Prysmian — Investor Presentation 2016

Jul 28, 2016

H1 2016 Financial Results

Milan – July 28th , 2016

Agenda

H1 2016 Highlights

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

Organic Growth at +1.8%, supported by continued strong performance of Energy Projects business and solid growth of Telecom business.

• H1 2015 benefitted from € 24m WL previous loss write-up
• H1 2016 is impacted by € 8m bad debt provision in Telecom business in Brazil

Net Financial Position at €1,031m (€811m excl. OCI and GCDT acquisition impact). LTM Free cash flow before acquisitions at €318m.

H1 2016 Key Financials

Euro Millions, % on Sales

* Org. Growth

811*

Continued profitability improvement

Underlying margin increase driven by Energy Projects, Telecom and OCI consolidation

Focus on Margin Growth Key strategic drivers.

Focus on Margin Growth

Energy Projects

• Investing in installation capabilities
• •Strenghtening project management

Telecom

• •Continued fiber cost reduction
• •Extension of optical cable capacity in Eastern Europe

OCI Acquisition

• Margin accretive acquisition
• •Strategic geographic position

Cost Efficiency

• Focus on fixed cost reduction
• •Continued footprint optimization

Strengthening our installation capacity.

New shallow water installation barge "Ulisse" added to the fleet.

GIULIO VERNE CABLE ENTERPRISE

• Main activity: Deep-water Installation
• On duty since: 1989
• Length overall: 133.2m

• Transport capacity: 7,000 tons

• Main activity: Mid-water depth Installation

• On duty since: 2012
• Length overall: 124m
• Transport capacity: 4,500 tons

ULISSE

• Main activity: Shallow-water Installation
• On duty since: July 2016
• Length overall: 120.2m
• Transport capacity: 7,000 tons

H1 2016 Highlights

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

Energy Projects

Euro Millions, % on Sales

Sales

* Org. Growth

Highlights

Submarine

• Double-digit organic growth benefitting from solid execution and favourable project phasing.
• Strong project management and new installation assets driving a significant margin improvement.
• H1 2015 Adj. EBITDA was helped by € 24m WL write-up.
• Market outlook remains solid, with an expected opportunities arising from Offshore wind projects in 2016/2017 (France, UK, Netherlands).

Underground High Voltage

• Very strong performance driven by the on-going execution of DC project in France and project execution North America and APAC.
• Intense tendering activity in the Middle East.

Transmission - Orders Backlog Evolution (€m)

	Dec '13	Dec '14	Jun '15	Dec '15	Jun '16
Underground HV	~450	~450	~600	~600	~500
Submarine	~2,050	~2,350	~2,900	~2,600	~2,450
Group	~2,500	~2,800	~3,500	~3,200	~2,950

H1 2016 Financial Results 9

Energy & Infrastructure

Euro Millions, % on Sales

Highlights Trade & Installers

• Low single-digit organic decrease also driven by mix improvement strategy in Europe.

• Positive trend in the Nordics, UK, Eastern Europe and Oceania more than offset by the slowdown in the other geographies (mainly South America).

Power Distribution

• Positive organic trend, slightly softening in Q2 as a results of slowing demand in Germany, in line with expectations.
• Solid performance in the Nordics, Netherlands, North America and APAC, partially offset by the slowdown and adverse FX in Argentina.

Industrial & Network Components

Euro Millions, % on Sales

* Org. Growth

Adj. EBITDA / % of Sales

Sales Highlights

Specialties & OEMs

• Organic trend substantially flat in H1 but softening in Q2, with sound growth in Defense, Crane and Marine offset by weak Nuclear, Railways and Mining.
• In Renewables, slowdown in wind (mainly China)
• South America still struggling in a challenging macroeconomic environment.

Elevator

• Solid organic growth supported by market share expansion in North America and APAC, mainly thanks to the growth of accessories and after-market activities.

Automotive

• Improving organic trend in Q2, thanks to good performance in China and Eastern Europe benefitting from new manufacturing setup.

Network Components

• Adj. EBITDA growth mainly driven by footprint optimization and better product mix in the HV business.

Oil & Gas Euro Millions, % on Sales

Sales

* Org. Growth

Adj. EBITDA / % of Sales

Highlights

SURF

• Umbilical: results in line with expectations, reflecting the framework agreement. Supply chain optimization and integration with key suppliers progressing well.
• DHT: Financials benefitting from the synergies generated from the integration with GCDT. Sub Saharan Africa & Middle East key markets.

Core Oil&Gas Cables

• Prices and volumes drop reflecting the difficult market scenario both in new projects and in drilling/MRO segments.
• Continued effort on manufacturing efficiency and leverage on Asian supply chain to improve economics.

