Prysmian S p A : Press release results at 31 December 2020

PRESS RELEASE RESULTS AT 31 DECEMBER 2020

PROFITABILITY TARGETS ACHIEVED, DEMONSTRATING RESILIENCE IN THE YEAR OF

COVID-19

ACCELERATION ON ESG AND CLIMATE CHANGE, PRYSMIAN ADOPTS SCIENCE-BASED

TARGETS (1.5°), WITH NET ZERO GOAL BY 2040 (SCOPE 1 AND 2)

PROPOSED DIVIDEND PAY-OUT RISES TO €0.50 PER SHARE

• ▪ SALES AT €10BN, ORGANIC CHANGE AT -8.3%1, IMPROVEMENT IN Q4 (-4.8%)

• ▪ ADJUSTED EBITDA AT €840M, RESILIENT MARGINS AT 8.4% (8.7% IN FY 2019)

• ▪ RECORD FREE CASH FLOW AT €487M2

• ▪ GOOD PERFORMANCE OF POWER DISTRIBUTION AND RENEWABLES IN THE US

▪

TELECOM: RECOVERY OF OPTICAL CABLES, PARTICULARLY IN NORTH AMERICA, AFTER THE EXPECTED DECREASE IN SALES

▪

PROJECTS IMPACTED BY OPERATING INEFFICIENCIES CAUSED BY COVID-19, PARTIALLY EXCEEDED IN Q4

• ▪ FY 2021 GUIDANCE:

  • o ADJUSTED EBITDA EXPECTED IN THE RANGE OF €870M-€940M

  • o FREE CASH FLOW: €300M +/- 20%

Milan, 10/03/2021. The Board of Directors of Prysmian S.p.A. has approved today the Group's consolidated results for 20203.

"At the start of 2020, we set people's health and safety, supply chain continuity and value creation for all of our stakeholders as our top three priorities in tackling the Covid-19 pandemic," stated CEO Valerio Battista. "Examining the results for the year just ended, we can say that we have achieved our objectives. We naturally felt the impact of the pandemic but, also thanks to the fact that we put people first, we succeeded in ensuring a high level of business continuity and largely met the profitability target, with a record-high cash generation. Uncertainty is expected to persist. However, in light of our strong resilience, we can look forward with confidence and with the awareness that we have at our disposal the necessary resources to relaunch the challenge to grow. We continue to invest in product innovation and in the sustainability of our production footprint, and the decision to set ourselves stricter CO2 emission reduction targets, based on scientific evidence, is aimed at making even more credible and transparent our commitment to pursuing sustainable growth."

1Excluding the Projects segment.

• 2 Antitrust cash-out excluded (€ 112M).

• 3 The Consolidated Financial Statements and Draft Separate Financial Statements are currently still being audited.

FINANCIAL RESULTS

Group sales amounted to €10,016 million, with an organic change of -10.3%; excluding the Projects business, the organic change was -8.3%, improving in Q4 to -4.8%. A good contribution to the Group's resilience came from the Energy segment, which limited the organic reduction of revenues to -7.1% and recovered as of the third quarter also thanks to the positive performance of Power Distribution and Renewables in North America. The expected decline in Telecom (organic change: -14.1%) showed a trend improvement in the second half of the year, particularly in North America (Q4 organic growth of the segment was -3.8%). Production and installation inefficiencies due to Covid-19, coupled with the unfavourable mix of projects and the lower capacity utilisation rate with respect to extruded cables, impacted the performance of the Projects business.

Adjusted EBITDA was €840 million, confirming the Group's resilience to the highly deteriorated market context, also thanks to the timely cost containment actions and the business mix improvement, which allowed the Group to preserve margins. The drop compared to €1,007 million Adjusted EBITDA in 2019 also reflected the negative effects of exchange rates for approximately €32 million. The ratio of Adjusted EBITDA to sales was 8.4% compared to 8.7% in 2019, confirming the Group's ability to protect profitability. The Energy segment benefited from the excellent performance of Power Distribution and overhead lines in North America. In the Telecom segment, the impact on adjusted EBITDA of the volume reduction and price pressure in Europe was partly offset by the cost efficiency actions which also contributed to stabilising margins. Q4 saw signs of a recovery in the optical cable business, mainly in Nord America. The Projects segment's profitability was impacted by production and installation inefficiencies caused by the pandemic and the modest capacity utilisation rate with respect to extruded cables, as well as by the unfavourable project mix.

EBITDA was €781 million (€907 million in 2019), including net expenses for company reorganisations, net non-recurring expenses and other net non-operating expenses totalling €59 million (€100 million in 2019). Operating income amounted to €353 million, compared to €569 million in 2019.

Net profit attributable to owners of the parent totalled €178 million compared to €292 million for the previous year.

Efforts to protect the cash generation capacity allowed the Group to achieve record-high Free Cash Flow at €375 million in 2020 (€487 million, excluding antitrust-related cash outs), higher than the guidance.

The strong cash flow generation allowed the Group to accelerate the further reduction of its Net Financial Debt to €1,986 million at 31 December 2020, sharply down compared to €2,140 million. This reduction was achieved thanks to the record-high cash generation amounting to €487 million, gross of antitrust-related cash outs. The factors that allowed this level of cash generation to be achieved were:

• - net operating cash flows (before changes in net working capital) amounting to €822 million;

• - net cash flows for payments related to restructuring and other payments amounting to €130 million;

• - a €259 million decrease in net working capital;

• - net operating investments amounting to €244 million;

• - net finance costs incurred amounting to €86 million;

• - taxes paid amounting to €142 million.

• - dividends received totalling €8 million.

