Prysmian S p A : Solid start to the year. sales recovered

PRESS RELEASE

SOLID START TO THE YEAR. SALES RECOVERED

• SALES €2,810M, ORGANIC CHANGE AT +4.6%1
• ADJUSTED EBITDA ROSE TO €213M, MARGINS STABLE AT 7.6%
• ENERGY BACK TO PRE-PANDEMIC LEVELS, WITH A +3.4% ORGANIC GROWTH
• TELECOM RECOVERED SHARPLY WITH A +11.4% ORGANIC GROWTH
• PROJECTS EXPECTED TO IMPROVE IN H2
• SOLID CASH GENERATION: LTM FREE CASH FLOW AT €553M2
• INCREASED CONFIDENCE IN FY 2021 TARGETS

Milan, 13/05/2021. The Board of Directors of Prysmian S.p.A. has approved today the Group's consolidated results for the first quarter of 2021.

"We have seen positive signs in the first quarter of the year, despite the on-going macroeconomic and market uncertainty" commented CEO Valerio Battista. "As a Group with a highly diversified geographical presence and business portfolio, we remain resilient to the challenges and we are well-positioned to benefit from the recovery opportunities across our markets and business divisions.

"During the period, the growth of the Energy segment has exceeded pre-pandemic levels and we have seen clear recovery in the Telecom segment, with volumes rising, despite on-going pricing pressure. Our Projects division remains impacted by project execution phasing, however we expect to see improvements as early as the second half of 2021. The Group's return to organic growth during the quarter has also been accompanied by a stabilisation of profit margins, and we remain a strong cash-generative business continuing the positive trend in 2020.

We are increasingly confident in guidance for the full year and that we have the technology, assets and strong organisational setup to capitalise further on energy transition and digitalisation opportunities in the medium term".

FINANCIAL RESULTS

Group sales amounted to €2,810 million with a +4.6% organic change, excluding the Projects segment3, sharply reversing the trend compared to Q4 2020. In the first quarter, signs of a sharp recovery were mainly recorded by the Telecom segment, with an organic growth of +11.4%, and the Energy segment, which reported a +3.4% organic growth, fuelled by the recovery of the construction and renewable energy sectors. The Projects segment continued to be impacted by the phasing on the projects in the portfolio, although signs of a recovery are expected in the second quarter following the acceleration of the development of the German Corridors.

Adjusted EBITDA rose to €213 million compared to €197 million for the first quarter of 2020, despite the negative impact of exchange rates (€14 million). The Adjusted EBITDA improvement was driven by both the volume recovery and the resilience shown by the whole organisation in ensuring business continuity

1 Excluding the Projects segment

2Excluding antitrust-relatedcash-out.

3 +3.0% 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

and customer proximity. Margins remained significantly stable, with the ratio of Adjusted EBITDA to sales at 7.6%, confirming the soundness of the efficiency-building measures undertaken, which offset the impact of the increase in raw material prices. The Energy segment reported an excellent performance, with margins that improved also compared to the pre-pandemic levels. Thanks to the cost containment measures, the Telecom segment was also able to limit the impact of the persistent price pressure and report gradually improving margins compared to Q1 2020. In the Projects segment, profitability is expected to recover in the second half of the year.

EBITDA grew to €199 million (€183 million in Q1 2020), including net expenses for company reorganisations, net non-recurring expenses and other net non-operating expenses stable at €14 million. Operating income rose to €123 million, compared to €58 million in the first quarter of 2020.

Net profit attributable to owners of the parent improved markedly to €76 million compared to €23 million in the same period of 2020.

The strong cash flow generation continued, with a Free Cash Flow of €553 million in the past 12 months (excluding the €112 million cash out for the dispute with antitrust authorities). In the first quarter of 2021, the cash generation allowed the Group to forge ahead with the further reduction of its Net Financial Debt, which amounted to €2,325 million at the end of March 2021 (€2,606 million at 31 March 2020 - €1,986 million at 31 December 2020). The factors that allowed to reduce the net financial debt were:

• net operating cash flows (before changes in net working capital) amounting to €813 million;
• net cash flows for payments related to restructuring and non-operating costs amounting to €76 million;
• net flows generated by the €255 million decrease in net working capital;
• cash outflows for net investments amounting to €221 million;
• net finance costs paid amounting to €90 million;
• taxes paid amounting to €137 million;
• dividends collected totalling €9 million.

