Prysmian — Earnings Release 2018

Mar 5, 2019

FY 2018 FINANCIAL RESULTS

MILAN – March 5th,2019

➢ FY 2018 Highlights

• o Group overview
• o Results by business
• o Outlook
• ➢ Financial Results
• ➢ Appendix

FY 2018 Financial Highlights

Fully combined organic sales growth at +3.3% supported by:

• Sound organic growth in Underground HV
• A solid performance in Telecom, with a high single digit growth in optical and double-digit growth in MMS

General Cable positive organic growth mostly driven by North America (Energy and MMS Telecom)

General Cable: strong focus on integration process. Synergies (cost and working capital) faster than expected

Net Financial Debt closed at 2,222 €M, (436 €M 2017) –better than expected- with 2,601 €M effect from General Cable acquisition (including transaction and integration costs)

Proposal of a EUR 0.43 /share dividend to the forthcoming AGM, in line with prior year

Adj. EBITDA at 763 €M (7.5% of sales), including 123 €M contribution from General Cable (for the 7 months June-December), mainly driven by:

• ♦ Projects: 95 €M provision related to WL project (including Q4 25 €M impact of February 19th problem) negatively impacting operating result. Profitability improvement in Underground HV
• ♦ Telecom: margin expansion spurred by volume growth in optical business supported by capacity increase in fiber, manufacturing efficiency and YOFC share of Net Income

Full year combined Adj. EBITDA at 837 €M. Forex (-€41 €M) strong headwind on profitability

FY 2018 Financial Highlights

Euro Millions, % on Sales

** % on annualized last quarter full combined sales-

* % on annualized last quarter sales

FY 2018 General Cable by Geographical Area

Euro Millions, % on Sales – Fully Combined Results

• Strong and improving Q4 as expected
• Recovery in PD, sound performance in Industrial and Telecom, growth in T&I
• FY Adj. EBITDA mainly impacted by forex effect and freight costs increase
• Declining Q4 driven by decreasing order backlog in H2 in projects business
• Positive organic sales development, driven by Projects in H1 and Optical Telecom
• Profitability supported by favorable business mix

• Strong Q4 Adj. EBITDA driven by solid T&I and Industrial performance

• Organic trend and margins affected by lower volumes in overhead lines in Brazil

* Org. Growth.

• FY18 Adj. EBITDA in line wit expectations

• Adj. EBITDA negatively affected by FX translation effect (8 €M), unfavorable metal prices dynamics and cost increase (raw materials and freight)

New Segment Reporting

Business previously included in the OIL&GAS segment

(*) Includes Downhole Technology business

(1) Energy segment includes sales from other minor business such as intermediate goods, raw materials or other products forming part of production process

Performance by Segment – FY 2018 Fully Combined results

Adj.EBITDA Bridge FY'17 – FY'18 Fully Combined

Starting to create value through the integration

Sound value creation

refinanced immediately at

➢ FY 2018 Highlights

• o Group overview
• o Results by business
• o Outlook
• ➢ Financial Results
• ➢ Appendix

Projects

Euro Millions, % on Sales – FY 2018 Fully Combined Results

	Dec '13	Dec '14	Dec '15	Dec '16	Dec '17	Dec'18*
Underground HV	~450	~450	~600	~350	~400	~435
Submarine	~2,050	~2,350	~2,600	~2,050	~2,050	~1,465
Group	~2,500	~2,800	~3,200	~2,400	~2,450	~1,900
						Including

* General Cable data included only for Dec'18 of €175m

* It does not include €220m offshore wind projects in France announced on August 29th

General Cable

Energy & Infrastructure

Euro Millions, % on Sales – FY 2018 Fully Combined Results

Adj. EBITDA / % of Sales

Industrial & Network Components

Euro Millions, % on Sales –FY 2018 Fully Combined Results

Adj. EBITDA / % of Sales

NETWORK COMPONENTS

• Positive performance supported by growth in China and in North America

OIL & GAS

• Stabilizing trend at a still low level

Telecom

Euro Millions, % on Sales – FY 2018 Fully Combined Results

* Adj.EBITDA including bad debt provision in Brazil

** Adj.EBITDA including reversal of bad debt provision in Brazil

MMS

• Solid performance in MMS business mainly driven by strong momentum in market demand in Europe (Datacentres, Industries and Buildings data cables) and mix improvement in North America

