Prysmian — Interim / Quarterly Report 2018

Sep 18, 2018

H1 2018 FINANCIAL RESULTS

Milan – September 18th, 2018

➢H1 2018 Highlights

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

➢Financial results

➢Appendix

H1 2018 Financial Highlights

Organic sales growth at +2.0% (excluding General Cable) supported by:

• High-single digit organic growth in Optical & Connectivity
• Positive organic trend in T&I and Underground HV

Fully combined organic sales growth at 2.7%, with General Cable organic growth at +4.4% driven by Projects and Telecom in Europe and Construction and Automotive in the US.

Adj.EBITDA at € 339m (7.8% of sales), including €25m contribution of General Cable (for the month of June), mainly driven by:

• Energy Projects: €70m provision related to WL project negatively impacting operating result. Underlying profitability stable.
• Telecom: margin expansion helped by volume growth, manufacturing efficiency, YOFC and Brazilian bad debt provision reversal in Q1.

Forex (-€24m) and OCI (-€5m, net of forex effect) main headwinds on profitability.

Net Financial Debt closed at € 3,014m, (€ 1,000m in H1 2017) due to €2,547m effect of General Cable acquisition (including transaction costs). €500m capital increase successfully executed in July 2018.

H1 2018 Key Financials

Euro Millions, % on Sales

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

General Cable

Prysmian excl. GC

H1 2018 Full Combined - General Cable Sales & Adj.EBITDA

Euro Millions, % on Sales

	Sales (3)(8)		Key Comments
3,449	+4.4%* 1,722	1,799	• Positive volume trend mainly benefitting from Projects and Telecom growth in Europe and solid performance of Construction and Automotive in the US. • Lower sales of overhead transmission line in North and South America and lower demand for utility and industrial cables in the US and Europe as main weaknesses.
2017	H1'17	H1'18
	Adjusted EBITDA (3)(4)(8)
			Key Comments
204	113	99	• Adj.EBITDA negatively affected by FX translation effect (€9m) vs. H1 2017. Unfavourable metal price dynamics impacting Adj.EBITDA margin. • Unfavourable sales mix in North America, partially offset by the recovery in high-margin businesses in Europe (Projects and Telecom).
5.9% 2017	6.6% H1'17	5.5% H1'18

Prysmian performance by Segment (excl. General Cable)

Confirmed positive organic growth. Profitability expansion in Telecom business.

Adj.EBITDA Bridge H1 2017 – H1 2018 Full Combined

General Cable

Prysmian excl. GC

General Cable Integration & Synergies.

➢H1 2018 Highlights

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

➢Financial results

➢Appendix

Energy Projects (Excluding General Cable)

Euro Millions, % on Sales

Adj. EBITDA(6)/ % of Sales

Highlights

SUBMARINE

• Adj.EBITDA impacted by €70m provision (€50m in Q2) related to the Western Link project. Shallow water cable repair completed on time; new land fault repair ongoing with the related economic effect covered by the €70 million provision.
• Stable underlying performance, excluding WL provision impact. Improving tendering activity expected in H2.

UNDERGROUND HIGH VOLTAGE

• Positive results supported by growth in APAC, South Europe and South America. UK and Netherlands volumes slowing down.
• Good progress in HVDC projects execution in Europe. Procurement process launched for German HVDC corridors, increasing visibility on project scheduling.

Orders Backlog Evolution (€m)
	Dec '13	Dec '14	Dec '15	Dec '16	Dec '17	Jun'18*
Underground HV	~450	~450	~600	~350	~400	~400
Submarine	~2,050	~2,350	~2,600	~2,050	~2,050	~1,750
Group	~2,500	~2,800	~3,200	~2,400	~2,450	~2,150

* Excludes €220m offshore wind projects in France announced on August 29th

Energy & Infrastructure (Excluding General Cable)

and Oceania.

Euro Millions, % on Sales

Adj. EBITDA / % of Sales

	Highlights
	TRADE & INSTALLERS
•	Positive organic trend, improving in Q2 with volume recovery in North America and confirmed positive trend in Europe (mainly Germany, Netherland, Italy and Spain).
•	Adj.EBITDA impacted by Forex and slowdown in Middle-East (OCI). Favourable sales mix (CPR introduction) and volumes helping performance in Europe.