CONSOLIDATED HIGHLIGHTS (in millions of Euro)

			3 months		3 months	Change %	% organic
			2021		2020		sales (*)
Sales		2,810		2,587	8.6%	4.6%
Adjusted EBITDA before share of net		207		196	5.6%
profit/(loss) of equity-accounted companies
Adjusted EBITDA		213		197	8.1%
EBITDA		199		183	8.7%
Adjusted operating income		135		117	15.4%
Operating income		123		58
Profit/(Loss) before taxes		110		31
Net profit/(loss) for the period		78		20
Net profit attributable to owners of the parent		76		23
(in millions of Euro)
			31 March		31 March	Change	31 December
		2021			2020		2020
Net fixed assets		5,110			5,258	(148)	4,971
Net working capital		1,071			1,122	(51)	523
Provisions and net deferred taxes		(597)			(737)	140	(579)
Net Capital Employed		5,584			5,643	(59)	4,915
Employee provisions		511			487	24	506
Shareholders' equity		2,748			2,550	198	2,423
of which: attributable to minority interest		171			180	(9)	164
Net financial debt		2,325			2,606	(281)	1,986
Total financing and equity		5,584			5,643	(59)	4,915

*excluding Projects

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

• Q1 RESULTS IMPACTED BY THE PROJECTS PHASING; IMPROVEMENT EXPECTED IN H2
• ORDER BOOK AT €3.8 BILLION. SUBMARINE CABLE ORDER BACKLOG ON THE RISE
• PRYSMIAN IS WELL POSITIONED TO GRASP THE ENERGY TRANSITION OPPORTUNITIES

Sales in the Projects segment amounted to €314 million (organic change: -7.9% compared to Q1 2020). Adjusted EBITDA was €29 million (€36 million for Q1 2020), with a ratio of Adjusted EBITDA to sales at 9.3% compared to 10.4% for the same period of 2020.

The Projects segment's negative organic growth was largely attributable to the different mix of the projects underway within the Submarine Power Cable and Systembusiness, which reported a lower use of assets in the reporting quarter.

The stable results of the High Voltage Underground Cables and Systemsbusiness are expected in the second half of the year, also thanks to the acceleration of the execution of the German Corridors projects.

The finalisation of the over €200 million contract awarded by RWE for cabling the Sofia offshore wind farm brought the Projects' order book to a total record value of €3.8 billion, of which about €1.8 billion referring to the Submarine Power Cable business. The main offshore wind farm projects underway are St. Nazaire, Fecamp, Calvados in France and Dolwin5 in Germany. The main interconnection development projects are the Viking Link (the Great Britain-Denmark interconnection), the Crete-Attica link in Greece and the interconnection between the Scotland mainland and the NNG offshore wind platforms. In the first quarter, the Group successfully completed the Crete-Peloponnese region submarine interconnection, where the innovative cable armoured with aramid fibres was first applied.

The transition towards the use of renewable energy sources for a decarbonised economy requires that the energy transmission and distribution grids are adapted and upgraded. The demand for cables and systems is therefore expected to grow exponentially until reaching an average of approximately €7.2 billion projects a year in the 2020-2030 period, compared to an average of about €2.4 billion in the 2015-2019 period. Prysmian Group is well positioned to grasp this extraordinary opportunity and confirm its role of technological enabler of the energy transition. The new cable-laying vessel Leonardo da Vinci, the largest and most capable cable layer in the world, will start to operate in the 2021 summer season, guaranteeing greater capacity and versatility in project execution. Besides its project installation and execution capacity, Prysmian's other competitive driver is technological innovation. The main and most recent innovations include the P-Laser cable systems ensuring greater transmission capacity, high performance and environmental sustainability (100% recyclable materials and -40% CO2 emissions), cables for HVDC links over long distances, aramid-armoured cables for record-depth of up to 3,000 m, grid monitoring and management technology.

