Prysmian S p A : RECORD results in 1H and strong FY 2022 Guidance upgrade

PRESS RELEASE RESULTS AT 30 JUNE 2022

RECORD RESULTS IN 1H AND STRONG FY 2022 GUIDANCE UPGRADE

ADJUSTED EBITDA FY 2022 TARGET UP BY 30% TO €1.3-€1.4 BN

• SALES AT €7,949M, ORGANIC GROWTH1 AT +12.5% (+13.5% IN 2Q)
• ADJUSTED EBITDA ROSE TO €699M, UP BY €229M COMPARED TO 1H 2021 (+48.7%) MARGINS IMPROVED TO 9.4% (AT 2021 METAL PRICES)
• GROUP NET PROFIT SOARED TO €259M FROM €162M (+59.9%)
• LTM FREE CASH FLOW AT €174M2
• REINFORCED FINANCIAL STRUCTURE: €1.2 BN SUSTAINABILITY-LINKED TERM LOAN SIGNED

FOCUS ON THE BUSINESSES

• STRONG PUSH FOR THE ENERGY BUSINESS FROM RENEWABLE SOURCES AND POWER GRIDS FOR DECARBONISATION (+13.6% ORGANIC GROWTH)
• TELECOM: SOLID PERFORMANCE (+6.6% ORGANIC GROWTH DRIVEN BY OPTICAL CABLES IN NORTH AMERICA)
• ONGOING IMPROVEMENT FOR PROJECTS: +28.4% ORGANIC GROWTH; MARGIN RECOVERY IN 2Q. GREATER CONTRIBUTION EXPECTED IN 2H. €2.4 BN NEW ORDERS ACQUIRED YTD, BRINGING VISIBILITY OF TOTAL ORDERS TO OVER €10 BN

Milan, 28 July 2022. The Board of Directors of Prysmian S.p.A. approved today the Group's consolidated results for the first half of 20223.

"The acceleration in recent months, after an excellent start to the year, has allowed us to record the best ever first half period, marked by robust sales growth and constantly improving profitability," commented CEO Valerio Battista. "The efficient management of operations and supply chain and our market and customer focus are confirmed as a strength, even in the uncertain macroeconomic scenario. Most of our markets of operation are highly exposed the energy transition and electrification long-term growth drivers. Energy's positive performance is attributable to the strengthening and expansion of power grids, a trend that is only partly affected by economic cycles. The energy transition is already benefiting the Projects segment, which in the first half alone acquired orders exceeding €2.4 billion, bringing the visibility of total orders to over €10 billion. As regards Telecom, digitalisation passes through optical fibre, where our range of products has proved to be highly competitive.

The excellent results achieved are supported by a sound and sustainable financial structure. The 1H record performances have led to a significant improvement of our FY expectations, with an upwards revision of 30% of our Adjusted EBITDA target," added Battista.

1. Excluding the Projects segment.
2. Excluding acquisition- and antitrust-related cash outs.
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 HIGHLIGHTS

Group Sales amounted to €7,949 million, with a +12.5% organic change excluding Projects4, accelerating in 2Q, with sales organic growth at +13.5% compared to 2Q 2021. The Energy segment reported outstanding performance with a +13.6% organic growth; cables for Power Distribution grew sharply in 2Q, as did Renewables and OEM. Over 50% of the Energy product portfolio is linked to the structural energy transition and electrification drivers. Telecom's +6.6% organic growth was mostly driven by the positive performance of the optical cable market in North America. The Projects segment - land and submarine power interconnections and wind farm cables - continued to record improving sales (+28.4% organic growth). An even higher and more relevant contribution is expected from Projects in the second half of the year.

