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Our financial discipline and strategy of focusing on higher-value businesses allowed us to stick to our commitment to create value for all stakeholders.
In 2013, the net financial position improved further and the free cash flow stayed solid. This meant we maintained our capability to continue investing at a robust pace into the very high added value businesses, allowing us to keep profitability on track.
And all this in 2013, which really wasn’t a brilliant year for the industry as a whole.
The macro environment in 2013 was still generally difficult, although trends diverged between the various markets and geographical areas and signs of partial stabilisation were seen in the second half of the year.
In this context, also beset by negative exchange rate effects, the Prysmian Group has achieved its stated annual targets. Positive sales and earnings performance by the higher value added businesses of power transmission and certain areas of the industrial cables market, in line with the Group's strategy, limited the negative impact of falling demand in sectors like power distribution, construction, renewables and telecommunications.
Further improvement in net financial position, strong cash flow generation capability and commitment to cost control, have all helped to confirm our Group as a benchmark in the cable industry for solidity, profitability and creation of value for stakeholders.
Prysmian’s growth strategy focuses on investing into high-tech, high value-added businesses, as well as into those geographical areas with the best growth prospects. Since our IPO in 2007, we have managed to keep our capital expenditure at a pretty sustained pace, with a cumulated amount of almost half a billion euros devoted to increase production capacity and develop the product portfolio.
In 2013, major investments included a new optical cables plant in Romania and a new high voltage cable factory in Russia. We always focus on delivering value while at the same time creating conditions for value to continue being delivered in the years to come.
Delivering value also means being equipped with the best-suited management and organizational tools to profit from future opportunities. During the year we started a new configuration of our energy business, both in terms of structure and management team, aimed at exploiting the full potential of our position of industry leader and technological pioneer.
• EBITDA €612 Million • Net Financial Position €834 Million • Free Cash Flow €170 Million • Cumulated Synergies €120 Million
€100 million EIB funding for R&D programs. The European Investment Bank (EIB) approved a financing facility of €100 million to support the Group’s €300 million R&D programs in 2013-16.
Capacity increased at two facilities. The Group increased capacity at two facilities which are both strategic in terms of product variety and of market. The Slatina plant, in Romania, has become a telecom centre of excellence at European level. The plant of Rybinsk, in Russia, was expanded in order to allow the production of medium and high voltage energy cables.
Major contracts in the Utility business. In 2013 Prysmian Group signed several new important contracts, mainly in the Utilities sector. They included a project worth more than €350 million for the submarine link of the wind power plant Dolwin 3 in Germany and the interconnection between the Balearic islands of Majorca and Ibiza in Spain.
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Prysmian Group is the world leader in the energy and telecom cables and systems industry.
In the Energy sector, the Group operates in the business of underground and submarine power transmission cables and systems, special cables for applications in many different industrial sectors and medium and low voltage cables for the construction and infrastructure industry.
In the Telecom sector, the Group manufactures cables and accessories for the voice, video and data transmission industry, offering a complete range of optical fibres, optical and copper cables and connectivity systems.
As for the diverse segments, the higher added-value businesses, namely submarine and HV cables, along with special cables for OEMs (original equipment manufacturer) and the offshore oil industry, performed better. On the other hand, demand for power distribution cables, mainly in Europe, and building cables was weaker, namely in Italy, Germany, France, Spain and Australia. Also demand for special cables for renewables (onshore wind power and solar power) was particularly weak in Europe and the US, due to the end of the stimulus programs.
Utilities: growth sustained by high added value-businesses. Profitability of Prysmian Energy cable business climbed in 2013 despite a drop in sales.
Trade & Installer: selective strategy. The product range has been further expanded to satisfy demand for infrastructure cabling in airports, ports and railway stations.
Industrial cables business: continuously specializing. Prysmian’s industrial business continued the process of intensifying specialization in 2013, in order to offer its global customers even more personalized products and solutions.
Telecom business sales in 2013 fell on the previous year. The market for optical fibre cables scored a growth in 2013, entirely thanks to China, India and other Asian countries, which offset a significant drop in the US, here again because of the end of the stimulus programs, and to a lesser extent in Europe. Demand for copper cables declined further, in line with the market trend that started in 2004, which benefits the optical cable market.
Energy – Worldwide leader in High Voltage & Submarine; partner of the major Utilities.
Telecom – Global market leader (# 1 in Brazil, Australia, North America and Western Europe); 19 dedicated manufacturing plants.
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Slide to the right to see some of our most significant events and projects during 2013.
In line with its growth strategy, the Group performed well in high value-added businesses, while focusing its investments in the same business areas.
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In a gradually stabilising global economic environment, placing the major stock markets in generally positive territory in 2013, the Prysmian stock increased its value by about 25%.
Prysmian Group is a genuinely Public Company: its free float is equal to 100% of the shares, with more than 70% of its capital held by institutional investors.
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The Group consolidated its commitment to sustainability during 2013 by renewing investment in the search for sustainable products, strengthening the process for developing its human resources and participating actively in projects and initiatives carried out in the public interest, as well as by reducing where possible the environmental impact of its products and production activities.
In 2013 Prysmian Group improved the Application Level of its Sustainability Report, determined in accordance with the Guidelines of the Global Reporting Initiative, from C+ to B+, achieved ISO 14001 certification for two facilities in France and Italy and OHSAS 18001 for three more plants, reused 27% of wooden drums and supported many projects for local communities (for example Save the Children and WorldSkills and ComunitàNuova) with in kind , time and cash contribution.
To foster and develop the passion, motivation and competencies of its people. The Prysmian Group’s human capital strategy is the basis of its competitive edge over competitors. Investing in human resources is to develop innovative ideas, products and services that can satisfy even the most demanding customers.
During the year, Prysmian Group consolidated its employee training and development programme based on the following four initiatives: Graduate Program, Prysmian Group Academy, Talent and Succession Management and Performance Management.
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Prysmian Group has always given key strategic importance to Research & Development to maintain its market leadership, with the aim of differentiating itself and of providing its customers with technologically innovative solutions at increasingly competitive costs.
The Group currently has 17 Centres of Excellence, with headquarters in Milan, and over 500 skilled professionals. With around 5,700 patents granted or filed and partnerships with major universities and research centres in many countries where it is present, the Prysmian Group intends to be industry leader in R&D. The Group’s spending on Research, Development and Innovation amounted to approximately Euro 68 million in 2013, broadly in line with the previous year and confirming its steadfast commitment to and focus on long-term sustainable growth.
Prysmian Group continually strengthens its relationships with strategic suppliers, through centralised procurement and adoption of a global approach involving just one organisational model, common processes and a single commodity management policy.
Prysmian Group launched several projects in 2013, as complements to the Customer Centricity and Factory Reliability initiatives, to improve logistics in terms of lead-time flexibility, timeliness and efficiency, which have already produced tangible results.
Prysmian Group worked in numerous ways to reduce and prevent the environmental impact of its activities, including focus on the responsible use of raw materials, the optimisation of logistical flows and the responsible management of waste.
The Group was recognised by the CDP (formerly the Carbon Disclosure Project) in 2013 as the "Best Newcomer" within the Italy 100 panel, obtaining the highest score, among the new organisations that participated and took part, for the section relating to environmental and safety matters, in RobecoSAM's assessment for inclusion in the Dow Jones Sustainability Index, in which Prysmian achieved a marked improvement with respect to the points obtained in the prior year.
The environmental performance of Prysmian during 2013 resulted in the following key statistics: about 6 million GJ of energy consumed by production systems, 94,000 tonnes of waste eliminated and almost 7.6 million m3 of water consumed.
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