MILAN, ITALY - The Board of Directors of Prysmian S.p.A. approved the Group's consolidated results for 2021
'The recovery trend gained pace at the end of the year, allowing the Group to close 2021 with sharp growth in revenue and exceed the guidance previously announced to the market,' stated CEO Valerio Battista. For the first time, sales exceeded EUR12 billion, a record milestone, and Adjusted EBITDA grew sharply, with stable margins despite significant rises in commodity prices. In particular, our results were driven by the resilience of the Energy business segment and the recovery in Telecom. Flawless execution of submarine cable projects in progress, also led to a recovery in the Projects segment, a business positively exposed to the energy transition, where the Group has reaffirmed its technological and market leadership, acquiring record orders worth approximately EUR4.8 billion in the year. With the aim of consolidating our position in the US market, we are also planning to build a new submarine cable plant in the USA. We have started 2022 with the same conviction and determination, which includes setting ambitious new targets for the year, with an expected Adjusted EBITDA in the range of EUR1,010 million to EUR1,080 million and a free cash flow target of EUR400 million +/-15%,' concluded Valerio Battista.
Financial results
Group sales grew to a record EUR12,736 million, with an organic change of +10.9% (+13,6% in Q4); excluding the Projects segment, the organic change was +11.0%. The Energy business segment confirmed its resilience, with organic growth of +10.7% compared to 2020 and +3.8% compared to 2019, exceeding pre-pandemic levels. Trade & Installer and cables for renewable energy performed particularly well while Power Distribution demonstrated a strong recovery during Q4 in North America. The Telecom segment also benefited from the favourable trends within the US market, reporting +12.7% organic growth. Prysmian's comprehensive execution in submarine cable projects was the main driver for the Projects segment, sharply accelerating in Q4 with a +34.7% increase over the same period of 2020, exceeding the Group's expectations.
Adjusted EBITDA rose by +16.2% to EUR976 million, exceeding the Group's upper range of expectations and revised guidance of EUR920-EUR970 million. There was also a strong acceleration in Q4, with Adjusted EBITDA reaching EUR251 million (the best fourth quarter performance ever in the Group's history). Exchange rates generated a negative impact of approximately EUR11 million during 2021. The Group result, net of the cumulative exchange rate effect in the two years (equal to EUR55 million) was higher than in 2019. Margins remained substantially stable, despite the impact of increasing metal prices, with the ratio of Adjusted EBITDA to Sales at 7.7% (8.6% restated at 2020 metal prices) compared to 8.4% in 2020. The Energy segment confirmed its resilience, particularly in terms of profitability, driven by the Trade & Installers' crucial contribution, with Power Distribution also showing signs of a recovery in Q4, driven by US demand. Margins remained stable across the Telecom segment, due to efficiency-building measures and an enhanced product mix. The Projects segment recovered markedly, reporting an increased Adjusted EBITDA mainly driven by a record Q4 performance.
EBITDA was EUR927 million (EUR781 million in 2020), net of costs for company reorganisations, non-recurring expenses and other non-operating expenses totalling EUR49 million (EUR59 million in 2020). These adjustments mainly included non-operating costs for EUR26 million and reorganisation charges for EUR21 million.
Operating income amounted to EUR572 million, compared to EUR353 million in 2020
Net profit attributable to owners of the parent rose to EUR308 million compared to EUR178 million in the previous year.
Free Cash Flow before acquisitions and divestments stood at EUR365 million (also excluding antitrust related flows), exceeding the guidance.
Despite having paid dividends of EUR134 million, the strong cash flow generation resulted in significant reduction of Net Financial Debt, which amounted to EUR1,760 million at year end (EUR1,986 million at 31 December 2020). The significant deleverage was achieved thanks to solid cash generation of EUR365 million, excluding outflows from acquisitions and disposals amounting to EUR93 million and as cash inflow of EUR58 million related to an antitrust settlement agreement.
