With new orders of €13 billion in the bag, Prysmian pinpoints energy transition and electrification as growth drivers

Italy-headquartered cabling giant Prysmian Group has revealed strong results for the first nine months of 2023, with new orders year-to-date amounting to approximately €13 billion, including projects for which the Italian player has been selected as the preferred bidder. This was driven by energy transition and electrification, which are expected to remain long-term growth drivers.


Prysmian’s results for 9M 2023 show sales growth and significant profitability increase in the Projects business segment, driven by execution and projects with higher margins, with €13 billion of new orders awarded so far. The Italian giant’s sales amounted to €11.825 billion, leading to a 1.5% organic growth compared to the results for 9M 2022, mainly driven by the Projects business, which reported a 23.9% organic increase thanks to the execution of interconnection and offshore wind farm projects.

According to the company, its Energy business recorded a 0.4% organic rise in sales supported by the long-term electrification drivers that increase demand for cables for grid upgrading and development. On the other hand, Telecom volumes declined, mainly due to the U.S. market downtrend, revealing a drop of 13.7% compared to the same period in 2022.

Prysmian’s adjusted EBITDA rose to €1.286 billion – a 13.7% increase – with improving margins, as the ratio of adjusted EBITDA to sales reached 10.9% compared to 9.4% for 9M 2022. The firm reports solid improvement in the Projects business, thanks to the execution and projects with higher margins, thus, the adjusted EBITDA margin was 11.7% versus 10.4% in 9M 2022.

Furthermore, the Energy business margins improved significantly, driven by the demand for power distribution grid cables and cables for renewable energy with an adjusted EBITDA margin of 10.3% compared to 8.2% in 9M 2022. The Italian firm noted a volume decline, mainly in the U.S. market for Telecom, with an adjusted EBITDA margin of 13.6% compared to 15.7% in 9M 2022.

Prysmian’s EBITDA grew to €1.192 billion versus €1.071 billion for 9M 2022, including net expenses for company reorganization, net non-recurring expenses, and other net non-operating expenses totaling €94 million compared to €60 million for the first nine months of 2022.

Moreover, the company’s operating income increased to €890 million compared to €684 million in the first nine months of 2022 while its net profit rose to €575 million compared to €431 million for the same period of 2022. This is a 33.4% growth. In line with this, the firm’s net financial debt decreased to €2.073 billion at the end of September 2023, compared to €2.372 billion at September 30, 2022.

Prysmian’s free cash flow amounting to €729 million in the last 12 months was driven by €1,591 million operating cash flows before changes in net working capital; €27 million cash flows due to changes in net working capital; €505 million capital expenditure; €326 million taxes paid; €72 million net finance expense; and €14 million dividends received from associates.

Multi-billion backlog

Prysmian highlights that its portfolio of around €20 billion orders, which entail backlog along with orders with solid commitment, ensures longer visibility on future performances, with €13 billion new orders awarded in 2023, including preferred bidder agreements. The Italian player explains that its backlog, including only projects with notice to proceed, amounts to €10 billion.

Valerio Battista, Prysmian’s CEO, commented: “The sound margins improvement achieved in the first nine months further proves the group’s resilience thanks to our complete and balanced business portfolio, well exposed to the secular drivers of the electrification and the energy transition.

“The road to keep growing and delivering good results is clearly drawn by the high quality of the order backlog combined with our recognized cost control mindset. This means extended visibility on future performance. Our strong focus on execution is paying back and paves the way to achieving the targeted yearly results.”

The Italian giant completed the Vineyard Wind 1 project, the first utility-scale offshore wind farm in the U.S. that will provide clean energy to more than 400,000 homes in Massachusetts, and the Viking Link, which is said to be the world’s longest onshore and offshore HVDC interconnector linking the power grids of the UK and Denmark.

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The company’s Energy segment sales were supported by the growth drivers of the energy transition and decarbonization, such as the expansion and upgrade of power grids, energy generation from renewable sources, the development of electric mobility, and clouding. The firm’s Power Distribution and Overhead Lines showed sustained growth and margins uplift, while the construction cable business experienced volume softening and price normalization in the U.S. and Renewables continued to grow double-digit y-o-y.

Performance spanning different geographies

Within the EMEA region, the Italian player’s sales amounted to €4.771 billion for 9M 2023, with a 1.1% organic growth, while the adjusted EBITDA was €360 million versus €268 million for 9M 2022, thanks to the positive performance across all businesses, in particular in Power Distribution and OEM & Renewables.

