Prysmian S p A : Growing H1 2021 Results; strong sales recovery and improving margins

PRESS RELEASE

GROWING H1 2021 RESULTS; STRONG SALES AND MARGINS PERFORMANCE

FY 2021 TARGETS REVISED UPWARDS: TARGET ADJUSTED EBITDA AT €920M-€970M

• SALES AT €6,034M, ORGANIC CHANGE1 AT +10.5% (+16.9% IN Q2)
• ADJUSTED EBITDA UP TO €470M (€419M IN H1 2020)
• GROUP NET PROFIT JUMPED TO €162M FROM €78M
• ENERGY RECOVERED SHARPLY (+9.5% ORGANIC GROWTH; T&I +38.5% IN Q2)
• TELECOM ACCELERATED ITS RECOVERY WITH +15.5% ORGANIC GROWTH (+19.6% IN Q2)
• PROJECTS BEGAN TO IMPROVE AS OF Q2. €1.2BN NEW ORDERS IN H1
• NEW VESSEL LEONARDO DA VINCI IS READY TO START OPERATIONS. FIRST MISSION: THE RECORD-BREAKINGVIKING LINK INTERCONNECTION BETWEEN THE UK AND DENMARK
• LTM FREE CASH FLOW AT €447M2

Milan, 28/07/2021. The Board of Directors of Prysmian S.p.A. has approved today the Group's consolidated results for the first half of 20213.

"The signs of recovery recorded at the beginning of the year have been confirmed and gained further pace in the following months, allowing us to close the first half of the year with even better than expected results," commented Chief Executive Officer Valerio Battista. "Sales have been chiefly driven by the strong recovery of Telecom and the further acceleration in the construction and infrastructure sectors. In profitability terms, margins improved, also thanks to cost efficiencies and price management. Projects also resumed in the second quarter, and we expect will gain further momentum in the second half of the year. The broad geographical diversification and the complementary businesses within the portfolio proved to be a strategic driver of growth. The continuity of the cash flows assured by businesses linked to the most mature economic sectors such as construction and the Energy segment's industrial sectors enable us to focus both on the opportunities provided by the mega trends of energy transition, electrification and digitalisation, as well as to support the non-organic business expansion strategy, whenever suitable opportunities arise. The Group's strength is also evidenced by its ongoing ability to remunerate shareholders with adequate dividends," concluded the CEO.

1. Excluding the Projects segment.
2. Excluding cash outs for acquisitions and the antitrust-related dispute.
3. The Half-year Financial Report is subject to limited audit, which is still underway as of today's date.

This press release is available on the company website at www.prysmiangroup.comand in the mechanism for the central storage of regulated information provided by Spafid Connect S.p.A. at www.emarketstorage.com

FINANCIAL RESULTS

Group sales amounted to €6,034 million, showing a +10.5% organic change excluding the Projects segment4, strongly accelerating in Q2, with organic sales growth at +16.9% compared to Q2 2020. The signs of a recovery witnessed in Q1 by the Telecom segment were confirmed and reinforced, resulting in +15.5% organic growth (+19.6% in Q2). The Energy segment showed a solid performance, with +9.5% organic growth, driven by the Trade & Installers business, whose sharp organic sales growth in Q2 stood at +38.5%. The Industrial and NWC business also reported positive results (+9.3% organic growth). The Projects segment witnessed the first signs of recovery in Q2, in line with expectations. This uptrend is expected to further accelerate in H2.

Adjusted EBITDA rose by +12.2% to €470 million compared to €419 million in H1 2020, despite the negative impact of exchange rates for €22 million. The ration of Adjusted EBITDA to sales stood at 7.8% (8.4% in H1 2020), strongly impacted by the increase in the price of metals (EBITDA margin at 9.1% of sales valued at the price of metals in 2020). The growth in Adjusted EBITDA was attributable both to the volume recovery and the measures to increase the cost efficiency and the price management strategy, which made it possible to offset the effects of the rise in raw material costs. In the Energy segment, which returned to pre-pandemic levels, mention should be made of the performance of Trade & Installers, which reported improving margins. Efficiencies and volume recovery enabled the price pressure effects to be mitigated, which resulted in a significant improvement in both Adjusted EBITDA and margins within the Telecom segment. The Projects segment's Adjusted EBITDA declined slightly, but margins remained essentially stable also owing to the reversal in trend that started in the second quarter and is expected to be confirmed in the second half of the year.

EBITDA grew to €444 million (€407 million in the first half of 2020) including net expenses for company reorganisation, net non-recurring expenses and other net non-operating expenses totalling €26 million (€12 million in the first six months of 2020). These adjustments chiefly included non-operating costs and sales for €15 million and reorganisation expenses for €9 million.

Operating Income jumped to €278 million compared to €173 million in the first half of 2020, while Net Profit attributable to owners of the parent improved markedly to €162 million compared to €78 million in the same period of 2020.

The Group's strong cash flow generation capacity was confirmed, with a Free Cash Flow of €447 million in the past 12 months (excluding the €112 million cash out for the dispute with antitrust authorities and €85 million for acquisitions). Net Financial Debt amounted to €2,387 million at the end of June 2021 (€2,516 million at 30 June 2020 - €1,986 million at 31 December 2020). The main factors that allowed to reduce the net financial debt were:

• net operating cash flows (before changes in net working capital) amounting to €859 million;
• net cash flows for payments related to restructuring and other non-operating costs amounting to €79 million;
• net cash flows generated by the €121 million decrease in net working capital;
• cash outflows for net investments amounting to €223 million;
• net finance costs paid amounting to €81 million;
• taxes paid amounting to €159 million;
• dividends collected totalling €9 million;
• outflows of €112 million relating to the Antitrust dispute;
• outflows of €85 million for acquisitions;
• dividends paid for €127 million;
• higher financial debts following the new contracts entered into, for which €52 million was recognised pursuant to IFRS 16;
• net decrease in financial debts following the 2021 convertible bond issued, as well as the early repayment of the 2017 convertible bond for €36 million.

