Prysmian S.p.a. · MIL:PRY
Prysmian — Investor Presentation (August 2017)
55 slides from Prysmian's investor presentation, August 2017
Slide 1: Prysmian Group Company Presentation
Prysmian Group Company Presentation August 2017
Slide 2: Agenda
Agenda Group overview Results by business Outlook Financial Results Appendix Company Presentation – August 2017 2
Slide 3: Prysmian group at a glance
Prysmian group at a glance FY 2016 Financial Results Sales breakdown by business Sales breakdown by geography Telecom Energy APAC 15% Projects 13% 22% Latin America Oil&Gas 6% 4% Other 1% € 7,567m North America € 7,567m EMEA 14% 67% Industrial & Energy Netw.Comp. Products 18% 59% E&I 40% Adj. EBITDA
Slide 4: H1 2017 Key Financials
H1 2017 Key Financials Euro Millions, % on Sales Sales Adjusted EBITDA (1) 7.567 711 -1.5%* 3.785 3.936 347 362 9.4% 9.2% 9.2% 2016 H1'16 H1'17 2016 H1'16 H1'17 * Org. Growth Operative Net Working Capital (2) Net Financial Debt 1.031 662 691 1.000 318 537 4.2% 8.4% 8.3% Dec-16 Jun-16 Jun-17 Dec-16 J
Slide 5: Adj. EBITDA by business
Moderate organic decline with improved profitability. Positive performance in Telecom and Energy Projects offset by weakness in E&I and SURF. H1’16 H1’17 Adj. EBITDA Margin 17,0% 16,8% 14,6% 13,7% 9,4% 8,3% 9,2% 9,2% 5,5% 4,5% 4,2% 1,1% Energy Industrial Projects E&I Oil&Gas Telecom Total & NWC. H1’
Slide 6: Agenda
Agenda Group overview Results by business Outlook Financial Results Appendix Company Presentation – August 2017 6
Slide 7: Energy Projects
Energy Projects Euro Millions, % on Sales Sales Highlights 1.634 Submarine • Improving organic trend recovering after a soft start in Q1. -5.3%* • Adj.EBITDA margin improving also thanks to full utilization of the new installation assets (new vessel Ulisse, new jetting system). 761 685 • Solid marke
Slide 8: Energy & Infrastructure
Energy & Infrastructure Euro Millions, % on Sales Sales Highlights Trade & Installers 3.016 • Positive performance in the Nordics, Oceania and China was more than offset by weakness in Oman, Turkey and Argentina. The recent update in -3.3%* renewable energy regulation in US negatively affected volum
Slide 9: Industrial & Network Components
Industrial & Network Components Euro Millions, % on Sales Sales Highlights Specialties, OEMs & Renewables 1.343 • Low single digit organic growth thanks to a solid performance in Railway and Infrastructure, ongoing recovery in Mining and Renewables. Crane, +2.5%* Defense and Marine slowing down afte
Slide 10: Oil & Gas
Oil & Gas Euro Millions, % on Sales Sales Highlights SURF 300 • Umbilical: weak performance driven by 2016 low projects awards in Brazil. Market environment remains highly competitive. -14.8%* • DHT: Volume recovery in onshore segment (US Shale) partially offset by weak demand from international mar
Slide 11: Telecom
Telecom Euro Millions, % on Sales Sales Highlights 1.164 Telecom Solutions • Double-digit organic growth in optical cables segment confirmed in Q2. +7.5%* • Solid market demand in Europe and US driven by FTTH/FTTC roll-out acceleration. 646 570 • Declining performance in the copper business due to t
Slide 12: Agenda
Agenda Group overview Results by business Outlook Financial Results Appendix Company Presentation – August 2017 12
Slide 13: FY 2017 Outlook
FY 2017 Outlook 2017 Adj.EBITDA Target (€ million) 2017 Adj.EBITDA Target Assumptions (€ million) Mid-point target assumptions: • Continued strong performance in Telecom business. • Stable results in Energy Projects after adsorbing 710 Mid-point € 730m 750 negative perimeter effect in Underground HV
Slide 14: Agenda
Agenda Group overview Results by business Outlook Financial Results Appendix Company Presentation – August 2017 14
Slide 15: Profit and Loss Statement
Profit and Loss Statement Euro Millions H1 2017 H1 2016 Sales 3.936 3.785 YoY total growth 4,0% 0,0% YoY organic growth (1,5%) 0,0% Adj.EBITDA 362 347 % on sales 9,2% 9,2% Adjustments (31) (25) EBITDA 331 322 % on sales 8,4% 8,5% Adj.EBIT 274 261 % on sales 7,0% 6,9% Adjustments (31) (25) Special it
Slide 16: Adjustments and Special Items on EBIT