Adjusted EBITDA soared by +48.7% to €699 million, with the ratio to Sales improving to 8.8% (+9.4% ratio to sales at 2021 metal prices) compared to 7.8% in 1H 2021. 2Q saw an excellent acceleration when the Group achieved an Adjusted EBITDA of €411 million, with the crucial contribution of the Energy segment, which benefited from exposure to long-term trends linked to decarbonisation and electrification. Telecom profitability remained stable, whereas Projects' reported double-digit margins in 2Q, thanks to the positive progress of order execution. Our market and customer focus, our product portfolio management and the efficient management of operations and supply chain allow the Group to best grasp the opportunities generated by the current market phase.

EBITDA grew to €665 million (€444 million in 1H 2021) including net expenses for company reorganisation, net non-recurring expenses and other net non-operating expenses totalling €34 million (€26 million in the first six months of 2021).

Operating Income rose to €423 million compared to €278 million in 1H 2021, while Net Profit attributable to owners of the parent jumped to €259 million compared to €162 million in the same period of 2021.

The effective management of net working capital, despite the impact caused by the rise in raw material prices, led to a Free Cash Flow generation of €174 million in the past twelve months (excluding the €19 million cash out for acquisitions and an inflow of €57 million mainly due to settlement agreements reached with third-party counterparties).

Net Financial Debt amounted to €2,330 million at the end of June 2022 (€2,387 million at 30 June 2021 - €1,760 million at 31 December 2021). The factors that led to the Net Financial Debt reduction in the past 12 months were:

• €1,094 million net operating cash flows (before changes in net working capital);
• €15 million net cash flows for payments related to restructuring costs;
• €363 million cash used for increasing net working capital;
• €322 million cash outflows for net investments;
• €67 million net finance costs paid;
• €160 million taxes paid;
• €7 million dividends collected;
• €57 million cash inflows from antitrust disputes;
• €19 million outflows for acquisitions;
• €151 million dividends paid.

4 +14.3% including the Projects 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 2022		1st Half 2021	Change %	% organic sales
						(*)
Sales		7,949		6,034	31.7%	12.5%
Adjusted EBITDA before share of net		683		461	48.2%
profit/(loss) of equity-accounted companies
Adjusted EBITDA		699		470	48.7%
EBITDA		665		444	49.8%
Adjusted operating income		521		312	67.0%
Operating income		423		278	52.2%
Profit/(Loss) before taxes		368		238	54.6%
Net profit/(loss) for the period		261		164	59.1%
Net profit attributable to owners of the parent		259		162	59.9%

*Excluding the Projects segment.

(in millions of Euro)

	30 June 2022	30 June 2021	Change	31 December 2021
Net fixed assets	5,521	5,061	460	5,304
Net working capital	1,374	1,129	245	650
Provisions and net deferred taxes	(648)	(578)	(70)	(659)
Net Capital Employed	6,247	5,612	635	5,295
Employee provisions	361	485	(124)	446
Shareholders' equity	3,556	2,740	816	3,089
of which: attributable to minority interest	183	168	15	174
Net financial debt	2,330	2,387	(57)	1,760
Total financing and equity	6,247	5,612	635	5,295

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

• MARGINS IMPROVEMENT IN 2Q, DRIVEN BY EXCELLENT PROJECTS EXECUTION
• €2.4 BILLION ORDERS YTD, ORDER VISIBILITY OF OVER €10 BILLION
• GROWING CONTRIBUTION EXPECTED FOR 2H

Projects' sales amounted to €922 million (+28.4% organic change compared to 1H 2021). Adjusted EBITDA stood at €87 million (€76 million for 1H 2021), with the ratio to Sales at 9.4% (9.7% at 2021 metal prices) compared to 11.1% for the same period of 2021. Results improved sharply in 2Q, with Adjusted EBITDA at €55 million (€32 million in 1Q) and margins back to double-digit levels (10.7%).

The Projects business is expected to contribute more in 2H thanks to progress in executing the important orders in portfolio.