(in millions of Euro)

	3 months 2021	3 months 2020	Change %
Sales	314	347	-9.7%
% organic sales change	-7.9%
Adjusted EBITDA	29	36	-18.8%
% of sales	9.3%	10.4%

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

ENERGY

• RESULTS IMPROVED ALSO COMPARED TO PRE-PANDEMIC LEVELS
• TRADE & INSTALLERS PERFORMED WELL, POWER DISTRIBUTION STABILISED AFTER THE HIGHS OF 2020
• INDUSTRIAL: SALES AND PROFITABILITY IMPROVED. SPECIALTIES, OEM AND RENEWABLES REPORTED A POSITIVE PERFORMANCE

The sales of the Energy segment amounted to €2,114 million, with a +3.4% organic growth compared to Q1 2020, thus markedly reversing its trend. Profitability also improved significantly, with Adjusted EBITDA at €126 million (€113 million for the same period of 2020), thanks both to the volume recovery and the efficiencies achieved and to a 6% ratio of Adjusted EBITDA to sales, improving also compared to the pre- pandemic levels.

(in millions of Euro)

	3 months 2021	3 months 2020	Change %
Sales	2,114	1,888	12.0%
% organic sales change	3.4%
Adjusted EBITDA	126	113	11.3%
% of sales	6.0%	6.0%

Energy & Infrastructure

Energy & Infrastructure sales totalled €1,400 million in the reporting quarter, with a +3.5% organic change compared to the first quarter of 2020. Adjusted EBITDA rose to €75 million (€68 million in Q1 2020) with essentially stable margins (ratio of Adjusted EBITDA to sales at 5.3% in Q1 2021 compared to 5.5% for the same period of 2020).

The Trade & Installersbusiness reported a very positive organic change, mainly in South Europe, Central Eastern Europe and North Europe. Overall, the profitability of the Trade & Installers business improved also compared to 2019, thanks to the volume recovery, the efficiencies achieved and the price adjustment, which limited the impact of the rise in raw material prices.

The Power Distributionbusiness started to stabilise, after the jump reported in 2020 driven by the strong demand generated by the supporting measures granted to the onshore wind industry in North America. Overheads lines showed a positive organic growth, mainly in North America.

Industrial & Network Components

Industrial & Network Componentssales amounted to €648 million, with a +3.5% organic growth compared to the first quarter of 2020, sharply reversing the trend. Adjusted EBITDA was €49 million (€45 million in Q1 2020), with a good margin resilience (ratio to sales at 7.6% compared to 7.5% in Q1 2020 and 6.9% in Q1 2019).

The Specialties, OEM and Renewables segments posted positive results with a good profitability.

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

TELECOM

• SALES IMPROVED SHARPLY
• EFFICIENCY MEASURES REDUCED THE EFFECT OF THE PRICE PRESSURE
• €4 MILLION POSITIVE EFFECT GENERATED BY YOFC IN Q1 (CARRY OVER)

Sales of the Telecom segment grew to €382 million in the quarter, with a +11.4% organic change compared to the same period of 2020 and markedly reversing its trend. Adjusted EBITDA stood at €58 million, (€48 million in Q1 2020) with a ratio to sales at 15.2% compared to 13.6% for the first quarter of 2020. The sales organic growth reported in the first quarter of 2021 was mainly attributable to the recovery of demand for optical fibre cables, mainly in South Europe and North America.

In Europe, the volume trend of optical cables in the first three months recovered compared to the same period of the previous year. The destocking policy launched by the main European players in 2020 changed, leading to a gradual volume recovery. South America reported an increase in volumes, in line with the market uptrend.

The Multi Media Solutions business also improved gradually.

The high value-added business of optical connectivity accessories continued to perform well, fuelled by the development of new FTTx networks (last mile broadband access).

The efficiency-building measures contributed significantly to the Business Unit's overall result, thus partially offsetting the steady price pressure.

Medium-to-long-term growth drivers are confirmed also in the current scenario, where the need of broadband telecommunications infrastructures has even become more urgent, as they are necessary to support the digitalisation processes and 5G development. The commitment to technological innovation continues.

(in millions of Euro)

	3 months 2021	3 months 2020	Change %
Sales	382	352	8.7%
% organic sales change	11.4%
Adjusted EBITDA	58	48	21.0%
% of sales	15.2%	13.6%

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