Telecom Euro Millions, % on Sales

Sales

* Org. Growth

Adj. EBITDA / % of Sales

Highlights

Telecom Solutions

• Optical cables and fiber business broadly stable, with a slight acceleration in Q2 thanks to strong growth in Australia, North America and France, more than offsetting the market weakness in the rest of Europe and Latam.
• Underlying margin expansion helped by optical fiber and cables manufacturing cost improvements. Adj. EBITDA impacted by € 8m one-off bad debt provision in Brazil.
• Continued sharp growth in copper telecom cables driven by strong demand in Australia.

MMS

• Steady top-line growth supported by European market and production capacity extension in the copper business.

* % org. growth vs. same quarter of previous year

H1 2016 Financial Results 13

Agenda

H1 2016 Highlights

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

FY 2016 Outlook

Margin improvement mainly driven by Energy Projects and Telecom. Negative FX.

Actual Adj. EBITDA 2010-2015 & Guidance 2016 Mid-point Adj. EBITDA (€ million)

Draka stand-alone Contribution			+4.5% CAGR '10-'16**	** Referred to 2016 Mid-point Target.		695
	586	650	613		623
535				509
148
387
2010*	2011*	2012	2013	2014	2015	2016 Mid-point Target
* Pro-forma fully combined with Draka.

Prysmian Group.

H1 2016 Highlights

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

Financial results

Appendix

	H1 2016	H1 2015	∆ OCI contrib. H1 '16 vs. H1'15
Sales YoY total growth YoY organic growth	3,785 1.3% 1.8%	3,737 13.7% 7.6%	289
Adj.EBITDA	347	314	2
% on sales	9.2%	8.4%	4
Adjustments	(25)	(53)	(5)
EBITDA	322	261	1
% on sales	8.5%	7.0%	9
Adj.EBIT	261	242	1
% on sales	6.9%	6.5%	0
Adjustments	(25)	(53)	(5)
Special items	(19)	(16)
EBIT	217	173	5
% on sales	5.8%	4.6%
Financial charges	(37)	(53)	(1)
EBT	180	120	4
% on sales	4.8%	3.2%
Taxes	(56)	(42)	(1)
% on EBT	(31.0%)	35.0%
Net Income % on sales	124 3.3%	7 8 2.1%	3
Minorities	9	(2)	5
Group Net Income % on sales	115 3.0%	8 0 2.1%	(2)

	H1 2016	H1 2015
Non-recurring Items (Antitrust Investigation)	-	(20)
Restructuring	(11)	(28)
Other Non-operating Income / (Expenses)	(14)	(5)
EBITDA adjustments	(25)	(53)
Special items	(19)	(16)
Gain/(loss) on metal derivatives	2 0	(1)
Assets impairment	(15)	(7)
Other	(24)	(8)
EBIT adjustments	(44)	(69)

	H1 2016	H1 2015
Net interest expenses	(28)	(40)
of which non-cash conv.bond interest exp.	(4)	(4)
Bank fees amortization	(2)	(2)
Gain/(loss) on exchange rates	7	(16)
Gain/(loss) on derivatives 1 )	(12)	8
Non recurring effects	(1)	(2)
Other	(1)	(1)
Net financial charges	(37)	(53)

1) Includes currency and interest rate derivatives

	30 Jun 2016	New Perimeter Acquired	30 Jun 2015	31 Dec 2015*
Net fixed assets	2,565	359	2,268	2,581
of which: goodwill of which: intangible assets of which: property, plants & equipment	444 347 1,563	67 199 93	383 172 1,447	452 371 1,552
Net working capital of which: derivatives assets/(liabilities) of which: Operative Net working capital	646 (16) 662	232 1 231	580 (14) 594	347 (41) 388
Provisions & deferred taxes	(299)	(43)	(294)	(330)
Net Capital Employed	2,912	548	2,554	2,598
Employee provisions	393	4	362	341
Shareholders' equity of which: attributable to minority interest	1,488 223	- 190	1,213 33	1,507 229
Net financial position	1,031	8 0	979	750
Total Financing and Equity	2,912	8 4	2,554	2,598

* Restated figures

	H1 2016	H1 2015
Adj.EBITDA	347	314
Adjustments	(25)	(53)
EBITDA	322	261
Net Change in provisions & others	(14)	8
Share of income from investments in op.activities	(14)	(18)
Cash Flow from operations (bef. WC changes)	294	251
Working Capital changes	(291)	(198)
Dividends received	2	1 1
Paid Income Taxes Cash flow from operations	(38) (33)	(25) 3 9
Acquisitions Net Operative CAPEX	- (101)	- (72)
Free Cash Flow (unlevered)	(134)	(33)	LTM Q2 2016 Free
Financial charges	(42)	(64)	Cash Flow (levered)
Free Cash Flow (levered)	(176)	(97)	excl. acquisitions
Free Cash Flow (levered) excl. acquisitions	(176)	(97)	318
Dividends	(101)	(91)
Treasury shares buy-back & other equity	-	2
movements Net Cash Flow	(277)	(186)
NFP beginning of the period	(750)	(802)
Net cash flow	(277)	(186)
Other variations	(4)	9
NFP end of the period	(1,031)	(979)

