figure of €41 million in the first half of 2013. Without the impact of the Western Link project, net profit for the first half of 2014 would have been €132 million.Net financial position at the end of June 2014 amounted to €1,209 million (of which approximately €70 million due to negative effects associated with the Western Link project), compared with €805 million at 31 December 2013 (€1,186 million at 30 June 2013).
“The results of the first half of 2014 include the financial impact of the problems encountered in the execution of the Western Link project and the effects of exchange rate trends” explains CEO Valerio Battista. “Excluding these two major factors, it is important to note the recovery in volumes and slight improvement in profitability since the start of the year, albeit less visible than in the first quarter. With regard to the Western Link project, I am pleased to report that the extensive and rigorous testing performed to ensure the perfect execution of such an important project has been successfully completed on the submarine cables and now allows us to have a realistic view of the overall impact on the project’s profitability. The power transmission business has continued to grow and, thanks to intensive tendering and continuous customer confidence, our Group’s order book has reached a record Euro 3 billion.”