Prysmian — Interim / Quarterly Report 2018

Nov 14, 2018

9M 2018 FINANCIAL RESULTS

Milan – November 14th, 2018

➢9M 2018 Highlights

o Group overview

o Results by business

➢Financial results

➢Appendix

9M 2018 Financial Highlights

Organic sales growth at +3.8% (excluding General Cable),7.4% in Q3, supported by:

• High-single digit organic growth in Optical & Connectivity
• Positive trend in Energy Products (Industrial and T&I) and Underground HV

Fully combined organic sales growth at 3.4%, with General Cable organic growth also positive driven by Europe and US (mainly Construction and Automotive)

Adj. EBITDA at € 577m (7.9% of sales), including €74m contribution from General Cable (for the 4 months June-September), mainly driven by:

• ♦ Telecom: margin expansion spurred by volume growth in optical business, manufacturing efficiency and YOFC
• ♦ Energy Projects: €70m provision related to WL project negatively impacting operating result. Profitability improvement in Underground HV

General Cable: strong focus on integration process. Synergies in line with expectations

Net Financial Debt closed at € 2,877m, (€ 1,052m in 9M 2017) in line with expectations, impacted by €2,599 m effect from General Cable acquisition (including transaction and integration costs)

9M 2018 Key Financials

Euro Millions, % on Sales

* Org. Growth.

Reported Operative Net Working Capital (5)(7) Reported Net Financial Debt

General Cable

Prysmian excl. GC

9M 2018 Full Combined - General Cable Sales & Adj.EBITDA

Euro Millions, % on Sales

Prysmian performance by Segment (excl. General Cable)

Accelerated organic growth. Profitability expansion in Telecom business.

Adj.EBITDA Bridge 9M 2017 – 9M 2018 Full Combined

General Cable

Prysmian excl. GC

General Cable Integration & Synergies

Progress Update
OPERATING SYNERGIES	FINANCIAL SYNERGIES	WORKING CAPITAL

SMOOTH INTEGRATION PROCESS. SYNERGIES WELL ON TRACK

2022 Integration Plan

• Organization streamlining: ~ €90m (~ 60%)
• Procurement optimization: ~ €40m (~ 27%)
• Footprint rationalization: ~ €20m (~ 13%)
• Total integration cost confirmed at ~ €220m

Procurement 27%

Footprint 13%

➢9M 2018 Highlights

o Group overview

o Results by business

➢Financial results

➢Appendix

Energy Projects (Excluding General Cable)

Euro Millions, % on Sales

* Org. Growth

Adj. EBITDA (6)/ % of Sales

SUBMARINE • Adj. EBITDA impacted by €70m provision related to the Western Link project. • Order intake in line with Prysmian market share. Backlog not including recent awards (Offshore Wind Projects in France and Crete-Peloponnese). • Market 2018 expected between 2,600€M – 2,800€M, in line with historical trend • New laying vessel investment decision taken UNDERGROUND HIGH VOLTAGE • Positive results, confirmed in Q3, supported by growth in APAC, South Europe and South America. • Tendering process started for Suedlink and Suedost link. Highlights

Orders Backlog Evolution (€m)
	Dec '13	Dec '14	Dec '15	Dec '16	Dec '17	Sep'18*
Underground HV	~450	~450	~600	~350	~400	~350
Submarine	~2,050	~2,350	~2,600	~2,050	~2,050	~1,550
Group	~2,500	~2,800	~3,200	~2,400	~2,450	~1,900

* It does not include €220m offshore wind projects in France announced on August 29th and Crete-Peloponnese project (€125 m) announced on October 2nd in Submarine and 80 m€ projects awarded in Underground HV

Energy & Infrastructure (Excluding General Cable)

Euro Millions, % on Sales

* Org. Growth

Adj. EBITDA / % of Sales

Highlights TRADE & INSTALLERS • Positive organic trend, consolidated in Q3 with continued volume growth in North America and Europe (mainly Germany, Italy and Spain). Improved trend in Middle East (OCI)

• Stable Adj. EBITDA , with favourable sales mix (CPR introduction) and volume supporting performance in Europe. Forex and OCI main headwinds.