Adjustments and Special Items on EBIT Euro Millions H1 2017 H1 2016 Non-recurring Items (Antitrust Investigation) (15) - Restructuring (9) (11) Other Non-operating Income / (Expenses) (7) (14) EBITDA adjustments (31) (25) Special items (36) (19) Gain/(loss) on metal derivatives (11) 20 Assets impair
Slide 17: Financial Charges
Financial Charges Euro Millions H1 2017 H1 2016 Net interest expenses (34) (28) of which non-cash conv.bond interest exp. (8) (4) Bank fees amortization (2) (2) Gain/(loss) on exchange rates 2 7 Gain/(loss) on derivatives 1) (12) (12) Non recurring effects (1) (1) Other non-operating financial expen
Slide 18: Statement of financial position (Balance Sheet)
Statement of financial position (Balance Sheet) Euro Millions 30 Jun 2017 30 Jun 2016 31 Dec 2016 Net fixed assets 2.599 2.565 2.630 of which: goodwill 441 444 448 of which: intangible assets 318 347 344 of which: property, plants & equipment 1.625 1.563 1.631 Net working capital 700 646 325 of whic
Slide 19: Cash Flow
Cash Flow Euro Millions 12 Months (from H1 2017 H1 2016 1/7/2016 to 30/6/2017) Adj.EBITDA 362 347 726 Adjustments (31) (25) (72) EBITDA 331 322 654 Net Change in provisions & others 4 (14) 18 Share of income from investments in op.activities (19) (14) (36) Cash Flow from operations (bef. WC changes)
Slide 20: Agenda
Agenda Group overview Results by business Outlook Financial Results Appendix o Prysmian at a glance o OCI Acquisition o Financials o Energy Projects and Energy Products o Telecom Company Presentation – August 2017 20
Slide 21: Key milestones
Key milestones 1998 2001 2005 2008 2011 2015 Growth by Restructuring Managing the Reacting to downturn “Bolt-On” Profitable growth acquisition process downturn through consolidation Acquisitions Public Listing Company #1 Cable Post merger July 2005: Maker integration Strategic Closure of 11 GS March
Slide 22: Prysmian Group business portfolio
Prysmian Group business portfolio Focus on high value added segments PROFITABILITY Submarine Look for Network Profitable High Components Growth Optical Cables • Focus on & Fibre products and High Voltage service • Focus on • Limited solutions product Medium Oil&Gas Industrial • Diversification diver
Slide 23: Cash Flow generation as key priority to create value for shareholders
Cash Flow generation as key priority to create value for shareholders Low leverage enabling multiple capital deployment opportunities. Historical free cash flow generation and Net Financial Debt/Adj.EBITDA ratio (year-end) 500 2 450 1,8 400 1,6 350 1,4 300 1,2 250 1 200 0,8 150 0,6 100 0,4 50 0,2 0
Slide 24: Disciplined Capex to grow in high margin business and out of Europe
Disciplined Capex to grow in high margin business and out of Europe Investments focused on business with long term drivers and high entry barriers CAPEX 2007-2016 (€ mln) Prysmian + Draka 233 Cap. Increase & Product mix 210 158 163 139 138 116 107 102 89 Approx. € 680 million cumulated CAPEX 2007-16
Slide 25: Metal Price Impact on Profitability
Metal Price Impact on Profitability Supply Main Application Metal Influence on Cable Price Metal Fluctuation Management Contract Impact Impact • Projects (Energy • Technology and design • Pricing locked-in at order intake transmission) content are the main • Profitability protection through Predeter
Slide 26: Agenda
Agenda Group overview Results by business Outlook Financial Results Appendix o Prysmian at a glance o OCI Acquisition o Financials o Energy Projects and Energy Products o Telecom Company Presentation – August 2017 26
Slide 27: Focus on Oman Cables Industry Acquisition
Focus on Oman Cables Industry Acquisition A perfect example of “Bolt-on” acquisition. 2015 Sales Breakdown (€ million (1)) Structure of the Deal STRUCTURE OF THE DEAL MENA Domestic • Acquisition of approx. 16% stake in listed 57% 43% company OCI • Total cash consideration € 105 million Sales FY15 •
Slide 28: Agenda
Agenda Group overview Results by business Outlook Financial Results Appendix o Prysmian at a glance o OCI Acquisition o Financials o Energy Projects and Energy Products o Telecom Company Presentation – August 2017 28
Slide 29: Profit and Loss Statement