4 +8.5% including the Project segment.

This press release is available on the company website at www.prysmiangroup.comand in the mechanism for the central storage of regulated information provided by Spafid Connect S.p.A. at www.emarketstorage.com

CONSOLIDATED HIGHLIGHTS (in millions of Euro)

			1st half 2021		1st half 2020	Change %	% organic
								sales (*)
Sales		6,034		4,985	21.0%	10.5%
Adjusted EBITDA before share of net		461		414	11.4%
profit/(loss) of equity-accounted companies
Adjusted EBITDA		470		419	12.2%
EBITDA		444		407	9.1%
Adjusted operating income		312		253	23.3%
Operating income		278		173
Profit/(Loss) before taxes		238		118
Net profit/(loss) for the period		164		76
Net profit attributable to owners of the parent		162		78
*excluding Projects
(in millions of Euro)
		30 June 2021		30 June 2020	Change	31 December
								2020
Net fixed assets		5,061		5,153	(92)	4,971
Net working capital		1,129		1,088	41	523
Provisions and net deferred taxes		(578)		(711)	133	(579)
Net Capital Employed		5,612		5,530	82	4,915
Employee provisions		485		499	(14)	506
Shareholders' equity		2,740		2,515	225	2,423
of which: attributable to minority interest		168		181	(13)	164
Net financial debt		2,387		2,516	(129)	1,986
Total financing and equity		5,612		5,530	82	4,915

This press release is available on the company website at www.prysmiangroup.comand in the mechanism for the central storage of regulated information provided by Spafid Connect S.p.A. at www.emarketstorage.com

PROJECTS

• RECOVERY STARTED IN Q2; ACCELERATION EXPECTED IN H2
• SOLID PROJECT PIPELINE. ORDER BOOK AT €3.8BN OVERALL
• THE SOO GREEN PROJECT AWARDED IN THE USA FOR APPROXIMATELY $900M - THE LARGEST PROJECT EVER AWARDED
• GERMAN CORRIDORS: TESTS SUCCESSFULLY COMPLETED, LAUNCH OF THE P-LASER525 KV CABLE PRODUCTION FOR THE SUEDOSTLINK
• THE CABLE-LAYING VESSEL LEONARDO DA VINCI IS READY TO START OPERATIONS. FIRST MISSION: THE VIKING LINK

Sales in the Projects segment amounted to €681 million (organic change at -3.5% compared to H1 2020). Adjusted EBITDA was €76 million (€80 million for H1 2020), with a ratio of Adjusted EBITDA to sales at 11.1% compared to 11.4% for the same period of 2020, with margins substantially stable. Q2 results sharply improved compared to Q1, with Adjusted EBITDA at €47 million (€29 million in Q1) and an organic growth at a positive 0.8% compared to -7.9% in Q1.

The negative organic growth in the half-year was largely attributable to the different mix of orders being executed in the Submarine Power Cable business, where there is a lower capacity utilisation rate of extruded cables. The Submarine Telecom and Offshore Specialties business grew moderately, driven by higher volumes and a positive mix effect.

The value of the Group's order book in the Submarine Power Cable business rose to about €1.8 billion, and mainly included the offshore wind orders in France (St. Nazaire, Fecamp and Calvados), Germany (Dolwin5), and Great Britain (Sofia), and the project for the link between Great Britain and Denmark (Viking Link), the link between Scotland and the NNG offshore wind platforms, and the Crete-Attica interconnection project in Greece. The value of the Group's order book in the High Voltage business neared €2 billion. Accordingly, the overall value of the Group's order book stood at approximately €3.8 billion at 30 June 2020.

In the High Voltage Underground Cables business, the second quarter reported improving results, which are expected to gain pace in the coming months thanks to the growing contribution of the German Corridors. In Germany, the Group has successfully set up the new organisation for executing the projects, with 3 new regional offices open in Würzburg, Bayreuth and Wuppertal and 200 employees hired. The Group is also ready to launch the production of P-Laser 525 kV cables for the SuedOstLink, following positive completion of the numerous and rigorous laboratory and production tests carried out.

The positive signs of a recovery recorded in the second quarter of the year in the Projects segment are expected to be consolidated and further accelerated in the second half of the year thanks to the greater contribution that will result from the Submarine Cables business and the start of the work on the German Corridors.

The Group confirmed its strong focus on the opportunities arising from the transition to renewable energy sources and a decarbonised economy, which will require massive investments in power grid infrastructure. The new cable-laying vessel Leonardo da Vinci, the largest in the world, is ready to start operations and its first mission will be the installation of the cable for the Viking Link interconnection between the UK and Denmark, the longest in the world with about 620 km underwater and 70 km of land route (Great Britain). The use of the Leonardo da Vinci vessel for this important project will enable time savings and lower CO2 emissions.

This press release is available on the company website at www.prysmiangroup.comand in the mechanism for the central storage of regulated information provided by Spafid Connect S.p.A. at www.emarketstorage.com

(in millions of Euro)

	1st half 2021	1st half 2020	Change %
Sales	681	708	-3.8%
% organic sales change	-3.5%
Adjusted EBITDA	76	80	-5.8%
% of sales	11.1%	11.4%

This press release is available on the company website at www.prysmiangroup.comand in the mechanism for the central storage of regulated information provided by Spafid Connect S.p.A. at www.emarketstorage.com