Prysmian — Earnings Release 2019

May 13, 2019

Informazione Regolamentata n. 0902-35-2019		Data/Ora Ricezione 13 Maggio 2019 17:42:58	MTA
Societa'	:	PRYSMIAN
Identificativo Informazione Regolamentata	:	118348
Nome utilizzatore	:	PRYSMIANN05 - Bifulco
Tipologia	:	REGEM
Data/Ora Ricezione	:	13 Maggio 2019 17:42:58
Data/Ora Inizio Diffusione presunta	:	13 Maggio 2019 17:42:59
Oggetto	:	(analyst presentation)	Prysmian S.p.A.: First-quarter 2019 results
Testo del comunicato

Vedi allegato.

Q1 2019 FINANCIAL RESULTS

MILAN – May 13th,2019

➢ Q1 2019 Highlights

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

Q1 2019 Financial Highlights

Organic sales growth at +1.9% supported by:

• Reiterated high performance in Telecom (+9.8%) with a double-digit growth in optical and MMS
• Solid trend in E&I, with a double digit Power Distribution (+15.7%)
• Strong performance of North America (+5.4%) and LatAm (+6.0%)

Net Financial Debt at 2,900 €M (2,761 €M excluding 139 €M IFRS16 impact) in line with expectation and business seasonality

Synergies: well in line with the upgraded plan

Adj. EBITDA at 231 €M (8.3% of sales) vs 198 €M in Q1 2018 (7.2% of sales), mainly driven by:

• ♦ Projects: organic results declining –as expected- mainly due to 2018 low order intake
• ♦ Energy: solid trend in E&I, particularly in North America. Stable Industrial & Network Components
• ♦ Telecom: robust volume growth in optical business supported by capacity increase in fiber and manufacturing efficiency, notwithstanding a lower YOFC contribution
• ♦ Net negative one-off of 9 €M in Q1 2018 (negative 20 €M WesternLink & positive 11 €M Telecom)
• ♦ Q1 2019 IFRS 16 positive impact of 9 €M

Q1 2019 Financial Highlights

Euro Millions, % on Sales

Performance by Segment – excluding IFRS 16 impact

Overall margin improvement

* Excluding one-offs

Adj. EBITDA by Segment – excluding IFRS 16 impact

Euro Millions, % on Sales

6

▪ Positive performance across all segments, except

Automotive

Q1 Sales Organic Growth by Geography

Beyond synergies: the value of the acquisition

* Organic growth excluding Projects segment

Overperforming on synergies: Confirming updated targets and timing

Updated Synergies Plan 2018-21

➢ Q1 2019 Highlights

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

2019 Guidance Confirmed

Adj. EBITDA Outlook Bridge (€M)

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

FCF Outlook (€M) (*)

(*) Including estimated WL cash impact related to February 19th and April 6th problems (excluding further impact); assuming no cash impact from Brazilian Antitrust decision and other compensation claims for anti-competitive damages

➢ Q1 2019 Highlights

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

		Q1 2019		Q1 2018		Adj. EBITDA Bridge Q1 2018 – Q1 2019
	total	of which IFRS16	combined	reported		ADJ EBITDA Q1 2018
Sales	2,771	-	2,734	1,879		Q1 2018 WL effect
YoY total growth combined	1.3%
YoY organic growth	1.9%					Q1 2018 TLC one-offs
Adj.EBITDA % on sales	231 8.3%	9	198 7.2%	153 8.1%
Adjustments	(11)			(17)		Projects (ex-WL)
EBITDA	220	9		136		Energy
% on sales	7.9%			7.3%
Adj.EBIT	155	1		109		Telecom (ex-YOFC & one-offs)
% on sales	5.6%			5.8%		YOFC
Adjustments	(11)			(17)
Special items	16			(35)		ADJ EBITDA Q1 2019 ex-IFRS 16
EBIT	160	1		57		IFRS 16 EFFECT
% on sales	5.8%			3.1%
Financial charges	(38)	(1)		(19)		ADJ EBITDA Q1 2019
EBT	122	-		38
% on sales	4.4%			2.0%
Taxes	(33)	-		(10)
% on EBT	26.5%			27.0%
Net Income	89	-		28
% on sales	3.2%			1.5%
Minorities	1	-		-
Group Net Income	88	-		28
% on sales	3.2%			1.5%

Profit and Loss Statement

Euro Millions

12

Adjustments and Special Items on EBIT

		1 2018
--	--	--------

	Q1 2019	Q1 2018
Restructuring	(4)	(3)
of which General Cable integration costs	(2)	-
Other Non-operating Income / (Expenses)	(7)	(14)
of which General Cable acquisition related costs	-	(1)
of which General Cable integration costs	(1)	(8)
EBITDA adjustments	(11)	(17)
Special items	1 6	(35)
Gain/(loss) on metal derivatives	1 7	(26)
Other	(1)	(9)
EBIT adjustments	5	(52)