Confirming its undisputed leadership in a market destined to grow exponentially given the strategic role of network infrastructures for energy transition, the Group continued to strengthen its order book with €2.4 billion in new orders acquired YTD. At the reporting date, the order book amounted to €4.3 billion, including only the orders for which the Notice to Proceed has already been issued. This adds to a further €5.8 billion for projects already acquired and expected to be fully accounted for in the order book between 2022 and 2024. The most recent contracts acquired include the development of two submarine interconnections awarded by Red Electrica in Spain worth €250 million.

The German Corridors project contributed significantly to the High Voltage Underground Cables segment, particularly in 2Q, and is expected to grow further, thus playing a key role in Projects' robust recovery expected in 2H. The Group was awarded a project worth about €700 million by TenneT for doubling the SuedOstLink capacity in Germany.

The Group confirmed its 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.

Noteworthy is the progress made in developing the first high-voltage submarine cable production hub in the USA, at Brayton Point, Massachusetts, where the first layer of approval of the construction permits has been received. The importance of this plant was also reiterated upon the recent site visit by US President Biden.

(in millions of Euro)

	1st Half 2022	1st Half 2021	Change %
Sales	922	681	35.4%
% organic sales change	28.4%
Adjusted EBITDA	87	76	14.4%
% of sales	9.4%	11.1%

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

ENERGY

• ROBUST GROWTH IN NEARLY ALL GEOGRAPHICAL AREAS AND MARKETS
• EXCELLENT PERFORMANCE OF E&I, OEM AND RENEWABLES
• OVER 50% OF THIS BUSINESS LINKED TO THE GROWTH DRIVERS BASED ON THE ENERGY TRANSITION AND ELECTRIFICATION

Sales of the Energy segment amounted to €6,116 million, with a +13.6% organic growth compared to 1H 2021, owing in particular to the contribution of Energy & Infrastructure and OEM & Renewables, with growth reported across nearly all geographical areas. Over 50% of the Energy segment is linked to the growth drivers of the energy transition and decarbonisation, such as the expansion of power grids, energy generation from renewable sources, the development of electric mobility and of clouding, which are less affected by short-term economic cycles. Profitability improved significantly with Adjusted EBITDA at €474 million (€271 million for the same period of 2021) and growing margins. The ratio of Adjusted EBITDA to Sales was 7.8% (8.4% at 2021 metal prices) compared to 6% in 1H 2021.

(in millions of Euro)

	1st Half 2022	1st Half 2021	Change %
Sales	6,116	4,551	34.4%
% organic sales change	13.6%
Adjusted EBITDA	474	271	75.0%
% of sales	7.8%	6.0%

Energy & Infrastructure

Energy & Infrastructure sales totalled €4,194 million in 1H, with a +16.5% organic change compared to 1H 2021. Adjusted EBITDA rose to €344 million (€169 million in 1H 2021), with margins substantially increasing, as confirmed by a ratio of Adjusted EBITDA to Sales at 8.2% in 1H 2022 (8.9% at 2021 metal prices) compared to 5.5% in 1H 2021.

Trade & Installers continues to report a positive performance across nearly all regions. The customer focus and efficient supply chain management allow the Group to best grasp the opportunities generated by the current market phase. The Group represents an important and essential partner for its customers.

Power Distribution reported solid growth especially in 2Q, chiefly driven by the power grid expansion plan. The Group has recently signed a global agreement with ENEL for the supply of medium-voltage cables, confirming the validity of its P-Laser technology, which offers a lower environmental impact and a greater performance, and is increasingly recognised as the "energy transition" cable.

Industrial & Network Components

Sales of Industrial & Network Componentsrose to €1,714 million, with a +8.7% organic change compared to 1H 2021. Adjusted EBITDA reached €130 million (€99 million in 1H 2021) with margins improving to 7.6% (8.1% at 2021 metal prices) compared to 7.3% in 1H 2021.

Specialties, OEM and Renewables grew sharply, supported by energy transition investments. Nearly all applications performed well, and Mining and Infrastructures in particular.

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