POWER DISTRIBUTION

• Positive organic trend in Q3, especially in Europe (mainly France and Germany)
• Profitability mainly affected by Forex, slowdown in Middle-East (in H1) and weakness in Nordics.

Quarterly Adj.EBITDA and Organic Growth Evolution

Industrial & Network Components (Excluding General Cable)

Euro Millions, % on Sales

Adj. EBITDA / % of Sales

• Solid growth, confirmed in Q3, supported by favourable market conditions in North America
• Forex effect and raw material price inflation (steel) impacting margin.

Automotive

• Mid-single digit organic growth, led by positive momentum in North and South America, partially offset by APAC.
• Adj.EBITDA benefitted from volume effect, footprint rationalization and cost reduction in Europe and North America.

Network Components

• Solid performance supported by volume growth in China in North America.

Telecom (Excluding General Cable)

Euro Millions, % on Sales

Adj. EBITDA / % of Sales

reversed provision) in Q1.

Quarterly LTM Adj.EBITDA and % on LTM Sales

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

General Cable by Geographical Area –9M 2018 Full Combined

Euro Millions, % on Sales

➢9M 2018 Highlights

• o Group overview
• o Results by business

➢Financial results

➢Appendix

Profit and Loss Statement Euro Millions

		9M 2018 Reported (1)
	Total	of which General Cable	Total
Sales YoY total growth YoY organic growth	7,293 24.3% 3.8%	1,246	5,867
Adj.EBITDA % on sales	577 7.9%	7 4 6.0%	547 9.3%
Adjustments	(43)	(30)	(33)
EBITDA % on sales	534 7.3%	4 4 3.6%	514 8.7%
Adj.EBIT % on sales	425 5.8%	5 5 4.4%	415 7.1%
Adjustments Special items	(43) (59)	(30) (9)	(33) (39)
EBIT % on sales	323 4.4%	1 6 1.2%	343 5.8%
Financial charges	(73)	(6)	(72)
EBT % on sales	250 3.4%	1 0 0.9%	271 4.6%
Taxes % on EBT	(67) (27.0%)	(4) (40.0%)	(77) (28.4%)
Net Income % on sales	183 2.5%	6 0.4%	194 3.3%
Minorities	-	-	(2)
Group Net Income % on sales	183 2.5%	6 0.4%	196 3.3%

Adjustments and Special Items on EBIT

Euro Millions

		9M 2018 Reported (1)
	Total	of which General Cable	Total
Non-recurring Items (Antitrust investigation)	(1)	-	(17)
Restructuring	(25)	(10)	(12)
of which General Cable integration costs	(15)	(10)	-
Other Non-operating Income / (Expenses)	(17)	(20)	(4)
of which General Cable acquisition related costs	(6)	(2)	-
of which General Cable integration costs	(20)	-	-
of which inventory step-up release	(16)	(16)	-
of which gain YOFC listing	3 6	-	-
EBITDA adjustments	(43)	(30)	(33)
Special items	(59)	(9)	(39)
Gain/(loss) on metal derivatives	(43)	(9)	(2)
Assets impairment	(1)	-	-
Other	(15)	-	(37)
EBIT adjustments	(102)	(39)	(72)

	9M 2018 (1) Reported (1) (1)	9M 2017 Reported
Net interest expenses	(56)	(50)
of which non-cash conv.bond interest exp.	(9)	(13)
Bank fees amortization	(6)	(4)
Gain/(loss) on exchange rates	(24)	(4)
Gain/(loss) on derivatives	15	(10)
Non recurring effects	(2)	(2)
Other non-operating financial expenses	-	(2)
Other	-	-
Net financial charges	(73)	(72)