Profit and Loss Statement Euro Millions H1 2017 H1 2016* Sales 3.936 3.785 YoY total growth 4,0% 0,0% YoY organic growth (1,5%) 0,0% Adj.EBITDA 362 347 % on sales 9,2% 9,2% of which share of net income 19 14 Adjustments (31) (25) EBITDA 331 322 % on sales 8,4% 8,5% Adj.EBIT 274 261 % on sales 7,0% 6
Slide 30: Energy Projects Segment – Profit and Loss Statement
Energy Projects Segment – Profit and Loss Statement Euro Millions H1 2017 H1 2016 Sales to Third Parties 685 761 YoY total growth (10,0%) 19,3% YoY organic growth (5,3%) 22,7% Adj. EBITDA 116 111 % on sales 17,0% 14,6% Adj. EBIT 96 94 % on sales 14,0% 12,4% Company Presentation – August 2017 30
Slide 31: Energy Products Segment – Profit and Loss Statement
Energy Products Segment – Profit and Loss Statement Euro Millions H1 2017 H1 2016 E&I 1.658 1.567 YoY total growth 5,8% Sales to Third Parties YoY organic growth (3,3%) Industrial & Netw. Comp. 739 682 YoY total growth 8,5% YoY organic growth 2,5% Other 70 49 YoY total growth 41,9% YoY organic growt
Slide 32: Oil&Gas Segment – Profit and Loss Statement
Oil&Gas Segment – Profit and Loss Statement Euro Millions H1 2017 H1 2016 Sales to Third Parties 138 156 YoY total growth (11,7%) YoY organic growth (14,8%) Adj. EBITDA 2 7 % on sales 1,1% 4,2% Adj. EBIT (7) (1) % on sales (5,1%) (0,8%) Company Presentation – August 2017 32
Slide 33: Telecom Segment – Profit and Loss Statement
Telecom Segment – Profit and Loss Statement Euro Millions H1 2017 H1 2016 Sales to Third Parties 646 570 YoY total growth 13,4% (1,5%) YoY organic growth 7,5% 5,8% Adj. EBITDA 109 78 % on sales 16,8% 13,7% Adj. EBIT 89 58 % on sales 13,7% 10,3% Company Presentation – August 2017 33
Slide 34: Agenda
Agenda Group overview Results by business Outlook Financial Results Appendix o Prysmian at a glance o OCI Acquisition o Financials o Energy Projects and Energy Products o Telecom Company Presentation – August 2017 34
Slide 35: Investing in submarine to increase ROCE
Investing in submarine to increase ROCE Strengthening production and installation capabilities Arco Felice (Italy) Drammen (Norway) Pikkala (Finland) Main projects in execution/orders backlog: • Western Link • West of Adlergrund • BorWin 3 / DolWin 3 • Cyclades • Messina II • Philippines • Mon.Ita.
Slide 36: Off-shore wind development in Europe
Off-shore wind development in Europe High visibility on new projects to be awarded next quarters Europe Offshore Wind capacity (GW) Europe 2016 Cumulated Capacity by Country Cumulated Offshore Wind capacity (L axis) Others 0.2 GW Annual Additional capacity (R axis) Netherlands 1.1 GW 20 22 3,2 Thous
Slide 37: Offshore Wind Market Prospective
Offshore Wind Market Prospective. Cost reduction driven by technological innovation and projects scale. LROE* Analysis of traded offshore wind projects Key Highlights * LROE: Levelised Revenue Of Electricity • LROE reduced by half in the last 2 years. 150 • Larger projects scale and increasing turbi
Slide 38: Major transmission projects to be awarded
Major transmission projects to be awarded Large pipeline of pan-European projects under development Main subsea and underground projects of pan-European significance List of main projects 1. Germany (HVDC Grid Offshore) Main power flow trends 2. France Off-Shore (Inter-Array) Main planned subsea & u
Slide 39: Latest submarine projects awarded
Latest submarine projects awarded Key success factors Latest Key projects Customers Period €m* • Track record and reliability IFA2 RTE / National Grid 2018-20 350 ElecLink Groupe Eurotunnel 2017-19 79 • Ability to design/execute turnkey COBRA cable TenneT – Energinet.dk 2016-18 250 solution Hainan I
Slide 40: SURF – Off-shore oil exploration
SURF – Off-shore oil exploration Oilfield structure Flexible Pipes Fixed Floating Platform Floating Platform (SEMI-SUBMERSIBLE) Platform (FPSO) Umbilical Injection control Umbilical (Power) Flexible Umbilical Pipes For control Christmas Manifold Tree Petrol Well Company Presentation – August 2017 40
Slide 41: SURF – Off-shore oil exploration
SURF – Off-shore oil exploration Cross selling opportunities driven by the Downhole technology business contributed by Draka Downhole Technology (DHT) HYBRID ELECTRO-OPTIC FIBER OPTIC ELECTRICAL GAS & FLUID TUBING PACKAGED GAS & FLUID TUBING Company Presentation – August 2017 41