➢ FY 2018 Highlights

• o Group overview
• o Results by business
• o Outlook
• ➢ Financial Results
• ➢ Appendix

Overperforming on synergies: upgrading targets and timing

Updated Synergies Plan 2018-21

2021 target

1 Year faster

25 €M additional costs synergies

2019 Guidance

Adj. EBITDA Outlook Bridge (€M) (1)

Mid-point Assumptions

• Continued growth in Telecom business
• Recovery of WL 2018 one-off
• Declining results in submarine, as a result of low 2018 order intake.
• ➢ Assuming 2019 order intake in line with historical market share
• Moderate volumes growth in cyclical business with stable prices
• Synergies from GC integration 85 €M in 2019 (120 €M cumulated) partly offset by freight, energy and specific raw material costs increases, other than normal inflation impact
• FX assumed neutral

17 (2) Including WL cash impact related to February 19th problem and assuming no cash impact from Brazilian Antitrust decision

(1) No further impact from WL; The 2019 guidance does not include the estimation impact from the application of IFRS 16

➢ FY 2018 Highlights

• o Group overview
• o Results by business
• o Outlook

➢ Financial Results

➢ Appendix

		FY 2018 Reported (1)
	Total	of which General Cable	Total
Sales YoY total growth YoY organic growth	10,158 28.5% 3.3%	2,117	7,904
Adj.EBITDA % on sales	763 7.5%	123 5.7%	736 9.3%
Adjustments	(167)	(59)	(76)
EBITDA % on sales	596 5.9%	6 4 2.9%	660 8.4%
Adj.EBIT % on sales	536 5.3%	7 6 3.6%	559 7.0%
Adjustments Special items	(167) (59)	(59) (16)	(76) (59)
EBIT % on sales	310 3.0%	1 0.0%	424 5.4%
Financial charges	(112)	(10)	(99)
EBT % on sales	198 2.0%	(9) (0.4%)	325 4.1%
Taxes % on EBT	(68) (34.3%)	(4)	(88) (27.1%)
Net Income % on sales	130 1.3%	(13) (0.6%)	237 3.0%
Minorities	-	-	(4)
Group Net Income % on sales	130 1.3%	(13) (0.6%)	241 3.0%

Profit and Loss Statement

Adjustments and Special Items on EBIT

	FY 2018 Reported (1)	FY 2017 Reported
	Total	of which General Cable	Total
Non-recurring Items (Brazil Antitrust investigation)	(69)	-	(18)
Restructuring	(66)	(39)	(30)
of which General Cable integration costs	(49)	(39)	-
Other Non-operating Income / (Expenses)	(32)	(20)	(28)
of which General Cable acquisition related costs	(4)	-	(16)
of which General Cable integration costs	(31)	(5)	-
of which inventory step-up release	(16)	(16)	-
of which gain YOFC listing	3 6	-	-
EBITDA adjustments	(167)	(59)	(76)
Special items	(59)	(16)	(59)
Gain/(loss) on metal derivatives	(48)	(15)	1 2
Assets impairment	(5)	0	(22)
Other	(6)	(1)	(49)
EBIT adjustments	(226)	(75)	(135)

Financial Charges

	FY 2018 Reported (1)	FY 2017 Reported (6)
Net interest expenses	(80)	(70)
of which non-cash conv.bond interest exp.	(12)	(17)
Bank fees amortization	(8)	(5)
Gain/(loss) on exchange rates	(11)	(5)
Gain/(loss) on derivatives	(5)	(15)
Non recurring effects	(2)	(2)
Other non-operating financial expenses	-	(2)
Impact Hyperinflationary economies	(6)	-
Net financial charges	(112)	(99)

Statement of financial position (Balance Sheet)

