Prysmian S.p.a. · MIL:PRY
Prysmian — Investor Presentation (August 2016)
58 slides from Prysmian's investor presentation, August 2016
Slide 1: Prysmian Group Company Presentation
Prysmian Group Company Presentation August 2016
Slide 2: Agenda
Agenda Group overview Results by business Outlook Financial Results Appendix Company Presentation – August 2016 2
Slide 3: Prysmian group at a glance
Prysmian group at a glance FY 2015 Financial Results Sales breakdown by business Sales breakdown by geography Telecom Energy APAC 15% Projects 13% 19% Oil&Gas Latin America 6% 8% Other EMEA 2% € 7,361m € 7,361m 63% North America Industrial & Energy Netw.Comp. 16% Products 20% 60% E&I 38% Adj. EBITDA
Slide 4: H1 2016 Key Financials
H1 2016 Key Financials Euro Millions, % on Sales Sales Adjusted EBITDA (1) **∆ OCI Contribution H1’16 vs. H1’15 * WL previous loss write-up 7,361 623 **∆ OCI Contribution H1’16 vs. H1’15 +1.8%* 347 3,737 3,785 314 24** 289** 24* 8.5% 8.4% 9.2% 2015 H1 '15 H1 '16 2015 H1 '15 H1 '16 * Org. Growth Oper
Slide 5: H1 2015-2016 Adj. EBITDA Bridge
Continued profitability improvement Underlying margin increase driven by Energy Projects, Telecom and OCI consolidation Organic Growth X.X% +22.7% -1.1% -1.5% -33.9% +5.8% +1.8% Adj. EBITDA Margin H1’15 15.1% 15.6% 14.6% 12.2% 13.7% H1’16 ~12%* Excl. bad debt 8.2% 9.4% 8.4% 9.2% 7.0% provision 4.3%
Slide 6: Agenda
Agenda Group overview Results by business Outlook Financial Results Appendix Company Presentation – August 2016 6
Slide 7: Energy Projects
Energy Projects Euro Millions, % on Sales Sales Highlights 1,416 Submarine • Double-digit organic growth benefitting from solid execution and +22.7%* favourable project phasing. 761 • Strong project management and new installation assets driving a 639 significant margin improvement. • H1 2015 Adj. E
Slide 8: Energy & Infrastructure
Energy & Infrastructure Euro Millions, % on Sales Sales Highlights **∆ OCI Contribution Trade & Installers 2,795 H1’16 vs. H1’15 • Low single-digit organic decrease also driven by mix improvement -1.1%* strategy in Europe. 1,468 1,567 • Positive trend in the Nordics, UK, Eastern Europe and Oceania m
Slide 9: Industrial & Network Components
Industrial & Network Components Euro Millions, % on Sales Sales Highlights Specialties & OEMs 1,499 • Organic trend substantially flat in H1 but softening in Q2, with -1.5%* sound growth in Defense, Crane and Marine offset by weak Nuclear, Railways and Mining. 752 682 • In Renewables, slowdown in wi
Slide 10: Oil & Gas
Oil & Gas Euro Millions, % on Sales Sales Highlights 421 SURF • Umbilical: results in line with expectations, reflecting the framework -33.9%* agreement. Supply chain optimization and integration with key suppliers progressing well. 245 • DHT: Financials benefitting from the synergies generated from
Slide 11: Telecom
Telecom Euro Millions, % on Sales Sales Highlights Telecom Solutions 1,109 • Optical cables and fiber business broadly stable, with a slight +5.8%* acceleration in Q2 thanks to strong growth in Australia, North America and France, more than offsetting the market weakness in 578 570 the rest of Europ
Slide 12: Agenda
Agenda Group overview Results by business Outlook Financial Results Appendix Company Presentation – August 2016 12
Slide 13: FY 2016 Outlook
FY 2016 Outlook Margin improvement mainly driven by Energy Projects and Telecom. Negative FX. 2016 Adj.EBITDA Target (€ million)* 2016 Adj.EBITDA Target Assumptions (€ million) Mid-point target assumptions: • Positive trend in Energy Projects and Telecom 670 Mid-point € 695m 720 • Cyclical businesse
Slide 14: Agenda
Agenda Group overview Results by business Outlook Financial Results Appendix Company Presentation – August 2016 14