• Profitability mainly affected by Forex effect and slowdown in Middle-East.

Quarterly Adj.EBITDA and Organic Growth Evolution

Industrial & Network Components (Excluding General Cable)

Euro Millions, % on Sales

Adj. EBITDA / % of Sales

	Highlights
	Specialties, OEMs & Renewables
•	Sound organic growth, stabilizing in Q2, with continued sharp increase in Railways and Rolling Stock and recovery in Crane, partially offset by negative performance in Nuclear, Mining and Renewables (Wind).
•	Sales volumes improved in Australia, Argentina and EMEA. Profitability affected by unfavourable sales mix and Forex.

Elevator

• Organic trend acceleration in Q2 thanks to the continued growth in EMEA and the recovery of North and South America. Negative APAC.
• Forex effect and raw material price inflation (steel) impacting margin in North America and China. Recovery expected in H2.

Automotive

• Mid-single digit organic growth, led by the 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 and MV products in North America.

Telecom (Excluding General Cable)

Euro Millions, % on Sales

Adj. EBITDA / % of Sales

Highlights

• Adj.EBITDA margin growth supported by volume increase, manufacturing efficiency, footprint optimization and YOFC results. Adj.EBITDA also benefitted from the reversal in Q1 of a bad debt provision accrued in 2016 in Brazil.
• Optical & Connectivity organic sales trend confirmed at high-single digit level, benefitting from increasing market demand in France and US (Verizon).
• Negative trend of Copper business affected by unfavourable phasing of NBN project in Australia.
• Solid performance of MMS business mainly driven by strong momentum in market demand in Europe for Datacenters, Industries and Buildings data cables.

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 –H1 2018 Full Combined

Euro Millions, % on Sales

➢H1 2018 Highlights

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

➢Financial results

➢Appendix

FY 2018 Outlook Combined

➢H1 2018 Highlights

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

➢Financial results

➢Appendix

Profit and Loss Statement

Euro Millions

		(1) H1 2018 Reported	H1 2017 Reported
	Total	of which General Cable	Total
Sales YoY total growth YoY organic growth	4,364 10.8% 2.0%	381	3,938
Adj.EBITDA % on sales	339 7.8%	2 5 6.7%	364 9.2%
Adjustments	(46)	(9)	(31)
EBITDA % on sales	293 6.7%	1 6 4.4%	333 8.5%
Adj.EBIT % on sales	246 5.6%	2 0 5.4%	276 7.0%
Adjustments Special items	(46) (40)	(9) (5)	(31) (36)
EBIT % on sales	160 3.7%	6 1.8%	209 5.3%
Financial charges	(46)	(3)	(49)
EBT % on sales	114 2.6%	3 0.7%	160 4.1%
Taxes % on EBT	(32) (28.1%)	- 0.0%	(47) (29.4%)
Net Income % on sales	8 2 1.9%	3 0.7%	113 2.9%
Minorities	-	-	-
Group Net Income % on sales	8 2 1.9%	3 0.7%	113 2.9%

Adjustments and Special Items on EBIT

Euro Millions

	(1) H1 2018 Reported		H1 2017 Reported
	Total	of which General Cable	Total
Non-recurring Items (Antitrust investigation)	-	-	(15)
Restructuring	(14)	(4)	(9)
Other Non-operating Income / (Expenses)	(32)	(5)	(7)
of which General Cable acquisition related costs	(4)	-	-
of which General Cable integration costs	(18)	-	-
of which inventory step-up release	(5)	(5)	-
EBITDA adjustments	(46)	(9)	(31)
Special items	(40)	(5)	(36)
Gain/(loss) on metal derivatives	(25)	(5)	(11)
Assets impairment	(1)	-	-
Other	(14)	-	(25)
EBIT adjustments	(86)	(14)	(67)