Euro Millions

31 December 2017 Reported*

	31 December 2018 Reported	Reported*
	Total	of which General Cable	Total
Net fixed assets	5,071	2,297	2,610
of which: goodwill	1,541	1,101	438
of which: intangible assets	591	314	297
of which: property, plants & equipment	2,629	882	1,646
Net working capital	721	381	128
of which: derivatives assets/(liabilities)	(15)	1	2 2
of which: Operative Net working capital	736	380	106
Provisions & deferred taxes	(661)	(329)	(308)
Net Capital Employed	5,131	2,349	2,430
Employee provisions	463	121	355
Shareholders' equity	2,446		1,639
of which: attributable to minority interest	188		188
Net financial debt	2,222		436
Total Financing and Equity	5,131		2,430

Cash Flow

Prysmian Group Debt Profile

Limited exposure to financial market volatility

FIXED/VARIABLE RATE COMPOSITION

(*) excluding 118 €M of debt held by local affiliated

(***) amortization period from 2019 to 2021

(**) not utilized at 31 December 2018

(***) 100 €M bridge loan to be refinanced on 6 March 2019 with Mediobanca Term Loan signed in February 2019 and maturing in 2024

➢ FY 2018 Highlights

• o Group overview
• o Results by business
• o Outlook
• ➢ Financial Results
• ➢ Appendix

Bridge Consolidation Sales

Euro Millions - Fully Combined Results

Total Consolidated

Industrial & Network Comp. Telecom

Prysmian group at a glance

FY 2018 Financial Results - Fully Combined Results

Projects

Energy & Infrastructure

Industrial & Network Components

Telecom

FY 2017 Reported (6)

736
$\frac{9.3\%}{42}$
(76)
660
8.4%
559
7.0%
(76)
(59)
424
5.4%
(99)
325
4.1%
(88)
(27.1%)
237
3.0%
(4)
241
3.0%

	Total	of which General Cable	Total
Sales	10,158	2,117	7,904
YoY total growth	28.5%
YoY organic growth	3.3%
Adj.EBITDA % on sales of which share of net income	763 7.5% 5 9	123 5.7% -	736 9.3% 4 2
Adjustments	(167)	(59)	(76)
EBITDA % on sales	596 5.9%	6 4 2.9%	660 8.4%
Adj.EBIT % on sales	536 5.3%	7 6 3.6%	559 7.0%
Adjustments Special items	(167) (59)	(59) (16)	(76) (59)
EBIT % on sales	310 3.0%	1 0.0%	424 5.4%
Financial charges	(112)	(10)	(99)
EBT % on sales	198 2.0%	(9) (0.4%)	325 4.1%
Taxes % on EBT	(68) (34.3%)	(4)	(88) (27.1%)
Net Income % on sales	130 1.3%	(13) (0.6%)	237 3.0%
Minorities	-	-	(4)
Group Net Income % on sales	130 1.3%	(13) (0.6%)	241 3.0%

FY 2018 Reported (1)

Profit and Loss Statement

FY 2017 Reported (**)

Adj.EBITDA	763	736
Adjustments	(167)	(76)
EBITDA	596	660
Net Change in provisions & others	1 5	(2)
Share of income from investments in op.activities	(59)	(42)
Cash flow from operations (before WC changes)	552	616
Working Capital changes	4	8 5
Dividends received	1 6	1 0
Paid Income Taxes	(110)	(104)
Cash flow from operations	462	607
Acquisitions/Disposals	(1,290)	(7)
Net Operative CAPEX	(278)	(254)
of which acquisitions of assets of ShenHuan	-	(35)
Free Cash Flow (unlevered)	(1,106)	346
Financial charges	(84)	(70)
Free Cash Flow (levered)	(1,190)	276
Free Cash Flow (levered) excl. Acquisitions & Disposals*	100	318
Dividends	(105)	(101)
Capital increase, Shares buy-back & other equity movements	496	(97)
Net Cash Flow	(799)	7 8
Net Financial Debt beginning of the period	(436)	(537)
Net cash flow	(799)	7 8
Equity component of Convertible Bond 2017	-	4 8
Conversion of Convertible Bond 2013	283	1 3
Consolidation of General Cable Net Financial Debt	(1,215)	-
Other variations	(55)	(38)
Net Financial Debt end of the period	(2,222)	(436)