Statement of financial position (Balance Sheet) Euro Millions

	30 September 2018 Reported (1)		30 September 2017 Reported*	31 December 2017 Reported*
	Total	of which General Cable	Total	Total
Net fixed assets	4,838	2,135	2,598	2,610
of which: goodwill	1,677	1,237	439	438
of which: intangible assets	295	1 8	304	297
of which: property, plants & equipment	2,560	880	1,632	1,646
Net working capital	1,447	625	743	128
of which: derivatives assets/(liabilities)	4	9	2 0	2 2
of which: Operative Net working capital	1,443	616	723	106
Provisions & deferred taxes	(472)	(184)	(334)	(308)
Net Capital Employed	5,813	2,576	3,007	2,430
Employee provisions	440	108	369	355
Shareholders' equity	2,496		1,586	1,639
of which: attributable to minority interest	186		190	188
Net financial debt	2,877		1,052	436
Total Financing and Equity	5,813		3,007	2,430

* Restated according to IFRS 15

Cash Flow Reported

Euro Millions

Prysmian Group Debt Profile

Limited exposure to financial market volatility

(*) excluding 143 €M of debt held by local affiliated

(**) not utilized at 30 September 2018

(***) amortization period from 2019 to 2021

AGENDA

➢9M 2018 Highlights

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

➢Financial results

➢ Appendix

Bridge Consolidation Sales (excl. General Cable)

Euro Millions

Profit and Loss Statement

Euro Millions

	9M 2018 Reported (1)		9M 2017 Reported (6)
	Total	of which General Cable	Total
Sales	7,293	1,246	5,867
YoY total growth	24.3%
YoY organic growth	3.8%
Adj.EBITDA	577	7 4	547
% on sales	7.9%	6.0%	9.3%
of which share of net income	5 0	-	3 6
Adjustments	(43)	(30)	(33)
EBITDA	534	4 4	514
% on sales	7.3%	3.6%	8.7%
Adj.EBIT	425	5 5	415
% on sales	5.8%	4.4%	7.1%
Adjustments	(43)	(30)	(33)
Special items	(59)	(9)	(39)
EBIT	323	1 6	343
% on sales	4.4%	1.2%	5.8%
Financial charges	(73)	(6)	(72)
EBT	250	1 0	271
% on sales	3.4%	0.9%	4.6%
Taxes	(67)	(4)	(77)
% on EBT	(27.0%)	(40.0%)	(28.4%)
Net Income	183	6	194
% on sales	2.5%	0.4%	3.3%
Minorities	-	-	(2)
Group Net Income	183	6	196
% on sales	2.5%	0.4%	3.3%

Cash Flow Statement Euro Millions

	9M 2018 Reported (1)	9M 2017 Reported (**)	12 Months (from 1/10/2017 to 30/9/2018) Reported
Adj.EBITDA	577	547	766
Adjustments	(43)	(33)	(86)
EBITDA	534	514	680
Net Change in provisions & others	(81)	(21)	(62)
Share of income from investments in op.activities	(50)	(36)	(56)
Cash flow from operations (before WC changes)	403	457	562
Working Capital changes	(664)	(510)	(69)
Dividends received	4	9	5
Paid Income Taxes	(78)	(78)	(104)
Cash flow from operations	(335)	(122)	394
Acquisitions/Disposals	(1,290)	(3)	(1,294)
Net Operative CAPEX	(162)	(164)	(252)
of which acquisitions of assets of ShenHuan	-	(35)	-
Free Cash Flow (unlevered)	(1,787)	(289)	(1,152)
Financial charges	(38)	(50)	(58)
Free Cash Flow (levered)	(1,825)	(339)	(1,210)
Free Cash Flow (levered) excl. Acquisitions & Disposals*	(535)	(301)	8 4
Dividends	(105)	(102)	(104)
Capital increase, Shares buy-back & other equity movements	496	(100)	499
Net Cash Flow	(1,434)	(541)	(815)
Net Financial Debt beginning of the period	(436)	(537)	(1,052)
Net cash flow	(1,434)	(541)	(815)
Equity component of Convertible Bond 2017	-	48	-
Conversion of Convertible Bond 2013	283	-	296
Consolidation of General Cable Net Financial Debt	(1,215)	-	(1,215)
Other variations	(75)	(22)	(91)
Net Financial Debt end of the period	(2,877)	(1,052)	(2,877)