Financial Charges

	Q1 2019	Q1 2018
Net interest expenses	(22)	(15)
of which non-cash conv.bond interest exp.	(2)	(4)
Financial costs IFRS 16	(1)	n.a.
Bank fees amortization	(1)	-
Gain/(loss) on exchange rates	(12)	(6)
Gain/(loss) on derivatives	5	3
Non recurring effects	(1)	(1)
Monetary adjustment on provisions	(2)	-
Impact Hyperinflationary economies	(4)	-
Net financial charges	(38)	(19)

Statement of financial position (Balance Sheet)

	31 Mar 2019	31 Mar 2018	31 Dec 18 (4)
Net fixed assets	5,264	2,615	5,079
of which: goodwill	1,567	436	1,549
of which: IFRS 16 effect	139	n.a	n.a
Net working capital	1,333	587	658
of which: derivatives assets/(liabilities)	6	(17)	(15)
of which: Operative Net working capital	1,327	604	673
Provisions & deferred taxes	(685)	(293)	(677)
Net Capital Employed	5,912	2,909	5,060
Employee provisions	467	353	463
Shareholders' equity	2,545	1,908	2,375
of which: attributable to minority interest	188	177	188
Net financial debt	2,900	648	2,222
of which: IFRS 16 effect	139	n.a	n.a
Total Financing and Equity	5,912	2,909	5,060

16

Cash Flow

Euro Millions

	2,889	2,900
1st Jan 2019	Other	31-Mar-19

Net debt evolution in Q1 2019

* including acquisition, restructuring and integration GC + cash out for WL

Prysmian Group Debt Profile

Average maturity of 3.7 years including RCF 2019 – Limited exposure to financial market volatility

(*) excluding 118 €M of debt held by local affiliated and 139 €M coming from IFRS 16 (***) amortization period from 2019 to 2021 (**) RCF refinancing signed on 3 April 2019. No utilization at 31 March 2019

➢ Q1 2019 Highlights

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

Projects

Euro Millions, % on Sales, excluding IFRS 16 impact

Adj. EBITDA / % of Sales (4)

	Dec '13	Dec '14	Dec '15	Dec '16	Dec '17	Dec'18*	Mar'19*
Underground HV	~450	~450	~600	~350	~400	~435	~400
Submarine	~2,050	~2,350	~2,600	~2,050	~2,050	~1,465	~1,300
Group	~2,500	~2,800	~3,200	~2,400	~2,450	~1,900	~1,700

* Org. Growth.

* It does not include €220m offshore wind projects in France announced on August 29th 2018

Energy & Infrastructure

Euro Millions, % on Sales, excluding IFRS 16 impact

Adj. EBITDA / % of Sales (5)

Highlights

TRADE & INSTALLERS

• Global stable trend, with continued positive momentum in North America and APAC. Stable Europe
• Profitability improvement, driven by favourable product and geographical mix

POWER DISTRIBUTION

• Sound growth, mainly driven by North America and Europe
• Improvement in profitability thanks to geographical mix, volume growth and operational efficiency

OVERHEAD

• Tough market conditions in Latin America
• Excluding Overhead, E&I organic growth at 5.4%

Industrial & Network Components

Euro Millions, % on Sales, excluding IFRS 16 impact

Adj. EBITDA / % of Sales (5)

Highlights

SPECIALTIES, OEMS & RENEWABLES

• Positive renewables performance, especially in Latin America
• Positive trend in Mining, Wind and Infrastructure.

ELEVATOR

• Solid growth, confirmed in Q1, supported by favorable market conditions in North America and APAC. Stable Europe
• Adj. EBITDA recovery in Q1 driven by volume, in particular in North America high margin market

AUTOMOTIVE

• Negative organic growth driven by lower volume mainly in North America
• Lower Adj. EBITDA due to tough market conditions partially recovered by efficiencies

NETWORK COMPONENTS

• Positive organic growth with stable profitability supported by growth in China

* Org. Growth.

OIL & GAS

• Stable trend in Europe and APAC with a positive performance of DHT

Telecom

Euro Millions, % on Sales, excluding IFRS 16 impact

Highlights

MMS

• Solid performance mainly driven by North America, benefitting by General Cable integration

22 18.0% 80 78 FY 2018 Q1 2018 Q1 2019 18.0% 20.1% 18.0% 295 Excluding 2 €M IFRS 16 effect

Brazil, Carry over of YOFC 2017 results & IFRS 16

OPTICAL CABLE & FIBRE

• Robust growth, supported by positive trend mainly in Europe and North America
• EBITDA Margin benefitting from volume increase, capacity expansion in fiber, plant supply mix
• Tough comp with Q1 2018 positively impacted by one-offs (YOFC 2017 carry over and OI bad debt provision reversal)
• Strong innovation pipeline on new products