FY 2018 Reported (1)

Cash Flow Statement

Euro Millions

³³ (*) Calculated as FCF (levered) excluding, acquisition of assets of ShenHuan" and Acquisition and Disposal"

(**) Based on restated figures according to IFRS 15

Financial Highlights

Euro Millions - Fully Combined Results

34

				Sales / Growth								Adj.EBITDA / Adj.EBITDA Margin
		FY 2018			FY 2017				FY 2018			FY 2017
	Prysmian	General Cable	Total	Prysmian	General Cable	Total		Prysmian	General Cable	Total	Prysmian	General Cable
PROJECTS	1,538	266	1,804	1,533	221	1,754		149	21	170	278	20
YOY total growth	0.3%	20.4%	2.8%					9.7%	7.8%	9.4%	18.2%	9.1%
YOY organic growth	2.6%	19.2%	4.7%
Energy & Infrastructure	3,368	2,124	5,492	3,271	2,108	5,379		119	88	207	130	103
YOY total growth	3.0%	0.8%	2.1%					3.5%	4.2%	3.8%	4.0%	4.9%
YOY organic growth	3.6%	-0.1%	2.1%
Industrial & Network Components	1,711	642	2,353	1,693	609	2,302		116	51	167	115	54
YOY total growth	1.1%	5.4%	2.2%					6.8%	8.0%	7.1%	6.8%	8.8%
YOY organic growth	2.5%	5.6%	3.3%
Other	154	140	294	149	177	326	0		(2)	(2)	(1)	(6)
YOY total growth	3.3%	-20.7%	-9.8%				0.2%		-1.6%	-0.7%	-0.8%	-3.3%
YOY organic growth	-1.4%	0.0%	0.0%
ENERGY	5,233	2,906	8,139	5,113	2,894	8,007	235	137		372	244	151
YOY total growth	2.3%	0.4%	1.7%				4.5%	4.7%		4.6%	4.8%	5.2%
YOY organic growth	3.1%	1.1%	2.4%
TELECOM	1,270	364	1,634	1,258	334	1,592	256	39		295	214	33
YOY total growth	1.0%	9.0%	2.6%				20.1%	10.7%		18.0%	17.0%	9.9%
YOY organic growth	5.0%	11.3%	6.4%
Total Group	8,041	3,536	11,577	7,904	3,449	11,353	640	197		837	736	204
YOY total growth YOY organic growth	1.7%	2.5%	2.0%				8.0%	5.6%	7.2%		9.3%	5.9%
	3.3%	3.3%	3.3%

Project Segment – P&L Statement

	12M 2018	12M 2017*
Sales to Third Parties	1,804	1,754
YoY total growth YoY organic growth	2.9% 4.7%
Adj. EBITDA	170	298
% on sales	9.4%	17.0%
Adj. EBIT	118	239
% on sales	6.5%	13.6%
(*) Restated according to IFRS 15

		12M 2018	12M 2017
	E&I	5,492	5,379
	YoY total growth	2.1%
es	YoY organic growth	2.1%
arti	Industrial & Netw. Comp.	2,353	2,302
P	YoY total growth	2.2%
hird	YoY organic growth	3.3%
o T	Other	294	326
es t	YoY total growth	(9.8%)
	YoY organic growth	0.0%
Sal	ENERGY	8,139	8,007
	YoY total growth	1.7%
	YoY organic growth	2.4%
	E&I	207	233
	% on sales	3.8%	4.3%
A D	Industrial & Netw. Comp.	167	169
T BI	% on sales	7.1%	7.4%
Adj. E	Other	(2)	(7)
	% on sales	(0.7%)	(2.1%)
	ENERGY	372	395
	% on sales	4.6%	4.9%
	E&I	108	138
	% on sales	2.0%	2.6%
T	Industrial & Netw. Comp.	126	131
BI	% on sales	5.4%	5.7%
Adj. E	Other	(21)	(9)
	% on sales	(7.1%)	(2.7%)
	ENERGY	213	260
	% on sales	2.6%	3.2%