Energy Projects Segment – P&L Statement (Excl. General Cable) Euro Millions

	9M 2018	9M 2017*
Sales to Third Parties	1,086	1,041
YoY total growth YoY organic growth	4.3% 6.4%
Adj. EBITDA	117	181
% on sales	10.8%	17.4%
Adj. EBIT	8 5	151
% on sales	7.8%	14.5%

* Restated according to IFRS 15

Energy Products Segment – P&L Statement (Excl. General Cable) Euro Millions

		9M 2018	9M 2017
	E&I	2,533	2,467
	YoY total growth	2.7%
es	YoY organic growth	1.7%
arti	Industrial & Netw. Comp.	1,146	1,100
	YoY total growth	4.3%
hird P	YoY organic growth	4.9%
o T	Other	114	105
es t	YoY total growth YoY organic growth	7.8% 0.0%
Sal	ENERGY PRODUCTS	3,793	3,672
	YoY total growth	3.3%
	YoY organic growth	2.6%
	E&I	9 2	107
	% on sales	3.6%	4.3%
A D	Industrial & Netw. Comp.	8 8	8 8
T BI	% on sales	7.6%	8.0%
Adj. E	Other	0	(1)
	% on sales	0.4%	(1.1%)
	ENERGY PRODUCTS	180	194
	% on sales	4.7%	5.3%
	E&I	4 7	6 4
	% on sales	1.9%	2.6%
T	Industrial & Netw. Comp.	7 2	7 2
BI	% on sales	6.3%	6.6%
Adj. E	Other	(1)	(2)
	% on sales	(0.9%)	(2.2%)
	ENERGY PRODUCTS	118	134
	% on sales	3.1%	3.7%

Oil&Gas Segment – Profit and Loss Statement (Excl. General Cable) Euro Millions

	9M 2018	9M 2017
Sales to Third Parties	194	201
YoY total growth YoY organic growth	(3.6%) (0.4%)
Adj. EBITDA	2	5
% on sales	1.3%	2.3%
Adj. EBIT	(4)	(8)
% on sales	(2.0%)	(3.8%)

Telecom Segment – Profit and Loss Statement (Excl. General Cable) Euro Millions

	9M 2018	9M 2017
Sales to Third Parties	974	953
YoY total growth YoY organic growth	2.1% 6.5%
Adj. EBITDA	204	167
% on sales	20.9%	17.6%
Adj. EBIT	171	138
% on sales	17.5%	14.5%

General Cable Full Combined P&L 9M 2018 by Geography(2) Euro Millions

		9M 2018	9M 2017
a	Sales	1,604	1,577
c ri	YoY total growth	1.0%
e m	YoY organic growth	2.6%
A h rt o N	Adj.EBITDA % on sales	101 6.3%	122 7.7%
e p o	Sales YoY total growth YoY organic growth	654 15.5% 9.8%	566
r u E	Adj.EBITDA % on sales	2 5 3.8%	1 8 3.2%
a c ri e m	Sales YoY total growth YoY organic growth	407 (9.4%) (8.0%)	449
A n ti a L	Adj.EBITDA % on sales	2 2 5.4%	2 7 6.1%

Notes

• (1) General Cable consolidated in the period 1 June 2018 30 September 2018;
• (2) General Cable included in the period 1 January 30 September; 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) 9M 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 and 9M'17 figures are restated according to IFRS 15
• (7) Dec-17 and Sep-17 figures are restated according to IFRS 15
• (8) General Cable perimeter in the period 1 January 30 September; 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 Energy Projects, Energy Products 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.