CONSOLIDATED HIGHLIGHTS

(in millions of Euro)

2020

2019

Change %

Sales

Adjusted EBITDA before share of net profit/(loss) of equity-accounted companies Adjusted EBITDA

11,519

-13.0%

% organic sales -10.3%

822

983

-16.4%

840

1007

-16.6%

EBITDA

907

-13.9%

Adjusted operating income Operating income Profit/(Loss) before taxes

689

-25.3%

569

-38.0%

444

-43.2%

Net profit/(loss) for the period

174

296

-41.2%

Net profit attributable to owners of the parent

178

292

-39.0%

(in millions of Euro)

31 December 2019

Change

Net fixed assets Net working capital

Provisions and net deferred taxes Net Capital Employed Employee provisions Shareholders' equity of which: attributable to minority interest Net financial debt

Total financing and equity

4,971 523 (579) 4,915 506 2,423 164 1,986 4,915

5,301 (330)

755 (232)

(820) 241

5,236 (321)

494 12

2,602 (179)

187 (23)

2,140 (154)

5,236 (321)

COVID-19: "PEOPLE FIRST", PROTECTION OF BUSINESS, INNOVATION/DIGITALISATION

A significant presence in China enabled the Group to understand the outbreak of the pandemic at an early stage. "People first" - people's health and safety first -, technological innovation, lean manufacturing and protection of the business are the three guidelines adopted by the Group to tackle the pandemic. "People First" entailed increased investment in health and safety (+29% to €17 million), in the massive supply of medical equipment and the carrying out of tests and analyses to detect contagions, in the redefinition of procedures for the safe use of workplaces, and in the extensive use of remote working, in the digitalisation of the Academy and initiatives in favour of the communities impacted by the virus (from donating cables to the Wuhan hospital, to citizenship initiatives also in other areas of the world). In a context that is redefining social and economic priorities, the Group has confirmed its ambition to be an energy and digitalisation transition enabler. From the flagship 525 kV P-Laser cable to fibre and optical cable innovations like Sirocco, the cable with the highest fibre count, and the submarine power cable for record-depth installation up to 3,000 m, the Group has strengthened its commitment to technological innovation. There was also an important focus on digitalising its manufacturing processes (Fast Forward Project).

Putting health and safety first allowed the Group to ensure supply chain and business continuity. The operations at production sites never dropped below 80%, thus maintaining the ability to serve customers nearly unaltered (on time delivery exceeded 94%). The Group also promptly implemented a robust cost containment plan and measures to protect its cash generation capacity.

ACCELERATION ON CLIMATE CHANGE. 'ZERO EMISSION' PRYSMIAN BY 2040 (SCOPE 1 AND 2)

Prysmian Group confirms its ambition to be one of the leading technology players in the transition to the use of renewable energy sources and to a decarbonised economy. 48% of the Group's sales are attributable to business segments and products that contribute to a low-carbon economy4. With the goal of supporting the expected acceleration of the development of new submarine and underground power interconnections (chiefly links and interconnections of offshore wind farms), the Group has planned investments in the range of €450 million by 2022 (over 50% of total investments), which are also intended to further improve the sustainability of its organisation and supply chain.

Prysmian Group has also announced a new ambitious climate strategy adopting science-based targets, in line with the requirements of the Paris Agreement, and endorsing the Business Ambition (1.5°C) with the "net zero" target expected to be achieved between 2035 and 2040 with regard to the emissions generated by its operations (Scope 1 and 2) and by 2050 for emissions generated by the value chain (Scope 3). Among the most important initiatives in this area is the Group's Pikkala plant, chiefly dedicated to the production of cables for offshore wind farms, which will become the first net zero plant, where 100% of the energy used will be obtained from certified renewable sources.

IMPROVED ENVIRONMENTAL AND SOCIAL PERFORMANCE

The Board of Directors of Prysmian S.p.A. also approved the Consolidated Disclosure of Non-financial Information pursuant to Legislative Decree No. 254/2016. Even in a particularly difficult year due to Covid-19, Prysmian continued to invest in the three drivers of value creation for all stakeholders: People, Culture & Organization; Sustainable Innovation & Lean Manufacturing; and Extended Value Chain. The total economic value generated, namely the overall wealth created by the Group for all stakeholders, stood at €10,273 million in 2020 (€11,653 million in 2019). The creation of shareholder value is shown by the Total Shareholders' Return, which amounted to +155.5%, achieved since listing. Environmental performance improved both as a result of the efficiency actions undertaken and the decrease in production levels due to Covid-19: CO2 emissions were 817,000 t5 in 2020 (920,000 t in 2019), energy consumption dropped by -6%6, whereas total recycled waste grew to 69% (63% in 2019). In the People dimension, the Group's diversity indicators improved, with the percentage of female in executive positions at 13% (12% in 2019) and the hiring percentage of female white-collars at 34% (32% in 2019).

In 2020, the Group improved its positioning in the main sustainability indices, confirming its inclusion in the Dow Jones Sustainability World (87/100), in the FTSE4Good (4/5), the MSCI (A), Bloomberg and the STOXX Global ESG Index. Prysmian Group also obtained the Ecovadis Platinum level and maintained good ratings in the other ESG indexes, such as CDP Climate Change (B) and Standard Ethics (EE+).

4

This figure has been calculated based on the revenues of Prysmian Group's different business areas at 31 December 2020. All businessareas, or those among them, that are classified as "low carbon enabling" have been identified by applying the Taxonomy defined by the Climate Bond Initiative.

5 The reduction was attributable to several factors that impacted the Group's total CO2 emissions: the decline of SF6 emissions and of energy consumption, as a consequence of lower production due to the Covid-19 health emergency.

6 The decline of the Group's energy consumption in 2020 was mainly attributable to the decrease in plant production due to the Covid-19 health emergency.