Slide 15: Profit and Loss Statement
Profit and Loss Statement Euro Millions ∆ OCI contrib. H1 2016 H1 2015 H1 ‘16 vs. H1’15 Sales 3,785 3,737 289 YoY total growth 1.3% 13.7% YoY organic growth 1.8% 7.6% Adj.EBITDA 347 314 24 % on sales 9.2% 8.4% Adjustments (25) (53) (5) EBITDA 322 261 19 % on sales 8.5% 7.0% Adj.EBIT 261 242 10 % on
Slide 16: Adjustments and Special Items on EBIT
Adjustments and Special Items on EBIT Euro Millions 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 20 (1) Assets impair
Slide 17: Financial Charges
Financial Charges Euro Millions 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
Slide 18: Statement of financial position (Balance Sheet)
Statement of financial position (Balance Sheet) Euro Millions 30 Jun 2016 New Perimeter 30 Jun 2015 31 Dec 2015* Acquired Net fixed assets 2,565 359 2,268 2,581 of which: goodwill 444 67 383 452 of which: intangible assets 347 199 172 371 of which: property, plants & equipment 1,563 93 1,447 1,552 N
Slide 19: Cash Flow
Cash Flow Euro Millions 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 recei
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 2016 20
Slide 21: Key milestones
Key milestones 1998 2001 2005 2008 2011 2014 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 SURF Components Growth Optical Cables • Focus on & Fibre products and High Voltage service • Focus on • Limited solutions product Medium Industrial • Diversification diversif
Slide 23: Cash Flow generation as key priority to create value for shareholders
Cash Flow generation as key priority to create value for shareholders Growing capabilities to invest organically/acquisitions and remunerate shareholders Cash Flow generation Free Cash Flow (levered) excl. Acquisitions (L axis) NFP / Adj. EBITDA (R axis) € mln 400 2.3x 2.2x 2.0x 320 1.8x 1.8x 240 1.
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 2007-2015 (€ mln) Prysmian + Draka Cap. Increase & Product mix 210 158 163 139 138 116 107 102 89 Approx. € 580 million cumulated CAPEX 2007-15 to
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 2016 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 2016 28
Slide 29: Profit and Loss Statement
Profit and Loss Statement Euro Millions ∆ OCI contrib. Full OCI H1’16 H1 2016 H1 2015 H1 ‘16 vs. H1’15 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 24 31 % on sales 9.2% 8.4% 10.6% of which share of net income from OCI - 7 (7) - Adjust
Slide 30: Energy Projects Segment – Profit and Loss Statement
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 111 100 % on sales 14.6% 15.6% Adj. EBIT 94 85 % on sales 12.4% 13.3% Company Presentation – August 2016 30
Slide 31: Energy Products Segment – Profit and Loss Statement
Energy Products Segment – Profit and Loss Statement Euro Millions ∆ OCI Contribution H1 2016 H1 2015 H1 ‘16 vs. H1’15 E&I 1,567 1,468 289 YoY total growth 6.8% 0.0% Sales to Third Parties YoY organic growth (1.1%) 0.0% Industrial & Netw. Comp. 682 752 - YoY total growth (9.4%) 0.0% YoY organic growt
Slide 32: Oil&Gas Segment – Profit and Loss Statement
Oil&Gas Segment – Profit and Loss Statement Euro Millions H1 2016 H1 2015 Sales to Third Parties 156 245 YoY total growth (36.3%) YoY organic growth (33.9%) Adj. EBITDA 7 17 % on sales 4.2% 7.0% Adj. EBIT (1) 12 % on sales (0.8%) 4.7% Company Presentation – August 2016 32
Slide 33: Telecom Segment – Profit and Loss Statement
Telecom Segment – Profit and Loss Statement Euro Millions 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 78 71 % on sales 13,7% 12.2% Adj. EBIT 58 49 % on sales 10.3% 8.5% Company Presentation – August 2016 33
Slide 34: Non Recurring Items – Change in Representation