The factors that allowed this level of cash generation: operating cash flows before changes in net working capital amounting to EUR883 million; cash outflows due to restructuring costs amounting to EUR24 million; cash outflows due to the EUR28 million increase in net working capital; net investment amounting to EUR275 million; net finance costs amounting to EUR79 million; paid taxes amounting to EUR120 million; collection of dividends from affiliates totalling EUR8 million.
Outlook
During 2021, there was a noticeable recovery in the global economy following the easing of pandemic-related restrictions in the wake of accelerated vaccination campaigns. The recovery was also supported by national plans to support the development of infrastructure projects, energy transition and digitalisation. The strong recovery in economic activity was accompanied by significant inflation pressures, mainly driven by rising energy and commodity prices and continuing disruptions in supply chains. Towards the end of 2021, some central banks showed confidence in the economic recovery and began withdrawing some monetary stimulus measures, also with a view to containing rising inflation.
After a 3.1% contraction in 2020, the global economy is expected to grow by 5.9% in 2021 and 4.4% in 2022 according to most recent estimates from the International Monetary Fund. Although there are positive economic growth expectations for the future, a number of short-term uncertainties persist, not least in the face of persistent inflationary pressures fuelled by disruptions in supply chains, rising commodity and energy prices, and developments of the pandemic. Growing geopolitical tensions in Ukraine are a further element of instability.
The results for FY 2021 testify to the Prysmian Group's focus on proactively and seamlessly serving its customers and efficiently managing its industrial footprint. This is evidenced by the results achieved by the Energy business, which exceeded pre-pandemic levels, with a significant improvement in margins when excluding the effect of higher metal prices on revenues, and by the record amount of approximately EUR4.8 billion of new orders awarded in 2021 to the Projects business.
This favourable trend is seemingly continuing at the outset of 2022. For the full year 2022 Prysmian Group expects moderate demand growth in the construction and industrial cables businesses after last year's excellent performance, with earnings also supported by the ability to implement pricing policies to contain inflation-driven cost pressures.
In the high voltage underground and submarine cables and systems business, the Group aims to confirm its leadership on the market which is expected to show strong growth, driven by the development of offshore wind farms and interconnections to support the energy transition, as well as the start of a trend of significant market growth in the United States, where the Group has decided to expand its production capacity of submarine cables. For this segment, the Group expects results to be up on the previous year, thanks to a solid order book and increased capacity utilisation in the submarine cable business. In the Telecom segment, the Group expects volumes to grow in the optical business, amid a challenging competitive environment, especially in Europe.
Prysmian Group's long-term growth drivers are confirmed, mainly linked to the energy transition, the strengthening of telecommunications networks (digitalisation) and the electrification process. The Group can also leverage its broad business and geographical diversification, solid capital structure, efficient and flexible supply chain and lean organisation, all of which is enabling it to effectively seize growth opportunities.
In light of the above considerations, the Group expects to achieve Adjusted EBITDA in the range of EUR1,010-1,080 million in 2022, a significant improvement on the EUR976 million reported in 2021. In addition, the Group expects to generate cash flows of approximately EUR400 million +/- 15% (FCF before acquisitions and disposals) for FY 2022.
These forecasts do not include any negative impacts resulting from the military conflict in Ukraine and assume no major changes will occur in the evolution of the health emergency and, consequently, no further disruptions and slowdowns in global economic activity. In addition, the higher part of the range of Adjusted EBITDA and cash flow targets is based on the assumption of a stability of the current favourable market conditions, especially in the United States. Moreover, the forecasts are based on the Company's current business scope, on a EUR/USD exchange rate of 1.15, and do not include impacts on cash flow related to Antitrust issues.
Contact:
Lorenzo Caruso
CORPORATE AND BUSINESS COMMUNICATIONS DIRECTOR
Phone: +39 02 6449.1
Email: lorenzo.caruso@prysmiangroup.com
PRYSMIAN S.P.A. 
