Prysmian S.p.a. · MIL:PRY
Prysmian — Q1 2017 Earnings Presentation
53 slides from Prysmian's earnings presentation, May 2017
Slide 1: Prysmian Group Company Presentation
Prysmian Group Company Presentation May 2017
Slide 2: Agenda
Agenda Group overview Results by business Outlook Financial Results Appendix Company Presentation – May 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: Q1 2017 Key Financials
Q1 2017 Key Financials Euro Millions, % on Sales Sales Adjusted EBITDA (1) 7,567 711 -3.7%* 1,810 1,849 150 154 9.4% 8.3% 8.3% 2016 Q1 '16 Q1 '17 2016 Q1 '16 Q1 '17 * Org. Growth Operative Net Working Capital (2) Net Financial Debt 785 1,038 998 673 318 537 4.2% 9.3% 10.6% Dec-16 Mar-16 Mar-17 Dec-1
Slide 5: Adj. EBITDA and organic growth by business
Moderate organic decline with stable profitability. Positive performance in Telecom offset by weakness in Energy Products and Oil&Gas businesses. Q1’16 Q1’17 Adj. EBITDA Margin 15.4% 16.3% 14.4% 11.2% 8.7% 7.9% 8.3% 8.3% 5.0% 4.3% 3.8% Energy Industrial Projects E&I Oil&Gas Telecom Total & NWC. Q1’1
Slide 6: Agenda
Agenda Group overview Results by business Outlook Financial Results Appendix Company Presentation – May 2017 6
Slide 7: Energy Projects
Energy Projects Euro Millions, % on Sales Sales Highlights 1,634 Submarine • Positive market momentum confirmed by the recent projects awarded both in Interconnection (IFA2, approx. €350m) and Offshore wind (RTE Offshore, approx. €300m). January-April ‘17 order intake at approximately €700m. -15.2%*
Slide 8: Energy & Infrastructure
Energy & Infrastructure Euro Millions, % on Sales Sales Highlights 3,016 Trade & Installers • Positive trend in the Nordics and Oceania, counterbalanced by a weak performance in Central-Eastern Europe, Turkey and Argentina. -2.3%* • Profitability in the quarter temporarily affected by sharp increase
Slide 9: Industrial & Network Components
Industrial & Network Components Euro Millions, % on Sales Sales Highlights Order Backlog 1,343 • Order backlog started to recover after 2 consecutive quarters of decline. Specialties, OEMs & Renewables -3.7%* • Sound performance in Railway, supported by increasing order inflow, more than offset by s
Slide 10: Oil & Gas
Oil & Gas Euro Millions, % on Sales Sales Highlights SURF 300 • Umbilical: volume and price drop in line with expectations driven by the low level of orders in Brazil in 2016. 2017 bids characterized by continued price pressure. • DHT: positive result in North America shale, offset by major deep-wat
Slide 11: Telecom
Telecom Euro Millions, % on Sales Sales Highlights 1,164 Telecom Solutions • Solid performance mainly driven by the strong demand of the optical business. • The new supply agreement signed between Prysmian and Verizon in the US +12.3%* (approx. $300m in 3 years) confirms the solid market momentum in
Slide 12: Agenda
Agenda Group overview Results by business Outlook Financial Results Appendix Company Presentation – May 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 growth in Telecom business 710 Mid-point € 730m 750 • Stable results in Energy Projects after adsorbing negative perimeter effect in Underground HV (Chin
Slide 14: Agenda
Agenda Group overview Results by business Outlook Financial Results Appendix Company Presentation – May 2017 14
Slide 15: Profit and Loss Statement
Profit and Loss Statement Euro Millions Q1 2017 Q1 2016* Sales 1,849 1,810 YoY total growth 2.2% 0.0% YoY organic growth (3.7%) 0.0% Adj.EBITDA 154 150 % on sales 8.3% 8.3% Adjustments (24) (10) EBITDA 130 140 % on sales 7.0% 7.7% Adj.EBIT 110 107 % on sales 5.9% 5.9% Adjustments (24) (10) Special i
Slide 16: Adjustments and Special Items on EBIT
Adjustments and Special Items on EBIT Euro Millions Q1 2017 Q1 2016 Non-recurring Items (Antitrust Investigation) (15) - Restructuring (5) (7) Other Non-operating Income / (Expenses) (4) (3) EBITDA adjustments (24) (10) Special items (8) (25) Gain/(loss) on metal derivatives 3 2 Assets impairment -
Slide 17: Financial Charges