Energy segment – P&L Statement

	12M 2018	12M 2017
Sales to Third Parties	1,634	1,592
YoY total growth	2.6%
YoY organic growth	6.4%
Adj. EBITDA	295	247
% on sales	18.0%	15.5%
Adj. EBIT	245	199
% on sales	15.0%	12.5%

Telecom Segment – P&L Statement

Dividend Proposal

Dividend proposed to the forthcoming Shareholders' Meeting

Dividend Per Share: € 0.43

• •Ex-dividend date: 23 April 2019
• •Record date: 24 April 2019
• •Payment date: 25 April 2019

DPS evolution (Euro per share)

IFRS 16 ESTIMATED IMPACTS

• First release in Q1 2019, with Q1 2018 comparable numbers
• The transitional effect will be reported as on opening balance adjustment for leased assets and the corresponding liabilities
• Prysmian applies the modified retrospective approach and consequently will not publish restated figures

Key Highlights

( ¹) First estimation as at 1st January 2019 figures subject to changes

( ²) Estimated amount based on agreements in place as of 1st January 2019 ➢ Only reclassification impact on Cash Flow, with Free cash flow improvement about 33 €M

1	2	3
Balance Sheet (1)	Income statement 2019 (2)	Cash Flow
Impact as at 1st ➢ January 2019 in right of use of assets and financial liabilities of ~140 €M	➢ Estimated increase in EBITDA of 37 €M Estimated increase of 35 €M in ➢ depreciation Estimated increase of 4 €M in financing ➢ expenses	about 33 €M

Notes

• (1) General Cable consolidated in the period 1 June 2018 31 December 2018;
• (2) General Cable included in the period 1 January 31 December; General Cable figures are restated applying Prysmian accounting principles and policies; 2017 figures excludes General Cable "non-core" perimeter already sold at the end of 2017;
• (3) FY 2018 results are net of intercompany consolidation adjustment;
• (4) Adjusted excluding restructuring, non-operating income/expenses and non-recurring income / expenses;
• (5) Defined as NWC excluding derivatives; % on annualized last quarter sales;
• (6) 2017 figures are restated according to IFRS 15 and IFRS 9
• (7) Dec-17 figures are restated according to IFRS 15 and IFRS 9
• (8) General Cable perimeter in the period 1 January 31 December; General Cable figures are restated applying Prysmian accounting principles and policies; 2017 figures excludes General Cable "non-core" perimeter already sold at the end of 2017;

Disclaimer

• The managers responsible for preparing the company's financial reports, A.Brunetti and C.Soprano, declare, pursuant to paragraph 2 of Article 154-bis of the Consolidated Financial Act, that the accounting information contained in this presentation corresponds to the results documented in the books, accounting and other records of the company.
• Certain information included in this document is forward looking and is subject to important risks and uncertainties that could cause actual results to differ materially. The Company's businesses include its Projects, Energy and Telecom Operating Segments, and its outlook is predominantly based on its interpretation of what it considers to be the key economic factors affecting these businesses.
• Any estimates or forward-looking statements contained in this document are referred to the current date and, therefore, any of the assumptions underlying this document or any of the circumstances or data mentioned in this document may change. Prysmian S.p.A. expressly disclaims and does not assume any liability in connection with any inaccuracies in any of these estimates or forward-looking statements or in connection with any use by any third party of such estimates or forward-looking statements. This document does not represent investment advice or a recommendation for the purchase or sale of financial products and/or of any kind of financial services. Finally, this document does not represent an investment solicitation in Italy, pursuant to Section 1, letter (t) of Legislative Decree no. 58 of February 24, 1998, or in any other country or state.
• In addition to the standard financial reporting formats and indicators required under IFRS, this document contains a number of reclassified tables and alternative performance indicators. The purpose is to help users better evaluate the Group's economic and financial performance. However, these tables and indicators should not be treated as a substitute for the standard ones required by IFRS.

Thank you

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