H1 2016 Highlights

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

Appendix

Bridge Consolidated Sales

Euro Millions

H1 2016 Financial Results 23

Profit and Loss Statement

	H1 2016	H1 2015	∆ OCI contrib. H1 '16 vs. H1'15	Full OCI H1'16 Results
Sales	3,785	3,737	289	289
YoY total growth	1.3%	13.7%
YoY organic growth	1.8%	7.6%
Adj.EBITDA	347	314	2 4	3 1
% on sales	9.2%	8.4%		10.6%
of which share of net income from OCI	-	7	(7)	-
Adjustments	(25)	(53)	(5)	(5)
EBITDA	322	261	1 9	2 6
% on sales	8.5%	7.0%		9.0%
Adj.EBIT	261	242	1 0	1 7
% on sales	6.9%	6.5%		6.0%
Adjustments	(25)	(53)	(5)	(5)
Special items	(19)	(16)	-	-
EBIT	217	173	5	1 2
% on sales	5.8%	4.6%		4.2%
Financial charges	(37)	(53)	(1)	(1)
EBT	180	120	4	1 1
% on sales	4.8%	3.2%		3.9%
Taxes	(56)	(42)	(1)	(1)
% on EBT	(31.0%)	35.0%		(12.1%)
Net Income	124	7 8	3	1 0
% on sales	3.3%	2.1%		3.4%
Minorities	9	(2)	5	5
Group Net Income	115	8 0	(2)	5
% on sales	3.0%	2.1%		1.6%

Energy Projects Segment – Profit and Loss Statement Euro Millions

	H1 2016	H1 2015
Sales to Third Parties	761	639
YoY total growth	19.3%
YoY organic growth	22.7%
Adj. EBITDA % on sales	111 14.6%	100 15.6%
Adj. EBIT % on sales	94 12.4%	85 13.3%

Energy Products Segment – Profit and Loss Statement

		H1 2016	H1 2015	∆ OCI Contribution H1 '16 vs. H1'15
	E&I	1,567	1,468	289
s e rti	YoY total growth	6.8%	0.0%
	YoY organic growth	(1.1%)	0.0%
a	Industrial & Netw. Comp.	682	752	-
P d	YoY total growth	(9.4%)	0.0%
r hi	YoY organic growth	(1.5%)	0.0%
T o	Other	4 9	5 5	-
s t	YoY total growth	(10.7%)	0.0%
e	YoY organic growth	(2.9%)	0.0%
al S	ENERGY PRODUCTS	2,298	2,275	289
	YoY total growth	1.0%	0.0%
	YoY organic growth	(1.3%)	0.0%
	E&I	8 7	6 3	2 4
A	% on sales	5.5%	4.3%
D T	Industrial & Netw. Comp.	6 4	6 1	-
BI	% on sales	9.4%	8.2%
E	Other	-	2	-
dj.	% on sales	0.0%	3.2%
A	ENERGY PRODUCTS	151	126	2 4
	% on sales	6.6%	5.5%
	E&I	5 6	4 6	1 0
	% on sales	3.5%	3.1%
T	Industrial & Netw. Comp.	5 4	4 9	-
BI E	% on sales	8.0%	6.6%
dj.	Other	-	1	-
A	% on sales	0.0%	1.3%
	ENERGY PRODUCTS	110	9 6	1 0
	% on sales	4.8%	4.2%

Oil&Gas Segment – Profit and Loss Statement

	H1 2016	H1 2015
Sales to Third Parties YoY total growth	156 (36.3%)	245
YoY organic growth Adj. EBITDA % on sales	(33.9%) 7 4.2%	1 7 7.0%
Adj. EBIT % on sales	(1) (0.8%)	1 2 4.7%

Telecom Segment – Profit and Loss Statement

	H1 2016	H1 2015
Sales to Third Parties	570	578
YoY total growth	(1.5%)	0.0%
YoY organic growth	5.8%	0.0%
Adj. EBITDA	7 8	7 1
% on sales	13,7%	12.2%
Adj. EBIT	5 8	4 9
% on sales	10.3%	8.5%

Non Recurring Items – Change in Representation

Implementing ESMA recommendation.

Reference Scenario

Commodities & Forex

25 50 75 100 125 150 J-08 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16 Brent \$/bbl Brent €/bbl

Based on monthly average data Source: Nasdaq OMX

Disclaimer

• The managers responsible for preparing the company's financial reports, A.Bott 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.