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Prysmian S.p.A.: Prysmian S.p.A., First Half 2008 Results
(M2 PressWIRE Via Acquire Media NewsEdge)
RDATE:27082008
NET INCOME UP BY 26.5% AT EURO 190 MILLION.
SALES GROWTH ACCELERATES IN SECOND QUARTER.
STRONG INCREASE IN ORDER BOOK FOR HIGH VOLTAGE AND SUBMARINE CABLES.
ENTRY INTO THE NEW BUSINESS OF OFF-SHORE OIL DRILLING SERVICES.
* SALES : EURO 2,659 MILLION (EURO 2,583 MILLION IN FIRST HALF 2007)
* ORGANIC GROWTH: +5.3%
* ADJUSTED EBITDA[1]: EURO 291 MILLION (EURO 269 MILLION IN FIRST HALF
2007; + 8.2%)
* ADJUSTED OPERATING INCOME[2]: EURO 260 MILLION (EURO 236 MILLION IN
FIRST HALF 2007; +9.9%)
* NET INCOME: EURO 190 MILLION (EURO 150 MILLION IN FIRST HALF 2007;
+26.5%)
* NET FINANCIAL POSITION IMPROVES TO EURO 780 MILLION FROM EURO 908
MILLION AT 30 JUNE 2007
FULL YEAR 2008 ADJ EBITDA EXPECTED TO RISE ABOVE EURO 550 MILLION (EURO
529 MILLION IN 2007)
Milan -- The Board of Directors of Prysmian S.p.A., a worldwide leading
group in the industry of cables and systems for energy and
telecommunications, has approved today the results for the first half
of 2008.
The strong growth in the high voltage underground and submarine cable
businesses has allowed the Group to boost its sales to Euro 2,659
million. Net of metal price effects, currency translation effects and
changes in the scope of consolidation, organic growth in the first half
of 2008 was 5.3%. This marks a significant improvement on the first
quarter of the year when organic sales growth was 3.4%. Rising
performance by the utilities business accounted for a large part of
this improvement, achieving an organic growth of 14.2% in the first
half year and accelerating from the 11.3% organic growth recorded in
the first quarter. In particular, Prysmian confirmed its leadership
position in the high value added sector of underground and submarine
systems for high and extra high voltage power transmission, securing
new major contracts in the first half of 2008 such as the Kahramaa
project in Qatar and Greater Gabbard, the world's largest off-shore
wind farm being built in the UK, which join other large projects
currently in progress worldwide such as SA.PE.I in Italy, Transbay in
the USA, GCCIA in Bahrain and Cometa in Spain.
"The first half of 2008 has confirmed the long-term trend by utilities
to invest in projects to modernise and upgrade power transmission
infrastructure" - explains Valerio Battista, the Chief Executive
Officer -. "Prysmian was able to meet this demand globally and can now
rely on a solid order book ensuring high visibility on future sales
growth: the order book for submarine cables covers production capacity
until the first half of 2010, while orders for high voltage underground
cables already cover more than 50% of production capacity in 2009.
Recently we have also taken a strategic step forward, signing an
agreement with the oil company Petrobras, allowing us to expand our
scope of operations into high-tech, high-margin businesses and entering
with a full range of products into the industry of services for the
off-shore oil drilling industry".
Prysmian and Petrobras have signed a four-year Technical Cooperation
Agreement involving the design, production and supply of flexible pipes
for off-shore oil drilling with an initial value of USD 135 million.
Prysmian will start up a new plant in Vila Velha (Brazil) by mid 2010
for this purpose. It will be located at the same site currently
dedicated to the production of umbilical cables and will involve an
overall investment of USD 110 million, most of which will be made in
2009. The new flexible pipes plant is expected to generate sales in
excess of USD 600 million in the period 2010-2014. Prysmian intends to
extend this business to other oil-drilling regions in the world and at
the service of other customers.
In the Telecom cables business, demand for optic fibre cables and
systems keeps growing in most of the regions; this led to a more than
10% increase in volumes and also to an improvement profitability
despite the negative impact of the weak dollar.