Financial Charges Euro Millions Q1 2017 Q1 2016 Net interest expenses (17) (15) of which non-cash conv.bond interest exp. (4) (2) Bank fees amortization - - Gain/(loss) on exchange rates 1 7 Gain/(loss) on derivatives 1) (7) (9) Non recurring effects (1) (1) Other non-operating financial expenses (2
Slide 18: Statement of financial position (Balance Sheet)
Statement of financial position (Balance Sheet) Euro Millions 31 Mar 2017 31 Mar 2016* 31 Dec 2016 Net fixed assets 2,656 2,546 2,630 of which: goodwill 447 446 448 of which: intangible assets 340 272 344 of which: property, plants & equipment 1,653 1,535 1,631 Net working capital 788 646 325 of whi
Slide 19: Cash Flow
Cash Flow Euro Millions 12 Months (from Q1 2017 Q1 2016 1/4/2016 to 31/3/2017) Adj.EBITDA 154 150 715 Adjustments (24) (10) (80) EBITDA 130 140 635 Net Change in provisions & others (1) (17) 16 Share of income from investments in op.activities (10) (7) (34) 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 – May 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 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 2007-2016 (€ 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 – May 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 – May 2017 28
Slide 29: Profit and Loss Statement
Profit and Loss Statement Euro Millions Q1 2017 Q1 2016* Sales 1,849 1,810 YoY total growth 2.2% 0.0% YoY organic growth (3.7%) 0.0% Adj.EBITDA 154 150 % on sales 8.3% 8.3% of which share of net income 10 7 Adjustments (24) (10) EBITDA 130 140 % on sales 7.0% 7.7% Adj.EBIT 110 107 % on sales 5.9% 5.
Slide 30: Energy Projects Segment – Profit and Loss Statement
Energy Projects Segment – Profit and Loss Statement Euro Millions Q1 2017 Q1 2016 Sales to Third Parties 275 346 YoY total growth (20.5%) 0.0% YoY organic growth (15.2%) 0.0% Adj. EBITDA 40 39 % on sales 14.4% 11.2% Adj. EBIT 30 31 % on sales 10.7% 8.8% Company Presentation – May 2017 30
Slide 31: Energy Products Segment – Profit and Loss Statement
Energy Products Segment – Profit and Loss Statement Euro Millions Q1 2017 Q1 2016* E&I 806 754 YoY total growth 7.0% Sales to Third Parties YoY organic growth (2.3%) Industrial & Netw. Comp. 340 333 YoY total growth 1.9% YoY organic growth (3.7%) Other 34 23 YoY total growth 48.1% YoY organic growth
Slide 32: Oil&Gas Segment – Profit and Loss Statement
Oil&Gas Segment – Profit and Loss Statement Euro Millions Q1 2017 Q1 2016 Sales to Third Parties 66 82 YoY total growth (19.4%) 0.0% YoY organic growth (21.2%) 0.0% Adj. EBITDA 0 3 % on sales - 3.8% Adj. EBIT (4) (2) % on sales (6.5%) (1.8%) Company Presentation – May 2017 32
Slide 33: Telecom Segment – Profit and Loss Statement
Telecom Segment – Profit and Loss Statement Euro Millions Q1 2017 Q1 2016 Sales to Third Parties 328 272 YoY total growth 20.6% 0.0% YoY organic growth 12.3% 0.0% Adj. EBITDA 53 42 % on sales 16.3% 15.4% Adj. EBIT 43 32 % on sales 13.2% 11.7% Company Presentation – May 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 – May 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: 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 38: 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 39: 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 – May 2017 39
Slide 40: 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 – May 2017 40
Slide 41: 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 42: 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 43: 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 44: 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 45: 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 – May 2017 45
Slide 46: 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 47: 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 48: Telecom Cables Main Applications
Telecom Cables Main Applications BACKBONE METROPOLITAN RING ACCESS NETWORK Company Presentation – May 2017 48
Slide 49: 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 50: 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 51: 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 52: 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 53: 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