In North America, sales totaled €3.506 billion, with a negative organic growth of 4.4% compared to 9M 2022 while the adjusted EBITDA was €548 million versus €551 million for 9M 2022. The strong results of Power Distribution & Overhead Lines were offset by Telecom business decline and ongoing price softening in T&I. Additionally, the results were negatively impacted by Forex of €14 million.

When it comes to Latin America, sales amounted to €983 million, with a slight decline in organic growth of 1.4% while adjusted EBITDA was €102 million compared to €95 million for the same period of 2022, with margins improving to 10.4% compared to 9.8% for 9M 2022. The growth in T&I and Industrial was partially offset by the Telecom business.

Last but not least, the sales in Asia Pacific amounted to €763 million for 9M 2023, with a decline in organic growth of 3.1% while adjusted EBITDA was €66 million versus €68 million for 9M 2022, with margins rising to 8.7% compared to 7.9% for the same period in 2022. This region saw overall stable results notwithstanding a negative Forex impact of €6 million.

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As Prysmian expects to generate €3.2 billion of cumulative free cash flow in the 2023-2027 period, the firm identifies three main priorities to deploy its capital allocation strategy. In lieu of this, the M&A and share buyback are expected to take up to 55-60% of the cash generated while the timing and split between the two options will depend on the opportunities that will arise in the period considered.

The second pillar of the Italian giant’s capital allocation strategy is dividend increase, with a progressive increase in the total dividend distributed to shareholders anticipated by approximately 10% year-on-year, starting from 2024, resulting in up to 30-35% of the cash generated during the 2023-2027 period being allocated to dividend increase.

The third priority of capital allocation is debt reduction, as the company expects to continue to deleverage, always willing to stay within the range of net debt/adjusted EBITDA ratio between 0.5x and 1x during the period, thus, about 10% of the expected cash flow generated during the 2023-2027 period will be used for further debt reduction.

What’s in store for Prysmian?

Following a 3.5% growth in 2022, the global economy is expected to grow by 3.0% in 2023 and by 2.9% in 2024, according to the latest estimates by the International Monetary Fund from October 2023. While the global economy rebounded after the Covid-19 pandemic, it is now facing a new set of challenges, characterized by volatility and uncertainty, with inflation reaching its peak in the last decades, mainly due to the hikes in energy and commodity prices, and supply chain bottlenecks.

The ongoing Ukraine crisis, the rekindled Israel – Palestine conflict, the tightening of global monetary conditions to tame high inflation, and the high interest rates continue to leave their mark on the global economic outlook. Bearing this in mind, Prysmian expects its adjusted EBITDA for the full year 2023 to grow in the Energy segment, with a slowdown in the sectors linked to the construction market following last year’s performance.

Additionally, the firm’s businesses linked to grid hardening, renewables, and industrial applications are anticipated to grow. Regarding its high-voltage underground and submarine cables and systems business, the Italian giant aims to keep its top spot within this market which is expected to grow, driven by the development of offshore wind farms and interconnections in support of the energy transition.

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Thanks to the level achieved by its order backlog of approximately €10 billion, the company hopes to fully exploit the potential of both its actual and new planned assets, such as the submarine cable plant in Brayton Point, Massachusetts, the increased production capacity in Europe and the new cable-laying vessel Monna Lisa that will join the Leonardo da Vinci.

The results for the firm’s Projects segment are forecasted to grow in 2023 compared to the previous year, thanks to the level of its order backlog, a solid execution, a better mix of the projects under execution, and the full use of the submarine cable business’s capacity. Even though the demand in the Telecom segment is affected by a temporary slowdown, growth drivers remain solid for the medium/long term thanks to digitalization.

Prysmian also confirmed its long-term growth drivers, mainly linked to the energy transition, the electrification process, as well as the strengthening of telecommunications networks. The company expects an adjusted EBITDA in the range of €1.575-1.675 billion for FY 2023, compared to the €1.488 billion reported for 2022, and a cash flow generation of €550-650 million.

“These forecasts assume no material changes in both the geopolitical crisis relating to the conflicts in Ukraine and in Israel, in addition to excluding extreme dynamics in the prices of production factors or significant supply chain disruptions,” elaborated Prysmian.