Adjusted EBITDA amounted to Euro 291 million in the first half of 2008,
up 8.2% on Euro 269 million in the corresponding period of 2007, with
margin on sales rising to 10.9% from 10.4% in the first half of 2007.
The increase in profitability was achieved thanks to strong growth in
volumes in the higher added value businesses of high voltage and
submarine cables. In the Trade & Installer business efforts focused on
product mix and sales channel improvement, with the aim of safeguarding
profitability and limiting exposure to the weakest markets, such as
residential construction, and to the products most sensitive to rising
raw material prices.
EBITDA[3] reached Euro 280 million in the first half of 2008. EBITDA
amounted to Euro 299 million in the corresponding period of 2007,
having benefited from Euro 30 million in net non-recurring income
compared with Euro 11 million in net non-recurring expenses in the
first half of 2008.
Adjusted operating income climbed by 9.9% in the first half of 2008 to
Euro 260 million, up from Euro 236 million in the corresponding period
of 2007. The margin on sales also improved to 9.8%, up from 9.1% in the
first half of 2007. Operating income amounted to Euro 248 million
compared with Euro 266 million in the first half of 2007, which had
benefited from Euro 30 million in net non-recurring income compared to
Euro 12 million net non-recurring expenses in the corresponding period
of 2008.
Net financial charges improved in the first half of 2008, reporting net
costs of Euro 10 million compared with net costs of Euro 67 million in
the corresponding period of 2007. This improvement was mainly due to
the Euro 59 million bank fees write-off in the first half of 2007 and
to the recognition in the income statement of positive valuation of
derivatives (Euro 23 million before tax in 2008 compared with Euro 39
million in the first half of 2007).
Net income rose considerably in the first half of 2008, climbing from
Euro 150 million to Euro 190 million (+26.5%). This result benefited
from Euro 10 million in net positive extraordinary items, mainly
attributable to the recognition in the income statement of the
derivatives valuation.
The Prysmian Group kept delivering strong cash generation also in the
first half of 2008, achieving a Cash flow from operations (before
changes in net working capital) of Euro 290 million, compared with Euro
268 million in the corresponding period of 2007. Part of this positive
cash flow was absorbed by the increase in net working capital due to
the high seasonality of the business and to the significant growth of
high voltage and submarine business, and lastly by Euro 42 million in
net investments (including Euro 2 million related to the acquisition of
Facab-Lynen). Free cash flow (before dividends) generated in the last
twelve months (July 2007 - June 2008) amounted to Euro 249 million,
reporting a major improvement on the corresponding amount at the end of
March 2008 (Euro 194 million).
At the end of June 2008, net financial position amounted to Euro 780
million, improving from Euro 908 million at 30 June 2007.
BUSINESS PERFORMANCE AND RESULTS
Energy Cables and Systems (in millions of Euro)
Sales to third parties in the Energy Cables and Systems business rose
to Euro 2,365 million in the first half of 2008, reporting 5.3% organic
growth, with a significant acceleration in the second quarter at 6.8%.
Adjusted operating income increased by 11.0% to Euro 233 million from
Euro 210 million in the first half of 2007, with margin on sales
surging to 9.8% from 9.1%
Utilities Sales to third parties in the Utilities business rose to Euro
1,010 million, reporting organic growth of 14.2%. This major
improvement was attributable to strong growth in the higher value added
segments of high voltage underground and submarine cables, with a sharp
acceleration in the second quarter. Utility companies have increased
investments in transmission networks, with demand increasingly focused
on extra high voltage projects and on innovative sectors such as
renewable power transmission networks; Prysmian has tripled the number
of 400 kV high voltage projects compared with the corresponding period
of 2007. Europe, the Middle East, China and Russia are the regions
where demand is particularly sound. Among the contracts secured in the
first half of the year it is worth mentioning the Kaharamaa project for
the construction of a new high voltage link in Qatar and the Greater
Gabbard project, the world's largest wind farm under development in the
UK, where Prysmian will create the connections for onshore transmission
of the power generated. Profitability also improved, with adjusted
operating margin on sales climbing to 12.5% from 10.6% in the
corresponding period of 2007.