Non Recurring Items – Change in Representation Implementing ESMA recommendation. BEFORE AFTER Adj. EBITDA Adj. EBITDA Antitrust Investigation Non Recurring Items Non Recurring Restructuring Restructuring Items Others Other Non Operating Income (Expenses) EBITDA EBITDA Company Presentation – August 2
Slide 35: New segment reporting
New segment reporting ENERGY PRODUCTS REPORTED ENERGY Industrial & Energy & PROJECTS OIL&GAS Network Infrastructure Other TELECOM Components Trade & Optical, Connectivity OEMs & Submarine SURF Installers Other Specialties & Fiber OCI Consolidation Multimedia & High Voltage Core Oil&Gas Automotive Ar
Slide 36: New segment reporting
New segment reporting Sales and Adj.EBITDA breakdowns Previous Segment Reporting FY 2015 New Segment Reporting FY 2015 Sales Sales Telecom Energy Energy Telecom 15% Projects Projects 15% Other 22% 19% 2% Oil&Gas 6% Other € 7,361m 2% € 7,361m Industrial & Netw.Comp. Energy Industrial & Energy 24% Pro
Slide 37: New segment reporting: 2014-15 Sales & Org. Growth by quarter
New segment reporting: 2014-15 Sales & Org. Growth by quarter Euro Millions SALES and ORG. GROWTH FY 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 FY 2015 ENERGY PROJECTS 1,248 250 302 300 389 1,241 281 358 355 423 1,416 1.1% 8.4% 14.7% 15.8% 8.9% 11.9% E&I 2,747 638 6
Slide 38: New segment reporting: 2014-15 Adj. EBITDA by quarter
New segment reporting: 2014-15 Adj. EBITDA by quarter Euro Millions ADJ. EBITDA and % ON SALES FY 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 FY 2015 ENERGY PROJECTS 215 6 26 52 56 140 26 73 53 68 221 17.2% 2.4% 8.6% 17.3% 14.4% 11.3% 9.4% 20.4% 14.9% 16.1% 15.6% E&I
Slide 39: 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 2016 39
Slide 40: 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 • Shannon River • BorWin 3 / DolWin 3 • West of Adlergrund • Messina II • Cyclades • Dardane
Slide 41: 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 2015 Cumulated Capacity by Country Cumulated Offshore Wind capacity (L axis) Others 0.3 GW Annual Additional capacity (R axis) Netherlands 0.4 GW 20 38 3.2 Belgi
Slide 42: 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 Main planned subsea & underground pro
Slide 43: Latest submarine projects awarded
Latest submarine projects awarded Key success factors Latest Key projects Customers Period €m* • Track record and reliability COBRA cable TenneT – Energinet.dk 2016-18 250 Hainan II China South Grid 2016-19 $140m • Ability to design/execute turnkey NSN Link Statnett SF – National Grid 2015-21 550 so
Slide 44: 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 Pipes Umbilical For control Christmas Manifold Tree Petrol Well Company Presentation – August 2016 44
Slide 45: 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 2016 45
Slide 46: 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 47: 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 48: 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 49: 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 50: 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 2016 50
Slide 51: 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 52: 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 53: Telecom Cables Main Applications
Telecom Cables Main Applications BACKBONE METROPOLITAN RING ACCESS NETWORK Company Presentation – August 2016 53
Slide 54: 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 55: 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 56: 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 57: 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 2,500 100 8,000 2,000 75 6,000 1,500 50 4,000 1,000 25 2,000 500 J-08 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16 J-08 J-09 J-
Slide 58: 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