Bridge Consolidation Sales

Euro Millions - Fully Combined Results

Total Consolidated

Industrial & Network Comp. Telecom

Profit and Loss Statement

	Q1 2019		Q1 2018
	total	of which IFRS 16	combined	reported
Sales YoY total growth combined YoY organic growth	2,771 1.3% 1.9%	-	2,734	1,879
Adj.EBITDA % on sales of which share of net income	231 8.3% 8	9	198 7.2%	153 8.1% 20
Adjustments	(11)			(17)
EBITDA % on sales	220 7.9%	9		136 7.3%
Adj.EBIT % on sales	155 5.6%	1		109 5.8%
Adjustments Special items	(11) 16			(17) (35)
EBIT % on sales	160 5.8%	1		57 3.1%
Financial charges	(38)	(1)		(19)
EBT % on sales	122 4.4%	-		38 2.0%
Taxes % on EBT	(33) 26.5%	-		(10) 27.0%
Net Income % on sales	89 3.2%	-		28 1.5%
Minorities	1	-		-
Group Net Income % on sales	88 3.2%	-		28 1.5%

Cash Flow Statement

Euro Millions

	Q1 2019	Q1 2018	12 Months (from 1/4/2018 to 31/3/2019)
Adj.EBITDA Adjustments EBITDA	231 (11) 220	153 (17) 136	772 (186) 586
Net Change in provisions & others Share of income from investments in op.activities Cash flow from operations (before WC changes)	(26) (8) 186	3 (20) 119	8 1 (47) 620
Working Capital changes Dividends received Paid Income Taxes Cash flow from operations	(634) 1 (19) (466)	(528) 3 (17) (423)	(103) 1 4 (112) 419
Acquisitions/Disposals Net Operative CAPEX Free Cash Flow (unlevered)	- (36) (502)	- (46) (469)	(1,290) (268) (1,139)
Financial charges Free Cash Flow (levered)	(12) (514)	(10) (479)	(86) (1,225)
Free Cash Flow (levered) excl. Acquisitions & Disposals*	(514)	(479)	6 5
Dividends Capital increase, Shares buy-back & other equity movements Net Cash Flow	(5) - (519)	- - (479)	(110) 496 (839)
Net Financial Debt beginning of the period	(2,222)	(436)	(648)
Net cash flow Conversion of Convertible Bond 2013 Consolidation of General Cable Net Financial Debt NFD increase due to IFRS16 Other variations	(519) - - (147) (12)	(479) 283 - - (16)	(839) - (1,215) (147) (51)
Net Financial Debt end of the period	(2,900)	(648)	(2,900)

EBITDA	220	136	586
Share of income from investments in op.activities Cash flow from operations (before WC changes)	(8) 186	(20) 119	(47) 620
Working Capital changes	(634)	(528)	(103)
Dividends received	1	3	1 4
Paid Income Taxes	(19)	(17)	(112)
Cash flow from operations	(466)	(423)	419
Acquisitions/Disposals	-	-	(1,290)
Net Operative CAPEX	(36)	(46)	(268)
Free Cash Flow (unlevered)	(502)	(469)	(1,139)
Financial charges	(12)	(10)	(86)
Free Cash Flow (levered)	(514)	(479)	(1,225)
Free Cash Flow (levered) excl. Acquisitions & Disposals*	(514)	(479)	6 5
Dividends	(5)	-	(110)
Capital increase, Shares buy-back & other equity movements	-	-	496
Net Cash Flow	(519)	(479)	(839)
Net Financial Debt beginning of the period	(2,222)	(436)	(648)
Net cash flow	(519)	(479)	(839)
Conversion of Convertible Bond 2013	-	283	-
Consolidation of General Cable Net Financial Debt	-	-	(1,215)
NFD increase due to IFRS16	(147)	-	(147)
Other variations	(12)	(16)	(51)
Net Financial Debt end of the period	(2,900)	(648)	(2,900)

Financial Highlights

Euro Millions - Fully Combined Results

			Sales			Adj.EBITDA
		Q1 2019		Q1 2018		Q1 2019			Q1 2018 *
	€ M	total growth	organic growth	€M	€ M	of which IFRS 16	Adj.EBITDA Margin	€ M	Adj.EBITDA Margin
PROJECTS	368	-5.2%	-5.3%	389	39	1	10.6%	32	8.2%
Energy & Infrastructure	1,310	3.2%	3.4%	1,269	69	4	5.2%	50	3.9%
Industrial & Network Components	599	-1.6%	-1.6%	609	41	2	6.9%	36	6.0%
Other	58	-14.6%	0.0%	68	2	-	3.2%	-	-0.1%
ENERGY	1,967	1.1%	1.7%	1,946	112	6	5.7%	86	4.4%
TELECOM	436	9.1%	9.8%	399	80	2	18.4%	80	20.1%
Total Group	2,771	1.3%	1.9%	2,734	231	9	8.3%	198	7.2%

Notes

• (1) General Cable figures included starting from 1 January 2018; General Cable figures are restated applying Prysmian accounting principles and policies;
• (2) Adjusted excluding restructuring, non-operating income/expenses and non-recurring income / expenses;
• (3) Defined as NWC excluding derivatives; % on annualized last quarter sales;
• (4) The FY 2018 figures have been restated due to revision of the purchase price allocation for General Cable, conducted in accordance with the procedures and timing established by IFRS 3 - Business Combinations;
• (5) 2018 figures have been reclassified, following a better allocation inside the Energy segment mainly related to Oman Cable Industries

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.

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