Trade & Installers Sales to third parties in the Trade & Installers
business amounted to Euro 894 million. Despite signs of market
contraction due to the construction industry crisis in North America
and in certain European countries, Prysmian achieved the same volume of
sales as in the prior year thanks to steady and growing demand in areas
such as South America and Australia. Prysmian has reacted to the steep
rise in raw material prices by enlarging its exposure to higher value
added products such as LS0H/Afumex fire-resistant cables, increasingly
used in prestigious structures where safety is paramount, like the new
Wimbledon tennis stadium and the new F1 motor-racing circuit in
Singapore, where the first night Gran Prix will be held in September,
both of which cabled by Prysmian. Adjusted operating income reported a
7.3% margin on sales compared with 8.1% in the first half of 2007; the
slight erosion in margins is mainly due to difficulties - in a slowing
market - in transferring the entire increase in non-metal raw material
costs to sale prices and to the impact of exchange rate movements.
Industrial Industrial cables sales to third parties amounted to Euro
409 million in the first half of 2008, substantially stable compared to
the previous year; the second quarter marked a significant recovery,
posting an organic growth of 7.4%. In the segment of cables for the Oil
& Gas industry, the second quarter reported a significant recovery in
umbilical cable deliveries in Brazil, with a strong order book expected
to drive further growth in the second half of 2008. Other high margin
sectors such as cables for renewable power generation and cables for
the mining industry also performed well. The acquisition of Facab-Lynen
in Germany at the beginning of June will allow Prysmian to strengthen
its presence in high margin markets like cables for the mining
industry, infrastructure and renewable energy. Adjusted operating
margin on sales rose to 9.4% from 8.6% in the corresponding period of
2007.
Telecom Cables and Systems Sales to third parties in the Telecom Cables
and Systems business amounted to Euro 294 million, reporting 5.2%
organic growth, with a significant acceleration in the second quarter
at 8.2%. Adjusted operating income rose by 5.4% on the corresponding
period of 2007 to Euro 27 million. Operating margin on sales rose to
9.1% from 8.6%.
Prysmian continued to achieve relevant performances on the optical
cables market, benefiting from growing demand in Europe and recovery in
North America. Sales development was positive in Australia as well,
where an important contract with the telecom operator Telstra was
renewed. In terms of product innovation, the market has particularly
appreciated some important technological innovations introduced by
Prysmian, such as CasaLight optical fibre, specially designed for FTTH
(Fibre to the Home) applications, and Verticasa, involving a new optic
fibre cabling system for high-rise buildings.
In the copper cables business an important contract was signed with the
Libyan General Post & Telecommunications Company to supply a wide range
of telecom cables.
SALES AND RESULTS BY GEOGRAPHICAL AREA
The Group's sales in EMEA (Europe, Middle East and Africa) reported
6.0% organic growth in the first half of 2008, up from 4.3% in the
first quarter, particularly thanks to the development of high voltage
and submarine projects. EMEA accounted for 70% of total sales.
Sales in North America reported a slight organic decrease (-0.4%). In
terms of profitability, it is worth noting how demand shifted towards
the higher margin business of high voltage cables while contracting in
other areas of business such as Power Distribution. Sales in North
America accounted for 12% of total sales in the first six months of
2008.
Sales in Latin America reported 6% organic growth thanks to good
performance by industrial cables for the OGP industry and by the Trade
& Installer business. The region accounted for 9% of total sales in the
first six months of 2008.
The region with the highest organic growth in sales was Asia and
Oceania (+8.9%) with a positive performance by all areas of business.
Asia and Oceania accounted for 9% of total sales in the first six
months of 2008.