Financial Charges Euro Millions

	(1) H1 2018 (1) Reported	H1 2017 Reported
Net interest expenses of which non-cash conv.bond interest exp.	(33) (7)	(34) (8)
Bank fees amortization	(3)	(2)
Gain/(loss) on exchange rates	(12)	2
Gain/(loss) on derivatives	3	(12)
Non recurring effects	(1)	(1)
Other non-operating financial expenses	-	(2)
Other	-	-
Net financial charges	(46)	(49)

Statement of financial position (Balance Sheet) Euro Millions

	(1) 30 June 2018 Reported		30 June 2017 Reported*	31 December 2017 Reported*
	Total	of which General Cable	Total	Total
Net fixed assets	4,571	1,913	2,599	2,610
of which: goodwill	1,905	1,466	441	438
of which: intangible assets	303	1 8	318	297
of which: property, plants & equipment	2,096	429	1,625	1,646
Net working capital	1,091	720	649	128
of which: derivatives assets/(liabilities)	2 2	1 2	9	2 2
of which: Operative Net working capital	1,069	708	640	106
Provisions & deferred taxes	(305)	(9)	(343)	(308)
Net Capital Employed	5,357	2,624	2,905	2,430
Employee provisions	449	116	371	355
Shareholders' equity	1,894		1,534	1,639
of which: attributable to minority interest	185		199	188
Net financial debt	3,014		1,000	436
Total Financing and Equity	5,357		2,905	2,430

* Restated according to IFRS 15

Cash Flow Reported

Euro Millions

AGENDA

➢H1 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	(1) H1 2018 Reported		H1 2017 Reported
	Total	of which General Cable	Total
Sales YoY total growth YoY organic growth	4,364 10.8% 2.0%	381	3,938
Adj.EBITDA % on sales of which share of net income Adjustments	339 7.8% 3 6 (46)	2 5 6.7% - (9)	364 9.2% 1 9 (31)
EBITDA % on sales	293 6.7%	1 6 4.4%	333 8.5%
Adj.EBIT % on sales	246 5.6%	2 0 5.4%	276 7.0%
Adjustments Special items	(46) (40)	(9) (5)	(31) (36)
EBIT % on sales	160 3.7%	6 1.8%	209 5.3%
Financial charges	(46)	(3)	(49)
EBT % on sales	114 2.6%	3 0.7%	160 4.1%
Taxes % on EBT	(32) (28.1%)	- 0.0%	(47) (29.4%)
Net Income % on sales	8 2 1.9%	3 0.7%	113 2.9%
Minorities	-	-	-
Group Net Income % on sales	8 2 1.9%	3 0.7%	113 2.9%

Cash Flow Statement Euro Millions	(1) H1 2018 Reported	H1 2017 ** Reported	12 Months (from 1/7/2017 to 30/6/2018) ** Reported
Adj.EBITDA	339	364	708
Adjustments EBITDA	(46) 293	(31) 333	(88) 620
Net Change in provisions & others Share of income from investments in op.activities Cash flow from operations (before WC changes)	2 7 (36) 284	4 (19) 318	2 1 (59) 582
Working Capital changes Dividends received Paid Income Taxes Cash flow from operations	(333) 4 (45) (90)	(434) 3 (36) (149)	186 1 1 (113) 666
Acquisitions/Disposals Net Operative CAPEX of which acquisitions of assets of ShenHuan Free Cash Flow (unlevered)	(1,290) (103) - (1,483)	- (111) (35) (260)	(1,297) (246) - (877)
Financial charges Free Cash Flow (levered)	(39) (1,522)	(45) (305)	(64) (941)
Free Cash Flow (levered) excl. Acquisitions & Disposals*	(232)	(270)	356
Dividends Treasury shares buy-back & other equity movements Net Cash Flow	(103) - (1,625)	(101) (99) (505)	(103) 2 (1,042)
Net Financial Debt beginning of the period	(436)	(537)	(1,000)
Net cash flow Equity component of Convertible Bond 2017 Conversion of Convertible Bond 2013 Consolidation of General Cable Net Financial Debt Other variations	(1,625) - 283 (1,215) (21)	(505) 4 8 - - (6)	(1,042) - 291 (1,215) (49)
Net Financial Debt end of the period	(3,014)	(1,000)	(3,014)

