MILAN -- The Board of Directors of Prysmian S.p.A. today approved the Group's consolidated results for the first nine months of 2019.
"The sound operating performance in the first nine months of 2019 continued to be primarily driven by North America, in geographical terms, and by the Telecom and Energy & Infrastructure businesses," said CEO Valerio Battista. "The Projects business was impacted by the phasing on order execution but is expected to improve as early as late 2019, with an expanding order portfolio and a robust project pipeline.
"The Group is proving particularly dynamic in seizing opportunities in the renewable energy sector, with the acquisition of important contracts for cabling offshore wind farms, such as Vineyard in the US and Dolwin5 in Germany, and for special cables for wind turbines following the agreement with Siemens Gamesa, as well as and with Dongfang in China for new 10MW turbines," he added. "In the reporting period, synergies resulting from the integration with General Cable were in line with forecasts. Profitability improvement, with an increase in margins in the first nine months, makes it possible to confirm the targets for the full year, with Adjusted EBITDA expected in the range of 950M to 1,020M."
Group sales amounted to 8,635 million with a slight organic growth of +0.3% (+1.3% excluding the Projects segment), mainly driven by the Telecom business (+3.8%), with an increase in optical cables and the excellent performance reported in Multi Media Solutions, and by the solid trend in Energy and Infrastructure, driven by Power Distribution. The expected negative organic growth in the Projects segment was attributable to the 2018 low order intake, the timing of installation activities, and the phasing on some projects within High Voltage Underground.
Adjusted EBITDA amounted to 773 million (up +18.8% compared to 651 million in the first nine months of 2018), including a positive amount of 30 million arising from the positive effect of the application of the new IFRS 16, effective 1 January 2019 and a negative amount of 12 million due to the revocation of the 2018-2020 LTI plan (see paragraph Further Board of Directors' Resolutions). Margins improved as well, with a ratio of Adjusted EBITDA to sales at 8.9% compared to 7.5% for 9M 2018. Profitability improved mainly driven by the good result reported by Energy & Infrastructure, particularly in North America and LatAm, and by Telecom, thanks to the positive performance that the optical cables and MMS businesses obtained thanks to increased productivity and industrial efficiencies. The solid performance of Power Distribution and Industrial & Network Components also generated a positive impact on profitability. With respect to 2018, the profitability of the Projects segment, excluding the Western Link impact, was affected by the reworks required and the unfavourable phasing on the execution of various orders. Recovery is expected for the fourth quarter.
EBITDA grew to 711 million (534 million in 9M 2018, including General Cable as of 1 June 2018) and comprises net expenses for company reorganisation, net non-recurring expenses and other net non-operating expenses totalling 62 million (43 million in 9M 2018).
Operating income rose to 479 million, compared to 316 million in the first nine months of 2018 (including General Cable as of 1 June 2018).
Net profit grew sharply to 273 million, +53.4% compared to 178 million for the first nine months of 2018 (including General Cable as of 1 June 2018).
Net Financial Debt amounted to 3,027 million, or 2,898 million net of the 129 million impacts due to the application of the new IFRS 16, in line with expectations and the business' seasonal nature, and consistent with the 2019 Free Cash Flow guidance.
The main factors that influenced said item over the past 12 months were:
- Positive operating cash flows (before changes in working capital) of 873 million
- An increase in net working capital amounting to 149 million, mainly attributable to the Projects business' dynamics and phasing
- Cash outflows totalling 71 million due to restructuring, integration and ancillary expenses associated with the acquisition of General Cable
- 82 million for the WL project's repair costs and penalties for which provisions had been allocated in 2018
- Net operating investments totalling 246 million
- N et finance costs incurred in the amount of 125 million
- Taxes paid amounting to 113 million
- Dividend pay-out of 118 million
- 155 million increase in financial liabilities following the adoption of IFRS 16
- Other increases improving by 36 million
Sales at 30 September 2019 amounted to 1,247 million, with an organic decrease of 5.4%. Excluding the IFRS 16 impacts, Adjusted EBITDA was 148 million, up compared to 138 million in 2018, which was affected by the 70 million negative impact of the Western Link project in the first half of the 2018.
The profitability of the Submarine Cables and Systems business was chiefly impacted by the phasing on installation operations and several additional work that proved necessary. In July, also thanks to the award of the Viking Link project for a value of nearly 700 million, the Group achieved ahead of time its 2019 targets for projects awarded. Among the main projects acquired in the first nine months of 2019, mention should be made of Vineyard, the first large-scale offshore wind power farm in the United States, with a value of approximately 200 million, as well as of the Dolwin5 project in Europe, connecting new offshore wind power farms to the German mainland power grid, with a value of 140 million. In the submarine telecommunications cable market, the Group acquired an important project in Chile early in the year. The intense tendering activity pursued by the Group continued in the third quarter of the year, with a solid project pipeline (interconnections and offshore wind farms).
The High Voltage order intake was mainly focused on Europe and North America, whereas tendering activities continued as planned with regard to the important SuedLink and SuedOstLink interconnection projects in Germany. Important technological milestones were reached in the first nine months of 2019 with the qualification of the 525 kV P-Laser and XLPE cable systems.
The order backlog of the Projects segment is back to growth: at the end of September 2019 it amounted to 2,150 million, compared to 1,900 million in December 2018. The Group is carrying out an intense tendering activity, particularly with reference to the opportunities arising on the transition to renewable and sustainable energy sources.
For full financial results by division and region, go to Prysmian Group.