Slide 42: Trade & Installers – Overview
Trade & Installers – Overview BUSINESS DESCRIPTION KEY SUCCESS FACTORS • Building wires, Low and Medium voltage cables for Global partner with strong local presence residential, commercial, industrial and infrastructure constructions Full Product range • Partner of the World best Wholesalers, Instal
Slide 43: Trade & Installers
Trade & Installers Offer overview - POWER SUPPLY - LIGHTING - EMERGENCY CIRCUITS (INTERIOR/EXTERIOR) RESIDENTIAL – COMMERCIAL – - CONNECTIONS - BRANCHES INDUSTRIAL - INFRASTRUCTURE - MACHINERY (MOBILE OR NOT) - CONTROL/DATA - SWITCHBOARD - ELECTRICAL APPLIANCES BEST IN CLASS FIRE RESISTANT AND LSOH
Slide 44: Industrial & Network Components – Overview
Industrial & Network Components – Overview Business description Key customers Integrated cable solutions highly customized to our Large and differentiated customer base industrial customers worldwide generally served through direct sales Specialties & OEM Products for mining, crane , marine, railway
Slide 45: Macro-structure of Energy Cables
Macro-structure of Energy Cables Product macro structure Production process Conductor Final production Outer jacket (drawing, Insulation Screening Lay up Armouring Sheathing quality (Polyolefine, PVC, …) inspection Insulation (XLPE, EPDM) stranding) WB yarns Conductor (Cu, Al) Building Wire (T&I) Lo
Slide 46: Agenda
Agenda Group overview Results by business Outlook Financial Results Appendix o Prysmian at a glance o OCI Acquisition o Financials o Energy Projects and Energy Products o Telecom Company Presentation – August 2017 46
Slide 47: Telecom – Overview
Telecom – Overview Business description Key customers Integrated cable solutions focused on high -end Telecom Key customers include key operators in the telecom sector Telecom solutions Optical cables: tailored for all today’s challenging environments from underground ducts to overhead lines, rail t
Slide 48: Optical cables
Optical cables Global overview Market trends Key success factors • Demand function of level of capital expenditures • Continuous innovation and development of new budgeted by large telecom companies cable & fibre products (PTT/incumbents as well as alternative • Cable design innovation with special
Slide 49: Telecom Cables Main Applications
Telecom Cables Main Applications BACKBONE METROPOLITAN RING ACCESS NETWORK Company Presentation – August 2017 49
Slide 50: Digital Agenda for Europe
Digital Agenda for Europe Setting up guidelines for all Member States to facilitate broadband development. 2020 TARGETS NGA Coverage by Region • 100% coverage with 30Mbps download speed • 50% take-up of 100Mbps subscription. NEW 2025 TARGETS PROPOSAL • New targets have to be confirmed by EU Commissi
Slide 51: Telecom – Market trend
Telecom – Market trend Growth opportunities coming from the development of broadband in Europe Evolution of NGA (Next Generation Access) Opportunities coming from national plans to coverage and high-speed (>30Mbps) / ultrafast achieve EU 2020 Digital Agenda targets (>100Mbps) take-up (% of homes) in
Slide 52: Telecom – FTTA as key driver of optical demand
Telecom – FTTA as key driver of optical demand 4G and Long Term Evolution (LTE) deployments require Fiber-to-the-Antenna (FTTA) Global LTE Growth Forecast # of users Roof top antenna towers for urban applications Antenna towers used by 4G and LTE networks Source: Informa Telecoms & Media, WCIS+, Mar
Slide 53: Macro-structure of Telecom Cables
Macro-structure of Telecom Cables Product macro structure Production process Primary Coating (250 Micron) Fibre Cladding (125 Micron) optic Core (10 Micron) Final quality Pre form deposition Consolidation Drawing inspection Main Technologies: OVD - VAD - MCVD Aramid Yarns Loose tubes Optical fibres
Slide 54: Reference Scenario
Reference Scenario Commodities & Forex Brent Copper Aluminium Brent $/bbl Copper $/ton Aluminium $/ton Brent €/bbl Copper €/ton Aluminium €/ton 150 12.000 3.500 125 10.000 3.000 8.000 2.500 100 2.000 75 6.000 1.500 50 4.000 1.000 25 2.000 J- J- J- J- J- J- J- J- J- J- 500 J- J- J- J- J- J- J- J- J-
Slide 55: Disclaimer
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 th