* Calculated as FCF (levered) excluding "acquisition of assets of ShenHuan" and "Acquisition and Disposal" ** Based on restated figures according to IFRS 15

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

	H1 2018	H1 2017*
Sales to Third Parties	684	687
YoY total growth YoY organic growth	(0.4%) 1.8%
Adj. EBITDA	5 0	118
% on sales	7.4%	17.2%
Adj. EBIT	2 9	9 8
% on sales	4.2%	14.3%

* Restated according to IFRS 15

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

		H1 2018	H1 2017
	E&I	1,681	1,658
	YoY total growth	1.3%
s e	YoY organic growth	0.2%
arti	Industrial & Netw. Comp.	764	739
P d	YoY total growth	3.4%
hir	YoY organic growth	4.8%
T o	Other	7 6	7 0
s t	YoY total growth	8.4%
e al	YoY organic growth	(0.0%)
S	ENERGY PRODUCTS	2,521	2,467
	YoY total growth	2.2%
	YoY organic growth	1.6%
	E&I	6 1	7 4
	% on sales	3.6%	4.5%
A D T	Industrial & Netw. Comp.	5 9	6 2
BI	% on sales	7.7%	8.3%
dj. E	Other	0	(1)
A	% on sales	0.6%	(1.1%)
	ENERGY PRODUCTS	120	135
	% on sales	4.8%	5.5%
	E&I	3 2	4 6
	% on sales	1.9%	2.8%
T	Industrial & Netw. Comp.*	4 8	5 1
BI	% on sales	6.3%	6.9%
dj. E	Other	(0)	(1)
A	% on sales	(0.0%)	(1.7%)
	ENERGY PRODUCTS	8 0	9 6
	% on sales	3.2%	3.9%

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

	H1 2018	H1 2017
Sales to Third Parties	134	138
YoY total growth YoY organic growth	(3.1%) 0.8%
Adj. EBITDA	3	2
% on sales	1.9%	1.1%
Adj. EBIT	(2)	(7)
% on sales	(1.7%)	(5.1%)

Oil & Gas (Excluding General Cable)

Euro Millions, % on Sales

Adj. EBITDA / % of Sales

Highlights

SURF

• Umbilical: improved performance in Q2 after the negative start of the year thanks to a favourable project phasing.
• DHT: volume growth driven by solid demand in North America (shale) and Middle East. Signs of recovery in Offshore activity in Middle-East.

Core Oil&Gas Cables

• Improving activities in Onshore projects (mainly Petrochemical, Refinery and LNG) in North America and Middle East. Offshore remains at low level.
• Adj.EBITDA helped by fixed cost reduction and design-to-cost initiatives.

^* % change vs. same quarter of previous year

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

	H1 2018	H1 2017
Sales to Third Parties	645	646
YoY total growth YoY organic growth	(0.1%) 4.4%
Adj. EBITDA	141	109
% on sales	21.8%	16.8%
Adj. EBIT	119	8 9
% on sales	18.4%	13.7%

General Cable Full Combined P&L H1 2018 by Geography(2) Euro Millions

		H1 2018	H1 2017
a	Sales	1,057	1,055
c ri	YoY total growth	0.1%
e m	YoY organic growth	1.7%
A h rt o N	Adj.EBITDA % on sales	6 4 6.1%	8 8 8.3%
e p o r u E	Sales YoY total growth	462 22.2%	378
	YoY organic growth	16.0%
	Adj.EBITDA % on sales	2 0 4.2%	9 2.5%
a c ri e m A n ti a L	Sales YoY total growth YoY organic growth	280 (3.0%) (2.1%)	289
	Adj.EBITDA % on sales	1 5 5.5%	1 6 5.7%

Notes

• (1) General Cable consolidated in the period 1 June 2018 30 June 2018;
• (2) General Cable included in the period 1 January 30 June; 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) H1 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 H1'17 figures are restated according to IFRS 15
• (7) Dec-17 and Jun-17 figures are restated according to IFRS 15
• (8) General Cable perimeter in the period 1 January 30 June; 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;

Reference Scenario

Commodities & Forex

Based on monthly average data Source: Nasdaq OMX

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.