BUSINESS OUTLOOK
In a slowing-down economic environment, which is expected to continue
throughout 2008, the Prysmian Group expects to confirm its
profitability drivers for the full year. In particular, the Group will
continue to benefit from growing demand for high voltage cables for
power transmission and cables for industrial applications such as OGP
and renewable energy, as well as from a positive trend in demand for
optical cables by telecom operators.
Based on the results achieved in the first-half, combined with the
strong order book in the higher value added businesses, operating
profitability is expected to improve in 2008, and, in particular,
adjusted EBITDA is expected above Euro 550 million (Euro 529 million in
2007).
RESIGNATION OF A MEMBER OF THE BOARD OF STATUTORY AUDITORS AND
REPLACEMENT BY AN ALTERNATE AUDITOR.
The Board of Directors of Prysmian S.p.A. has acknowledged the
resignation of Mr. Paolo Francesco Lazzati as a statutory auditor,
tendered today and with immediate effect in relation to the provisions
of art. 144-terdecies of the Consob Issuer Regulations no.11971/1999.
In accordance with art. 2401 of the Italian Civil Code, he is being
replaced by Mr. Giovanni Rizzi, an alternate auditor elected in the
Shareholders' Meeting on 28 February 2007.
Mr. Rizzi, who will remain in office until the next Shareholders'
Meeting, has confirmed the contents of the legally required
declarations made at the time of his appointment as an alternate
auditor. His curriculum vitae can be found in the IR/Corporate
Governance/Corporate Boards section of the Company's website at
www.prysmian.com.
The Half-year financial report at 30 June 2008 will be filed at
theCompany's registered offices at Viale Sarca 222, Milan, and with
Borsa Italiana S.p.A. in compliance with relevant regulations. It will
also be available on the corporate website at www.prysmian.com.
This document may contain forward-looking statements relating to future
events and operating, economic and financial results of the Prysmian
Group. These forecasts are, by their very nature, risky and uncertain
since they depend on the occurrence of future events and developments.
The actual results may differ significantly from those stated owing to
a series of factors.
Mr. Pier Francesco Facchini, manager responsible for preparing
corporate accounting documents, hereby declares, pursuant to paragraph
2 of article 154-bis of Italy's Financial Markets Consolidation Act,
that the accounting information contained in this press release
corresponds to the underlying documents, accounting books and records.
Prysmian
A leading player in the industry of high-technology cables and systems
for energy and telecommunication, the Prysmian Group is a truly global
company with sales exceeding Euro 5 billion in 2007 and a strong
position in higher added value market segments. With its two
businesses, Energy Cables & Systems (submarine and underground cables
for power transmission and distribution, for industrial applications
and for the distribution of electricity to residential and commercial
buildings) and Telecom Cables & Systems (optical cables and fibres and
copper cables for video, data and voice transmission), Prysmian boasts
a global presence with subsidiaries in 36 countries, 54 plants in 20
countries, 7 Research & Development Centres in Europe, USA and South
America, and over 12,000 employees. Specialising in the development of
products and systems designed to meet clients' specific requirements,
Prysmian's key strengths include: a focus on Research & Development,
the capacity to innovate products and production processes, and the use
of advanced proprietary technologies. Prysmian is listed on the Milan
Stock Exchange Blue Chip index.
[1] Adjusted EBITDA is defined as EBITDA before income and expenses
considered by the Group's management to be non-recurring and reported
in the table in Annex B.
[2] Adjusted operating income is defined as operating income before
non-recurring income/expenses.
[3] EBITDA is defined as earnings/(loss) for the period, before finance
income/costs, tax, depreciation amortisation and impairment and the
share of income/loss from associates and dividends from other companies.
For further information, please see the table in Annex B, which
provides a reconciliation between net income (loss) for the period,
EBITDA and adjusted EBITDA.
CONTACT: Lorenzo Caruso, Media relations, Communication Director,
Prysmian S.p.A
Tel: +39 02 64491
e-mail: lorenzo.caruso@prysmian.com
Luca Caserta,, Investor Relations, Head of Investor Relations, Prysmian
S.p.A
Tel: +39 02 64491
e-mail: luca.caserta@prysmian.com
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